Topics: higher education, Federal Budget
E&OE…
Kieran Gilbert
This is AM Agenda, thanks for your company. With me Senator Scott Ryan of the Liberal Party, and Labor’s Jim Chalmers. Jim Chalmers to you on the comments of John Brumby, he’s said that it’s inevitable, the GST will rise. A Labor elder, well respected former Victorian Premier has really broken ranks with the Labor Party generally on this issue, what do you say to that?
Jim Chalmers
Look, I’ve got a lot of respect for John, as a lot of people do in the community, but I don’t agree with him on this point. I think the GST is a regressive tax, because people on low and fixed and middle incomes spend a greater proportion of their income it hurts them more. The reality is that this $80 billion cut to schools and hospitals has been engineered to try and create an inevitability that the GST has to go up, that’s been the sneaky plan of Joe Hockey and Tony Abbott all along. They are absolutely salivating at the prospect of jacking up the GST. Senator Macdonald, as I said before, wants it on food, senior Liberals want the base broadened and the rate jacked up, we won’t be for that because it hurts people the most who can afford it the least.
Gilbert
Senator Ryan, this is something that your colleagues are now speaking openly on, as Jim Chalmers pointed out, Senator Macdonald, your Liberal counterpart in the Senate, he’s saying that it should be applied to fresh foods, what are your thoughts? Is it inevitable, do you agree with the former Labor Victorian Premier?
Scott Ryan
No I don’t. The only leader of a government out there arguing for an increase in the GST is Katy Gallagher, Chief Minister of the ACT, and a Labor Chief Minister. Look, Ian Macdonald’s welcome to make his comments, but we made a commitment we wouldn’t be changing the GST, we’re not going to…
Chalmers
You made a lot of commitments though, Scott.
Ryan
Jim I let you speak earlier, just relax.
Chalmers
Yeah, but you made a lot of commitments that turned out not to be right.
Ryan
If the state Premiers want to actually campaign for an increase in the GST they’re welcome to, after all, every cent of it goes to the State and Territory Governments. But I’ve got to address a couple of important points here Kieran, this so-called $80 billion cut is fictional. Firstly, Labor made promises with money that doesn’t exist…
Chalmers
It’s in your Budget Papers Scott.
Ryan
Labor made promises with money that doesn’t exist, and let me make clear that over the next four years funding to public hospitals increases by 36%…
Chalmers
Unbelievable.
Ryan
Over the next four years funding per student continues to schools all around Australia. After that, we’re funding the states and the schools with the cost of inflation, so increase in the cost of the service and the cost of living, but also the increase in enrolments and the increase in population. So funding to schools and hospitals continues to increase. This is nothing but a Labor fiction, but even more worryingly is they made promises with money that didn’t exist, they made promises they could never deliver.
Gilbert
But Senator Ryan, this is something Labor is arguing, but also the Liberal Premiers are making the same point, that these are cuts. It’s not just Labor, is it?
Ryan
They are reductions in the rate of growth, and we can respectfully disagree with one another in the Liberal Party, but they are reductions in the rate of growth. Funding and spending on hospitals and schools continues to increase every year outlined in these Budget Papers.
Gilbert
Ok, Jim Chalmers I want to ask you about something. You said the GST’s a regressive tax, so too was the carbon tax, that didn’t stop Labor from implementing that with appropriate compensation, why not do the same thing with the GST but with compensation, because obviously you would generate a lot of revenue from broadening the base and increasing the rate, and if you’ve got enough to increase the pension and support for low income earners, why not look at that?
Chalmers
Emissions trading was something that had an environmental benefit, it wasn’t just a straight whack on cost of living for people who could least afford it. I don’t have any faith that this Government would be interested in compensating or assisting people on low and middle incomes. They’ve actually done the opposite in this Budget, they’ve whacked them with increased taxes and charges and cut their schools and hospitals. Scott said before that the $80 billion cut to schools and hospitals wasn’t right, it’s in Joe Hockey’s own budget document. When it comes to commitments given before the election, they’re not worth the paper they were written on. So when we hear now that they have no plan to raise the GST, nobody believes them.
Gilbert
But the point I make to you is if every economist is saying that the GST is the best way to increase revenue, provide a sustainable stream to the states, if it is accompanied by appropriate compensation, what is fundamentally wrong with that, because surely those with more money spend more, and therefore tax avoidance and so-on is going to be minimised by having a consumption tax increase.
Chalmers
Well the first point is not every economist is arguing to jack up the GST, that’s not right. But secondly, it’s not that wealthier people spend more and therefore pay more GST, it’s that people on low and middle incomes spend a greater proportion of their income, week-to-week. They live week-to-week from payment-to-payment from salary cheque-to-salary cheque, so the GST hike would hurt people on low and middle incomes more, the carbon price was an entirely different matter. I have no confidence in the Government, either in their promises or in anything that anyone might say about them being adequately able to compensate people for their cost of living hikes.
Gilbert
I’m not sure I said every economist, I think I said economists, but anyway, Scott Ryan, your thoughts on that, and I suppose the merits of the case that’s been put by your own colleagues privately, and even publicly today as we can see in the Fairfax press.
Ryan
The solution to a spending problem is not to increase taxes, Kieran. I mean you made the point there about the carbon tax, that did embed right through the economy. Jim said there was an environmental benefit, well there wasn’t, emissions continued to go up. It was a badly levied consumption tax that hit Australian jobs, hit Australian exporters, and hit the cost of living, which we’re trying to get rid of and Labor won’t let us. But when it comes to the GST, just to put this in context, we’ve increased spending on schools by just under 50% per student in real terms over the last fifteen years. Those sort of spending increases are not sustainable to keep going when the Budget is in such a dire situation. We’ve had two ratings agencies over the last fortnight say that these budget measures are important to maintaining Australia’s stable credit outlook.
Gilbert
Gentlemen we’re out of time, thank you for that this morning.
(Ends)