774 ABC Melbourne, Mornings with Jon Faine

Topics: federation, COAG, tax reform, vocational education and training.

 

E&OE…

JON FAINE

Although I hear utterances coming from the premiers’ conference and the meeting with the Prime Minister suggests that federalism is being redesigned on the hob. Scott Ryan is a close confidant of Malcolm Turnbull, he’s the Minister for Vocational Education and Skills in the federal liberal Turnbull government. Senator Ryan, good morning to you.

SCOTT RYAN

Good morning, Jon.

FAINE

Redesigning federation off the back of an envelope, it’s a sure sign of chaos, is it not?

RYAN

Jon this is something that is a product of months and months of work. It was flagged at the most recent COAG meeting late last year and there’s been ongoing consultations between officials at the Commonwealth and state level. Now there’s substantive politicking that the premiers do when they come to Canberra and ask for money, which is as old as Federation itself. But this is a well-thought out, long-standing idea I might say that both Malcolm Fraser and Bob Hawke considered, but it’s been the product of months of work since Malcolm Turnbull… (inaudible)

FAINE

(interrupts) Sure it’s been in the too-hard basket forever but it’s never been anybody’s number one priority, it’s never been put up there as a serious proposal that merits and warrants serious consideration. It’s always been an add-on, tack-on thought-bubble kind of idea and it makes Malcolm Turnbull look silly.

RYAN

Look, I disagree with that Jon. Malcolm Fraser made a very serious attempt at that and Bob Hawke, Nick Greiner and Wayne Goss tried very seriously to do this a quarter of a century ago and they were knocked-off by Paul Keating becoming Prime Minister. So this is a long-standing, very serious issue. Malcolm Turnbull understands that the model of our federal relations is broken. Labor broke it when they promised billions of dollars that didn’t exist and that were unbudgeted. I mean, if I promised to give you a million dollars next year Jon, and you know I didn’t have it, then you shouldn’t believe me. And that’s what Labor did. They promised billions of dollars off the budget that were unfunded. That is not sustainable. The Commonwealth does not have the money. So we need to look at new ways to make the system work so that we get better schools, better hospitals and better services.

FAINE

You’re just outsourcing responsibility, the federal government, aren’t you? You’re just trying to get the states to do what you’re not prepared to do, which is increase taxes.

RYAN

No, Jon we don’t run a school. I mean the states want to…

FAINE

(interrupts) No but you levy under the constitution, I remind you, the constitution upon which this nation is based, you have the power to levy income tax, not the states.

RYAN

So do the states, Jon. Jon, so do the states…

FAINE

(interrupts) They’ve ceded that power fifty years ago.

RYAN

It was seized from them and in fact it was offered back to them in the ‘70s, and I saw an academic say the other day that power is still there. No Federation in the world has the imbalance between Commonwealth and state taxes that Australia does. And it drives so much cross-shifting, so much inefficiency. The Commonwealth hands over billions of dollars and it doesn’t have influence over how it is spent. We have all these national partnerships and agreements that some state governments say cost as much to administer as to deliver the funding to people, we have a lot of bureaucrats employed at both levels. Local governments employ grants officers who are employed to fill out forms to seek money from the federal government. This system doesn’t work anymore. Labor broke it by trying to promise tens of billions of dollars that didn’t exist. This is a serious attempt at trying to bring that balance back and guarantee that there are the resources for better services.

FAINE

If you seriously wanted to embark on a system of constitutional reform and changing Federation, this is not the way that you’d embark upon it, Senator Ryan, you would sit down with some sort of a… I mean Tony Abbott started a Federation White Paper – that went nowhere. Why wouldn’t you revive that process and go about it systematically, rather than just bringing it by way of an ambush at a premiers’ conference?

RYAN

This isn’t, this is not an ambush, Jon. This has been discussed at officials-level between Commonwealth and states. Now these discussions have been going on for a substantial period of time. The idea that both the Commonwealth and the states would look at a tax base and try and talk about how we can rationalise it has been discussed at the COAG meetings for more than twelve months. So this is the product of those discussions and the work is a product of that. Now we always have this politicking. Every premiers’ conference, every COAG meeting, the states say we need more money. Now, the people are sick of it. They’re as sick of it as they are of politicking between state and federal government on so many other issues. This is trying to say we can keep the argument going, or we can try and put in place one of the steps that will help solve it. It’s not the silver bullet, but it will actually help solve the problems because the states will have predictable, reliable funding services that they don’t have to come to Canberra with a begging bowl every year.

FAINE

It looks like a smokescreen to try and disguise the absence of any consistent and coherent tax reform policy from Scott Morrison and Malcolm Turnbull.

RYAN

Well, look we said we’d have a tax reform policy out before the budget, we said we’d have this discussion publically. I know some people have been critical of it, but I actually think that by having the discussion publically, by putting the information out there, explaining why we have ruled out certain options and not moving ahead with them, is the way you generate public support and consent for change. The idea that you can have ten experts in a room deciding what’s best for the country and drop it on the table, and hope there’s going to be public support for that, well those days are gone.

FAINE

Well, whether or not this actually generates genuine reform or ends up… I mean, Daniel Andrews, the Victorian premier, quite rightly said if there isn’t actually any extra money, what’s the point of it all anyway?

RYAN

The point of it is to actually provide two things – certainty and certainty about a growing revenue base.

FAINE

But there’s certainty already. The certainty is that the Commonwealth levies income tax, the states have a fight over it, and you end up getting something close to your share.

RYAN

No, actually no. There’s no certainty. Every year the Commonwealth Grants Commission decides how much of the GST Victoria, Tasmania, South Australia get. That unpredictability can make a difference of hundreds of millions of dollars for the Victorian budget. And you can speak to every state treasurer of both sides and they’ll tell you that. What this also does, it gives states access to both the GST and the income tax revenue base. They’ve complained that the GST revenue base isn’t growing as fast as it used to, so this essentially allows them to hedge their risk. It allows them to have the same revenue base, in many ways, and have the same set of risks along with their own taxes, the Commonwealth tax. Because in the end, we can argue about how much we want to spend on services, but it all comes down to how much revenue we have, and the resources we have to spend.

FAINE

When this gets shot down as it’s going to this morning, I’m quite sure by various premiers say ‘under no circumstances, no way’, when it gets shot down, where do you go from there? I don’t understand the strategy Senator Ryan. You floated GST increase and that gets shot down by your own backbench, you float changes to negative gearing and self-managed super – that gets shot down by vested interests on the backbench, now you float a state income tax – that gets shot down. It just ends up leaving the Prime Minister looking like he’s got nowhere to go.

RYAN

Well I would characterise it differently. We’ve publically talked about should we do a GST, the decision was made not til we explained why. We’ve done the same on negative gearing. We’ve talked about superannuation and explained the risks there. So I’d characterise that differently. Let’s see what comes out of today, it was never a prospect of today coming out with specific number on shares and taxation revenues. The objective of today is to have a timetable moving forward about can we work these issues out, as the 150-plus Commonwealth-state agreements expire over the next two years, and is there a better way to fund these services for states having predictable, reliable own revenue sources.

FAINE

And just finally, relating to your portfolio as the Minister for Vocational Education and Skills, we yesterday heard of a proposal from a very experienced administrator in the sector of privatised training from the early days, that she would… well she’s failing to secure a meeting with you and your office or your advisers in order to secure a blueprint or provide you with some… a way out of the mess that you’ve inherited and she can’t even get a meeting with you.

RYAN

Well my office met with Lisa for forty-five minutes. She had a proposal, and I appreciate we were pressed for time. We asked for a copy of the proposal, we were told that it had been circulated elsewhere – we couldn’t have it. We chased up the ‘elsewhere’ that we’d been told that it had been circulated to, and they don’t have a copy of it. A couple of names were used as supporting the proposal, we spoke to those people and they said that’s not quite the best representation or characterisation of what they’ve said. This sector has been full of people that have said there’s an easy way to solve the problem. The truth is, there are no easy solutions. There have been smarter people than me in this job beforehand – if there was an easy solution, they would have done it. And I am sceptical when people say ‘with this several-hundred-million-dollar plan, you can solve all the problems’, because this sector has had too much of that. So if anyone wants to put a proposal to me, send it to me in writing. I will read it, we will talk about it. But my office met with Lisa, when we asked for the proposal, we were not provided with it.

FAINE

Well that was not made clear yesterday, we’ll follow through and thank you indeed for your answers to all of my impertinent questions this morning.

RYAN

Thanks, Jon.

FAINE

Senator Scott Ryan, Victorian liberal senator and the Minister in Malcolm Turnbull’s government for Vocational Education and Skills.

 

(ENDS)