Topics: Tax reforms, fuel excise indexation, refugee resettlement in Nauru.
E&OE…
CHRIS HAMMER
We’re joined now in the studio by Liberal Senator, Scott Ryan, from Victoria and Michelle Rowland, Labor MP from Greenway. Good morning to you both.
SENATOR SCOTT RYAN
Good morning.
HAMMER
Scott Ryan, the Prime Minister has requested this mature debate about tax reform, federalism, whatever, just set out very briefly, if you can, what’s the need for that? People out there in the electorate [wondering] why is this happening? What’s happening with the Government’s demands, whatever? Is this necessary now?
RYAN
Well last night the Prime Minister outlined a couple of things. Firstly, that over most of the last three decades, Australia had quite a strong record of economic reform. He rightly gave credit to the era of Hawke and Keating, and Howard and Costello, and pointed out that during the era of Hawke and Keating, virtually all of the economic reform measures were supported by the opposition, often led by John Howard. He also pointed out, and I think everyone would agree, that as well as reform being an ongoing challenge, the world’s changing. Our region is changing. We constantly have to make sure that we are at our most competitive. He also pointed out that no one would agree that our Federation works perfectly, no one would agree that our tax system could not be better. And what he did was he outlined the need for Australia to start having serious discussions around these topics so that we can continue the strong economic growth we’ve had since the early 1990s.
HAMMER
So there’s a serious consideration – almost by definition – a consideration of changes to the GST?
RYAN
Well look, there’s an obsession on the second floor of this building that every time someone talks about how we can improve our tax system, that’s the three letters people run to. What the Prime Minister has made clear is that because that is a tax collected by the Commonwealth, but entirely for the states and territories, that that discussion can only happen if the states and territories lead it and participate in it. But he’s invited that conversation to start, and that’s the only way it will happen. But there’s a bigger issue here, and that is …
HAMMER
[Interrupts] So the Federal Government is not pushing any changes to the GST – just leaving it open for the states?RYAN
It’s effectively a tax collection for the states to provide everything from firefighters to police to schools and public hospitals. And so, since the day it was introduced, it’s always been protected by a piece of legislation that says it can only be changed if all the states and territories agree. Now, there’s an election in Australia every year in one of the states and territories, and he’s asked the leaders of the states and territories that do represent different parties, and invited them to participate in this discussion. Now it’s a bigger discussion about tax reform, and it’s a bigger discussion about our Federation. So, how can we improve the way our country works? Because six years under Rudd and Gillard weren’t years of reform in this area, they were years of major spending. And we’ve now got an economy that is slowing because of the red tape and the burden put on it by the previous government, and we’ve got a situation where the Budget is in serious trouble, and that needs to be made more sustainable.
HAMMER
Okay, Michelle Rowland, how would changing a tax that’s dedicated totally to the states affect in any way the Federal Budget bottom line?
MICHELLE ROWLAND
Look, I think the first thing to note is that the nature of the GST is that it is a regressive tax – it’s a consumption tax. So, the less disposable income you have, the greater you actually need to spend in order to stay afloat. You don’t have other options, unlike people at the higher end of the scale. So I think, at a starting point, it’s important to understand the nature of the GST as a regressive tax.
The second point is, and it’s been made very clearly upfront, for this Prime Minister to say that he wants a mature and open debate on these issues is actually quite incredulous. This was the man who was the most divisive, obstructionist opposition leader that this country has seen in the modern age.
But even if I put that to one side, Chris, I actually approach these issues from having a local government background – looking at it from a local government perspective as well. And we need to remember that when you have the COAG table, we have states there, we have Federal Government, but local government is also represented – so three tiers of government system in Australia, I think sometimes people forget. And unfortunately local government ends up being at the tail end of some of the worst cost-shifting. And this has been empirically documented – local government comes out worse off every time.
What I really take issue with is some of the changes that have been made – cuts that have been made in this Budget in particular – and the way it impacts on service delivery at the local level. You can look at the level for local councils – ratepayers – a billion dollars just in federal assistance grants that’s been cut in this Budget. And then look at the state delivery – cuts in health and education, which the states then need to pick up. So I can understand why the reaction broadly from state premiers has been so hostile to this notion of having this mature debate. When on one hand, the Prime Minister is calling for it and on the other, he’s making cuts that makes it harder for them to do their jobs.
HAMMER
So you, essentially, are accusing the Government of trying to twist the arms of the states into supporting changes say to the GST through these sort of cuts?
ROWLAND
I have no doubt that’s what it is. This is a guise for actually saying to the states: ‘you need to get on board otherwise there’s more to come’.
HAMMER
Scott Ryan?
RYAN
Well let’s talk about the actual facts in the Budget. In education – funding for education – there is no cut. Over the next three years, it goes up by eight to nine per cent a year, and then it gets indexed by CPI. There is no cut. In public hospitals and health funding, it is the same. It is a funding increase over the next three years at just under 10 per cent, and then it’s indexed by CPI. There is no reduction whatsoever in funding to health and education in the previous Budget. It is nothing but a Labor lie.
There has been a reduction in the rate of growth and when you have a Budget deficit that we inherited from Labor, it is foolhardy to keep promising unsustainable rates of growth with absolutely no plan to bring the Budget back into balance. And Labor had no plan. They make promise after promise, and all of the promises that Michelle and her Labor colleagues make are meaningless unless they have a plan to bring the Budget back into balance, and they haven’t told us that.
HAMMER
Okay. The reintroduction of indexation on fuel – Michelle Rowland, Labor is highly critical of that, but will you continue to oppose it when it comes to the Senate, say, in a year’s time?
ROWLAND
We’ve made it very clear that this is a broken promise and when we went and responded to the Budget shortly after it was announced several months ago now, we made it very clear that there were some measures that we would look at – some we would support and some we wouldn’t. And this was one of the ones we were very clear about not supporting. And the reason for that is because it is a broken promise, it is a new tax…
HAMMER
But the question is, much of the interpretation of the Government’s move of introducing it by regulation is that it’s going to make it more difficult for Labor and the Greens to oppose it in a year’s time because that would be meaning cutting off an established revenue stream, and it will involve reimbursing money to oil companies, whatever. So, what is Labor’s position? Are you [inaudible]…
ROWLAND
I don’t have a crystal ball, but I can tell you everything you described there is actually quite – I think the voters find it quite perverse – and you only had to see some of the vox pops last night. The revenue that is collected going back to the oil companies, no wonder motoring groups are telling consumers ‘keep your receipts’.
The way that it was done – the sneaky way that it was done – particularly in light of the fact that this was an opposition leader who went to the last election and said ‘we will address cost of living issues’. A Treasurer who says ‘poor people don’t drive cars very much’. And I represent an electorate where you have to have at least two cars in your family to survive – these are the people who are going to be disproportionately hit by this, so I can tell you the answer on that, Chris, is that I approach, and Labor approaches it from a values basis.
This is bad for consumers, and you talk about small business and red tape, this is going to add about $800 a year in compliance costs for over 6000 petrol stations. We have a huge number of petrol stations in western Sydney – you only have to look around – because it reflects our reliance on cars. And these are many franchisees – are small businesses – who are going to be hit by this as well.
HAMMER
Scott Ryan, can I ask you, if you like, to defend not the measures or the financial need for the measure, but the way it’s been introduced because Labor is accusing the Government, one, of a broken promise by introducing a tax that wasn’t set out – or the indexation of a tax that wasn’t set out before the election – and now the Government has bypassed the Senate. Many voters will go: ‘well, what have we got a Senate for?’
RYAN
We haven’t bypassed the Senate at all. This is a long-standing part of Commonwealth Law. In fact, the Labor Party used this when they implemented their dramatic tax increase that was allegedly for health purposes on ‘alcopops’. This is a power granted …
HAMMER
But you were critical of that?
RYAN
Because of the tax increase, and because it was hidden under the guise of an alleged health measure. Labor wasn’t honest about a tax grab in that case – a dramatic increase in the price of some alcoholic drinks hidden behind a health guise. What we have said on this is that this is less than half a cent a litre. The average household impact in the short-term will be 30-40 cents …
HAMMER
In the long-term it will be tens of billions of dollars.
RYAN
$2.2 billion over four years. So, without denying the fact that household budgets are tight, we think that maintaining the real value of the excise and making sure that this rises in line with inflation, just like the other elements of what people buy and what people pay for do, is a reasonable way to help bring the Budget back into balance and fix the disaster we were left by Labor.
Now, the measure and the means we’ve used to introduce this are part of Commonwealth Law – it’s a power granted to the Government. And in 12 months’ time, Michelle and the Greens will have to answer and determine whether or not they want to provide refunds to the oil companies.
HAMMER
Is there a political problem, I guess, with the Government in selling its message here? You’ve got Michelle Rowland, Labor, saying [inaudible] about the GST, it’s a regressive tax, fuel excise hits poor people – those people in the western suburbs. You’ve got Rupert Murdoch saying there’s a problem with increasing inequality in our societies. Is it hard for the Government to sell its message and not be vulnerable to this accusation that it’s serving the needs or the desires of the better off at the expense of…?
RYAN
Well hang on, let’s be fair about this. I mean I don’t think what you just said there adds up, from the point of view that Rupert Murdoch’s address was about the impact of [inaudible] diesel, and it was actually critical of the approach that saw the prices of assets rise at the expense of wage and salary earners. Murdoch’s speech, that was reported yesterday, was quite critical of that and I think that’s quite a legitimate concern.
I wish that, as a member of the Liberal Party, we didn’t constantly come to office to have to clean up Labor’s mess. I would love to be like the Labor Party and come to office one day, unlike Jeff Kennett did, unlike John Howard did and unlike Tony Abbott has, with massive budget deficits and having to make difficult decisions that balance a budget. Because Labor inherits money, they spend it and they make it worse. We have to clean up the mess. These are difficult decisions, we don’t deny that, but it is something that we have to do in order to bring the Budget back into balance and we think that while it does have an impact on household budgets, it is a small impact at less than half a cent a litre in the short-term and that that is a reasonable way to help bring the Budget back into a sustainable situation.
HAMMER
Michelle Rowland, how do you respond to that? Labor will complain about the regressive nature of the GST or whatever, but the Government is trying to get the Budget back into balance or surplus. Don’t they make a good case?
ROWLAND
The first point to make, Chris, is that the recently released NATSEM modelling clearly shows that this Budget is hitting people who can afford it least the hardest. My electorate, for example, and many of my counterpart’s electorates throughout western Sydney are clearly some of the worst hit by this Budget. Families are over $1000 a year, on average, worse off each year. So I think we need to put that to rest because that is the evidence. They are facts.
The second point to make is – I hear comments about cleaning up Labor’s mess and so forth – this is a Government that has now been in for over a year. It brought down the Budget in May, which it still cannot sell. And the reason why it cannot sell it is because it fails even former Prime Minister John Howard’s test on equity, and also actually achieving its aims. This is a Government who came in and has actually doubled the deficit and so much more since coming to power, and it wonders why it still can’t sell its Budget message. I think that, just to give a bit of advice on this one, people are alive to the fact that this is a Budget that is still hurting them, they are alive to the fact that this Government said they would be the adults in charge here. They don’t want any more excuses, and to say and claim that this is a small impost on people, the reality is that it is going to hit people who can afford it the least.
HAMMER
Okay, just finally, asylum seekers, offshore processing. We’ve had reports from Nauru of people that have been assessed through the system, found to be refugees, resettled on Nauru – this is a case of four children – they’ve been beaten up by locals who have told them to get off the island and are threatening to kill them. Michelle Rowland, what’s your reaction to these reports?
ROWLAND
This is extremely concerning, and I think the first point to make is that the arrangements that we have, in Nauru in this case, but also of course we have a resettlement arrangement with PNG – one that hasn’t quite come into being yet because people haven’t actually been settled in a way that they have on Nauru. We need this to work. It’s important to note that when this resettlement arrangement came in, we did see a dramatic impact on the number of people arriving by boat seeking asylum. I think the most important thing to note on this case is the fact we need to make it work.
And we can’t have a Minister saying ‘not my problem anymore’, because part of these arrangements is resettlement. To simply say ‘this is not our problem’, to wash our hands and say ‘it’s up to you, Government of Nauru’ is simply inviting these arrangements to fall over. It sets a bad precedent for manners, it sets a bad precedent in Nauru itself of course, but I think we need to remember at the end of it, these are children – these are children. We cannot wash our hands of responsibility and I completely reject the Minister’s comments that this is not my problem.
HAMMER
Okay, Scott Ryan, Michelle Rowland says we need this to work – Australia needs this to work, whether it’s resettlement in Nauru, or Papua New Guinea, or Cambodia or whatever. She makes the point then that the Minister’s office has said ‘look, these people have been accepted as refugees into Nauru, so it’s the responsibility of the Nauru Government’. But in practical terms, the Australian Government does need to make these resettlement programmes work.
RYAN
Unlike what Michelle just said there, this Minister and his Government have taken responsibility. The way we avoid all these problems is by stopping the illegal arrivals, and that’s something this Government has managed to do. That’s first and foremost. We don’t have the problem, we wouldn’t have this problem, if Labor hadn’t actually opened the doors, and we had tens of thousands of people arrive unlawfully.
I’ve read this story, and I’ve only read that one story so I haven’t seen any other reporting of it, or other circumstances. But we do have to be careful, we cannot unilaterally intervene in domestic affairs in another nation, so internal domestic law and order is a matter for another sovereign nation. But this Government has put an enormous amount of effort into improving the situation in Nauru and on Manus, a lot circumstances and a lot of resources were left unfunded by the previous government as they came up with their haphazard mechanisms in the dying days of Kevin Rudd’s second Prime Ministership. This Government and its Minister have taken responsibility. What the Minister was alluding to is we can’t unilaterally intervene in the domestic affairs of another sovereign nation.
HAMMER
But what would happen, say, if these children got on a plane, came to Australia and claimed to be refugees because they were being persecuted in Nauru?
RYAN
Well, I think, to be fair, let’s draw a distinction between the behaviour of some – what was absolutely appalling and obviously illegal behaviour, as reported, of some people in Nauru – versus the actions of the state of Nauru. When we have regrettable incidents in Australia – you know, we’ve had a few reported and we’ve even discussed some here over the last few weeks where people have been harassed in the street because of their religious wear, or their cultural wear – that doesn’t condemn the nation of Australia or the state in which it happens. So I do think we need to draw a distinction between the behaviour of, in this sense, what seems to be illegal and appalling behaviour of a group of people and equating that to the state of a nation.
HAMMER
Okay, Senator Scott Ryan, Michelle Rowland, thank you so much for your time today.
ROWLAND
Pleasure.
RYAN
Thanks.
(Ends)