Topics: Fuel excise indexation, Australian troops in the Middle East.
E&OE…
Rafael Epstein
So the Federal Government is going to reintroduce indexation to your fuel tax bill – it means your fuel tax bill is going up. Is it an essential new tax – something we need to build roads and re-jig the Budget? Or, is it a broken promise, a breach of faith, a dismissal of the oft-repeated line ‘no new taxes, no excuses, no surprises’?
[Interlude]Now the Federal Government, through the Finance Minister, Mathias Cormann, announced today that they will reintroduce indexation – so that means the price of your fuel will go up twice yearly, according to inflation. They’ll do that, not with legislation through the Senate, but with regulation. There is a bit of a catch, it does need to be approved by the Parliament in 12 months’ time. If it’s not approved, they’ll have to give the money back. But the money doesn’t go back to you the motorists; the money goes back to the fuel companies. Let’s explore this with Coalition Senator from Victoria, Senator Scott Ryan. Good afternoon.
Scott Ryan
G’day, Raf. How are you?
EPSTEIN
I’m good. Is it a tax increase?
RYAN
Well, economists can debate whether you technically index the fuel excise. It really is about making sure that the fuel excise maintains its current value. What it really means, though, for a household is initially less than half a cent a litre, in the short-term 30 cents a week, to the average household in the coming year, and in four years when it has its full effect over the period of the Budget, it’s 40 cents a week. So we think that’s a small contribution in order to help bring the Budget back into balance, and to fund the infrastructure plans that the Commonwealth has announced.
EPSTEIN
So are you hoping because it is very small for most of us, that people won’t mind that you’ve broken a promise?
RYAN
Well look we were honest about this in the Budget – I mean, this wasn’t just announced today, this was announced on Budget night…
EPSTEIN
[Interrupts] But very different to everything that was said last year?RYAN
Well, it’s a tiny contribution. We are looking at less than half a cent. I don’t want to dismiss the pressure on household budgets but since the excise was frozen by John Howard over a decade ago, it’s substantially declined in real terms. We know that $100 ten years ago doesn’t buy you the same as $100 now. So indexing the fuel excise just means that, effectively, the price paid – the excise paid – is worth the same in four years as it is now. Otherwise it will continue to decline, now…
EPSTEIN
[Interrupts] It’s not really that much money, anyway, for most of us.RYAN
Well, on an individual level, no. As I said, it’s less than half a cent a litre in the short-term, at 30 cents a week. It does mean $2.2 billion to the Commonwealth over four years, though, so it is a substantial measure for the Commonwealth. And we think it’s a reasonable way to spread the burden fairly.
EPSTEIN
Now the Premier Denis Napthine is facing an election in, what is it, just over four-and-a-half weeks’ time? He’s part of your team. He’s unimpressed with the price raise. He’s also unimpressed with the process – I’ll call it through regulation rather than legislation – just a quick word from the Premier. Have a listen.
Denis Napthine
[Audio grab] Any increase in fuel excise hurts Victorian families and hurts Victorian businesses. This is a process that was adopted by the federal Labor government previously, but it’s not a process that I would endorse. I think it’s a process that is not appropriate and I think it should go through proper Parliamentary processes.EPSTEIN
So you’ve got your own side, the Premier, disagreeing with the idea and the process.
RYAN
Look, I heard what Denis said and I respect Denis’ opinion. Just on a technical level, this is a process that the Parliament has given the Government to use – it’s been used before…
ESPTEIN
[Interrupts] It was a tax grab last time, too, wasn’t it?RYAN
It was. It was used for ‘alcopops’ by the previous government, which we remain critical of because it didn’t achieve the so-called health objectives that were behind that. We’ve said what this is for. This is to help balance the Budget. Look, we wish we didn’t have to do this, but we did inherit a substantial financial mess and Labor has been in the Senate blocking not only the measures we announced in the Budget, but the measures they announced in their previous budget that would stop the Government borrowing such substantial amounts of money every week just to pay the interest bill.
EPSTEIN
You tell me if I’m harping on the wrong things but there are no end of examples in 2008 of Joe Hockey, Shadow Health Minister at the time, calling the process a ‘tax grab’. So there’s no doubt in his mind at the time that it was a tax. And there’s no end of examples where Tony Abbott, as opposition leader, said there would be no new taxes, no excuses, no surprises. So are those words important and I should put stock in them, or not?
RYAN
Well if we look at the ‘alcopop’ example, and that happened when I first came into Parliament, that wasn’t justified on anything other than health grounds, but it was a tax grab. But the government at the time didn’t talk about raising revenue, it said…
EPSTEIN
[Interrupts] But that’s a value judgement. I mean, is intent…RYAN
[Interrupts] No, that’s the reason they gave. We’re being honest…EPSTEIN
[Interrupts] There’s intent and result, and every single [politician] has a view on the intent and the result, and I’m sure if you bring Nicola Roxon in, who was health minister at the time, she’d tell me how wonderful it was. But, it’s important, isn’t it, that politicians be held to account? If it was a tax grab then, why isn’t it a tax grab now? And if there were going to be no new taxes, well why is there a new tax?RYAN
The mechanism used is the same as the ‘alcopops’ but it is very different. They were proposing a substantial increase in a particular form of alcoholic drinks, we are reintroducing indexation that just maintains the current value of the petrol excise. The petrol excise doesn’t increase in real terms like the ‘alcopops’ tax did. It was designed to increase the price…
EPSTEIN
[Interrupts] It does increase – it’s going to cost me more.RYAN
Yeah, and this is why I said this is something that economists can debate, it is going to cost people more. It is going to be 30 cents a week for the average household more for those who use more petrol, but in real terms the excise just maintains its current value. To use that example of $100 ten years ago is not worth $100 now. We would like the petrol excise, if it’s $100 now to be worth the same and buy the same, in terms of Government services, in terms of welfare payments that the Government funds, in ten years’ time because it has been declining substantially since the Howard Government froze the excise in 2001.
EPSTEIN
I’m very keen to get your view, though, is the question actually valid if I say to you: ‘no new taxes, no excuses, no surprises’. Is that even a valid question, in your mind?
RYAN
Raf, you ask the questions, I’ll answer them. I’m not going to tell you if it’s a valid question or not. It’s a bit like I don’t want to say what voters make their election decisions over…
EPSTEIN
[Interrupts] Is it a broken promise?RYAN
I don’t think it is because I think it’s maintaining the real value of the excise, but I accept – and we’re being honest about the fact – that it is going to cost people that little bit more each week.
EPSTEIN
So even ‘no excuses, no surprises’ – what was it, Tony Abbott, when he was asked – he was asked if there would be any changes because of the state of the Budget. Let me read this to you. This is 13th of August 2013: the condition of the Budget will not be an excuse for breaking promises – that’s the question. Tony Abbott: ‘Exactly right. We will keep the commitments that we make.’ I’m asking the question because, in opposition, he said it was one of the fundamental mistakes of the Gillard Government, to break promises.
RYAN
And I don’t think, with all due respect, that a fine debate over whether re-indexation of an excise level by less than half a cent on a litre of petrol is in any way the same magnitude as introducing major new taxes like the Carbon Tax. And I don’t think anyone would suggest that. We think that there are a couple of challenges that we need to address. But firstly and most profoundly is the Budget deficit, which is unsustainable. And secondly was the economic challenge with the mining boom and the investment boom ending, we want to provide infrastructure funds for the states. And particularly in Victoria, money raised from measures like this goes to fund programmes like the East-West Tunnel, which is so important not only in providing investment and jobs in their building phase, but creating a more productive economy over the longer term.
EPSTEIN
I think that’s the very link that the Premier doesn’t like at all. You’re giving Labor something to beat him about the head with, aren’t you? East-West is going to cost you more on your petrol bill.
RYAN
Well this measure has been announced by the Government in the Budget – we’ve come up with the mechanism to implement it today. The Commonwealth is responsible for balancing its own Budget – we’re putting some funds into East-West phase one and two – but I think people differentiate between state and federal elections. They know that those hundreds of apprentices that Daniel Andrews was talking about today having a discount on their registration won’t have a job to drive to if Labor gets in and cancels the East-West contract.
EPSTEIN
Scott Ryan is part of the Coalition Senate team here in Victoria. It’s coming up to 21 minutes past five. Interested to know what you think – I’ll get to some of your calls in a moment. 1300 222 774. Now Senator, I know you might not have your eye entirely into the nitty-gritty detail around the conflict in Iraq, but I was very interested when the Defence Minister David Johnston said yesterday on SKY that our special forces could end up fighting with Iranian-backed and controlled militia groups. Now, for a very long time, both sides of politics in Australia have had not such a charitable view of the Iranian Government. Is that a problem for you, if Australian forces are on the ground fighting alongside Iranian-backed militias?
RYAN
Well, I saw the comments – it’s way outside my portfolio responsibilities. I think, to be fair to David Johnston, what he did do was he refused to rule it out. And what he was highlighting was the fact that there is such a significant threat in the Iraq region and in Syria from ISIL that we have to consider things that we previously wouldn’t have had to consider. Now at the moment our special forces, people need to recall, aren’t directly involved in fighting. They are there in a training and advisory capacity, and obviously if the Government was going to change that, we’d see the open and transparent process that Prime Minister Tony Abbott and David Johnston have regularly undertaken with press conferences over the last two months.
EPSTEIN
It is the very dilemma of this conflict, isn’t it, that there are groups on the ground that it’s illegal for me to give money to. I mean, there are terrorist militias on the ground – we will not only be helping them with air strikes, we could be fighting alongside groups that it’s illegal for me to give money to. That’s a little odd, isn’t it?
RYAN
Well this is an area of the world, Raf, with profound difficulties. I take your comment about our criticisms of Iran. I’ve been one of those, particularly for its hostility towards Israel and things that the previous president there said about the Holocaust. But the challenge is that we have a humanitarian disaster and sometimes to make a situation less worse, sometimes intervention doesn’t mean that you have a side of the angels to choose from.
EPSTEIN
Okay, interesting times [inaudible]. Senator, thanks for your time.
RYAN
Thanks Raf.
(Ends)