E&OE…

PATRICIA KARVELAS

My first political guest tonight is Assistant Cabinet Secretary Scott Ryan. Scott, thanks for coming in.

SCOTT RYAN

Thanks for having me.

KARVELAS

You didn’t go to family fun day today at the Lodge?

RYAN

I stayed in Melbourne for you.

KARVELAS

You’re a kind man. On the GST, is it dead, buried, and cremated?

RYAN

What the Prime Minister said this morning is what he has been saying all along in this debate. We didn’t start by ruling ideas out, we want to consider all of the options for a tax system that is actually going to support further economic and jobs growth. What he outlined this morning is a statement of the obvious…

(Interrupted)

KARVELAS

But it is not of the obvious, because it is different to what the Government was saying earlier.

 

RYAN

This has been going for several months and part of the way of doing these public policy debates in the open, rather than a group of self-appointed lobbyists or experts behind closed doors, is explaining to the people what your hurdles are, and what your thresholds are. Which the Prime Minister mentioned again today, which are supporting economic growth, supporting jobs and passing the fairness test. And then explaining to people how you are going about measuring policies; and what he said this morning is that he remains to be convinced about the prospect about a serious increase in the GST for a tax mix change which might see reductions in other taxes, and would see reductions in other taxes because we are not going to see an overall increase in taxation. So, he has an open mind.

KARVELAS

Does he though? Because it has been widely reported today that he has pretty much killed the idea.

RYAN

What we saw him say was that he remains to be convinced, and they are his words.

KARVELAS

So that does mean – I will ask it a different way – that now the onus is on everyone in the political sphere to convince him still, so he could still be convinced?

RYAN

We also saw Arthur Sinodinos outline this morning on Sky how long the Howard-Costello tax process took, it was over a year of work before the Howard-Costello tax plan came out in August 1998. Now, we are compressing some of that work – and you can use previous work that was done as part of the Henry  tax review and part of the (inaudible) tax paper that Joe Hockey brought out – but the onus on people proposing policy change, particularly difficult policy change that would involve compensation and sacrifice from some parts of the community and change in their own tax arrangements, the onus is always on those proposing change to convince people of the need for it and not take that for granted.

KARVELAS

Okay, what are your personal views about the GST?

RYAN

My personal view is that firstly and foremost we cannot see an increase in the burden of taxation, secondly…

(Interrupted)

KARVELAS

So, you’re worried about the churn, the compensation you would have to deliver to taxpayers?

RYAN

But I am also worried about leaving the tax system as it is, it will see taxes rise. There are two elements of fairness in the tax system, there is fairness to those who we support and who can’t afford to contribute but there is also fairness for those who pay tax. Now, last year the most recent tax statistic showed the top 1 per cent of taxpayers in Australia paid more tax than the bottom half of taxpayers, now I think, quite frankly, that is doing its fair share. When you look at them earning 9 per cent of income and paying 16 per cent of tax , the top 2 per cent of taxpayers paying a quarter of all tax, I think we have a fairly progressive tax system. We have got to make sure that the tax burden doesn’t start falling on middle income earners and millions of people going into higher tax brackets and seeing their standard of living decline even though their real wages have not grown.

KARVELAS

Would you say though that after the comments made by the Prime Minister this morning on Insiders, that the chances of a GST being announced at Budget time have been radically reduced?

RYAN

I think a lot of people jumped at shadows last year and assumed that something was going to happen…

(Interrupted)

KARVELAS

Well, we jumped at shadows that were offered to us, there were very blatant shadows.

RYAN

But all the Prime Minister said was, and I know this stood out given recent behaviour in Australian politics, all the Prime Minister and the Treasurer said was ‘we are going to consider all of the options’. Now that shouldn’t have been as revolutionary as it was, but it was revolutionary in Australian tax policy in recent years. He has always made it clear that it has to pass the fairness test, that it has to not see an increase in the tax burden and it has to support growth and jobs. We have gone through three or four months of that, he has said that he remains to be convinced, now some people might read into that, that it means: well, you have only got a few more months to do it. Those who want to support those changes have less time than they had…

(Interrupted)

KARVELAS

Who are those people? Does this mean that right now that Mike Baird the New South Wales Premier, the Premier of South Australia Jay Weatherill need to be a lot more convincing with the Prime Minister if they want to see their plan? What do they need to do?  What is the burden that they need to meet?

RYAN

Mike Baird and Jay Weatherill seem to have very different proposals. Mike Baird seems to understand that while he has his particular spending pressures that he understands the Commonwealth and the Coalition and Liberal Party are not going to see an increase in the tax burden. Whereas Jay Weatherill has made it clear that he wants to see an increase in spending. The Commonwealth Government will not undertake tax reform that is going to see more money shovelled out for people to spend at the expense of tax payers.

KARVELAS

Do you concede now that letting this run wild like it has – because it has, there have been no parameters, we have heard a very unstructured debate around tax – that the Labor Party can still run a scare campaign now saying that Malcolm Turnbull has a secret plan. Do you fear that?
RYAN

I have no doubt that they will run a scare campaign, but I disagree with you about this being a debate run wild. I think it is a debate that reflects a substantial change in politics that has taken place over ten years. The idea that there can be an expert group deciding the policy and it dumped on the desk the way the Henry Report did and that’s going to generate public support for change; that is dead and buried.

KARVELAS

Does that mean that Green papers, White papers, that whole process should be altered radically? Should we dump all of that?

RYAN

I think what we are seeing now is that over the last three or four months that we have had an incredibly free ranging debate. I have got members of the Government, Coalition members, who have different views about how we should change the tax system. I think that actually generates public support for the fact that this Government has thought seriously about it, that they are letting their people express opinions. The biggest criticism of politicians is often that they are robots on talking points; no one can accuse members of this Government of not being free to talk about their different views. I haven’t seen Cory Bernardi and Russell Broadbent agree on some things over time, but they both have a very strong view that there shouldn’t be a GST increase. There are others, like Dan Tehan’s piece on Friday who say: no, we need to be more pointed.

KARVELAS

Well, actually I was going to raise that piece. He asks for the collapsing of the five rates to three, do you support that idea?

 

 

RYAN

Anything that flattens tax rates and reduces those thresholds which are real barriers to participation, I think that is something that has long been a desire of Australian public policy. I remember in 1990 that was actually a Liberal policy…

(Interrupted)

KARVELAS

Would you like collapsing those rates to three like the Henry tax review suggests? Should that be an idea that is considered in this Budget?

RYAN

Those are the sort of ideas that have come out of Henry, that have come out of rethink, they are the ideas that are being considered and what we are seeing is that being debated publically. Some think that means it is a bit messy or a bit undisciplined, I actually think that sends a signal to the public that we are not just going to what we always wanted to do we are really thinking about it.

KARVELAS

Let’s move on to another issue which is the Asylum seeker issue, no doubt you have read the letter that Dan Andrews…

(Interrupted)

RYAN

He tweeted yesterday.

KARVELAS

He tweeted, he put it on Facebook too. Did you see it on Facebook?

RYAN

No, I saw it on Twitter.

KARVELAS

It did get a lot of social media attention, it was – you’ve got to say – a very successful strategy for sharing his message. He says that Victoria could take all 267 asylum seekers. Why shouldn’t Victoria be given the chance to do that?

RYAN

Melbourne, particularly Melbourne but Victoria takes a substantial number of our humanitarian and resettlement program and the state works very much in cooperation with the Commonwealth. But, I will be honest; I thought yesterday was cynical grandstanding on his behalf because if you are really serious about solving a problem you actually start talking to someone in private about it. You don’t actually put it on Twitter; you don’t put it on Facebook. That was cynical grandstanding at its worst. He was appealing those who have…

(Interrupted)

KARVELAS

How about Mike Baird, because he suggested he would be open to the idea too. Was he being cynical as well?

RYAN

What Mike Baird and Will Hodgman have said is they actually believe that we should play a role and the state governments are happy, particularly when it came to the Syrian extra number the 12 000 extra refugees. What Daniel Andrews did yesterday was not send a letter to the Prime Minister saying ‘hey mate, can we have a chat about this over the next few days’ he put it on Twitter, he put it on Facebook, he did it to get a headline and he did it for the Twitterati to give him…

(Interrupted)

KARVELAS

If he had done it quietly, discretely, had not shared it on social media would his chances be higher, or would it be the same outcome?

RYAN

One of the challenges in this area is that there are a series of activists who don’t like that we have mandatory detention that we don’t have permanent protection…

(Interrupted)

KARVELAS

Are you comfortable with sending babies that were born in Australia, small children that have allegedly been sexually abused back to offshore detention.

RYAN

This is a policy area where people of good faith are never always entirely comfortable, but one of the real challenges…

(Interrupted)

KARVELAS

So you are not entirely comfortable with it?

RYAN

Mandatory detention and some of these things are not pleasant but I firmly believe that they are necessary elements of our border protection policy. And what we have is a group of people who use every example, every argument not to solve that problem but to try and undermine those key elements. The Australian people have expressed support for it at election after election. One of the challenges has been that when, for example, John Howard did resettle a number of people on Nauru and tried to do it quietly, those advocates went out and publically said: this is the great failure of John Howard’s Nauru policy. Well, that actually sends a signal to the people smugglers which is: send them here anyway. That undermines the policy. I think if you want to actually work in this space, and that you are really committed to the people and not the politics, that you do it in private.

KARVELAS

In a moment I will bring in a panel of Indigenous leaders to discuss the Closing the Gap statement which will be delivered by the Prime Minister this week, big moment for him. What do you make of the national referendum on Indigenous affairs, to change the Constitution? Are you uncomfortable with changing the Constitution to recognise Indigenous Australians?

RYAN

I am uncomfortable recognising any race in the Constitution. Like all nations and particularly colonised nations in the new world, we have a race legacy. We are not unique but we have some issues that we have been really trying to deal with over the last 20 or 30 years and have some places to go. And for most of the last 60 years, we have spent as much time as we can getting away from the issue of race mattering. I don’t think race has a place in our Constitution and I don’t think we should actually be moving away from the fact that each of us is treated as an individual that each of us…

(Interrupted)

KARVELAS

So, you are not comfortable with changing the Constitution to acknowledge Indigenous Australians as the first people?

RYAN

If there is, and Gary Johns and others have spoken about this, a statement of historical fact is one thing but we have to ensure that we don’t…

(Interrupted)

KARVELAS

But we know, and the Indigenous leaders will say this, that they don’t just want a statement of historical fact.

RYAN

The challenge about referenda is that one of the reasons they have always failed is that all the people who actually believe in the change get around and agree with one another and they end up going to the referendum where it gets defeated.

KARVELAS

You’re a close adviser to the Prime Minister, have you shared that view with him, that you are not comfortable with changing the Constitution on the grounds and terms that have been described.

RYAN

I have deferred to the point that there is a process in place to come up with the question. To many people, and I have spoken to Noel Pearson and others who are passionately committed to this including some of my colleagues, I have made it clear where I think not only my views are but where I think the public would go in a referendum. I think this idea that we can acknowledge historical fact, but I think a lot of Australians are uncomfortable with recognising race. It is a thing that we teach our children from the youngest age to move away from.

KARVELAS

Before I let you go, that view that you have just shared, which is a controversial view, it is not the view of the Party position, how many people in the Party would you say agree with you?

RYAN

I have never done a test, but there has never been a significant debate. There has been a commitment to allow this process to go forward and to try and develop a question that people agree with, but I see there is a difference of opinion on this. I don’t think it is particularly controversial, I think it is a…

(Interrupted)

KARVELAS

There is a bipartisan view that it should change and not just acknowledge the past but do more…

(Interrupted)

RYAN

With due respect, there has been bipartisan support at the leadership level for this process going forward, there has never been Party Room or substantial discussion around the detail of the question. That is what the process if for, what Noel Pearson and others are involved in, and everyone supports that. But, I think given you have asked and given your history on this, it is also important to outline that referenda have failed in this country because people have underestimated the arguments or views of those who don’t support them and in this case I don’t think anyone would want it to go forward if there wasn’t a strong chance of success.

KARVELAS

Scott, thank you so much for coming in and missing Family Fun Day at Lodge.

RYAN

Thanks for having me; it was great to be in Melbourne for the day.

KARVELAS

And Senate Estimates tomorrow, which one are you in?

RYAN

I think I am sitting in for immigration tomorrow evening, and then some economic and industry later in the week.

KARVELAS

Many thanks for your time.

RYAN

Thanks Patricia.

(ENDS)