SCOTT: Earlier, I spoke to Finance Minister Penny Wong over just what has to happen to bring about some kind of greater revenue stream for the Government.
WONG: I dont agree with you that tax rises have to be the talking point. I think what is important is that this discussion is informed by the fiscal realities. And theyre not just the Governments fiscal strategy, which is very, very important to the economy, but also by the longer term perspective, about where the economy is going. What will happen in 20, 30, 40 years as the population ages. So, that perspective has to inform these discussions.
SCOTT: The fiscal reality would be, surely, that by 2050, on current calculations, we could be facing an $80 billion shortfall to government finances. How do you bring that money in, other than raising taxes?
WONG: Lets understand what the document I released showed. It picked up on Peter Costellos Intergenerational Reports, which showed that as the population ages, obviously theres more demand for different services. But remember, that gap can be bridged by many mechanisms. We can deliver services more efficiently, we can grow our economy better, we can increase our productivity, we can increase participation. And all of those things are important, and in part, thats why the Government has focused on participation and focused on skills.
SCOTT: What about restoring the GST, though, to a growth tax. Because that was the first principle of it, its been allowed to move away from that. The OECDs putting us at the bottom ranking now, near the bottom, when it comes to our reliance on personal taxation versus a value added tax for our growth. Does that not concern you, stepping away from first principles?
WONG: Lets remember there is the issue of values that you need to bring to a tax debate. You need to look at tax reform from the perspective of simplicity and efficiency, but also fairness. Weve said that we dont believe that extending the GST extending the base or increasing the rate is a fair reform. It essentially says to Australian households, you pay for tax reform. We think there must be a better way forward.
SCOTT: You dont think its the most equitable tax thats shown to be one that everyone is shouldered with? Its a value added tax, its a consumption tax.
WONG: Its a tax on food, is what youre proposing, and in fact what the Liberal Party is proposing. We saw Mr Briggs today from the Liberal Party saying that it should be extended. And thats essentially a call to Australian families to pay more for their food bill. And we dont think thats fair.
SCOTT: Whats the fairness, though, of those on lower incomes having to pay higher taxes if were overly reliant on personal tax for revenue?
WONG: Lets remember, weve delivered some $47 billion worth of personal tax cuts. As part of the clean energy package, one of the big reforms in the assistance package is a tripling of the tax-free threshold. Now, who does that advantage? Australians earning under $80,000 a year. So I think our
SCOTT: Its not sustainable though, those are one-off tax cuts. Wheres the sustainability in the long term, to chart out to where were talking: 2030, 40, 50?
WONG: And that needs to continue to inform reforms. And this Government has done a lot of work in that regard. Quite a number of the savings weve made in our previous budgets have been what youd call structural saves. The Dependent Spouse Tax Offset is an example of savings that improve over time.
SCOTT: Because a tax cut youve said that everything has to be revenue neutral. Ultimately, cutting doesnt equal neutrality. Its going to hit the bottom line. You have to look at ways of putting up taxation; you have to have that on the discussion table. Its not really there.
WONG: I think we need to look at ways to ensure that we increase efficiency, that we grow our economy, we increase our productivity, and we increase participation. In any discussion of tax reform, we have to do it in a way thats fiscally responsible. The point Im making is that fiscal responsibility is not just the short term, its the long term as well.
SCOTT: What fresh ideas did Rob Oakeshott bring to this Tax Forum, on reflection, from what youve heard from yesterday? He stood up there, used some fairly strong language, like aggression and urgency. But what was fresh about that?
WONG: I think Robs done a great job in making sure people came together to have this discussion. Hes put forward a couple of ideas. I think, more importantly, that hes been a strong advocate for this Forum, and I think its been a very good forum. Its certainly been a better debate than weve had in the Parliament about tax policy in some time.
SCOTT: In terms of productivity in the Parliament, are you convinced that pay rises for your own kith and kin are justified, unless you can prove productivity gains. Wheres the message, and the lesson, thats being sent to those out on the street?
WONG: Can I say on politicians pay, which I think is what youre asking about, its always a difficult issue. Its an issue thats controversial.
SCOTT: But therell be no debate on it.
WONG: Theres always a debate on it. The view that the Government and the Opposition came to, the majority of the Parliament came to, is that it is better for this to be done independently, rather than in the context of the parliamentary debate.
ENDS