ROWLAND: Well, for more on the Forum, the Minister for Finance and Deregulation, Penny Wong joins us now from Canberra. Senator Wong, good morning.
WONG: Good morning to you all.
ROWLAND: How can this be considered a serious stab at tax reform if the Federal Government has already ruled out, even before the opening gavel, so many tax reform prospects?
WONG: Weve made our policy position clear on a couple of issues, but they are not the only issues that are being raised. Not only the people who youve spoken to this morning, but if you have a look at the submissions and the public statements of many of the organisations coming to this forum, I think it will be a very useful discussion about tax reform, about priorities, and about where we go from here.
ROWLAND: The GST will of course be the big elephant in the room, and Im fully aware the Government has ruled out an increase in the rate of the GST. Id just like you to explain why you think that is a bad idea and a bad option for tax reform.
WONG: Because we dont believe that sending the bill to Australian households, for tax reform that people are seeking, is good reform. We dont think that is fair. And we are consistent with that position. But I dont know that its the elephant in the room. People are free to raise it, they are free to put their views on it. They already have. But the government is also entitled on this issue to make our policy position clear. And we have for the reasons Ive outlined.
ROWLAND: Even if it meant, say, raising the rate of GST, enabling the government, for arguments sake, cutting the income tax rates. That would be of, potentially, net benefit to a lot of taxpayers.
WONG: Weve already put in place quite a lot of tax cuts some $47 billion worth of personal tax cuts. As part of our clean energy package, we will triple the tax-free threshold. That will take about a million people out of the tax system. This is consistent with the approach taken in the Henry review. So, we are up for tax reform. All we are saying is we have a view about how you manage that, and how you fund that.
ROWLAND: Is the Federal Government willing to consider, at all, the request by various state governments to give them access to either a greater share of the GST or income tax receipts, in return for them abolishing what they argue are inefficient taxes, like payroll tax.
WONG: Well, a couple of points: GST revenue has substantially increased over the last decade, and obviously that has gone to the states. The Government has also put in place quite an enormous amount of funding for the states, both in heath and education. So this Government has provided the states with very substantial funding for those things. We would welcome the states reforming their tax systems; we would welcome them trying to look at how they could make their taxation systems, their revenue base, more efficient. And weve said that.
ROWLAND: They argue they cant do that without access to a guaranteed revenue stream, like income tax, for arguments sake.
WONG: Were not going to be revising the income tax arrangements. But look, we are happy to have the discussion more broadly about tax reform, and I hope that what we can do is look at not just the short term, but the longer term, and talk about what are the priorities, and how we also ensure we have a stable revenue stream to fund the health and education system that Australians want.
ROWLAND: And just based on that, you put out a paper ahead of this tax summit, forecasting an $80 billion, or so, shortfall between revenue and spending by the middle part of this century if some serious tax reform didnt take place. How does the Federal Government see that $80 billion hole being filled? Is it either through raising taxes or cutting spending?
WONG: Before we get to that point, can I tell you why I put that out? And Im pleased that its got some attention. Its because I think its really important both in the context of the tax forum, but more broadly that we look to the longer term. That we think about what we need to fund, not just in the next few years, not just in the next ten years but also out to mid century. I think its a very important set of facts to bound the debate. In terms of that gap, that is a gap absent any policy change. Absent trying to ensure we increase our productivity, increase our participation rates, grow our economy faster. Absent reforms which are looking to try and deliver health and other services more efficiently. So all of those things will be required. But the point of that paper is to say to people if you want tax reform, its very easy to demand it. But we have to think about how we fund it.
ROWLAND: And on that basis it would be economically irresponsible for any Federal Government at least in the short to medium term to offer anything resembling tax cuts?
WONG: Weve already put in place $47 billion worth of tax cuts.
ROWLAND: Already, but looking forward.
WONG: And we are also implementing a mining tax, opposed by Mr Abbott which will provide a revenue stream to Australians, which will fund tax cuts for other sectors of the economy. I mean the bizarre thing is, Tony Abbott stands for lower taxes for miners, higher taxes for manufacturers and small business. It makes no economic sense whatsoever.
ROWLAND: And as the Finance Minister speaking of the mining tax, surely you must be frustrated by the foregone revenue of not including the booming gold sector as part of the mining tax. Will the Government reconsider that?
WONG: As the Finance Minister, I find it astonishing that the alternative Government is seriously saying to the Australian people that we believe miners should pay less tax than they are prepared to pay and we oppose the investments of superannuation, infrastructure and lower company tax rates which are about securing the strength of the economy.
ROWLAND: But its your Government thats come up with this reform mining tax deal. Are you robbing taxpayers of this extra revenue that could be garnered from including for instance, the gold sector in the mining tax?
WONG: No the robbing of revenue is Mr Abbotts position. Our position is what was agreed between the Prime Minister, the Treasurer and the mining industry. We did, as governments are often asked to do, sat down and consulted with the mining sector about the implementation of this policy. We have an agreement, and that will be the agreement the Government will legislate.
ROWLAND: And finally Senator Wong, youve been given all sorts of deadlines as a government from the Independent MPs. Andrew Wilkie wants his pokie reforms legislated by May. And as we just heard on News Breakfast, Rob Oakeshott wants tax reform options to be delivered to him by Christmas. Is that a realistic time frame?
WONG: I think were always looking at what are the next priorities for tax reform. Were always looking at whats the way forward. Weve got a strong track record in that sort of reform.
ROWLAND: Can you do it by the end of the year?
WONG: There are a set of options that already out there on the table. I think the purpose of the forum I hope, is that people can hear what other people have to say. That people can look to the national interest rather than just pressing their particular case for their particular reform. If we can do that, that would be a very, very constructive contribution.
ROWLAND: OK. Penny Wong in Canberra, thank you very much for your time this morning.
WONG: Good to speak with you.
ENDS