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| Jay Weatherill: raising GST not unfair to poor households if it goes to hospitals | Jay Weatherill: raising GST not unfair to poor households if it goes to hospitals |
| (7 months later) | |
| A higher goods and services tax need not be unfair if the revenue is spent on household compensation and public hospitals, the South Australian premier has said, appealing to the Turnbull government and federal Labor to solve the looming hospitals funding crisis as they prepare for an election year battle over tax reform. | A higher goods and services tax need not be unfair if the revenue is spent on household compensation and public hospitals, the South Australian premier has said, appealing to the Turnbull government and federal Labor to solve the looming hospitals funding crisis as they prepare for an election year battle over tax reform. |
| In an interview with Guardian Australia, Jay Weatherill said the debate needed to take into account the fact that services like public hospitals provided a far higher comparative benefit to the poor. | In an interview with Guardian Australia, Jay Weatherill said the debate needed to take into account the fact that services like public hospitals provided a far higher comparative benefit to the poor. |
| While a GST hike was “second best” compared with his preferred option of the states receiving a specified share of federal income tax, or a combination of the two, it could be “constructed in a way that is not unfair”, he said, contradicting Bill Shorten’s central arguments against a GST hike. | While a GST hike was “second best” compared with his preferred option of the states receiving a specified share of federal income tax, or a combination of the two, it could be “constructed in a way that is not unfair”, he said, contradicting Bill Shorten’s central arguments against a GST hike. |
| But Weatherill also criticised treasurer Scott Morrison’s repeated suggestion that the states could somehow make up the hospitals funding shortfall by becoming more efficient, saying such rhetoric made state governments “insane with anger”. | But Weatherill also criticised treasurer Scott Morrison’s repeated suggestion that the states could somehow make up the hospitals funding shortfall by becoming more efficient, saying such rhetoric made state governments “insane with anger”. |
| “The federal government says we have to get costs under control but what we are talking about is whether we can keep hospital doors open – we are closing hospitals and rationing services to keep within our current budget – to suggest we have any capacity to cope by making savings when these cuts come in, it just makes the states insane with anger to hear that kind of rhetoric,” Weatherill said. | “The federal government says we have to get costs under control but what we are talking about is whether we can keep hospital doors open – we are closing hospitals and rationing services to keep within our current budget – to suggest we have any capacity to cope by making savings when these cuts come in, it just makes the states insane with anger to hear that kind of rhetoric,” Weatherill said. |
| “Those cuts would mean the closure of major teaching hospitals and/or massive new revenue measures or user pays co-payments or a cocktail of all of those things. We just cannot let that happen.” | “Those cuts would mean the closure of major teaching hospitals and/or massive new revenue measures or user pays co-payments or a cocktail of all of those things. We just cannot let that happen.” |
| The former Labor government had promised the states $57bn in long-term hospital funding after protracted negotiations to address the fact that the cost of hospitals – as the population aged and medical technologies became more expensive – was projected to exceed some states’ entire budgets over time. The Abbott government cut this agreement in its 2014 budget, meaning that promised 9% per year funding increases after July 2017 would fall to 4.5%. | The former Labor government had promised the states $57bn in long-term hospital funding after protracted negotiations to address the fact that the cost of hospitals – as the population aged and medical technologies became more expensive – was projected to exceed some states’ entire budgets over time. The Abbott government cut this agreement in its 2014 budget, meaning that promised 9% per year funding increases after July 2017 would fall to 4.5%. |
| All states say they cannot operate existing hospitals with this funding, with the New South Wales premier, Mike Baird, calculating the shortfall would reach $35bn nationally by 2030. | All states say they cannot operate existing hospitals with this funding, with the New South Wales premier, Mike Baird, calculating the shortfall would reach $35bn nationally by 2030. |
| Last December’s Council of Australian Governments (Coag) meeting considered various options for meeting the shortfall, including raising the GST, increasing the Medicare levy and Weatherill’s suggestion that the states be given a fixed share of federal income tax. | Last December’s Council of Australian Governments (Coag) meeting considered various options for meeting the shortfall, including raising the GST, increasing the Medicare levy and Weatherill’s suggestion that the states be given a fixed share of federal income tax. |
| Reports over the weekend suggested the federal government’s tax white paper, to be released before the next Coag meeting in March, was proposing two options to fund personal income tax cuts – a preferred option involving an increase in the GST as well as changes to superannuation tax concessions and negative gearing and another, less ambitious plan, without the GST increase. But the priority for the states in the tax revamp is a solution to the health funding shortfall. | Reports over the weekend suggested the federal government’s tax white paper, to be released before the next Coag meeting in March, was proposing two options to fund personal income tax cuts – a preferred option involving an increase in the GST as well as changes to superannuation tax concessions and negative gearing and another, less ambitious plan, without the GST increase. But the priority for the states in the tax revamp is a solution to the health funding shortfall. |
| With the federal government’s tax planning well advanced and Shorten beginning the election year with a national tour to fight the idea of a GST increase “under any circumstances” because of its impact on the poor, Weatherill is appealing to both parties to explain their solution for hospitals. | With the federal government’s tax planning well advanced and Shorten beginning the election year with a national tour to fight the idea of a GST increase “under any circumstances” because of its impact on the poor, Weatherill is appealing to both parties to explain their solution for hospitals. |
| “A GST hike would be a second-best solution, but if the money was used for compensation and to cover the hospitals funding shortfall it is not as bad for poor people as the traditional left view suggests,” he said. | “A GST hike would be a second-best solution, but if the money was used for compensation and to cover the hospitals funding shortfall it is not as bad for poor people as the traditional left view suggests,” he said. |
| “I’m not dogmatic about it. We need a practical solution that helps low-income earners and we haven’t seen as comprehensive proposal from either major party to solve the long term health funding problem. Both major parties need to propose a solution. | “I’m not dogmatic about it. We need a practical solution that helps low-income earners and we haven’t seen as comprehensive proposal from either major party to solve the long term health funding problem. Both major parties need to propose a solution. |
| “The GST is a second-best solution but it can be constructed in a way that is not unfair. We do know what is incredibly unfair for low-income earners is an unfunded hospitals system – and we are looking down the barrel of a US-style system and that is not something I am prepared to contemplate. | “The GST is a second-best solution but it can be constructed in a way that is not unfair. We do know what is incredibly unfair for low-income earners is an unfunded hospitals system – and we are looking down the barrel of a US-style system and that is not something I am prepared to contemplate. |
| “The debate has been framed around the impact of the GST on low-income earners – obviously there has to be compensation but if the revenue was used for hospitals that also has a far greater value for low-income earners. The OECD has done work showing the value of public services worth 76% of income for the poorest 20% of households, so when we are considering the GST, if it were to be used for hospitals, we need to consider who benefits most from those services and who suffers most if they are not available. | “The debate has been framed around the impact of the GST on low-income earners – obviously there has to be compensation but if the revenue was used for hospitals that also has a far greater value for low-income earners. The OECD has done work showing the value of public services worth 76% of income for the poorest 20% of households, so when we are considering the GST, if it were to be used for hospitals, we need to consider who benefits most from those services and who suffers most if they are not available. |
| “I’d like to build a consensus among Liberal and Labor leaders. I’d be happy for federal Labor to be part of a political discussion and put a plan on the table. If federal Labor’s anti-GST campaign succeeds in taking one option off the table it makes it more difficult to reach an agreement. The treasurer’s caveat that there can be no increase in net tax revenue makes it more difficult, too.” | “I’d like to build a consensus among Liberal and Labor leaders. I’d be happy for federal Labor to be part of a political discussion and put a plan on the table. If federal Labor’s anti-GST campaign succeeds in taking one option off the table it makes it more difficult to reach an agreement. The treasurer’s caveat that there can be no increase in net tax revenue makes it more difficult, too.” |
| The federal Labor party has proposed changes to superannuation tax concessions and the taxation of multinationals to raise additional revenue, including for hospitals. It has supported consideration of changes to negative gearing. | The federal Labor party has proposed changes to superannuation tax concessions and the taxation of multinationals to raise additional revenue, including for hospitals. It has supported consideration of changes to negative gearing. |
| In January, the NSW opposition leader, Luke Foley, also said he could support an increase in the GST if the funds were used solely for health and education and to compensate low-income earners. | In January, the NSW opposition leader, Luke Foley, also said he could support an increase in the GST if the funds were used solely for health and education and to compensate low-income earners. |