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Coag: Tony Abbott favours overhaul of GST over increase in Medicare levy Coag: Tony Abbott favours overhaul of GST over increase in Medicare levy
(about 7 hours later)
Tony Abbott has spelled out his criteria for taking an increase to the goods and services tax to the next federal election, saying he would aim for “something approaching a consensus” and an overall reduction in the tax burden.Tony Abbott has spelled out his criteria for taking an increase to the goods and services tax to the next federal election, saying he would aim for “something approaching a consensus” and an overall reduction in the tax burden.
After two days of talks with state and territory leaders, the prime minister confirmed that “changes in the tax mix” were on the table and he would prefer to look at overhauling the GST rather than increasing the Medicare levy.After two days of talks with state and territory leaders, the prime minister confirmed that “changes in the tax mix” were on the table and he would prefer to look at overhauling the GST rather than increasing the Medicare levy.
Abbott, who ruled out increasing the GST before the 2013 election, said he was up for having “a decent conversation with the Australian public” before the next election, due in 2016.Abbott, who ruled out increasing the GST before the 2013 election, said he was up for having “a decent conversation with the Australian public” before the next election, due in 2016.
Related: Tony Abbott backs Mike Baird's call to raise GST to 15%Related: Tony Abbott backs Mike Baird's call to raise GST to 15%
He was pleased that the New South Wales premier, Mike Baird, had proposed raising the GST rate from 10% to 15% because the consumption tax was “a joint exercise by the commonwealth and the states”.He was pleased that the New South Wales premier, Mike Baird, had proposed raising the GST rate from 10% to 15% because the consumption tax was “a joint exercise by the commonwealth and the states”.
“I’m not ruling things in, I’m not ruling things out, but my preference would be to consider GST issues rather than Medicare levy issues,” Abbott said after the Council of Australian Governments (Coag) meeting in Sydney on Thursday.“I’m not ruling things in, I’m not ruling things out, but my preference would be to consider GST issues rather than Medicare levy issues,” Abbott said after the Council of Australian Governments (Coag) meeting in Sydney on Thursday.
“But again I stress we are at the start of a process and this process is going to take some time – whatever the outcome, it is going to take some time – because we do need to engage the public, we do need to keep faith with the public, and springing tax changes on an unsuspecting public, however arguable they might be, is not a way to build the kind of trust and confidence that we need to see more of in our democracy.”“But again I stress we are at the start of a process and this process is going to take some time – whatever the outcome, it is going to take some time – because we do need to engage the public, we do need to keep faith with the public, and springing tax changes on an unsuspecting public, however arguable they might be, is not a way to build the kind of trust and confidence that we need to see more of in our democracy.”
Abbott also called for “a conversation rather than a scare campaign” when debating the big issues.
In an interview on the ABC’s 7.30 program, Abbott brushed off suggestions his call was hypocritical in light of his dire predictions about the former Gillard government’s carbon price.
“Well, we certainly waged a truth campaign about the carbon tax and the mining tax,” he said.
“The important thing, if I may say so, is to try to be as good as we possibly can be going forward.”
The Coag meeting followed a leaders’ retreat in Sydney on Wednesday that focused on federation reform. The Abbott government is preparing tax and federation white papers which could form the basis of an election platform at the next poll.The Coag meeting followed a leaders’ retreat in Sydney on Wednesday that focused on federation reform. The Abbott government is preparing tax and federation white papers which could form the basis of an election platform at the next poll.
There is still no sign of consensus on big-ticket revenue options, such as increasing the rate of the GST or the Medicare levy, with the latter dismissed by some federal government ministers as “lazy”.There is still no sign of consensus on big-ticket revenue options, such as increasing the rate of the GST or the Medicare levy, with the latter dismissed by some federal government ministers as “lazy”.
Asked whether increased taxes were an option, Abbott said he wanted to see taxes that were lower, simpler and fairer, “but that doesn’t mean that we can’t have changes in the tax mix”.Asked whether increased taxes were an option, Abbott said he wanted to see taxes that were lower, simpler and fairer, “but that doesn’t mean that we can’t have changes in the tax mix”.
“There’ve got to be changes in the tax mix which overall improve the efficiency of our economy and help our systems to work better,” he said.“There’ve got to be changes in the tax mix which overall improve the efficiency of our economy and help our systems to work better,” he said.
Abbott said if there were major changes to taxes and government responsibilities “we need to have something approaching a consensus because change ought to be durable”.Abbott said if there were major changes to taxes and government responsibilities “we need to have something approaching a consensus because change ought to be durable”.
A joint statement summarising Wednesday’s leaders’ retreat in Sydney said premiers and chief ministers had agreed with the principle of broadening the GST to cover overseas online purchases that fall under the existing $1,000 threshold.A joint statement summarising Wednesday’s leaders’ retreat in Sydney said premiers and chief ministers had agreed with the principle of broadening the GST to cover overseas online purchases that fall under the existing $1,000 threshold.
Leaders are also considering a federal takeover of vocational education and training and are cautiously supporting a new push for the Northern Territory to become a state.Leaders are also considering a federal takeover of vocational education and training and are cautiously supporting a new push for the Northern Territory to become a state.
The leaders’ retreat at Victoria Barracks was billed as an opportunity to put aside the daily political argy-bargy to focus on charting a way forward on federation reform.The leaders’ retreat at Victoria Barracks was billed as an opportunity to put aside the daily political argy-bargy to focus on charting a way forward on federation reform.
The communique issued on Thursday morning said leaders unanimously agreed to focus reform on health, education, infrastructure and housing.The communique issued on Thursday morning said leaders unanimously agreed to focus reform on health, education, infrastructure and housing.
They agreed that the federation reform process provided a rare opportunity to rethink the roles and responsibilities of different levels of government, and that a failure to tackle the issues would leave Australians facing “the risk of declining services in the future”.They agreed that the federation reform process provided a rare opportunity to rethink the roles and responsibilities of different levels of government, and that a failure to tackle the issues would leave Australians facing “the risk of declining services in the future”.
“We must reform the vocational education and training [VET] sector so that training helps young people get jobs when they finish, as well as providing real pathways for older workers to transition between careers,” the communique said.“We must reform the vocational education and training [VET] sector so that training helps young people get jobs when they finish, as well as providing real pathways for older workers to transition between careers,” the communique said.
“Leaders committed to change that will see a more demand-driven system, greater engagement with business about their skills needs to deal with emerging industries, and new ways to help support students.“Leaders committed to change that will see a more demand-driven system, greater engagement with business about their skills needs to deal with emerging industries, and new ways to help support students.
“Leaders agreed to consider a shift in responsibility for VET to the commonwealth, provided states and territories could elect to remain Tafe providers within a national system.”“Leaders agreed to consider a shift in responsibility for VET to the commonwealth, provided states and territories could elect to remain Tafe providers within a national system.”
States and territories provide about 70% of the $5.9bn in annual training subsidies to VET; the commonwealth chips in the rest.States and territories provide about 70% of the $5.9bn in annual training subsidies to VET; the commonwealth chips in the rest.
The recent federation reform discussion paper suggested several options, including achieving “clearer accountability” by having one level of government in charge. The communique opens the door to pursuing this.The recent federation reform discussion paper suggested several options, including achieving “clearer accountability” by having one level of government in charge. The communique opens the door to pursuing this.
Related: Coag pledges cooperation on growing healthcare bill, but split on tax changesRelated: Coag pledges cooperation on growing healthcare bill, but split on tax changes
Leaders also supported the Northern Territory chief minister, Adam Giles, in his push for the NT to become Australia’s seventh state by 1 July 2018. “The chief minister will report on progress at the next meeting of Coag,” the communique said.Leaders also supported the Northern Territory chief minister, Adam Giles, in his push for the NT to become Australia’s seventh state by 1 July 2018. “The chief minister will report on progress at the next meeting of Coag,” the communique said.
The NT previously narrowly rejected a proposal to become a state according to the terms set out in a referendum in 1998. That proposal involved the NT having three senators.The NT previously narrowly rejected a proposal to become a state according to the terms set out in a referendum in 1998. That proposal involved the NT having three senators.
The federal treasurer, Joe Hockey, seemed lukewarm on the idea on Thursday. “I think we had a referendum not too long ago in the Northern Territory on that specific issue and they chose not to go down that path,” he said.The federal treasurer, Joe Hockey, seemed lukewarm on the idea on Thursday. “I think we had a referendum not too long ago in the Northern Territory on that specific issue and they chose not to go down that path,” he said.
The leaders’ retreat acknowledged that even after reforms to service delivery, governments would face a significant revenue shortfall. Leaders unanimously agreed “to confront these issues head on and keep an open mind on ways to better fund the needs of our citizens”, the communique said.The leaders’ retreat acknowledged that even after reforms to service delivery, governments would face a significant revenue shortfall. Leaders unanimously agreed “to confront these issues head on and keep an open mind on ways to better fund the needs of our citizens”, the communique said.
“Any revenue arrangements need to be fair, efficient and lasting.“Any revenue arrangements need to be fair, efficient and lasting.
“Leaders asked for further work to quantify the scale of the fiscal gap and in particular, health funding, together with revenue options. The total fiscal gap has been estimated at $45bn with the health funding gap in particular set to rise to at least $35bn per annum by 2030.”“Leaders asked for further work to quantify the scale of the fiscal gap and in particular, health funding, together with revenue options. The total fiscal gap has been estimated at $45bn with the health funding gap in particular set to rise to at least $35bn per annum by 2030.”
Baird has suggested increasing the GST from 10% to 15% to fund healthcare with compensation for lower-income households.Baird has suggested increasing the GST from 10% to 15% to fund healthcare with compensation for lower-income households.
But the Victorian premier, Daniel Andrews, and the Queensland premier, Annastacia Palaszczuk, have suggested an alternative proposal: to increase the Medicare levy above the existing level of 2% of taxable income. They argued the levy increase could be tied to health reforms and would be more equitable than GST changes.But the Victorian premier, Daniel Andrews, and the Queensland premier, Annastacia Palaszczuk, have suggested an alternative proposal: to increase the Medicare levy above the existing level of 2% of taxable income. They argued the levy increase could be tied to health reforms and would be more equitable than GST changes.
The joint communique kept the options open. “All leaders agreed to keep commonwealth and state tax changes on the table, including the GST and the Medicare levy,” it said.The joint communique kept the options open. “All leaders agreed to keep commonwealth and state tax changes on the table, including the GST and the Medicare levy,” it said.
“As a first step, there was agreement in principle by leaders to broaden the GST to cover overseas online transactions under $1,000. This matter will be referred to the upcoming meeting of treasurers to progress in detail.”“As a first step, there was agreement in principle by leaders to broaden the GST to cover overseas online transactions under $1,000. This matter will be referred to the upcoming meeting of treasurers to progress in detail.”
The federal social services minister, Scott Morrison, said if the GST increased “the Australian people would reasonably and legitimately expect to have their taxes cut in other areas”.The federal social services minister, Scott Morrison, said if the GST increased “the Australian people would reasonably and legitimately expect to have their taxes cut in other areas”.
Morrison nominated income tax, stamp duty, payroll tax and land tax as targets for corresponding cuts, and emphasised that welfare payments would also have to rise to compensate low-income-earners for a GST increase.Morrison nominated income tax, stamp duty, payroll tax and land tax as targets for corresponding cuts, and emphasised that welfare payments would also have to rise to compensate low-income-earners for a GST increase.
He flatly rejected Andrews’s alternative proposal to increase the Medicare levy. “No I wouldn’t [support it] because states have to deal with their spending, not just keep putting their hand out for more money from the commonwealth and more taxes from the taxpayer,” he told 3AW.He flatly rejected Andrews’s alternative proposal to increase the Medicare levy. “No I wouldn’t [support it] because states have to deal with their spending, not just keep putting their hand out for more money from the commonwealth and more taxes from the taxpayer,” he told 3AW.
The federal health minister, Sussan Ley, said she was focused on improving the efficiency of the health system rather than increasing the Medicare levy.The federal health minister, Sussan Ley, said she was focused on improving the efficiency of the health system rather than increasing the Medicare levy.
“It’s an easy, and may I say lazy, option to increase taxes, and we are not a party that does that,” she said.“It’s an easy, and may I say lazy, option to increase taxes, and we are not a party that does that,” she said.