The federal government’s rejected plan to allow states to levy income tax “called their bluff” on wanting higher health and education funding, Scott Morrison has said, but the treasurer denied the proposal was designed to fail.
On Friday most state premiers rejected Malcolm Turnbull’s short-lived state income tax plan at the Council of Australian Governments meeting.
Asked by Ray Hadley on his regular weekly appearance on Monday whether this was an embarrassing outcome, Morrison replied: “No, I think what the prime minister did was call [the states’] bluff.
“They’ve been running around saying ‘give us more money’ ... then, when you say if you want more money you raise the tax, they run a mile.”
Morrison said the exceptions were the West Australia premier, Colin Barnett, who was prepared to support the state income tax plan, and the New South Wales premier, Mike Baird, who was prepared to consider it.
“We’re not going to raise taxes, they don’t want to raise taxes, so we agree on one thing: we shouldn’t be raising taxes to pay for promises made by Julia Gillard based on money that wasn’t there,” Morrison said.
The dispute over funding was sparked by Tony Abbott’s 2014 budget decision to cut $80bn from projected forward spending on hospitals and schools.
The few details released and immediate rejection by the states has led to criticisms the income tax proposal was designed to shift blame to the states for funding cuts rather than solve the looming revenue problem.
Morrison said the proposal was serious and a “clear threshold question” of whether states were prepared to take responsibility for raising more revenue.
Addressing concerns the plan lacked detail, he said: “We could have sent them an encyclopedia three months in advance but the response to the threshold question would have been the same: when push comes to shove would they be prepared to deal with the revenue issues themselves? And they said no.”
Morrison said once the states’ bluff had been called Coag was able to address “what can we do within our means to support health” and had produced agreement on returning $2.9bn in funding for hospitals.
“When it comes to education, they said it doesn’t need to be addressed until next calendar year and we’ve got a timetable for addressing that,” he said.
Morrison said the government would “live within its means” and accused Labor of planning to increase taxes or deficits to spend $60bn more than the Coalition on health and education.
