Malcolm Turnbull says state governments can no longer credibly demand more money for health and education from the commonwealth because they refused to consider his plan to take on income tax powers of their own.
Turnbull’s radical income tax idea was rejected out of hand by all but one of the state premiers at Friday’s Council of Australian Governments meeting less than 48 hours after it was unveiled.
The prime minister is now using that rejection to bat away demands from the states for money to make up for the $80bn in projected forward funding for hospitals and schools that his predecessor Tony Abbott cut in the 2014 budget.
“Often a quick and clear ‘no’ is very revealing, what we have learned from the premiers is they have no credibility ... because when they were offered the opportunity to be able to levy a portion of income tax themselves they had no interest at all, they didn’t even want to discuss it ... so what that means is we have to live within our means, they don’t want to raise taxes, well neither do we,” Turnbull said in an interview on Sky news on Sunday.
“That was the threshold political question. Basically the ball is now in their court.”
Turnbull is giving the states an extra $2.9bn over the next three years for hospitals, but confirmed that any additional funding for schools would not be resolved with the states until early next year, after this year’s federal election.
Federal Labor has already promised the additional $4.5bn for the final two years of the Gonski education plan, but the Coalition is intensifying its argument that more money won’t make a difference.
The education minister, Simon Birmingham, released figures over the weekend showing that 46% of public schools that had the biggest improvement in Naplan results had had their funding cut.
Turnbull also insisted: “The issue is not how much money being put into schools, the issue is why is the performance of schools declining when they are receiving so much more money in real terms.”
Like Abbott did before him, Turnbull is now describing the $80bn cut in 2014 as “fantasy” money.
“What it reveals is the Gillard promises were a fantasy, the money was never there. There is simply not the money to fund the promises she made at that time.”
Despite rejecting the offer of their own income-taxing powers, the premiers were adamant on Friday that the nation faces a serious revenue problem, and governments would need to raise taxes to retain health and education services at the levels Australians expect.
The NSW premier, Mike Baird, said the commonwealth had provided enough for hospitals up to 2020, but after that time he believed Australia faced “an expenditure and revenue problem. Both of them. And we have to be honest about that”.
Jay Weatherill, the South Australian premier, said: “I think that there is a truth and this is something that we are at odds with the commonwealth about. There is a revenue problem in this nation. These are needs, in particular in relation to hospitals. It is not a question of whether or not which level of government funds it. The reality is this expenditure is locked and loaded. These people are coming into our hospitals. The real question is who bears the burden of actually meeting that need. And there has to be a substantial discussion about increased revenues.”
The Victorian premier, Daniel Andrews, said there was “no getting away from, forgetting or politely explaining away the fact that many billions of dollars will not be flowing to hospitals in my state and hospitals right across the nation as a result of decisions made in the 2014 budget”.
Even Colin Barnett, the premier of Western Australia, who said the $80bn in funding promised under Labor had never been realistic, said he believed in the longer term “there has to be some extra revenue if we want to maintain the quality of healthcare we have”.
And the Queensland premier, Annastacia Palaszczuk, said there was “obviously going to be a huge strain on health and education and we have not yet talked about how we close that gap.”
