Malcolm Turnbull has locked his government into a “no disadvantage” position on tax reform, saying any changes to the tax and transfer system must be fair, and seen to be fair.
With Labor on Monday positioning for an election fight on a GST increase, the prime minister emphasised that fairness would be a key criterion of any reform ultimately advocated by his government.
Turnbull told reporters in Sydney a looming overhaul of the tax system would not leave vulnerable or “less well off” Australians worse off.
“Any changes to the tax system have got to be ones that ensure that there is no disadvantage to the most vulnerable Australians, to less well-off Australians,” the prime minister said.
Turnbull also emphasised the government was yet to settle on a preferred policy model for tax reform. “I think it’s really important that we get lots of ideas out there and lots of discussion, but it’s premature to say that the government has landed on one particular change or another.”
With the government now in clear kite flying mode about a potential GST hike and other tax changes, the shadow treasurer Chris Bowen on Monday sharpened his political rhetoric.
Despite no detail being known about the government’s GST position – no confirmed particulars on the proposed GST rate or the coverage, or any accompanying compensatory measures or related tax changes – Bowen declared federal Labor would oppose any GST increase.
“Of course we will oppose it,” Bowen told reporters. “Of course we will oppose it in the parliament; we will oppose it in an election, we will oppose it across the country. Of course we would.”
The treasurer, Scott Morrison, on Monday confirmed treasury had modelled various GST reform options for the states, and that work had been the basis of a weekend media report citing firm government plans to increase the GST to 15%.
But he said people citing specific GST increases at this point were “jumping the gun a bit”.
“At the next meeting of state treasurers we will be looking at what all the state taxes are and what all the options are there,” Morrison said.
One Coalition MP, David Gillespie, as part of the government’s tax review, asked the parliamentary budget office to cost a 15% GST levied on more goods and services.
The Gillespie proposal would extend the GST to childcare, fresh food, education and health, water and sewerage. The PBO costing suggests that change would raise $65.5bn in 2017-18.
Gillespie’s contribution was welcomed on Monday by both Turnbull and Morrison, but both said the 15% proposal was an idea, an “option” – not settled government policy.
Morrison also noted there were “real and practical reasons” why the GST was not applied to health or education.
In his critique of a GST increase on equity grounds, Bowen noted that Morrison had opened his tenure in the treasury portfolio by declaring the Commonwealth had a spending problem, not a revenue problem – but now seemed more interested in chasing revenue than cutting spending.
The South Australian premier Jay Weatherill told Sky News on Monday afternoon his support for an increase in the GST was predicated on two firm principles: there needed to be adequate compensation for low-income earners, and the revenue raised needed to plug a funding gap left by the Abbott government’s first budget, which cut $80bn from health and education.
In a recent interview with Guardian Australia, Turnbull said the premiers had primary responsibility for making up that multi-billion dollar funding gap – not Canberra.
“[The] states have got to address the productivity of their own services,” the prime minister said. “Are they getting value for their own expenditure in health and education and so forth? How are they managing their own tax bases?”
Weatherill said he was not attracted to an increase in the GST, because it was a regressive tax. But he said he had practical concerns to address. “I have to run a health system,” the SA premier said. He said he was running to stand still when it came to funding community services.
