ABC Newsradio Interview with Marius Benson

Release Date: 
5 November 2015

MARIUS BENSON: Alan Tudge, good morning.

ALAN TUDGE: Good morning Marius.

MARIUS BENSON: It’s not a new point being made by ACOSS but it’s got new research from NATSEM backing it up that if you increase a consumption tax which the GST is you hit lower incomes hardest.  Do you argue with that?

ALAN TUDGE: We’ve had great discussions with ACOSS and they’ve got an important contribution to make.  In some aspects we share their concerns, as the Prime Minister has articulated that any change to the tax system must ensure that there is no disadvantage to less well-off Australians and that any change must be one’s that are fair and seen to be fair across the board.

I’m confident that we do have the capacity as a nation to make changes that are fair but also create greater incentives for people to work and for companies to invest and ultimately that’s how wealth is created.

MARIUS BENSON: Just on that consumption tax and the effect on lower incomes, the modelling that ACOSS has commissioned says that if you go a 10 per cent GST takes 13.4 per cent of the disposable income of the bottom fifth of household incomes, put it up to 15 per cent and that 13.4 per cent becomes 20 per cent.  Do you accept that, that is the impact of a GST in isolation?

ALAN TUDGE: They’ve just done some modelling on an increase to the GST in isolation whereas we’ve been much more talking about broad-based tax reform and in that reform process there may be some increases to say the GST, but there will be decreases elsewhere.  There may be other alternatives which are made.

Overall though we’ve made the point, and the Prime Minister has made this point, that any change to the tax system must ensure that there’s no disadvantage to less well-off Australians.  So in that regard we share ACOSS’s aspirations.

MARIUS BENSON: So you’re guaranteeing lower income Australians won’t be worse off as a result of the tax reform package as a whole?

ALAN TUDGE: The Prime Minister has already made that very clear that less well-off Australians won’t be disadvantaged in this process. The process ... any tax reform has to be fair and it has to be seen to be fair.  At the same time we’ve got important objectives with tax reform and that is to create a system which provides greater incentives for people to work, greater incentives for companies to want to invest.  If we do those two things, we can get greater economic activity, it means we’ve got more wealth in society and ultimately that actually means more taxes for the services that we want and need.

MARIUS BENSON: The debate itself is a bit unsatisfactory isn’t it Mr Tudge in the sense there are no definite specific proposals from the Government.  You’re calling or a discussion but there will be a Green Paper, then there will be a White Paper, that will be next year.  So it’ll be months and months of talking in these broad terms not knowing what the Government’s plan is.

ALAN TUDGE: I actually think this is a healthy process for the Government and the broader community to have a broader discussion about what the issues are, what some of the problems are that we’re trying to address. Then to try and bring the Australian people with us in this tax reform journey.  That’s why we welcome the ACOSS contribution and we welcome the contribution from others so that we can have this constructive discussion.  I think to date it has been a good one.

Over the months ahead we need to narrow down what the various options are and start to put more concrete proposals on the table.  Today the Prime Minister will be making an important speech which will be outlining some further markers as to what reform might look like. 

We’ve still got a while to go on this Marius and we do want to bring the Australian people with us on this journey.

MARIUS BENSON: Before you get to that narrowing down or as the narrowing down continues can you speak about in broad terms what the boundaries are for the Government’s plan.  Will the Government as a result of its tax reform end up with the overall tax rate higher or lower?

ALAN TUDGE: There’s already a couple of principles which have been articulated.  The first one being the one which I mentioned about the Prime Minister making clear that any change must ensure that there’s no disadvantage to well-off Australians.

MARIUS BENSON: Well-off?  Lower incomes.

ALAN TUDGE: Sorry, lower income Australians.

The second principle being that we want a system that will lead to greater incentives for people to work, to save, to invest.

Thirdly this will be a package which is about reform if you like and reform of the system as a whole looking at the interaction of all the various taxes.

MARIUS BENSON: Sure but the question was in broad terms would you end up with the overall tax rate higher or lower?

ALAN TUDGE: Overall as Liberals we always want the tax-take to be lower for Australians....

MARIUS BENSON: Sadly that’s not been the case with Liberal Governments for a long time.

ALAN TUDGE: ....that's  always our ambition.  We’ll be working through this, we’ll be putting together and analysing each of the taxes and how they interact with each other and social security system to design a system which overall is fair and creates incentives for people to work, to save, to invest, which ultimately is the way that we generate wealth for this country.

MARIUS BENSON: Alan Tudge putting aside your social services responsibility can I ask you as Assistant Minister to the Prime Minister, you were assistant to Tony Abbott, you’re now assistant to Malcolm Turnbull, what’s the difference?

ALAN TUDGE: Both in my view are incredible leaders.  Both have their strengths.  I think perhaps the key difference we’ve seen over the last month or two since Malcolm Turnbull has been Prime Minister is that he is able to have a broader conversation with the Australian people and to bring the Australian people along with him on this conversation.

I think that is an encouraging sign for us to be able to do more substantial reform.

MARIUS BENSON: Alan Tudge thank you very much.

ALAN TUDGE: Thanks so much Marius.