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Question – The government’s abandonment of tax reform

Question
Richard Di Natale 25 Feb 2016

My question is for the Minister representing the Prime Minister, Senator Brandis. Reports today indicate that your government has walked away from major tax reform, and yet today you have announced a major increase in defence spending. Given the so-called budget emergency and your refusal to end huge tax concessions like negative gearing and like the concessions in the superannuation system, Minister, how do you intend to pay for it?

George Brandis (Queensland, Liberal Party, Attorney-General)  

Senator Di Natale, your question addresses two important topics—one is tax reform and the other is the defence white paper—and on both of those important matters of national discussion this government has been very agile. Let me deal with them one at a time.

Senator Di Natale, as you know because it has been much discussed in this chamber since late last year, the government has initiated a national conversation about tax reform in which many voices have been heard on a variety of topics. One of those topics about which much has been heard is whether or not there should be a change to the tax mix by having an increase to the GST. That was a discussion, in fact, initiated by the Premier of South Australia, Mr Jay Weatherill, and the Premier of New South Wales, Mr Mike Baird. Having heard the voices of all stakeholders in that discussion—state premiers, local government, party representatives in this parliament, economists, commentators and industries—the government has decided to rule out an increase to the GST, but there remains nevertheless a long way to go in the national discussion about tax reform.

In relation to the defence white paper, I join with my colleagues on the government side in congratulating Senator Marise Payne on a magnificent body of work. I should also acknowledge the contribution in laying the foundations for that body of work of previous defence ministers Senator Johnston and Mr Kevin Andrews. Senator Di Natale, the fiscal outlook incorporates the defence white paper and the next update of our fiscal position will be released as usual in the 2016-17 budget.

 

Richard Di Natale  

Mr President, I ask a supplementary question. Minister, given your agility in ripping out $50 billion from the public hospital system and flexibility in refusing to fund year 5 and 6 of the Gonski reforms, can you tell us what future agile and flexible manoeuvres you will use to cut further services that the Australian people want and deserve?

 

George Brandis  

Senator Di Natale, let me correct you: there has not been a reduction to Commonwealth spending on education nor has there been a reduction in Commonwealth spending on health. The fact is, Senator Di Natale, as you acknowledged in your original question, when the government were elected 2½ years ago we faced an unprecedented budget position as a result of the ruin left to us by the previous Labor government and in particular by the previous Labor finance minister, now the Leader of the Opposition in the Senate, Senator Wong. So we had to find economies, but we also had to deal with areas of significant neglect left behind by the previous government. One of the areas of significant neglect was defence. The proportion of GDP spent by Australia on defence had fallen as a result of that neglect to the lowest proportion of GDP since 1938, and we make no apologies for addressing that neglect. (Time expired)

 

Richard Di Natale  

Mr President, I ask a further supplementary question. Minister, is your refusal to make any meaningful changes to negative gearing, any meaningful changes to ending those huge tax breaks in the super system and any meaningful changes to ending fossil fuel subsidies a sign that you are governing for the top one per cent rather than ordinary Australians or is it just a lack of courage?

George Brandis  

Senator Di Natale, you mentioned negative gearing. Might I remind you, as I reminded the chamber earlier in the week, that negative gearing arrangements are availed of not by people at the top end of town, not by the wealthy one per cent and not by the top decile of income earners but by middle-class Australians—nurses, teachers, policemen and tradesmen—because they want to invest in an asset so that they can get ahead. We say to those Australians: 'We will back you. We will back you to the hilt. We will back your enterprise. We will back your ambition. We will back your aspirations.' The Australian Labor Party on the other hand wants to introduce a policy in relation to negative gearing that would have the result of taking the value out of the principal asset of most Australians—that is, their house—and we will not have a bar of it, Senator Di Natale. We will stand by Australian homeowners. (Time expired)

 

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