Interview with Kieran Gilbert – Sky News AM Agenda – 3 February 2016

SUBJECT/S: Malcolm Turnbull’s plan for a 15 per cent GST on everything; the Liberals trade union royal commission; Election timing.

KIERAN GILBERT: This is AM Agenda, continuing this morning with Jason Clare the Shadow Communications Minister. Jason Clare thanks for your time. First of all I want to talk about Paul Keating’s analysis of the GST, the prospect of an increase. He did say in that piece, which I have read this morning that an increase of one to two percent could be justified. So it’s not an outright rejection on the argument on the GST here.

JASON CLARE, SHADOW MINISTER FOR COMMUNICATIONS: I think that is a misrepresentation of the key point in that article. He smashes the argument that we need to increase the GST for 10 percent to 15 percent to smithereens. He says it is a regressive tax that hits the poor. He says it doesn’t change behaviour, you still need to go to the shops, you still need to pay for petrol and that means you are going to pay more for that and that there is the risk that it goes from 10 per cent to 15 per cent to 20 per cent. What he says is that one way to deal with the need to invest more in health is you might go down the path of increasing the GST by 1 or 2 percent. There are other ways to do that as well. We have announced our education policy last week, we will be announcing our health policy before the next election and looking at all those challenges.

Remember under Tony Abbott and continued under Malcolm Turnbull they’ve cut $50 billion out of health. That threatens our health system, we have got one of the best in the world, and we need to make sure we continue to have one of the best health systems in the world and that includes looking at funding but we will have more to say about that closer to the election.

GILBERT: But he did say that a one to two percent increase could be justified if it is hypothecated into health funding or education funding.

CLARE: He uses the word might, but there might be other ways to do that as well.

GILBERT: In terms of the argument of increasing the GST because it’s a more efficient tax.

CLARE: I’d contest that argument.

GILBERT: Isn’t it in some ways better coverage of tax payable in the sense that those who spend more, those who earn more generally spend more. Those who have more money generally spend more money. Like in New Zealand, Rob McLeod that gentleman who conducted that review in New Zealand said that in that respect it is a luxury tax if you have appropriate compensation at the middle to lower end.

CLARE: I think that is a bit of a stretch. The analysis that the Government has done shows that a GST is no more efficient than income tax. Poor people spend a greater proportion of their income than wealthier people and so that is why it is a regressive tax and it hits people harder. Then you have to go and compensate people for that. We know already people are spending about $5,000 on average to pay the Government the GST, if they bump this up by 50 percent it will go up to something like $8,700.

GILBERT: Labor talks about this and yet you are willing to slap smokers who, the greatest smoking rates are those at the lower socio economic end. That is the flattest of flat taxes. It’s a very blunt instrument, isn’t it?

CLARE: I will acknowledge it is blunt.

GILBERT: They have got less money to spend on food.

CLARE: Poor people do tend to smoke more, but guess what, poor people tend to die from lung cancer more as well. They are full of the hospitals in my local area. If you are given the choice between taxing something that will kill you and taxing something like fresh food which is good or you.

GILBERT: But they won’t do that. They won’t broaden the base to that.

CLARE: Are you sure? They haven’t ruled it out.

GILBERT: But in terms of this argument of regressive tax that’s the point. You say that this is a flat tax, the smoking tax is worse in terms of being a blunt, flat tax, no compensation.

CLARE: If you are going to go down a regressive tax, you have got to be sure that you will change behaviour so one of the arguments put is that an ETS is a regressive tax. It changes behaviour. If you are going to put a tax on cigarettes, the evidence is in that it changes behaviour. What Paul Keating said today is if you increase the GST it doesn’t change behaviour because you have still got to pay for food, you’ve still got to pay for petrol, you have still got to pay for things that we spend on every day and I don’t think the people of Australia can afford to pay more for the basics of life.

GILBERT: On the Building and Construction Commission, Labor you’re not going to budge on that. You say that it should be the Crime Commission that looks into these matters if there is crime at that level but you know as well as I do that they haven’t made the necessary investigations and achieved the necessary outcomes in the construction industry, so why not rethink this because Turnbull from my understanding he has seriously, genuinely not made up his mind as to whether or not he will go early to an election on this issue?

CLARE: We have put forward a proposition. We have said increase the powers of ASIC. Give ASIC the same powers to investigate unions as they do for companies. So there is a straight forward proposition. It makes sense. The Liberals have often argued Kieran that unions should be subject to the same scrutiny as companies so we have said do that. I think that makes a lot of sense and if Malcolm Turnbull is different to Tony Abbott then he will pick that suggestion up.

GILBERT: And on the early election, this could be a potent argument for Turnbull if he does go early.

CLARE: Malcolm Turnbull, what he said yesterday has all the menace of a Maltese Terrier. He is trying to do what he did in business – trying to threaten and bully people like he did when he was a merchant banker. It doesn’t wash in politics. You saw people reject that yesterday and if he wants to go to an election now where he is going to increase the cost of everything and cut peoples wages and conditions bring it on.

GILBERT: Jason Clare we are out of time unfortunately. Thank you.