"It would be fair to say
the Commonwealth is not particularly interested in
increasing tax to fill that gap, so that's their
starting point."
Mr Morrison threatened to
kill off GST reform, warning states extra revenue could
not simply prop up their own budgets.
Prime Minister Malcolm
Turnbull had said he was seeking a "new dialogue for
economic reform", including changes to the GST and
possible improvements to state and federal government
spending. Mr Barr, who will attend a Council of
Australian Governments meeting with Mr Turnbull on
Friday, said there had been "absolutely no change" in
approach since the toppling of Tony Abbott and Joe
Hockey in September.
"If anything there has
been an affirming of their policy approach," Mr Barr
said. "That question was specifically asked, would the
new prime minister and treasurer mean a change in
approach? The answer to that was an emphatic no."
Parliamentary Budget
Office analysis released before the meeting showed if
the GST was increased to 15 per cent, without
exemptions, it would collect about $66 billion a year.
An additional $7 billion would be raised if the current
10 per cent rate remained unchanged but exemptions for
fresh food were lifted.
The federal government has
also modelled an increase in the Medicare levy, an
option preferred by some of the Labor-led states. On
currently estimates, states and territories could face a
combined deficit of about $50 billion within 15 years,
including about $35 billion for health and $10 billion
in education.
Mr Barr said consideration
of the South Australian government's proposal for states
to take some income tax revenue, not seen in Australia
since World War II, would continue but some
jurisdictions remained unconvinced.
"The attraction to that
switch in the tax mix is the GST revenue stream is not
growing as fast as health and education spending,
whereas if the income tax pool is growing at a rate fast
enough to keep up with the rate of growth in health and
education."
He warned the any moves to
let the states and territories manage more of their own
tax affairs could have flow on implications for public
service employment levels in Canberra.
"If the national
government is not playing as significant a role in a
number of these areas as it has traditionally, then the
Commonwealth Public Service would be reduced in size
commensurate.
"That's why this kind of
change appeals to the current federal government, that
they are looking for further ways to downsize the public
service."
Mr Barr said GST changes
could "fall off the table" as Mr Morrison was unlikely
to take a package more beneficial to the states to the
election, expected in the second half of 2016.
"I got a distinct
impression that they weren't just going to support an
increase in the GST for the sake of it," he said.
"What they call "reckless
spending" is the states and territories delivering
hospital services. The federal Libs "reckless spending"
is our elective surgery. That's the fundamental
disconnect at this point."
Source::
The Canberra Times, dated 10/12/2015. |