8 February 2016
Transcript - #2016015, 2016

In the role of: Minister for Small Business and Assistant Treasurer [21 September 2015 - 18 July 2016]

Interview with Rafael Epstein, 774 ABC, Drive

SUBJECTS: Philip Ruddock; Tax reform

RAFAEL EPSTEIN:

Kelly O'Dwyer is the Assistant Treasurer in Malcolm Turnbull's Government, Minister for Small Business and Member for the seat of Higgins as well. Kelly thanks for joining us.

MINISTER O'DWYER:

Great pleasure Raf.

EPSTEIN:

Now Kelly I don't think I could even form words when Philip Ruddock was voted in to Parliament in 1973 because I was two. He's been there a while.

MINISTER O'DWYER:

Yes, you were two, well I wasn't even born.

EPSTEIN:

Well there you go. That's why he is called the father of the House.

MINISTER O'DWYER:

Indeed.

EPSTEIN:

It is a job with a certain amount of prestige being an envoy for human rights and he's made significant contribution to public life. But how much of this is simply cleaning out factional war in New South Wales inside the Liberal Party?

MINISTER O'DWYER:

Well none of it. I have to say from my own personal perspective that Philip Ruddock is someone I greatly admire. He is the father of the House, he rightly wears that title very proudly because he is a mentor to so many in this place. He has served, I think, with great distinction over very many years – more than 42 years in this Parliament and it's time, as he said, to think of new challenges and new things that he would like to be able to contribute because he is still somebody who is still incredibly energetic and I am very confident, as someone who has served our nation with great distinction as, I think, one of our best Immigration Ministers that he will play a very central role as the special envoy for human rights in the UN.

EPSTEIN:

Might attract some criticism from the left. He didn't endear himself to the ALP as Immigration Minister.

MINISTER O'DWYER:

I would find it very difficult to think that he would be criticised. I think he is someone who has always acted with great honesty and integrity with everything he has done and I think that he will continue to do that in his new role and I absolutely wish him all the best – he will be greatly missed.

EPSTEIN:

Nothing to do with factional cleaning up in New South Wales? Nothing to do with that?

MINISTER O'DWYER:

Well I have no idea about New South Wales politics. All I can say is that he is someone who I think has made an enormous contribution to our nation and will continue to make very significant contribution with this new role.

EPSTEIN:

1300 222 774, you are welcome to join the conversation as well. Kelly O'Dwyer is the idea of a GST hike now finished?

MINISTER O'DWYER:

I think it's important to understand that if you are considering changing our taxation mix you need to properly investigate what impact it will have. I mean, let's go back a step. We need to understand that we have had incredibly high living standards in this nation and we want that to continue. We've had 25 years of uninterrupted economic growth but our prosperity Raf is not predestined, we need to continue to lock in that growth in the years to come. One of the biggest leavers that we can pull as a Government is in relation to taxation policy. The Government has been very carefully considering whether changing the tax mix will lead to increased growth in our economy. One of the suggestions that has been put forward, and it hasn't, I would hastily, add been put forward by a state Labor Premier and a Liberal Premier in New South Wales as well.

EPSTEIN:

And your government has encouraged the talk of a GST right?

MINISTER O'DWYER:

Absolutely, we have encouraged a very broad based discussion about taxation reform and when we talk about taxation reform we're not talking about simply increasing taxes which is what previously I think the Labor Party used as code for taxation reforms, simply hiking up tax. We're talking about getting rid of a whole host of inefficient taxes, getting rid of taxes or lowering taxes that are actually holding us back. We know that there are problems with our taxation system when you consider that an average wage earner will be in the second highest tax bracket next year, that's a problem. That's a problem when only 15 years ago only 80 per cent of those people who were paying tax were paying less than 30 cents in the dollar. We want a country that encourages people to work hard and where they work hard, that rewards them for their effort. If our taxation system is holding them back we need to look very carefully at that.

EPSTEIN:

If you were a Coalition voter at the last election and you were thinking about it for this election, I would imagine for many voting for the Coalition, debt deficit and a GST rise would be at the top of the list. Debt and deficit have just gone up and you're not going to go forward with the GST rise which many in the business community would like you to. Have you achieved much of what you told those who voted for you if you haven't made progress on those three?

MINISTER O'DWYER:

We haven't actually finished with the discussion. What the Prime Minister said, is that before the Budget, we will present our plan to the Australian people. We're not going to be lazy about it; we are going to kick the tyres on a whole range of options. I know that those opposite us in the Parliament here, those in the Labor Party, would say you simply just rule things out without properly looking at it, without looking at the outcomes. We say no - you should look at an evidence base before you make a decision, and you need to look at that very, very carefully.  Now we're doing that. That's why we're not being rushed into making a decision on it that's why we're not being rushed into one set of options. That's why we're going to release to the Australian people the options that are before us and that will make it very clear as to why we have taken the approach that we ultimately do take leading into the Budget.

EPSTEIN:

If you're not going to increase the tax take, beyond where it's already heading, and you're not going to hike up the GST, aren't you effectively saying the states are going to have to raise the extra money for health and education?  Aren't you putting it all on the states to raise taxes?

MINISTER O'DWYER:

Let me say this about health and education, on education, let me start with that, we are spending more on education than we have at any other time. We are spending more dollars on education than the previous Labor Government. In fact, because they couldn't conclude agreements with a number of states and territories, we had to tip in an extra $1.2 billion into education for those states and territories...

EPSTEIN:

All governments spend more than the previous government, there's a population increase.

MINISTER O'DWYER:

It will continue to increase. What we are arguing about is whether it should increase at the rate of growth that those, in Labor, argue it should. Now we're saying you've got to look at whether or not we are delivering the right outcomes in our education system and whether we can afford to do it, because it has got to be paid for at some point.

EPSTEIN:

Absolutely.

MINISTER O'DWYER:

You can't simply borrow the money, or ever-increasingly hike up taxes to chase that spending. You need to make sure that you have a plan to pay for it so that's point number one. Point number two is that you've got to make sure that just spending money doesn't necessarily deliver good outcomes, and we have seen that real problems with literacy and numeracy and the ways to deal with are through making sure we have a strong national curriculum that ensures we are the very best that we can be as a nation, and that we can compete internationally on educational rankings. We need to make sure we have world class teachers that are also rewarded for being the very best teachers that they can be. So these are the focuses that we have when we talk about education. Labor's plan without a payment plan, is not a plan at all.

EPSTEIN:

The Premiers wouldn't disagree with anything you have said about the need to make sure we are spending money properly. They're all saying they need more money for health and education, so if you're not going to change the tax mix significantly, they're going to have to raise taxes to pay for it.

MINISTER O'DWYER:

They say that, but I would also say to you that they also need to look very carefully at how they spend their money. And if they think that it is important, that they are increasing spending in particular areas, they are in control of their own priorities as a State Government. They are also in control of their very own tax levers. If they want to make an argument to the people of their State that they want to increase their taxes then they should make that argument. It's a bit easy to say the Commonwealth Government, you should increase the GST and simply hand us the money. That's an easy argument for State Premiers to make…

EPSTEIN:

So you are putting it on the States to raise taxes.

MINISTER O'DWYER:

No, I'm simply saying, if they want to make an argument that they need to increase their spending, they also need to make an argument to the people that vote them in as to why they should also increase their taxes.

EPSTEIN:

Kelly O'Dwyer I will need to leave it there but thank you for your time.

MINISTER O'DWYER:

Great pleasure Raf.