Prime minister lauds Australia’s mix of laissez-faire capitalism and the ‘culture of a fair go’

This article is more than 4 years old

This article is more than 4 years old

Malcolm Turnbull says the fairness test in his looming tax reform package will be whether people with more resources pay more than people with fewer resources.



Having locked his government into a “no-disadvantage” tax reform package earlier this week, the prime minister was pressed for a precise definition of fairness during a radio interview on the ABC on Thursday morning.

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“Fair is obviously in the eye of the beholder, but fair, I think, for Australians, means that the burden of tax is best borne by those able to pay it,” the prime minister said.

“It’s a question of judgment. We have a very unique culture in Australia, a very good mix of laissez-faire capitalism and free market, but we also have a culture of a fair go, looking after each other,” he said.

“We have an egalitarian tradition and I think the test of whether any set of measures is fair is whether people look at it and say, yep, that’s fair enough.”

Turnbull has emphasised the importance of fairness in economic reform since becoming prime minister in September.

Tony Abbott’s prime ministership suffered a direct hit when he delivered his government’s first budget, an economic statement widely judged to be unfair.

Abbott’s leadership never recovered from the blow of the 2014 budget.

Turnbull has attempted to draw a line over past miscalculations, and has reset the national tax reform debate by putting all potential reform options back on the table, including an increase in the GST.

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One government backbencher this week called for the GST to be increased to 15% and the coverage be broadened to include health and education.

Overnight, the Australian Council of Social Services released new modelling showing a 15% GST would cost the lowest paid Australian families an extra 7% of their disposable income, while the richest families would only pay an additional 3.6%.

The analysis underscores the fact a GST hike is inherently regressive – hitting low and middle income earners harder than wealthy taxpayers.

Labor has already pledged to oppose a GST increase on that basis. The shadow treasurer Chris Bowen cited the Acoss modelling on Thursday to validate Labor’s stance.

“Malcolm Turnbull’s plan would be to make Australia’s tax system more regressive, to hit low income earners in particular harder than is currently the case under our tax system,” Bowen told reporters in Melbourne. “That is the opposite of good tax reform.”

But the government is very unlikely to pursue a GST increase without accompanying compensation in the form of tax cuts or increases in transfer payments.



The modelling produced by Acoss suggests a fair compensation package would require a spend almost as large as the revenue raised under the higher GST, and state governments are advancing a GST increase in order to pay for hospitals and schools.

Turnbull on Thursday refused to be drawn on the detail of the government’s thinking.

The prime minister said he wanted to avoid being drawn into a trajectory where scare campaigns led to various policy options being rule in or ruled out. “I don’t want to get drawn into the details of what may be in a tax package,” Turnbull said.

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Bowen urged Turnbull to drop the “soothing words” and “platitudes” and get about releasing details of the government’s tax package.

The shadow treasurer said if the government produced tax reform that was fair then Labor would look at it. “We always said if the government comes up with something fair we are prepared to back it.”

“We don’t see an increase in the GST as being fair or reasonable or necessary,” Bowen said.

The prime minister in his ABC interview played down the idea wealthy Australians currently used more options to avoid their tax obligations than average income earners.

Turnbull suggested that may be the case in countries such as the United States, but it was “just wrong to say tax is optional in Australia as it is in some countries”.

“That’s not the case in Australia,” the prime minister said.

“The rich will always pay more tax because they have more to pay it with.”