Tanya Plibersek (Sydney, Australian Labor Party, Deputy Leader of the Opposition) Share this | Link to this | Hansard source

My question is to the Prime Minister and refers to his previous answer, in which he referred to fairness. Prime Minister, what is fair about cutting the family tax benefits of 1½ million Australian families and then raising the price of everything by jacking up the GST to 15 per cent?

Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

I thank the honourable member for her question. I have answered, in my previous answer, the question about GST, I believe. Fairness, in any—

Opposition Members:

Opposition members interjecting—

Malcolm Turnbull (Wentworth, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

I would urge the honourable member to consider the issue of equity in a value-added tax. It is a very, very important issue. It is important to remember. For example, the Leader of the Opposition has spoken about—

Opposition members interjecting—

The opposition wants to have a discussion about tax. Let's have a discussion. The honourable member talks about the GST exemption on fresh food, for example. It is important to remember that, just as the cost of GST on goods that are subject to it does not discriminate or differentiate between the income of a particular person who buys a washing machine or a service—something that is subject to GST—so the exemption benefits everybody, whether they are a wealthy person buying fresh food or a person on a low income. So the fact is, whether it is goods that are taxed with GST or goods that are free from GST, invariably there is a regressive element in it. The extent of that regression is a matter of some controversy among economists, and it is generally accepted it is not as bad or as big as it was once thought to be, but nonetheless it is plain that in any tax of that kind—whether it is a GST, broad based or narrow based, or whether it is a carbon tax, as the honourable member's government had when they were in office—there needs to be compensation to ensure that that regressive element in the tax does not disadvantage households on lower incomes. So fairness is absolutely critical in any discussion of tax.

Our tax system, broadly speaking, is fair; it distributes the burden substantially on the basis of income. But it also has to be efficient, because, you see, while an income tax is progressive and people pay more tax as they earn more money, as they move up through the tax brackets there is an increasing disincentive to work, save and invest, because more of the income is being taken by the government. So getting the balance right is vital, and getting fairness is absolutely vital.

Opposition members interjecting—

It is interesting: whenever we move to talking about the substance of tax, the opposition stop listening. They only want to shout, as the Leader of the House said right at the outset.