Bill Shorten (Maribyrnong, Australian Labor Party, Leader of the Opposition) Share this | Link to this | Hansard source

My question is to the Prime Minister. Reports suggest that government ministers are backing away from plans to increase the price of everything with a 15 per cent GST. Prime Minister, today is the day to stop the waffle and come clean with the Australian people. Will the Prime Minister introduce a 15 per cent GST, yes or no?

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

The Leader of the Opposition invites me to rule out any changes to the GST—and, to be fair, there is something to be said for doing so, because it would mean the green-groceries aisles of Australia would be safe from the Leader of the Opposition! Thousands of lettuces would no longer have the Leader of the Opposition flinging himself in front of any would-be charges on them! But I say to the Leader of the Opposition: it is very important that we have a fully informed—

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

Mr Speaker—

Government members interjecting—

Tony Smith (Speaker) Share this | Link to this | Hansard source

Before I call the Manager for Opposition Business, members on my right will cease interjecting.

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

Mr Speaker—

Tony Smith (Speaker) Share this | Link to this | Hansard source

Can he bear in mind, just as he starts his point of order, that we are just over 30 seconds into the answer to what was a very long question.

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Finance) Share this | Link to this | Hansard source

Yes, I know! The point of order is on direct relevance. The Prime Minister does not have to maintain relevance to the word 'waffle'.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The Manager of Opposition Business will resume his seat. The Prime Minister is in order.

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

The government is carefully considering a whole range of proposals for changes to the tax system.

Let me say something about the GST. A rise to the GST obviously increases the price of the 47 per cent or so of all of the goods and services in the consumer basket that it covers, so an increase in the GST reduces the purchasing power of an Australian consumer. Were you to increase the GST, as many people argue, and apply that money to reduce personal income tax, then of course to a greater or lesser extent that reduction in purchasing power would be counteracted—in other words, the taxpayer would have more money in their pocket after tax, and that would ideally be greater than or at least equal to the amount of extra money they would have to pay at the store. The argument in favour of this, in terms of the economic efficiency, is that taxes on income apply to income that is both consumed, spent and saved. That is why there is an argument that a tax-mix switch provides a net economic benefit.

Opposition members interjecting—

As I have said, the government is not yet persuaded that in the context of Australia today such a tax-mix switch would give an adequate improvement in economic activity—but those are the trade-offs. Honourable members opposite can scoff as much as they like, but those are the trade-offs. It is a question of balancing the increase in GST on the one hand and an offsetting reduction in income tax on the other and the extent to which that is fair and gives additional impetus to economic growth depends on the design. There is a considerable amount of complexity there. I believe that all Australians expect this government to approach this issue not with slogans or with scare campaigns but with careful analysis.