Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

My question is to the minister representing the Treasurer, Senator Cormann. Can the minister confirm modelling by the National Centre for Social and Economic Modelling, which shows that an increase in the rate of the GST to 15 per cent will require people in the lowest 20 per cent of income brackets to pay seven per cent more in tax?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I thank Senator Cameron for that question. I guess the modelling he is referring to is the modelling that has been put into the public domain by the Australian Council of Social Services. The government welcomes and has welcomed their contribution to what is a very important debate about the way our tax system can be improved, moving forward. Right now, the government is involved in a good faith public consultation about how we can improve our tax system, moving forward. It is about how we can ensure—by a better, more efficient and less distorting tax system and by a tax system that encourages people to work more, save more and invest more—that we can strengthen growth in a way that will help deliver lifts in living standards for people across Australia and help increase the level opportunity for people across Australia, and, of course, deliver a growth dividend for government, which will help us continue to afford the social safety net and all of the important benefits and services.

Opposition Senators:

Opposition senators interjecting—

Stephen Parry (President) Share this | Link to this | Hansard source

Order on my left. I call Senator Cameron.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I rise on a point of order. My question was very specific. It went to the issue of the modelling and whether that would require people in the lowest 20 per cent of income brackets to pay seven per cent more in tax. The minister has not gone to that point and his attention should be drawn to the question.

Stephen Parry (President) Share this | Link to this | Hansard source

I will draw the minister's attention to the question that was asked. Minister, you have 48 seconds in which to answer.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

As I said, the government welcomes the contribution that ACOSS has made to the tax reform debate. The NATSEM modelling prepared for ACOSS is not realistic. It is not accurate. It ignores, entirely, the fact that welfare payments, for example, are automatically indexed for price increases. For the ACOSS stylised scenario to occur, the parliament would have to pass legislation to switch off the automatic CPI indexation of transfer payments in order to prevent welfare recipients from automatically receiving increased payments. That would be contrary to the government's commitment to ensure fairness, and we will not ever do it.

But the more fundamental point is that we are engaged in good faith in that process—in a public conversation—about how our tax system can be improved, so we can strengthen growth and opportunity for all. (Time expired)

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Can the minister confirm modelling by NATSEM, which shows that funding personal income taxes with a GST increase of 15 per cent would see almost two-thirds of households worse off?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I have already pointed to one flaw in the NATSEM modelling. In the end, with this sort of modelling it all depends on the assumptions you are making. At this point in time, the government has not made a decision on a particular tax reform proposal, moving forward. We are considering, with an open mind, all of the options that have been put forward in the course of the tax reform discussion paper process. Like ACOSS, the government is of the view that all options to strengthen the tax system should remain on the table and be properly considered and assessed. At some point in time, over the next few weeks or months, when all of the information has been properly assessed and considered and all of the implications have been properly worked through, the government will make a decision on the best way forward. Our focus will be on pursuing tax reform, which will help us strengthen the economy, strengthen growth, create more opportunity and ensure that the important benefits and services provided by government are sustainable. (Time expired)

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Is it not true that lower income households will be worse off under the Turnbull government's plan to increase the GST?

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

That is a hypothetical question.

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

Senator McDonald is quite right: it is a completely hypothetical question. It is making an assumption on something that has not been decided in any way, shape or form. The Turnbull government is committed to tax reform which is fair. We will pursue reforms which are fair to low- and middle-income earners. That is a commitment that we have, very clearly, made. Our most important focus, right now, in considering how the tax system can be improved, is on how we can ensure that the tax system can be designed such that we can be more productive, more competitive, more innovative and more agile, and how we can strengthen growth to ensure that we have the best possible opportunity for everyone across Australia to get ahead, to get a better job, to get better pay and to improve their living standards.