Five things we learnt from Treasurer Scott Morrison’s speech at the National Press Club
Thursday, February 18, 2016/
Scott Morrison has used his first speech to the National Press Club as federal treasurer to reiterate the government will not take a GST increase to the next election.
Morrison, who is almost 10 weeks out from handing down his first budget, told journalists yesterday modelling for the goods and services tax showed the benefits associated with an increase to the GST did not outweigh the costs.
In his speech, the Treasurer hinted at what we can expect to see in this year’s budget – however he did not outline any specific policies.
Here are five things we learnt from Morrison’s speech.
1. The GST is a “no goer” for now
The Treasurer used his speech to confirm the federal government will not broaden or raise the rate of the GST in its next term.
Morrison said the government had done its “homework” and decided the benefits did not outweigh the costs.
“For me, this was terribly troubling,” Morrison said.
“So, on balance, the Prime Minister and I and the cabinet decided that this was not a goer, that it was not go for launch, it was something that had to be put away. So this government will not be taking a GST increase to the next election.”
“The times are not right for that and this government would never seek to change the GST unless we put it to the Australian people first.”
2. Any changes to income and company tax rates will be modest
The Treasurer has previously indicated his willingness to pursue tax cuts.
However, with a GST increase now off the table, it remains unseen how cuts to company tax or personal income tax will be funded, especially while the government is attempting to reign in spending.
When quizzed about this yesterday, Morrison flagged his intention to fund tax cuts by controlling new spending.
“We are looking to control new spending, it’s a very similar model to what was employed by John Key in New Zealand and other places,” Morrison said.
“I’m saying we have to exercise great discipline and restraint in terms of new spending and ensure we continue to keep the tension on our existing levels of spending.”
3. Morrison believes individuals, not government, are better at creating wealth
“We believe that you are more likely to turn a dollar that you have into two dollars than if the Government keeps it,” Morrison said yesterday.
“We are more likely to turn it into 50 cents. That’s true at the federal level as it is at a state or local government level. Our view about the budget is that we want to put as much money in your hands to do the best thing you want to do with it, rather than keeping it in ours.”
4. The government will likely have a very different policy on negative gearing compared to Labor
Opposition leader Bill Shorten announced Labor’s policy on negative gearing over the weekend.
Labor’s plan is to restrict negative gearing to newly-constructed homes only, with the changes to come into effect by July 2017.
While the government has also indicated it is willing to tackle perceptions of unfairness when it comes to negative gearing, Morrison yesterday pointed out the majority of Australians taking advantage of the policy at the moment are on “modest incomes”.
“Two thirds of those who use negative gearing have a taxable income of $80,000 or less,” he said.
“It is one of the few opportunities that people on modest incomes have to try to get ahead … I don’t think people who are making those difficult decisions to try to provide for their future are the problem.”
5. The government continues to spend, spend, spend
Yesterday Morrison revealed the government has saved around $80 billion over the past two years.
However, he also pointed out in that time the government has spent around $70 billion.
The Treasurer said the road back to a budget surplus will be a long one.
“Our fiscal challenge that we inherited, there is no quick fix to it,” Morrison said.
“There is no one statement, there is no one budget. There are budgets and budgets and budgets and budgets that are required to fix that problem.”