5 July 2018
Transcript - #2018141, 2018

Interview with Tony Jones, 3AW

Subjects: All States and Territories better off from a fairer way to share the GST; tackling the black economy

TONY JONES:

This will affect all of us in some way shape or form because there's been big changes to the GST system. At least there's big changes coming. But, no. It's not what you and I pay for in terms of everything. It's about how the States and Territories carve it all up. The Productivity Commission was given the job of, well essentially coming up with some solutions to make the system fairer. See what's happened is Victoria has often complained that we don't get a fair share and that essentially means less money for services like hospitals, schools, roads and rail. But is it all about to change. Well, we hope so because in the past I think we've been propping up the other States. I'm not too sure if that's going to change or not. But anyway, the Treasurer Scott Morrison is outlining all this at a media conference currently underway in Canberra. We caught up with him a little earlier this morning and I guess the one thing we want to know is, can he guarantee that we, as in Victorians won't be worse off? And that's one of the questions we put to him earlier.

TREASURER:

Yes, that's what the plan that I'm outlining today delivers. The way I achieve that is we ensure that the pool of money that is distributed to all the States is actually larger than it otherwise would have been. That means that any changes from the formula that which we're putting into make the whole system fairer is more than compensated for by having a bigger pie to draw the slice from.

JONES:

Where's the bigger pie come from. Does that mean the Federal Government contributes to that pie?

TREASURER:

That's right. Up until now the money distributed to all the States and Territories comes just from the GST collected. Now, we know that in order to leave every state better off that pie would have to be bigger to compensate for any changes in the formula. Those changes won't be great, but this more than deals with that problem and at the end of the day that means more money in Victoria, some $425 million we estimate at the moment, which is more money for schools, hospitals and police.

JONES:

Ok, so we're not going to be worse off. Are you saying that we will actually be better off?

TREASURER:

Yes, that's what this plan does. By making the pool of money which is shared amongst everybody bigger, because of the extra we put in as the Commonwealth Government, that means there is more money for the States and Territories to invest in those essential services. We guarantee essential services delivery, not just by running a stronger economy because frankly that has an even bigger impact on how much money is available to spend on these things, but we also do it this way, by the way the GST is carved up and shared amongst the States.

JONES:

Treasurer, you talk about topping it up out of Federal Government coffers. The figure I've seen bandied around is $7 billion. I mean where do you just snap your fingers and create $7 billion from?

TREASURER:

Well that's not in one year. That's done over eight years.

JONES:

Yes, but it's still $7 billion.

TREASURER:

It is but at the end of that program the GST pool is $100 billion and the additional funds we'd put in is $1 billion in that final year. It starts off a lot less than that and it builds up to that. But that's the only way you can give the guarantee we're giving and I think its important Victorians know, as much as Western Australians or Tasmanians or Queenslanders or anyone else, that the changes we're making will ensure all States are left better off. But the other important thing is we have to change the system. It is simply just not right that a state like Western Australia could have their GST fall to less than 30 cents per person. They actually got less money from the GST in Western Australia last year than the Northern Territory got and they've ten times the population. The system is broken.

JONES:

Yes, but without being too crude why would that worry us in Victoria that WA is only getting 30 cents in the dollar?

TREASURER:

Because Victorians are Australians. I'm from New South Wales, I'm an Australian. Western Australians are Australians. We're one country and we need a system that's fair for everyone not just any one state.

JONES:

Right, so this is all designed to prop up WA is it?

TREASURER:

No, this is designed to have a stronger system that's fairer for everyone to ensure that GST monies are shared on a reasonable basis across all States and Territories. If it doesn't work for one, it doesn't work for all and it's important in New South Wales and Victoria, I'm from New South Wales, both New South Wales and Victoria have been subsidising all the other States and Territories for more than 100 years. We know what that's about. We're Australians and we understand that that's our role as stronger States. WA has been in the same situation for the last decade but their share fell to less than 30 cents in the dollar. Our shares in New South Wales and Victoria didn't come anywhere near that. So, you know, it's fair enough that stronger States do their bit but having your GST fall from over $4 billion down to a bit just over $2 billion, that's not fair.

JONES:

Yeah, but what happened to all the funds created from the mining boom. We didn't have that advantage. So what happened with that for WA? They should be the most sustainable economy in Australia.

TREASURER:

Well, every States and territory has to manage their own finances appropriately. That's their job. My job is to ensure, as Federal Treasurer, that the GST is shared around all the States and Territories fairly and that you have a plan to ensure that is delivered. What we've learnt is that the mining investment boom basically broke the system. It was no one's fault. The people who put the formula together could not have envisaged the impact of what has happened in Western Australia would have on the system for everyone else. What this now means for Victoria is they'll be $425 million better off over the next eight years. It also means we'll have a GST system which is less volatile. It's easier to predict. It means that the state Treasurer in Victoria or Tasmania for that matter or anywhere else can have greater certainty about what the GST distribution to their state will be in the future.

JONES:

These changes that you're advocating fly in the face of the Productivity Commission. What is the point of even having the Productivity Commission if they come up with their own model only for you to say, no we don't like it?

TREASURER:

Well now that's not actually what happened. There are nine recommendations in the Productivity Commissions report. We've accepted eight of them. On their preferred approach for how it should be carved up they put one model forward but said "it's not unambiguously better than any other". What they are saying is the formula does need to be changed. It should be done over time and there should be an appropriate compensation method for doing that. And we agree with all of that. But if we'd adopted the Productivity Commission recommendation, Victoria would have been substantially worse off and what the Commonwealth would've had to have done to right that would've been too expensive. So, I mean, people provide advice. It is important to have the work done that they did, that helped us come up with our plan and I thank the Commission for the great work they've done but we've come forward, I think, with an even better plan.

JONES:

Treasurer, can I just change topic for a moment. The supposed ban on those cash transactions of above $10,000, are you still committed to that?

TREASURER:

Absolutely. I mean the idea that somehow ordinary Australian walk around with sports bags full of $10,000 for ordinary everyday transaction or business transactions…

JONES:

Well it is legal tender isn't it?

TREASURER:

Well it is but it also alerts authorities, I think and should. We are in a digital economy now. You don't need to walk around with big suitcases full of cash to do business any more. That might have been true in 1935 but it's not true today and it's time for the economy to be updated and the need to do transactions in cash of that scale basically opens the door for quite nefarious type activity which we want to see put to an end.

JONES:

Well, at the behest of those who actually go about their business in a cash manner, all above board.

TREASURER:

There aren't too many frankly, businesses who run around exchanging on $10,000 and more in cash. I mean you know who does that? Crooks. I'm not saying everyone's a crook who does that, I'm not saying that and I want to stress that. It is legal tender and that's fair enough. This limit is far lower than what occurs in other countries. We're well behind the game when it comes to this. We've got to crack down on the Black Economy. It's not ok. It's not clever for people to say, "oh, I'll just pay cash and you know I'll get a discount." What you're doing when you're doing that is you're ripping off someone else who has to pay more tax because you're not paying yours. That's not fair.

JONES:

It's not fair but for a lot of people that's the way of the world. Treasurer, thanks for your time.

TREASURER:

Well the way of the world should be right and fair. The way of the world should be that everybody does the right thing.

JONES:

Treasurer, thanks for your time.

TREASURER:

Thanks a lot. Cheers, thanks Tony.