State of the State Victoria: The Hon. Daniel Andrews

Simply changing the rate of GST is not tax reform, Victoria Premier the Hon. Daniel Andrews has told an audience in Melbourne.

Speaking at the State of the State, Mr Andrews provided an update on the government’s activity while providing perspective on current issues that are being discussed including tax reform.

“We seem to have a phony debate at the moment where simply increasing the rate of the taxes is being dressed up as tax reform. That is not tax reform, that is simply changing the rates of a tax,” he said.

“The conventional wisdom is that you would broaden the base and lower the rate – that would be a good taxation policy outcome.

“Instead, we’ve got all sorts of talk, all sorts of discussion about doing the opposite. That is not fair and I don’t know if that is necessarily good for our country.

“There’s one… option that’s been talked about quite a bit at the moment. You increase the GST to 15 per cent, you put it on food, you put it on health, you put it on education you put it on everything basically.

“You then take… half the money that comes in from that fundamental change to our broad-based GST and you provide some compensation, some support to those families who really do it very tough under those sort of changes.

“You then divide the other half of those additional revenues between personal income tax cuts to deal with issues of bracket creep and perhaps a company tax rate cut, and then whatever was left out of that pie you allocate it to the thing that started this tax reform national reform debate, and that’s the health system… a massive challenge for all of us, a $30 to $40 billion dollar hole in the medium term.

“To start that way and then to potentially have an outcome where just the crumbs, or just the scraps of that process get allocated to the thing that brought it about, a crisis in the sustainability of our hospital funding, that I don’t think is reform.

“I think that’s frankly change at reforms expense.

 “A national debate that is truly reforming…needs to have equity and a true national conversation in a broad sense and deal with those things that is not really negotiable. And healthcare must be at the top of that list.”

Mr Andrews also discussed the relationship the Victorian Government is building with China.

“We went to China to help rewrite our China strategy, not something that any state government has done before – go to china and speak with them about what should be in our China engagement strategy,” he said.

“This is such an important market to us but it’s more than just a transactional relationship, if you view it simply as a market then I think you’ll always come up short, trust and confidence, those personal relationships are very important and that’s why it’s such a priority for us.”