I wonder who in Canberra asked you to ask this question, Laurel! Interesting. I have had no conversations to that end with anybody in the federal government. My views on the GST are well known.
The problem with – it is often – not being critical. Speaking in broad terms.
Tax reform and just jacking up taxes are two very different things. And it’s very easy for people in Canberra – again I’m being broad – it is very easy for people in Canberra just to sort of point a finger at the states and say why don’t you abolish a whole lot of these things. Go on! Just get that done.
Payroll tax supports the provision of police, nurses, teachers all sorts of different things. It is a significant percentage of our revenue base. It is an even bigger percentage of our own source revenue base.
We all know that GST’s hardly calved up, in our judgment, as fairly as it might be.
I’d also approached any debate about genuine tax reform, not just changing the rates, but genuine tax reform which in general terms the equitable outcome – the outcome you get that grows productivity – is to broaden the base and lower the rate.
That’s the way good tax reform usually works we’ve had a lot of debates – I’m not talking specifically about GST, I’m talking in broad terms, right. And I will direct you do my many comments over a long period of time about the GST. Ruthlessly efficient. But very hard to make equitable.
I gave a speech, I think at CEDA some time ago where I talked about the notion that increases in the GST can be very problematic in that by the time you compensate everybody for the fact they’re worse off, there isn’t much left.
You haven’t actually – it will grow over time. Then there is the small matter of the market that we don’t get 100 cents in the dollar that Victorians pay in goods and services tax, we get – through a convoluted and we think unfair formula, we will get a personal of that.
So, I’m not – that is probably more than I needed to say. But I’m not aware of any specific proposal.
The notion of telling people ought to about payroll tax – it is a significant step. I’m not aware of a proposal. If one came forward we would look at it.
Perhaps there is an opportunity for significant reform. But there is also a pressing obligation to perhaps not get involved in a debate that would be potentially divisive. The cost of capital at the moment is very low.
The governor of the Reserve Bank has been crystal clear. You have to borrow to build. This is a one-in-100-year event. Build infrastructure, build confidence, rebuild businesses and build prosperity and growth.
That’s what you have to do. And the cost of finance at the moment is at historic lows. Doesn’t mean it doesn’t have to be paid back. But you can’t pay back any debt until you get the place growing. That’s the message that I’ve heard loud and clear from the governor.
There is another whole debate woe could have about – we could have about the governor buying bonds, potentially not selling them. That is something states would be pleased with. That is within the province of the governor of the bank.