Stop! Press rewind! Did you see what just happened? The federal Treasurer and the Finance Minister threw several years of Coalition dogma out the window and it's been reported as if it's just another day at the office.
Sure, Trumpland has redefined "amazing" in politics, but this is big. The mob who made an art form out of chanting "no new taxes", who promised that lower taxes were in their DNA, who talked about tax cuts, who consistently claimed the government had an expenditure problem, not a revenue problem, is now saying it will need to increase taxes if the Senate doesn't pass its welfare cuts. And the Senate isn't going to pass the cuts.
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Did Scott Morrison announce a revolution?
The mob who made an art form out of chanting âno new taxesâ is now saying it will need to increase taxes. Michael Pascoe comments.
Scott Morrison and Mathias Cormann aren't talking about changing the tax mix, they're talking about raising more revenue.
That is an entirely reasonable thing to do if, as a nation, we decide we want to maintain present levels of government expenditure and then some – everything from the NDIS to expensive submarines and joint strike fighters. It would mean we're finally facing up to the contradiction fingered by Kim Beazley: we've married a European social system with an American tax system.
On a comparative basis, we actually run a fairly lean and efficient social safety net, much better targeted and means-tested than most. The "middle-class welfare" bit got away from us during the Howard-Costello years of family tax benefit largesse, but as every politician knows, once you buy a vote, it's very hard to ask for the money back.
Nonetheless, having committed to increased defence and NDIS spending, never mind health and education's inexorable higher inflation rates, the revenue problem has to be admitted. Marvellous what the threat of losing our AAA credit rating can do to finally enforce a little fiscal reality. The budget's zombie measures are to be buried by Moody's, Standard & Poor's and Fitch.
A wild optimist might hope this shock change of language by the Treasurer and Finance Minister is the first step in returning to a reset tax reform table, to working out how to tax more intelligently as well as a little more if we have to.
It is a very optimistic hope as there's always political pain in genuine tax reform and it requires some co-operation in the Senate for the national good. The promise of "everything being on the table" had a use-by date briefer than fresh milk when Malcolm Turnbull first became prime minister.
(And, as an aside, where is Turnbull? A massive change in Liberal rhetoric and his name doesn't appear anywhere near it.)
With the sound bites still ringing in reporters' ears, the signs for intelligent, brave reform for the national good are not good.
For purely political wedge reasons, Cormann has already ruled out touching negative gearing for housing investors – a potential saving of $3.6 billion or so. It looks like The Australian Financial Review report of the government considering changes to the capital gains tax discount for housing investors also spooked the senator into immediately denying it before there was revolution in the ranks. Another potential few billion dismissed.
And there's no point mentioning the very reasonable and rational idea of removing the capital gains exemption for owner-occupied housing. Many more billions of tax haven money foregone. As the saying goes, a few billion here, a few billion there and pretty soon you're talking real money.
Not that there aren't expenditures other than welfare payments that could be cut if we had a principles-based government. My personal yardstick of whether the Treasurer is a serious person or a political flunky remains the novated lease rort – an easy $1.8 billion to be picked up by improving the tax system. It doesn't help one's optimism that Labor last year quietly dropped the idea – flunkies all round.
So what then? It's all in the report released nearly seven years ago – Australia's Future Tax System, better known as the Henry Review. Nobody has invented a better mouse trap since then, wheels as we already know them continue to turn. The rebalancing of the tax mix, the land tax, it's all in there.
But now it's Labor that's pretending to be outraged by the idea of increasing the tax take by one means or another, immediately rushing to resurrect the GST scare tactic – as well as pointing out the contradiction of the government wanting to pursue large company tax cuts while needing to raise more tax. And the Senate remains the domain of the lacklustre, the populist, the loopy and outright scary.
Oh well, hope blooms eternal.