Abbott says no new savings needed for company tax cut

Tony Abbott says his $5 billion company tax relief can be paid for out of the $17 billion cuts he has already announced, but the government is conjuring up a bigger, broader GST being needed under a Coalition government.

As Labor focused on the GST, Abbott quickly declared the Coalition has “no plans whatsoever” to alter it, and also pointed out changes could not be made without consent from the states.

But it does have plans for a review of Australia’s tax system, that would undoubtedly see consideration of the GST, which many experts believe should be increased in its rate or scope or both to help deal with long term revenue problems.

The opposition says any proposed tax reforms coming out of that review would be taken to a subsequent election. But Abbott won’t be drawn into speculation about what a Coalition might do on the GST in a second term. “I am focused on winning a first term. I am not getting ahead of myself,” he said.

Abbott said his 1.5% company tax cut, starting July 1, 2015, would offset the levy on about 3000 large companies for the paid parental leave scheme and benefit nearly 750,000 other companies.

He said that in his budget reply and his National Press Club speech in January he had identified $17 billion worth of “saves” over the budget period. These would cover keeping the carbon tax compensation even when that tax was abolished and fund the company tax cut.

But Treasurer Chris Bowen said Abbott was double counting – he had already allocated savings from the budget reply. A savings dollar could only be used once, Bowen said.

Earlier Prime Minister Kevin Rudd seized on comments from Joe Hockey (which the shadow treasurer said had been wrongly reported) to speculate about a rise and expansion in the GST under the Liberals.

“If you’re going to jack up the goods and services tax, you’ve got to be upfront with the Australian people about how much and what it’s going to cost them,” he said. “If you’re going to expand the goods and services tax onto food, which is what expanding the base means, then you’ve got to be upfront with people.”

The opposition leader continues to be dogged by reports about critics within his own ranks, especially in the Nationals, of his very generous PPL scheme, which has become one of his signature policies.

“I accept for conservatives this important move forward has been difficult. Ask me the question a decade ago and my answer would have been different from today. If you want to recognise the reality of modern Australian families, of modern Australian women and of the modern Australian workforce you need a fair dinkum paid parental leave scheme,” Abbott said.

“This shows that we get it in a way that no other political party, no other government or potential government does.

“I am pleased and proud that I have moved on this. I think in this respect I am a bigger, better man now than I was a decade ago and I would respectfully invite everyone to come with me on this.”

This election has seen the appearance of systematic fact checking operations (including by The Conversation). But the politicians are not letting the fact checkers get in their way.

Despite a fact check published by PolitiFact and Fairfax Media finding the claim that the coalition would need $70 billion in cuts to return the budget to as good a position as the government’s is false (at least $20 billion out, and perhaps more), Labor continues to use the $70 billion.

Rudd today referred to “$70 billion worth of cuts to jobs and to education and to health” and demanded Abbott produce details. Bowen spoke of a $70 billion hole.

When Finance minister Penny Wong was pulled up on the ABC over the $70 billion she said “$50 billion is still a pretty big figure”.

What’s a mere $20 billion when you’re trying to make a political point?

Michelle Grattan is a Professorial Fellow at University of Canberra .

This piece was first published on The Conversation.