It’s great to be here at HMAS Canberra with the Minister. We’ve just inspected the ship. The ship’s company has done a fantastic job in Fiji as you’ve all seen and it is a remarkable sight, the enormous resources here that this ship provides.
On the question of shipbuilding, it’s important to remember that in the six years of the Labor Government not one ship was commissioned from an Australian yard.
As the Minister will explain in a moment, we have a substantial shipbuilding program underway – Future Frigates to be built in Adelaide; submarines; Offshore Patrol Vessels, subject to a competitive evaluation process.
The Coalition is making real commitments to the Australian Navy, to its capabilities and of Australian industry. An industry – a shipbuilding industry – that Labor neglected for six years and we are of course and the workers in that industry are paying the price for that neglect.
If I may make an observation too before I go to Marise on shipbuilding – and I just make this observation on tax. What we have seen over the last few days is a great insight into the fiscal realities of Australian governments. In recent times, state premiers have called on the Federal Government to raise the GST and give them the proceeds. They’ve called on us to raise income tax and give them the proceeds. And yet when they were given the opportunity to levy a share of income tax themselves they had no interest at all.
So, they don’t want to put up tax and neither do we. So, that’s clear – there’ll be no increase in income tax, no state levy of income tax, no sharing of income tax in the terms of the state raising it. We will give the states greater flexibility in the way they spend the money granted to them from the Federal Government and we’re prepared to link its growth to the growth in income tax. So we’re going to give them – cut them a better deal and a more flexible deal, but we will have to work within the fiscal envelope we have.
We have to live within our means and that is the critical thing. We have to live within our means and we have to ensure that whatever we do is affordable and that is the upshot of the recent discussions and it’s a good outcome because what it means is that governments will be sticking to that fiscal envelope and Australians know that we will be living within our means, as every prudent business and every prudent household has to do.
Marise – on ships.
Thanks very much, Prime Minister. And it is great to have had an opportunity to show the Prime Minister some of the highlights of the capability right behind us here – HMAS Canberra – and particularly note the great work that the ship’s company did in Fiji most recently. Hundreds of tonnes of aid, numerous heavy vehicles there on the ground in Fiji to really support the Fijian government in their work at repairing the damage after Tropical Cyclone Winston.
But the Prime Minister is quite right, absolutely right in saying that in the six years – the term of the Labor Government – in the Rudd/Gillard/Rudd Government not one single order for a ship was placed with an Australian shipbuilder – not one.
In contrast, this Government has underway a tender process for Pacific Patrol Boats which will come to fruition quite soon. We have underway a competitive evaluation process for the Future Submarines. We have underway a competitive evaluation process for Offshore Patrol Vessels and for Future Frigates. A commitment for the Future Frigates which is a $30 billion build to be constructed in Adelaide. A commitment to the Offshore Patrol Vessels – a $9 billion project to be constructed in Australia.
That is in stark and harsh contrast to those of the Labor Party who made absolutely no commitments in relation to commissioning a ship from an Australian shipbuilder in six years. So, frankly, it is hypocritical in the extreme for the Opposition Leader and the Senate Leader of the Labor Party, Penny Wong to stand up to manipulate their own supposed supporters in the AMWU by making promises that they never even tried to keep in government. It is hypocritical in the extreme and they should be exposed for the absolute hypocrisies that they are.
And, frankly Prime Minister, the work that we are doing is what will ensure that we have a continuing Australian shipbuilding industry in this country and it will have absolutely nothing to do with any contribution from the Labor Party.
Prime Minister, isn’t it humiliating for you to launch a grand plan for Federation and have it torn down two days later?
The important thing is that what we have seen is the states making it very clear that they are not prepared to contemplate being responsible for levying a share of income tax. Many state governments in the past have called for access to that and many – this has always been seen as the fundamental flaw in the Federation, that the states do not levy enough, raise enough of the money that they spend.
And so we’ve made them that offer, we said alright we’re prepared to look at that and explore that with you and they’ve said no we don’t want to have a bar of it. Well, that is their call. But what that means is they cannot any longer credibly ask the Federal Government to raise taxes for them to spend if they were not prepared to raise those taxes themselves when they were given the opportunity.
So this is a great moment of clarity for the Australian people. They know that our Government is committed to reducing taxes, certainly to ensure that income tax does not rise, that we keep a restraint on spending. That is our commitment.
States have taken a different view. When given the opportunity to actually step up to the mark they’ve said no, we don’t want to have any role in levying income tax. Well, they’re sovereign governments, sovereign parliaments, they’re entitled to take that view. But what that means is we must now live within our means and that is our commitment and now it should be theirs.
You do not know where people stand unless you put the offer to them. It is very important to be frank and forthright about these issues and our Cabinet discussed this, we recognise this as a significant issue in the federal relations. But, plainly, as I said at the outset – it’s not something we can impose, it is really up to the states. They have always said that their problem is they don’t have access to a big tax base and that they’re restrained – constrained – in what they can raise in revenues. Well, we’ve said alright you could have access to the income tax base to levy a portion of that and they had no interest in taking up that responsibility.
So this has been a very important moment of clarity and what it says to us is that we must live within our means, we must live within the fiscal envelope and because we will not increase taxes, we are not going to increase income tax, we will endeavour to undertake tax reform – obviously – and make sure our tax mix is more efficient and we’ll have more to say about that at the time of the budget. But overall federal taxes are already high and we don’t want them overall to be any higher.
The states who’ve argued for higher taxes are not prepared to raise taxes themselves and therefore they do not have a credible case to make to us that we should do something they are not prepared to do.
Haven’t you given Bill Shorten a free kick though by not sounding out the premiers first before you came out with this plan?
Well, the proposal that we should consider this was actually raised at the officials level by the Secretary of my Department with the head of the various premier’s departments. Within hours of it being raised, in that very respectful and confidential environment, it was on the front page of every newspaper.
So, we went about it in a very professional and confidential and respectful way, but as it happened it was put into the public domain by others. So the matter’s been brought to a head but I think it is a good thing to be brought to a head because the fundamental threshold question is this, to the states: They have urged us to increase GST and give them proceeds from that, they’ve asked us to increase income tax, the premiers of Queensland and Victoria urged us to increase the Medicare levy and give them the proceeds and yet when they were given the opportunity to levy a portion of income tax – not additional tax, not we would retreat, as you know, because the concept they would be able to levy a portion of income tax. When they were given that opportunity to take responsibility for raising a portion of the income tax receipts they did not want to pursue that idea at all.
And so that is a very important moment of clarity. It is a wakeup call for the state governments and for all governments. We will live within our fiscal envelope, we will live within our means and that’s what Australians expect us to do.
But is it a great moment of clarity for you as Prime Minister to come up with a plan and then have it blown down two days? Does that send a message that you’re someone who comes up with ideas that are actually are achieved?
Well, the proposal that we made was one that could only – it was either going be acceptable to the states or not. Either way we have learned a great deal and as I say it’s a very important moment of insight. The clarity of our fiscal reality that is revealed by the states’ refusal to contemplate taking more responsibility for raising revenues is very important because they cannot credibly ask us to raise taxes which they were not prepared to raise themselves when they were given the opportunity to do so. So, we’re all agreed. We’re not going to raise any more taxes in net terms. We’ll try to make our tax systems more efficient. The states should do that and we will do that, but we have to live within our means. We have to live within that fiscal envelope.
Well, you’ll have to wait till the Budget; it’s not very far away now. It’s getting closer and closer.
Prime Minister, did the Treasurer support your plan to let the states levy their own income tax?
The proposal that we took to the states was considered and approved by the Cabinet. So it was certainly approved by the whole Government.
Don’t you have a massive job now to come up with the Treasurer on another tax policy before the Budget though now?
Well, we will be – the Treasurer will be presenting a Budget that is obviously the product of the deliberations of the Government, of the Expenditure Review Committee and the Cabinet, and he’ll be doing so on the 3rd of May.
Okay – thanks very much.