State treasurers are still open to a discussion on tax reform, but have ended a meeting with Scott Morrison without any concrete measures to change the overall system.
Instead the meeting agreed to look at further modelling of Australia’s tax base, while accepting there needs to be a growth-friendly tax system.
“From the commonwealth perspective, the only models that we will be looking at will be ones that don’t lead to an increase in the tax burden in this country,” Mr Morrison told reporters in Sydney after the meeting.
He said there were certainly differing views around the room on how to move forward.
Queensland Treasurer Curtis Pitt said Mr Morrison confirmed the Commonwealth would not be reversing its 2014/15 budget cuts that have hit his state to the tune of $18 billion over the next decade and will affect the nation by $80 billion.
“What they are saying is that their cuts are our problem – that’s unacceptable,” Mr Pitt told reporters after the meeting.
In contrast, South Australian Treasurer Tom Koutsantonis was happy with the result.
South Australia had put forward a proposal where part of the nation’s income tax take would be hived off towards the states and an increase in the GST could fund income tax cuts.
“That work will continue and I am very pleased with the outcome,” he told reporters.
Mr Morrison said all tax options remain on the table.
NSW originally put forward the proposal to raise the GST to support its health expenditure earlier this year, while Victoria and Queensland have called for an increase in the Medicare levy.
Whatever changes are eventually agreed upon will be taken to next year’s federal election.
“That’s been our commitment all along,” Mr Morrison said when asked when people can expect the final tax package to be announced.
“The election is scheduled for the second half of next year, and that gives you, I think, a time-frame by which these issues would need to be resolved one way or the other.”
Respected economist Saul Eslake said from a purist economic perspective, raising the GST rate or broadening its base is the obvious thing to do.
“From a practical political perspective there are all sort of hurdles in the road,” Mr Eslake told Sky News.
“I’m increasingly coming around to the view … it will be a bridge too far politically.”
The meeting also discussed competition law, following the Turnbull government’s recent response to the Harper review, and foreign investment.
The prime minister, premiers and chief ministers will meet on Friday for the Council of Australian Governments.
Federal shadow treasurer Chris Bowen described the meeting as a “complete failure”.
“It’s an outcome that perfectly fits the Turnbull government’s approach of `all talk, no action’,” Mr Bowen said in a statement.
“No concrete outcomes, just the promise of more talking.”