Joe Hockey ‘daring’ states to ask for a rise in the GST, says Labor

Prime Minister Tony Abbott in Canberra. Labor has accused the government of daring the states to ask for a rise in the GST. Photo: Andrew Meares Treasurer Joe Hockey does breakfast television interviews on the front lawns of Parliament House after budget day. Photo: Alex Ellinghausen

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The Abbott government is ”daring” the states to push for an increase in the GST, Labor says, after Treasurer Joe Hockey revealed in the budget that the states would be stripped of billions of dollars of funding for health and education.

Shadow treasurer Chris Bowen said on Wednesday the funding cuts would force the Premiers to begin the potentially politically toxic argument to raise the goods and services tax to make up the shortfall, but Mr Hockey refused to be drawn on the issue in morning interviews, saying the GST was a ”matter for the states”.

Mr Hockey faces a fight on the issue, with the treasurers from conservative-led states Queensland, NSW and Victoria indicating on Wednesday that they would oppose the cuts.

Mr Bowen told ABC Radio that “as sure as night follows day, Premiers will say ‘to make up from this cut, we will need to increase the GST”.

“Mr Abbott and Mr Hockey have set it for this express purpose,” he said, adding that Labor’s position was clear in opposing a rise in the GST or broadening its base.

Opposition Leader Bill Shorten said the GST was firmly in the government’s sights and that the Coalition had deliberately shifted greater burdens onto the state in health and education spending to force their hand.

But Mr Hockey told ABC radio on Wednesday that he made “no apologies” for his decision to push funding for schools and hospitals back on to the states and the Commonwealth would ;;sit down with the states to work through the details”.

He signalled that he would be difficult to move on the cuts, saying the ‘‘same taxpayer’’ funded hospitals and schools.

When asked if it could lead to an increase in the GST rate, Mr Hockey said the government wouldn’t move on the 10 per cent rate without taking it to an election.

But if the states wanted more money from the GST, ‘‘it’s up to them to argue the case to change the GST.”

Mr Hockey said the commonwealth had always funded those services at base levels, but the Rudd and Gillard governments went on a ‘‘spending spree’’ with no plan to pay for the increases in funding for schools and health.

Prime Minister Tony Abbott echoed his Treasurer’s sentiments on Wednesday saying the GST was “a matter for the states.”

“The states do well out of this budget, we are expecting them to run public hospitals and run the schools,” he said.

In a later interview with ABC Radio, Mr Abbott further explained his position.

“Changes to the GST is not something the government is planning, the states are perfectly entitled to argue for change, each level of government should be sovereign in its own sphere,” he said.

Queensland Treasurer Tim Nicholls said it would be tougher to deliver services because of cuts to future spending on health and education

‘‘We will use the time between now and the implementation of those decisions over the next couple of years to take the fight up with Canberra,’’ Mr Nicholls told ABC radio on Wednesday. ‘‘The revised funding models are going to make it tougher to deliver the services.’’

NSW Treasurer Andrew Constance, who will announce NSW’s budget on June 17, said the federal budget was really just ‘‘cost-shifting’’, estimating his state would have to find an additional $1.2 billion over four years to make up the shortfall.

‘‘We have committed expenditure to these areas. What we’ve seen from the commonwealth in this year’s budget is a cost-shift in terms of their growth monies,’’ he told ABC radio. ‘‘We want to see the agreements honoured. These are vital areas of service delivery at a state level.’’

NSW Premier Mike Baird said on Wednesday: “What we saw last night was a kick in the guts to the people of NSW.”

“I have a question to the Prime Minister and to the federal Treasurer . . . what services would he like us to cut here in NSW on the back of the funding cuts that we have seen overnight?”

Mr Baird described Mr Hockey’s actions as a “flick pass”.

“Our message to Canberra is, ‘no, we are in this together. You cannot outsource your problems to the states.”

Victorian Treasurer Michael O’Brien said on Wednesday: “We don’t want to see people deciding they are not going to see their GP because of this co-payment and they wind up clogging up our emergency departments in our hospitals with things which are really more appropriately seen by a GP.”

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