Tax, revenue reform urgently needed: Brumby’s parting shot

LABOR Party elder John Brumby will today escalate calls for an overhaul of the nation’s tax system.

LABOR Party elder John Brumby will today escalate his calls for an overhaul of the nation’s tax system to increase revenue for basic services and back a federation convention to chart a new path for Australian government.

The outgoing chairman of the Council of Australian Governments Reform Council will argue that Australia’s budget crisis is due to a crisis of revenue and that the existing tax system is unable to meet demand.

Mr Brumby will say that the growing demands on basic services are a fact of life that needs to be acknowledged, but that this is not an “argument for big spending’’.

The former Victorian Labor premier will also call for a special convention populated by the public and opinion leaders to debate how to take the nation forward amid the growing threat and/or opportunity of the explosion in Asian growth and the debate about federal and state governance.

Mr Brumby has long been an advocate of GST reform and last month called for a mature debate about the scope of the tax and the need to cater for health, education and transport spending. He will argue that there has been a historic slide in revenue to the states since the federal government took control of income tax during World War II and the High Court in 1997 further limited the states’ ability to raise their tax take.

The Abbott government’s decision in the recent budget to strip $80 billion from the states merely escalates the debate, he will say.

“This understandably upset the state and territory first ministers,’’ he will say in the speech.

“But the truth of the matter is that even before the budget announcement of the withdrawal of $80 billion of commonwealth funding, the issue of how to fund education and healthcare and how to get the federation back into better balance was a conversation we were going to have anyway.

“The reality is that post-GFC, Australian governments — state and federal — have a major revenue problem.

“Our existing taxes and charges are simply not adequate to provide the services in transport, infrastructure, health and education the community expects us to provide.’’

Mr Brumby’s comments will be among his last as council chairman, with the Abbott government abolishing the body, effective this month.

Before entering state politics, Mr Brumby was an MP in the Hawke government and has championed the reform of state relations since 1999.

In a speech to be delivered today to CEDA’s State of the ­Nation conference, Mr Brumby will also argue that the looming White Paper into the issue highlights the need for a so-called federation convention.

He suggests the federal convention should be held later this year or early in 2015.

Mr Brumby wants a Federation Reform Council to be established to monitor the timetable, milestones and progress of recommendations flowing from the White Paper on federation reform.

“This is important for accountability of governments and to ensure that the issues we agree to about our federation stand the test of time and not just until the next election cycle,’’ he will argue today.