Scott Morrison emphatic on issues, but details lacking

Scott Morrison has tried to reset budget and tax reform expectations but has had to concede that, without raising the GST, almost $30 billion in tax cuts and the “bigges­t change” in 30 years to ease the crushing burden on ­taxpayers can only be “modest” over a very long time.

What’s more, the Treasurer has had to admit that the government does not have a solid plan for even that modest, protracted change only six months from an election.

He was able to easily identify the problems: workers paying the highest share of the economy in tax for 40 years, bracket creep killing growth and the failure of spending cuts to ­sufficiently offset new expenditure.

Morrison used the last point to jettison the Abbott-Hockey deal of allowing ministers new spending if they provided offsetting ­savings because, after more than two years and $80bn in politically painful cuts, the Coal­ition is “back where it started” because of $70bn in new spending and the Senate blocking the savings.

Morrison was able to declare a guiding principle and philosophy of heading off new government spending — state and federal — in aiming the budget at cutting the deficit and pursuing tax reform to promote growth and jobs.

But the Coalition is still ­considering the detail of proposed changes to negative gearing, tax deductions for work expenses and capital gains tax, as well as lifting the tax threshold for middle-income­ earners and giving ­company tax relief.

It is unlikely there will be any detailed plan until the May 10 budget, which will reveal the tax package the Turnbull government will take to the election in the second half of the year.

An almost rueful Morrison put the final nail in any GST change — which would have funded a cut in personal and company tax — for at least two elections, talking about the tax burden on workers going “up and up and up” and killing jobs and economic growth.

He confirmed the record high of 25.8 per cent for the ratio of tax as a proportion of gross domestic product, and pointed to the ­danger of government spending as a share of the economy rising.

In a confident and fluid present­ation, Morrison identified the problems, emphatically ruled out a GST rise, put the states and his colleagues on notice that new spending had to be curtailed and made clear there would not be deep cuts into existing programs.

But the revelation of any detailed­ solution, which until now has been held captive by the process of considering the GST rise at length, was not possible yesterday and nor is it likely for some time.

Meanwhile, Labor will call every day for a tax plan while continuin­g to run a GST scare for all it’s worth and while finding itself­ in the unusual position of being out in front on the debate over tax reform­.