ABC Breakfast

PAUL KENNEDY: Minister thanks very much for your time. You're hopeful that any agreement will reach today? The bottom line is that the Prime Minister is hoping that they'll agree to think about it some more.

STEVEN CIOBO: Well we are of course hopeful that an agreement will be reached because I think frankly that's what Australians are looking for. Australians want to know that they're going to continue to have access to high quality services. They expect to know that, with respect to both health and education for example, that governments of all tiers, state, federal will continue to invest and provide good quality health care and education services. What the Coalition is putting forward from a federal level, is a reform of Australia's federation that will guarantee money supplied to the states so they can invest in these types of services and we stop this age old, decades old, blame game and bucket shifting that goes between state premiers and the Federal Government.

PAUL KENNEDY: What's going to be on the table for health between now and 2020? Is that $3 billion accurate?

STEVEN CIOBO: I'm not going to outline exactly the terms of negotiation, but let's get back to what the actual principle is here. The principle that Prime Minister has put forward, his vision for the way in which we reform Australia's federation is to guarantee state governments a percentage of income tax. We will in return, reduce the Commonwealth's percentage of income tax, so Australians will see no difference in terms of overall tax rates, but what we will do as a consequence of this reform is provide a guarantee of funding to states so that state premiers actually have responsibility and have the actual income, the actual tax revenue flowing into them, which they can use. This is a transparency measure. It brings accountability back to state premiers with how they choose to spend the money on health and on education. It provides them a guaranteed line of funding. I don't understand why state premiers think that the approach of the last decade, which sees them running to the Commonwealth Government and this blame game and fund shifting between the two tiers of government taking place...How on earth is that a better approach than a guarantee level of funding direct to state governments?

PAUL KENNEDY: Aren't those reluctant state governments hearing what you're saying, and you're saying there will be no difference in those rates, some people are a bit more – or less certain about that in the coming years, maybe ten years down the track, but also they're saying if there is no difference, what's in it for us?

STEVEN CIOBO: Well a guaranteed line of funding. That's what's in it for the states. The states are guaranteed to be receiving a percentage share of income tax that's flowing directly to New South Wales, to Queensland and WA and to all the states, so they're in a position where they can know that they have a guarantee pipeline of revenue that's coming in to fund hospitals, to fund schools and we stop this silly merry-go-round where we have state premiers coming in, hairy-chested to Canberra saying "give us more money Prime Minister". We've got the Commonwealth Government doing what it can to try to restore the nation's finances after the excesses of the Rudd-Gillard-Rudd Government. So we're doing what we can to reform our federation. This is a clear plan that provides an ongoing source of revenue to state premiers. It means that there will be money for schools and education and lots more. We are spending more money on schools and hospitals than the previous government ever did. Frankly, I think that this is a bold vision to take Australia forward.

PAUL KENNEDY: The income tax-sharing proposal has not struck a good chord at all. Is there a plan B or will the Federal Government stand by this and wait for the states and territories to blink?

STEVEN CIOBO: I'm just going to take up the proposition of your question. When Colin Barnett has said that this is a good plan and good reforming, there's a couple of strange things–

PAUL KENNEDY: Colin Barnett was the only one who's been wholly positive about it. You would need many more to come on board.

STEVEN CIOBO: Take for example, Daniel Andrews from Victoria, who says, "Oh no, no, I don't like the idea. We should have a 2 per cent extra levy on Medicare". For goodness sake, the Victorian Premier is saying, "We don't want a share of income tax, but we will take a 2 per cent Medicare levy". This is the kind of hypocrisy frankly that I don't think is going to do us any good. It just reinforces why the current approach is a failed approach, why the current approach is old politics and sees premiers as I said, arguing with the Commonwealth. Let's fix this. Let's give the states a percentage of income tax revenue, so that they can fund hospitals, they can fund schools and they can know that money is there.

PAUL KENNEDY: Just as worrying for state and territories, this morning, is the Prime Minister's comments that he doesn't see a place for the Federal Government continuing to fund public schools. How do you think that that is going to fly considering the Federal Government will stay in control of the curriculum and also the states and territories are saying they're not going to have enough money to fund beyond this Gonski money?

STEVEN CIOBO: Does any sane person really suggest that a better approach when the Commonwealth Government absolutely employs absolutely no school teachers, when the Commonwealth Government has no say over schools, or the capital invested into schools for example. Does anyone seriously suggest that it's a better approach for the Commonwealth Government to keep raising income taxes and cutting chequess from the state governments over what we're proposing, which is as said, they get a guarantee share of income tax and then they use that money themselves directly, over a service delivering responsibility that state premiers have so they so they have the money coming into the state governments, which they then use to spend on schools. So we stop this whole cycle. This is the very point Paul. We stop this whole cycle of state premiers arguing with the Commonwealth Government and we say "you know what? This money now belongs to state governments. You should spend this money as you see fit. You're accountable for it. There's transparency around it. It's all collected by the ATOS so there is not extra red tape or compliance or complications or anything like that". I mean, that is a much better approach frankly than the continuation of the same cycle argy-bargy that we've seen over the last several decades.

PAUL KENNEDY: Isn't the central point that they're not going to have enough money?

STEVEN CIOBO: How can they not have enough money? This the whole point. We're talking about shifting income tax from the Federal Government and giving it to state governments. This is a 0 sum game at the end of the day. They will have income tax that they can use to spend on hospitals and schools.

PAUL KENNEDY: Schools and hospitals are getting more expensive so they're looking longer term and looking at those gaps that are widening as they look beyond the next decade.

STEVEN CIOBO: They we're spending money in these areas. This comes down to priorities, Paul, this is the whole point. We are saying, "Let's fix this problem once and for all so we don't have the argy-bargy of state premiers trying to muscle up to the Commonwealth Government". Let's provide funding directly to the state governments and they can choose how they want to prioritise their spending. They can choose whether they want to put more money into schools, more money into hospitals. We're spending more now, so let's be clear about that. We are already spending more now. What this is about is who is getting the money. Is it coming to the Commonwealth Government and going through the filter of having an argument with the state premiers before it goes to the state governments or should it just go directly to the state governments? That's what is at the centrepiece of this discussion.

PAUL KENNEDY: Minister thanks for your time this morning.

STEVEN CIOBO: Pleasure.