GST doesn’t pass economic test: Turnbull

Malcolm Turnbull says the government’s modelling shows raising the GST would not “pass the first hurdle” of being economically feasible.

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As the prime minister briefed a joint party-room meeting in Canberra on Tuesday on the government’s tax reform work, state and territory leaders called off a meeting to discuss their position.

Mr Turnbull said it was the responsibility of a “grown-up government” to examine tax and economic policy with great care.

“We have looked very painfully and carefully at the proposal to raise the GST and it does not proffer the economic benefits that many have assumed,” Mr Turnbull said.

MPs were told further modelling was being done, including more work on the GST.

The final decision on the coalition’s tax policy would be unveiled in the May budget, Mr Turnbull said.

Nationals MP David Gillespie, who wants the GST rate increased and its base broadened, urged the government not to make a “knee-jerk reaction” and take the GST off the table.

Meanwhile, Northern Territory chief minister Adam Giles – who was to host a Council for the Australian Federation (CAF) gathering in early March to discuss tax reform – has written to his counterparts saying the meeting is off after Mr Turnbull effectively ruled out any change to the GST.

Mr Giles said in his letter to the premiers the national tax reform discussion had become “even more uncertain” since he initiated the March 1 meeting.

“Until such time the prime minister provides greater clarity with the commonwealth’s proposed tax reform package, any CAF discussion would only be speculative and add little to the national conversation,” he wrote.

“I therefore recommend that any further discussion around taxation reform is deferred.”

The most immediate concern was funding health and education during the next four years, Mr Giles said.

“A co-ordinated effort to close the fiscal gap through sensible and long-overdue reforms is paramount,” he said.

The next meeting of the group is now expected just before the Council of Australian Governments meeting in April.

Mr Turnbull said in December unless the April meeting could chart a way forward on tax reform the two levels of government would go their own ways.

Cabinet Secretary Arthur Sinodinos said he was prepared to put superannuation back on the table, and commended Labor for discussing the issue.

“In this constrained environment fiscally, we need to look at where we can tighten up concessions,” he told ABC radio on Tuesday.