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Government may support Turnbull tobacco tax h -

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Government may support Turnbull tobacco tax hike

Reporter: Alexandra Kirk

PETER CAVE: The Federal Government has dismissed Malcolm Turnbull's alternative Budget plan, but
says it is looking at lifting tobacco taxes as part of a wide-ranging review.

The Opposition meanwhile, which has already voted against Labor's tax hike on pre-mix drinks is
taking another look at the issue, citing the need to rein in the deficit.

It's a meeting of minds of sorts but as the debate over the Budget is overshadowed by the Prime
Minister's threat of an early election if his economic agenda isn't passed in its entirety.

From Canberra, Alexandra Kirk reports.

ALEXANDRA KIRK: The Prime Minister wants his Budget passed as is. If not, he's leaving the threat
of an early election hanging.

Malcolm Turnbull says so be it.

MALCOLM TURNBULL: Look, he's the Prime Minister. He can have an election, you know as well as I do,
pretty well any time he wants. So that's up to him. But everyone will know what his motives are.

This is a Prime Minister who is horrified now by the full consequences of what he's done and he's
going to cut and run to an election before he's found out by the people.

ALEXANDRA KIRK: The Opposition leader has pledged to oppose the Government's plan to pare back the
30 percent private health insurance rebate, proposing instead the $1.9-billion revenue hole be
plugged by a 12.5 per cent tobacco tax hike. He says that will improve Australians' health.

MALCOLM TURNBULL: Here is one suggestion. And it's a tough suggestion - it's not a popular
suggestion. But it shows the difference between my character and his.

I am prepared to make tough decisions about the Budget, tough fiscal decisions. And so I've said to
him, alright, you can increase the tax on cigarettes and that will promote healthier living, it
will reduce tobacco consumption, it will reduce the dreadful health consequences of smoking
obviously, and it will therefore reduce the pressure on hospitals and health services.

ALEXANDRA KIRK: The Heart Foundation says it's a good idea that deserves bipartisan support because
the tobacco tax hasn't been increased in real terms for almost a decade and price increases are one
of the most effective ways to encourage smokers to quit, as well as deterring young people from
taking up the habit.

The Government is dismissive of Mr Turnbull's proposal, saying if he wants to be taken seriously he
has to support Labor's alcopops tax hike.

But it turns out the Government is considering raising the tobacco tax.

The Finance Minister Lindsay Tanner:

LINDSAY TANNER: It's one of the options that is on the table, along with all other possibilities in
the review of the overall tax system by Ken Henry. But one of the things we have to consider of
course is the total tax burden.

ALEXANDRA KIRK: And there's a bipartisanship of sorts on Labor's 70 per cent alcopops tax hike from
Malcolm Turnbull. Having voted no once, the Opposition may vote yes second time round.

MALCOLM TURNBULL: We opposed the alcopops tax because it was not an effective health measure. I
mean the alcopops tax, if you compare it to cigarettes, it would be like putting up the tax on one
brand of cigarettes.

I mean obviously people would just move to the other brands. The alcopops tax has not been an
effective health measure.

But we will, if and when they re-present it, we'll examine it on its merits in of course in the
context of this budgetary environment.

ALEXANDRA KIRK: And the Opposition's health spokesman Peter Dutton has confirmed the shift.

PETER DUTTON: Now we realise now, of course, how much debt the Government has got itself into in
such a short period of time.

And I suspect, we're hearing some whispers at the moment, that there may be a change in the
legislation which the Government's putting forward.

We'll wait to see what it is they're proposing and we'll make announcements in due course.

ALEXANDRA KIRK: So it seems more a case of we decide what revenue raising measures or extra taxes
are levied and the circumstances in which they come to be supported. Neither side wants to be seen
as marching to the other's tune.

But there's still an impasse on cutting the private health insurance rebate. Assistant Treasurer
Chris Bowen won't say definitively if it's a make or break issue.

CHRIS BOWEN: Well look, we want the Budget through. It's a very carefully crafted Budget. It's a
Budget which has a lot of well designed measures.

Now of course because of Mr Turnbull's opportunistic and obstructionist approach that means that
the Senate will play a major role and that means the minor parties in the Senate will play a major
role and we'll need to talk to them about all our measures.

But we'll be arguing vigorously for them and pursuing them vigorously in the Senate.

ALEXANDRA KIRK: If your private health insurance measure doesn't get through, does that constitute
a trigger for a possible early election?

CHRIS BOWEN: Well look, we're not interested in an early election. We just want to get the Budget
through. It's not part of our agenda. The Australian people are looking to us and to the Parliament
as a whole for leadership.

So we're not sitting around saying, how do we get an early election? We're sitting around saying,
how do we get this Budget through? That's the focus from the Prime Minister down.

ALEXANDRA KIRK: The Greens, Family First Senator Steve Fielding and Independent Senator Nick
Xenophon are in the box seat again.

Greens leader Bob Brown is leaning towards supporting the health rebate cut, but questions the
accompanying hike in the Medicare levy surcharge for high income earners.

He suggests the Prime Minister get used to the idea of sometimes having his Budget measures amended
in the Senate.

BOB BROWN: I think the Budget will be improved by the Senate and the Government can lump it. I'm
not into a prescriptive Prime Minister saying the Senate will be a rubber stamp or else.

That's not for one minute going to stop the Greens from putting forward innovative ideas or for the
Senate voting for them.

PETER CAVE: Greens leader Bob Brown.