Only Turnbull's political opponents will say that he is going to squib tax reform. The obvious reality is that this discussion is about good policy, not politics, and there is good reason not to proceed, as I argued back in November 2014. The real test of tax reform is still ahead because there are numerous big tax reform decisions yet to be decided.

In the 1980s Paul Keating's plan for a 12.5 per cent GST was dumped by Bob Hawke and the unions. The substitute package involved new taxes including capital gains. From 1990 John Hewson and I spent much of our three years as leader and deputy selling a 15 per cent GST. We lost to a Keating scare campaign but when the Howard government was elected it was not long before some of us were pressing for another shot at introducing a GST. 

The 1998 election was one of John Howard's greatest moments. It was a testament to Howard's leadership but it was not easy. On the bright side, the Howard team never flinched and we even had some people saying they didn't like the GST but they knew it was good for the country.

If I thought an increase in the GST to 15 per cent was really good for the country then I'd happily argue the case again. As Malcolm Turnbull said on Sunday, that claim has not yet been verified.

The reality is that any increase must be accompanied by an increase in pensions so that people who would otherwise be worse off are compensated for the additional cost of living. A 15 per cent GST brings in additional revenue of roughly about $30 billion. Of that about one third has to go to compensation.

Of the remaining revenue, some might go to cutting income tax, some may go to the states and some to cutting corporate tax. After paying the compensation of about 1.5 per cent, there is about 3.5 per cent left. Compare today's potential funds to the revenues available in 1998 when the 10 per cent allowed for the revenue to entirely abolish the wholesale sales tax. In one stroke, the burden of that tax was permanently lifted from business costs and gave the economy a shot in the arm.

Soon after, the economy recorded the biggest GDP lift in one quarter for services in 25 years.  Nothing in today's economic options are nearly as beneficial.

Another problem with the focus that a GST attracts is that it wrongly suggests that the GST is the main issue for economic management. There is no such thing as a silver bullet for Australia's economic challenges. There are plenty of other tax reforms that need to be tackled including state-based taxes, as suggested by the prime minister on Sunday. On top of that we need fiscal reform and labour market reform.

Just because the government is about to drop the 15 per cent does not mean the need for a substantial reform plan is somehow lost. At least the prime minister has emphasised the need for growth policy reforms. But he seems to have forgotten an even more pressing requirement. He needs to bring out the knife.

And here are the words about expenditure that everyone must remember: "We therefore cannot wait for economic growth to fix the budget line." And "we believe continuing with reform in the areas of both revenue and expenditure should have regard to the higher priority of budget repair".