The Federal Government is being a little hypocritical over the question of paying state and territory stamp duty for the Telstra float. And the ACT Government is being a little greedy and unrealistic.
The federal legislation provides an exemption for any state or territory stamp duty for the Telstra deal. If Telstra had been an ordinary float of a private company, the deal would have attracted duty. The expected $14 billion float would have attracted about $40 million in stamp duty in the ACT, where the float is taking place, but for the exemption.
The Commonwealth is entitled, legally, to make the exemption. But the legal position is not the issue. Rather it is the economic issue and the question of good faith between the levels of government.
Both this federal government and its predecessor have argued in line with the Hilmer report that each level of government should pay the taxes and charges of the other levels.
There was economic merit in this. The theory is that privatisation and corporatisation yield efficiencies the dividends of which get passed on equitably. But those efficiencies will not be created unless there is a competitive environment in which no player gets an unfair advantage. This theory has been preached by the privatisers of both major parties. And there is some merit in it, provided it is not taken too far. Privatisation and competition have been beneficial in a range of hitherto government-provided utilities and services. The benefits are lost, of course, when privatisation is taken to extremes into areas where the provision of services and policy advice to government is better delivered in the public sector.
The trouble with the stamp-duty exemption in the Telstra float is that it draws on the advantages of public-sector immunity while at the same time preaching level-playing field competition. But Telstra’s competitors will not get the same benefit.
It is hypocrisy for federal ministers to talk of the benefits of level playing fields and even competition in the provision of services hitherto provided by government monopolies and then use the power of government to give the newly privatised organisation a lift up with a special benefit that others in the private sector do not have access to.
What is the motive? In Telstra’s case it is political. The Government wants it to be a success. It wants the float to be fully subscribed. More importantly, it wants the huge number of Mums and Dads shareholders to make a small profit so they will look more benignly at the government that gave it to them. Stamp duty may be a small amount, but every bit counts in that endeavour.
There is also the public-policy question of ensuring that a small cut of major commercial transactions goes to consolidated revenue to provide for essential government services and as a redistributive element to ensure that the poorest in our society are not ignored.
That said, there is no reason why the tiny ACT should be the sole beneficiary of the stamp duty of such a huge national float just because the share register of a federal government organisation happens to be in Canberra. In the case of large floats of major Australian public enterprises, the stamp duty should be more equitably spread among the states and territories.