Month: August 1998

On treasury figures, the tax plan will raise between $6bn and $8bn a year in extra revenue. This is because Government is right in saying that the new GST will extract no more than the existing wholesale sales tax and other indirect taxes being abolished.

But after the abolition of WST, tobacco and alcohol would be taxed at only the 10 per cent GST rate. The Government argues that this is bad for health. So it will introduce two new excise taxes on alcohol and cigarettes to bring their retail prices up to the pre-GST level.

A similar argument was made with luxury cars. The sales tax of 45% on them is abolished. The 10% GST is applied, so their price would fall dramatically. The Government proposes a special tax on them to bring their retail price to pre-tax-package equivalent
Continue reading “1998_08_august_the scam”

Watch what the major parties do with the Senate in the next three years. They will be spurred on by the elegance and “”success” of the Tasmanian manipulation at the weekend which in effect rid the major parties of the turbulence of minor parties and independents. Their federal colleagues in the major parties must be salivating.

For more than 15 years, the major parties have had a thorn in their sides in Tasmania: the Greens. Under Tasmania’s Hare-Clark voting system, the Greens have obtained between three and five seats and held the balance of power in Tasmania’s Lower House for nearly all of that time. It has meant that Labor administrations have not been able to do the “”right thing” by their union mates and dam, mine or chop down the state’s resources to create jobs, jobs, jobs. It has meant that Liberal administrations have not been able to do the “”right thing” by their business mates and dam, mine or chop down the state’s resources to create profit, profit, profit.

The Greens — love them or hate them — presented an ameliorating factor against the excesses of the big two. The Greens became such a thorn in the side of the two major parties that this year the majors conspired to do them in. The conspiracy came at a cost, but they thought it worthwhile. They cut the number in the Legislative Assembly from 35 to 25. At the election at the weekend, there were only five members for each of the five Tasmanian electorates. At previous elections there were seven. It meant that for a minor party or an independent to get a seat, they needed 16.6 per cent of the vote (after preferences) instead of the 12.5 per cent when there were seven seats per electorate.
Continue reading “1998_08_august_senate manipulation”

Another crucial test takes place on October 3 — the fight for control of the Senate.

It is in the Senate that the fate of either the Coalition’s or Labor’s tax package will be determined.

Half of the 72 state senators will face the people on October 3. But they will not take their places until July 1, 1999.

All four territory senators will also face the people and will take their places at the same time as members of the House of Representatives. Invariably, each territory returns one Coalition and one ALP senator, so their political effect can be discounted. So the new government will have to deal with the existing Senate until July 1 next year.
Continue reading “1998_08_august_senate analysis”

The Northern Territory has by far the highest financial dependency on the Federal Government of all the states and territories.

This is despite frequent derogatory references by its political leaders to interference from “”Canberra” and the need to get government out of people’s lives.

In 1998-99, the NT will take $5400 per head in general Commonwealth financial assistance, more than five times the average of $950 per head.
Continue reading “1998_08_august_nt debt”

The Constitution gives far too much power to the Federal Parliament and far too little power to the people.

The question of Northern Territory statehood is a good example.

The Constitution says, “”The Parliament may admit to the Commonwealth or establish new states, and may . . . impose such terms and conditions, including the extent of representation in either House of Parliament, as it thinks fits.”

Notice the people of the new state, or the existing states, get no binding say.
Continue reading “1998_08_august_northern territory statehood”

The ACT Government has announced that it will give up cash grants as a method of attracting industry to the ACT. Instead it will concentrate on indirect assistance such as tax concessions and land grants to tempt new businesses and to help existing businesses expand.

It has cut direct grants from $2 million over the past three years to just $250,000 for the next financial year.

The reason given by Chief Minister Kate Carnell for the change of method was that the ACT could not compete against enormous amounts of money given by other states. Given the large amounts handed out by Tasmania and South Australia, that may be so.
Continue reading “1998_08_august_leader31jul industry aid act”

Prime Minister John Howard says that the election he has called for October 3 is about economic management. He points to the Coalition’s past performance in bringing federal spending under control and points to the future, saying his proposed tax system offers a better program for economic management than Labor’s plan.

That may be so, but the timing of this election is not about economic management, it is about the re-election of the Coalition Government. There was no valid reason for an early election. Rather Mr Howard appears to have made the judgment that his chance of re-election are better now than in March next year when the election is due, given the way international events are putting such strain on Australia’s economic performance. Whatever the merits of the Coalition’s tax package — and there are many — the timing of its delivery, the use of the resources of the Government to advertise it, and the calling of the election early have been a completely cynical exercise.

Australia should move to a fixed election date for three-year terms (to coincide with the Senate) as part of any constitutional change that might come with the centenary. It would make thing more predictable for business. The fact Mr Howard has called this election six months early points to mismanagement, not good management.
Continue reading “1998_08_august_leader31aug election called”

The separation of powers is a very important element of our system of government. The legislature passes laws that apply to all, including the members of the executive government. The executive administers those laws. The judiciary determines how those laws apply in particular cases when there is a dispute about it. Further the legislature, in a Westminister system, determines who forms the executive government and the executive government is responsible to it. A critical function of the legislature is to appropriate money to the executive for the functions of government, but it is for the executive to determine how that money is spent.

The importance of separating these powers is to prevent abuse or concentration of power. Separating the powers also helps balance accountability and independence.

Thus the legislature or the executive cannot interfere in a court case. A judge cannot take a role in adminsitering a law until a case about the law is brought to court by disputing parties.

The separation of legislative and executive powers is less obvious, particularly where the government of the day enjoys a majority in the legislature. But where it does not, the separation is more important, particularly in places, like the ACT, which have only one house of parliament and minority government.

The Government does not always get its way on legislation. The Opposition and minor parties can push legislation through and the Government has to administer it. But the Government must be allowed to govern. In particular, it should get the money to govern and should not have imposed upon it strictures about the spending or not spending of significant amounts of money. If the legislature does not like a line item in a budget, a vote against that line item is really a vote of no-confidence in the Government itself.

This much is recognised in the case of the federal parliament in the Constitution and in the case of the ACT Legislative Assembly in standing orders. The Constitution says that the Senate cannot amend financial Bills and that Bill raising revenue can only deal with revenue raising and not with any other matter. The standing orders say that only a Minister may introduce legislation that requires significant government spending or revenue measures.

private members’ Bills ht respect to the in the Am

Transformatio has made it difficult to judge year to year, but now settled. Bit like going metric. One generation suffers.

The best element of Labor’s tax package is its dealing with of welfare traps and disincentives to work. The worst element is its failure to tax services. As it happens, both elements involve problems of Labor’s making.

When in government Labor, quite properly, changed the social security system so that benefits were more targeted to those who needed them. That required strong means-testing based on income. The unforeseen outcome was that as people attempted to return to the workforce or earn more income than the means test permitted they got hit with both income tax and a reduction in benefits such that it was hardly worth their while (in monetary terms) going out to work or working extra hours to earn more income. They might lose 50 per cent of what extra they earned in reduced benefits and a further 34 cents in tax — an effective marginal tax rate of 84 per cent. They were getting just 16 cents in every extra dollar earned and all plus more was going in costs of going to work — transport, work clothes, lunch on the run and so on. This acted as a welfare trap, particularly for families earning between $25,000 and $30,000. They needed a sudden leap of earned income to something like $45,000 to $50,000 to get to where they were with the earlier lower earned income combined with social security. It is likely that this is a significant contributor to higher social security outlays and to underemployment if not unemployment.

This is a major structural flaw in Australia tax and social security systems which must be addressed urgently whichever party is in government. Indeed, the issue transcends the mere tax debate. Australia must be a place that gives incentive and opportunity to work and prosper, not a place which encourages welfare dependency.
Continue reading “1998_08_august_leader28aug labor tax”

It is now more than a week since the Government issued its tax package. In that time several matters have emerged that are of as great concern as the implications of the package itself.

The first is the nature of the debate that has flowed since the launch. Much, indeed nearly all, of it has been couched in terms of what’s in it for me, or my pressure group. Or worse, someone or some group has got more than me even though I will be no worse off.

It seems the tax package has lowered the level of political debate to the mere mercenary. There was no room in this debate for John Kennedy’s exhortation to ask what you can do for your country, rather than what your country can do for you. One of the most significant reasons for that was not so much that the Australian people automatically saw the debate in monetary terms. Rather they saw it that way because that was the way it was pitched in the first place. Virtually all the literature that came from the Government explaining the package was dressed up with examples from all economic levels and family permutations “”proving” that each person or group would be better off under the new package.
Continue reading “1998_08_august_leader23aug tax debate”