Lost chance to fix tax

Prime Minister Scott Morrison’s knee-jerk dismissal of one of his backbencher’s tax proposals was a wasted opportunity and a hypocritical one at that.

The well-respected moderate Western Australian Liberal backbencher Senator Dean Smith proposed that payroll tax – perhaps the most insidious anti-jobs tax ever invented – and property stamp duties be abolished and in their place the GST be widened and/or increased slightly and that a modest land tax be introduced.

Morrison said widening or increasing the GST had been considered and rejected because by the time you pay for compensation (as was done in 2000) there would be no increase in revenue. 

Opposition Leader Anthony Albanese said the GST was a regressive tax that fell on the poor, so Labor would not agree to an increase.

The responses illustrated the woeful lack of economic understanding and good sense among Australia’s political leadership. Or worse, it illustrated that they had simply given up on the task of leadership – to explain and get support for worthwhile change in Australia and that they have accepted that scare tactics will rule the nation’s political agenda.

At present, health, education and fresh food are exempt from the GST. That was the condition the now-extinct Australian Democrats put on passing the GST through the Senate in 1999. It was feel-good politics that was supposed help the less well-off afford the important things in life. Over the past 20 years it has back-fired spectacularly.

Go to any supermarket and see what the well-dressed obviously wealthy people put in their trolleys: fresh food and finest cuts of meat and fish, all GST exempt. See what the poorly dressed obviously time-stressed struggling people with kids in tow put in their trolleys: processed frozen TV meals, sugary drinks, all attracting the GST.

Who sends their kids to private schools with GST-exempt fees – mainly wealthy people.

Who spends more on GST-exempt health goods – mainly wealthy people.

If you imposed the GST on those things, as Smith proposes, you would make it less, regressive, not more so.

And it you increased it to 12.5 per cent, you could give compensation to lower-income people. And that is not self-defeating as Morrison suggests. To the contrary, it means that wealthy income-tax dodgers would have to pay more tax if they wanted to enjoy their income.

And if it removed payroll tax, it would generate jobs – you know the jobs, jobs, jobs that Morrison harps on about all the time.

Tax is a disincentive. People reduce taxable activity as far as possible. So employers are more reluctant to employ if they have to pay more tax.

Similarly, people are more reluctant to move to more suitable housing as they age because they do not want to waste very large sums of money in stamp duty.

Morrison’s position is made worse by the timing. NSW and Victoria are both making noises about replacing erratic and economically damaging stamp duties and dealing with the eroding GST revenue base because spending on exempt health is spiralling while spending on GST-applicable consumer goods is stagnating.

The Liberal Party has supposedly been the party of states’ rights. John Howard and Peter Costello made a point of saying that the GST is the states’ tax. Yet Morrison dismisses any changes without a hint of consultation with the states.

The Smith proposal was an ideal opportunity to invite all the states and territories to do something about Australia’s increasingly inefficient and corrupt tax system. Instead Do-Nothing Morrison flicked it to the too-hard basket.

The only upside to the do-nothing approach to the country’s finances would be if Morrison applies it to private health insurance. If he resists the selfish pleas of the health funds to be propped up with ever more taxpayer money, maybe enough people would abandon private cover and go to Medicare so that no government would be able to get away with the obvious need to expand and improve Medicare so that waiting times could be cut and a lot of the lucrative private work for specialists would dry up and they would be forced to work more in the public sector.

But the track record of the Coalition is to always pander to business special interests, rather than adhering to what they say is their pro-private enterprise policy.

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The recent review into government in the ACT made a whole lot of solid recommendations and observations – and one utterly asinine one. That was the proposal that the ACT have, like the Northern Territory, an Administrator, or equivalent of a state Governor.

There is simply no need for one because the federal legislation providing self-government for the ACT set out the rules in such a way that an Administration was unnecessary.

Aside from prancing about the place ceremoniously representing the unelected hereditary monarch, the Governor-General, state Governors and the Northern Territory Administrator have only three functions. First, is to chose who should get first chance form a government after an election (which only matters if there is a hung parliament). Second, is to accept or reject a Prime Minister’s, Premier’s or Chief Minister’s request to call an election. And third, to sign into law, bills passed by the Parliament.

In the ACT, all these things are taken care of without the need of an Administrator.

Election dates are fixed: the third Saturday in October every four years. The Electoral Commission determines who has been elected. The Chief Justice swears them in and the Clerk over the Parliament (Legislative Assembly) while it conducts its first piece of business: the election of a Speaker. The Speaker then presides over the next piece of business: the election of a Chief Minister. If the Chief Minister resigns or dies the Parliament elects a new Chief Minister.

The Clerk signs the passed laws certifying that they are a true version of the law passed, and then the Speaker writes to the Parliamentary Counsel asking her to notify the law on the Legislation Register.

The question should not be, why doesn’t the ACT have an Administrator (equivalent of Governor or Governor-General) like all the other Australian jurisdictions, but rather, why don’t all the other jurisdictions amend their constitutional rules to ones like the ACT so the pompous, expensive, undemocratic and unnecessary role of Queen’s representative can be done away with?

CRISPIN HULL.

This article first appeared in The Canberra Times and other Australian media on 2 November 2016.