THE tussle of wills this week between Prime Minister John Howard and Treasurer Peter Costello was eerily similar to that between Prime Minister Bob Hawke and Treasurer Paul Keating.
Costello, like Keating, has (to use Keating’s phrase) his head down and bum in the air working on tax detail. Meanwhile, (again to use Keating’s phrase) Howard is out there tripping on television cables at shopping centres.
Costello seems to be suffering the same frustration as Keating. His leader is ready to undo his work at the slightest, transitory, popular backlash.
On the Business Activity statement this week, Costello defied Howard, at least initially.
Costello wants an efficient tax system and efficient small businesses. It means upsetting a lot of small businesses who have run their accounts out of a shoebox and slopped cash about without paying proper tax.
They need upsetting. Some of these cash businesses will have to start paying proper levels of tax for change. Perhaps that is why they are squealing.
But the path of reform is difficult. Voters are quick to denounce any change and only see the negatives.
The difference between Costello and Howard was significant.
Howard, freshly in from the marginal electorates, had listened to the squeals and wanted to do something immediately. After all, the backbenchers’ meeting was held the day after the BAS statement was due. It required maximum knee-jerkism. Votes come before long-term national objectives.
Backbenchers were squealing, too. So Howard announced his backdown (or BAS-flip) to them in the party-room and details were leaked to the media, though the precise quotes were not. The back-down was Hawke-like. Remember, Hawke was called Old Jellyback.
Howard left open the possibility of moving from a quarterly to yearly BAS statement. He was willing to countenance ma jor changes.
Costello heard Howard but obviously disagreed. The next day he rejected the annual BAS. By then, Labor had made that foolish, unworkable, populist, opportunist promise.
Costello pointed out the impossibility of an annual statement. The annual provisional tax being replaced by the GST-BAS was based on the whole of the previous year’s activity. The GST had only been in for two quarters, so you could not estimate the annual liability. Besides, it would be dangerous to have businesses hoarding up to a year’s worth of GST takings before remitting them to the Government. Costello pointed out that this was only the second BAS. Obviously there would be some learning-curve agony before it became routine.
In Costello’s words to Sky News: “You’ll always have quarterly payments. You have to have quarterly payments to actually make sure that people manage the cashflow in relation to that [GST payments to Government] properly.”
Costello’s arguments were sound, but did not mollify the squealers. Nor did they please Howard, it would seem.
Here was Costello ruling out any move to an annual BAS, ever, and ruling out any major change.
His leader’s message was very different. Howard wanted to give the impression that the Government would deliver major changes and that there would be immediate change.
“We are looking at ways of simplification, we’re looking at all the options and any changes that can be announced with effect to the next BAS will be made,” Howard told Perth radio 6PR. “”We’re not going to delay it, those changes that can be made immediately will be made.”
And on the ABC’s PM: “”I said we are looking at all of the options, all of them. And that obviously includes looking at the option of an annual return for particularly small business.”
It meant Costello would have to change his earlier statement if he was to be consistent with his leader. Bear in mind, this is no accidental inconsistency where a Minister says one thing oblivious that the leader’s position is different. Costello’s public statements came (ital) after (end ital) the party meeting on Monday.
It was as if – Keating-like – he said to himself, “”I’m not having anyone mucking about – including the leader — with my tax system”.
Costello had to buckle, without eating humble pie.
So he dressed up some mechanical updating of the BAS form as “”major simplification”. He dressed those changes up as the Government responding now to business concern when they would have come anyway after the transitional arrangements for wholesale sales tax and provisional tax ended.
After three days, Howard and Costello are now consistent on the BAS: The Government is looking at all the options, including an annual BAS. If it goes annual it will be a defeat for Costello. If it stays quarterly, it will be the first significant tilt by Costello at his leader.
Costello can do nothing on the leadership front till after the election, presuming Howard wins (and there is a stronger case for that now that Malcolm Mackerras is tipping a Labor victory). But after the election we may get a Keating-Hawke replay. The young Hamlet, indecisive not about what to do but about when to do it, against the old Lear who agrees to let go leadership but doesn’t do it.
And the older man never gives way voluntarily to the younger man. Like antelopes and sea lions, the new young buck has to fight for it.