Last Chance For An Anti-gst Vote Sort Of
Sydney Morning Herald
Wednesday October 31, 2001
Labor's proposed rollbacks on electricity and gas are its central electoral bribe, writes Ross Gittins, but are worth only $2 a week per household.
THE one thing you're not allowed to say in this election campaign is that John Howard has played the race card and Kim Beazley has followed suit. So I won't say it. I'll just tell you about a friend I met at a dinner party on Sunday night.
He was back from spending some months in Europe and had one topic: how, at the time of the Tampa, the European press had been full of articles describing Australia and its Prime Minister as racist.
It didn't make him proud to be an Aussie. And when you consider how much Australians care about what other people think of them, it's surprising we haven't heard more about the way our name's being dragged through the mud overseas.
If you had to think of the single factor most likely to have tempted Howard to pander to the public's fear of Muslims that is, the factor contributing most to his pre-Tampa unpopularity it would surely be the GST.
The GST is the unwelcome visitor in this campaign. It's unwelcome in several senses. One is that the public still doesn't like paying it and small business still doesn't like collecting it.
It's unwelcome to Howard he managed to get through an extraordinarily long and boring policy speech on Sunday without those three letters once crossing his lips.
And, as we saw with the Della Bosca affair, the GST's welcome is disputed even within Labor's ranks. Labor's dilemma is whether to focus all its attention (and extremely limited funds available for promises) on the issues it claims are vital to our future education and health or whether to try to capitalise on our resentment of a new tax.
It's typical of Beazley that he decided on a bit of both and risks falling between the two stools: not enough GST rollback to really tempt us but at the same time, not enough focus on education's pivotal part in our future to inspire us.
That there's so little left in the Government's coffers to pay for Labor's promises is, of course, a situation the spendthrift Peter Costello has worked for the past year to bring about. And I suspect it was the prospect of a really big rollback offer that had the Liberals most worried.
After all, the GST and its accoutrements turned out to be far less wonderful than the Libs promised, either at the last election or in those terrible unchain-my-heart ads.
To think they tried to tell us GST would make the tax system simpler! That it would eliminate the black economy, make the system fairer and do wonders for the economy!
Without doubt, it was the GST's effect on home owners that flattened the building industry in the second half of last year, causing the economy to go backwards, full-time employment to fall and unemployment to worsen. (Where Labor's at fault, however, is in its pretence that this setback was anything but temporary.)
So what was the point of doing it? You wouldn't credit it, but Howard got closest to the truth with a statement he made during the leaders' debate that got the biggest worm down from the studio audience: ``The best thing that anybody's done for education in this country in recent years is to bring in the GST."
He meant that the main reason for introducing the GST was to give us a broad and sturdy indirect tax capable of generating revenue as fast as the economy grows and thereby helping to finance growth in the state governments' spending on education, health and all the rest.
But it's unrealistic to imagine we could have got through this campaign without a part for the GST. Think back oppositions always try to win votes by challenging a new tax in the election following its introduction.
Andrew Peacock did it with the assets test and the lump-sum super tax at the election of December 1984 and Howard did it with capital gains tax at the election of July 1987.
Note, however, that neither man was successful and that the assets test, lump-sum super tax and capital gains tax are now just part of the furniture. And that brings me to my point: the dreaded GST has played a part in most federal election campaigns since 1984, but this one's its last hurrah. In three years' time it will be an almost indistinguishable part of the furniture.
But, really, what a pathetic send-off Labor is giving it. Labor's definitely not offering to abandon the GST and what it is promising is not so much rollback as trickledown.
And note this: Simon Crean has been most reluctant to agree that Labor would undertake more significant rollback in its second term.
The list of items on which GST would be removed is short and even that would be phased in over the next 20 months.
Students' textbooks are largely GST-free already; Labor would finish the job from January. The removal of tax on nappies, tampons and sanitary pads, and on long-term caravan park and boarding house rentals wouldn't apply until July.
The tax on funerals wouldn't go until the January after next, while the tax on electricity and gas wouldn't go until July 2003.
You can see there isn't any great logic to this odd list. It exploits some political pressure points (textbooks, tampons and caravan parks) while including nappies and funerals allows Labor to claim that rollback covers people ``from cradle to grave" ho, ho.
What these exclusions have in common is that they're cheap as chips except for the exclusion of electricity and gas bills, which by itself accounts for more than 80 per cent of the ultimate total cost of $1.1 billion a year in 2004-05. By then, that would represent just 3 per cent of the GST's total collections of $32.6 billion a year.
So the removal of GST on electricity and gas bills is the big one. It is, indeed, the central, what's-in-it-for-me blatant political carrot that Labor's offering in this campaign. Labor says it's worth about $100 a year per household, or just under $2 a week.
Dear me this is a strange election.
However, it's an offer that sits uncomfortably with another Labor promise, to ratify the Kyoto agreement on global warming.
And here's something else to bear in mind: Labor's rollback isn't as big as the version of rollback Howard has already implemented off his own bat. His decision earlier this year to cut petrol excise by 1.5? a litre and abolish its indexation had a cost to the Budget half as much again as Labor's plan.
Of course, cutting the price of petrol doesn't sit easily with a concern to reduce greenhouse gas emissions, either.
So a parting voter warning: should a government of either colour ever get serious about global warming, the taxes on fossil fuels petrol, electricity and gas will be going up, not down.
© 2001 Sydney Morning Herald