The Politics    Wednesday, November 4, 2015

Softening the ground

By Michael Lucy

Softening the ground
Don’t be surprised if the GST goes up next year

It’s been a slow news day (in federal politics, at least). The closest thing to a story has been the steady stream of speculation about the government’s plans for changes to the tax system – or “reform”, if you prefer. It’s speculation because the government hasn’t said much about it yet, aside from that it will be happening. The goal will be greater efficiency, rather than raising more money directly: as Malcolm Turnbull put it, “a more efficient tax system, even if it only raises the same amount of money, would likely increase revenues over time because you would get stronger GDP growth”.

Despite the lack of concrete policies, campaigning and market-testing has begun. At the start of the week, Nationals MP David Gillespie released some figures he’d asked the Parliamentary Budget Office to crunch out on the effect of increasing the GST rate from 10% to 15% and reducing the exemptions from it (such as healthcare and education). The projected result: an extra $65 billion in revenue in financial year 2017/18.

Gillespie was at pains to make clear that it was all his own idea: “It's not part of a coordinated program, I just got off my butt and did this myself.” Nonetheless, it has started a conversation that is very useful for the government: the public mood is sounded, politicians get to take a stand for or against, commentators let their views be known.

Not that most of the views are very surprising: Tony Shepherd, who led last year’s National Commission of Audit, thinks it’s simply a reality that people will have to accept; some Coalition backbenchers have expressed reservations; Labor is dead-set against. Scott Morrison has refused to be drawn; all proposals are welcome, he says, but the process is in its discovery phase.

As for the public: no-one likes higher taxes per se, but perhaps they can be talked around. We do know that a lot of people feel that the cost of living is rising and their incomes are not keeping up. The GST is a regressive tax, in that it disproportionately affects people on lower incomes. (The discovery phase has not yet turned up many options to extract more cash from the already wealthy.) Any increase to the GST would need to be clearly balanced with cuts to other taxes if it wants popular support.

Still, the idea is a live one now. We will all have a while to get used to it, and no-one will be too surprised if it comes back again next year. And if it doesn’t come back, well, it was just a bit of freelancing from a northern NSW backbencher.

 

Today’s links

  • Eric Abetz says that Tony Abbott, an “opinion and thought leader”, should stay in parliament.
  • In Jordan, Peter Dutton gave out the first Australian visas to Syrian refugees.
  • Greg Hunt has hinted that Australia may have “constructive things” to propose at December’s climate talks in Paris.
  • Last week, journalist Amy McQuire went in hard on Annabel Crabb and her show Kitchen Cabinet for going soft on politicians. (Scott Morrison in particular, with Jenny Macklin a close second.) Crabb has defended her approach today.
  • Video of Bill Shorten dancing in Kiribati. Shorten is touring the Pacific with Tanya Plibersek and Richard Marles to talk about climate change.
  • Is it time to let photographers into the senate?

Listen to The Politics Podcast, with Rachel Withers

Michael Lucy

Michael Lucy is a writer based in Melbourne.

@MmichaelLlucy

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