Andrew Bartlett has had a couple of fascinating posts up recently. The first is a look back on Brian Harradine’s speech in the Senate when he announced his intention to vote against the tax. Bartlett quotes the key part of Harradine’s speech:
The question now in my mind is whether it is inherently regressive to such an extent that it should not be supported. The GST burdens the poor and those with the least capacity to pay. It discriminates against the poor and the pensioners who are living a hand-to-mouth existence and spending the bulk of their income on the necessities of life—food, clothing, rent, heating, power, bus fares and so on.
I have always been conscious of the fact that the true test of a civilised society is how it regards and treats its most vulnerable. But I do not claim here a monopoly on moral judgments in respect of this. I do not criticise the government, and I do not reflect upon the government or on any of its members. I just happen to believe that the inherently regressive nature of the GST does not achieve that test. The regressive nature of the goods and services tax is why compensation is invariably needed to secure its passage wherever it is introduced throughout the world. The government’s genuine attempt to compensate and to lock in that compensation is something to be commended, but it cannot be guaranteed.
But one thing can be guaranteed, and that is that the goods and services tax, once enshrined in legislation, will never be removed. Decisions we make now on this issue are not for the next three years; we are making decisions here that will affect generations.
Of course, Harradine’s decision to vote no left the Australian Democrats the option of negotiating a deal with the government over the GST, the outcome of which we all know very well. Which brings me to his second post, about bad politics, good policy, and broken electoral promises, of which he singles out the 8 cents a liter fuel subsidy paid by the Queensland government as a classic example.
In one sense, we have ourselves to blame – often calling for strong action while opposing anything that we feel will make us personally worse off. You can never fully remove the practice of broken political promises, but if more people were prepared to speak out in support of good policies that we know are unpopular, it might slightly reduce the need for governments to make quite so many of those promises in the first place.
Looking back, ten years on, was the GST itself an example of good policy that was bad politics?
Have the vulnerable been hurt by it? Have the rich been made better-off by it? It’s impossible to tell in isolation, because you have to look at the totality of income (including transfer payments) and taxation (in all its forms). And, in this context, aged pensioners have been mostly looked after. By contrast, the unemployed have been kicked around for an additional nine years under the conservatives, and look like they’re going to be kicked around some more under Labor. But wouldn’t this have happened anyway, regardless of the introduction of the GST? The rich – at least until the stock market tanked – have done very well, but isn’t that due to the economic cycle, as well as cuts in the top income tax rates? But then, what’s the upside to the country of the GST been?
For what it’s worth, a decade on it’s hard to see what the fuss was about, one way or the other.