WA Mining Chronicle, 18 May, 1999
Paying homage to Mammon--and Democrats
By Brian Jenkins
After the triumph of a well-received budget surplus, there was no rest for PM John Howard. The lightning of politics struck Senator Harradine's crucial vote from the Goods and Services Tax arithmetic and the Government was forced into unwinnable negotiation with the Australian Democrats, whose policy proposals it had haughtily ignored since September.
The situation is fraught with hazard not only for the Government - which must now drop its bluff and consider exemptions at least for food - but also for the Democrats, who are facing an internal revolt. Many AD members insist the party's policy demands rejection of the "regressive" GST.
There is a chance that the Democrats will take a three-week breathing space for a postal ballot of its members on the issue. Another possibility is a move to depose Senator Lees as leader - requiring signatures of 100 members on a spill petition. When this right was exercised in 1992, leader Senator Janet Powell was ousted in the party room before the petition was collected.
THREAT TO DIESEL REBATES
In any event, if not defeated outright, the GST will be gutted to fit Democrat policy. Diesel rebates to farmers would be allowed subject to special conditions, but mining industry would share a reduced rebate with all non-city off-road users as a boost to the tourism industry. All claimants of diesel rebates (except small businesses) would be required to sign up to energy efficiency plans, consistent with industry strategies, to reduce greenhouse gas emissions.
In July, when the 1998 electoral changes take effect, the Democrats will have nine senators. The National Party's numbers will fall to four and One Nation will be represented for the first time in the Senate.
The Democrat GST responses have been made public on the party's website. Their taxation spokesman, WA Senator Andrew Murray, envisages an annual saving of $2.5 billion from the curtailment of diesel rebates, which would partially fund the exemption of food from GST.
'STRONG ECONOMY' CLAIMS
Remembered as one of Australia's most prudent treasurers, Mr Howard commissioned the Campbell Inquiry in 1979, sparking two decades of financial deregulation. He is fond of saying economic conditions are better now than they have been at any time since the late 1960s.
"We grew stronger last year than any country in the industrialised world. We have low inflation, the lowest interest rates for 30 years, we have high levels of business investment, we've turned a budget deficit of $10.5 billion into a strong surplus, we are repaying debt," Mr Howard said.
So workers who have felt the pinch of real wage cuts and retrenchment can at least congratulate themselves on helping the Commonwealth retire all its borrowings by 2003.
To a meeting of the National Farmers' Federation, Mr Howard said the GST reforms, if implemented, would reduce general business costs in Australia by $10.5 billion a year, export costs by $4.5 billion, and fuel costs by $3.5 billion. There would be personal income tax cuts of $13 billion and the financial position of the Australian States would be underwritten for the first time, through a growth tax.
GLOBAL CENTRE TASKFORCE
As the resources sector moves into a period of decline Mr Howard is pressing on with his plan to put Australia on the world financial map and share regional leadership with Singapore.
In the PM's own words, he was "paying homage to Mammon" when he launched the idea of a global centre for financial services at the Sydney Stock Exchange on 17th May.
As a first step, an International Financial Centre Taskforce is being established in the Sydney central business district to plot a strategy for the project. The Treasury will reopen an office in Singapore and Financial Services Minister Joe Hockey will take on the role of roving ambassador to promote Australia as a centre for global financial services.
"The Government will also establish a new committee of regulators comprising the Treasury, the Reserve Bank, APRA, ASIC, the ACCC and the Australian Taxation Office. We are going to improve data collection to benchmark Australia's performance," Mr Howard said.
This initiative complements the commissioning in October 1998 of a high-powered Task Force on International Financial Reform, chaired by Treasurer Peter Costello, to advise on how Australia can contribute to international financial reform. The taskforces will draw on the expertise of public and private sector members to provide suggestions for reform for Australia to pursue in international forums.
The most important such forum this year will be the ministerial meeting of the World Trade Organisation (WTO) in Seattle, starting on November 30. The agenda will include agricultural and forest products agreements. It is also certain that the WTO will move to establish a new "millennium round" of negotiations aimed at global regulation of investment - replacing the Multilateral Agreement on Investment which was scrapped last year in the OECD forum.