FED: Parliament exposes political problems on GST

AAP General News (Australia)
02-18-2000
FED: Parliament exposes political problems on GST

by James Grubel, Chief Political Correspondent

CANBERRA, Feb 18 AAP - The first week of federal parliament for the year has exposed
the immediate political problems facing John Howard.

No matter how much the prime minister and Treasurer Peter Costello try to convince
the nation about the benefits of tax reform, they remain exposed to countless examples
of GST-inspired price hikes to hit from July 1.

And while Mr Howard and Mr Costello preach the overall benefits of the package, including
personal tax cuts, cheaper fuel and a $5 billion boost for exports, Labor continues to
rifle through the minute details of the GST.

The backlash against the GST on tampons, which resulted in a 10,000-signature petition
in parliament this week, is just one example of how the government has struggled to control
the debate about the new tax.

Labor has spent the past week working hard to undermine Mr Costello's promise that
nothing will rise by the full 10 per cent.

The ALP has gleefully told parliament about a range of 10 per cent price rises from
July 1, including theatre tickets, pyjamas, parliamentary seminars, a book about ANZACs
published by Australia Post, magazine subscriptions and hotel rooms.

The government was able to dismiss most of the examples as simple mistakes, but they
did expose the fact that many businesses remain blissfully unaware of the need to pass
on sales tax cuts which kick in at the same time as the 10 per cent GST.

At the same time, the polls continue to show a slide against the government, with an
ACNielsen poll in the Fairfax newspapers showing support for the GST at a record low of
34 per cent.

Mr Howard signalled that the news for the coalition is likely to get worse, at least
in the short term.

In his first pep-talk for the year to coalition MPs and Senators, Mr Howard urged his
troops to hold their nerve on the GST and not to give in to demands for new exemptions.

He told his charges the government faced a challenging few months until the GST was
bedded in from July 1, and that nervous backbenchers in marginal seats should remember
the next election is still 18 months away.

Other governments had recovered from similar mid-term slumps, he said. But if the government
faltered now, it could be written off.

The prime minister believes the coalition is somewhat vulnerable to the ALP's scare
campaign, but once the tax system is in place, voters will see the benefits of tax cuts
and cheaper prices on some goods.

By the end of the week, the government had moved to turn the attack back onto the ALP
and its lack of a tax policy.

Opposition Leader Kim Beazley sat uncomfortably in parliament on Thursday as Mr Costello
urged him to put a promise in writing to revoke the GST if the ALP ever won office.

But unlike the government, Mr Beazley has time and history on his side.

He knows that any early commitment to a tax policy now would only give the coalition
political ammunition in the long march to the next election.

Mr Howard and Mr Costello went a long way to calming their backbench on the GST by week's end.

However, Mr Howard has another political headache in the shape of mandatory sentencing
laws in the Northern Territory and Western Australia.

Many coalition MPs and Senators are urging federal intervention after a man was jailed
for 12 months in the NT for stealing biscuits and cordial, and a 15-year old died in jail
a few weeks earlier.

United Nations Secretary-General Kofi Annan is set to become involved in the debate
during his Australian visit next week.

The issue is a political minefield for Mr Howard and has already divided the coalition.

The Liberal Party's federal president Shane Stone was the man who drafted the NT's
mandatory sentencing laws, and many Liberals strongly believe the government has no right
to interfere in state and territory issues.

Mr Beazley is also reluctant to criticise the laws in his home state of WA, where he
knows the political potency of the law and order issue.

So far, the government has taken a diplomatic approach, writing to the NT and WA governments
to ask them to consider the impact of their laws on young offenders.

But Mr Howard may be forced into action when a Senate inquiry into mandatory sentencing
hands down its report in March.

He might then find himself again asking his backbench to hold their nerve.

AAP jg/ss/it

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