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Treasurers' politics blowing your future away

Australia's state and federal treasurers are meeting today for their usual ritual of duck-shoving, buck-passing and finger-pointing as their individual and collective political limitations are given precedence over your future. It's as disheartening as it is maddening.

Symptomatic of this motley crew's priorities is that state treasurers reportedly are holding out to ransom the possibility of actually doing their jobs properly, improving the welfare of their citizens, in return for the federal government slinging them some extra cash – even if that cash comes at an uneconomic cost.

The Australian Financial Review reports the subset of NSW, Tasmania and South Australia say they “would look at stamp duties and insurance taxes in tandem if the Commonwealth committed to a trade-off like lowering the GST threshold on imported goods, which includes online purchases”.

Thus the state governments are declining to consider what would be best for their people unless the Commonwealth pursues a GST threshold change that would cost the nation more than it would raise for the states, according to the Productivity Commission review of the thing.

As NSW is the only state that hasn't committed to abolishing the absolute folly of insurance taxes, it's possible to infer that Treasurer Mike Baird is holding off implementing the findings of a “community consultation” over this evil little tax.

The states, labouring under greater or lesser degrees of mediocre leadership, keep demanding the federal government do “something” to solve their problems for them. Given the extent of the fiscal problems facing Wayne Swan and, potentially, Joe Hockey, the states may as well base their economic planning on buying lottery tickets.

Neither Swan nor Hockey (as ciphers for Gillard and Abbott) is game to even hint at broadening the GST. Lowering the threshold on the import exemption from GST is the only thin reed the mendicant states have left to lean on – a measure of the paucity of their ambitions.

Thus Swan is keen to turn the problem back on the states by suggesting they follow the ACT's leadership in phasing out stamp duty for a broad-based land tax.

The state treasurers all know that would be better for their citizens in the long run, better for their economies, better for their budgeting processes. They all know the Henry Review was right in that broad recommendation. But they all want Canberra to smooth its political passage with money as none wants to bear the label of imposing a “big new tax”.

The sad whining from the state treasurers ahead of today's meeting underline those limitations. There is a nonsensical repulsion about taxing “the family home” when said institution is already taxed by iniquitous stamp duties for general state revenue and council rates for local services.

The brief press release by NSW's Baird about stamp duty on insurance premiums to fund emergency services can have a few words changed and apply equally to stamp duty:

“The current system has serious weaknesses and is economically inefficient. Stamp duty increases the price of housing and can lead some people to remain in inappropriate housing or not move to take up opportunities.

“The system is also unfair because people who do not buy properties or stay in one property for their lifetime do not contribute to the funding of our state services, but still receive the same services as those who do pay stamp duty.

“NSW property buyers are subsidising the households who stay put.

“A better and fairer system would spread the costs across the whole community. The government is considering a number of ways to replace the current reliance on residential stamp duty to enable a fairer, more productive and more efficient state for all.”

But I might as well go buy a Lotto ticket myself.

Michael Pascoe is a BusinessDay contributing editor.

14 comments

  • The treasurers state and federal aren't really that interested in the long term good of the nation. They are much more focused on the short term goal of gettin themselves re-elected . There will be no meaningful tax reform in his country until we get rid of the "what's in it for me" mentality of the opposition parties and the media.

    Commenter
    Rhm
    Date and time
    December 17, 2012, 2:44PM
    • The mentality you speak of will never change. You just need to look at the last 12 months at federal level. Its more about having the power than it is about actally using it to do any good. Like medicine, what will do the most good has the worst taste. This is where democracy works agianst itself. Nobody wants to sacrifice something today for a better tomorrow, esecially when we have leaders telling us we should be able to have it all today. The voting public need to face some reality now before they find themselves facing the same reality that Europe and America are facing.

      Commenter
      Tony P
      Location
      Leumeah
      Date and time
      December 17, 2012, 4:13PM
    • What?

      Last time I looked it was Wayne Swan who essentially binned the Ken Henry review on tax reform.

      Commenter
      Enrico
      Location
      Sydney
      Date and time
      December 17, 2012, 4:29PM
    • What?

      That was my point Enrico, i said State and Federal treasuers, Swan is a a career politician who wants to continue his career. And if, as seems likely, Joe Hockey is treasurer in a year's time he will be exactly the same when it comes to meaningful reform. At the risk of sounding partisan, Rudd had a mandate and the majority to change a few things. He squibbed it and it will be decades before a prime minister tries again.

      Commenter
      rhm
      Date and time
      December 17, 2012, 5:23PM
  • Hear Hear. RHM so true. I dont know why I should care about their elections when quite clearly neither major political party gives a toss about the country. Far too many Eddie Obeids and Ian MacDonalds in politics for my liking. How is that Parra to Epping Railway line going??????? In 25 years still no solution in site for Sydney Airport from either party!!!!!!!!

    Commenter
    Disillusioned
    Location
    Penshurst
    Date and time
    December 17, 2012, 4:09PM
    • It is time to look at an alternative to the GST. Before the introduction of the GST i was one of many that promoted what was then called a federal debit tax which was a tax on all money going into and out of a financial institution when calculated at a rate of one third of a cent in the dollar it would raise enough money to abolish all other taxes, the beauty was that there was no exemptions and no credits so that meant that the worker, the wife, the miner and the banker all paid it. Come on people at least put a "Financial Transaction Tax' back on the menu for a proper discussion.

      Commenter
      Denis Brown
      Location
      Briswbane
      Date and time
      December 17, 2012, 4:11PM
      • I recently bought a house and paid 60k stamp duty. I've paid my fair share to the state. If they try to hit me up again by introducing another tax I'll certainly vote against them as it'd clearly be unfair. I'd suggest any person who's an existing property owner and previously paid stamp duty will vote the same way; and rightly so. That would annihilate any party that tried to introduce it at the next poll.

        Commenter
        Jack
        Date and time
        December 17, 2012, 4:17PM
        • I have come to the conclusion that Gillard and Swann have not just destroyed the Federal Government, but have have turned there hand to the states, pressuring the States to Gonski and the NDIS when they have had decade of Labor Party neglect, and are quite frankly broke. So before we know it, Gillard and Swann will have destroyed The Federation. Well done Labor.

          Commenter
          Martin Says
          Location
          Canberra
          Date and time
          December 17, 2012, 4:24PM
          • Hi Martin,
            Actually it was the states that were picking up the tab in health and education while the “brilliant duo Howard and Costello” slashed and burned. NSW Labour begged the feds to clear up funding for health and education but they refused because it made an easy blame game.
            Fact is federal funding of NSW hospitals during the howard years fell from 60% to 55%, feds gave more money to private schools in NSW than to public schools in 2007 as opposed to 1996 when they gave a quarter of the funding to private schools and three quarters to public. We the residents of NSW residents picked up the tab. Labour looked bad by cutting anything and everything to get a chance to provide half decent education and healthcare and the libs federally gave us tax cuts and baby bonuses for the unemployed to breed more dole bludges.
            Lets not forget that the budget was in structural deficit when howard got kicked out thanks to all the vote buying.
            There are always 2 sides to every coin, use your brain and see past the fog of lies.
            P.S Swnnie os not perfect, he should have stopped the tax cuts that they promissed to keep up with howard-costello as soon as the GFC hit but that moron kruddie put a stop to that and here we are 50 billion spent on tax cuts we could not afford

            Commenter
            Alex
            Location
            SYD
            Date and time
            December 17, 2012, 4:58PM
        • Mr. Swann, you and P.M. Gillard personify incompetence and arrogance. You took a massive stockpile of money and wasted it. You took a perfect democracy and defiled it. You flung open our borders to illegal entrants, thus leaving others to rot in camps whilst those rich enough to pay top dollar get to the from of the line, and you sold out those of us who used to be forever Labor. Neither of you crooked, arrogant fools deserves the pay you're on, and thanks to your new low standards, we won't even get a reasonable government with the other lot; because though they will be in government long after the next election they will have no credible opposition. You are a disgrace to Australia, to the Labor Party and to democracy. You should feel ashamed of your selves. I pity you.

          Commenter
          James
          Location
          Bray Park
          Date and time
          December 17, 2012, 4:54PM

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