Protection, but for who and why?
Few topics could be said to cause the eyes to glaze as quickly as that of the distribution of GST revenues to the states and territories according to the principle of horizontal fiscal equalisation. Not surprisingly, a report into this worthy but arid issue received negligible coverage in the media after its release last week. One secondary aspect of the report did, however, grab headlines: a proposal to cut the GST-free threshold for goods bought online from overseas stores.
At present the threshold at which GST is payable on goods imported from overseas is $1000. The report wants this cut to $500 ''as soon as practicable'' and then reduced further to the point where ''the GST exemption threshold for physical parcels [was] a nominal level, no more than $20 or $50''. The federal government's response has been sympathetic. Assistant Treasurer David Bradbury indicated the government would begin looking at ways to lower the limit at some future point. ''We do accept that there is a strong case in the interest of fairness and competitive tax neutrality that this issue be dealt with,'' he said.
Those supporting a reduction could legitimately argue that the $1000 threshold is high - though inflation will reduce it in real terms soon enough. They could also argue that the slowdown in the growth of GST revenues since 2008 is placing undue strain on state and territory budgets - although there would seem to be nothing to stop governments agreeing to hike the GST rate or apply it more widely. But are there grounds for suggesting that a lower threshold is needed to ensure that domestic retailers are not unfairly disadvantaged?
Retailers have been complaining loudly for some time that the ''generous'' GST limit, and the growing popularity of internet shopping, has cost jobs. However, computers and the internet have radically disrupted entire sectors, including publishing, music and education. It's not immediately obvious why bricks-and-mortar retailers should be considered worthy of protectionist measures when other sectors have had to sink or swim.
If the growth of imports bought online is affecting the fiscal position of the states, remedial measures must be examined. The government should tread carefully, however, when issues of competition and taxes intersect.
Talk of reforms
Labor party conscience and elder statesman John Faulkner has taken up the cudgels again, arguing in a speech in Melbourne on Tuesday that the ALP must curb the power of its factions and union backers, if not muzzle them completely, if it is to regain the trust of the voting public. He says it also needs to introduce a code of conduct for federal parliamentarians, establish an independent external tribunal to deal with party disputes, allow rank-and-file members more of a say in selecting candidates for political office, and promptly expel any member found guilty of corruption or ''sharp practices''.
Political parties have always been susceptible to factional machinations, but Labor's shrinking membership has enabled even relatively small groups to exert a large and disproportionate influence within the party, often for nefarious ends. It is clear Senator Faulkner's warning speech was prompted in part by the allegations of patronage, abuse of office and public corruption now being investigated by the Independent Commission Against Corruption in NSW. But it's probable he was also stirred by the various scandals that have come to light this year involving the rorting of Health Services Union money.
At times like this, it is not unusual for senior ALP figures (usually retired) to echo the sentiments. Unfortunately, the individuals who really could make a difference - senior serving office holders - routinely turn a deaf ear, as they owe their positions to factional powerbrokers.
Unusually, perhaps, the present general secretary of the NSW ALP, Sam Dastyari, has publicly backed Senator Faulkner's reform proposals. Mr Dastyari has pointed out that reforms are a matter for the organisational wing of the party and that debates will need to occur beforehand. Such precautions are warranted. Entrenched party-political cultures cannot be changed overnight. But they are almost impossible to shift if party leaders fail to acknowledge the need for reform. Senator Faulkner is one of the few figures with the authority to point out Labor's shortcomings, but the evidence that senior party members are paying attention is not overwhelming.