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April 21, 2005

I was having a coffee in Adelaide this morning on the way to work and I glanced through today's AFR. Bob Hogg, a former national secretary of the ALP, has an op.ed which outlines a bold new reform agenda that he reckons the Howard Government should adopt.

I'm always interested in the policy advice the ALP's ex-movers shakers offer to their political enemies. Peter Walsh and Gary Johns come to mind.

Hogg says that his reform agenda is one that requires a lot of political courage, but the country requires it. The opportunity to implement the tough new reform agenda has arrived as the control of the Senate passes to the Howard Government this July.

That caught my eye. What then is the agenda? No no, it's not about Australia going nuclear to ensure sustainable energy. Hogg's concern is state taxes and the GST. Hogg's policy advice is:

Howard should increase the rate [of the GST] to 12.5% and seek to make it variable by plus or minus 1 per cent. Food should be included in the GST regime, with an appropriate compensation package. In return, the states would have to agree to to either remove or substantially reduce stamp duties on housing, as well as removing other inequitable taxes.

Wow! An ex-ALP national secretary is saying that? That makes him such a good neo-liberal bedfellow with Senator Minchin, the Finance Minister. Nay, Hogg is further to the right than Minchin in defining what 'economically responsible' is.

Now this is not a clever way to help defeat the Howard Government by raising gungho reform expectations within the Government that would then be difficult for Howard to manage. Hogg actually believes this approach to tax reform is the right and proper thing to do for the country.

| Posted by Gary Sauer-Thompson at 4:28 PM | | Comments (4)


Scary stuff. It's a worry that Howard has something of a blank cheque in the Senate come July 1.

There is a real possibility that all (or at least some of) the draconian reforms rejected by a hostile Senate during the last several years will come back in a more mean-spirited form.

The fact that Hogg is a fan of the GST is no secret. He went public when it was introduced by Howard saying that it was a great idea, which was echoed enthusiastically by his partner Maxine McKew on the ABC.

Labor had their chance with this one on the GST and squibbed it with the Dems. If they had been smart they would have rubber stamped the Govt's version of the GST, (albeit with much political tut-tutting), saying it was all in their hands because they put it to the people at election time. They could then enjoy the fruits of that result later in office.

Yes the ALP is telling different stories here.

On the one hand federal ALP says that the GST is bad and always has been. So we oppose it and will roll it back, when we regain power in the near future.

On the other hand, the states are saying that the GST revenue flow into their coffers is good and that they are not going to give it up to the Federal Treasurer. It's their money thank you very much.

The two stories don't jell.

And Hogg is telling a another story--all the way with a full on GST.

No doubt this new story will be linked into the micro-economic reform need to ensure the succcess of all the new free trade agreement that are being put into play.

These are going to deliver billions in benefits (wasn't $24 bilion floated the other day for China?), but there is that small matter of ensuring the Australian economy is efficient and competitive.