ACOSS and the GST: naivete or cooption?


By Sue Boland

After the goods and services tax (GST) was decisively rejected at the 1993 federal election, the Australian Council of Social Service (ACOSS) helped resuscitate it.

In 1996, ACOSS and the Australian Chamber of Commerce and Industry jointly hosted a tax reform summit at which various big business representatives repeated like a mantra that "Australia needs a GST".

Despite the fact that welfare groups have traditionally opposed broad-based consumption taxes because they hit low income earners harder than those on higher incomes, ACOSS refused to rule out support for a GST-style tax. Throughout 1998, ACOSS campaigned for a broad-based consumption tax, arguing that such a tax could be made fair.

The debate among welfare groups focused on how to make a GST fairer, while the question about whether or not a GST should be supported at all was avoided or stifled.

This is similar to what happened in the trade union movement during the 1980s. At that time, a number of trade unionists privately criticised the Prices and Incomes Accord, the wage-cutting agreement hatched between the leaders of the Labor Party and the ACTU, but almost none were prepared to oppose it in public for fear of being made a pariah.

The first public indication that not all welfare groups support a GST came in the March 12 Sydney Morning Herald. It reported that Dr Tim Battin, a member of the Australian Catholic Social Justice Council and a political scientist from the University of New England, had told the Senate inquiry on the GST that he was "very sceptical of the position adopted by ACOSS ... because it showed breathtaking naivete". ACOSS was "pairing up" with business, Battin said, in the belief that they were also concerned about the poor.

Speaking to Green Left Weekly on May 5, Battin said that he was "hostile to, or at least extremely sceptical of", the GST because of its regressive nature. Catholic social teaching advocates "a progressive tax system based on the principle of ability to pay", he said.

"While there is a technical argument about how you can make a GST fairer", Battin said ,"that's not saying much because the current proposals are so grossly unfair. It is almost impossible to make a GST fair.

"A GST is a flat rate tax — a 'one-size fits all' tax — but one size doesn't fit all. You've got various groups in the community who need special assistance. If you need to compensate, then you're admitting that there's something wrong with the GST."

Battin described as "outrageous" the fact that the government wants its GST legislation passed before the announcement of its proposals for business taxation, which will include further cuts to the company tax rate.

"It seemed incredibly naive for ACOSS to enter discussions with the government in the belief that it was genuinely concerned with a fairer taxation system", Battin told Green Left Weekly. Battin agreed that welfare groups should reject the GST rather than attempt to modify it, "if it's not too late".

Battin highlighted the need to differentiate between welfare groups. Church groups, for example, have taken a more sceptical stance towards the GST. "Many welfare groups are politically naive. They came to the GST debate blind to the political reality that we are dealing with a government that is trying to transfer income from the poor to the rich.

"That changes the whole nature of the debate about compensation. To compensate properly for a GST, you need a government that is genuine about compensation. I don't believe this government is."

When asked why he thought ACOSS had adopted a pro-GST position, Battin said that it "could be because ACOSS is the peak [welfare] organisation with the ear of government. Because of this, it wants to appear as reasonable and responsible as possible. This could lead to it being coopted by government.

"Even if it didn't get funding from government, the socialisation process that occurs [when an organisation has the ear of government], could be enough to push a peak body like ACOSS to adopt the stance it has."

Battin pointed out that, according to the government's own figures, it will raise $5 billion less revenue than under the current system by the year 2002. "This government will have no compunction about cutting $5 billion more from social services", Battin warned.

This fact destroys ACOSS's argument that a GST is necessary to raise revenue for welfare services.