It is ironic that on the day the Business Review Weekly released its Rich 200 list, the Australian Democrats and the Coalition agreed on a GST deal to make those on the list even richer.
Australia's richest tycoons increased their wealth by $9 billion over the past year. Kerry Packer's wealth jumped by $1.2 billion, an increase of $3.2 million a day!
In 1996, the effective tax rate for Packer's NewsCorp, Fosters Brewing, Burns Philp, Brierly Investments, Village Roadshow and Lend Lease ranged from 2% to 7%.
In 1998, the richest 10% of Australians owned 48% of the nation's wealth and the richest 1% owned 15%. In contrast, the poorest 20% owned just 3.8% the national wealth.
Confronted with this inequality, the Democrats have joined the government to introduce a tax which will shift more wealth from the poorest 20% to the richest 10%. By agreeing to a 10% GST on the essentials of life, including most food, the Democrats have agreed to cut the incomes of all working and poor Australians by 10%.
At the same time, most businesses won't have to pay the GST — so the GST won't catch the biggest tax cheats. The Democrats also support government proposals to cut company tax.
It is breathtaking that the Democrats were prepared to dump so many of their proposed amendments to the government's tax package, such as exemptions for public transport, rent and books. Their bottom line in the negotiations was clearly the introduction of the GST, just as it was for the government.
Now that the Democrats and the government have struck an agreement, their campaign has begun to convince the 58% of people in Australia who oppose a GST that they won't be disadvantaged. Their claim that the "compensation" package will protect people on low incomes is rubbish.
The pension will be increased by a paltry 4% and self-funded retirees will receive a one-off "compensation" payment of $2000. This "compensation" won't help the numerous people who aren't working and aren't entitled to social security .
The pension increase won't cover the more than 4% increase in the price of most items. The cost of electricity, gas, telephone bills, rent, second-hand cars, education expenses and public transport is likely to increase by 10% or more.
The pension increase is likely to be whittled away over time, or abolished, an outcome consistent with the Howard government's efforts to date to reduce benefit payments and drive people off government benefits.
The $2000 one-off "compensation" payment for self-funded retirees is a joke. Once it is spent, they will continue paying the higher prices.
The proposed funding for homeless programs is entirely tokenistic given that the GST will make it more difficult for homeless people to afford shelter after paying increased prices for all the essentials of life.
The tax cuts for workers are just as fake as the "compensation" for pensioners. Within a few years, most full-time workers in the 30% tax bracket will be pushed into the highest income-tax bracket, plus they'll be paying a GST.
The fact that none of the parliamentary parties support indexation of income-tax brackets means that the tax cuts are just a ruse to tempt workers into supporting a GST.
Democrat senator Natasha Stott Despoja has told the media she will vote against the GST. If her opposition is genuine she will resign from the party that made the GST possible. Anything less than resignation will indicate that her opposition is merely tactical, to maintain left support for her seat in parliament.
However, it is not only the Democrats and Coalition parties that are responsible for the GST. The Labor Party must also bear some blame. By announcing that a future ALP government would keep the GST and support cuts to business taxes, and by refusing to mobilise the workers' movement against the GST, the ALP has demonstrated that its anti-GST position is pure electoral opportunism.
Democrat leader, Meg Lees, has described the GST deal as a "win/win for the Australian people" which "demonstrates that parliament works". The truth is that the Democrats' GST deal is win for business and a loss for everyone else, demonstrating the futility of relying on parliament to protect or advance the interests of ordinary people.