Motor Trade Association, 2005

Taxing Times: Interview with The Hon Peter Costello, Federal Treasurer

The Federal Treasurer Peter Costello recently announced that he would crack down on the State Government for double-taxing the people of Western Australian. MOTOR spoke to him about this and the industry’s own double-dipping woes…

In A Nutshell: The Federal Treasurer believes that with GST revenue far surpassing all expectations, the States need to now make good on their pledge to abolish the nine State taxes GST has replaced in accordance with the inter-governmental GST agreement signed by all States in 1999.

However, many States feel they have already met their obligations to the Federal Government, with many holding the view they have been ‘ripped off’ by the Treasurer and Democrats Leader Meg Lees citing him as ‘mischievous’. NSW recently offered the Federal Government $1 billion to pay its way out of the GST deal, which was rejected, after refusing to cut stamp duties.

On 1 July, the Treasurer announced he would put measures in place to force NSW and WA into honouring the GST agreement. Eric Ripper conceded his government would fully comply with the GST agreement with the abolition of the Bank Accounts Debits Tax. He also said WA had already axed the Financial Institutions Duty and Stamp Duty on Quotable Marketable Securities.

On 7 July, WA State Treasurer Eric Ripper announced that there would be a new review of State taxes.

JSL: According to you, many Australians are currently being double-taxed by the GST as well as the taxes it was designed to replace. As you are probably aware from your meeting with Peter Fitzpatrick, the vehicle dealers of WA are also the victims of double-dipping by the State Government following the introduction of the new stamp duty Ruling on loan and leave vehicles on 1 July 2005. Can you provide a national perspective on this issue for our readers?

PC: I am concerned about the tax burdens imposed on businesses and individuals by State and Territory Governments. The WA Government is projecting to collect $645 million in motor vehicle taxes in 2004-05 and $642 million in 2005-06, which is up 30 per cent since July 2001. Across the Forward Estimates total tax revenue for WA is projected to increase from around $4 billion in 2005-06 to $4.6 billion in 2008-09, which is an increase of around 16 per cent.

JSL: Could you provide a brief synopsis on the issues surrounding the GST agreements with the States?

PC: In 1999, Australian Government, State and Territory leaders signed an Intergovernmental Agreement on the Reform of Commonwealth State Financial Relations (the IGA) which provides that all GST revenue is paid to the States and Territories. The GST revenue for WA is forecast to increase from $3.8 billion in 2005-06 to around $4.4 billion in 2008-09. In the absence of further tax reform, this will provide a cumulative windfall above WA’s Guaranteed Minimum Amount of around $1.4 billion. The GST was intended to replace a range of inefficient indirect taxes, one Commonwealth and nine State taxes, which were listed in the IGA. These State taxes were identified by the States themselves as undesirable on efficiency and equity grounds.

Originally, all of these taxes were to be abolished on or before 1 July 2001, with the exception of stamp duty on non residential conveyances of real property which was to cease to apply from a date to be determined by the Ministerial Council on the basis that no State or Territory would be worse off. In order to get the GST legislation through the Senate, as part of an agreement with the Australian Democrats, some items were removed from the GST base meaning it raised less revenue. As a result the States would not receive enough revenue to abolish all these taxes by 1 July 2001 without being worse off.

It was therefore agreed that wholesale sales tax and accommodation (bed) taxes would be abolished on 1 July 2000, Financial Institutions Duty and stamp duty on quoted marketable securities would be abolished by 1 July 2001, and bank account debits tax abolished by 1 July 2005. All the other taxes would then be reviewed so that if GST was sufficient they could then be abolished.

Over six years from 2004-05, anticipated GST revenue payments to the States will amount to around $243 billion, exceeding original projections. In the absence of further tax reform, it is estimated that this would result in the States receiving a windfall of around $17 billion compared to the amount they would have received under the former system of Commonwealth-State financial relations. In light of this growing GST windfall, at the 23 March 2005 meeting of the Ministerial Council for Commonwealth State Financial Relations, the Australian Government proposed a timetable for the elimination of the majority of stamp duties listed under the IGA for the benefit of Australian businesses and families.

On 20 April 2005, six States and Territories responded to the Australian Government with an alternative proposal on the timing and sequencing of the elimination of these taxes. Western Australia was not a party to this offer. It wants to keep the State taxes and the GST, which was introduced to replace them. The Australian Government is disappointed.

JSL: You announced on 1 July 2005 that over the next twelve months you would be putting measures in place to compel NSW and WA into honouring the GST agreement with the Federal Government. What sort of measures do you mean to use to force the WA Government into abolishing some of its taxes, and what are the legal ramifications of this move?

PC: People in other States will not have to pay GST and the State taxes it replaces. The WA Government wants to double tax West Australians, unlike those in the Eastern States. The Australian Government wants to encourage the WA Government to protect West Australians against double taxation and give them tax relief that other Australians will receive. A range of measures are available to the Australian Government to encourage the WA Government to abolish these taxes. However, as noted before, the Australian Government wants to deliver this outcome by agreement. It is premature, at this stage, to outline the response if the WA Government tries to maintain double taxation.

JSL: What would your message to Mr Gallop & Mr Ripper be at this point in time?

PC: Everyone knows the GST was introduced to replace nominated State taxes. Six of the eight States and Territories have offered timetables for the abolition of IGA taxes. The WA Government is at present refusing to abolish the taxes that the GST is intended to replace and putting West Australians behind people in other States. No State can keep the GST revenue and the taxes it is designed to replace. Should the WA Government continue to double-tax its citizens, the Australian Government will introduce measures to encourage the WA Government to relieve the tax burden.

Business News

HGM Goes Worldwide

WA-based engineering and environmental consultancy company Halmpern Glick Maunsell (HGM) has joined the international firm AECOM. AECOM is represented outside the Americas by the Maunsell company and comprises a network of individual consulting companies, operating in their own geographic markets, but brought together to service client needs in the global market.

Member firms employ a total of 13,000 people worldwide.

HGM will continue to service the WA market but also integrate with the Australia and South-East Asia region of the Maunsell operations.

The activities of HGM will expand beyond its traditional WA market to become more closely integrated with those of Maunsell.

However, the Perth operation will continue, with the company intending to develop centers of technical excellence to service Australasia from HGM’s Perth base.

Sydney's / Melbourne's / Brisbane's Child, 2008

Playground Politics

A peal of laughter erupted from the room next to me. Outside, I dejectedly kicked a ball around the playground and watched the children take turns on the slide. Afterwards, amid a volley of cheery farewells – ‘Talk to you tomorrow’, ‘See you on Saturday’ – I received a polite ‘Have a good week, then’. But this wasn’t school. It was playgroup. And I was the interloper.

For many Mums, the weekly ritual of playgroup is an event to look forward to. It’s a chance for a bit of a chat, a bit of a laugh and some adult interaction while the kids have a play. For some Mums however it can be a mixed blessing. Sure it gets us out, gets our children stimulated and socialising. But it can sometimes lead to us feeling more alone than we were before we joined. Take my first playgroup experience. When my son was born I was late off the mark in joining a local playgroup and, with the walls closing in around me ten months later, I was beginning to understand why they were so popular. So I signed up with a local playgroup. My first day was nerve-wracking – getting my tongue pierced sounded more attractive than fronting up to a bunch of women who had already enjoyed a year of bonding and asking if my child and I could be their friend. At first it all seemed fine. Sure, they didn’t ask much about me or my son but that just took time, right? Several troubling months of playing catch-up ensued, after which I somewhat belatedly realised that these women were never going to let me in. And I don’t think it was personal either. It was just abundantly clear that this group didn’t want any new members in their club. Over those months I watched as other new Mums tentatively joined, got ignored, and crept out again several weeks later. I guess I was a bit slow – it took me nearly a year to twig before taking my son and what was left of my dignity and bolting for the door.

The pack is a fickle beast. Street gangs who have been happy enough to beat someone up are, when separated, rarely able to give an adequate explanation as to why they did it. Individually, I had gotten along with most of these women incredibly well. As a group however there was a distinct code – they talked and us interlopers listened. If one of us dared interject the ambient room temperature dropped by several notches. As a lifetime member of the ‘sisterhood’, I found this lack of support between women – especially Mums – a little bemusing. Mums (and Dads) need peer groups that support and encourage, not reject them. Surely being a parent is a tough enough job - who needs this kind of flack?

In retrospect, and despite the nagging feeling I’d failed to give it a red-hot go, I’m so glad we left when we did. And happily, several weeks later another door opened in the form of an invitation to join a different playgroup. My son and I eagerly jumped back into the fray and are now active members of a group that is not only very inclusive, but does finger-painting as well. We both get to enjoy the social contact and acceptance we were looking for in a loving, nurturing environment. Which is what playgroup is all about, really.

The West Australian

When Size Matters

Picture the scenario. You’ve put your best frock on and painted your toenails with a classy little red number. Your hair’s been blow-waved to within an inch of its life and, basically, you’re as ready as you’re ever going to be. Your date picks you up, and both he and his car are sparkly clean. You look at each other and smile: it’s going to be soooo good.

You arrive at the restaurant and it reeks of style. Elegant table lamps on starched white linen, cutlery winking at you, a little jazz in the background – it all points to a big bill at the end of the night. But you don’t care. You won’t be paying.

Cut to the meal, and you are starving. It’s 8:30pm and your stomach has been making embarrassing gurgly sounds for the past half hour. Ah, here comes the meal. A stylishly camp waiter is placing it in front of you with a flourish. But hang on, what’s this? Oh right, this must be a complimentary appetiser from the chef. No? Surely this can’t be the meal you ordered, in all its mouthwateringly vivid detail? It’s so…. compact. You give your date a sick little smile, stab your one piece of smoked trout and dip it in the accompanying home-made egg mayonnaise. Mmmm. Now, where’s my meal?

Yes, folks it’s true. Nouvelle cuisine is back in style. I’ll never understand how it got there in the first place, but here it is again, in all its glory, mocking us peasants. Who made it stylish? Rich eccentrics? French people? Who else in their right mind would pay $25 for a sliver of artichoke? Yes, alright, it’s on a big white plate swimming in a pool of exquisite sauce, but where’s the value for money? Where’s the food police? Where’s my MEAL? And the worst thing is, you are powerless to complain for fear of being sniffed at by the mait’re de. Yes, sir, I understand that the hens who laid the eggs for my mayo were hand-fed by fair maidens in Austria, but I’m still hungry. Just give me a dollop of Praise, OK? I want the meal that was described on the menu. No, I don’t want a complimentary macciatto. I just want a serving that is more than a mouthful. What?! Another $25?! Look, just give me everything on the dessert menu, OK? With extra cream.

What exactly does ‘nouvelle’ mean, anyway? I think it means ‘new vogue’. I looked it up in the Collins dictionary, but it didn’t rate a mention. I tried my thesauras: it had three meanings – ‘new’, ‘vulgar’ and ‘wealthy’. Hmmm. Could this possibly mean that my meal is modern and revoltingly expensive, therefore justifying its diminutive proportion? Or that it is a new trend only for the filthy rich? I don’t know, but one thing I do know is that it certainly doesn’t mean a great big roast with lashings of gravy and four different types of root vegetable.

So what to do about nouvelle? Revolt and insist that all our meals come with chips and HP? Eat pizza for the rest of our lives? Rest assured, lovers of food, things change and they will change again (thank God). In the meantime, viva the free bread roll.