Thursday, March 29, 2007

How to misrepresent a report

The report is entitled Australia's Federal Future.

Section 3.7 has attracted the eye of the Treasurer.

Here's my account of a day of nonsense:

The Treasurer Peter Costello has been accused of spreading Da Vinci Code fantasies ahead of what is expected to be a fiery meeting today with with state and territory treasurers.

Mr Costello yesterday used question time to claim that a report commissioned by each of Australia’s eight state and territory governments contained within it a plan to increase the rate of the Goods and Services Tax from 10 per cent to 17.2 per cent.

But one of the authors of that report, the ANU’s Professor Glenn Withers has told the Canberra Times that it contains no such suggestion. “It is a simple and sad misrepresentation”, he said.

The Treasurer seized on a passage in the report that read “If the Commonwealth had been serious about giving the states fiscal autonomy, it would have ensured that the states had access to revenue that covered, and eventually exceeded, the loss of state taxes plus the combination of financial assistance grants and the specific purpose payments. It did not do so.”

Mr Costello took that to mean that the authors wanted the GST to increase to 17.2 per cent...
a figure not mentioned in the report.

“I think the Treasurer is playing some Da Vinci Code game in reading things into the text,” Professor Withers said.

“It is just plain misrepresentation of what our report said. It makes no recommendation on tax at all, let alone the GST.”

The rate of Australia’s GST could only be increased with the agreement of each of Australia’s states and territories and the Commonwealth which would have to get legislation through both the House of Representatives and the Senate.

Mr Costello told Parliament that if Labor came to power federally he expected that to happen.

“You would have an inexperienced Labor Prime Minister with eight Labor premiers and chief ministers, all with a lot more clout and experience than him, putting the weights on him for an increase in GST, which they would get the benefit of. There would be no checks; there would be no balances. When the state premiers say ‘jump’, the Leader of the Opposition cannot jump high enough,” he said.

Professor Withers who ran the Commonwealth’s Economic Planning and Advisory Committee during the 1980’s told the Canberra Times that only once had any of his 72 reports been misrepresented so badly. The report was about aging and noted that over time there would be growing public discussion about the question of euthanasia. It was headlined in one newspaper “Federal Government considers euthanasia”.

Professor Withers said he found it particularly odd that the Treasurer had not addressed the central finding of his report which was that Australia’s federal system of government probably increases Australia’s prosperity by about $4,500 per head compared to a system of central government.

At today’s meeting with state and territory treasurers Mr Costello will demand that they abolish stamp duties on business property transfers, which he says they undertook to do when the GST was introduced.

“As far as the government is concerned, the GST was introduced to get rid of other taxes, not in addition to other taxes. The people of Australia deserve to have all of those taxes abolished. That is something that the Commonwealth will require the Labor states to do,” he said.

The Treasurer did not elaborate on how he would require the states and territories to abolish those taxes.

The ACT will be represented at today’s Treasurer’s meeting by the Chief Minister and Treasurer Jon Stanhope.

Mr Costello has said previously that he wants Mr Stanhope to abolish the new Utility Land Use Permit Fee introduced in January. Dubbed the “Stanhope charge” it requires all infrastructure companies to pay for their use of ACT land and if passed on is expected to add $27 per household to the cost of phone and internet bills.

The Treasurer said that while the Labor Party federally was saying it wanted more investment in broadband “here we are in the ACT, where a new tax is being proposed on all utilities including broadband”.