Michelle Grattan provides the perfect starting point this morning
for talking tax: “The question is this: are we, in the lead-up to a
budget that will cut taxes, going to have a proper debate, canvassing
the options, with Costello giving some leadership? Or does the
Treasurer think everything should be worked out in the strictest
secrecy and simply brought forth on budget night? He would much prefer
the latter. But if, as many think, we need another round of reform, not
just tax cuts, that reform requires proper debate.”


have a Government that has got its policy priorities so wrong that one
Minister can josh with another in Question Time about the welfare payments their family gets.
That’s a government that collects tax dollars and hands them over as
welfare to someone already earning a six figure package from the public
purse – plus all the administration costs that build up through the
process of collecting and disbursing this gratuitous payment.

have a cracking surplus. The May Budget forecast a surplus this year of
$8.9 billion. Treasury now says that figure will reach $11.5 billion.
It may even be higher, thanks to the resources boom. As Peter Costello says, “The
Mid-Year Review of Australia’s economy shows that Australia’s potential
is strong, that our economy continues to grow and that our Budget is in
sound shape.”

So, as Malcolm Turnbull said yesterday, “If not us, who? If not now, when?” Like the Business Council’s Katie Lahey says, “It is crystal clear that the Government has both the means and the opportunity to act now.”

We shouldn’t forget the excellent point Wayne Swan
made in his response to the figures, “The first thing we have to
understand about this surplus is that it’s the peoples’ surplus. It’s
not Peter Costello’s surplus and it must be put to genuine reform.” As The Australian‘s editorial says today , the Howard Government is living large on our money:

The boost to commonwealth income in yesterday’s Mid-Year
Economic and Fiscal Outlook is not the result of the Government’s hard
work. It is the result of the hard work of Australians, too much of the
fruits of which has been lifted from their wallets before they have had
a chance to decide what to do with it – a decision they are better
qualified to make than politicians… But instead of responding to the
hard work of Australians by doing some serious work on the tax system,
the Government has taken the easy road, delivering significant tax
relief but, with the major exception of the GST, no root-and-branch

Unfortunately, there is little to suggest things will be different in
2006… John Howard and Peter Costello have hinted there is tax relief on
the way, but this is likely to be more of the same – tinkering at the
edges rather than removing the disincentives to hard work and solid
saving that litter the present system. By taking this road, the
Government will be giving its own short-term political interests a
higher priority than the plethora of advice it has been receiving from
external agencies, such as the OECD, and business and industry groups
in Australia. All these voices suggest that what we need is a broader,
flatter and simpler tax system.

One could add Malcolm Turnbull to that list, too – but he also
recognises that this is more than just an issue of economics. Turnbull
kicked of his tax speech yesterday with these observations: “In August
this year, Jeromey Temple and I published a paper on the subject of tax
reform entitled ‘Taxation Reform in Australia: Some Alternatives and
Indicative Costings.’ It was designed to make, or restate, the case for
making our tax system simpler, more efficient and more equitable. This
would involve not only reducing rates but also broadening the tax base
and thereby simplifying our personal tax system. This was hardly
radical stuff.”

Absolutely. The people’s representatives
debating what to do with the people’s money – in public – is a
fundamental of democracy.

The Australian‘s editorial
warns about “ministers keen to lay the groundwork for a vote-buying
splurge.” It says “Australians are just not that gullible. They are
finally ready to ask not what they can do for their tax system, but
what their tax system can do for them.”

Try telling that to the Nationals. Their deputy leader, Warren Truss, seems to feel a dam coming on. Why try to do things better when you can offer a bribe, the subliminal seems to be.

Now that’s deep policy thinking. Deep policy thinking – and democracy in action.