Joe Hockey is dead right that there should be a conversation about the GST. And he's dead wrong to hold a gun to the states' heads before that conversation has even started.
Plenty of economists argue the 10% GST should be lifted or broadened (some food is exempt, as are health and education services and exports). Plenty of countries have a deeper GST -- 20% in the United Kingdom, 19% in Germany, 25% in Norway.
Lifting the GST should be part of a serious national conversation about tax, as should generous superannuation tax concessions, bracket creep and Hockey's plan to cut personal income tax rates. It's a welcome move that the Abbott government will start work on a tax white paper this year and deliver it by 2016.
But it's dirty work to slash the states' health and education funding by $80 billion in Tuesday's budget as a preemptive strike to force the states to push for a GST hike -- as quite a few (Coalition) premiers have said. That the federal Coalition promised not to cut health and education funding before the election makes it worse.
Any decision to lift the GST is a federal one. If Hockey and Abbott want to lift the GST, do it properly. Start the conversation, commission extensive modelling and make the case. Instead, the Coalition has picked up the sledgehammer on day one.
Australia has struggled to have a mature conversation about tax. Ken Henry had a go under Labor but was prevented from looking at the GST and most of his recommendations were not implemented.
Based on Tuesday's budget, the alternative to sensible tax reform seems to be stinging the young via cuts to the dole and higher university fees, while, as Bernard Keane rams home today
, superannuation rorts lie untouched. Tony Abbott has pledged to be a strong economic manager. So far he's on the wrong track.