The outcome of last week's hard cop (Peter Costello) and soft cop (John Howard) routine around the removal of sales tax exemption for state governments was another blow to working people.
Not surprisingly, the federal treasurer's move early in the week to impose an estimated $1.2 billion worth of sales tax on the states was immediately applauded by the bosses' media. It revealed, yet again, that the Howard government has no intention of keeping any pre-election promises that get in the road of its dirty work on behalf of big business — to maintain states' funding and not introduce any new taxes or tax increases, for example.
The Australian's economics correspondent, Ian Henderson, wrote in the June 13 issue that the federal government's sales tax plan was "hard to fault", adding that this move "against the tax shelter enjoyed by the public sector should not be its last".
On the same day, the Financial Review editorial argued that "being confronted with less revenue from Canberra should serve to focus [state governments'] minds much more firmly on [the] difficult cost-cutting task". To pay for the sales tax, it advises, the states should consider applying taxes on selected services, thereby "advancing Australia's long overdue move towards a broadly based consumption tax".
The message was clear: without having to utter those ill-fated words, the federal government could and should introduce a broader goods and services tax via the back door.
Thanks to the state premiers' consensus in support of Howard's economic rationalist agenda — including NSW Labor's Bob Carr — the Howard government got its money even though it didn't get its sales tax — yet. In order to cover their $2 billion donation of public funds to the federal coffers over the next three years, all states will have to raise state taxes and/or cut costs and services even further. The bonus for Howard is that they, not the federal government, will wear the political price.
Shifting the responsibility for carrying out capitalism's attacks from the federal to state governments is not a new tactic. Between 1983 and 1994-95, under federal Labor, grants to state and local governments decreased by 2.3% of GDP. Over the last six years, the states have increased their annual revenue base by about $10 billion, a large proportion of that income having been raised from public sector cost-cutting and the corporatisation or sale of public utilities.
This latest move to transfer even more wealth from the poor to the rich coincided with the release last week of UNICEF's The Progress of Nations report. This reveals that 14% of Australian children now live in families with inadequate incomes, a rate which is worse than almost every other First World country. And according to UNICEF special representative Justice Marcus Einfield, the situation is getting worse.
For the mass of ordinary people, the fact that more taxes and more cuts to services will be imposed by the states rather than directly by the federal government makes not an iota of difference. They will continue to pay.
Whether it's a federal Coalition government promising no new taxes or a federal Labor government promising that "by the year 1990 no Australian child will live in poverty", the result for the majority of working people and their children will be the same until we replace this rotten two-party system with governments that put people before profit.