03 February 2016
by John Passant

Hey unions – how about fighting for big wage increases as compensation if the GST goes up from 10% to 15%?

Scott Morrison this week likened a possible GST increase to turning back the boats.

Tough, but needed, and he is, he said modestly, just the man to do it. Of course an alternative view might be that the bastard who brutalised refugees is moving on to brutalising poor people and workers, made confident in this by the very support he has received in locking up asylum seekers and refugees on the Manus Island and Nauru concentration camps.

Increasing the rate of the GST from 10% to $15% will raise an extra $32.5 billion, according to New South Wales premier Mike Baird in the same article. That money will come from me and you. Ah but each and every defender of GST ‘reform’ says that we will be compensated with income tax cuts for workers and increased payments to welfare recipients.

That sits at odds with the distribution demands of those making the case for the GST increase. Thus Mike Baird argues not just for social welfare increases and tax cuts for workers but for increased State government spending on health and education to come out of the $32.5 billion magic pudding. On top of that business and politicians want to cut company tax rates from 30% to 25%, costing about $7 billion.

So the obvious question is – if the GST is going to raise an extra $32.5 billion, and if some of that is diverted away from increased benefits to welfare recipients and tax cuts, to more spending on health and education and company tax cuts, doesn’t that mean that poor people and workers will not in fact be fully compensated for the 50% increase in the GST?

Not only that but bracket creep will eat up the tax cut in a few years, leaving workers in the same position as they were before the increase in the GST in terms of their effective tax rates, but with an increased GST on top. Those on welfare will have their entitlements restricted and tightened as part of a general crack down on government spending.

There are 2.5 million Australians, including 660,000 kids, living below the poverty line. Will these changes make them any better off? No.

Talk of GST compensation is a three card trick. We should not fall for it.

Since the income tax cuts to compensate for increasing the GST will not deliver real and lasting compensation for workers, and since workers are the one group in society with the power to fix that, the task of militants in our trade unions should be to argue for and organise around winning wages increases to compensate for any increased GST. Over to you militant unions and class conscious workers. Just the threat of GST wage increase strikes might cause some ruling class members to hesitate about increasing the GST. And it might help unions win back some working class support.