BY SUE BOLTON
The truth is out about just what the GST is doing to working families.
Before the 1998 election, the government didn't just unleash a barrage of misleading, even lying, propaganda about the consumption tax, it also prevented the release of Treasury research about its impact on living standards. The secret research was only to come to light long after the election, under freedom of information laws.
Prior to the election also, research institutes were busy using computer models to predict the impact of the GST on different types of households. Since the GST's introduction, however, there has been silence from these mostly pro-government sources.
According to the Australian Council of Social Service there has been no computer modelling to determine the actual impact of the GST since its introduction.
Despite the government's best efforts, though, the facts are now emerging.
The first indication in the media that people were suffering under the GST was when business pages began reporting a slump in consumer spending as a result of it. McDonald's was one corporation which blamed the GST for a slump in sales.
The full impact of the regressive tax wasn't apparent immediately after its introduction. For many people, it was only when household bills for electricity, water, telephone and repairs began arriving that they realised what it was doing to them.
One truck driver, who voted for Howard in 1996 and 1998, told the Sydney Morning Herald on March 21, "The way the GST was explained, I didn't think it was going to be a bad thing because we'd have a lot more concessions that would compensate".
Since then, however, he has found that his income tax cut was smaller than expected and was more than used up by increased fuel and other prices. He was also surprised at the big jump in his household bills — he had never expected that the GST would be levied on items like power bills and netball fees for his kids.
Research conducted by the ACTU in 1999 predicted that the real value of income tax cuts would fail to compensate for GST-related price rises for all workers earning between $20,000-40,000 a year. Virtually all full-time workers on award rates would be worse off, it found, with the greatest losses borne by workers earning between $23,000-30,000 per year.
People on pensions and other forms of welfare also discovered that their "compensation" was not nearly enough.
The February 25 Sun-Herald interviewed an aged pensioner couple who kept a detailed diary of all their expenditure. Between July and December 2000, they paid $720 in GST on goods and services, but the 4% "compensation" gave them just $375 extra over the same period.
The government has also begun whittling away even this meagre sum.
In 2000 the government increased pensions and benefits by 4%, telling welfare recipients that it was compensation for the tax. Unbeknownst to pensioners and the unemployed, the government considered 2% of the 4% increase to be a loan, rather than a grant. On March 20, the government reduced the scheduled cost of living increase in pensions and benefits by half, to 2%.
It also changed the method of calculating rent assistance in order to cut the payment for thousands of pensioners and unemployed.
In 1998 the government announced that most retired people over the age of 60 would be eligible for a one-off grant of $1000 for pensioners and $2000 for self-funded retirees as GST compensation. However, stringent means testing has meant that 40% of elderly people have received nothing and more than 43,000 received cheques for just $1.
The people who have probably suffered the most are those that the government never intended to compensate. Anyone on workers' compensation, new migrants and refugees and many homeless people will fit into this category.