Tax reform is definitely needed. The goods and services tax probably does need to be at 15% – at least 12.5% – and the base for GST needs to be broadened.
But having said that, the whole tax reform agenda as with any major change, is about communication, engagement and process.
It is easy to get a policy right but a failure to communicate or failure to engage or the development of a convoluted complicated process will undo good policy every time.
Certainly during the last 10 years various governments have not shown great skill at engagement and communicating; the carbon tax and recent reforms in Queensland are key examples. But we do, however, have in our history two examples of exceptional management of major change.
Bob Hawke and Paul Keating did an extraordinary job during the late 1980s and early 1990s of managing the changes associated with the industry reforms led by John Button. These reforms had a profound effect on industries such as textiles, clothing and footwear and in the passenger motor vehicle industry, and on many communities across Australia.
Engagement with affected industries, businesses, workers and communities resulted in government programs that provided assistance with industry restructuring, support for individual enterprises, training support for displaced workers, job creation where needed and a national program of local economic development that still has repercussions today.
John Howard and Peter Costello, with the introduction of the GST, also showed how to engage, inform and communicate across most communities in Australia on the biggest change in the tax system that Australia had ever seen.
They met constantly with concerned groups, dealt with the Senate crossbenchers, were open to change and understood the need for the small business community to understand the change and how to manage the new processes. The change did have some hiccups as some taxes that were supposed to be removed never were but there were not many other problems.
So as we approach this next round of essential reforms we already have templates that can be copied and indeed improved on for managing the processes.
Any increase in the rate of the GST will create real concerns about negative impacts on particular groups in the Australian community. Recently the Australian Council of Social Services (ACOSS), led by one of our key community leaders Cassandra Goldie, flagged its concern about the potential impact on disadvantaged people and on pensioners. The information ACOSS has provided should inform how any changes are applied and what other changes are needed to ensure equity and that we do not have one or two groups win and others lose.
In the small business community we believe the changes are needed but we are also concerned that the changes may be of greater benefit to big business and of little worth to most small businesses. We are also focused on any changes being easy to manage; indeed the changes should make it easier to comply with tax regulations and processes.
When the GST was introduced we were promised that many other taxes would disappear, this included payroll tax and stamp duties, which didn’t happen; we need a guarantee this time that promises will be honoured.
Our other concern is the influence that a small number of big businesses and the Business Council of Australia (BCA) are having on government policy.
The chair of the BCA recently stated that given the failure of political leadership, the BCA’s “ … role is to take up a leadership position”. The BCA is a worthy organisation and small business and most of the BCA members have good professional relationships. It is however no secret that the BCA is close with Wesfarmers and a couple of other very dominant businesses, and has reportedly been undertaking secret briefings of government ministers and engaging in belligerent hidden lobbying on behalf of those few businesses over areas that are of public interest.
No industry or community group should claim to be the leader of the Australian community. The BCA’s claim has sent shivers down the spines of many large, medium and small business people who know from hard experience that when a few dominant businesses believe they are the leaders of a country that trouble will follow. The Global Financial Crisis and the Asian Financial Crisis were caused by a few big businesses giving instructions to policy makers and government.
We expect the Prime Minister and Treasurer, who are already noted for their communications skills and desire for engagement, will ensure those affected are listened to, not those wishing to manage effects for their own purpose.
The government already has an excellent team in place in the office preparing the Tax White Paper, which reports to the Treasurer, and it can build that group into a greater communications role.
If we want the best from change then let’s all be involved in managing that change and creating an outcome from which all Australians benefit.
It might be called consensus and it just might be called good quality change management. We in the small business community are happy to help.
Peter Strong is executive director of the Council of Small Business of Australia.