Nelson's Column

The Australian Governments 3 G-spots Deliver no Pleasure

Charlie Nelson

June 2000

John Howard's government is delivering little pleasure to the electorate at present and things are set to become painful in the future. Three key factors in this are the goods and services tax (GST), Genetically Modified (GM) foods, and Greenhouse policy.

The government has spent some $400 million, in the last few days before the introduction of the GST, in an attempt to "educate" consumers about the effect of the package. This comes 18 months after an election fought mainly on GST and after surveys by ACNielsen and The Melbourne Institute of Applied Economic and Industry Research have shown for over a year that consumers significantly over-estimated the price impact of GST. Or did they?

As more information about the impact of GST on petrol prices and on services such as rent for long-term caravan park residents is revealed, it is becoming evident that the price impact may have been understated by the government during the election campaign. That in turn means that the compensatory income tax cuts and benefit increases may not be as attractive as consumers believed during the election campaign. Businesses too are becoming less enchanted with the GST, especially small business who face considerable compliance costs.

Consumers in Australia, as in Britain and elsewhere, are very concerned about GM food and the Howard government is not being very sensitive about this. Their primary concern seems to be the potential cost of being left behind other countries in terms of farming efficiency and the cost of labelling products containing GM foods.

Food is, of course, very important to people in terms of health and pleasure. Surveys by ACNielsen show that most consumers have reservations about the potential long term risk of GM foods and that labelling of foods containing GM ingredients is non-negotiable.

If the government gets its way on this issue, they will alienate the majority of voters.

The government cannot please everyone on greenhouse policy. Business generally argues for a "no regrets" policy - that is, only reduce greenhouse gasses when it can be done without economic cost. And, of course, few Australians will support a carbon tax on petrol. However, surveys by ACNielsen show that the electorate sees the environment as more important than interest rates and gambling - although not as important as economic growth and unemployment.

The three G-spots are likely to be the source of pain and divisiveness for many years to come. They will cost this government office, and others after it. It is, perhaps, facile to say that we can only resolve these issues with a long-term vision for our country. But without some shared goals we are unlikely to forego anything in the pursuit of our own individual short-term ends.