View from The Hill

View from The Hill

Hockey’s expensive night out

Joe Hockey made policy on the run when he appeared on ABC television’s Q&A. AAP/Lukas Coch

Treasurer Joe Hockey has always been wary of going on Q&A. He was right.

Hockey made policy on the run on the program when he agreed that GST shouldn’t be applied to women’s sanitary products and promised to take the issue up with the states.

Hockey had been confronted with a question from university student Subeta Vimalarajah about her petition to remove the tax that had more than 86,000 signatures. Should the GST be removed? “It probably should, yes. The answer is yes,” he said.

Praising the questioner – “good on you for getting the petition together” – Hockey said he needed the agreement of the states to make a change, and “I will raise it with the states at the next meeting of the treasurers in July”.

But Tony Abbott was less than keen on the exemption, telling his Tuesday news conference that the government had no plan for this. It was a matter for the states to decide whether they wanted any changes to the GST and if they did, to come to the Commonwealth, he said.

Hockey is pressing on, saying late on Tuesday he’d asked Treasury for a costing and then would write to the states for them to consider the issue ahead of the July meeting.

Labor, which in the 2001 election proposed rolling back the GST on these products, said it would support an exemption. Bill Shorten suggested it could be a trade off for the government’s planned extension of the GST to Netflix.

Hockey’s agreement that the exemption should be made was odd, to say the least. This was a fiercely debated issue at the start. It’s true that there were inconsistencies in the exemptions, which include for instance condoms. But does the government really want to revisit individual items, when exempting one could open the way for argument over others?

Removing sanitary products would cost some A$30 million annually, according to Chris Richardson of Deloitte Access Economics.

And, as Richardson says, it is taking the debate off in the opposite direction to the one in which it should be going.

“Australia has too little reliance on indirect tax and too much reliance on direct tax,” Richardson says.

A year ago Hockey was, not too subtly, trying to get the states to push for the GST to be increased or broadened.

Now the pressure is on them to exclude something, or wear the political odium for not doing so.

The three Labor states – Victoria, Queensland and South Australia – have quickly said they would support the exemption. The Labor government in the ACT is also on board.

Victorian Treasurer Tim Pallas said: “We’ve supported the removal of GST on sanitary products for a long time, so we welcome the federal treasurer’s statements … We look forward to Mr Hockey now putting his proposal to the states and territories, and allowing them the opportunity to back it in.”

South Australian Treasurer Tom Koutsantonis said sanitary products “should be exempt”.

The NSW Liberal government is much more cautious. NSW Treasurer Gladys Berejiklian said the states would have “an opportunity to discuss the GST and tax reform more broadly in July”.

Tasmanian Treasurer Peter Gutwein said he was “happy to have that discussion with my state and federal counter-parts”.

West Australian Treasurer Mike Nahan said that “any change to, or removal of, exemptions from the GST process should be part of broader GST reform.

"Western Australia considers broader reform of the GST distribution process, a process that currently results in Western Australia receiving an unacceptably low share of the national GST pool, to be our main priority.”

The way things are shaping up, with Labor taking a unified position at federal and state level, Hockey has managed to have the Liberal states cornered on the issue – one that resonates with many women – and the federal government as well.

Facts matter. Your tax-deductible donation helps deliver fact-based journalism.