(-- Goods and Services Tax)

There are clear arguments to propose that there are strong Australian Constitutional problems in the way of the [Australian] Commonwealth Coalition Government implementing its GST Tax Reform Package.

To educate about these problems, David Keane of PO Box 582, Gosnells, WA, has distributed two open letters to all currently serving Senators and Leaders of State Parties.  The first of these was distributed in November 1998, and received a broad and positive response from politicians.   At the suggestion of several Senators, the first open letter was then reworded slightly and was submitted as a submission to the Senate Inquiry into the Goods and Services Tax (GST) and New Tax System.

OPEN LETTER, "GST Tax Reform and the Constitution"
by David Keane, February 1999

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A second open letter, which provides an overview, was then distributed in February 1999.  The text of the second open letter appears below.  The text of the first open letter, which is much longer and goes into legal and political argument, has been set up on Internet, reference given in the text of the second open letter.

The next four months will be a time of intense challenge and tension in the Senate, and it may well be that Constitutional considerations are paramount in how much of this debate proceeds.  It may be a time of unprecedented opportunity for democratisation in Australian politics.

The text of the Second Open Letter to Senators and State Leaders appears below.

Second Open Letter to Senators and Leaders of State Governments

Since I sent an Open Letter to Senators and Leaders of State Governments in November 1998, on Constitutional issues touching the GST New Tax System, I have received a number of replies expressing interest, and a few suggestions that I make a submission to the Senate Inquiry.

I have therefore rewritten my Open Letter of November 1998 in a form of a submission which has now been presented to the Senate Inquiry into the GST and a New Tax System.  The submission is generally identical to the Open Letter of November, with two main alterations.

Firstly, it has been presented under the Inquiry term of reference (3) (t) (ii);

"the effects of the taxation reform legislation proposals on legal and constitutional matters, including:

(ii) the constitutionality of the proposed reorganisation of federal-state tax arrangements and whether the powers and functions of states and territories are materially affected by this reorganisation".

Secondly, I have provided a summary as is befitting such a submission.  The conclusions in the way of "suggested Commonwealth Parliamentary resolutions" remain unchanged.

Also, my Open Letter of November 1998 to Senators and Leaders of State Government, has now been set up on Internet at the following site, for anyone who wishes to take electronic copies of it:

I have received a number of replies to my first Open Letter to Senators and Leaders of State Governments in November 1998, about 20 of these letters expressing interest or support in the views I shared, and just four (from the Liberal State Leaders of the four southern States) presenting opposing views.  In brief, the opposing views included the following points;

While expressing gratitude for these replies, I would say that none of these opposing views touched the real issue.  The positive or negative quality of the GST Tax Reform Package remains a controversial issue and can be established only after comprehensive review as is now being undertaken by the Senate Inquiry; the 1998 Special Premiers Conference was more in the way of a one-way briefing session, as it did not invite the States to become involved in the really fundamental issues of participation as equal partners in the planning for Australia's long term economy; and a model of how consensus politics works has been already demonstrated by success of the spiritual work of the United Nations General Assembly (as opposed to the Security Council which is controlled by vested interests).

But all of these points miss the real and central issue. The point is not whether there will be agreement or dissent from the States in this year, 1999, but how will the States respond in a few years time, when either:

  1. the presently theoretical Coalition GST Tax Reform Proposals have had a testing time and what if huge problems then emerge and the Coalition predictions are proved to be exceedingly optimistic,  or
  2. when the entire rationalist-economic and national competition policy agenda of the Coalition comes apart at the seams, perhaps in response to a global economic crisis?

At such times the last thing the States would want is to be encumbered by national legislation requiring the States to be comprehensively submissive to the Commonwealth in all economic planning matters.

At such times the inherent economic equity between States and Commonwealth as guaranteed in our Australian Constitution is the only assurance for the Australian public against total economic disaster. Let us not legislate this guarantee away by the States prematurely conceding Constitutional rights that have protected them for a century.

It is said that a chain is as strong as its weakest link. I would propose that the weakest link in the entire GST New Tax System, is that it has no Constitutional teeth to enforce these proposals upon the States.  Ultimately then, these GST New Tax System proposals can only be adopted by the States through a testing of political will between the Commonwealth and the States.

Because of lack of prior consultation, that time of testing must come in a year or two, after the enactment of Commonwealth legislation and a period of consideration by the States.

The Commonwealth Coalition Government is proceeding on the assumption that the States will on that occasion be comprehensively submissive.  How unfortunate that the Commonwealth had not been involving the States as equal partners in planning Australia's long-term economic future, during the past several years.  Instead, the States are being asked to be content with a simple briefing session on GST in late 1998.

When the time of testing of political will between the Commonwealth and States comes in a year or two, then must the very deepest issues of Australia's long-term economy be brought to the surface, to be vigorously debated, in both the Senate and State Parliaments.  That debate must ultimately find a vision for a way to resolve Australia's most profound economic problems.  It is in the States that the impact of these severe economic problems are most deeply felt, and so unless a passionate voice arises from the States or on the States' behalf for true solutions, then the way ahead must remain uncertain and ever moving through repeated economic crises.

The States are hurting.  Let us list a few of the ways in which Australia's economic problems are being felt by the States:

Let the States therefore demand full equity in Australia's long-term economic planning.

I commend you to a serious consideration of the matters raised in my Open Letter of November, and later submitted to the Senate Inquiry on the GST New Tax System.

Yours sincerely,

David Keane,  February 1999          [See 1st Open Letter "The Tax Reform Bill and the Constitutional Problem"]

Tagged on AOLPress/2.0  04 Apr 1999,  last revised 06 June 2000
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DOC 18: Internet address (URL):
Electoral Authorisation: David Keane, PO Box 582, Gosnells, W.A., 6110, Australia.