Are we beginning to see the re-emergence of the wets and the dries in the ranks of the national Coalition government – wets being the moderates and the dries being those who espouse more conservative views?

They haven’t been referred to as such for the best part of 20 years, but the purported parlous state of the coffers is giving rise to a range of demands from the monetarists in our midst.

You will recall that the Howard Government introduced the GST in 2000 to replace the wholesale sales tax system (having assured Australian voters the GST would “never become part of Liberal Party policy”). At the same time, a whole range of payments were made to compensate people for this new tax. Commitments were also made to abolish a range of other taxes and duties – but that’s a story for another day.

Liberal Dan Tehan is the federal member for Wannon, whose most noted representative was John Malcolm Fraser, prime minister from 1975 to 1983. Mr Tehan wants to boost federal coffers by removing exemptions on the 10 per cent good and services tax, notably food, health and education services.

According to Mr Tehan, the current tax system, and the current GST, are “half-baked”. He says that the extra 10 per cent we would pay in those areas currently exempted would yield $21.6 billion a year – and he reckons that’s a good thing.

Let’s examine the practical implementation of that.

Assume that, at the moment, a litre of milk costs $1.60. Add 16 cents GST and it becomes $1.76. That is one scenario.

Tasmanian consumers, already having the highest unemployment rate in the country, earning less than their mainland counterparts and with the worst health and nutrition profile in the country, would then have find 10 per cent more household food budget money to feed themselves and their kids each week.

A second scenario is that supermarkets will keep the price of milk at $1.60, pay the 14 or 15 cents GST themselves and reduce the price they pay to their milk suppliers. And who are they? This means that farmers are likely to be forced to absorb the increase in costs because they are not able to pass on their costs.

However, experience has shown that the retailers rarely lose out and they won’t forego profit under any circumstances.

If a GST on fresh food were imposed, a worst case scenario could see retailers increasing the price to consumers and, at the same time, decreasing the payments to farmers and other suppliers.

Tasmanian Farmers and Graziers Association and the National Farmers Federation are concerned are both strongly opposed to extending the GST. This is a no-win for farmers and a no-win for the public.

A GST on food could have been imposed from the very start. However, the Democrats negotiated it (and some other exemptions) out of the GST when it was introduced. To about face and suddenly bring a new tax on food in now will have significant adverse consequences. This horse has bolted.

Earlier this week, National Farmers Federation CEO Simon Talbot said the suggestions were a cause for serious concern. He called for the GST exemption for fresh food to be retained, saying the move would have a negative impact on the welfare of Australian farmers and Australian families.

“No one understands better than farmers the importance of fresh food. The NFF understands budget pressure. But we also understand the reality of family budgets,” Talbot said.

“We want Australians to eat more fresh food, not less. Increasing the cost of food could mean consumers demand less fresh fruit, vegetables and protein, leading to a decrease in overall sales and poorer health outcomes.”

If that were to happen, we are looking down the barrel of even worse health outcomes. In Tasmania, that would be disastrous.

On the other hand, if farmers have to underwrite the GST by taking cuts in prices from wholesalers and retailers, then you are banging nails into the coffin of this industry.

Unhealthy eating is the greatest factor affecting the burden of disease in Australia. Obesity, diabetes and nutritional deficiencies are all increasing problems; and they are costly ones. Our view is that, in any community, good nutrition and the provision of affordable fresh food have to be key priorities – and these essential services have to be provided in a climate where the producers, the farmers, can do so profitably.

It is the duty of the national government to ensure that we have every opportunity to lead healthy lives. We do not need disincentives. The government needs to look elsewhere to bring in more money to balance the budget.
TFGA chief executive Jan Davis