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GST a setback to health and wealth in rural and remote communities.



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Media Release

 

ATSIC

Aboriginal and Torres Strait Islander Commission

 

7 February 1999

 

GST a setback to health and wealth in rural and remote communities

 

A Goods and Services Tax (GST) is inequitable because of its disproportionate burden on the resid ents of rural and remote communities, particularly Aboriginal and Torres Strait Islander people - the poorest and most disadvantaged sector of the Australian community.

 

ATSIC's Northern Territory (North) Zone Commissioner, Ms Josie Crawshaw, said today that this is the conclusion of detailed independent studies commissioned by ATSIC on the impact of the GST.

 

The studies, by Professor Owen Stanley of James Cook University and Dr David Charles and Mr Brad Coles of the Allen Consulting Group, underpin a detailed submission to the Senate Select Committee an a New Tax System publicly released today by Commissioner Crawshaw on behalf of the Commission.

 

“ATSIC concedes that tax reform may well be overdue,” she said.

 

“However, we have serious concerns that the GST will simply compound disadvantage.”

 

Commissioner Crawshaw said the tens of thousands of indigenous Australians living in rural and remote communities faced extremely limited job opportunities.

 

“They rely on income support such as the Community Development Employment Projects scheme, family support payments and pensions.  Fixed incomes are often below the 1996 average wage for indigenous people of around $14 000 - itself two-thirds the average wage in the non-indigenous community.

 

"Income tax relief is largely irrelevant at these levels.

 

“Our people have been running hard simply to stay in the same place - to achieve basic survival at very poor levels of health.  The GST would see people enter a further spiral of disadvantage as they spend more for less.

 

“If the basic diet is eroded because people simply can't afford to buy enough or better quality food, their health will further deteriorate.  In turn, the cost of providing appropriate health services will increase."

 

Commissioner Crawshaw pointed out that expenditure surveys based on ready access to mainstream supermarkets suggest around 40 per cent of household income is spent on food.

 

In Darwin, the city with the nation's highest supermarket prices, people pay $142.83 for a food basket that costs $109.36 in Townsville.  A GST on this basket would he $3.30 more in Darwin than in Townsville.

 

In more remote locations, the cost would be much higher.

 

Actual prices in community stores - usually facing no competition and setting their own mark-ups - depended on distance from the nearest major centre.

 

Commissioner Crawshaw said remote communities sometimes payed twice the prices charged in the cities and towns of south-eastern Australia.  The reduction of the diesel fuel excise was likely to have a negligible effect on transport costs because other forms, like aircraft and barges, were also involved.

 

“ATSIC's submission shows that the proposed tax reform will increase hardship on indigenous communities because it will add considerably more to the cost of living than the 1.9 per cent calculated by the government,” she said.

 

“The GST will also be counter-productive to economic development as it has the potential to be a disincentive to business and employment and reduce the ability of community organisations to provide services.

 

“The government would need to introduce additional measures to stimulate economic activity in those communities and increase funding to ensure that rising costs do not mean a reduction in the level of services.”

 

NB: A summary of recommendations is attached.  The full ATSIC submission and attachments are available from www.atsic.gov.au

 

Media contacts:

 

Francine Chinn (NT Media Officer),  0419 819 025

Martin Freckmann,  018 631 045

 

Attention Radio News Editors:

 

Two short audio grabs accompany this release - to access, dial 02 6262 5850 and enter access code 3000.

 

 

ABORIGINAL AND TORRES STRAIT ISLANDER COMMISSION

MLC TOWER BUILDING, PHILLIP, ACT, 2606. TEL. (06) 289 1222 FAX: (06) 282 2854

 

 

SUMMARY OF ATSIC’S RECOMMENDATIONS

 

Recommendation 1:

that the government consider one of the following options to ensure that indigenous people living in rural and remote communities are not severely disadvantaged:

 

* exempting food from the GST; or, at a minimum,

* increasing the level of compensation provi ded to rural and remote communities from the proposed rate of 4% to 7.9%.

 

Recommendation 2:

that the government introduce additional measures to stimulate economic activities in rural and remote communities.  Measures could include:

 

* tax exemption for i ndigenous-owned businesses located on rural and remote community-owned, inalienable land (such as that applied in Canada);

* subsidies for capital costs of setting up businesses;

* greater rate of allowable depreciation on capital items for indigenous-owned businesses;

* assistance to identify business opportunities;

* assistance with skills development and capital to take up those opportunities; and

* provision of adequate infrastructure to reduce the production and supply costs.

 

Recommendation 3:

that the government establishes a targeted program to assist indigenous businesses meet the start up and ongoing needs and costs of being GST collectors.

 

Recommendation 4:

that the government increases its funding to community organisations to compensate for the increasing costs.  The additional funding is needed to avoid a reduction in the level of services and an increase in the disadvantages already suffered by Indigenous people living in rural and remote areas.

 

Recommendation 5:

that the government considers extending the transport fuel credit for registered businesses and to air transport businesses involved in transporting essential perishable food items to remote regions.

 

Recommendation 6:

that the government uses existing monitoring mechanisms to ensure that any reduction in fuel prices as a result of the, fuel credit is passed on to indigenous consumers.

 

 

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