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Democrats will not vote for a GST which includes food.

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FRAN KELLY: On the domestic front, the big story of course this week is tax, and we’ll speak to Democrat leader, Meg Lees, in a moment, but there’s another issue for the Senate to deal with this session, as well, and that again concerns the future of Kakadu National Park. The government’s currently proposing a change to the management of the park. They want to remove the statutory authority currently vested in the national park’s director and transfer it directly to the minister. The board of management is unhappy with this and I understand they’ve advised the environment minister, Robert Hill, of legal advice suggesting this change would be a breach of the terms of the Kakadu leases. Peter, this was one of the issues raised by the UN World Heritage Committee when it visited Kakadu last year, and their report recommended that the change not go ahead, so senators will presumably take that into account or will be asked to take that into account when they consider that next week.


Back to tax now, though. The Senate inquiry final report comes out today and it’s expected the Democrats will recommend removing food from the GST loop. Democrat leader, Meg Lees, says there’s nearly five million potential losers from the government’s tax package, a claim that the government hotly disputes, based on the evidence, they say, from all the economists who have appeared before the inquiry.


Senator Lees joins us, now, in the studio. Meg Lees, good morning.


MEG LEES: Good morning.


FRAN KELLY: You’ve viewed all the evidence. What is the Democrats verdict? Will you be recommending against food now?


MEG LEES: Oh, absolutely. And I just cannot understand, firstly, the government’s insistence that the evidence isn’t there - perhaps the kindest thing I can say is that they haven’t bothered to read the evidence - but also the fact that most countries who have this type of tax - indeed the vast majority - have food treated as a special case. Now, if some 700 million people around the world in Western countries can do it, why can’t we?


FRAN KELLY: So the Democrats report, when it comes out today, will recommend against a GST on food. What else will you be recommending?


MEG LEES: It’s really not up to me, looking at the way in which the Senate works, to start going through the report. It will come out later on today. We’ve tried to leave our options open. We have looked at a variety of ways of defining food, a variety of ways of paying for taking food out, and tomorrow, when I speak at the Press Club, then I will go through our specific preferences in terms of how we define food and where we go from here.


FRAN KELLY: All right. The other claim in your press release, apart from the fact that a number of groups will be better off with food excluded, also lists 14 different groups that the Democrats say would be worse off under the government’s tax package - potentially 4.9 million Australians - and yet the government rightfully quotes Professor Ann Harding and Neil Warren saying that, under a reasonable set of assumptions, it didn’t look, on average, as if there were any losers. Now, you can’t call black white, can you - and both sides seem to be doing this?


MEG LEES: I think we need to go back to what they said, particularly in their final evidence before the committee, at that last hearing. There are going to be losers. Both of them identified where that is and what some of the problems are.


FRAN KELLY: But yet, that was a direct quote I read. Both of them said that under option 3, using a reasonable set of assumptions, it didn’t look, on average ….


MEG LEES: Can we just go back to that again. Looking at option 3 - this the government very neatly picking out one comment from them across a broad range of comments. And their final conclusion is what I’m referring to, and that was towards the end of the hearing on that last day, that people are going to be losers. They differ with us as to whether food should be the way in which we tackle that, but both of them agree: yes, there are going to be losers. And one group in particular is the group that are not touched by the compensation package. They don’t pay tax because they earn so little, and yet ….


FRAN KELLY: Isn’t that in fact the only group that Professors Harding and Warren counted as definite losers - perhaps a group that isn’t counted at all in the package?


MEG LEES: We begin with 1.1 million people in that group, but no, it isn’t. Then you go on and look at the way in which pensioners are treated: firstly, the actual amount of pensions, and there’re some suggestions that we should be looking at not a 4 or 5 per cent rise in pension but something close to 10 or 11 per cent rise, looking at going through their figures and actually adding up all that will be needed by pensioners and then looking at the problem of the way pensions are tied to average male weekly earnings. Whatever is given will erode away over time unless the government fixes that.


FRAN KELLY: Okay. So the tax debate is about to begin. If the government comes up through this and offers improved compensation, will you vote for that package?


MEG LEES: If food is still in it, no, we will not.


FRAN KELLY: If food is in it? Well, food will be in it. The Prime Minister has said he won’t back down on food. He’s talking about some finetuning. Most commentators assume that that could mean some kind of talk about compensation. So your position is: no matter what the compensation, if food is in, the Democrats will vote against this.


MEG LEES: The amount of compensation needed if they keep food in is - I don’t have the figures in front of me, but it is billions and billions of dollars. It’s not the couple of billion we understand they’ve got in their back pocket to see if they can get this through the Senate. I think the first step we are looking for, this week, is an acknowledgment from government that they have to talk to the Senate, that we are the second chamber of the Australian parliament and that we are simply not going to let this through in the form it’s in now.


FRAN KELLY: You have had some talks with the Treasurer, I understand. Has he given you any clues, any suggestion of what the finetuning that the Prime Minister refers to could look like?


MEG LEES: Oh, no. They are still sitting over there saying there is nothing wrong with the package, when virtually all the evidence before the committee - even those people who don’t agree with us that food is the way to tackle the problem; virtually all the evidence before the committee, even those groups supporting the government - say that the compensation package isn’t adequate.


FRAN KELLY: Given that Labor strategy is that they will oppose any amendments, the government’s said they won’t accept food out, is Labor on the right track? Are they doing the right thing to oppose this package outright?


MEG LEES: Well, I think the Labor Party is looking to the next election. They know if it goes through with food in it, that that will be a great place for them to start campaigning. Certainly, if food goes in this time, we will actively campaign in the years ahead to get it out. And in overseas countries, such as Ireland, they were forced to do that. When they saw the inequities and problems of putting food in, they took it out later. So while the Labor Party is saying ‘No, no, once the GST is there we can’t undo it’, certainly I think you’ll see them campaigning to make it fairer at the next election and probably winning on that basis.


FRAN KELLY: Senator Lees, thank you.


MEG LEES: Thank you.


PETER THOMPSON: The Democrats leader, Meg Lees, with Fran Kelly.