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Tuesday, August 14, 2012

Why should the not-for-profit sector and the vulnerable pay to increase the profits of the private sector?

Richard Denniss of The Australia Institute poses a very good question in this piece in the Canberra Times- why should the not- for- profit sector have to pay for Government to reduce  red tape to increase business profits when the private sector pays nothing?

The ACT Chief Minister Andrew Barr recently announced plans to increase the efficiency of the ACT government and reduce the cost of ''red tape'' for business by creating a Red Tape Reduction Panel to identify, remove and improve outdated, unworkable and illogical business regulations''.

But to pay for this the ACT Government is imposing a $1.4 million tax on the not- for- profit community sector to fund these initiatives. However, the private and business sector who will primarily benefit from the reduction in red tape will pay nothing.

So as Dennis points out, the not-for-profit sector will have to pay for the privilege of less red tape while the taxpayer foots the bill for delivering the same benefits to the for-profit business sector.
"While these initiatives make sense, especially the commitment to remove illogical regulations, it is hard to see why the community sector should be asked to incur the costs of meeting some of these commitments. The government has argued that because the highly efficient community sector would benefit from a reduction in government red tape they should be the ones to pay for it. This argument is as novel as it is confused.

The more money the community sector can raise, and the more volunteers they can mobilise, the more services they will provide to the most vulnerable members of society. There is no profit margin; there is no incentive to do anything other than to support the community. On the other hand, the less money they receive from government, the fewer services they can provide.

It therefore follows that it is not the community sector that has ''lost'' $1.4 million dollars, it is the community. If the government believed that the level of support provided to disadvantaged children and families caring for those with disabilities was adequate, then it might make sense to reduce funding for community services. But if the government believes that the disadvantaged in our community have all the support they deserve it is not clear where or when it came to that conclusion.

It is great that the government is trying to reduce the amount of red tape it produces. Governments should always be on the lookout for opportunities to streamline their processes. But it is not clear why the government has adopted such a different approach to reducing red tape for private business and reducing red tape for the community sector.

As pointed out by the Greens leader, Meredith Hunter, while the community sector is being charged $1.4 million to fund the streamlining of the ACT, the government is footing the bill for the cost of reducing the cost of red tape incurred by the for-profit sector.

Economic rationalists are usually big on user pays, but, in the case of this new tax it is not the users that will pay, but the most vulnerable in our community. While it makes little sense for a government to charge any sector of the economy for increasing the efficiency of government, it makes no sense to ask the not-for-profit sector to pay for the privilege while the taxpayer foots the bill for delivering the same benefits to the for-profit sector. Australia is one of the lowest taxed countries in the developed world and, while Canberra has the highest average income in the country, it has the lowest average tax rate.
If our elected representatives wanted to spend more on community services they could. If our elected representatives wanted to return the benefits of reducing their own red tape to the community sector they could.

Unfortunately for those in the greatest need, the ACT government has gone in a different direction"

1 comment:

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