New South Wales: July to December 2003

By Scalmer, Sean | The Australian Journal of Politics and History, June 2004 | Go to article overview

New South Wales: July to December 2003


Scalmer, Sean, The Australian Journal of Politics and History


The Carr Labor Government began the second half of 2003 with confidence. Its electoral victory in March had delivered fifty-five of ninety-three seats, and had entrenched an image of administrative competence and adroit political management. In the first few months of his new term, Carr renovated the Ministry, passed a painful budget, and contemplated surprising social reforms. The government brought forward plans for the legalisation of cannabis for patients facing painful or terminal illness, gave permanent approval for the nation's first legal heroin injecting rooms, lowered the age of consent for homosexual men, and began to study the abolition of prison sentences for petty crime. After years of caution, some wondered whether the Government had taken a more challenging, leftward turn (e.g., Sydney Morning Herald, 19 July 2003).

The road of reform is seldom smooth, and in the second half of the year the Government's new direction faced important obstacles. Unpopular policies began to bite, Labor's reputation for administrative competence was sullied, and the Party's smooth management was rocked by scandal. A battle was afoot.

Anti-Tax Backlash

The Government developed a tax on poker-machine profits, to be phased in over six years from September 2004. It is to be targeted at those richer clubs and hotels that possess a large number of machines. Under the scheme, those registered clubs that make up to $200,000 on poker machines will not pay any tax on their revenue, and those earning from $200,000 to $1 million will get a tax cut. However, for those clubs that turn over more than $10 million a year, tax rates will be increased from 17.16 per cent in 2003 to 40 per cent by 2010. A hotel that turns over more than $5 million will pay 50 per cent of its revenue in tax by 2010, and the government expects to reap $1.6 billion per annum by that time (Daily Telegraph, 14 July and 22 September 2003).

Not surprisingly, the clubs quickly mobilised to have the tax reversed. They commissioned economic analyses that foretold financial ruin. They lobbied MPs and demanded a meeting with the Premier. They broadcast advertisements against the tax, emphasising that the community projects and sporting activities that rely on club-funding now face an uncertain future. Fifteen thousand protesters rallied at the gates of Parliament House (Daily Telegraph, 2 October 2003). Rugby League players and officials spoke out, and even threatened to stand against the government. Bob Carr and ad-man John Singleton had a famous telephone spat over the issue (Sydney Morning Herald, 20 September 2003). Opposition Leader, John Brogden, championed the cause of the clubs, and the Daily Telegraph lent its strong support (e.g., 14 July 2003).

The clubs had been among the biggest donors to the ALP before the 2003 election. Those to be hit hardest by the tax increases are all in Labor electorates (Sun-Herald, 7 September 2003), and the political strength of the industry is often remarked upon. By mid-July, the Telegraph was reporting backbench disquiet. By August, a compromise was being floated, and by September it was being predicted. On 2 September, Carr faced a caucus revolt. Strathfield MP, Virginia Judge, moved a motion that: "the Government investigate in conjunction with registered clubs a complete review of the capability of clubs to pay additional taxation". The vote was tied at thirty-four MPs for and thirty-four against, and the cabinet solidarity of twenty-one ministers was all that prevented the measure from passing. Some observers predicted that a debate at Labor Conference was likely (Daily Telegraph, 3, 6 September 2003). Carr's authority was questioned.

The disquiet over "pokie tax" extended to anger over stamp duties. Over 2002/03, the revenue from stamp duties rose to $5.22 billion. This was $125 million more than had been expected in the June budget (AAP Newsfeed, 28 October 2003). John Brogden attempted to capitalise on discontent with the duties, and developed a bill for a 10 per cent cut over three years. …

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