Mrs DRAPER —My question is addressed to the Treasurer. Can the Treasurer inform the House whether he is aware of calls to alter the comprehensive nature of the goods and services tax? What is the rationale for the government's approach? What level of support does this enjoy?

Mr COSTELLO (Treasurer) —I thank the honourable member for Makin for her question. I am aware that a press release was issued earlier today by ACOSS talking about an unprecedented church and community alliance calling for tax change. I note at the outset that, although it says there is a church call for tax change, in the main it is church agencies, certainly not the bishops themselves. I think it has been made entirely clear by both the Anglican bishops and the Catholic bishops that the churches themselves say that there is no position of the Church in relation to these issues.

Unfortunately, the statement does not contain any analysis. It does not have any analysis of the tax package, nor does it advance one inch an analysis of the benefits which are going to be provided to Australia, particularly to low income earners, as a result of the government's tax changes. It does not take any further the analysis that was done by ACOSS with the help, I believe, of the Melbourne Institute, presented to the Senate inquiry which, on their own analysis, showed that every single demographic would be better off as a result of the government's tax changes—age pensioner single, age pensioner couple, single in the work force, couple in the work force, couple with children, sole parent with children. Members of the House will recall that, after ACOSS released its own analysis showing that people would be better off, it then called for further work to try to identify somebody who would be worse off.

Support for a broad based goods and services tax comes from all of the groups in the food industry—the Australian Food and Grocery Council, the Restaurant and Catering Association, the Association of Retail Grocers, Woolworths—all of which make the point that food, however defined, would require enormous compliance costs if it were taken out of a broad based goods and services tax. In fact, the Labor Party supports the government on this. The Labor Party's position, which was reaffirmed yesterday, is that it does not believe that food should be taken out of the goods and services tax. The Labor Party made it entirely clear yesterday that it is going to vote against excluding food from the goods and services tax. The fact that it says that does not necessarily mean that that is what it will do, but it was said as recently as yesterday.

The government has been supported in relation to this view by the international experts, and I have informed the House of probably one of the world experts on this—the Dutch professor who has been an international analyst in relation to this. The government is supported by all the economists who have appeared before the Senate inquiry, including those who were called by the Labor Party—economists Dixon, Harding and Warren. It has been supported by the Food Council—which made the bona fide point that zero rating food would give $5 of benefit to the top 80 per cent of income earners for every $1 of benefit to low income earners—which makes the point that it is fairer and it reduces compliance costs.

If you exclude food from GST, you are going to have tax inspectors running around trying to see whether the chocolate on a gingerbread man is bigger than the eyes, trying to determine whether it is food or a snack. You are going to have tax inspectors putting thermometers into pies to see whether they are fresh or takeaway. The government is supported by the economists, international experience, the Commissioner of Taxation and, of course, the Australian people, as expressed in their votes at the last federal election.

I finish by saying that it is all very well to say you should drive a $5 billion hole through the government's tax reform, but I note that nowhere in that press release was there any suggestion as to where you could get $5 billion from to make it up. To drive the budget back into deficit would, of course, cost jobs and cost interest rates in this country. The great news is that tomorrow the government will be introducing legislation to increase all family assistance in Australia. We are doing that in two ways—through payments for families that are not in the tax system and through increased tax-free thres holds for families that are in the tax system. Under the legislation which the government is going to introduce tomorrow, a single income family with two children will get the normal $6,000 tax-free threshold plus an additional $5,000 because it is a single income family plus $2,000 dollars for each of two children, making another $4,000, which will make for a two child, single income family a tax-free threshold of $15,000—no tax on your first $15,000.

Mr Howard —And they're going to vote against that.

Mr COSTELLO —Again opposed by Labor, these family benefits will go through to benefit families as a result of tax reform. Why can't the Australian Senate get on and see the wisdom of that policy?