Mr RUDD (9:55 PM) —I rise in support of the amendment moved by the opposition to the Taxation Laws Amendment Bill (No. 7) 1999 . This is a historic week in the fiscal history of our Federation. It is historic because this week the parliament is about to pass into law the single most regressive set of changes to the nation's taxation system in our history. It is historic because never before in our history has Australian business had transferred to it so massive a compliance burden. It is equally historic because all this is happening without the government having advanced a single shred of evidence that their tax package will in any way advance our national economic welfare or in any way advance our national social welfare.

We are told instead to embark upon this national taxation odyssey on trust and trust alone. Those opposite call it reform; I call it regression. Those opposite have made the fundamental mistake of confusing change for reform. Change this certainly is but reform it certainly is not. It is change in the wrong direction. While the Howard government marches boldly back in the direction of the 1950s when the Europeans first introduced consumption taxes, the Europeans themselves today are trying desperately to rid themselves of this taxation millstone as they embark upon a new century.

It is very easy to mindlessly chant the mantra of economic reform. Those opposite now do it with almost religious fervour—if not religious fervour, then at least ideological fervour because the mainstream churches have abandoned them midstream and expressed their profound reservations about the taxation package before the nation.

Mr Slipper —That's not true.

Mr RUDD —At least most of them are chanting the mantra of the GST because there are still among them some political hardheads who know that this is not only of dubious value to the nation but also of political kamikaze value to themselves. All those government backbenchers out there in marginal seats donning their white headbands as they jump into the fray to defend that which is indefensible, to defend a tax which will create 1.5 million taxation agencies for the Australian Taxation Office from the ranks of Australian small business, and do so less than 12 months before the introduction of this tax on 1 July 2000.

Of course, the Prime Minister and the Treasurer are telling the troops day in and day out in this place that all this is in the cause of reform. Have they ever taken the time to advance the case as to just how this economy is to be reformed by this new $33 billion tax? Have they ever taken the time to explain to the nation how much the economy will additionally grow by as a consequence of this tax? Have they taken the time to explain just how much employment will grow by as a consequence of this tax?

Have they taken any time to explain how much inflation will increase by as a consequence of this tax? Have they taken any time to explain just to what extent the existing revenue structure of the nation is somehow incapable of delivering adequate revenues for the future? Have they taken time to explain just how these measures will impact on the already substantial gap between rich and poor? No, they have taken no such time at all. They have failed to explain any of these things.

Why have they failed to do so? Because they know that this package will not result in additional growth in the economy. They know that it will not result in additional growth in employment. They know that it will only result in an increase in inflation. They know that there is no fundamental fault with the existing revenue system which cannot be fixed within existing structures. They know that, as a consequence of this, they will treble the compliance burden for Australian small business. They know what its consequences will be for the future of Commonwealth-state relations. And they know fundamentally that this will result in an unfair system.

But if it is all these things, why would you want to do it? The same question was asked by Professor Dixon of the Centre of Policy Studies at Monash University. He said, `If it delivers all these downsides, why would you wish to introduce it?' A very good question indeed.

I would posit that there are a number of reasons why you would do this. The first is that this whole strategy was conceived as a political distraction strategy; second, in its essence, this tax package is a wealth redistribution strategy; and, third, in the end, it became a political face-saving device for a Prime Minister and Treasurer who became hopelessly dug in.

Turning briefly to the first reason—that is, that it was all one huge political diversion strategy in the first place. Let us cast our minds back to the events of 1997. The government was in diabolical political trouble, with the issue of nursing homes being brought to this parliament's attention by the member for Jagajaga. That issue blew up in the government's face day by day. The introduction of unlimited up-front nursing home fees, including the requirement that seniors sell their own homes to pay for those up-front fees, reflected in a true way the bleak Dickensian view of human charity which so much characterises the social policies of this government.

The upshot? A government collapsing in the opinion polls and out of left field—or, should I say, out of right field?—what do we have charging in on the white charger? The GST, the perfect agenda shift. How we have all forgotten the Prime Minister's resounding proclamations going into the 1996 election that there would never, ever be a GST under his prime ministership. That was prior to the 1996 election. `We have learnt from the social experiment,' said the current Prime Minister, `from that great feral abacus, Dr Hewson, that a GST in fact is not good for the country, it is not good for the economy, it is not good for the society, and not on my nelly will we ever have one.' That was good, honest John Howard at the time. How things changed.

The rest of course is history. Remember that the date on which this package was released to the nation was 13 August 1998, two weeks before the election was called. Yet those opposite have the audacity, almost on a daily basis in this place, to complain to those of us who occupy the opposition benches that 2½ years out from the next election we should be producing in detail our approach to tax policy and economic policy. I would simply ask those opposite to reflect upon the timing of their own pronouncements in the lead-up to the 1998 election. Their policy was just produced on the eve of that election, leaving barely any time at all for public scrutiny.

However, I would predict in the full sweep of history that this will prove to be the end of this government—just as, in international experience, the introduction of a tax of this nature proved to be the destruction of the Canadian conservatives, it provided the basis for fundamental political damage to the Japanese LDP and, in Australia at the last election, it reduced what was a record majority for the Howard government to shreds. Nineteen seats were lost out of the 25 needed for a change in government. It was the most appalling performance by a first-term government in the history of the Australian Federation.

We come to the second reason why we have this package before us tonight to pass into the law of the Commonwealth tomorrow and over the next several days. Having committed themselves to a political strategy which lost them such a large number of seats in the election, the government were then faced with their underlying rationale for this scheme they call reform. If we recall, no arguments had been advanced as to why this taxation scheme represented any net benefit to the nation. The economic case had not been made. The social welfare case had not been made. So what was its real rationale?

Its real rationale is that this tax, in its essence, is a wealth redistribution tax of massive proportions. It is a redistribution tax which takes the taxation burden in a direction which advantages the rich and penalises those on low and middle incomes. This is not the Robin Hood tax; it is the Sheriff of Nottingham tax. It is an income transfer tax. It penalises low and middle income earners. It penalises pensioners. It penalises those on fixed incomes. It penalises small business through this monstrous compliance burden which is about to be imposed on them. But it rewards those at the top end of the income scale.

This tax rewards the traditional constituency of the Liberal Party of Australia. It is a fundamental assault on the doctrine of progressivity that has characterised the income taxation system of this country since the war, and it replaces that principle of progressivity with a simple and stark principle of regressivity.

At the heart of this proposal, we have at stake a debate about the future of the Australian nation. We have our past which has been characterised by a sense of fairness, an ethos which has governed this country for 1½ centuries, and its prospective replacement by a new ethos of unrestrained greed. We have the replacement of Henry Lawson as a national icon by a new icon called Gordon Gecko. We have a new, brutal view of the world that says that the only path to maximising national economic performance is one which maximises national economic inequality.

This brings us to the third reason. The government hit the solid brickwall represented by Senator Harradine before turning to that wobbly wave of marshmallow otherwise known as the Australian Democrats. ANTS mark 1, the first package, the first variant thereof, was dead in the water. How then to move to ANTS mark 2 without having egg, cake, chicken, lettuce and doughnuts spread all over your face? Answer: total amnesia.

Remember, we have already had one dose of amnesia in this debate when, just prior to the 1996 election, the Prime Minister stated that `never, ever, ever' would he ever introduce a consumption tax to this country. But now we have a second dose of amnesia, this one particularly characterised by the remarks of the Treasurer. Let us look at the robust policy consistency of the Treasurer on this point—his courageous pursuit of principle, his unswerving dedication to good policy and not grubby compromise with lesser outcomes. Let us look at the Treasurer's statements of 12 May 1999 at the National Press Club, where he said:

Well look I've had numbers of meetings with the Democrats and I have tried to progress negotiations with them. [But] . . . their position is . . . a position which the Government cannot accept. That opens up $5 billion in the whole package.

That is $5 billion which then could not be delivered but which mysteriously overnight can be.

Let us go to the Treasurer's remarks of 21 April 1999, in his doorstop interview at Treasury Place in Melbourne, where he said:

You really want a tax system where we're employing people sticking thermometers into chickens to try and run a tax system—it's nightmare on Main Street. It is not real life. They've made it to try and sort of get some brownie points. It won't work.

Now apparently it does work, and the only thing that has changed is the fact that two or three months have gone by. Turning to more of the Treasurer's remarks, also of 21 April, he said:

. . . unlike the Democrat position which really is a recipe for, well, a nightmare. A small business nightmare . . . the government will stick to its position.

What was a nightmare just a couple of months ago apparently is a very pleasant dream today—at least in the Treasurer's reasoning.

Again, looking at more of the Treasurer's statements of 21 April, he said:

. . . if you exclude food and I think that costs 5 billion dollars. They're talking about another five billion dollars of compensation I think. Let me make this clear, to do that would be to put the budget in deficit, would be to risk Australia's prospects, it could put pressure on interest rates and the economic consequences of that for Australia would be very bad . . .

A prognosis of doom, it seems, barely two or three months ago—but one which apparently is entirely compatible with rational and proper economic management a few months later.

For a further episode in the record of consistency on the Treasurer's part on the architecture of the tax package, we turn to his statements of 30 March 1999, where he said:

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.

Now it seems our beloved Treasurer is quite happy to dispense tens of thousands of thermometers, one to every officer of the Australian Taxation Office, to go out there and do their duty for queen, empire and the taxation collection system of the country.

We have the Treasurer's statements of 19 February this year, where he said:

Excluding food would lead to nightmare compliance costs and efficiency and simplicity losses—

compliance costs and efficiency and simplicity losses, it seems, which the Treasurer is now apparently happy to have the small businesses of this country bear.

Finally, there are his remarks of 19 August 1998. When asked the question, `Is there any circumstance in which you would consider exempting food from the GST?' his answer is an unequivocal no. The no of yesterday is the yes of today.

So which Peter Costello do we believe? Do we believe the Peter Costello of 19 August, the Peter Costello of 19 February, the Peter Costello of 30 March, the Peter Costello of 21 April, the Peter Costello of 12 May; or do we believe the Peter Costello that did the dirty deed with the Democrats? Do we believe the chameleon who struts and frets his hour upon the stage in question time in this place, or do we believe the Treasurer whose words are recorded in the documents I have referred to this evening? No wonder the public of this nation holds the political class of this nation in such fundamental contempt.

So what is it that brings us to this last sordid compromise that we will face in this House tomorrow and during the remainder of this week? It could be described as the ANTS mark 67 package, replete with Democrat pike and twist. This latest and final variant of the package is a double disaster. It has all the downside of ANTS mark 1, but now we also have a total compliance nightmare for the 1.5 million small business taxation points that have been created under it.

If we look at the verdict which has been delivered on this package by Professor Dixon of the Centre of Policy Studies at Monash University—and this is the most recent package agreed on with the Democrats—he says:

As with the original ANTS package, the Democrats' changes now being hastily adopted by the Government have not been subject to rigorous economic analysis. Preliminary work at the Centre of Policy Studies using the MONASH model suggests that these changes will not generate jobs in the long run and will leave a significant risk of employment reduction in the short run. Nor will they help Australia's service exports or improve the terms of trade. They are likely to increase compliance costs substantially. Even ignoring compliance costs, the MONASH results indicate that the Democrats' changes will reduce Australia's overall economic welfare by about 0.3 per cent (approximately $1 billion a year).

If this is the government's definition of policy success, I would hate to encounter what it would describe as a policy disaster.

We are, however, not just looking at the verdict of the academic economists. We are looking at the verdict of the Australian community as a whole, the people who jump on to their telephones and ring us in our electorate offices across the length and breadth of this nation to express to us their point of view about how this new package will impact on them. I have here a letter, just one of the many my office has received recently—as many other members would have received recently. This particular letter is from the Melbourne City Mission, and it describes in great detail the impact of the GST on charitable organisations such as Melbourne City Mission.

We have received letters also from the New South Wales P&C Association, concerning the impact of the GST on books. That association stated:

The compromise decision by the Federal Government and the Australian Democrats to place a GST on books jeopardises the literacy development of Australian children.

It went on to say:

It is quite obvious that neither the Government nor the Democrats looked at the issues surrounding books in their recent compromise deal. There was no attention given to the impact on literacy, education or parents and their efforts to engender a love of reading in their children.

We have had in this place in the last couple of days the most extraordinary illustration of what I can only describe as an active act of policy fraudulence on the part of the Treasurer of the Commonwealth. Today in response to a question from the member for Bendigo about the impact of the GST on books, the Treasurer again implied that the impact would not be great at all. The reality is that there is a price gap today between the purchase of most books from your local bookstore and Internet purchases. The reason why Australians are buying more through the Internet is not because of some quixotic interest in electronic commerce but because it is cheaper. The imposition of this new tax will make it doubly cheaper to purchase items through the Internet, which will deliver a body blow to the Australian book industry. You do not have to be a Rhodes scholar to work that out. What we have had in this place is an entirely thespian performance by the Treasurer of the Commonwealth trying to convince us that that difference does not exist at all. He stands condemned by it.

This is a dark day in the history of the Federation; it is a dark day in the fiscal history of the Federation. In a decade's time we will look back and wonder why this country did it—why we imposed this burden on jobs, why we imposed the burden on pensioners and why we imposed this burden on the country at large. (Time expired)