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Monday, 22 November 1999
Page: 12260


Mr ANDREWS —My question is addressed to the Treasurer. Treasurer, would you advise the House of the details of stage 2 of the new business tax system? In particular, what is the effect of business tax reform on revenue?


Mr COSTELLO (Treasurer) —I thank the honourable member for Menzies for his question. On 11 November this year the government announced the second stage of business taxation reform. The government indicated that in principle it would accept the high level reform recommended by the Ralph inquiry, sometimes known as option 2, that we would work with business to clarify the concepts behind it and that those reforms would come into effect not before 1 July 2001.

In addition, we announced the government's response to remaining integrity measures, in particular integrity measures restricting the alienation of personal services income and integrity measures restricting losses from non-commercial activities. These measures, when taken together with measures previously announced by the government back in Sep tember of this year, have the effect of making the business tax reform package mildly revenue positive. In the first year there is a cost of some $100 million; in the second year a benefit, additional revenue, of some $700 million; in the third year a cost of some $500 million; and in the fourth year a revenue increase of some $400 million. The consequence of that is that we are accomplishing the historic reform of business taxation in a revenue neutral or, rather, mildly positive way.

The Australian Labor Party have been trailing their coat on business taxation all the way throughout this process, saying that they wanted to negotiate and be part of the historic reform of business taxation. They indicated that, if the government accepted the integrity measures which made the package revenue neutral, the Labor Party would be supporting business taxation reform. The government has done that. Now is the time for the Australian Labor Party to do something they find extremely difficult. Now they will have to make a decision, a very difficult matter for the Leader of the Opposition and the member for Hotham. They have been trailing their coats now for several months, saying that if the government announced its position on these integrity measures and if the package became revenue neutral they would be supporting it. We hear this constant refrain: because they cannot make a decision, they need more and more information. Now it is suddenly not enough to have a Treasury costing, it is not enough to have a Ralph costing, and it is not enough to have a revenue positive position. The heat is on Labor now to make a decision. They have been in opposition for four years, and they are yet to make a decision.

We know why they keep taking this position—because it is easier to oppose when you have no policy. To actually take a decision and support something requires a policy. The acid comes on to the Leader of the Opposition and his backup man the member for Hotham, fresh back from his sojourn in Paris, to see whether they can finally come out and announce their position on business taxation reform. The truth is that it was the Australian Democrats who were the responsible opposi tion party on indirect taxation reform. If Labor cannot make a decision, it will be the Australian Democrats who become the responsible opposition party on business taxation reform again.

The Senate report comes down at 5 o'clock this afternoon, and the Labor Party ought to have a policy. It ought to have a position. It is up to Labor whether it can be part of positive policy making in this country or whether it sidelines itself from the great historic shift in taxation reform again.