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Thursday, 25 November 1999
Page: 12633


Mr SLIPPER (11:31 AM) —in reply—Initially I want to refer to the comments made by the Deputy Leader of the Opposition with regard to the government's momentous business tax reforms. The opposition are now supporting the government's changes and today is therefore a welcome day for Australia. We will have a business tax system that will help small business, rural Australia and indeed the community at large. It will undoubtedly make Australia a much more competitive place.

The good thing about this is that we can reduce company taxes, we can change depreciation arrangements, we can reduce capital gains tax, we can simplify capital gains tax treatment and we can make Australia an even more competitive base for this region. Most importantly, we can create more jobs. We can have a higher standard of living as a consequence of all that and, of course, that is a very good thing for Australia. So today is a historic day to build on the government's tax reforms which have previously passed through the parliament. We now have an indication that the parliament is going to support the business tax reforms, and that is building on the government's successful record.

I would like to respond to some issues raised during the second reading debate on A New Tax System (Indirect Tax and Consequential Amendments) Bill (No. 2) 1999 . It is regrettable that the opposition have barely touched on the content of the bill but rather have used the second reading debate, as they have the entire debate on the new tax system, as an opportunity simply to rant. They have taken the opportunity to scaremonger further and to spread even more inaccuracies. They have completely, totally and comprehensively failed to talk about the substance of the bill, and they have not mentioned their alterna tives. They are policy vacuums, and they will be treated with contempt by the Australian people.

Apart from their support for the outdated and inequitable wholesale sales tax, the Labor Party have no tax policies. This is a fact which the honourable member for Rankin confessed in his address to the House by way of contribution to this debate. All he could muster was a particularly ham-fisted attempt to defend the indefensible—Labor's outdated and inequitable wholesale sales tax. Let us look at that policy. It is a tax policy that taxes goods at zero, 12 per cent, 22 per cent, 32 per cent, 37 per cent, 41 per cent and 45 per cent. The wholesale sales tax is a cascading tax which is embedded in the price of most goods we buy.

The honourable member for Newcastle, in his address, claimed that the amendments to the GST were cascading amendments. The member for Newcastle is clearly confused; he was really intending to refer to the cascading wholesale sales tax, which has been a disaster. The member for Rankin failed to mention that the goods and services tax will remove between $7 billion and $8 billion a year from business costs because it is not a tax on business like Labor's wholesale sales tax. We have had contributions from members of the opposition on the issue of inflation, but not once did they mention that, for most of the time that they were in government, the average inflation rate during the 1980s—those dark years of Labor rule—was 8.2 per cent.

The honourable member for Wills claimed that the legislation would increase red tape for small business, yet he failed to bring forward any substantive evidence that what he said had any validity. His rhetoric was simply that—empty rhetoric. The simple fact is that the tax legislation which has passed through the parliament will cut red tape for small business—

Opposition members interjecting


Mr SLIPPER —and will simplify matters for business. He also criticised the impact of the goods and services tax on petrol prices, yet in doing so he ignored Labor's appalling record on the petrol excise. It has been only a few years since the motorists of Australia knew too well of Beazley the Bowser Bandit. The member for Wills, unfortunately, had a particularly empty contribution.

I return to the member for Rankin, who claims that the new tax system is cumbersome. It simply is not so. It is a very positive change for Australia. We are the government which sought a mandate from the Australian people and we have implemented that mandate with the support of the parliament. I found it impossible to understand how the honourable member for Rankin could defend the wholesale sales tax. He actually argued that it was more streamlined than the new tax system Australians will have. The member for Rankin, unfortunately, is out of touch on this particular matter, as are many of his colleagues.

The honourable member for Corio, who is never short of a word—in fact, he never uses one word when 10 words will do—claimed that the legislation before the chamber was pernicious, choosing to ignore its enormous benefits. Strangely, he asserted that the devil was always in the detail of the ANTS package. Yet he and his colleagues have shied away from talking about the detail in this debate, as someone said to me, rather like Dracula running away from a wooden stake.

The Labor Party in this debate have failed to concentrate on the policy detail. They have sought to rediscuss the issue of Australia's new tax system without concentrating on the amendments currently before the chamber. It is a tragedy. When the record of this part of Australia's history is written, it will be recognised that the Labor Party in government were scared to tackle real and meaningful reforms that would deliver substantial benefits to Australia, were condemned by the Australian people and, ultimately, were rejected at the 1996 election.

However, I want to concede one point that the honourable member for Corio made when he said that Labor's years in government were 13 long, hard years. And so they were—long, hard years for the Australian people.

The honourable member for Blaxland—I suppose you could say Keating's apprentice—came into the chamber and blindly praised the failed wholesale sales tax. It is hard to under stand how, since this particular tax is so totally discredited, people who claim to be intelligent can enter the House of Representatives and support something that is clearly indefensible. He supported a 32 per cent tax on refrigerators, videotape recorders and most electrical goods. I wonder what the constituents of Blaxland would say if they were to read the contribution made by the honourable member. Like other Labor luminaries, he ignores the fact that the wholesale sales tax is an embedded tax that progressively adds to the cost of goods throughout the economy, and that is something which everyone ought to recognise.

The honourable member for Paterson also continued to sing the tune—it was a discordant tune—of those opposite, who have failed to come to terms with the result of the last election when the government stood up seeking the support of the Australian people for a new tax system. We received that support, and as a result we will have a new, more equitable and fairer tax system. The honourable member for Cunningham, a former Speaker, also cheered on the failed wholesale sales tax. He raised the question of the GST and insurance, and the honourable member for Mackellar in her interjection quite rightly accused him of pedalling Labor's fibs on this issue. It is obvious to everyone listening to this debate that Labor is opposed to lower personal taxes, and the Labor Party has traditionally been the party of high taxation in this country.

Returning to the honourable member for Newcastle, he hypocritically called this a hidden tax, but he and his colleagues stand and support the greatest hidden tax of all—the wholesale sales tax, which a number of them continue to support in the chamber. Most Australians would find that eminently regrettable.

The honourable member for Calare, who often makes a thoughtful contribution—he is not always right, of course, but he makes a thoughtful contribution in the chamber—referred to abattoirs and the question of over-the-hook sales. The Australian Taxation Office is issuing a fact sheet to clarify the issue, and there is no need for the treatment of over-the-hook sales to be different from the treatment of live sales. The GST treatment of over-the-hook sales depends on the terms of the contract between the buyer and the seller and when property passes from the farmer to the abattoir. If the property passes at the saleyard, GST is payable on the full amount paid to the farmer, as a taxable good is being sold. If property passes after processing, what is being supplied is GST-free food and taxable goods, and the GST would need to be apportioned in the same way as with other supplies of GST-free and taxable goods.


Mr Crean —That sounds simple!


Mr SLIPPER —It is simple, it will be simple, and I would commend to the Deputy Leader of the Opposition the Australian Taxation Office fact sheet when it is issued because, if he can read, he will see just how simple this will be.

Opposition members interjecting


Mr SLIPPER —The honourable members opposite make a lot of noise but never make any sense. They have mentioned nothing of substance in their contributions, nor do they talk about their appalling record—increasing the wholesale sales tax after the 1993 budget after saying that taxes would not rise. We all remember the broken promise when the l-a-w tax cuts were removed.

The Labor opposition also complained about the fact that the government is consulting on the A New Tax System legislation and amending the legislation to address legitimate concerns. It is a fact of public record that there have been a number of amendments to the tax legislation. This is not surprising, given the momentous and important nature of the reforms proposed by the government. We are a consulting government. We go out there and talk to the Australian community. We go out there and listen. And when there is a need for a minor change to the legislation to improve its operation we do not hesitate to make it. I have to say that we as a government disagree with the arrogant, typically Labor proposition that we have heard from those opposite. As many government members have already mentioned, we have been involved in this extensive consultation process. This process will continue, and it has involved a broad cross-section of industry and community sector representatives, the states and territories, the Australian Taxation Office, other government departments and the community at large.

Throughout this process we have assessed the finetuning required to ensure that the GST is implemented in the most effective way possible. This bill includes amendments that the government considers necessary to provide a smooth transition to the new tax system. I want to remind the House briefly of the main points. This bill and the regulations that have already been notified finetune the tax treatment of financial services without changing the fundamental policy outlined in the A New Tax System. The government also proposes a number of amendments relating to the application of GST and state regulated insurance schemes—in particular, amendments to simplify the application of GST to workers compensation and compulsory third-party insurance. The bill also proposes an amendment to remove the value of any state stamp duty from the calculation of GST on insurance premiums. The bill contains amendments to make sure that the domestic telecommunications industry is not put at a competitive disadvantage to foreign competitors because of the goods and services tax.

In relation to second-hand goods, the bill proposes changes that will better achieve the original policy intent of the second-hand goods provisions. The bill also contains amendments to remove GST from the calculation of the tax base of the petroleum resource rent tax. Further details of the measures contained in the bill are contained in the explanatory memorandum.

I want to praise the very capable contributions of government members who have spoken on this bill. I include amongst those the honourable members for Cook, Barker and Mitchell. The honourable member for Cook acknowledged the historic nature of these tax reforms—the most significant tax reforms since Federation. He highlighted lower personal income taxes, enormous benefits for exporters and the abolition of Labor's wholesale sales tax. He also pointed out that when one has historic reform there is the need for some small refinements, such as those contained in this bill. The honourable member for Barker pointed out, and it was admitted by some of those opposite, that the Labor Party is the only party that wants to retain the wholesale sales tax. He emphasised that the new tax system is simpler.


Mr Emerson —Mr Deputy Speaker, I raise a point of order. The Parliamentary Secretary to the Minister for Finance and Administration was just talking about the wholesale sales tax. Earlier he claimed that refrigerators had a wholesale sales tax rate of 32 per cent. I ask him to correct the record because the wholesale sales tax rate on refrigerators is 12 per cent.


Mr DEPUTY SPEAKER (Mr Mossfield) —There is no point of order.


Mr SLIPPER —It is interesting that the member for Rankin seeks to divert the attention of the House from the very important reforms we are discussing. The member for Rankin stands condemned by his constituents and by the Australian community for supporting the outdated wholesale sales tax. Returning to the contribution made by the honourable member for Barker, he referred to Labor's boundless negativity.

Mr Horne interjecting


Mr SLIPPER —When one listens to the hot air being emitted by the honourable member for Paterson, it is pretty clear that the negativity remains in this place, at least on his part. The honourable member for Mitchell highlighted the policy vacuum of those opposite. They are bereft of ideas or policies of their own.


Mr Horne —The member for Mitchell!


Mr SLIPPER —The member for Mitchell is a very competent member and he speaks often in relation to financial matters and the words of wisdom he utters are listened to by the people of Australia. Returning to the principal matters of this debate, I commend the provisions in this legislation to the chamber, but I want to foreshadow that the government will be moving amendments to this bill during the consideration in detail stage.


Mr Crean —How many?


Mr SLIPPER —These amendments were circulated on Tuesday and contain two major issues. The Deputy Leader of the Opposition, on behalf of the Labor Party, failed to circulate his amendments until just a couple of minutes ago, but the government has given all members of the chamber two days notice of the important amendments we are currently proposing. The two major issues relate, firstly, to the announcement made by the Treasurer on 19 August that there would be an immediate income tax deduction for small and medium sized businesses for expenditure incurred in acquiring or updating plant or software to prepare for the goods and services tax, and we will be moving amendments to that effect. Secondly, amendments will be moved to simplify the treatment of general insurance. This will mean that businesses will not have to pay GST on any payouts that they receive, and business will welcome the simplification. Other minor and technical amendments are also included, and these are explained in the supplementary explanatory memorandum which will be circulated shortly. The Labor Party stand condemned. They have failed to address the important issues contained in this bill and it is with a great deal of pleasure that I commend the legislation to the chamber.

Question resolved in the affirmative.

Bill read a second time.

Message from the Governor-General recommending appropriation for the bill and proposed amendments announced.