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Tuesday, 20 June 2000
Page: 17690

Mr SWAN (4:35 PM) —My question without notice is directed to the Minister for Community Services. Minister, can you explain to the House the disparity between the GST impact on boarding house rents reported in the media last night and the figures subsequently released by the Treasurer's office last night? Minister, why did media reports refer to short-term impacts on these rents of 4.4 per cent when GST taxed and 3.7 per cent when input taxed, while last night the Treasurer's office was saying four per cent and 3.6 per cent respectively? Minister, to explain these disparities, will you arrange today for the release of the full Econtech report in both its draft and final forms as well as the associated departmental briefing papers and other documents?

Mr SPEAKER —The Treasurer has the call.

Mr COSTELLO (Treasurer) —Since the question was in relation to figures I released last night, I am only too happy to answer the question and to inform the House. Last night I released figures from an Econtech report, not a government report, which had been done on boarding houses and which compared the difference between input taxation—that is, the taxation which is given in relation to residential rents—and the alternative taxation where there is the half-GST and full input tax credits. That report showed that in the short term the difference between the two taxation treatments is minimal. If you used the concessional GST treatment, you would get a price impact of four per cent in the short term, and if you used the other alternative—namely, input taxation—you would get 3.6 per cent. That is, the difference was marginal—almost non-existent. It also showed, interestingly enough, that in the long term, if you took the concessional GST treatment, the price effect would be 1.5, whereas on a boarding house if you took the input tax treatment, it would be 3.1. In other words, if you took the option out of the legislation, in the long term you would be penalising people in boarding houses. The government has always said that the two treatments work out approximately the same. They do, in the short term. In the long term, it actually works out more beneficially if you take the concessional treatment. This was not government modelling; this was Econtech modelling. It was done by an independent modeller, which I would have thought puts the kybosh on all of the ALP claims—notwithstanding that very interesting photo in the Sydney Morning Herald of independent caravan park owners in the Tweed over the weekend.