Mr EMERSON (10:00 AM) —Yesterday I spoke in parliament about the impact of the GST on small business. I want to talk today about the impact of the GST and the behaviour of major insurance companies on the smash repair industry and small businesses operating in that industry. This industry has been especially hard hit by the GST, because it performs some of the many services that are for the first time taxed by the GST. The smash repair industry has been not only affected by the GST but doubly hit by the falling Australian dollar, because quite a lot of this industry's costs are costs of imported items. With the dollar now below US50c, obviously the cost of imported material, such as paint, is now much greater as a result of the depreciation in the dollar. We were told before the GST was introduced that it would increase the value of the dollar. It has done nothing of the sort; the dollar, as we know, is now at an all-time low.

In addition to that squeeze as a result of changes to the tax system, there is a squeeze on these small reputable operators within the smash repair industry by insurers themselves. They are forcing the small businesses to absorb the cost increases associated with the falling value of the dollar and also to absorb part of the GST. This is a very similar pattern of behaviour to that of the trucking companies which are squeezing drivers who are under pressure because of the GST and fuel cost increases. Insurers are also directing, in some cases, smash repairers to use non-genuine replacement parts, often without the knowledge of the owners of the vehicles. I call on the insurers to review their behaviour and their abuse of market power over these small and reputable smash repairers. We do not want the fly-by-night operators surviving and the reputable smash repairers going to the wall. The public needs to know what is going on—that is, a deteriorating quality of work, the use of non-genuine replacement parts and ethical operators being squeezed out by unethical behaviour.

I link all of these realities to bankruptcy figures that were released just yesterday. In my home state of Queensland, bankruptcies are up to 21½ per cent in the three months to March compared with three months in the previous year. In addition, debt agreements are up by a massive almost 50 per cent. It was forecast by economic modellers that Queensland and Tasmania would be the states most adversely affected by the GST. Those forecasts are now becoming reality. It is not as if the government was not warned: even its own modellers predicted that Queensland and Tasmania would be the most adversely affected states. In Tasmania there was a massive 17.24 per cent increase in bankruptcies in the March quarter compared with the corresponding period for the previous year. Compare that with the Australia-wide figure of 13.64 per cent. These are unacceptable figures. They are very high and, unfortunately, they are just as were predicted by economic modellers in the Australian Labor Party.