Senator JACINTA COLLINS (5:34 PM) —I present the report of the Employment, Workplace Relations, Small Business and Education References Committee on the inquiry into the GST and A New Tax System together with the Hansard record of proceedings, documents presented to the committee and supplementary material.

Ordered that the report be printed.

Senator JACINTA COLLINS —I move:

That the Senate take note of the report.

The ACTING DEPUTY PRESIDENT (Senator McKiernan) —I understand that informal arrangements have been made to allocate specific times to each of the speakers in today's debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly. The chair of the committee is allocated eight minutes; three other speakers are allocated seven minutes each.

Senator JACINTA COLLINS —With that understanding I seek leave of the Senate to incorporate the remainder of my tabling statement remarks in Hansard if my time expires.

Leave granted.

Senator JACINTA COLLINS —In what time I have I will commence by addressing the committee's terms of reference. The committee was directed to look at the impact of the GST on employment and wages and on the education sector. From the evidence presented in over 90 submissions that related to our terms of reference, and from 170 witnesses who appeared before us, the majority of the committee were left with the overwhelming impression that this was a tax reform that nobody wanted.

To summarise briefly, we found evidence of likely disadvantage to a high proportion of the community as a result of the doctrinaire application of a tax system which contained more impositions than compensations, higher compliance costs overshadowing the promise of simpler accounting and probable distortion of the labour market in key areas.

Senators will recall the negotiations leading to the reference of the new tax system bills to Senate committees last November. There was implacable opposition to this reference from the Treasurer, echoed more lamely, I might say, by some senators opposite. At least they understood precisely how the numbers plan out in this place. The Treasurer's line and that of senators opposite was to chant the mantra of the mandate, as though it gave them carte blanche to introduce the bills in the form they did and allowed them to resist all attempts at questioning the assumptions and details of Treasury analysis, upon which the new tax system is based.

Treasury has a magic formula in its computer code called PRISMOD, which crunches numbers so sensitively and with such a high reliability factor that most of the information it churns out has to be kept secret. The committee learned this from what purported to be an answer to a question placed on notice to Treasury through DETYA by Senator Carr. Treasury informed Senator Carr that it had received a number of requests for information related to PRISMOD, but they were not going to tell us any more than what they had published in the ANTS document. I am sure they had good reasons for not providing this information. We all recall that Senator Kemp promised in the debate on this reference on 25 November last year that the government would cooperate with this inquiry, but I understand now that this was not to the extent of providing us with the information that we needed.

Keeping up the information flow seemed to be the job of this side of the chamber. Indeed, it seemed to the committee that we were assisting the government to find out what the community really thinks about the GST—things they did not hear from their contacts in banking and finance. For what other reason were we, and other committees, shadowed by advisers to Minister Reith, in our case, and Dr Kemp—unless, of course, they were there to report indiscreet comments and questions from government senators. Senator Knowles's behaviour, for example, was reported right across the media. Despite Senator Kemp and his colleagues, this committee—and doubtless all of the committees working on the general inquiry—learned a very great deal about the apprehension that is felt in many quarters about the effects of the GST. Opposition senators are of the view that the government's ANTS package is marred by several major flaws. To begin with, the committee came to the view that introducing a GST will do nothing to assist in solving the problem of unemployment. The services sector has been the most significant contributor to employment growth in Australia over recent times. Yet, absurdly at a time of still high unemployment, the government is now proposing an onerous tax on this job creating sector. A great deal of evidence from a range of witnesses supports the view that the effect of the ANTS package on the job-rich service sector will be overwhelmingly negative. There is particular concern about the impact of the GST on tourism, which is currently a major and growing source of employment in regional Australia.

The substitution of a GST for the wholesale sales tax system will result in significant overall increases in the costs of services, which will add up to an appreciable fall in the living standards of ordinary Australians, especially low income earners. The government claims that the inflationary effects of the GST will be more than offset by the compensatory elements of the ANTS package. Yet government officials now admit that the price effect of the GST will be far greater than the initial forecasts. We must all have strong doubts about the government's claims that there is fair and adequate compensation in the package. The promised income tax cuts will benefit mainly high income earners to any significant extent. They will be compensated for increased costs of ballet tickets and supper afterwards, but for low income earners the income tax cuts will go nowhere near providing full and adequate compensation for the introduction of the GST.

The government would have us all believe that the ANTS proposals will bring a long-awaited quick fix to the tax system. To the contrary, the ANTS package opens a continuing political issue on compensation for low income earners and the unemployed, as well as other groups who gain nothing as an outcome of the package. The ANTS package will do nothing except shift the ground of the tax debate from the question of how best to reform the system to the issue of how best to compensate people for what were ultimately ineffective reforms.

Opposition senators consider that the government should have placed more emphasis on making beneficial changes to the current tax system, such as a more determined effort to legislate against tax evasion. This would have been a far more convincing indication of the government's preparedness to tackle tax reform in an area that has aroused widespread public cynicism. Opposition senators have noted the concerns of the business community with great interest. Evidence to the committee has made it clear that while the business community supports taxation reform generally—many accepting a GST—they are not so supportive of tax reform as defined in the ANTS package.

Industry groups heard by the committee expressed their concerns about issues such as high compliance costs, the heavy administrative burden, poorly targeted and inadequate compensation, and a reluctance to tackle genuine impediments to employment, such as payroll tax. Certainly the proposed tax package has been welcomed by the big end of town. Those businesses are best able to afford and absorb the compliance costs, and their corporate structures are geared for the requirements, but small business is not so well placed.

I would like to close my remarks by emphasising the modelling that the committee did when we commissioned Professor Dixon. His model on the central effects of this package essentially highlighted that the whole issue was really a matter of a very high short-term employment risk for no long-term gain to the economy.

Unfortunately, the remainder of my remarks deal with the implications of the package for education. I will incorporate those, but I want to conclude my remarks by thanking the committee secretariat for the solid, hard and professional work they did for all members of the committee.

The ACTING DEPUTY PRESIDENT (Senator McKiernan) —Leave was granted earlier for the incorporation of those remarks.

The remainder of the speech read as follows—

The application of a GST to education also represents a tax on learning. The Government's refusal to zero-rate educational institutions indicates that given the choice between social benefit and ideological posturing, the Government has once again chosen to emphasise the latter. The result will be a quite unnecessary compliance burden placed on schools to the detriment of education programs.

The changes proposed bear most heavily on those educational programs which draw heavily on community participation for support, and those least able to either absorb the costs or assume the additional responsibilities which will be needed to keep school and community education programs operating effectively.

The proposed new tax on learning should be seen in the context of several years of serious decline in government funding of the education sector. The education community has been under siege since 1996, with program cuts aimed at re-orienting all segments of the education sector—schools, TAFE colleges and universities—toward greater reliance on corporate finance sources. The result of a GST on top of these developments will be a decline in participation rates in adult and community education and subsequent decline in the incidence of older and less well-educated people entering the workforce.

Opposition senators agree that the tax system need changing. This does not mean that we have to introduce a GST. When the Government speaks of `tax reform' we see it as a euphemism for the introduction of an unfair and highly regressive new tax such as a GST. Tax reform refers to a process through which the tax system is made genuinely fairer for ordinary Australians, not just high-income earners. Nor is it possible for Parliament or the community to see the application of a GST in the context of other tax measures, which may be in the mind of the Government. This is a deficiency in the policy of incremental tax reform.

The ANTS package will not deliver a fairer tax system. Contrary to the claims of the Government, it will do nothing to fix the problems of inefficiency and complexity in the existing system. It will do nothing to encourage job-creation in the economy. It will do nothing to improve the perceptions of inequity and unfairness that exist about the current system. That is why Opposition senators have recommended that the bill not be passed.