Senator CHRIS EVANS (4:31 PM) —I did not expect the good senator to make such a short contribution, given his interest in the matter. I rise to speak in this debate with the same background as most of the senators in this chamber. I was elected to this place promising not to introduce a GST. That was the platform on which I was elected. I share it with all Labor senators, most of the Independent senators and half the Liberal senators—because half of them were elected in 1996 promising never, ever to introduce a GST. So, if you go around this room, a good 75 per cent of us were elected promising that we would never introduce a GST. I for one will be continuing to honour that promise to the Australian electorate.

I want to start by making a couple of comments about process. I notice Liberal senators in this debate have concentrated a lot on process. I do not want to spend much time on it, because I think for some it is an excuse for avoiding debating the real issues, but I was concerned by an editorial in the Australian today which described the committee process inquiring into the GST as `a long, expensive, tedious and ultimately fruitless distraction from the goal of taxation reform.' I think that is an unfortunate view.

The Labor Party was not responsible for setting up the committee process in the form that it finally took, but I think it is correct to say that the committee process was an involving one, it did allow community voices to be heard, it was educative, and it did enable further debate about the goods and services tax propositions of the government. So I think it is very churlish for people to refuse to recognise the role that that process has played in educating both the electorate and members of this parliament. It has allowed the voices of people like the disability pensioners, the surf lifesavers, the boy scouts and the self-funded retirees to be heard in a way they have never been heard before. They were not heard during the election campaign and they were not part of the government's very limited consultative process. The Senate inquiry process has allowed their voices to be heard and their concerns to be aired.

It will be interesting to see whether the government listens to any of those concerns, because many people have raised very real issues about how the GST will impact on people's lives in this country. I am not talking about economic modelling or theories but real impacts, real imposts, real hurt and real damage to people's ability to conduct their lives and their ability to feed, clothe and house themselves. I think any process that allows debate about those issues and allows those concerns to be aired is, by definition, good for this country.

My major concern in the debate today is to make the point that this is not a debate about economic modelling. I heard Senator Gibson's contribution and I recognise the very valuable contributions made by Senator Cook, Senator Conroy and others from this side, but I think what we have to do in this debate is to concentrate on how these bills would impact on real people. We have to use economic modelling and we have to inform ourselves about theories, projections and assumptions, but we also have to deal very much with the impact on Australian citizens—what this means for people trying to survive and bring up their families in this country. I think that has been a little lost in this debate, as we hear arguments from one economist trying to dispute the assumptions of another economist. I do not know about the Australian community, but I get pretty turned off by it and I get lost in a lot of the argument.

What I want to concentrate on is the impact of these bills on Australian people, their families and their dependants, and I want to concentrate on the question of fairness. In response to a question I asked yesterday, Senator Alston dismissed the issue of fairness as being irrelevant. I think it is very relevant to this debate; I think it is at the heart of the debate. It is certainly at the heart of Labor's opposition to the GST. We say the GST is unfair, we say it is regressive. We say that any tax on necessities of life impacts more on people on low and fixed incomes, and it impacts unfairly. That is why, traditionally, countries with a GST have not taxed food and in many cases they have not taxed electricity, housing and other basic essentials. They accept that it is a regressive taxation regime if imposed on those basic necessities.

The interesting thing people should ask in this GST debate is: if it is so fair, if it is such a good idea, why is the major debate in this country about compensation? Since when do you offer compensation for a fair and equitable measure? The only time you offer compensation is when people have been adversely affected by a measure or unfairly treated. There has been a concentration on compensation in this debate because people will be unfairly treated as a result of the measure. The Labor Party maintains that you cannot make it fair. Other parties and senators have different views, but fairness must be at the centre of this debate.

It is not enough for the government and their supporters to all the time mount the mantra that tax reform is necessary. They have to be judged and held to account as to whether the tax reform they propose is fair. I say it is quite clearly not fair. In their tax package, a couple with two young children on $25,000 per annum will receive a tax benefit of $21.00 per week. A couple on $75,000 per annum, with children of the same age, will receive $121 per week. That is patently not fair.

It even represents a distortion in terms of the percentage of benefit. If you are on $25,000 per annum, you get a 3.9 per cent increase. If you are on $75,000 per annum, you get a 12.5 per cent increase. This is just not a fair measure. These bills are not about improving the fairness of the Australian taxation system. They are about giving half of the tax benefit to the top 20 per cent of income earners in this country. It is skewed to the top end of town. For that reason, the Labor Party will be voting against it. It is not fair and that must be one of the criteria used to judge anything that is marketed as tax reform in this country.

One of the other major issues that concerns me is this question of the economic modelling and averages. The government has done population wide averaging based on the CPI and they have tried to assess the impact then on all people in our community. That is just not good enough because we know people consume differently. Their experiences are different. The impact of measures on people on different incomes with different consumption patterns is quite different. People do not eat averages. What is also clear about averages is that for every average there must be people above and below the line. What must concern us here is the fate of those people who will be below the line, below the average, in terms of the impact of the GST.

From the work that I did, and other senators did on the Community Affairs References Committee report titled The lucky country goes begging, it is clear that the people who fall below the line are the pensioners, the people with disabilities, the self-funded retirees, the people on fixed and low incomes. They are the people who fall below the line of the average. There is a greater impact on them. Their consumption patterns are such, and the overall impact of the GST is such, that they will be worse off than the average. So compensation based on the average automatically leaves them worse off. It seems the government does not care about this because whenever I have asked them about the modelling they have done or the work they have done in the departments of health, Social Security, and family services to analyse the impact on these people in our community they have said, `We have not done any of that sort of work.' They have let Treasury do it. Treasury tell you that they have just done the population wide average. That is just not good enough.

We are talking about people in the community on fixed and low incomes. They are the people who are already struggling to make ends meet. We ought to know what the impact will be on them. We ought to have taken the time and interest to find out, but the government has not taken the time and interest to find out. They have just said that the averages are good enough for them. As I say, it is clear that the impact on them will be greater. The cost of the GST to people on low and fixed incomes will be larger and therefore they will be worse off. This matters very much.

Quite frankly, if you are on $80,000 per annum and you are getting $120 per week in tax cuts, it does not matter if the economic modellers have got it a bit wrong. Let us say they got it half a percentage point out and instead of getting $115 per week you get $110. That is only $5, but you are getting $80,000 per year, so what does it matter? But, if you are living on a pension of $180 per week and they get it wrong, it really does matter. That is what we are dealing with here, not averages and not economic modelling. We are dealing with Australian citizens—age pensioners, disability pensioners—who currently live on $180.50 per week.

They are doing it tough in the current environment. They would argue that the CPI does not take account of the real increases in food prices that are currently going on. They are supposed to be accepting of changes and of the government's proposal that gives them $6.48 per week increase, which is the extent of the government's generosity for those who are on $180.50 per week—that is, the age pension or the disability pension. We are not giving them the $120 per week that we are giving the top end of town; we are giving them $6.48.

On the government's first go at the figures, on the 1.9 per cent CPI increase they predicted, the GST would allegedly only cost those people $3.60. Therefore, the government argues, they would be $2.89 in front, or enjoy a 1.5 per cent margin for error. That was the government's first go. It has been widely accepted now that the first-year CPI increase will be 3.1 per cent and not 1.9 per cent. I would argue that that is also a very conservative figure. Again, we are dealing with averages. If you apply the 3.1 per cent increase which, as I say, is now much more widely accepted by economic modellers and I think by the Treasury, the cost of the GST will be $5.60. The government says that they will get $6.48, so they are getting 88c a week above what the government says will be the GST increase. They are left with a margin of error of 0.48 per cent—that is, 88c per week.

That is the standard of generosity we are prepared to apply, even if all the assumptions are right. I say they are clearly wrong and I am not the only one who says that. St Vincent de Paul says it; Aged Care Australia says it. All the church, charitable and community groups that work with aged people, with people with disabilities, with people on low and fixed incomes in this country, say that the assumptions in the government's figures about the GST and the impact on consumption by these people are all wrong. They say the costs will be much higher.

Even if you accepted the government's figures, on the latest estimate of the CPI increase in the first year those on $180.50 per week will have a margin of error of 88c per week. This is from a government which is proposing to give those on $75,000 per year a $121 per week tax benefit. That is the kernel of the question of fairness about this tax package. We are dismissing concerns from the pensioners, the disabled and those with fixed and low incomes in this country, and from the people who represent them. We are assuring them, `There is an 88c margin there; if we have got it a bit wrong, you have got 88c of comfort'—at the same time that we are saying to the top end of town, `Have $120 per week.'

This is not a fair package. It does not meet the needs of those on lower and fixed incomes. The compensation does not go anywhere near meeting their needs. All the evidence to the committee about the impact of the GST, from the people who work with the people on lower and fixed incomes in this country, is that the costs will be much higher and that therefore those people will clearly be worse off under a GST. There is no question in my mind about that.

It is important because, when we are talking about these people, we are not talking about whether they can afford to go out to a restau rant at night; we are talking, for the disability pensioner, about whether they can afford to catch the bus to get out of the house during the day. For the age pensioner, we are talking about whether they can afford to buy medication or basic foodstuffs or to pay an electricity bill. We are talking about them meeting the very basic necessities of life, living on $180.50 per week. It seems to me that this package is not fair to them and does not attempt to be fair to them. It attempts to woo those on higher incomes in this country with huge tax breaks and says, `Don't worry too much about the others.'

The reality in the countries that have introduced the GST in recent times is that those on fixed and low incomes have been worse off. Their compensation has been eroded over time. The poor have got poorer, and many people who were previously just making ends meet have been forced to rely on church and charitable groups for support because they are no longer able to meet their basic needs. These are real issues for real people, issues that have not been addressed by the government. The most callous thing that I find about the government's approach to this is that they refused to do the work to find out this information. They refuse to acknowledge that there needs to be more work done to assess the impact on the people on fixed and low incomes.

There is a lot more that I would like to cover, and obviously I will make some contributions at the committee stage of the debate. But I think it is important that the focus of this debate moves away from all the talk of economic modelling, of averages, assumptions and predictions and we start to concentrate on the real-life impacts on ordinary Australians living in our community today: people who are surviving on fixed incomes, surviving on age pensions, surviving on disability pensions or struggling on low incomes to bring up children—people who will be faced with enormous costs because we, if we pass these bills, are going to tax the necessities of life for the first time in this country. We are going to tax food, housing and electricity.

One of my favourite examples of how all this economic modelling means nonsense in the real world is the example used in the housing debate. Those people who are paying rent will have a GST applied on the rent. The government says that the average housing cost increase—and this includes owner-occupiers and tenants, et cetera, and so it is really a nonsense in terms of tenants anyway—will be 2.3 per cent. You can imagine how likely it is, if you are paying $100 per week rent—which is a low rent—in a suburb of Perth and bringing up a couple of kids, that the landlord is going to come in and say, `Well, the GST impact has just come through the economy, and I am going to have to increase your rent. Instead of your rent being $100 per week it is going to be $102.30 next week, because there has been a 2.3 per cent increase in housing costs as calculated by the government.' What nonsense! Rent goes up by $10 per week. It goes up in $10 increments. We all know that. Anybody with any experience in the rental market knows that.

Senator Woodley —If you're lucky.

Senator CHRIS EVANS —If you're lucky. If you pay $100 per week in rent now, your rent after the GST will be $110. It will not be $102.30. The difference in the rental increase will wipe out any benefit that you might have got, even on the government's figures, in terms of compensation. That one decision, that one calculation on your rent, would be enough to wipe out, in the pensioner's case, the 88c per week that the government alleges they might be in front. For people on low incomes, it would wipe out the $5 or $6 per week that the government says would be in the compensation package that would put them in front. The reality of people's lives is that rent does not go up by $2.30 per week. It goes up by $10 per week. The reality of the GST is that those costs will flow through the system and will hit those people on low and fixed incomes much harder.

The compensation package is inadequate, but fundamentally the GST is unfair. It cannot be made fair. The government has made very little attempt to make it fair. I suggest that we ought to reject these bills because they are not fair, they are not equitable, and they are not in the interests of a better Australian society.