Senator KNOWLES (3:50 PM) —Before the debate was adjourned I was referring to the new tax system that is currently before the Senate for debate and various aspects of it. In particular I was referring to the cost of motor vehicles and how the Labor Party would wish to have motor vehicles stay at a higher cost than they will be under the new tax system. During their 13 years of government, the Labor Party consistently increased tax on motor vehicles. We now have it at a level of 22 per cent.

But it is not just the tax on the motor vehicle itself when one goes to buy it: there are also the taxes embedded in the construction and manufacture incurred by all of the companies involved in putting that motor vehicle together. Under the new tax system, those taxes will all be removed and there will be a 10 per cent goods and services tax at the end. That is the only tax—at the end. At the moment there is 22 per cent at the end and there are all of the other embedded taxes all the way through the system.

The Labor Party will say that there is a buyers strike at the moment in terms of motor vehicles. Some people might be a little reluctant to buy a motor vehicle at the moment, but let us look at the facts. Total motor vehicle sales in the month of November are only half a per cent below the record sales levels achieved in November 1998, but they are nine per cent higher than in November 1997, which was the previous record year. Locally manufactured passenger vehicles are selling well. Total sales for Commodore, Falcon, Camry and Magna for the first 11 months of 1999 are only three per cent below their 1998 record levels and are 13.8 per cent higher than in 1997. The same applies to truck sales and so on.

But we go on to all of these examples that the Labor Party keep on giving, trying to frighten people about the impact of the new tax system. There is no evidence to support the scare campaign. Anyone would think we were coming up to an election in the next six months the way this scare campaign is now getting so out of hand. As I think Senator Murray said prior to the adjournment of this debate, once the next election comes by, this whole system will be in place and people will understand how it works. Everyone who is grizzling about it, particularly the opposition, is afraid of change, and they want to make sure that people are frightened as a conse quence. Anyone would think that a country had never gone through a change of tax system before. Not so! People will know that the new tax system will be less complicated.

I want to refer particularly to one of the bills that we are talking about today, which is A New Tax System (Pay As You Go) Bill 1999 . As I said before, there are so few on the other side who have ever run a business, who have ever had to file tax returns for the business, who have ever had to pay the bills, that they do not know the difference between what is currently the practice and what will be the practice after the pay as you go system is instituted. I want to say quite frankly that when I was in business one of the greatest imposts in running a business was having to deal with five levels of wholesale sales tax and, most importantly, having that wholesale sales tax sitting on the warehouse shelf prior to selling the goods to the customers.

Under this system, you collect the goods and services tax and remit it, but meanwhile you have the tax sitting in your bank account, not the government's bank account. That provides cash flow benefits. But the opposition cannot understand it. They cannot comprehend that it provides a cash flow benefit, whereby companies can use the tax money that they are collecting in their bank account. The use of that is a very important factor to a lot of small businesses. But the objective of the policy is to make sure that a modernised income tax assessment system is implemented.

There are many things that I would like to say about this, but I know that we are now under time constraints, that this bill and one other bill have to be dealt with before we rise tonight. But I do want to make reference to a couple of other things which are not insignificant, and one is the claim by the opposition that there are going to be complex returns. I have said for years, ever since the 1993 campaign, that if any of the people who claim that this is a complex return actually ran a business, they would understand how complex the system is today. In comparison, you have one A4 sheet to fill out and return with money you have had sitting in your own bank account—give me the one A4 sheet any day. That is the important part about it.

Of course, the Labor opposition will talk about discouraging tourism and everything else. Is there anyone in the opposition who will not travel to a country because it has a consumption tax? What absolute and utter nonsense! Yet somehow they think that people coming into our country as tourists should not pay and contribute to our taxes. It is absolutely ridiculous to think that we can pay it in other countries but people visiting us cannot. I remember a few years ago I went to New Zealand. Of course, the first thing that I did was get into a taxi to go into the city. I said to the taxi driver, `What do you think of the goods and services tax?' She turned to me and she said, `The what?' I said, `The goods and services tax.' She could not believe that I was actually asking the question. She said, `That's been here for ages.' I said, `Yeah, but how did it affect your business?' And she said, `My husband and I run the cabs. The way it affected our business is that we were able to buy another cab because we had tax benefits that we didn't previously have under the old system.'

So the ogre that is painted about other countries having a broad-based consumption tax is sheer and utter nonsense. We have heard in the last few days about Christmas vouchers and all of these things, that next year Christmas will be more expensive. Let us face it: this is the last year that mums, dads and grandparents will have to pay 22 per cent tax on toys. Next year, they pay 10 per cent. To say that gift vouchers and things like that—

Senator Calvert interjecting—

Senator KNOWLES —That is quite right, Senator Calvert—all of those things that children like. To say that gift vouchers for services are going to be taxed is also complete and utter nonsense. Last year I gave gift vouchers to relatives for various services, and most of those services will be well under $50,000. They will not even be in the net, and it will not cost a brass razoo more next year from this year.

Senator Forshaw —Why didn't you buy them a present?

Senator KNOWLES —I won't tell you what the service was! I will leave that to your imagination. The envelope was nicely wrapped! I have got to tell you that the service would not be one cent more expensive next Christmas from last Christmas. It is nonsense about vouchers and toys and everything else being more expensive—they will not be. We have never shied away from the fact that some things will be more expensive; other things will be much less expensive. Let us face it: the common denominator that the Labor Party conveniently forget all the time is that that is precisely why compensation is being paid to everyone. Whether they are in the tax system or out of the tax system, they will have more money left in their pockets to be able to spend to compensate them for anything that might be higher in cost.