Senator SHERRY (4:04 PM) —The GST imposes the massive burden of increased paperwork on small business, because the vast majority of small businesses did not have to act as tax collectors in this country. There will be well over 1.4 million new tax collection points as a result of the GST, and these will overwhelmingly be small business. Small business will have to pay the administrative costs associated with the collection of the GST. Of course, you do have to subtract from that the paltry $200 payment that the Liberal-National parties will be paying to small businesses to assist in its collection.

We have already seen commentary from informed quarters about the cost of the GST to small business. Recently an article by Tom Allard, who is an economics correspondent, examined the Australian Taxation Office's requirements for the collection of GST information. He spoke to a number of tax people and the comment was that, for small business in particular, many of whom do not have computerised business systems, the collection of the GST:

". . . will be like doing your annual tax return every month or every quarter," said Deloitte Touche Tohmatsu tax partner, Mr John Cohen. "If you have all the information on hand, it will take an hour or two. If you have to go chasing it up, that will mean you are looking at a day or longer."

A day or longer for small business to collect the GST!

Apparently the instruction document from the tax office amounts to some 130 pages.

A 130-page instruction booklet! This is from an informed correspondent.

There has been a survey of small business. The average cost to a small business to prepare for the GST will be $3,500. That is the average cost. That is a significant amount of money for small business operators. Obviously the paltry $200 that this government is offering to small business goes nowhere near meeting that average cost of $3,500 for small business.

I want to touch on a point that Senator Knowles raised in her contribution. She made the point about having been a small business operator and small business having to pay a variety of taxes. She pointed out quite rightly that small business has to pay payroll tax, superannuation guarantee contributions, workers compensation taxes and a range of other charges. She was quite right. But what has happened with the introduction of the GST? The GST is not replacing payroll tax. Remember the argument we used to get from this government that payroll tax should be abolished? Well, businesses are still going to be paying payroll tax and the significant other taxes that they have to pay. But, in addition to those taxes that Senator Knowles referred to, they are going to have to pay a GST—a whacking great new tax on top of the taxes they already pay. What is even worse, as I have already outlined, is that the paperwork involved in a GST is much more significant than the paperwork for the other taxes that they currently have to collect and/or pay.

It seems to me that it is very hard to argue that the goods and services tax is leading to a simplification of the current tax system. We are dealing with hundreds of new amendments. It is going to make life a lot tougher for most businesses. For large businesses it will not be so bad. They have computerised stock systems where they can calculate their sales very easily. But small business operators, many of whom do not have computerised systems, will have to either purchase them or struggle on collecting the tax and carrying out the calculations without computer hardware and software. So it is not too bad for big business, but it is really going to hurt small business.

The GST has been referred to by the current Treasurer, Mr Costello, as the new tax for a new century. He has contended that it is going to streamline Australia's tax system. But I draw the Senate's attention to some interesting figures that were calculated by my colleague Mr Emerson—a member in the other place—at the point in time when we had 756 amendments to the goods and services tax legislation. Mr Emerson calculated that the GST acts previously weighed 4.2 kilograms but that, with the addition of 756 amendments, the GST tax acts now weigh 4.4 kilograms. And we have to add roughly another 200 grams on top of that, given the other 300 or 400-odd amendments we have received since Mr Emerson kindly carried out his last calculations. Also, the sheer volume of new tax legislation that we are considering does not include the regulations that will need to be made and we are yet to see.

The government has consistently—and falsely—argued that this is all simplification. The fact of the matter is that, in terms of size and weight, the Income Tax Act has not got any smaller or simpler. The GST is a big new tax, adding more pages to the tax act. You could stack all of Australia's tax acts next to me and they would go over my head. There is so much paperwork involved with the changes to the tax system—

Senator McGauran —The detail goes over your head, too.

Senator SHERRY —We know the detail goes over the National Party's head, Senator McGauran. I will come to the National Party shortly. You have provoked me, and I will come to the National Party shortly.

The ACTING DEPUTY PRESIDENT (Senator Murphy) —We could do with a little less provoking and a little less attention paid to the provokers.

Senator SHERRY —We have to continue to draw the failings of the National Party to the attention of the Australian people—but that is for a little later. In the last few weeks the Senate not only has been bombarded with hundreds of amendments to the goods and services tax legislation but also has had a number of controversies involving the introduction of the goods and services tax. I have touched on one area already—the cost to small business—but we have also had controversy over the taxation of club membership, the taxation of charities and the issue of a tax on a tax. The GST will apply to a range of state services and those states supply state taxes; so we will have a tax on a tax.

With respect to charities, the debate has been raging in considerable detail and very fiercely over the last few weeks, and it is here that I want to make some criticism of the Australian Democrats. Suffice it to say, of course, we would not have a GST without the Prime Minister Mr Howard going back on his `never ever' commitment. But the other partner in this `tax adventure'—as the Prime Minister once referred to it as—is the Australian Democrats. Without the Australian Democrats, this country would not have a GST. What I find a little disturbing—aside from the fact that the Democrats supported the GST package—are two significant issues that have arisen in respect of the GST. We debated one earlier this week, and that was the diesel fuel rebate issue. The Australian Democrats signed an agreement with the government that said that the diesel fuel rebate for the forest industry would be reduced. The government walked away from that agreement, and the Democrats did not stand them up. The Democrats did not say to the government, `You signed up to the deal; you keep it.'

As Senator McGauran wanders around the chamber, he is reminding me that this highlighted a failure of the National Party. They allowed the coalition to sign up to an agreement that reduced the diesel fuel rebate to the forest industry workers in this country. That was clearly to the disadvantage of people who work in forest industries in rural and regional areas. But that is all I am going to say about the National Party because, frankly, their input into taxation—in fact, into most areas of policy—is so minor we really do not need to spend a great deal of time on them.

I return to the Australian Democrats. I have mentioned the diesel fuel rebate issue. But we have heard a lot from the Australian Democrats in the last few months about charities and the dreadful impact of the GST on charities. I am glad Senator Woodley is in the chamber today because, quite clearly, there are major problems for charities with the goods and services tax. There are major problems with the cost of collection and the definition of the services and sales offered by charities. This will obviously impose additional paperwork and additional cost and affect the service delivery of charities. What annoys me about the position of the Australian Democrats is that we have had a number of public comments in recent weeks from the Australian Democrats, saying that this is bad news for charities, that the GST and its application requires change and that it should not be hurting charities.

I ask the Senate: why did the Democrats sign up to the deal they did with the government on the GST? Why did they sign up to the deal? It was not as though the problems that charities were going to experience with a goods and services tax were not well known. We had pages and pages—hours of evidence—from charities before the Senate committees on the adverse impact of the GST. The Democrats were there, but did they listen? Did they stand this government up when they carried out their negotiations in respect to the GST package? No. And yet after they have carried out their deal with the government, here we have the Democrats complaining and trying to unravel the problems they themselves already knew about. That is one aspect of this issue that makes me particularly angry. It is hypocritical. I do not use that word often in political debate. I think it is overused. But the Democrats heard the evidence, they knew the problems for charities, they did the deal with the government on the GST and then, afterwards, they make public statements about the need to change the arrangements for GST on charities. I call that hypocrisy.

I want to conclude my contribution by briefly referring to the issue of a tax on a tax. As I have said, the claim from this governement has been that there is going to be a simplification of the tax system. We are dealing with over 1,000 amendments to the GST legislation here today, a few months after the GST was first passed. There are the problems for small business: small businesses will be the new tax collectors, over a million of them; and they will do the extra paperwork. The tax acts are getting longer, not shorter. They are weighing more every day with each new amendment. It is getting more and more complex and yet we were expected to believe that this was the new, simple tax system for the new century.

I must say one word about Botswana. The Treasurer is fond of quoting Botswana. Botswana has a wholesale sales tax. It is one of the few countries that does have a wholesale sales tax. I point out to the Senate that Botswana has an enviable economic record. In terms of economic growth, it is usually the leader in Africa. So the allegation that the wholesale sales tax retards growth is just nonsense.

There is the issue of a tax on a tax, as well. That issue has not been resolved yet. State governments can impose various state taxes on a variety of services, particularly in the financial services area, and we are going to have the GST on top of those taxes—a tax on a tax. We were told that this was not going to happen, that we would have a simplification of the system and that we would not have taxes on taxes. But this is happening in a significant number of areas and has not yet been resolved.