Senator IAN CAMPBELL (Parliamentary Secretary to the Minister for Communications, Information Technology and the Arts) (4:02 PM) —I think the first point that should be noted by all honourable senators is that here we are in the year 2000 discussing a motion moved by Senator Peter Cook to have a select committee into what is ostensibly an implementation of a new tax system, and it goes into some detail, which I am happy to go through because I think we should try wherever possible to restrict ourselves to the detail of the motion. Senator Cook just spent 20 minutes—

Senator Carr —It's a long motion.

Senator IAN CAMPBELL —It is a long motion.

Senator O'Brien —He should have just read it out. Is that what you are saying?

Senator IAN CAMPBELL —No, I would not expect that senators need to have the motion reread since it has been on the Notice Paper for some days. But I will refer to it because the outstanding fact that jumps out and grabs me is that Senator Cook on 17 February 2000 wants to have a significant and detailed inquiry into the implementation of the goods and services tax. I guess by way of tangential comment he has probably worded this motion after Simon Crean in the other place put down his details of the Labor Party's GST policy principles. I am glad that the next Leader of the Opposition, Mr Crean, has at least cleared that up for the time being. He has agreed on the principle of the GST for the first time by Labor since Mr Keating first proposed the policy back in 1984. The important thing here today is that we should look at the performance of Senator Peter Cook and the Labor Party generally in relation to the significant changes made to the indirect tax system in 1993.

If you want to take the Labor Party seriously on this—and it is very hard to do so—their policy opposing the GST, which was formally ended yesterday by Simon Crean, arose around the time of the lead-up to the 1993 election. In 1984 it was very much the then Labor Treasurer's policy to have a broad-based consumption tax based on very similar principles to the new tax system proposals which have now become law under the coalition. Treasurer Keating's proposals were very much to bring in a broad based tax. He was incredibly strongly opposed to exemptions on food, clothing and other things. If you read carefully the history of that period and the press clippings from that period—and, most importantly, I recommend to honourable senators and to you, Madam Acting Deputy President Crowley, who I know to be a close confidant and friend of the then Treasurer—the excellent biography by John Edwards of that period, you will see that the then Treasurer went into significant detail about the consequences of making exemptions from the tax base.

He went further and said that the more you seek to make exemptions, the more the equity of the whole policy—and he was a great supporter of the social equity of a broad-based consumption tax, or BBCT as it was called when the then Labor Treasurer was promoting the policy—was for particularly the disadvantaged and those on fixed and low incomes. The then Treasurer was very committed to that, as were a significant number of the Labor caucus at that time. He saw it as a social equity measure. He saw it particularly as a way of ensuring that the income tax scales did not, as they have done right up until now, militate against the interests of those on low and fixed incomes because the income tax and the tax raising base fell so harshly on those on average weekly earnings and around average weekly earnings and of course on the lower income scales because our income taxes are so significantly higher.

The then Labor Treasurer, Mr Keating, made it very clear that bringing in a broad based consumption tax would ensure that particularly people on high incomes who spend a lot of money pay a fair amount of tax. A lot of high income earners do not pay much income tax, as Senator Conroy knows better than most. This system ensures that people who go out and spend hundreds of dollars on restaurant meals, who hire expensive limousines, who have expensive lifestyles and who buy expensive clothes—Zegna suits—and those other sorts of accoutrements, pay an enormous amount of tax compared to someone on a low income, who naturally spends less. That is where the Labor Party's true philosophy on a sensible, socially equitable and broad based consumption tax and income tax base encourages people on low and middle incomes to increase their incomes and to keep some of that in their pocket, not see it go out in either lost welfare benefits or high marginal tax rates.

Tax rates and welfare rate dropouts should make any member of the Labor Party, anyone who has genuinely wanted to stand up for working men and women in Australia, people on low and middle incomes, feel very guilty, feel very queasy. Under certain income brackets, there are marginal tax rates approaching, and in some cameo cases going above, 100 per cent. So, every extra dollar you earn you lose by way of either reduced welfare benefits or other payments—rent assistance or other payments—and increased tax. So, for every extra dollar you earn, you lose either 90c, 92c, 98c or, in some cases, 102c because of the interaction of the tax and welfare system—what people who are inside baseball call poverty traps. This significant tax reform is the biggest single attack on those poverty traps in the history of the Commonwealth. It significantly reduces income tax and, of course, attacks those taper rates. It is a much better system for people on low, middle and average incomes.

That is where the Labor Party started out. Then, when the coalition decided that we would bring in significant reform and announced that in the reform package in 1992, Mr Keating did one of the most significant triple backflips with a pike in Australian political history. Having gone out only a few years earlier to sell the equity, sell the benefits for the economy, sell particularly the benefits for those in the low and middle income groups of a significant tax change—one away from a heavy reliance on PAYE tax collections and towards a broad based indirect tax—Mr Keating decided that, for base political reasons, he would go and campaign against such a change. He did this less than eight years after he himself proposed it. When he finished proposing it, he said that this was an important reform for Australia, that it was a reform that must take place and that it was something he would not give up on. They were his sort of parting words on his BBCT, or his so-called option C. He said in his final interview on the subject that he would never stop fighting for that. History proves otherwise.

Senator Cook, when challenged on the then Treasurer's views on this issue, made it clear that Paul Keating's true views on option C and a broad based consumption tax were evidenced in history because of his opposition to it in 1993. All of us who have any knowledge of Mr Keating and the Labor Party generally would know that we will have to wait a long time to find out the truth about Mr Keating's views about the tax reform. It was to his political advantage to campaign against it in the 1993 election. Of course, in 1998, when the proposals came forward for the changes to the tax system which have now occurred with amendments in the Senate, the Labor Party had no other policies. By then, they had had over two years in opposition. The only tax policies they came up with was to increase the tax on four-wheel drives—effectively increase the tax on cars driven by many people in middle income areas of Australia—and to retrospectively impose capital gains tax burdens on Australians as well. They were sort of the two key features of tax policy at the last election, and the only other thing they could do was bash the GST.

We are now in the year 2000 and Senator Cook wants to have an inquiry into the implementation of the GST. Yesterday, Simon Crean made it very clear that the Australian Labor Party would now accept the GST as part of their own policy. So you need to read very carefully the GST policy stance of the opposition when you see it. They want to score whatever political mileage they can out of the GST, but the Australian people must know one thing—that is, the Australian Labor Party are as committed to a broad based consumption tax today as they were back in 1984. So Simon Crean has completed the circle. He has taken Labor back to the policy that Mr Keating advocated in 1984, and it is now ALP policy.

What we are yet to see—and we hope that Senator Conroy will go to this in his contribution to this debate—is just where they are going to change the GST on coming to government. We reiterate the fact that it is not impossible for the ALP to change the GST. What they would have you believe is that it is too complicated, it is too hard, it is like unscrambling eggs, to actually change the GST. They cannot. It is just not a policy option, according to the Labor Party, to actually go back to their preferred system, the one they stuck with for 13 years—that is, five or six different rates of wholesale sales tax, 22 per cent on things like computers and modems.

I reiterate this point: it is very important to note that, when you hear the Labor Party talking about wanting to move into the information age and have a sort of intelligent island, smart country or whatever their latest gimmick is, this is the party that want to penalise people who want to get into the information economy, who want to buy themselves a computer and a modem and get an Internet connection, at 22 cents in the dollar at the gateway to the information economy. When you go up to the Labor Party gateway to the information economy and say, `I want to come in,' Labor say, `Before you get hooked up to the Internet, before you can become part of the information economy, we will take 22 cents out of every dollar you spend on computers, modems, printers, CD ROM drives and every other piece of hardware you need to get into the information age.' So theirs is a party whose rhetoric about getting people into the information age is not matched by their tax policy.

The other point that should be made is that the Australian Labor Party can, if they wanted to, make it their policy to go back to their old system. That is the point I started with. It is very easy to repeal the GST bills. You need one relatively small and uncomplicated piece of legislation repealing the goods and services tax bills and another bill to bring in a wholesale sales tax.

If the Australian Labor Party want to try to con the Australian people by saying that the only alternative they have is to fiddle around with the GST and they cannot repeal it, they are misleading the Australian people. They are seeking to mislead the Australian people either because they actually like the GST and they want the revenue, as the Labor premiers do, or because they are too lazy or incapable of coming up with an alternative policy. There are only two choices. I am looking forward to listening to Senator Conroy, although I am afraid it will have to be on my monitor in my office. But as always with Senator Conroy, I will listen very closely to him because I am genuinely interested to see if the Australian Labor Party can come up with any sorts of clues as to what their policy is.

We hear the Labor Party day in day out attacking the GST but, after some four years, we do not have any idea of the details of their tax plans, apart from increasing the tax on four-wheel drives and bringing in a retrospective capital gains tax on family jewellery. We have an idea of what their spending plans are: Senator Cook wants to introduce R&D benefits at a cost of probably billions of dollars, Senator Carr wants to increase expenditure on education and Senator Chris Evans wants to increase spending on child care.

We have already from them billions of dollars in commitments to increase government spending. We have from the current Leader of the Opposition and I expect from the next Leader of the Opposition, Mr Crean, commitments to roll back. Depending on which week you look at it and probably the mood or the physical health of the Leader of the Opposition, they want to roll back the GST, walk it back, possibly jog it back, wind it back or take it back. We have these cliches about what they are going to do to the GST.

They are jumping up and down about the tax on sanitary products, so we think they are going to remove the tax on them. Is that your policy now—I ask the opposition rhetorically, Madam Acting Deputy President, to stay within the standing orders—or is it just rhetoric? Will that appear in the tax policy? Will the tax policy ever appear? We do not know. If it is like the employment policy, it is like the Scarlet Pimpernel: `We hunt it here. We hunt it there. We hunt it everywhere. Where is this employment policy?' We wait to see. Hopefully, Senator Conroy will use the time available this afternoon to go into some detail about a walk back, a roll back, a drawback, just what his policy on the GST may be.

We then have to await—again, I suspect, with bated breath—to find out just how the Australian Labor Party would pay for the billions of dollars of additional government expenditure in the range of announcements they have made. Every time they roll back the goods and services tax, they will need to decide whether they will roll back the income tax cuts or how else they will raise the funds they need to fund the services of government, which will somewhat expand if one is to believe the rhetoric of the Labor spokesmen.

The Labor Party have quite a challenge. It is not a challenge where you can really say, `Just wait until the election.' I think the Australian people deserve better than that. In the lead up to the last election we were promised that we would see the Labor Party policies. The people of Australia asked, `What is the Labor alternative? Where are your policies? Where are your proposals?' Mr Beazley and others said, `Wait to the election.' We got to the election and they said, `Wait until next week.' Then in the last couple of weeks before the election—in fact, in just the last few days—we got the announcements and the sums did not add up, just as they did not add up all the way through the 13 years of Labor.

That is why the Australian people deserve better this time. The Australian people do not want to have to suffer years of mindless whingeing, carping and criticism of government policy only to be met by an absolute vacuum of policy ideas or proposals from the opposition. You cannot go around in modern politics proposing to spend billions of dollars on either tax roll backs or new spending programs and pretend you can get the money off the tree at the bottom of the garden, or as Mr Beazley did as finance minister and Mr Keating did as Treasurer just borrow the money, put it on the credit card, and expect current and future generations to pay with massive interest rates which hurt every single person in Australia who owned a home or had any sort of debt whatsoever.

You cannot get away with that in modern politics; that is certainly my view. You need to be able to put up an alternative proposal. The Labor Party's track record in government was to spend on average over the years they ran deficits $10 billion a year for nine years. They ran deficits for nine out of 13 years and the average of those deficits in current dollar terms was in excess of $10 billion. The people of Australia should never forget that. That money does not grow on trees. It has to be borrowed and it has to be paid back at some stage, and it massively increases the money we have to pay in debt interest.

Senator Cook's motion seeks to have an inquiry into the implementation of the GST. I am wondering where Senator Cook was back in 1993 when his good friend and Western Australian colleague John Dawkins was Treasurer. Having campaigned in the 1993 election to explain that there should be no new indirect taxes, as Senator Cook did so vigorously, within literally minutes of the return of the writs in that election, we had a proposal before us to put up indirect taxes by more than 10 per cent in many cases. So the 10 per cent rate rose by 20 per cent, the 20 per cent rate rose by 10 per cent and the 30 per cent rate rose by about five per cent.

As I turn to the wording of Senator Cook's motion, I notice that he wants to have a look at the impact on disadvantaged and fixed income groups. I suggest to Senator Cook that, if he does get this joint select committee established, I would seek to amend the motion to read that we have an investigation into the introduction of the wholesale sales tax system.

We should firstly look at why they had no monitoring in place to look at price exploitation with those increases—the tax on toilet paper, for instance, went up by 10 per cent with no implementation price monitoring. We should also look at why there were no increases in pensions and payments, such as veterans' affairs payments. We should look at why there were no tax cuts to offset the impact of those indirect tax increases on the disadvantaged on low incomes. We should also look at why there was no compensation for people buying a beer over a bar in Australian pubs. These guys opposite put up the tax by 28 per cent and gave no compensation. (Time expired)