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Thursday, 22 June 2000
Page: 15462

Senator COOK (Deputy Leader of the Opposition in the Senate) (12:14 PM) —The Financial Manage-ment and Accountability Amendment Bill 2000 is necessitated by virtue of the GST. Those who are the authors of this flat, regressive tax should stop for a moment and contemplate—because oh, what a terrible web they weave! This bill is that one that enables the appropriations to be added to, in order that government departments pay the GST. It is a necessary piece of legislation from that point of view. It raises a series of technical matters, some of which I would like to deal with in a moment; but the basic reason for this somewhat circuitous piece of legislation is that we have a GST and, in looking at the application of that tax, the requirements put on government departments, agencies and instrumentalities mean that we have to take with one hand and give with another—or vice versa, according to the circumstances.

The second thing I want to say before I turn to my substantive remarks is that there is, as Senator Harradine indicated in an intervention a few moments ago, a somewhat jerky management of the program. We have had a piece of legislation just complete its second reading stage, but the government has delayed the consideration of the committeestage of that legislation—on the alienation of personal income, an important part of the business tax reform package—because it is not convenient to go on. This follows part of the GST package being deferred the other day as well, when we were in a position to proceed with it. The program is being jerked around at a moment's notice to suit what is happening offstage. Offstage, what is happening has just been revealed in a press conference by the Leader of the Australian Democrats, Senator Meg Lees; and that is because the government has been hiding a report on the impact of the GST on caravan parks and boarding house rental accommodation. This report was leaked to the Sunday program, to the interviewer Laurie Oakes, and disclosed a couple of nights ago. ·

It is now clear that the government's undertaking to the Australian community about the impact of the GST on caravan park rentals and on boarding house rentals has been understated. Their promise was that it would go up by 1.9 per cent, but it has been revealed by the government's own report, which has now been leaked, that it will in fact go up by at least five per cent. Those people living on the margins in Australia, dependent on residency in caravan parks and boarding houses—and quite a huge number of Australians are, thanks to the attitude of this government, in such a situation—will have imposed on them new and unexpected charges that they were led to believe, prior to the election, would not occur. We know that the Democrats had asked for this report but we know as well that they never followed up on it, and they are now trying to resurrect the situation. The press conference that has, I understand, just concluded has led to an announcement by the Democrats that they will seek some compensatory amendments for the impact of the higher charges, and we will shortly no doubt see in this chamber a debate about that.

My point in raising this matter is not to have that debate now—because we will certainly join it when it comes on—but simply to make the point that the program in this chamber has been jerked around at the caprice of the government and the Democrats—who offstage have been manoeuvring to cover their embarrassment about the impact of the GST on ordinary Australians living in caravans and boarding houses—and that the Senate is not being provided with an opportunity to sequentially consider some of this legislation. We are being made the caprice of side deals offstage. That does interrupt the program, and it is important to make the point now lest, later on, someone says that the program is delayed. Let the finger be pointed at those who have jerked the program around: the government and the Australian Democrats.

I now turn to the legislation before us. As I said in my introductory remarks, this is one of those weird pieces of legislation necessitated by virtue of the GST. Let me address it by quoting, from the explanatory memorandum, the outline of this bill. The explanatory memorandum says:

The purpose of this Bill is to appropriate moneys to Commonwealth entities to meet certain payments arising from the introduction of the Goods and Services Tax (GST).

The appropriation will apply only where the Commonwealth can recover the amount of the payment as an input tax credit (recoverable GST) under the GST law.

The amounts of appropriation shown in the Appropriation Bills 2000-2001 do not include an allowance for recoverable GST. The figures represent the net amount that Parliament is asked to allocate for particular purposes. This approach is in line with the accepted accounting practice for GST, which specifies that revenues, expenses and assets are to be recognised net of the amount of recoverable GST.

Consequently, additional appropriation is required to cover the following payments that give rise to recoverable GST:

. payments to suppliers to the extent of the GST embedded in the acquisition price; and

. payments of GST on creditable importations.

That is the basic outline of the bill. The bill certainly does reflect exactly what the explanatory memorandum has described. It is important to note as well that the financial impact of this legislation is described thus:

The additional appropriation will have no effect on recorded revenues, expenses and assets. It will not have any impact on the cash or Fiscal Budget balances.

Some agencies may find it necessary to draw, for a short time, on bridging finance that is available under current agency banking arrangements in order to address the cash flow effects of the GST on departmental expenditures.

So there will be a cost in the form of bridging finance, a cost not quantified in the explanatory memorandum. I foreshadow now that that might be an issue, uncontroversial though it is, that in the committee stage of this legislation we will be asking the government to provide a figure on. We would like to know what the estimate is of the financial impact of this legislation in view of the fact that under the financial impact requirement no figure is given—although it is pointed to that a cost will be incurred. We would simply like to know in the public interest what that cost will be. ·

This bill only arises because of the GST, and in layman's language what it is doing here is ensuring that government departments will have to pay the GST in certain circumstances. We are allocating funds to them so that they can do that and pay the GST back to the government, and this looks just like a book entry. The bill has chosen to do this as a special appropriation. In order to check what the precedent for this type of action is and what, in parliamentary terms, the proper explanation of this process might be and to assess the impact procedurally, I turn to the eighth report of the Senate Standing Committee for the Scrutiny of Bills. Under the heading `Indefinite appropriation proposed: new section 30(a)', the report, in referring to this bill, states:

Schedule 1 of this bill proposes to insert a new clause—

I will skip all of the introductory descriptive parts and pick up the statement as follows:

However, proposed new section 30(a) limits the amount of any increase to the total of the GST qualifying amount for any acquisition or importation.

The memorandum notes that this appropriation will apply only where the Commonwealth can recover these amounts, and it goes on:

Therefore, this particular additional appropriation, though indefinite and arguably not subject to separate parliamentary scrutiny—

and I would emphasise those words—

is akin to a book entry which notes that a GST amount is payable and then recoverable.

It is the emphasis that I placed here that I wanted to draw the Senate's attention to. By agreeing to this bill, we are providing an `indefinite' appropriation—not one that we would claw back into this chamber and make accountable—that is `arguably not subject' to the parliamentary scrutiny which follows, of course, the indefinite nature of this legislation. My office, in order to tie down the precedent and the nature of this, asked for an opinion from the Clerk of the Senate. I have before me a letter he wrote to my adviser in this field, Mr Jody Fassina, who is an excellent adviser indeed. I wish to read into the Hansard the remarks of the Clerk on this legislation. His response, headed `Financial Management and Accountability Bill 2000', states:

You asked for a note on this bill.

The bill would insert a new section into the Financial Management and Accountability Act 1997 to increase every annual and standing appropriation under every act of the Commonwealth parliament by the amount necessary to fund payment of the GST by the Commonwealth departments and agencies which are authorised to spend money by those acts. The bill is therefore an appropriation bill, in that it would appropriate money to add to existing appropriations.

As the explanatory memorandum accompanying the bill explains, the addition to the appropriations would not result in an increase in actual expenditure because the GST applies only notionally to Commonwealth departments and agencies, and the amounts they pay as GST will be recovered through input tax credits.

I want to particularly draw the chamber's attention to the next two paragraphs:

It is not unusual for the Parliament to pass standing appropriations, that is, appropriations which continue as long as the relevant act of Parliament remains in force, and most standing appropriations are of indefinite amount, in that the act says only that funds are appropriated to the extent necessary to meet a particular commitment. The Financial Management and Accountability Act 1997 contains provisions which add to existing appropriations: section 28 appropriates money for the purpose of repayments by the Commonwealth which are required by any other act or law.

This bill, however, is unusual, and I believe unprecedented, in that it would add an indefinite amount to every

that word is emphasised—

annual and standing appropriation in effect. Moreover, this would be an extraordinary kind of appropriation, in that it would not involve actual expenditure, but would be purely a `bookkeeping' device. ·

It is important to have that opinion on the record so it is clear that we know what is being done here. From the point of view of the opposition, it delivers to us a dilemma. The dilemma is: should we require this legislation to be periodically presented to us with the appropriation bills in the normal time to ensure that the purpose of parliamentary scrutiny is served and the accountability of the government is met or should we agree to an open-ended appropriation knowing that in so doing we create a precedent and one that we would be loathe to have visited in any other conceivable set of circumstances on the processes of the parliament? We balance those considerations against the consideration that this government tax clearly imposes on those departments and agencies an onerous responsibility for them to meet it. If the bill did not carry, they would be debited on their normal appropriations by the amount that this bill will enable them to pay—and after all it is only a book entry.

The approach the opposition have taken to the government's handling of the GST is noteworthy in terms of our approach to how we should deal with this legislation. Our approach has been to fight tooth and nail to prevent the GST from being introduced. It is a matter of record that that is what we have done; it is a matter of record that the Labor Party are opposed to the GST. It is also a matter of record that, of late, government ministers have stood up in this chamber and said that the Labor Party support a GST. Coming from a most unreliable source, that is hardly a credible statement and, coming from the authors of the GST, is something that hardly anyone pays any attention to. It is also the case that, whenever that fatuous and facile allegation has been made, we have disowned it because it is not our position. Funnily enough, we think that the Labor Party speak for the Labor Party, not the Liberal Party. This is just the Liberal Party trying to shift the blame onto us for the type of tax that is being introduced. Emphatically, yet again—underlined, in italics, raised into bold print and blackened—we say: we are opposed to the GST. Now let us put that issue aside.

What we have done, though, having tried to prevent the introduction of this tax, is that we have enabled the processes that underpin it to be the government's. We have supported government legislation on how they will go about collecting this tax and how they will go about offsetting the regressive nature of this tax. As a consequence, we have supported the measures for pensioners, tax cuts and a range of other things as well. We have done that quite deliberately and for a reason. If we cannot defeat this tax, we want it to be the tax the government want so that when the Australian community is called to the ballot box, whenever that is, and a judgment is to be passed on the government, the government cannot say to the Labor Party, `You made us do certain things that caused this tax to be other than what we wanted.' So this is the government tax as they asked for it, replete with all the details they sought. Of course, the government's defence will be that they did a deal with the Australian Democrats which changed the nature of what they originally asked for. It is true; they did. And it is true that it did change the nature of what they originally asked for. But they agreed to it; it was, after all, an agreement. By agreeing, they have to accept the responsibility for the dog's breakfast that is going to be imposed, in a few days time, on the Australian community. Taking all that into consideration, it is appropriate for us in these circumstances to support the necessary remedial legislation, although it is unusual, although it is open-ended and although it creates a precedent, so that government departments and/or agencies that are met with a bill because of this tax will not be disadvantaged. It would be unfair of us to handicap them, if that were to be the case, in any way.

I will return to the Clerk's advice. We have a high regard for the office of the Clerk of the Senate and for the impartial advice that that office from time to time provides to this chamber. It is not always the case that we necessarily agree with that advice, and it would be inappropriate for me to pretend that we do. This is often an area that is heartily contested. But what he says here is confirmed not just by him—which would be a weighty enough argument on its own for this chamber to sit up and take notice—but also by what is in the explanatory memorandum produced to accompany this bill. If anyone wanted to take issue with what the Clerk has said, they would have a mighty difficult task to argue him down. We do not take issue; we think he is absolutely spot-on—right on the money. We support the views and the warning that he has given to this chamber in his letter. I want to emphasise that warning: this is open-ended, it is unprecedented and it is on account of the GST. We will not be opposing this legislation, but I want to mark in the Hansard the spot where we have raised these considerations, reflected the Clerk's advice and clearly put before the chamber—and in the mind of the chamber—the nature of this precedent so that it is not repeated on any other occasion and that we are only moving to this position because of the GST. If we can roll back the GST to cover this point at some future time when we get our hands on the Treasury books, we will obviate this precedent as well. (Time expired)·