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GOODS AND SERVICES TAX: SMALL BUSINESS
- Parl No.
Schacht, Sen Chris
- Question No.
Chapman, Sen Grant
- System Id
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- Start of Business
- INTERACTIVE GAMBLING AMENDMENT BILL 2001
- CENTENARY OF THE AUSTRALIAN NATIONAL FLAG
- Rural and Regional Affairs and Transport Legislation Committee
- Suspension of Standing Orders
- Procedural Motion
- AUSTRALIAN FLAG
- ASYLUM SEEKERS AND DETENTION CENTRES
- AUSTRALIA'S JOINT DEFENCE FACILITIES
- BUDGET 2001-02
- PHIL BOTHA MEMORIAL FUN RUN
- STATES GRANTS (PRIMARY AND SECONDARY EDUCATION ASSISTANCE) AMENDMENT BILL (NO. 2) 2001
- WOOL INTERNATIONAL AMENDMENT BILL 2001
- FAMILY LAW LEGISLATION AMENDMENT (SUPERANNUATION) (CONSEQUENTIAL PROVISIONS) BILL 2001
- AGRICULTURE, FISHERIES AND FORESTRY LEGISLATION AMENDMENT (APPLICATION OF CRIMINAL CODE) BILL 2001
- HEALTH AND AGED CARE LEGISLATION AMENDMENT (APPLICATION OF CRIMINAL CODE) BILL 2001
- FAMILY AND COMMUNITY SERVICES LEGISLATION AMENDMENT (APPLICATION OF CRIMINAL CODE) BILL 2001
- INDUSTRY, SCIENCE AND RESOURCES LEGISLATION AMENDMENT (APPLICATION OF CRIMINAL CODE) BILL 2001
- RECONCILIATION AND ABORIGINAL AND TORRES STRAIT ISLANDER AFFAIRS LEGISLATION AMENDMENT (APPLICATION OF CRIMINAL CODE) BILL 2001
- TREASURY LEGISLATION AMENDMENT (APPLICATION OF CRIMINAL CODE) BILL (NO. 3) 2001
- CUSTOMS TARIFF AMENDMENT BILL (NO. 5) 2001
- INTERNATIONAL MARITIME CONVENTIONS LEGISLATION AMENDMENT BILL 2001
- INNOVATION AND EDUCATION LEGISLATION AMENDMENT BILL (NO. 2) 2001
QUESTIONS WITHOUT NOTICE
Goods and Services Tax: Small Business
(Murphy, Sen Shayne, Kemp, Sen Rod)
(Coonan, Sen Helen, Hill, Robert (Leader of the Government in the Senate))
Goods and Services Tax: Small Business
(Lundy, Sen Kate, Kemp, Sen Rod)
(Macdonald, Sen Sandy, Ellison, Sen Chris)
Goods and Services Tax: Surveys
(Hogg, Sen John, Kemp, Sen Rod)
Refugees: Norwegian Ship
(Bartlett, Sen Andrew, Hill, Robert (Leader of the Government in the Senate), Hill, Sen Robert)
Goods and Services Tax: Amendments
(Forshaw, Sen Michael, Kemp, Sen Rod)
Sydney (Kingsford-Smith) Airport: Sale
(Stott Despoja, Sen Natasha, Abetz, Sen Eric)
Aged Care: Templestowe Private Nursing Home
(Evans, Sen Chris, Vanstone, Sen Amanda)
Christmas Island: Government Support
(Eggleston, Sen Alan, Macdonald, Sen Ian)
- Goods and Services Tax: Small Business
- ANSWERS TO QUESTIONS WITHOUT NOTICE
- COMMONWEALTH-SOUTH AUSTRALIA ARRANGEMENT: ROCK LOBSTER FISHERY
- JAPANESE FISHING BOATS: SOUTHERN BLUEFISH TUNA
- ROYAL COMMISSIONS AND OTHER LEGISLATION AMENDMENT BILL 2001
WORKPLACE RELATIONS (REGISTERED ORGANISATIONS) BILL 2001
WORKPLACE RELATIONS (REGISTERED ORGANISATIONS) (CONSEQUENTIAL PROVISIONS) BILL 2001
- GOODS AND SERVICES TAX: SMALL BUSINESS
- LEAVE OF ABSENCE
- GOODS AND SERVICES TAX: SMALL BUSINESS
- PARLIAMENTARY ZONE
INTELLIGENCE SERVICES BILL 2001
INTELLIGENCE SERVICES (CONSEQUENTIAL PROVISIONS) BILL 2001
CYBERCRIME BILL 2001
- Australian Defence Force Parliamentary Exchange Program: HMAS Canberra
- Australian Defence Force Parliamentary Exchange Program: HMAS Adelaide
- Elections: Voting Patterns
- International Corporate Governance Network: Tokyo Conference
QUESTIONS ON NOTICE
Department of Agriculture, Fisheries and Forestry: Programs and Grants to the Gwydir Electorate
(O'Brien, Sen Kerry, Alston, Sen Richard)
Environment and Heritage Portfolio: Parliament House Employees
(Faulkner, Sen John, Hill, Sen Robert)
Community Services Portfolio: Missing Computers
(Faulkner, Sen John, Vanstone, Sen Amanda)
Family and Community Services Portfolio: Missing Laptop Computers
(Faulkner, Sen John, Vanstone, Sen Amanda)
Disability Support Pensions
(Allison, Sen Lyn, Vanstone, Sen Amanda)
Torres Strait Baseline Study: Report
(Bourne, Sen Vicki, Hill, Sen Robert)
- Department of Agriculture, Fisheries and Forestry: Programs and Grants to the Gwydir Electorate
Thursday, 30 August 2001
Senator CHAPMAN (4:52 PM) —What a pathetic waste of senators' time has been the Labor Party approach to this notice of motion moved by Senator Cook for the Labor Party this afternoon. This motion purports to express concern about the alleged adverse effects, particularly on small business, of the government's botched implementation of its goods and services tax policy. We have now heard two Labor senators speak this afternoon—Senator Cook and now Senator Schacht—and I have hardly heard a mention of the effect of GST on small business.
Senator Schacht —What! I've spent 15 to 20 minutes on it!
Senator CHAPMAN —I have hardly heard a mention. Of course, we have to ask whether this is some sort of sick joke that the Labor Party is trying to perpetrate on this Senate. Of course it is, because there is no greater irony than the Labor Party trying to talk about its concerns with regard to small business. That is why we have heard nothing of these allegations about the GST and small business this afternoon. There was some passing reference to it on the part of Senator Cook. All we have heard from Senator Schacht is 20 minutes of diatribe and personal attack against three ministers in the present government—not a mention of small business and the GST. It has been a personal diatribe and attack against three Liberal-National Party government ministers. Of course, the reason for that is the Labor Party has no sympathy for small business, as explained by their leader, Kim Beazley, on 7 July 2000 on radio 6PR when he said:
We have never pretended to be a small business party. The Labor Party has never pretended that.
We know that only too well because of the experience of small business when the Labor Party was in government. Let us just remind Senator Schacht, who did not talk about small business at all but simply directed a diatribe of personal attack against three Liberal ministers, what small business suffered under 13 years of Labor government through its incompetence in economic management. Small business paid interest rates of 22 per cent and many of them went bankrupt. It absolutely crippled many small businesses during that period and, of course, especially during the so-called `recession we had to have'.
Of course, it is the Labor Party, now in opposition—deservedly in opposition and deserving to stay in opposition—that has consistently blocked changes in this chamber to the unfair dismissal laws which are costing Australians jobs, particularly with regard to small business, and placing undue pressure on the capacity of small business to employ new staff. That is what you would expect from a party that is run by the trade unions. It still remains the party of the trade union bosses.
What is Labor's latest policy for small business? It is roll-backwards, but they do not know what roll-backwards is. Senator Schacht claimed that roll-backwards involved reducing the paperwork for small business with regard to GST. That was his one reference to GST and small business in his 20-minute diatribe. Yet his colleague in the other place Mr McMullan describes roll-backwards as `GST tax cuts', which I assume means taking the GST off certain items. That would be an absolute nightmare for small business because, to the extent that small business has had any difficulties with the implementation of the GST, it is as a result of the amendments, which were forced on the government by the Democrats to ensure the package came into place, which made certain items free of GST. That has been the main administrative burden that small business has had to bear—compliance with those items that have GST on them and those items that do not.
Yet the Labor Party, according to Mr McMullan, wants to extend that and remove the GST from other items and increase the compliance nightmare for small business. There is absolutely no doubt that roll-backwards would, as everyone knows, mean further complexity, more paperwork and increased compliance costs for small business. Indeed, that point is reinforced by none other than the Executive Director of the Australian Chamber of Commerce and Industry, Mr Mark Paterson, who said that `further roll-back would only increase complexity'.
Roll-backwards also means higher interest rates. I referred a few moments ago to the 22 per cent interest rates that destroyed so many small businesses when Labor was previously in government. Economist Chris Murphy from Econtech estimates that each $4 billion of roll-back would hike up interest rates by one per cent and would send the current account skyrocketing. So the average family with a mortgage would be slugged an extra $80 a month in their home repayments and small business would be slugged enormously through that increase in interest rates. If you roll back GST, inevitably you are going to roll up interest rates.
So what does the Labor Party offer small business? It offers crippling interest rates, it offers stifling workplace relations laws and it involves unions busting down their doors in an administrative nightmare—something which no small business wants to have to suffer. Certainly no small business can afford to have the Labor Party back in office.
There is a lot of confusion in the Labor Party about what roll-backwards actually means. Senator Schacht a few moments ago claimed that it meant rolling back the paperwork and reducing the administrative burden. The government has already achieved that. Mr McMullan defines it as GST tax cuts. What does the leader, Mr Beazley, say that roll-backwards is? Two years ago he said that `anything you can conceivably think of' is implicated in the term `roll-back'. That was two years ago. Four months ago he was on talkback radio in Cairns and a caller rang up and said:
G'day, Kim. How are you going?
Kim Beazley responded:
Good mate, good.
Caller: That's the idea. Kim, could you tell us how you are going to roll back this GST and help primary producers?
What a gift of a question. What an opportunity for the Leader of the Opposition to spell out exactly to this farmer what roll-back means for primary producers. But what does the Leader of the Opposition say in his answer to this question? I quote:
What would be a very good idea is, if you think there is some way that we could assist you, would be for you to send in some suggestions to us.
Just four months ago, as I said, the Leader of the Opposition still had absolutely no idea what his party meant by roll-back. We know very well that when it comes to tax you cannot trust the Labor Party. Need I remind the chamber about the l-a-w law tax cuts before the 1993 election. Those tax cuts, supposedly, were written in black letter law, but they certainly did not last very long. They were abandoned straight after the election. Not only were the income tax cuts abandoned but also wholesale taxes were increased, fuel excise was increased by 5c a litre, and company tax was increased to 36 per cent. It is interesting to see what the attitude of the now Leader of the Opposition, Mr Beazley, is to this shameful episode. In an exchange in parliament in September 1993, when he was finance minister, just six months after that election, he defended all of those tax rises and abandonment of the l-a-w law tax cuts in these terms. He said:
Mr Howard repeated this furphy that the Liberals go on with—that the Australian public was lied to during the election campaign by virtue of the fact that—
and this is laughable—
small adjustments have been made to petrol taxes and sales taxes.
What he said was that the `small adjustments' were 5c a litre on fuel excise, a two per cent rise in wholesale sales tax and a significant rise in company tax. The now Leader of the Opposition, then finance minister, went on:
They were not conned. When the government of the day gets up and says that it will sustain the current level of taxation, and the taxation that is predicted in the out years is actually falling, the public clearly knows that at any point of time a government is going to adjust taxation levels irrespective of anything that is said during election campaigns. ...
The fact that the Coalition was never able to exploit that politically is not the fault of this government—
that is, the then Labor government—
... that Dr Hewson did not then go out and thump the table and demand to know how the government of the day was going to keep to that particular mark. He did not ask what taxes the government was going to raise or what tax cuts it was not going to put through. The fact that those opposite did not, day in, day out—like any halfway decent opposition—
the now government—
go through those propositions with us is not our fault.
What duplicity from the now Leader of the Opposition. The first point that needs to be understood is that Mr Beazley thinks he is entitled to hide his tax plans and if he is not caught out by the opposing political party that is just bad luck for the public. He is now trying to repeat that subterfuge, as he did a few weeks ago when he was interviewed by Laurie Oakes on Channel Nine. He refused to answer Mr Oakes's questions about taxation policy because he said it was undignified. He said, `It is undignified for an alternative Prime Minister to go through tax by tax under scrutiny like that.' Yet back in 1993 he said it was the fault of the opposition because they had not thought to go through what the then government's plans were for tax—tax by tax, item by item. Let me tell Mr Beazley that we will certainly be going through every item of the Labor Party's proposals on tax and demanding that they tell the Australian people what their plans are if, God forbid, they should ever come back into government.
The second point Mr Beazley made in his 1993 speech to the parliament was that, irrespective of what is said in election campaigns, if revenues in the out years are falling—that is, the years ahead as projected in the future budget papers—a government is entitled to increase taxes. That is exactly the situation we have at present, as the budget papers currently show that tax revenues are expected to fall over the next few years. In Mr Beazley's terms that means he can say anything, mislead the public in any way, about the tax policies of the Labor Party. But, on the basis of the current situation, he is then entitled—if perchance Labor wins the election and comes into government—to completely abandon that and to adopt a completely different tax policy. That is not the approach this government adopts. This government spells out, as we did before the last election, exactly what our tax policies are. When we received a mandate from the people, we sought to implement that to the extent that we were able, subject to the frustrations of the opposition and the Democrats in this place.
There is absolutely no doubt that the tax reform that this government has initiated has created an environment in which Australia is a much more competitive country. The benefit of that is being shown in the current state of our economy. The strength of our economic growth leads the developed world. The direct consequence of that is that we have more people in jobs than ever before and have substantially reduced the levels of unemployment that we inherited from the previous Labor government. A major factor in that achievement has been the cut in personal and corporate tax rates which has benefited both individuals and businesses and has been a major factor in maintaining demand in the economy.
In gross terms, there has been $12 billion in income tax cuts—the largest in Australia's history. Company tax has been reduced from 36 per cent to 30 per cent. The abolition of the financial institutions duty represents a saving of a billion dollars a year to taxpayers. There is also the abolition of the wholesale sales tax, which unfairly taxed the goods component of our economy but left the services component of our economy, in an unfair way, free of any indirect tax. This put an enormous burden on significant industries like the car industry, which is so important to my state of South Australia. We now have a much more equitable tax system in terms of the balance between income taxes and indirect taxes, and the indirect tax structure itself is a much fairer system, being a goods and services tax rather than a hidden wholesale sales tax.
The implementation of the GST is a major change, a dramatic change, to our tax system after more than 60 years of the previous system being in place. The government recognises the enormity of that change and has attempted to make the change as simple as possible for business. Of course, it would have been a lot simpler if the opposition and the Democrats had got on board and supported the government in implementing the tax reforms as we had originally proposed, as we so often did as a responsible opposition in those years from 1983 to 1996 when very occasionally the then Labor government put up good proposals such as opening up the Australian economy and deregulating our financial system. The then opposition supported those proposals. We did not adopt an approach of blanket opposition just for the sake of opposition.
If the then government came up with good policies and changes that were needed, we supported them wholeheartedly. That is not the approach of this opposition. They embark on an approach of opposition for the sake of opposition. Anything this government puts up, they oppose—it has got to be bad. They cannot distinguish between things that are beneficial and that they would do themselves if they were in government, and those things which, for ideological reasons or whatever, they might be bound to oppose. That distinguishes the nature of this Labor opposition from the Liberal and National parties during our previous period in opposition.
As I said, we have tried to make the new system as simple as possible, especially for small business. Following further consultations, the government has dramatically simplified the business activity statement and has introduced easier options in relation to lodgement of the business activity statement and payment of the goods and services tax. Indeed, under one of those options, small businesses do not need to do any more quarterly reporting. They can simply pay the GST on the basis of their GST liability for last December. They can continue to pay that amount each quarter and do an annual report and reconciliation of the GST that is due from them on an annual basis. That is a much simpler system. In contrast to that, the Labor Party is in complete disarray with regard to tax policies. All it can talk about is roll-back—a roll-back it cannot define and cannot explain to the Australian people in terms of implementation.
It is interesting to note that in January last year Bob McMullan was honest enough to admit the benefits for the Australian economy of the new tax system introduced by the government, when he said that GST should be good for exports. Of course, it has been very good for exports. When the government developed the new tax system, it was a policy priority to make Australian exports more competitive on international markets. The wholesale sales tax structure had reduced their competitiveness because it was a built-in tax which exports from other countries did not have to contend with. One of the major goals of the new tax system was to get rid of hidden taxes such as the wholesale sales tax, and that was successfully achieved.
The benefits of that are now showing through in a dramatic way. For the month of June, we had a trade surplus of $537 million, and a surplus of $0.7 billion for the financial year 2000-01—the first trade surplus in three years. That simply reflects, apart from the overall good management of the economy by the present government, the benefits of the new tax system in terms of getting those embedded taxes and embedded costs out of those industries and businesses which rely on export markets.
The government's policy is clear and it is beneficial. In contrast to that, we have this confused Labor Party, which does not have the capacity to detail any policies. One wonders whether it has the capacity to actually develop policies, let alone articulate them. This was demonstrated beautifully in the very public argument between Mark Latham and Kevin Rudd, two Labor members of the House of Representatives. Getting back to this confusion which the Labor Party has about roll-back, or `roll-backwardness', Mark Latham suggested that roll-back should be about making certain geographical areas exempt from the GST. His colleague Kevin Rudd soon jumped on that and described it as lunacy. He said:
Latham has written much that is innovative in each of these areas. His most recent tax proposal, however, is just plain loopy.
Of course, Mr Latham had to come back, and he said:
As expected, Rudd has no suggestions of his own to assist the poor. As ever, rhetoric is easy in politics. Change is hard.
That is a truism. Change is hard, and it is this government that has had the courage to bite the bullet and make those necessary changes to our tax structure to develop a system that is much more efficient and that offers us much better economic outcomes, which are being delivered. (Time expired)