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Thursday, 20 September 2001
Page: 27564


Senator COOK (Deputy Leader of the Opposition in the Senate) (4:21 PM) —I move:

That the Senate condemns the Government for introducing a goods and services tax after promising `never, ever' to do so and for the damage that this regressive tax has done to small business, middle- and low-income earners, and particularly Australian families, through the botched way it has been implemented and continues to operate.

The Treasurer, Peter Costello, in the House of Representatives on 29 May last year, said:

All Australians will be better off under the new tax system.

I do not think that there is a single person in Australia—apart from perhaps those on the other side of this chamber—who would consider that this promise was kept. Indeed, even those on the other side of this chamber know in their heart of hearts that this promise has been broken. The new tax system, particularly the GST, has been extremely damaging in so many respects to the Australian community.

Let me address the implementation of this unfair and regressive tax. There is clear evidence that this tax is having a devastating impact on small business and ordinary Australians who are least able to withstand its impact. We already know that the GST has not spared the overall economy, with economic growth less than half the level it was before the GST's introduction and with almost weekly announcements of proud Australian companies going under, turning belly-up.

We also know that the GST has been bad for jobs. While Peter Costello's A New Tax System document promised `the combination of higher growth and improved work incentives will deliver more jobs and lower unemployment', we know that the GST has been devastating on employment. Since the introduction of the GST, the rate of job growth has flatlined and the unemployment rate has risen. We have seen the following: a fall in the number of full-time employed persons of 87,700; a fall in full-time male jobs of 68,400; a rise in the unemployment rate of 0.7 percentage points; a rise in the number of unemployed of 77,500; a drop in the rate of growth in jobs of 0.6 per cent, after peaking at 3.7 per cent in July last year; and a rise in youth unemployment from 20.8 per cent to 23.5 per cent. The source for those figures is the Australian Bureau of Statistics labour force figures of 13 September 2001.

In terms of the impact on small business, the Society of Certified Practising Accountants—the CPA— survey of 600 small businesses released this week shows that all sectors of small business believe the GST has had a negative impact on their business. The survey confirms small business anger at the new tax system can no longer be dismissed as a transitional problem. More than a year after the introduction of the new tax system a staggering 72 per cent of small business say that it has increased their workload; 56 per cent of small business believe it has had a negative impact on their cash flow; just 19 per cent believe it has improved their business, with 39 per cent rating it as having a negative impact on their business activities; and just seven per cent say it improved payments of debts, with 40 per cent finding that the new tax system slowed down payments by debtors.

Regardless of whether they are in the city or the country and regardless of their turnover, the findings are the same for small business: the GST has been a disaster. Government attempts to improve the hated—and I use that word advisedly, because everywhere you go the reaction is one of pure hate— business activity statement, the BAS certificate, have also been a dismal failure, with just 17 per cent of small businesses using the new form. This puts the lie to government claims that small business does not want further reforms to the GST and the BAS certificate and backs the claim by Council of Small Business Organisations of Australia chief executive, Rob Bastian, that Labor's proposals for simplifying the new tax system have strong backing in small business.

We are now uncovering much evidence of how Australians outside of the major centres—the capital cities—have been particularly badly hurt by the GST. In this chamber, some months ago, I put up a proposition that the Senate conduct an inquiry into the impact of the GST on Australia, to see whether the promises made for it by the government prior to its introduction have in fact been kept by the government—in other words, an accountability inquiry, truth in politics. Has the government delivered what it promised to do? It is sad to report that this chamber did not find a majority to support that inquiry. Only the Labor Party voted for it.

As a consequence, since we were not going to conduct an accountability check—I was amazed that my parliamentary colleagues in the Australian Democrats, the so-called keep-the-bastards-honest party who hold accountability at the top of their totem pole as the raison d'etre for their existence, did not want to conduct an accountability check to see what electors in this nation thought of their actions— the federal parliamentary Labor Party set up its own inquiry, and many of the findings of that inquiry submitted to us by ordinary voters and constituents in a number of electorates around Australia are very important. We set up this inquiry because we thought it was high time that Australians got to tell their own stories of how the GST has impacted upon them and how they see relief from the worst ravages of the GST being best targeted.

Our inquiry has found that its impact on regional centres and smaller communities across Australia has been devastating. In Queensland, for example, the inquiry heard that 38 small businesses have gone under in the Caboolture shire alone since the introduction of the GST. This is a matter that should be of concern to the member for Longman, who, in his capacity as parliamentary secretary for small business, was telling small businesses in the area that the GST would be a boon for them. The inquiry found that the true story is very different, as 38 small businesses had in fact gone under. Small businesses in the Caboolture shire—those that are still in business—are in fact struggling to keep their heads above water. They are being buried under GST paperwork. `Our paperwork has tripled' was a comment frequently heard by the inquiry.

The compliance cost of the GST continues to be a nightmare. The government would have small businesses believe that the problems associated with the GST have been bedded down. This is clearly not the case. On the contrary, small businesses resent being tax collectors for the government—another typical comment. `I haven't worked 30 years in my business to turn out to be a tax collector for the government' was one small business comment we received. Comments similar to that were made everywhere our inquiry went. Here is another typical comment:

I'm in business to make money, not to provide the Government with a free service.

That was another frequently heard comment. That one was made on Bribie Island, also in the Longman electorate. A similar view was expressed in Gladstone and Bundaberg in the electorate of Hinkler. Mr Paul Neville is the National Party member for Hinkler, and in the local media he attacked the inquiry for listening to the electorate. It seems to me that the sooner the Labor candidate for Hinkler, Ms Cheryl Dorran, is elected the sooner the constituents of that federal electorate will have someone in Canberra prepared to represent their true grievances and their real wishes in this parliament and not someone who, like the current member, is simply prepared to patronise the genuine concerns of his own constituency.

Throughout regional Australia there was testimony on the tremendous costs associated with meeting Taxation Office GST requirements. The inquiry heard from one small business operator in North Queensland who, 15 months after the introduction of the GST, is still having to get a computer service provider to come in every week to ensure GST compliance. At $60 per hour it is a cost they, understandably, can ill afford. These are real Australians putting forward their real concerns about the real costs this regressive tax has imposed on them.

Beyond compliance costs, the hit the GST has made on the hip-pocket of small business customers has in turn led to a drop in the earning capacity of small businesses themselves. It is, after all, a vicious cycle. As one businessperson explained to the inquiry, `It is not just the GST's direct impact on small business that is the problem, it is its impact on the spending capacity of our customers.' People simply do not have the disposable income anymore to support small businesses. The GST has destroyed small business cash flows in regional centres. Businesses told us that they could no longer afford to take on new staff, as a direct result of the costs of the GST on them. In some cases, they have had to reduce the staff devoted to their core business and, instead, direct resources towards GST compliance.

We did hear of two thriving occupations in the wake of the GST's introduction: accountants and computer salesmen. Needless to say, this development was not looked upon fondly by the small businesses that have to shoulder the burden of extra accountancy fees and extra costs for computers and other electronic accounting equipment. Nor did they say that the cash grant given to them by the government met anything like the real and genuine costs incurred by them in reconfiguring their accountancy systems and in having to buy new automatic and electronic accounting machines.

The cash flow problem is a serious one and one that is having an ongoing impact on small business. They are telling us that they simply do not have the capacity to expand or even maintain that business. As one small business damagingly said:

I've made more money than I ever have, but I'm now worse off.

Another said:

My [GST associated] bank charges have now overtaken my advertising budget.

Many small businesses are becoming disillusioned. One small business bluntly told the inquiry:

The GST is discouraging entrepreneurial activity. So business is not an attractive option anymore.

Labor's parliamentary inquiry has also heard how the GST has impacted on Australians least able to afford it. Pensioners, students, the disabled and low income earners dependent on charities are all worse off. In fact, the evidence points strongly to all low income Australians being worse off. The inquiry received in Wonthaggi in Victoria last week a submission from a woman who is completely dependent upon a disability pension. Her plight mirrored that of many people who have shared their stories with us. She detailed just how hard things were for her since the introduction of the GST. She said in her submission:

Before the GST I could manage quite well, but now I'm just not coping.

In another submission made to the inquiry, an ex-service pensioner from Sale in Victoria presented evidence to us of just how badly the GST has impacted on his livelihood. Not only did he receive a 1.6 per cent increase in his Comsuper pension, despite reasonably believing that all pensioners would get a four per cent increase in their pension—because that is what he was told by the government—but also his part-time job hours were radically reduced. Like many people, this gentleman has lost over 300 hours in work when compared with the previous year, and his employer told him quite unequivocally that it was the result of a dramatic fall in revenue at their hardware business since the introduction of the GST. The result of such a substantial loss in earnings, combined with having to pay the GST, has meant that this man and his wife have a substantial reduction in their already very modest way of life.

The reasons for this kind of impact are clear. The GST is an unfair and regressive tax. Those on fixed low incomes pay it on everything, except on some food. They pay it on their utility bills—that is, on their gas and electricity. They do not pay it on their water, but they pay it on the necessary requirement, especially in country Australia, of a telephone. They pay it on their household insurance, and following the collapse of HIH household insurance premiums have gone through the roof and the GST has risen as a consequence. They pay it on their education needs and, in the case of those with young families, they pay it on everything associated with the raising of young children.

I am surprised that I have not heard anyone from the government benches say, `But they do not pay it on education.' Go out and ask Australian families whether the GST is exempt from all education needs for a family, and you will receive a hoarse laugh. It is not payable on the direct education provision but it is payable on every other element of education needs, and for families with young children it is a significant slug. I was also told by a young mother, `If you are going to roll back the GST, please, for families with young children in nappies, take it off nappies first.'

Australia's charitable organisations have been severely damaged by the GST. As one welfare organisation said to the inquiry, it is as if `all welfare organisations have been tarred with the same brush as tax cheats'. I heard several times from those who volunteer their time for charitable and worthy community pursuits that they were very angry to hear the Treasurer, Mr Costello, call upon Australians to give up an hour a week to engage in voluntary work. As was pointed out to me by people coming forward from the community, the GST gave most non-profit organisations far more than an hour a week in additional paperwork and headaches. They do need an extra volunteer hour, but that is thanks to Mr Costello and the compliance paperwork mountain that charities now have to deal with weekly. These volunteers highlighted that many former volunteer bookkeepers and treasurers had given up assisting these organisations because of the stresses imposed on them by the GST.

Australians are desperate for some relief from this regressive tax. They understand that the government has scrambled the tax egg with the introduction of this tax and that any responsible future government cannot easily unscramble it. But they do not believe the Howard government and the Australian Democrats when they say that nothing can be done to make this tax fairer and simpler. They want roll-back and they want to return to a situation where tax compliance does not dominate their lives. Labor are committed to rolling back the GST on two principles: (a) we make it simpler and (b) we make it fairer. This is Labor's agenda. We have been listening to the people of Australia and to Australian small business and, at the coming election, we will present the Australian electorate with a well thought out, thorough and considered set of measures that will make this tax fairer for all Australians and simpler for those who have to bear the paperwork burden so that small business can get back to its core activity of doing business rather than being tax collectors for the government.

I conclude my remarks by saying that no-one who spoke to us believes any of the promises that the government made before it introduced the GST. No-one believes that they are better off—as the Prime Minister said they would be—because of the GST. (Time expired)