Senator JACINTA COLLINS (5:40 PM) —I am happy to support and extend Senator Cook's and Senator McLucas's contributions to this debate. I think it serves, at this stage and following Senator Watson's comments, to go back to the motion proper. Senator Cook moved:

I am not sure where Senator Watson referred to issues such as HIH and One.Tel—and I admit that I was in another meeting during part of Senator Cook's contribution, so Senator Watson may have sought to make some reference to contemporary issues—but I am really not sure how we got to be talking about the `white trash of Asia', either.

Today, I want to spend some time revisiting issues raised by a number of senators in this debate. I, as did Senator Cook and Senator McLucas, attended some of the inquiry meetings into the operation of the GST. I found this a very useful experience, involved as I was in the original Senate inquiry into the potential impact of the GST and a new tax system. The Senate Employment, Workplace Relations, Small Business and Education References Committee reported on its inquiry in March 1999, and it is interesting to note that many of the issues we foreshadowed in that report have become significant issues in the implementation of the GST.

Senator Watson referred to the issue of jobs, and I encourage senators to review a lot of what was said, with specific reference to a number of particular sectors and the likely impact of the GST on those sectors. The main one that comes to mind in contemporary circumstances is tourism. It is simply not the case that the tourism sector has not complained about the implications for employment of the introduction of the new tax system. In these contemporary circumstances, they are obviously even more concerned that they are, in a sense, bearing the double whammy of the current problems associated with Ansett and the ongoing implementation problems associated with the GST—not only in terms of their situations as business operators but also in terms of the level of demand for the products that they deal with.

I could spend quite some time today—and I suspect I will not have that time—going through a number of the issues that were raised at the meetings in both Boronia and Rowville in Melbourne by the large number of people who responded and attended those inquiries into the GST. I need at this stage to remind the Senate, following some of Senator Watson's comments, that the Labor Party sought to establish a Senate review—and Senator McLucas has covered some of this—and it is disappointing that, given some of Senator Watson's comments, the government did not actually participate in that review. If he believes that, as in some of the examples that Senator McLucas raised, people have been badly advised or that their problems—and he accepts that their problems are legitimate—could be corrected through better advice then I am sure that that contribution from the Australian community that responded to information about this inquiry would have been very welcome. But, as Senator McLucas pointed out, the government and the Democrats did not want an inquiry—or, indeed, an inquiry that would report before an election.

Senator Chapman, referring to the Labor Party, said, `They know it's good.' He said that we know the GST is good. However, Senator Watson pointed out by characterising Senator Cook as somewhat like a broken record that he is aware that we have consistently, repeatedly and for a very lengthy period of time, even before this government sought to introduce the GST in the first instance, referred to the problems associated with a GST. So where Senator Chapman gets the notion that we know it is good, I am really not sure.

I concur with Senator McLucas. This notion that, if we are really serious about the problems that we believe exist in the system then we should just get rid of it, reflects an approach that is simply out of touch. My experience in the inquiries and the discussions that I have had with people about the implementation of the GST is that the community does understand. I contemplated a few analogies of how they might understand that once this system has been put in place it is not something that can be simply undone. It is not a complicated notion. One example that was put to me was a rail analogy. You do not build a railway line and then shift its destination or change the infrastructure, but you can still change or deal in a different way with how people get on or off the railway line and which people or which goods or which services get on or off. That is the situation with the GST.

We are left with a system that cannot simply be `gotten rid of', in Senator Chapman's words. However—and the government has to acknowledge this as well, if you look at the changes that they have made in recent times—there are modifications to the system that can be made to improve it. Much was made about the concern of the business community with this notion of roll-back. I suspect that Senator Watson did not quite mean to say it this way and was perhaps not reading correctly from the note that he referred to, but he was suggesting that the article by Kurt Rendall suggested that business was `getting more comfortable with the tax and the ALP'. I suspect he meant to say something else there.

But the community is also becoming reassured that the notion of roll-back is a notion of improving the system and if change is to occur, it is to simplify and remove anomalies. The best example of that is the business activity statement. Business is concerned about further changes. They have had enough difficulty dealing with the changes that have occurred thus far, but at the same time they also say that there are still significant problems and that the changes that have occurred to date have not resolved a number of them. That is a fine balance that you can resolve only through adequate consultation.

As I said, I could spend time today going through the individual experiences of the several people who gave us their stories in Melbourne, but the examples raised by Senator Cook and Senator McLucas covered a fair range of the situations and the issues affecting people. They also covered issues such as the anomalies in the system that could be rectified to make it simpler rather than, as the government seems to frequently suggest, make it more complex. They also gave examples of areas where simple and straightforward reform would make it in some ways fairer. The latest example of that arrived in my in-box today. It was a letter to the Prime Minister from Smokenders. This is an example of their concerns with the GST. They say:

The question is posed in the letter to the Prime Minister:

The reason I use this example is that it is not the only one. We have had evidence put to us in this inquiry on several occasions of examples where people have been asked by representatives of the government to put forward their issues, their anomalies and their problems and suggest how they might be managed or resolved. They often have done that and they have provided us with examples of what they have provided to the government but then afterwards the calls do not get through or the calls do not get returned. That raises the question that, if the government is prepared to accept roll-back, of a sense, in relation to issues such as the nature of the business activity statement, petrol, caravan parks and beer, what do these other organisations need to do to get some movement in terms of their areas of concern?

This review undertaken by the Labor Party has been such an important measure because we have said in a comprehensive way, `This system has been in place 12 months now. Let us find out the details of the problems of its implementation and let us look at what can be done to improve that system.' Our view about improving is not, as has been beaten up by some, the notion of change for change's sake. It is an attempt to make this tax fairer and simpler. The response that Senator Chapman suggests of `Just get rid of it' is obviously quite irresponsible. Senator Chapman suggested to us in this debate today that there are serious problems with our notion of removing it from some items. I listened to Senator Watson's contribution about this issue and he quite rightly pointed out that the exemptions to the operation of the GST were as a consequence of a Senate action and this is why it was so important for us to review how effectively that Senate action is affecting the implementation of this tax.

Again, this is why it was so disappointing that both the government and the Democrats did not want to find out the answers to those questions before an election. We have looked at the consequence of that Senate action in terms of the exemptions that currently exist and we have looked at those areas where anomalies are creating problems. They are some of the issues that we will address when we look at how we review some of those matters.

Senator McLucas gave some examples of where you have businesses operating where the exemptions apply and the difficulties they have in dealing administratively with the components of their business to which the exemptions relate and the components to which they do not. I suppose the Smokenders example is another one where issues such as the health type exemptions create problems and distort markets as well. But we have not seen the government take a serious look at any of these issues. There seems to be this blind, head in the sand type approach. Senator Kemp characterises it best by saying, `Yes, but you like it; you are going to keep it, too', and that was reflected by Senator Chapman in commenting, `They know that it's good', when the reality is that there are a number of implementation problems that need to be addressed. The only people looking seriously at trying to do that at the moment are the Labor Party. To continue down the path this government has gone down with these ad hoc pragmatic responses, which is the fairest way to characterise some of what has happened in relation to items in that list that I referred to before—BAS, petrol, caravan parks and beer—is not a systematic way of running an appropriate tax system. Until the government gets serious on that score, I think the cynicism that exists within the business community will continue.

Senator Watson, I do not know who Kurt Rendall is. I will refer to the article to which you brought our attention in this debate. But I think I should balance it with the concerns expressed elsewhere from members of the business community. Before I do that, I will just make one point which reflects on some of Senator Watson's contribution. He said that the GST came in with a lot of promises. Yes, that is right. He made a select reference to those that he thought we had had a reasonable score on. But of course there are others. One such promise was, for example, that it would improve the integrity and simplicity of our tax system. I am not sure who believes that that has occurred. Another promise was that it would create a better quality of business, because GST reporting brings operators closer to their business. I am not sure who within the business community really believes that. Let us look at some of the other things that the business community has said.

On this anniversary of the GST's introduction, a survey by the Australian Industry Group found that almost 70 per cent of businesses were suffering GST related cash flow problems—70 per cent is very high—and that the GST was placing a massive burden on small companies, with a 40 per cent increase in tax administration costs. The Labor Party's small business spokesperson, Mr Joel Fitzgibbon, gave us a tidy representation of some of these surveys. I will refer to an excerpt of a speech that he made on some of these issues. Further, the AIG survey found that the time taken to administer tax has increased by 65 per cent to eight hours a week. This is precious time which small business owners and operators are forced to spend collecting tax for the government, when really this time should be devoted to the actual running of their enterprises. In the inquiry that we are running at the moment the small business view on this has been extraordinarily strong. The survey also found that the government's changes to the business activity statement had, as I mentioned earlier, only a minimal impact on the burden of red tape. So, according to the AIG survey, no, we still do not have it quite right. I am sure that small business operators have concerns about further changes but they would also be concerned to see it continuing as it is if they do not believe that it is quite right yet.

The CPA Australia survey that has been discussed most recently found that 39 per cent of small businesses believe that the GST has had a negative impact on their overall business performance and 56 per cent said that the new tax system had a negative impact on their cash flow. A survey by Hall Chadwick looking at independent retail grocers found the average total cost of compliance for their members was more than $12,000 per business. Senator Watson said that we needed to look at the compensations. Well, the comparison there in terms of that level of cost nowhere near matches the compensations given to small business.

A Victoria University small business research unit found last October that small business owners were devoting one full working day each week to GST related paperwork. Australian Business Limited's survey in May found that 65 per cent of small businesses cited the GST as hurting their cash flow. In May and August this year, the Yellow Pages index survey found that, of the seven most important reasons small businesses were critical of the federal government's policies, six were directly related to the goods and services tax and completion of the business activity statement, including key indicators such as cash flow, debt and profitability. The Australian Bureau of Statistics' national survey in June 2001 found that small businesses had the most pessimistic profit expectations of the business sectors, medium and large.

CPA Australia's July 2001 research found that 59 per cent of firms responding reported negative cash flow and only 22 per cent felt that the tax changes had improved their performance. Linking that back to the original promise of the system, I repeat that only 22 per cent felt that the tax changes improved their performance. Forty-two per cent—almost double— said that it had had an overall negative impact. Further, 84 per cent of businesses surveyed by PricewaterhouseCoopers in the same month believed their overall tax compliance was more complex than before the introduction of the GST, while 59 per cent of small businesses feel that their cash flow has been hit by the GST. A spokesperson for one of Australia's leading banks says, `The feedback we're getting from small business is it is a tough competitive environment.' (Time expired)