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Thursday, 25 June 1998
Page: 5492


Mr McCLELLAND (10:27 AM) —I raise an important matter which has been referred to by Sue Dunlevy, who is a reporter with the Daily Telegraph . She raised an issue concerning the pensioner revolt about the government's GST. What has happened is that this GST proposal is going to dramatically affect pensioners. Pensioners have worked all their lives and they have paid tax under one system and that system is, of course, by way of income tax. After retirement they have accumulated their savings and they have accumulated their superannuation entitlements. The whole nature of the game has changed under the GST regime. Overnight what has happened is that pensioners are going to lose the equivalent value of their assets as the amount of the GST. That is because the spending power of those assets will be reduced effectively by the size of the GST. If it is 10 per cent, obviously their assets are reduced by that amount. What has happened is that they are going to be paying a GST on everything that they spend. If they are unlucky enough to end up in a nursing home they will pay a GST on the government's nursing home accommodation charge. All people will pay a GST on non-prescription medications, train and bus fares, postage, phones, council rates, water rates, electricity, car registration and maintenance and insurance and health fund premiums. If they are involved in any sporting activities, whether it is bowls, golf, or indeed exercise classes at their senior citizen centres, they are going to have to pay a GST.

The best analogy of this proposed tax was given to me by a constituent in my electorate who described it as `the arthritis tax'. He said, `Once you have got it, you've got it for life, it's only going to get worse and it gets you every time you move.' I think that is a pretty fair description. The Treasury has flagged compensation for people, particularly those on fixed incomes such as senior citizens. The Business Council suggested that the compensation package would need to be about $2 billion to $3 billion. The mere fact that the Business Council is proposing compensation is an admission of the effect it will have on people on fixed incomes. The reality is that, in 21 of the 23 OECD countries that have introduced a GST, the rates have gone up. In New Zealand, they have gone up 25 per cent, but what we have seen is that the compensation package has been eroded. If the New Zealanders think the GST is so good, why are so many New Zealanders coming to Australia? What is quite clear is that any compensation package is liable to be undermined and undermined quickly. While the government will try to buy off people on fixed incomes, the reality is that those compensation packages are going to be undermined.

Why is the government introducing a GST? It says it is doing it for economic advantage. What it is doing is shifting the tax impost from businesses, as a result of pressure from the Business Council, and putting it onto families. Even Neil Warren for the Business Council of Australia said that inflation was going to increase by 5.6 per cent with the introduction of a GST. In New Zealand—again, another example—it went up by 8 per cent. So the cost of goods will go up. It is estimated that a family on a fixed income, a pensioner couple, will be at least $15 worse off under a GST.

Labor accepts that there is a continuing need for tax reform in a modern society, but we say that tax reform should be that which benefits ordinary Australian families, particularly those on fixed incomes, and not that which relieves the taxation burdens on big business so that they can make more money for themselves and their executives at the expense of ordinary Australians, particularly those on fixed incomes.