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Monday, 7 December 1998
Page: 1517


Mr SLIPPER (8:16 PM) —It is interesting to listen to those opposite huff and puff and claim that the tax system which this government inherited is in some way fair and equitable for Australia as we approach the next millennium. Everyone knows that the taxation system in this country is in dire need of fundamental reform. Everyone accepts that it is entirely inappropriate that, in a couple of years time, people on close to average weekly earnings will find themselves in the top marginal tax rate. It is also entirely inappropriate that the 1930s tax system which we have in Australia, and which has been abandoned by virtually every other country in the world, should continue to be the tax system we have. It is now an impediment to Australia's ability to compete internationally for job creating investment.

Let us get back to the facts. Our government is introducing a tax system for which it has a mandate. Before the election, we announced to the Australian people that we believed it was necessary to have real, meaningful, fundamental and equitable tax reform in Australia. The Prime Minister outlined a number of benchmarks against which tax reform would be judged. When the tax plan was announced prior to the election, there was national debate over the various matters included in it. We all know—and the opposition has criticised the fact—that there are substantial income tax cuts to benefit Australians.

We believe that lower tax rates create incentive. They create the opportunity for businesses to grow and invest and, most importantly, they assist in the creation of real long-term jobs. We abolish 10 taxes, including the unfair, inequitable and arbitrary wholesale sales tax. We have a compensation package for people in receipt of pensions and benefits. Prior to the introduction of the goods and services tax, there will be a four per cent boost in pensions and benefits. There is a guarantee that the rate of pensions and benefits will stay at least 1½ per cent above the price impact of inflation.

It is also interesting to note that independent Treasury calculations said that the price impact of our tax plan will merely be a 1.9 per cent increase in inflation. When one looks at the four per cent boost in pensions and benefits and the guarantee that pensions and benefits will stay 1½ per cent above the cost of any rate of inflation, it is very clear that the government has kept its pledge to make sure that people who are in need of compensation receive it.

The Sunshine Coast, like many other areas throughout the nation, strongly supported the government's plan for tax reform. Over the years, politics has not been well served by the way in which one party opposes reform plans of the other. In the 1980s, the Labor Party knew there was a need for a broad based consumption tax. We all remember option C. We all recall how then Treasurer Keating and the people who are currently in very senior positions in the ALP supported the principle of what was effectively a GST.

In 1993, we brought forward a tax plan and sought the backing of the people at that time. The Labor Party was entirely hypocritical in that, while in the 1980s it had supported the principle of a GST, it opposed our proposals in 1993. In 1998, this government, led by this Prime Minister, had the courage to stand before the Australian people, bringing forward a very broad based raft of meaningful reforms and seeking the support of the Australian people for it. When we got that support, the Labor Party said, in effect, `We know you won the election. We know the people of Australia voted for you to have this mandate, but we are seeking to thwart the will of the people.'

The Labor Party reform plans were merely to fiddle at the edges. However, they wanted to grab the assets of senior Australians retrospectively. They wanted to bring in a retrospective capital gains tax, despite the fact that in 1985, when the capital gains tax was introduced by the Labor Party, they said that all assets owned at the time of the introduction of the capital gains tax would not be brought within its reach. But in 1998, the Labor Party paid very heavily because the people of Australia decided that that was not the appropriate way to go. The Labor Party also considers that the wholesale sales tax, which is levied at seven rates from zero up to 45 per cent, is somehow fair. It is completely arbitrary, outdated and unfair and it is destroying our future in many areas.

The Labor Party's approach to tax reform was to bring in a few tax credits. Most people believe that those tax credits were poorly targeted, unfair and inequitable. Labor said that they wanted to tax jets and caviar, and yet they believe it is in some way appropriate that items which are currently taxed should remain taxed and items which are free of the wholesale sales tax net should remain free.

Let us look at some of the exemptions to the wholesale sales tax. Recently the Australian Taxation Office was involved in a ruling that frozen yoghurt was exempt from whole sale sales tax as long as it was above a certain temperature or pH level. This kind of nonsense is outdated and not accepted by the Australian people. On 3 October when the election was held the people of Australia voted against the system we have at the moment and they voted for our tax plan, which will see 10 taxes abolished, including the wholesale sales tax, substantial income tax cuts and compensation for those people in the Australian community deserving of compensation.

The new tax system will deliver income tax cuts worth $13 billion. Marginal income tax rates for ordinary workers will be reduced dramatically. It was interesting to listen to the honourable member for Melbourne when he tried to maintain that it is somehow in the interests of Aussie battlers for the current tax rates to remain in place.

Mr Martin interjecting


Mr SLIPPER —The shadow minister ought not to interject; he ought to stand up and apologise for being part of a party which sought to retrospectively tax with a capital gains tax the assets owned by Australians.


Mr Hockey —Vulnerable old Australians.


Mr SLIPPER —As the minister at the table says, they were striking at vulnerable old people, and those people reacted very dramatically when the Labor Party was not elected on 3 October.

It should be noted that, following the introduction of the tax plan, the top marginal tax rate for 81 per cent of taxpayers will be 30 per cent or less. That is a very major step forward. The minister at the table is one of the very strong supporters in the government of this tax plan.

It is important to recognise that our tax system ought to clamp down on tax cheats and those people who do not pay their fair share, and that will indeed happen under our tax plan. I am particularly disappointed that the Labor Party has sought to frustrate the decision of the Australian people. This is a very good plan. It is a very substantial plan. It is a plan which was overwhelmingly supported by the people of Australia. Yet, regrettably, we find that the Labor Party is prepared to do absolutely anything to prevent the implementation of this real and meaningful tax reform. If we are not successful in bringing our plan into legislative effect it will be many years before another government is again prepared to grasp the nettle, to stand up and be counted, and seek the support of the Australian people.

One aspect of our plan that I do want to mention in particular is the very many benefits for small business. On the Sunshine Coast, which I am privileged to represent in this parliament, small business is very important. Small business is the engine room of the Australian economy and it is responsible for the creation of an enormous percentage of jobs in this country. The Labor Party will be interested in this: small business costs will be reduced by three per cent after our income tax reforms. Other benefits will also flow to small business. Payment arrangements for the GST will deliver a cash flow benefit to most businesses. For businesses with sales less than $50,000, registration as a GST payer will be optional. Tax payments will be streamlined to a simple pay-as-you-go system of regular instalments. Most businesses will make only one payment each quarter on one form for all their taxes. Paperwork involved in registration and reporting will be cut.

Up to $500 million in financial assistance for small and medium sized businesses will reduce the start-up costs of a GST. Cost to exporters will fall 3.5 per cent and Australian exporters will gain some $4½ billion a year. Most importantly, provisional tax and the provisional tax uplift factor will be abolished. The government will consult with business on the taxation treatment of business investment with the prospect of further capital gains tax relief and movement towards a company tax rate of 30 per cent.

The Labor Party has spent some time in this debate seeking to criticise the regime that will be in place to ensure that price reductions are passed on. The minister at the table will be responsible for legislation which will ensure that the people of this country will receive the flow on benefits from our tax reform. This government is absolutely determined to ensure that there is no profiteering and that the benefits that will flow right through the community are in fact received by consumers.

The principal manner of this occurring will be through the impact of competition, but we will, through certain amendments to be introduced into the parliament, have provisions in place which will ensure that profiteering, should it occur, will be met with the full force of the law. Independent retirees will receive benefits, as will aged people. Families will be given new opportunities as a result of this legislation.

Part of our tax plan included the 30 per cent private health insurance rebate, a policy strongly supported by my constituents. I want to place on the record my very strong urging of the opposition to accept that people in all electorates, both those held by the coalition and those held by Labor, believe in the private health insurance rebate. When one looks at the percentages of the community in various electorates who are covered by private health insurance, it is clear that many Labor electorates have a very high proportion of private health insurance coverage. Indeed, the battlers of Australia are the people who are scrimping and saving and struggling to pay their private health insurance, but regrettably they are the people whom the Labor Party wants to kick in the teeth through its refusal to accept our mandate to bring in the 30 per cent private health insurance rebate.

This rebate would make it possible to put a platform under the decline in the percentage of the Australian community covered by private health insurance. It would make sure that many people who were currently finding it extremely difficult to stay in a private health insurance system would be able to do so. It ought to be noted also that a healthy private health system ensures a healthy public health system.

The legislation before the chamber is a broad change to Australia's tax system. The Prime Minister and the government have displayed great courage in being prepared to stand up prior to the election and say that we believe that Australia deserves better as we approach the next century. Our tax plan contains the scrapping of 10 Labor taxes, including the wholesale sales tax. It includes dramatic reductions in personal income tax. It includes a reduction in fuel tax. It includes fair compensation packages for those people who are deserving of compensation, including recipients of pensions and other beneficiaries, as well as retirees. This is a fair package. It is a package for which the Australian people voted and I would urge the Labor Party to respect the mandate of the government to bring in this new tax system as we approach the next millennium.