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Monday, 7 December 1998
Page: 1520


Mr KELVIN THOMSON (8:32 PM) —A bit over three years ago, John Howard told all Australians there was no way he would introduce a goods and services tax. He said, on 2 May 1995:

A GST or anything resembling it is no longer Coalition policy. Nor will it be policy at any time in the future. It is completely off the political agenda in Australia.

Yet here we are debating the tax that we were never ever going to have, with the government proposing to put it through the Senate using the vote of a senator it was never ever going to accept. It is precisely this kind of conduct that causes present day cynicism about politics and politicians, where a government promises no GST and then says, `Yes, let us have a GST.' It says it is not going to use the vote of Senator Colston and then says, `We need the vote of Senator Colston, therefore we are prepared to accept it.'

It ought to be noted that the Senate was elected back in 1996 and that half of the senators elected then continue to serve. This government is intent on getting this legislation to a Senate that at least in half measure was elected on the basis of both government and opposition senators saying they would never ever support a GST. Those are the kinds of political standards being shown by this government, bringing this House into disrepute as a result.

The GST is one of the most regressive, unfair pieces of legislation ever to be introduced into this House. It is a tax from the big end of town to slug the small end of town, a tax that will forever change financial relations between our three levels of government for the worse, a tax that will rise and rise, a tax that will do nothing for employment creation and a tax that involves in part some $13 billion in tax cuts, of which 52 per cent will go to the top 20 per cent of income earners. We see here the Liberal Party agenda exposed for what it has always been—an attempt to transfer money away from those who are not well off, away from battlers and the disadvantaged, towards those who are already well off.

When this government came in they said, `We have this terrible black hole—a $10 billion black hole—and as a result we are going to have to slug ordinary Australians.' They did that in abandoning the Dental Health Care program, increasing the HECS charges and taking the money out of nursing home capital upgrades and the like. Now, when there is a projected $5 billion to $7 billion surplus, what do they say? They do not say, `Let us put the money back into those programs.' Instead we see some $6.6 billion of income tax cuts going to the top 20 per cent of income earners in this country. So we see this government and this Liberal party doing what it has always done—transferring wealth away from those who have less towards those who already have more.

This piece of legislation has come to this House through fraud. Amongst other things, we saw some $17 million worth of taxpayers' funds used to advertise the government's program, with no allowance for a `no' case. If this election were a referendum on the GST, then the government would have lost it with over 51 per cent of the voters on a two-party preferred basis preferring Labor. Equally significant was that only one side of the argument was funded by taxpayers. Some $17 million was used to promote the government's case. As part of that production, they put out this booklet called Tax reform—Not a new tax, a new tax system, and this was distributed to every Australian household—at their expense.

If you go and have a look at the figures in it, you will find, for example, at page 11 reference made to senior Australians, and in particular a happy and smiling Marj and Dave, said to be $23 a week better off after the GST. If you turn over to page 12, you will find Doug and Betty, the self-funded retirees, who are said to be $18 a week better off after the GST. And they too are smiling.

Perhaps they would not be smiling so much if they were aware that, in the calculations that the Treasury used to arrive at these figures, firstly no allowance was made for the abolition of the savings rebate. That is to say, the $2 billion which had been earmarked for savings rebates of up to $450 per annum for those who were eligible for them. These would have been potentially of benefit to pensioners and self-funded retires. The government proposed as part of its tax package to abolish the savings rebate and is proceeding to do so. But no allowance for that has been made in the calculations on pages 11 and 12, and there is no reference anywhere in this booklet to the fact that the savings rebate was going to disappear.

Secondly, the government made no allowance for the application of the assets test. If you look at their assumptions, they have simply assumed that neither Marge nor Dave, neither Doug nor Betty, nor any other aged pensioner or self-funded retiree, will be subject to the assets test. That is a pretty far-fetched assumption in my view and it is one which, once again, was not presented in this booklet. So nobody looking at this booklet would have understood, on the face of it, that the assets test was not being taken into consideration.

Thirdly, the government talked about the aged persons savings bonus and included that in the calculations. So, when they said you would be $20 a week or $18 a week better off, as the case may be, they included that aged persons savings bonus. Yet that is a one-off bonus. It applies for 12 months only. It will not be there after its first year. So on those three counts we find this a most misleading document produced at taxpayers' expense and circulated to all Australian households. There are many flaws in the government's modelling of the tax package and they will become increasingly apparent as this bill makes its way through both the House of Representatives and the Senate.

The other matter I want to say something about is the extraordinary claim that every cent of tax reduction is going to be passed on to consumers, an assumption that 100 per cent of reduced costs or charges will be passed on to consumers. This is completely unrealistic. Indeed, Minister Vaile, when he referred to transport costs, said that, because of the high level of competition within the road transport industry, the `majority' of savings would be passed on to consumers as end users of the transport chain. `Majority' is not good enough. The modelling assumes 100 per cent. When the government claims 1.9 per cent in terms of price rises, they are assuming 100 per cent, and we all know that is certainly not going to happen. That figure is simply not credible.

There are a whole series of reasons why I and other Labor members are not prepared to support a GST. Firstly, we will not support it because it transfers the burden to the less well-off. Because it introduces a 10 per cent tax on presently untaxed necessities like food, electricity, gas, books, public transport and all those sorts of things, it transfers the burden to the less well-off.

Secondly, in particular it transfers the burden towards pensioners and retirees. There is simply no effective way of compensating people who have left the work force after a lifetime of work under relatively higher income taxes and relatively lower sales taxes. As for this idea of the one-off compensation package, as my father says to me, `Do you think we're going to stop eating after 12 months?'

Another reason why we are not prepared to support a GST is its impact on small business. It will force small business to become unpaid tax collectors. Presently, something like 80,000 small businesses are involved in the wholesale sales tax collection arrangements. The GST, on the other hand, will involve in the order of a million small businesses. They will be roped into the tax collection net. They will be the victims of substantial compliance costs, both start-up and ongoing compliance costs, as they implement the government's tax reform package.

Certainly, as I went around my electorate and on occasion others, I found in talking to a lot of small businesses and a lot of retailers great concern about the impact of a GST on them. That was one of the reasons why Labor polled over 51 per cent on a two-party preferred vote and, in terms of senators, polled even better than that with something like 60 per cent of the votes for senators being cast for parties and candidates who indicated their opposition to the GST.

The other area that I think is of great concern involves sporting, voluntary and charitable groups. How is this going to impact on them? We have not been able to get from the government straight answers as to what happens when scouts are trying to retail a $2 bar of chocolate, what happens to garage sales, what happens to a whole range of activities being undertaken by not-for-profit organisations.

These matters have not been satisfactorily resolved, nor have the issues involving financial supplies. I have had contact with people in the superannuation industry and in the life insurance industry where the arrangements concerning financial supplies are far from clear. We start coming across anomalies. We have seen the anomalies with the marriages—the civil celebrant marriages compared with the religious marriages—and we have seen the anomalies in the arrangements as they affect credit unions compared with banks and other financial institutions.

We also see in the insurance area, for example, that the legislation specifies life insurances as a financial supply but other insurances are not going to be exempt from GST. So with death and disability cover, which are traditional superannuation fund offers, charges for the death part of the insurance will be exempt from GST but disability cover will presumably attract the GST. That is a most unsatisfactory situation. It is going to make the life of the superannuation funds and others who offer that sort of death and disability cover much more complex than it ought to be, and that will only be at the expense of members of these funds whose benefits will diminish accordingly.

The other thing that ought to be said about this legislation is that it is an absolute stone-cold certainty that the GST will rise, as it has in some 21 out of 23 countries where it has been introduced. In Britain it started at 10 per cent—now 17½ per cent; in New Zealand it started at 10 per cent—now 12½ per cent. As for this lock-in mechanism, it is not even here in the bill before the House. The government are a bit like used car salesmen trying to sell you a used car. You ask where the brakes are, and they say, `Oh, they're still coming. They're going to come later.' Anyone who understands the constitutional arrangements which govern this country and the nature of parliamentary democracy knows that there is no prospect that this parliament can bind a successor parliament or stop the GST being increased if that becomes the wish of a future government or parliament.

On all those counts, I and the opposition reject the GST. We understand it is regressive. We understand the impact it is going to have on ordinary Australians. We had support from ordinary Australians at the last election to put forward the view that we are now putting forward. I urge members of the House of Representatives and senators to understand the impact this bill is going to have on Australia's taxation arrangements, shifting the taxation burden to those who are least able to afford it, to those who are least able to look after themselves. It is an outrageous sleight of hand on the part of this government and it ought to be rejected by all honourable members.