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Monday, 7 December 1998
Page: 1526

Mr FITZGIBBON (9:03 PM) —I was listening very intently to the member for Moreton. These goods and services tax bills put into effect what the member for Moreton calls `tax reform'. I prefer to refer to it as `tax change' because these bills are simply about shifting the burden from the big end of town to those in the Australian community who can least afford to carry that burden. There are really only three tests for a tax system, in my view.

The first is the relative size of the tax take, as a percentage of the size of the economy. I see the Minister for Financial Services and Regulation at the table agreeing with me on that issue. By OECD standards or by any international standard, it has to be said that this country is a low taxing country. It surprises me that the minister at the table denies that fact. It was the Hawke and Keating governments that took us down that path and ensured that the Commonwealth revenue as a percentage of GDP over those 13 years came down significantly.

The second test for any tax system is its progressive nature, whether or not it acts progressively and is effective in ensuring that we use the tax transfer system to help those most in need and tax people on their ability to pay. Again, I think the minister at the table should agree that we have a very progressive tax system in this country, given that such a large slice of government revenue comes from the PAYE system and given that the wholesale sales tax system is in itself progressive in that it taxes luxury goods at a very high rate and exempts the essentials of life. So, given that such a large slice of government revenue comes from the very progressive PAYE system and given that the wholesale sales tax, by its very nature, in the way that it is structured, is progressive in itself, we have by international standards a very progressive tax system in this country.

The third test is the efficiency of our tax system. Here is where the minister at the table will cheer and say, `This is what it is all about.' If the wholesale sales tax leads to any inefficiencies due to the cascading effect that might flow on to exports, that is not a structural problem with the wholesale sales tax. It can be fixed. If the problem is the way it applies to business inputs, exempt them. That is very easily done. These are other issues that can be addressed.

Mr Hockey interjecting

Mr FITZGIBBON —If that is your main beef, if you say there is a structural problem with the wholesale sales tax, in the same way that the government says, `This is a terrible tax; it taxes some food but not caviar,' that is simply fixed as well—tax caviar. If you say there are anomalies in the wholesale sales tax—and we recognise that they exist—tax them. The minister at the table is saying, `What about plumbers, accountants and all those people?' I understand that currently the services of accountants, plumbers, electricians and motor mechanics are untaxed. I appreciate the recognition of the minister at the table that all these services, which ordinary Australians are so dependent upon, are currently untaxed.

There are really only two very good reasons for introducing a goods and services tax. The first is that any GST represents a huge revenue raising mechanism for the government; it is a big win for the government. The second is that it adds to the stability of the government's revenue—of course it does. In many senses it is very non-sensitive to economic downturns because people's expenditure or consumption patterns remain largely the same, because those who work within the economy commit so much of their income to the essentials of life. So there are two advantages with respect to a GST but, unfortunately, both of those advantages are seen through the eyes of the government only. I do not see any advantages for the wider Australian community. I can see, though, a great deal of pain for the wider Australian community. The government talks about compensation—and I will not go into all of the issues because the member for Hotham has articulated and outlined them so very well.

I noticed the member for Morton looking a bit nervous because he knows that he will be in trouble in his marginal seat if he looks to be too enthusiastic about the introduction of this tax. Let us put it in simple terms. Let us talk about the last election. I hear members of the government in here claiming a mandate for this tax. This election more than any other was a referendum on one issue—this last election was a referendum on the GST.

And who got the majority of the two-party preferred vote in this country? Who got a larger swing against them than Paul Keating did in 1996? It was John Howard proposing this new and regressive tax on the Australian community. It was John Howard who went to the Australian electorate and told older Australians and those on fixed and lower incomes that if he was re-elected he was going to whack them with a flat 10 per cent tax on every service and good they buy.

There is a very simple way of summing up what is happening here: you cannot take such a large slice out of the progressive PAYE system—which I have already argued is a progressive wholesale sales tax system—and transfer that to a flat tax on everyone, regardless of their income, and pretend it is not going to hurt them. It is as simple as that. They can argue all they like. The arithmetic of this measure is as simple as that: a huge whack out of two progressive taxes transferred to a big flat tax on everything you buy, whether it be a good or a service, regardless of your capacity to pay. That is what this tax is about. I said there is no mandate for this new tax, nor do I expect there ever will be.

Mr Hockey —What do you mean there is no mandate? Of course there is a mandate. Who is in government?

Mr FITZGIBBON —You cannot have a mandate with about 48 per cent of the two-party preferred vote. Those who the government were able to convince that a GST might be a good idea for the Australian economy were those who were courted by the prospect of personal income tax cuts—but there were not too many of them. There were not too many of them because most of them were smart enough to realise that these tax cuts are unfunded and are likely to be undelivered. They were pretty quick to work out that about 80 per cent of those income tax benefits are going to 20 per cent of the community, and of course they are the 20 per cent of the community who are earning the most money. So the Australian electorate worked that out pretty quickly.

All this is notwithstanding the fact that the government squandered $20 million or more of taxpayers' money to sell this lousy and regressive tax to the Australian community. The top earners will be okay under this change, if the Senate is foolish enough to pass it, but the people I represent in the Hunter electorate will not be. Low and middle income earners certainly will not be, and certainly small business operators and tourism operators in my electorate will not be better off as a result of this tax.

The tourism sector retails, largely, one commodity—it retails services. It provides services to the community, services hitherto untaxed. A GST is also a tax that ensures that a holiday in Bali is going to be cheaper than a trip from Sydney to Cairns or from Melbourne to Cairns. I was disappointed to see the Minister for Sport and Tourism, who was in here for only a moment, leave, because she is setting the example already by taking a honeymoon in Bali, but I do wish her well on her wedding last Saturday.

Even more so, this is a new tax that is going to hit the small business community for six. This is the tax that is going to create 1.3 million unpaid tax collectors. This is a business community already struggling. It is already struggling because the government has failed to match up on the issues really important to it—the market dominance issues. The Minister for Employment, Workplace Relations and Small Business has been ducking and weaving on the issue of an inquiry on market dominance issues. I am told he might finally be dragged screaming to have something to say about that tomorrow, but he has dropped the ball on the red tape issues, and he has failed to embrace the Bell report. Of course, this is only a feeble attempt to address the real issues in the small business community.

A GST is going to mean huge compliance costs. I have here a document from the New Zealand government's Department of Inland Revenue entitled GST guide: a guide to working with the GST. It says:

We have written this booklet to help all businesses and organisations that have to charge GST and need more information about it. We hope you find this guide helpful when filling in your GST returns. It will show you how you can avoid incurring penalties and how or when GST is refunded to you.

I ask the minister at the table to have a look. It is 80 pages long and, of course, the New Zealand model is generally accepted as one of the more simple forms of a GST in the international community. It is 80 pages, and this is the quick, easy guide to operating a small business under a GST regime in New Zealand! When you open it up, you see a whole plethora of complicated forms that business people in the New Zealand economy have to face daily.

Mr Hockey —Will you table it?

Mr FITZGIBBON —I will be happy to table it, as the minister at the table invites me to do. I am sure it will make great bedtime reading for him tonight. I seek leave to table the document.

Leave granted.

Mr FITZGIBBON —Contrary to what the government would have us believe, this is a poor, regressive tax which is going to produce huge cash flow problems for the small business sector. As a consequence, it is going to lead to higher operating costs.

This is a poor, regressive tax. I was pleased to see the government finally appoint a consultative committee to look at the impact of the GST—the finer detail of the GST—on the small business sector. I congratulate those people who have been appointed to that committee. I have had the opportunity to meet with them and discuss matters of importance to the sector over the last few weeks. I wish them well in their endeavours, because there is no doubt that there are a number of issues for them to address and Curt Rendall and his team will have to grapple with those over the coming weeks.

The government should make no mistake about the fact that the small business community is, at the very best, ambivalent about these tax changes. I will not call them tax reforms as the government chooses to. You will hear certain representatives of some of the peak bodies—in some cases out of loyalty to the conservative side of politics—say that this is not a bad thing for their members. But, if the minister at the table took the time to walk the streets, the strip developments and the shopping centres and actually talk to the small business community, I can assure him he would find a small business community very concerned about the impact of this tax.

Mr Hockey —They love it.

Mr FITZGIBBON —The minister at the table says that they love it. I have travelled the length and breadth of the country over the last few months as well as talking to my own small business community in my electorate and I have not yet found one small business operator enthusiastic about this tax. I remind the minister at the table that the ABS definition of a small business is one which employs 20 people or less or, in the case of a manufacturing firm, 100 or less. I point out that it is time that he left the big end of town and stopped talking to those who least need assistance. He should get down to the other end and talk to the mum and dad businesspeople of this world and find out what sorts of issues they are facing. Learn for yourself, Minister, that they are horrified by the prospect of the introduction of this tax. They are prepared to listen but, as last week's Yellow Pages Small Business Index showed, you have a long way to go before you convince the small business community that this is a good tax for them.