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Tuesday, 8 December 1998
Page: 1601


Mr LINDSAY (6:40 PM) —Mr Deputy Speaker, tonight I brought a paper bag into the parliament. You would have to ask: why have I brought a paper bag in? The reason I brought a paper bag in is that the treatment of this paper bag is just a classic example of what is wrong with the current tax system we have in this country.

This is a bag that you would probably find in any baker's shop; if you go in and buy a pie, you would expect the baker to put the pie in this bag. What happens if you buy an apple pie? The baker puts the apple pie in the bag. How much wholesale sales tax does the government collect because there is an apple pie in that bag? The answer is none. But what if you change your mind, if you go to the baker and say, `Look, I won't have an apple pie, I would like to buy a meat pie, please'—and many Australians buy meat pies—so he takes out the apple pie and puts in the meat pie. How much tax do you pay on the bag? The answer is 22 per cent.

But if you change your mind again and say, `Look, no, I don't think I will have a meat pie, I think I would like to buy a family pie,' and the baker takes out the meat pie and puts in a family pie, how much tax does the baker pay to the Commonwealth of Australia in wholesale sales tax on the bag? The answer is zero.

So you say, `This is a bit complicated. Why do we have a tax system like that in this country, in this modern day and age?' Then you say, `Look, I think I will just go and buy a bag.' So where do you buy a bag? You go to Franklins. You can buy this bag at Franklins but you pay wholesale sales tax on the bag. How much do you pay? Twelve per cent—not zero, not 22, but 12 per cent, if you buy that bag at Franklins. Remember, if you buy it with a meat pie it is 22 per cent; if you buy it with an apple pie it is nothing; if you buy it at Franklins, it is 12 per cent.

What happens if you go and buy this bag at a wholesalers? Surprise, surprise, it is different again. The poor person who goes to the wholesalers to buy this bag, instead of going to Franklins to buy the bag, pays 22 per cent.

How could we have a wholesale sales tax system in this country that carries on like that? Why haven't we moved forward towards getting a sensible tax system? This is what the current government of Australia intends to do. We want a new tax system for a new century. This is a historic opportunity to make the most significant change to the Australian taxation system since Federation. And, goodness me, isn't it overdue!

The example I have given with the bag is repeated right throughout Labor's archaic wholesale sales tax system. I did not go into milk cartons tonight, as to whether you buy them with fresh milk or flavoured milk in them, and what is a food and what is not a food, and so on. But I can tell you there are many other examples of what is wrong with the wholesale sales tax system.

This new tax system for Australia is about cutting taxes in the country. This is not about increasing taxes; this is about giving tax cuts. The budget is in surplus. This is about giving $4 billion back to the Australian economy. You all know, and you have heard many of us say in this place, that we will end up with 81 per cent of taxpayers paying 30 per cent as their top marginal rate of tax. What a wonderful outcome. Why is the Labor Party standing against cutting people's taxes? I do not understand that. I do not understand how their position can be sustained. I do not understand why they are opposing the government taking $4 billion less in tax from Australian taxpayers. It beats me. I would have thought that was a pretty good outcome for the new century.

But the government, in proposing this new tax system, has got significant credibility on the board now. For example, in this morning's Courier-Mail there is the headline on page 4, `Economy's golden run rolls on as job ads rise'. I think that even Labor Party people have been significantly surprised at the achievements of the current government. They have been surprised that in just 2½ years we have been able to turn the economy around. We have been able to deliver the budget surplus. We have been able to deliver an economy which is the best economy in 30 years. We have been able to deliver marvellously low inflation and interest rates for home owners. It has been wonderful. And now we want to deliver a new tax system for a new century.

Our credentials have been established. There is no challenge to what the government might be able to do. We have a plan and we intend to put that plan in place. I believe that we will be able to do that. We took the hard decisions in the first 2½ years and now we want to build on those, we want to deliver the new tax plan.

This morning in the Australian Financial Review there was an article headed, `The secret of Australia's success.' Note that the media now has turned around and is talking about the positives in the Australian economy. It is talking about our country doing better than most other countries in the world. That article says:

The secret of this economic magic is productivity growth. Australian productivity growth has been drifting up over the expansion in a way we have not seen in the last 20 years.

Surely, that is the biggest tick that you could possibly get for a federal government.

On top of that we have been able to put in place landmark industrial relations reform, landmark waterfront reform, landmark small business reform, and now we want to put in place a new tax system for Australia. I call on the Labor Party to stop standing in the way of this progressive reform. The Labor Party's position on this seems to have been, `Let's oppose this for the sake of opposing it.' It is like opposing the health insurance rebate. They are saying, `Let's oppose it because it is good for Australia. Let's vote down a new tax system.'

They ought to have a look at what Paul Keating said back in 1985. He indicated that a consumption tax benefits business because for business it is a simple tax. He said the current wholesale sales tax system is irrational. Too right it is. You have seen the example of the paper bag that I mentioned earlier. Keating said that the great value of a tax of this kind in terms of its efficiency will be its simplicity. Why does the Labor Party not listen and learn?

Keating talked about the importance of few exemptions. He said that you buy the same necessities but out of your relieved tax income. Certainly the government is giving significant tax cuts to families in Australia. He said that many items are taxed highly now and they will be taxed less under a consumption tax, and he was right on that too. He said many items with the seven different sales tax rates are going to become cheaper. Most items are going to become cheaper. He said the current tax system is discriminatory and hurts our economy. He was right on that too. Labor members should look at what we are proposing to do with exports. He also said, `We will junk the sales tax.' Labor members should certainly listen to the words of Paul Keating.

If you do not like those words, listen to the words of Kim Beazley. Kim Beazley said back in June 1985:

I, like all cabinet ministers, support the thrust of the option that is being presented. I think that it is capable of being implemented equitably. I think that it is capable of being finetuned to overcome most of the objection.

Kim Beazley said that in an interview with ABC television in 1985.

The message to the ALP is quite clearly to get out of the way, support a new tax system for a new century, support the government's position to make sure that we have a strong economy and something that is fair to the people of Australia.

In relation to exports, that is dear to my heart because in Townsville we have the third largest port in Queensland. Exports are very significant to our city. All exports of goods under the government's new tax plan will be GST free. All GST on business inputs will be fully refunded.

As the Deputy Prime Minister has said time and time again, every container of export goods will depart Australia free of all internal taxes. That is not what happens now. It is going to make our exports more competitive, and it is going to make them cheaper. More exports mean more jobs for Australia. It has a bearing on the current account at this stage. The Labor Party whinge and whine about the state of the current account, yet they stand in the way of a mechanism to fix the problem. We want to lift the burden of wholesale sales tax off the backs of exporters and transport operators and tilt—as it was once described by the Deputy Prime Minister—the unlevel playing field in favour of exporters and rural and regional Australia. That is the bonus that flows from replacing the antiquated wholesale sales tax system with a broad based indirect tax. In September the Minerals Council of Australia said:

The fuel excise proposals in the reform package are very important not only to the minerals sector but also to the oil and gas, agricultural, fishing, forestry, manufacturing and transport sectors. This is good news for job prospects in regional Australia.

That means places like Townsville and Thuringowa. The government's tax plan will take $4½ billion off the cost of Australian exports. There are also very significant benefits to Commonwealth-state relations. We have all seen that all of the states have unanimously endorsed the government's position on this, even the Labor states. That should send a strong message to the federal Labor Party.

I turn to local government. Local government, where I come from, is going to be $70 million a year better off. Rates should be able to come down, because costs in local government will be able to come down. At this stage I want to put local government on notice: if their costs come down and they do not reduce their rates, I will be the first person to make sure that the ACCC comes knocking on their door—that is, any council that artificially keeps its rates up when it should be reducing its rates because its costs have gone down. I put councils on notice that, if I have complaints from ratepayers that councils are taking up the windfall that they will get from this new legislation and are not passing it on to ratepayers, they will find the ACCC at their door. Early next year legislation will be introduced to allow the ACCC to become involved in that.

I turn to the compliance costs of the current antiquated, outdated 1930s Labor taxation system. I want to give the example of a person selling bags in the packaging industry. How long does it take for a small business employing four people selling packaging to account for the wholesale sales tax collections on this bag and the other products that are sold by the business? I will tell you, because I took the trouble to find out. Out of every 20 days in a month, five full days are spent by a clerk accounting for the wholesale sales tax—five full days. If there was a GST, do you know how long it would take? Five minutes. Why are you standing in the way of fundamental reform of the tax system? Why are you forcing small business to spend five days accounting to the government when it could take five minutes with the new tax system? I do not understand your position.

There are many more issues that could be dealt with in this debate, but I am mindful of the time. I am also mindful of getting into strife with the Chief Government Whip, who is in the chamber. So, in deference to the Chief Government Whip, I will say only that I will be taking strong support for this legislation to my electorate. I know that I am backed by the people of Herbert.