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Tuesday, 8 December 1998
Page: 1608


Mr LEE (7:16 PM) —I rise to speak on the A New Tax System (Goods and Services Tax) Bill 1998 and cognate bills. In his contribution today, the previous speaker, the honourable member for New England, said that the tax cuts were about rewarding effort. You can understand the sorts of people the government is targeting in this attempt to reward effort when you look at how the government's income tax cuts are distributed. The coalition's income tax cuts total almost $13 billion, and yet the top 20 per cent of income earners receive 52 per cent of those income tax cuts. Some $6.6 billion of the $13 billion in income tax cuts goes to people in the top 20 per cent of incomes, whereas only 48 per cent of the income tax cuts go to the other 80 per cent of Australians—the battling families which the Prime Minister speaks about so much.


Mr McArthur —You don't believe that, do you?


Mr LEE —My friend the honourable member for Corangamite interjects and claims that I do not believe these figures. This is what your own document delivers. In an attempt to reward effort, it delivers half of the tax cuts to the top 20 per cent of the popula tion, and the other half is spread out very thinly amongst battling families. Quite clearly, the Labor Party opposes the government's plans to introduce a goods and services tax because the tax is unfair and unnecessary and will be an administrative nightmare for the million or more Australian business men and women who will have to collect the government's new tax.

This is the tax debate we should never, ever have had. The Prime Minister made certain undertakings before he was elected to the office of Prime Minister. He was interviewed outside the Tweed Heads Civic Centre—a very nice part of the world—on 2 May 1995. He gave the following interview:

JOHN HOWARD:

"There's no way a GST will ever be part of our policy."

REPORTER:

"Never ever?"

JOHN HOWARD:

"Never, ever. It's dead; it was killed by the voters at the last election."

On the same day, in a press release, the Prime Minister said:

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.

It is quite clear that the Prime Minister has broken the undertaking that he would never, ever introduce a GST. We say this is an unfair tax because it hits the necessities of life. It is going to force ordinary families to pay a 10 per cent GST on food, clothing, telephone bills, water bills, electricity bills, and even on garbage collection services in some council areas. We believe it is unfair to put a new 10 per cent GST on these essential items. It is also a tax on learning—on books, private tuition, using the Internet and musical instrument hire. It is a tax on sickness—on simple medicines like pain-killers, cough syrup and bandaids.

The large number of retirees in my electorate are going to be hit by this government's introduction of the GST. One retiree in a retirement village on the New South Wales Central Coast has advised me that his retirement village, which accommodates about 100 residents, currently spends about $150,000 on the upkeep of the village—looking after the grounds and gardens, and mowing the lawns. A 10 per cent GST on that retirement village's costs will increase them by $15,000 a year. That amount will have to be paid by the 100 residents of that retirement village—no-one else is going to pay that money. It is quite clear that services in areas such as that are going to be hit by almost the full 10 per cent increase as a result of the imposition of the GST.

The government also claims that retirees should be grateful to the government in some way because the government guarantees in the package to increase pensions by four per cent. We all know that because the government was pressured by the Labor Party, the Democrats and other senators it was forced not only to agree to fix pensions to increases in the CPI, but also to agree to maintain pensions at 25 per cent of male average weekly earnings. That means that pensioners will receive a 3½ per cent increase by the time this GST comes in. It is like someone whose birthday is on Christmas Eve. On Christmas Eve, the Howard government gives pensioners a birthday present of a 3½ per cent increase in their pensions, and on Christmas Day it says, `We are going to give you an extra half a per cent to compensate for the massive impact on the cost of living of a 10 per cent GST.

The minister at the table, the Minister for Community Services, Mr Truss, frowns—he is a bit lost by that argument, so let me go through it again. The minister and other members of the coalition have been running around saying that pensioners will not be worse off because of the 10 per cent GST because they will receive a four per cent increase in their pensions. That is, the Prime Minister is telling pensioners that they will get the four per cent increase by Christmas Day.

What he does not tell them is that, on Christmas Eve, they are entitled to the 3½ per cent increase anyway because of the legislative requirement to maintain pensions as a percentage of male average weekly earnings. You know it—you are the minister who makes sure those cheques are delivered on time. You know that 3½ per cent of that four per cent is already in the post—it is required by legislation. So only one half of one per cent of extra compensation is paid by this government to pensioners to compensate for the increase of the 10 per cent GST. It is quite clear that many of them are going to be badly hurt by this.

There is no guarantee that the GST will stay at 10 per cent. We all know that in 21 of the 23 OECD countries that have brought in a GST the rate has risen. Our old friends across the Tasman, New Zealand, introduced their GST at 10 per cent; it is now at 12.5 per cent. In Denmark the original rate was 10 per cent; today it is 25 per cent. In Sweden it was 11.1 per cent; now it is 25 per cent. In Finland it was 11.1 per cent; now it is 22 per cent. In the United Kingdom it was introduced at 10 per cent; now it is at 17.5 per cent. There is no way we can have any confidence that the GST will not be increased above 10 per cent at any time in the future.

We also have the government being very quick to bring the legislation into the parliament to impose the 10 per cent tax on almost everything, but there is no sign of the legislation to close the loopholes in the Income Tax Act or in company tax. We have had no indication from this government of when they intend to clamp down on Australian individuals, companies and trusts who are not paying their fair share of tax. That is an issue I will return to later if I have time.

I would like to turn now to education. Despite the fact that the government spent $17 million of taxpayers' money on television, radio and print ads before the last election, the government misled the Australian community. The government spent $17 million of taxpayers' money, and almost every ad said that education would be GST free. By the way, every time you saw one of those ads on national television, that was six months or more of a teacher's salary. For every one of those ads that you saw on prime time national television, we could have employed a teacher in your electorate, Mr Deputy Speaker Mossfield, at one of the schools that are there trying to make sure that we can improve the chances of young kids, as is the case in schools right across the country. It was a tremendous amount of taxpayers' money diverted to this government's political purpose of selling this 10 per cent GST.

While the ads on TV, paid for by the taxpayer, arranged by the Liberal Party, said that education was GST free, when you look at the fine print you realise that there is a GST on private tuition for HSC coaching at home, there is a GST on remedial reading which is provided at home, there is a GST on the hire of musical instruments, there is a GST on swimming and dancing classes, there is a GST on school uniforms, there is a GST on schoolbooks, there is a GST on school shoes, there is a GST on school lunches and there is a GST on school bus fares and rail fares. There is going to be quite a heavy burden placed on the parents of children attending school because of the imposition of this GST.

Today at question time we had the example of the Minister for Education, Training and Youth Affairs refusing to admit what we all know is true, and that is that there is a 10 per cent GST on remedial reading, on coaching and tuition provided at home by companies such as Power Coaching and McGrath. The minister knows that there is a 10 per cent GST on those payments but he could not bring himself to admit it. After two days of questions in question time, he could not bring himself to admit that, if you can afford to send your children to an exclusive private school where the tuition is included in the annual school fees, you do not pay GST on the remedial reading coaching, the HSC coaching, the sport coaching or the music lessons. But the ordinary families who pay one of these companies to provide a teacher to come to their home will be hit with the 10 per cent GST.

There is no fairness in that. But the minister for education just refuses to admit what we all know is true: that there is a 10 per cent GST tax on the tuition provided in people's homes. We wasted an hour or more of our time this afternoon in dissent motions and people getting named and suspended because the minister for education could not bring himself to come to the dispatch box and just say the word yes—yes, there is a 10 per cent GST on private tuition in homes. We could have saved so much effort if the minister for education could have had the honesty to admit that today.

It is hard to think of a more essential tool for education than books, yet this government is going to impose, for the first time ever, a tax on books. This new GST is in fact a tax on learning. This tax on learning will hit textbooks for primary and secondary school students, making it harder for parents to afford everything they need for their children's education. This government's stupid book tax is going to make it much harder for university and TAFE students, already struggling to find hundreds of dollars a year for their costly textbooks.

Mr Truss interjecting


Mr LEE —You are not only going to tax their exercise books, you are going to tax their textbooks. You are going to tax every book that they use.


Mr Truss —They are going to get a tax cut.


Mr LEE —The minister at the table says that they are going to get a tax cut. That will be small consolation to the parents of kids who are going to primary and secondary schools in his electorate who have to pay a 10 per cent GST on book hire and who will have to pay a 10 per cent GST on the children's books that they buy for the kids to encourage them to read. We are all about trying to encourage kids to love reading, to enjoy feeling a book between their fingers and to enjoy reading, which does so much to build up their capacity to learn in life. Here you are imposing a 10 per cent GST on books that parents buy for their kids.

Mr Truss interjecting


Mr LEE —The minister does not seem to understand that when university students pay money to use the Internet at the university that will have a 10 per cent GST imposed on it. If you use the Internet at home, you will be paying 10 per cent GST on top of your telephone bill and on the other Internet charges that families are hit with. So the minister does not know what he is talking about. Many university and TAFE students will also have to pay the GST not only on their books, on computer software and on the Internet but also on food, clothing, transport and those electricity and phone bills. Many of these students are already living on low incomes while they are studying, and it will be a tragedy if this tax on learning forces them out of education and employment training.

The government is also going to impose a massive administrative burden on many people involved in education in Australia. These massive costs of complying with the GST will have a serious effect on many educational institutions. The government's tax consultative committee has already recognised this as a serious problem. At the moment schools can claim wholesale sales tax exemptions for computers. Currently schools and universities are exempt from wholesale sales tax, but under the GST they will have to pay an extra 10 per cent for just about everything they buy and then claim a refund.

They will have to upgrade and update their accounting systems, retrain their staff, change stationery and also plan for and deal with the massive disruptions and interruptions to cash flow. I have already had one representative of one school body tell me that he estimates the cost for his school will be the equivalent of one teacher's salary—so, instead of employing more teachers, we will be spending money on accountants and on upgrading financial systems to pay this new GST.

One of the great chilling things about this particular piece of legislation is that in the Treasurer's second reading speech there was so little devoted to education—in fact, he made an error in that speech which makes it very clear that he has very little understanding of the devastating effect the GST is going to have on education. He said in his speech that education courses would be GST free for `all secondary and tertiary courses, including vocational courses, provided students are eligible for income support'. This is simply not correct. The legislation makes it clear that the exemption applies to the course and not to the student. This is the sort of mistake that happens when the government puts such a low priority on education and puts such little effort into making sure that the detail of the package is dealt with in a fair way.

Many Australian families out there will be hard hit by that extra 10 per cent GST on the necessities of life. Low income families spend more on food and on the necessities of life than people who have high incomes. Low income families will be the families that will be hardest hit by this government's unfair GST package.