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Tuesday, 8 December 1998
Page: 1615

Ms HOARE (7:47 PM) —I rise in this House to join my parliamentary colleagues in opposition to this package of 16 goods and services tax bills. I want to reiterate our vehement opposition to this unfair, gross tax. First of all, I want to talk about where this government is coming from and its capitalist agenda.

Notwithstanding this government's first term when it launched a savage attack on Australian workers which benefited only those multinational companies which the government supports, we only need to look at the first two months of this particular term to see the further savage attacks on workers, including the proposed introduction of youth wages, the exclusion of superannuation from workers' basic rights and the reintroduction of amendments to the unfair dismissal laws. Now we have the current proposals before this House and before the Senate.

All these proposals leave us in no doubt that this is a government for big business and the extremely wealthy. The proposals currently in the Senate and which passed through this House last week include a health insurance rebate designed to provide large cash bonuses for the 70 per cent of people who earn over $70,000 a year and have private health insurance—a cash bonus which is not means tested. This means that those wealthy individuals who can afford the highest health premiums will receive the highest bonuses.

Further to this government's agenda we now have in front of us these 16 bills on a GST. The Labor opposition have been clear in our opposition to a GST. We stated our position in May—five clear months before the government introduced the tax package. Our leader made it clear in his budget reply speech in May that a vote for Labor was guaranteed to be a vote against a GST; moreover, that a vote for Labor would be a vote for fairness in the taxation system.

The GST is regressive, unfair and unjust. It is all of these things because it will be imposed at a flat rate. This means that all consumers will pay it, irrespective of their wealth. Therefore, it will be a tax imposed on what is spent rather than on what is saved. Lower income earners will pay a higher proportion of their income in tax than will higher income earners who can afford to invest part of their income. This tax replaces part of the direct income tax which was designed to ensure equity and structured so that those with higher incomes were taxed at a higher rate. Therefore, the revenue derived from a GST paid by lower income earners will compensate for the reduced personal income tax paid by high income earners.

The tax will be placed on basic household needs such as the food that families eat and the bills that families pay to live their lives every day. A GST will be detrimental to the economy because the inflation rate will increase because all goods and services will increase in price. Nobody can deny this. The government cannot sit back and say that a 10 per cent goods and services tax imposed on all types of goods a person buys and every service a person uses will not have any effect on the inflation rate. Interest rates will increase and this will affect home buyers, small businesses and farmers.

More than one million retail outlets and service providers will have to shoulder an unfair burden of administration because they will be forced to become tax collectors. Therefore, higher prices, higher interest rates and higher administration costs will stifle enterprise, discourage small business production and discourage small business employment.

Tax reform can be achieved, though, through other measures, measures which this government has failed to address in its first term and has also failed to address in this piece of legislation. These measures can include removing the anomalies in the present wholesale sales tax system, adjusting marginal tax rates to eliminate bracket creep, eliminat ing law provisions which enable the rorting of the tax system and effectively policing the tax system to stop tax evasion. As we have all heard, the introduction of a GST in other countries has shown that the initial rate at which it was introduced has increased in all but three countries.

The countries where the GST has risen since it has been introduced are Denmark, Sweden, Finland, Luxembourg, United Kingdom, Japan, Italy, Germany, Mexico, Turkey, Netherlands, Thailand, Spain, Ireland, Austria, New Zealand, Iceland, Belgium, South Africa, Norway, Greece, Portugal, France, Canada, Switzerland and Singapore. These countries also show that the built-in compensation measures are soon eroded, leaving the most disadvantaged and vulnerable to the burden of continually increasing tax. Core services such as education and health, which are provided by our states at the moment, become so expensive that lower middle income families cannot afford them.

The previous speaker, the member for Aston, spoke on the compensation measures which are provided in some of the 16 bills. Why would compensation measures be needed to be taken if the tax was not unfair or unjust? If it were a fair tax, there would be no need to provide compensation for anybody in the community.

I turn to the question of a mandate. This government has been claiming since the 3 October election that it has a mandate to introduce the GST, the same as it claimed to have to privatise the rest of Telstra and to further attack workers' rights and conditions. I reiterate what I mentioned in my first speech, and that is that this government does not have a mandate to do any of these things. It has a mandate to govern and to govern well. It is a government which was elected with less than 49 per cent of the two-party preferred vote. Of the primary vote, less than 40 per cent of people cast a vote for the coalition in favour of the GST, which means that 60 per cent of the electorate voted against it.

I call upon this government to show a bit of respect for democracy in this country and, if it talks about a mandate and talks about the will of the electorate, to hold off on this piece of legislation and not introduce it into the Senate until those senators who were elected on 3 October take their places on 1 July next year. Then we will see what the Australian people voted for, that is, a Senate composed in such a way as to knock out a GST, to knock out this unfair and regressive tax.

The points that the member for Aston made on Labor's history of tax reform require a bit of correction. Labor had an excellent history on tax reform. Between 1983 and 1996, the Labor government achieved cuts in personal income tax, as well as providing extra assistance to families through the social security system. We did that without having to introduce a GST. The cuts to personal income tax achieved over 13 years of Labor included changes in the tax-free threshold from $4,595 in 1983 to $5,400 in 1996, decreases in the lowest tax bracket from 30 per cent to 20 per cent, decreases in the highest tax bracket from 60 per cent to 47 per cent and significantly reduced tax brackets in between to create fairness and equity in the tax system.

The changes also addressed bracket creep, which not only is being ignored by this government but has even been used to create a budget surplus built on the backs of struggling families. If this government had addressed the issue of bracket creep, it would have had a $2.5 billion budget deficit this year, not a surplus. This means that the surplus was delivered to the government from low and middle income families whose wages increased with inflation and thus moved into higher tax brackets.

In conclusion, the revenue provided by the GST is based on the government's forecast of 3.5 per cent growth in the economy. We have seen recently that the forecast growth is not going to be 3½ per cent but going to be two per cent or less. So all Australian families will get a 10 per cent GST but the government will not be able to afford the sweeteners. It will not be able to afford the income tax measures or the compensation measures. The states will have to increase the GST to be able to supply quality education, free hospital beds and affordable housing. For this reason and for all the other reasons that my col leagues have spoken about, the Labor Party is in total opposition to this unfair growth tax.