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Tuesday, 8 December 1998
Page: 1636

Mr BEVIS (9:37 PM) —We have 16 tax bills before us, about 20 hours for debate and a lot of members who want to speak but who are not on the speaking list. Those of us who are on the list have had their time confined. This is an unfortunate set of circumstances for what is undoubtedly one of the most important packages of legislation that this parliament will deal with in the life of the 39th Parliament.

The government has adopted the tactic not just of arguing the issue—which I will come to in a minute—but of claiming a mandate for this legislation. The Treasurer, both in the parliament and outside it, has said, `Hold us to our promise. We said we were going to do this. Keep us to our word.' The Treasurer and other members of the government, including the Prime Minister, regularly refer to their mandate to push this matter through. They rail at the suggestion that members in this House should have more than 20 hours to talk about 16 separate bills or at the suggestion that the Senate might want to have a closer look at it and come up with a different view from that which the Liberal Party caucus room wants them to have.

I want to say something at the outset about this `mandate' approach to politics. The Prime Minister and, for that matter, the Leader of the House are quite clearly on the record in making their views known about a mandate. On 15 September 1987, Hansard records John Howard, the present Prime Minister, as saying:

The mandate theory of politics from the point of view of proper analysis has always been absolutely phoney.

At that stage the question before the parliament was the identity card, which the then Labor government was seeking to introduce. He went on:

We are saying to the Government: put aside all this phoney nonsense about mandates. If the Government really believes, as the Prime Minister (Mr Hawke) keeps telling us, that the great majority of the Australian people want an identity card, if it really believes that it is in the interests of the Australian public to have an ID card and if it really believes that it will collect $1,000m of evaded tax by introducing an ID card, why does it not have a referendum?

Why do we not go to the Australian public and have a clear, unvarnished vote?

The simple fact of life is that the Prime Minister in 1987 had one view about the role of the parliament when in opposition. He clearly has a different view of the role of the parliament now he is in government. But he did make an observation which I am sure members on this side of the House would now endorse with some fervour. In 1984, when dealing with a tax bill, he said:

This Government has no mandate from the Australian people or anybody else to enact unjust taxation legislation.

He was right, I guess, but it is a view that he does not want to be reminded of now. Just for completeness, I should add the comments of the now Leader of the House, Mr Peter Reith, on the powers of the Senate. In 1985, he said:

When the founding fathers established the terms of both Houses they did so on the basis of a mandate at different points in time for both chambers.

He then went on to laud the split term system. In 1988, he said:

It is a system designed to discourage hasty decisions. This is a fundamental aspect of our system, and it is a sensible system. It has worked well.

From the start, we should dismiss the debate about whether the government should have its way on this simply because it claims to have a mandate. If there is such a thing as a mandate, it applies to each of us who stood for office, depending on the success we had in our constituencies, based on the policies and platforms we took to our constituents. It certainly does not rest with a government that was elected on the popular vote of well under half the population—one of the smallest popular votes of any government in the history of this parliament. The other thing which has mystified me about the mandate theory is that the Prime Minister is keen to claim a mandate—as have many government speakers in this debate—by referring to the fact that they took this issue to the people and that the people knew what they were voting for and returned them to government; therefore, they should be allowed to exercise the will of the people as determined by the 1998 election. They might like to think that through.

If they are so keen to let the will of the people prevail—as evidenced in the October 1998 election—then they should wait for the senators who were elected in October to take up their seats. The government are not doing that; they want to rush this through before those senators get here. Government members in the House of Representatives are claiming that the 1998 election is a fair assessment of the popular view; but they sure as hell do not want the senators who were elected to be able to take up their positions in the Senate. So the mandate argument that has been advanced in this debate has been totally misleading—deliberately so—certainly by the Prime Minister and the Treasurer, who are clearly on the record as having held different views in the past.

This goods and services tax is, beyond any doubt, a socially unjust and unfair tax which places the burden most heavily on low and middle income families, especially those on fixed income. This fact is beyond dispute. The government acknowledges this hardship by saying, `We will put in place compensation for them.' There is no denial that this is a harsh and unfair tax, that it will hurt many people on low and middle incomes, and that it will hurt all the people on fixed incomes; that much is conceded. The government then says, `We can fix that for you. Trust me, I am from the government. I am going to give you some money this year. Don't worry: for the rest of your life, you and all those who follow in your footsteps will be protected by me, because I am from the government and we want to look after you.' The fact that the GST will continue to apply in the future is beyond doubt. Whether those compensation packages are going to apply in the future is very much in doubt.

It would be very easy for me to go well over my time speaking about the social inequities associated with this tax. I want to talk about some other matters because I think that matter has been widely canvassed in other speeches. Before doing so, I want to quickly mention the impact the GST will have on services.

People on low incomes and ordinary families face a very heavy impost from this GST on essential services which are currently without any direct component of tax. You can talk about the fact that there is fuel excise or some sales tax on a truck, but if we are talking about what percentage of the final good is subject to tax, things such as phones, trains, electricity, gas, entertainment, taking the kids to the football and going to the picture show are all basically without tax now. All the things that families do as a matter of course, that people do in order to live, will now be subject to an increase in cost.

There are but three things you can do with money: you can spend it, you can save it or you can invest it. The great bulk of my constituents spend just about all of it. They spend just about all of it not on luxury items but on basic necessities of life—to put a roof over their head; to put food on the table; to clothe themselves and their family; and to try to give their children, through education and other means, a better opportunity in life. At the moment the great bulk of that expenditure is not subject to any form of direct tax through the system of wholesale sales tax or any other. It is not subject to those imposts—but it will be subject to a GST.

Those people at the top end of town—those who, each month or quarter or week when they get their dividends or salary, are able to sit down and decide how much they want to plan for their investments, how much they want to plan for their savings and what their discretionary income will be—are the winners out of this, as are those industries that are capital intensive. The simple inescapable fact of this tax is that it is socially inequitable.

In the few moments remaining, I want to say something about the wholesale sales tax system because it has been widely pilloried, and I am quite happy to stand here and defend the wholesale sales tax system as both efficient and just. At the moment there are some 70,000 collection points for the wholesale sales tax system. The government's solution to those 70,000 collection points is to introduce a point of retail sales tax that will see that figure balloon out to about 1.3 million collection points—and we are told this is a simpler, easier way of generating about the same amount of revenue; that this package is supposed to be roughly revenue neutral. So we take 70,000 collection points, turn them into 1.3 million and regard that as good economic reform.

The wholesale sales tax system does have anomalies in it, and there is no doubt about that. We are well versed in the good lines about it, whether about the plain milk that is put on your cornflakes in the morning not having a wholesale sales tax imposed on it but that it is put on the flavoured milk you buy; with biscuits, argument about what sort they are as to whether they are food or confectionary; put the litmus paper into the yogurt. All these things are good banter.

But what is the government's solution to those sorts of anomalies? The government's solution is to say, `Well, okay, strawberry flavoured milk is taxed but plain milk is not, so what we'll do is tax the plain milk for you; we'll put a tax on the milk that you put on your cornflakes as well as on the chocolate or strawberry flavoured milk you buy for drinking purposes from the corner shop.' The government has actually said, `There's a range of anomalies here, and our solution to it is that we'll tax the lot.' The member for La Trobe, who was here, said that he could never understand why you taxed toothpaste but not toothbrushes. His answer: tax the toothbrush as well. That is an incredibly regressive response and, having been continually raised throughout this debate by members of the government, it is one which has amazed me.

The wholesale sales tax system has some very important inherent values. One I have already mentioned, which is the efficiency of collection points. But the other is that it actually allows society to discriminate, to positively discriminate, for good social policy reasons. For example, you can consciously decide that you will not directly tax bread, milk, electricity, bus fares and a whole host of other things that people need as basic necessities of life. I regard the fact that that occurs as a strength of the system. I regard it as a strength of the system that recycled paper is taxed at a lower rate than virgin paper. That is, you can discriminate for socially desirable things, such as environmentally friendly products—and why shouldn't we?

These are things that governments are elected to do. It is the difference between having a government that sees itself as a group of bookkeepers or a government that sees itself as having some sort of social and moral obligation to the people of the nation. If what we are about is simply trying to adopt a means of generating a fixed amount of money in the most efficient collection method, then let's not bother with elections in this country; let's forget about elections altogether. Let's just go to tender and get a large accountancy firm to run the books for us. If you want to extract out of it the social-moral judgements—which is what the GST does—then go ahead and do that and forget about having a parliament. Get KPMG in here and they will frame the budget for us.

The reason we have a parliament, the reason we have governments, is to make those sorts of decisions—and a wholesale sales tax system allows you to do that. Imperfect as it is, it has those benefits.

Rather than sort the problems out in the wholesale sales tax system, the Liberal Party have opted for a tax which is regressive and which is harmful to the great bulk of Australians. This is a tax which has not been supported by ordinary Australians—and evidence of that was the vote at the last election—but it is a tax that has been supported by the top end of town. I thought it interesting the comment made earlier this year by Stan Wallis, President of the Business Council of Australia. He said:

. . . the GST holds out the prospect of significant reductions in the indirect tax burden currently borne by business.

Well, bully for them. I do not think the Business Council of Australia, the organisation that represents the top 100 companies in this land, was out there paying money to argue that we should have a goods and services tax.

Mr Hockey interjecting

Mr BEVIS —The Business Council was not out there arguing for this goods and services tax because it wants its members to pay more. It was not saying to the people of Australia, `Well, big business thinks we're not paying enough, we're not pulling our weight in this country; we want a GST because we think we should pay more to support the nation.' Stan Wallis let the cat out of the bag when he said, `This offers the opportunity for us to pay less, fellas.' `Like, we're paying too much already, we want to pay less, and the GST is the way through it,' says the big end of town. And this government has supported it; those opposite have in fact been the puppets of that debate.

One of the other furphies in this has been to say that the black economy is going to be reduced; we will catch the cheats. I have had people say to me, `Well, at least Kerry Packer will have to pay the GST when he goes and he gets his Weeties or whatever,' and I suppose he will. But, if you want to talk seriously about the black economy, you need look no further than the place that is held out by this government as the model for what we are now embarking upon—the European Union.

Only this year the European Union made public a report it commissioned into the state of its tax raising mechanisms. It had an assessment of the black economy in the European Union in a report this year that said that the black economy in Europe is now 16 per cent—16 per cent of the GDP in Europe is now black economy—and growing. The reason behind it is the GST. The GST itself promotes the black economy. That is the experience in Europe, that is the experience in New Zealand, and the European Union has been able to identify that this year in a formal report.

This is a bad law. My final comment relates to national savings, which was mentioned by the member for La Trobe; I am sorry that he is not here. I want to make one point about it because it is very important: the government is making a terrible mess of superannuation, which was one of the real answers to national savings. Now you are making a real mess of it in the tax system. This is what Ted Evans, the Secretary to the Treasury, said:

Every economic text that I know of will tell you in principle that shifting the tax burden towards further reliance on indirect taxes will significantly aid national savings. . .

So far, so good for you guys. You say, `Right, we're on the right track.' But listen to this. He then went on to say:

. . . you won't find that convincingly demonstrated in studies of international tax reform experience.

What he said was, `Yes, the pointy heads will tell you that it works and that it improves savings, but do you know what? Look around the world and you will see that it does not.' This is a bad tax and it should be defeated.

Honourable members interjecting

Madam DEPUTY SPEAKER (Hon. J.A. Crosio) —I call the honourable member for Parramatta. I advise both the Minister for Financial Services and Regulation and the member for Banks, who are at the table, that if they wish to participate in the debate they can do so. The member for Parramatta has the call.