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Wednesday, 9 December 1998
Page: 1679

Mr MARTIN FERGUSON (11:09 AM) —I rise to speak in support of the second reading amendment moved by the member for Hotham. In doing so, I suggest to the House that, to my way of thinking, the Howard government's GST legislation is based upon lies, inequity, discrimination and job destruction.

The Howard government has conned the Australian business community with its promise of a simple, efficient and user-friendly tax system. According to the Howard government's strongest allies, the business community, the government's 600-page GST legislation is highly complicated and an administrative nightmare. In the words of tax expert Anna Carey, `The GST legislation is draconian and cumbersome.'

I believe this is an extraordinary statement given that it was precisely these reasons the Howard government used to justify the introduction of a GST in the lead-up to the last election. If this bill is passed, Australians will be forced to become tax experts simply to understand the Howard government's GST legislation.

The detail of the government's GST legislation has revealed not only its contempt for the business community but also, importantly, its disregard for the welfare of Australians. The Howard government has stubbornly refused to remove the GST on food, despite repeated warnings from Australia's peak welfare lobby group, the Australian Council of Social Service, that low income earners and pensioners will suffer the most from the GST.

I turn to the automotive industry, which will also suffer through plummeting car sales in the lead-up to the GST because of the Howard government's steadfast refusal to change GST transitional arrangements. So much for the future of the automotive industry and jobs in a number of major states in Australia. It is also no wonder that Econtech has estimated the welfare gains from the GST to the Australian economy to be negligible—a maximum of one-fifth of one per cent of GDP. Australians living in regional Australia also face closures of their credit unions by the decision to apply the GST to the outsourcing of financial institutions. This is despite the government's rhetoric that financial services will be GST free.

I go to the issue of the Olympics. The Howard government says that the Olympic Games will be GST free, when all TV rights and sponsorship contracts signed after 1 July 2000 will be taxed by 10 per cent. The government then says that charities will be GST free. The truth is that all raffles will be taxed by 10 per cent, as well as all goods sold above half their market price. The government says that funerals will be GST free, but only until 1 July 2005 and only if a contract has been entered into before 2 December. It would be interesting to see how many members of the front bench on the other side have entered into such a contract before 2 December, just to save the 10 per cent.

The government says that education will be GST free, when it will tax books, uniforms, school bus services and fundraising activities by 10 per cent. Clearly, the Howard government is using its GST legislation to deliberately mislead the people of Australia. That is what it is doing. The devil is in the detail. The Howard government GST legislation is not only complex, inequitable and misleading but it is also, I contend, discriminatory.

The Howard government will discriminate against couples who choose not to marry in a church by imposing a 10 per cent tax on civil celebrants. The Howard government will discriminate against first home buyers who choose to live in Sydney by paying them the same rebate as a couple buying a house in Hobart, despite huge differences in housing costs. The Howard government will discriminate against builders by forcing them to pay a GST on constructions that have not been completed by 1 July 2000. On top of this, builders will have to pay a GST on building materials that are currently tax free, and will face substantial losses if they underestimate the GST impact on their quotes in a cutthroat industry.

Not only is the Howard government's GST legislation complex, inequitable, misleading and discriminatory; it is also, without any doubt, a job destroyer. The Howard government will be imposing a 10 per cent tax on spending, when spending is precisely what drives job growth in an economy. When the Howard government is only too aware of this fact, how can it credibly say that the GST will create jobs in Australia? The GST is a job destroyer, as the Leader of the Opposition said today. One need only look to overseas evidence to see that a GST does not create jobs. I know the issue of jobs is not a priority in the mind of this government when one of the major and first statements of the new Minister for Industry, Science and Resources is to virtually throw in the towel with respect to jobs in the manufacturing industry by walking away from a core promise in the lead-up to the 1996 election to create 200,000 manufacturing jobs by the year 2000.

While the federal Treasurer often enjoys quoting the number of overseas countries that have a GST, he is careful to remain silent on the rate of unemployment in those countries, but I think that is very important. European Union countries with a GST such as Germany, France, Spain and Italy all have unemployment levels that average 12 per cent. In other non-European countries with a GST, such as Canada and New Zealand, unemployment averages eight per cent. So much for a GST being job friendly. The United States, on the other hand, does not have a GST but has an unemployment rate of 4.4 per cent. If the GST is the job creator the Howard government says it is, the overseas evidence is far from encouraging.

The GST, without a doubt, is a job destroyer because it will tax services for the first time, despite this being the sector that drives job growth in Australia. That is the truth of the matter. The evidence that I will take the House through today clearly shows our dependence as a national economy, to a large extent, on the services sector for future jobs growth.

I refer, for instance, to the fact that since 1985 the share of Australia's work force employed in the services sector had grown from 75.5 per cent or 5,056,000 jobs to 81.1 per cent or over 6,926,800 people in August 1998. This corresponds to a rate of job growth of nearly 37 per cent since 1985 compared to a 0.3 per cent growth in the manufacturing sector and a three per cent decline in the primary sector. Clearly we will have a major dependence on the services sector if we are to continue to make progress in reducing unemployment in Australia. It is also especially important when you consider that more than one-third of Australia's unemployed are now classified as long-term unemployed and have been unemployed for 12 months or more.

The Economic Modelling Bureau of Australia has predicted that most of the 150,000 full-time and 50,000 part-time jobs destroyed by the GST in its first year alone will be in the services sector. That reinforces my view that we should not be imposing a new tax on the services sector when we depend on the services sector for job growth and when we need to front up to the crisis in employment in Australia today.

The GST is all about job destroying, not job creating as the Howard government would have us believe. The Howard government's GST threatens not only the security of nearly seven million Australians who are already in jobs but also the 719,800 Australians who were desperately looking for jobs in October and who also understand the potential impact on their job prospects in the future.

I go to the issue of employment, because not only does it go to our aggregate figures but it also impacts individually on the unemployed and their families. Take what the Howard government will tax with respect to the efforts of the unemployed to find work. Where will the 10 per cent apply with respect to employment? It will apply to employment placement fees. A 10 per cent GST will also apply to the cost of a professionally prepared resume, a suit for people seeking to buy one for a job interview, dry-cleaning and shoe repairs, the cost of getting to and from interviews, and a haircut to prepare for an interview.

What we have is a new tax that will not only impact on the number of jobs in Australia but also impose additional costs on people who are doing it tough in seeking to find a job. They will have to confront additional costs in seeking to prepare themselves for a job interview, from the preparation of a resume through getting a haircut to the cost of getting to and from the interview. The new tax will represent yet another barrier to the desire of these people to find a meaningful job and, in doing so, to make a major contri bution to the future of the country and to the wellbeing of their family.

I believe that the Howard government would be ensuring that the unemployed stayed unemployed by taxing any efforts to raise their skills. That is what it is about. The GST will represent a major tax on the efforts of the unemployed—the unemployed whom this government likes to point a finger at with respect to what it describes as mutual obligation, saying that they have a responsibility to get out there and to seek to find a job. I contend that the great majority of Australia's unemployed actually want to work. The issue at the moment is that there is an inadequate number of jobs available. Most of those people want to fulfil not only what they believe is their personal responsibility to find a job but also their community responsibility to find a job. To now place additional barriers in the face of those people and their families is an absolute disgrace and a failure of this government to face up to its responsibilities to the unemployed.

I go also to the issue of those who are seeking work. This goes to the question of textbooks, tools and other training items, which will be subject to a 10 per cent GST. This will be on top of a 10 per cent GST on day-to-day living expenses such as rent, food, clothing, electricity, gas and water. I would like to see the member for North Sydney being unemployed and having to meet all of those charges on unemployment benefits in a situation in which job growth is inadequate to create the necessary jobs for those people with a desperate desire to get a job.

According to the Howard government, just $2.54 a week is enough to compensate the unemployed for a 10 per cent GST on virtually every good and service, while a single person earning over $100,000 will receive $64 per week. That is the comparison. Friends of the coalition government on salaries of over $100,000 per week have a compensation package of $64 a week, while the unemployed will get $2.54.

The Howard government is not even prepared to allocate one cent of the $30 billion revenue raised from the GST to pay for job creation programs. So much for its mutual obligation to reduce unemployment in Australia. It makes it harder for the unemployed to get a job and it will not even commit any additional resources to try to get those people back into work. Instead, the Howard government will use the $30 billion to fund tax cuts for Australia's wealthy—the friends of the coalition government, who kick the can when it comes to the election campaign. Clearly, the priority of the government's GST legislation is not to create jobs for the unemployed of Australia but to finance tax cuts for their rich mates.

The second reading amendment moved by the member for Hotham is correct. This tax is an unnecessary, unfair job destroying tax which discriminates against lower and middle income earners, the aged and families. The Howard government stands condemned. As I said at the outset, the Howard government's GST legislation is based upon lies, inequity, discrimination and job destruction.