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Wednesday, 9 December 1998
Page: 1696

Dr NELSON (12:30 PM) —In his introductory remarks this morning in his contribution to the debate on these tax reform bills, the Leader of the Opposition—the member for Brand—displayed both his ignorance of and, to some extent, his arrogance towards, the private health care sector and he also misled the House. He said that there was not `a single private children's hospital in Australia'.

He ought to be informed that the Allowah Children's Hospital was established at Dundas almost two decades ago. It provides acute, semi-acute and respite care for developmentally disabled children from birth to 13 years of age. It also caters for the special needs of children who have a disease from which they will not recover, and for those with head injuries. In fact, in 1984, when he was the health minister, Dr Neal Blewett sought to change the 3b certification rule to ensure that these children—whom I would suggest to you are the most vulnerable—were required to be reimbursed at the long stay rate from day one of admission.

The Leader of the Opposition should visit Allowah private hospital at Dundas. It is, as I said, a 38-bed private hospital specifically for children who have significant needs.

Mr Fitzgibbon —I raise a point of order, Mr Deputy Speaker. Reluctant as I am to interrupt, I think you will agree that on a matter for relevance, the member for Bradfield is right off the track.

Mrs Sullivan —On the point of order, Mr Deputy Speaker; I was listening with some interest to what the member for Bradfield was saying. I believe he is developing a point and should be allowed to make it, and then you can judge whether it is relevant.

Mr DEPUTY SPEAKER (Hon. D.H. Adams) —The matter before the chair is tax bills. These are pretty wide ranging and I think the honourable member for Bradfield is answering argument that has been put before the House on the same bills.

Dr NELSON —Thank you Mr Deputy Speaker. In fact, when the Australian Council on Health Care Standards certified Allowah private hospital—for children, I might add—it described this hospital as `a centre of excellence . . . providing such a unique and necessary health service at a level which could be used for quality bench marking throughout Australia.'

Apart from rectifying his ignorance in relation to the private hospital sector, one of the reasons why the Leader of the Opposition and his colleagues should visit this hospital is to have a look at the sort of children who are there and the sacrifices made by their families to maintain their private health care insurance which gives them access to the hospital. Then come back here and tell us that you do not want to support a 30 per cent private health insurance rebate for people who take out private hospital insurance.

Turning specifically to tax—of which private health insurance is a significant part, including a 30 per cent private health insurance rebate—I would like to quote the Prime Minister. He said:

. . . you can't have a continuation of a tax system which is haemorrhaging, imposing burdens on those least able to bear them—

and which is `economically inefficient.' He went on to say:

The second thing is that if the broad-based consumption tax is brought in, those increasing numbers of people in the community who by the use of clever lawyers and accountants have avoided the payment of any tax on their income and also in the absence of a consumption tax, aren't paying any tax on the spending of that income. They will be caught up there by the twelve and a half per cent consumption tax, they will be paying tax . . .

That was the Prime Minister—but it was the Prime Minister Mr Bob Hawke. The first quote was on 2 June 1985 on the Sunday program, the second was on the Willesee program two days later on 4 June 1985. On 7 June 1985, Mr Hawke, as the then Labor Prime Minister of Australia, said to the Melbourne Age taxation symposium:

We must all recognise that it would be all too easy in this debate to inflame fears and prejudice. And we should realise that some people will be trying to do just this . . . But the question is whether we have, as a nation, the maturity to pursue a dispassionate debate in order to achieve such overdue change.

Two days later, again on the Sunday program, Prime Minister Bob Hawke said this:

Most of the things in the thirty-two and a half per cent schedule—

that is the whole sales tax schedule—

are today everyday items, such as TV sets, video tape recorders, biros, these sorts of things. And there are very few which are luxuries . . . I mean, I just don't think we ought to skew the whole tax system around to worry about a couple of items like that.

Finally, on 13 June 1985, in the context of the debate about whether there should be exemptions like food, Labor Prime Minister Bob Hawke told AAP:

At the moment we all have to buy the necessities; if you're not buying them you can't live. And you buy them now out of your after-tax income, after it has suffered these very high, oppressive marginal rates.

Bob Hawke was saying that you actually pay a very high level of income tax and then you have to buy the necessities of life, which already have hidden taxes embedded in them. He went on to say:

The best way of making these taxes operate effectively and efficiently is with minimum exemptions and with a single rate; that is the lesson which comes from all over the world.

The problem that we have as Australians—whatever our socioeconomic circumstances, whatever our political affiliations—is that we currently tax everything we are trying to encourage. We tax productivity, employment and savings—and then we wonder why we are not doing quite so well in those three areas.

Our revenue raising concentrates predominantly on income, both personal and corporate, in addition to wholesale sales tax on three principal goods—durables, motor vehicles and beer—all of which represent a diminishing share of household expenditure as it shifts to services, now 70 per cent of our economy and largely untaxed.

What may have escaped the attention of the House is that last financial year, for the first time since Federation, government receipts were down as a proportion of GDP. To some extent it was due to the reduced dividend from the reserve because of the appreciation of the dollar the year before. But it was largely because the base upon which we are trying to raise our money to finance essential social infrastructure is eroding.

These are the problems. In 1954 you had to earn 19 times the average wage to be on the top marginal rate. Today it is only 1.4 times average weekly earnings, and in seven years time you will be paying the top marginal rate as an average wage earner. The second problem we have is that the Income Tax Assessment Act in 1936 was 120 pages; it is now over 3,300 pages, having doubled in size over the past seven years alone. In fact, David Koch, the respected finance commentator, told me last year that the average tax agent has to read 25 pages of tax rulings and interpretations just to keep across changes in tax law.

The third issue that we all confront, and this is particularly important, is that at the end of World War II, as Tony Blair observed when he was addressing the Trades Unions Congress in Britain on 9 September last year, there were 100 segmented markets throughout the world. The world has essentially coalesced now into three major trading blocs. If my children are likely to have a job and to carry the reasonable expectation of having one, we actually have to be a part of that trading environment. Yet, as we try to compete in an increasingly competitive world, we in Australia lumber our exporters and our manufacturers, at least what is left of them, with input taxes with which their competitors are not lumbered. They have to compete on international markets where you simply cannot increase your price to offset input costs that are unique to the country of origin.

We add an impost of between three and five per cent to everything that goes across Australia's continental shelf into international markets. Only Botswana, Jordan, Swaziland, Pakistan, the Solomon Islands and Australia have wholesale sales tax without some kind of broad based, indirect tax. In fact, Coopers and Lybrand, which published a report in September 1997 on this, found that 143 countries impose a broad based, indirect tax of some form on goods and services—109 of them are VAT and 34 of them are general taxes on goods and services. As I said, only six countries, of which Australia is one, have just a wholesale sales tax.

A company that tries to operate across Australia faces 42 state and federal taxes before it gets to any kind of industry specific tax. The taxes paid by businesses depend on the type of structure. At the moment in Australia, companies structure themselves legally around the tax system. The tax system drives the structure of corporations in Australia rather than the other way around. The previous speaker was quite right when he said that a GST would not eliminate the black economy. I do not think there is a tax system known to man that will. But a multistaged tax, as a GST is, will make considerably more inroads into it than the current tax system.

I recommend to honourable members opposite the electronic commerce task force report from the Commonwealth Law Enforcement Board released, I think, in March 1996. Have a look at the impact that electronic transfers are having on the way we do business in Australia. Have a look at the way in which you can set up companies offshore and run them from Australia and the way you can move large sums of money around without having to have a big suitcase and a rottweiler by your side. All this is eroding our tax base. But, in the end, you have to spend it.

The other problem that we have is that, if you are a single income family earning $24,570 a year and you increase your income to $33,150, you are actually $24 a week worse off. You are worse off because you lose $6,435 in benefits and you pay almost $5,000 in tax. The government's tax package—in reducing marginal income tax rates, introducing a broad based, indirect tax, reducing tapering rates for welfare benefits and streamlining the 12 family benefits into three—actually provides incentives for people to work harder and earn more money. How often do you hear people say, `I am wasting my time earning more money, I'm wasting my time going to work—I would be better off on the dole and living on social security'?

Finally, Mr Beazley said on 30 April 1996 that revisiting the consumption tax debate would not be helpful to the ALP. It is not helpful to the government either, but sometimes you actually have to do something that serves the interests of the nation. And that is what this is all about.