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Wednesday, 9 December 1998
Page: 1708

Mr LEO McLEAY (1:29 PM) —This has been an interesting debate. Unfortunately, there has not been enough time for people to be able to suss out all the things that are wrong with the GST. If you listened to the government speakers in the debate, you would think that all they are talking about out there at the football and in voter land is tax reform—you go to the football and they come up and tell you, `Tax reform, tax reform.' You go to the movies and they come up and tell you, `Tax reform, tax reform.'

Obviously none of the people from the government hear anyone telling them that the real issues in this country are about jobs, health and education. The government will tell you that this tax reform is about the only thing that is going to be any good for the country. They say it will make us more productive, more competitive, help exporters, deliver more jobs and increase living standards. About the only thing they have not claimed about the GST is that it will cure dandruff—but there is a little while left to go in this debate, and one of them will probably even claim that. No doubt the minister at the table might end up claiming that, because he does not know the difference between a ringgit and anything else, so dandruff is probably one of the things that will solve the problem for him with the GST.

If the GST is so terrific, why are people so suspicious of it? Why aren't people welcoming it the way the government thinks they should? Why don't people believe the government's rhetoric? I will tell you why: because not everybody is as gullible as the government likes to think they are. We know—and the electorate knows—that the proposed GST will not be a panacea for the deficiencies of the current system.

We are aware of overseas experiences of this 1960s tax. The previous speaker said that we should look forwards rather than backwards. The government had to look back to the 1960s to find the GST. Most of the countries in Europe with a GST got it in the 1960s; they did not get it in the 1980s or the 1990s. The overseas experience is a very salutary thing, because we know that the outcome of the introduction of those taxes did not provide the utopia that those governments said they would.

We see from the overseas experience that the GST rate rises. It is no good the government trying to reassure the House and the voters by saying that it will only rise here if the states want it to rise. Why wouldn't the states want it to rise, particularly when they will get the revenue from it and the Common wealth will have the responsibility of raising that revenue?

I remember one of the interesting sayings of former Prime Minister Keating was that the most dangerous place to be in this country was between a bunch of state premiers and a bucket of money. What the government wants to do with this GST legislation is put the taxpayers between a bunch of state premiers and a bucket of money—probably the most dangerous place to be in this country. The government does not want to put itself there; it wants to put ordinary taxpayers there. I guess one could not blame the state premiers for sitting back and thinking, `Christmas really has come because the Commonwealth is now going to give us a bunch of revenue that it will raise and that we will have the key to.'

The government thinks people should think that this is a clever tax. It also says that the states would have to be unanimous in their decision to raise the rate. I have not seen a state premier yet who is not willing to say, `If you want to give me more money, I am happy to have it.' I think Paul Keating was right: the most dangerous place in Australia is between a bunch of state premiers and a bucket of money, and I do not see why the government should want to put ordinary taxpayers there.

What will happen to taxpayers when the government puts them in that dangerous position? Prices will rise. Sure, the government says that wholesale sales tax will disappear, but it will be replaced by the GST. Only those who believe in fairy stories or fairy godmothers—and the Commonwealth will be the states' fairy godmother in this—would believe that the sellers of goods will offer them at a lower price.

If the government does believe that prices will come down, why doesn't it allow the GST to be shown separately on dockets? It is not just the opposition saying this. In fact, the other day at the annual general meeting of Woolworths the chairman, John Dahlsen, told shareholders that Woolworths would prefer the GST to appear as a separate item on dockets rather than be hidden in the price of each item, as the government has indicated is its preference.

Mr Causley interjecting

Mr LEO McLEAY —We have a bit of an echo here from cocky's corner. The member does not actually have the drift of it because, had he listened to the previous speaker, he would have said, `The reason the wholesale sales tax is terrible is that it is a secret tax.' The government is just substituting another secret tax for one that it is claiming is a secret tax. If the GST is so terrific, why doesn't the government let it come up on the bill every time?

Mr Hockey —Because it is 10 per cent on everything—

Mr LEO McLEAY —Because it is 10 per cent of everything that comes up, and the government, most particularly, does not want the taxpayers to know that every time the till is rung up they are paying an extra 10 per cent put on by the government. This is one secret tax the government wants to keep very secret because the government knows there will be profiteering from this. The government knows that and the government will not do anything about it.

And that is what ordinary voters know. Ordinary voters know that there will be profiteering from this and that the government will not do anything about it. Voters know that this tax has not worked overseas. They know that the world's biggest economy—that is, the United States of America—does not have a GST. They know that some countries, such as Italy, regret that they have introduced a GST. But voters also know that once a GST is introduced it is difficult, if not impossible, to dismantle it.

That is why we, as the opposition, are so vehemently opposed to the introduction of a GST. It does not work. It is a regressive tax, a tax on jobs, and the poorer you are the harder it will hit you, because it will apply to the necessities of life which currently are not taxed. Things that we all have to buy, like food and clothing, which currently are not taxed, will now be taxed. We are talking here about items that people cannot get away from. These are not discretionary items, unless the government believes that food is a luxury.

Research by the Melbourne Institute of Applied Economic and Social Research has shown that food takes up 24.6 per cent of the expenditure of lower income families but only 12.5 per cent of the expenditure of families on incomes like those that politicians have. Imposing new taxes on food, which is what the GST will do, will hit the most vulnerable in the community the hardest. Of course it is not just food that will have a GST, there are a lot of other items.

The government has claimed that the GST will assist businesses by reducing the tax burden on them, but there will be a very high price on that. It will be at the expense of the individual. Small businesses that the government says it will look after will be most hit by this. The number of tax points will increase from about 70,000 with the wholesale sales tax to millions with the GST. All that the government has put forward is a $500 million package to help businesses overcome these compliance costs, and every day the Treasurer expands the number of categories of people who will be able to get their hands into this $500 million. Businesses will have to face large set-up costs, training of staff, professional advice, et cetera, and significant outgoings relating to the compliance requirements.

But there is another furphy about the GST that the government will not nail, and that is the black economy. We have heard government speakers in this debate get up all the time and say that this will cut down the black economy. A GST in fact increases the opportunities for tax evasion, it does not reduce them. It certainly increases, rather than reduces, the incentive to operate in the black economy.

If a plumber goes to the hardware store to get a tap for Mrs Jones, he finds that the tap costs him $9 and he pays 90c GST on it. He charges Mrs Jones $50 to put the new tap on. For the plumber it is a simple choice: he can claim back his 90c GST or he can pocket the $5 that he would have to add on to the $50 he charged Mrs Jones for the plumbing.

And the government thinks this is going to stop the black economy? This is going to increase the black economy, because voters are not the mugs that the government thinks they are. If people in the black economy now are dishonest, they are not going to become honest overnight because the GST is there. Are they going to say, `I should claim the 90c so that I can pay the government back $5'? What a joke, and the government knows it is a joke.

There are more hidden problems in this tax than the government is willing to tell the voters; there are more problems in this tax than the government is willing to reveal. The government knows that this is tax reform for the sake of the Prime Minister having something to say. It is not tax reform for the sake of Australia. It is certainly not tax reform for the sake of the vast majority of Australians who are on ordinary wages and salaries.

This package of taxes, with the compensations that are in it, takes money from those who do not have it and gives it to those who do not need it. This is a massive bribe for people who do not need the money. The government should be using tax reform to chase people for the massive $800 billion that we believe could be achieved by looking at trusts and by attacking those people who are into tax evasion and avoidance in a big way. The government should not be using tax reform to chase ordinary people who are trying to make a living, or to tax pensioners and ordinary income earners 10 per cent on everything they buy. This is a disgraceful, outdated, old-fashioned tax and should not be supported.

Debate (on motion by Mr Causley) adjourned.