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Wednesday, 9 December 1998
Page: 1759


Mr MARTIN (7:15 PM) —In his contribution to the debate on A New Tax System (Goods and Services Tax) Bill 1998, the honourable member for Menzies talked about a tax honestly being proposed. The GST is the tax that the Prime Minister said would `never ever' be part of the tax agenda of his party in government or out of government again. This is the tax which the government said was off the agenda for all time within the Liberals. If that is an honest approach to the people of Australia—they should have and probably could have taken him at his word when he was in opposition—then one wonders why we are actually here tonight debating the issue.

I say to the honourable member for Menzies: we also have long memories in this place. It is an absolute nonsense to suggest that in government Labor did nothing to try to remedy problems within the tax system. Those of us that came into this place some time ago will remember that Labor in government reduced the top marginal tax rate, which we inherited, from 60 cents in the dollar down to 47 cents in the dollar. It was a government that also reduced the bottom marginal tax rate, which we inherited from the Prime Minister when he was Treasurer in the Fraser government, of 30 cents in the dollar down to 20 cents in the dollar. Where was the equity then? Where was the equity in taxation when Mr Howard was the Treasurer of this country?


Mr Hockey —What about FBT?


Mr MARTIN —The Minister for Financial Services and Regulation says, `What about FBT?' It is true that FBT and capital gains tax were introduced by a Labor government. It was also a Labor government which introduced a crackdown on tax avoidance offshore. It was also a Labor government which fixed the marginal rates, put imputation in place for business so that there were no double taxation arrangements, fixed tax avoidance and provided funds to families through family allowances and family allowance supplements and so on, so that the most disadvantaged in our community could have an income around $25,000 to $26,000 at least without any tax being paid. After all this, is this the criticism that is levelled at Labor for its approach to taxation matters?

Yet here we have a government proposing to introduce a tax which is blatantly unfair—again—a tax which they previously said they would not introduce, and a tax that is hidden. And just on that point: it was drawn out yet again today in question time from the Treasurer. One of the big criticisms that he and the government level at the wholesale sales tax regime is that the tax is embedded in the price that people pay for goods where the sales tax is actually applied. Yet in the same breath he indicated that the GST is going to be embedded in the final price as well. It is not going to be signalled as to what it is. Where is the honesty and the integrity in saying that this separate system now being proposed under the GST is going to be fairer in that it indicates that this tax applies?

The honourable minister knows, he goes to McDonald's like all of us, that those tax machines—the registers—are there and they are already geared up for tax. They are already geared up so that if you go and buy your Big Mac, your Coke and your fries, they can punch that in and then they can punch the other button and the tax will be added on and you would see it.

The government, on the other hand, says, `No, we're not going to do that; we're going to hide it. We're going to hide that away.' Then they say, of course, that it is 10 per cent. But when you go to this legislation and try to find the section in it that says the rate is going to be fixed at 10 per cent, you cannot find it. All you can see in the objectives to the bill is a reference to the fact that there is going to be a GST rate of 10 per cent. It is in the objectives, not in the legislation. As a consequence, the government has paraded itself around and said, `We will say to the states that we will give them all the proceeds of the GST, and it is only going to be if they all decide that they want to change the rate that we will have to do it.'

I say this to you, Mr Deputy Speaker: you and I both celebrated 14 years in this place last Tuesday.


Mr Hockey —Fourteen years!


Mr DEPUTY SPEAKER (Mr Nehl) —Yes.


Mr MARTIN —And you would know, as I would know, that when it comes to state governments, who regularly come down here asking for funding to supplement whatever the federal government has given them, there is always a blue—in the Australian colloquium. As a consequence, I can just imagine now, the first time that any of the grants to the state governments are cut back—it will not matter what persuasion the political party in government—they will all put their hands up and say, `Righto, it's time,' and up goes the GST rate. The letters will be written off. They will be faxed down to the Prime Minister, and the Treasurer of the day will be bringing in a regulation or a bill, or whatever is going to be required—we still do not know—and up goes the GST rate. History will show you that in every OECD country where the GST has been applied it has gone up.

I also find interesting that one of the things that, for example, our friend the member for Menzies puts some stock in—and I know the Prime Minister does—is the concern that is there for families and this issue about fairness. Well I ask this genuinely of the minister across the table; he is one of the better people on that side: if you are applying tax, why do you then want to apply a tax on items for families where it does not exist now—on food, clothing and shoes? Why do that?

Do you genuinely believe that people out there in the community are going to throw their hands up and say, `Hallelujah! Thank goodness for this government. They have promised us a bit of a tax cut over here, but they are going to put a 10 per cent GST on the necessities of life'? The government is going to put a 10 per cent GST on kids going to school, with their school uniforms, their school shoes, their school bags and the cut lunches at the canteens—all those sorts of things.


Mr Slipper —They will be better off.


Mr MARTIN —Even the member for Fisher up there on the Sunshine Coast would find that some of his constituents would rail at the thought of that. They would ask, `Where is the fairness in that?' The Treasurer has come in here and said, `Look, the inflation effect on this proposal is going to be 1.9 per cent.' If anybody believes that, they believe literally in fairies. Because the effect that is going to be felt here in an inflation sense is one that is going to be much more than that 1.9 per cent based on whatever modelling anybody wants to throw up.

I also say that a concern we would have, as we have outlined here, is with the inconsistencies that have already been identified. Some of the things are just absolutely absurd. The fact that if you are going to get married in a church, you do not pay GST; if you have a civil celebrant, you are going to pay a GST. What sort of an argument is that to be running in this day and age? You talk about the tourists coming here from overseas and the domestic tourists. Domestic tourists are going to be hit with the GST, international tourists are not.


Mr Hockey —So they should.


Mr MARTIN —Where is the consistency in that? The minister at the table says, `So should domestic tourists.' People like him and me and our constituents in Wollongong and North Sydney should be hit with a GST, but international tourists should not. I find that a strange argument. I also say to the minister that the Leader of the Opposition clearly demonstrated this afternoon the farcical circumstance involving people in nursing homes. He talked about the two streams of people in nursing homes—those that will be subject to the GST and those will not.

Mr Deputy Speaker, as you are aware, in the last parliament I was Labor spokesperson on small business, tourism and sport. There were genuine concerns expressed within those sectors of the economy about the effect of a GST—there were real worries about it. None of those worries have been assuaged by any of what this government has done—not one. Whether it be tourism or small business, the fact is that you will have to have computers, computer programs and so on to offset the massive amount of time that is going to be required for the record keeping associated with the GST. It is a genuine and a real problem for small businesses, as well as for microbusinesses that the Leader of the Opposition spoke about this afternoon.

The minister knows himself that the fastest growing sector of the small business community are the microbusinesses—they do not employ anybody; they work from home. That is about 50 per cent of small businesses now. There are going to be additional hours of work placed on them to keep all the records. Whether they have the computer program or not, they will still be inputting that data so that records can be kept so they can apply for GST rebates or whatever—or just so they can work out what they are going to have to send to the tax commissioner.

The other insidious issue associated with this relates to the fact that, during the course of the election campaign, we saw some $17 million of taxpayers' money—


Mr Laurie Ferguson —It was $19½ million.


Mr MARTIN —My colleague the member for Reid says it was $19½ million. It cost $19½ million of taxpayers' money to virtually put the `yes' campaign for what was seen by the government as a referendum on the GST, and that amount was matched by $10 million from the business community even before the election campaign started. Where is the fairness in that? How can I say to my constituents in Wollongong that there is going to be justice and fairness and equity with the imposition of a GST?

My final point goes to the nonsensical argument that has been raised about the mandate theory of politics, and how this government have been given a mandate to implement their tax change. There was an eight per cent swing to me in this election from people who said they do not want a GST—69 per cent of my constituents in Wollongong told me `No GST' and told me to come down here and to stand up and be counted. Mr Deputy Speaker, I am doing just that.