Mr BAIRD (10:07 AM) —I rise to speak to the GST bills, not to the amendment. I look forward to the minister at the table debating that issue if he wishes. It is very clear from listening to the member for Hotham how much the Labor Party are into retropolitics. It is about justifying their fifties look in this House. They are not concerned about providing the states with a stable source of income, a growing source of income which all states and territories around this great country have been asking for for decades. It is clear that the member for Hotham has not been listening to the various premiers as they outline the problems that they face with vertical fiscal imbalance and the regressive range of taxes that are available. Those taxes will be abolished as a result of this particular piece of legislation. Nine taxes will be abolished, and in their place will be a much more efficient regime. The whole of the GST will be allocated to the states.

Whether it is a Labor state or a coalition held state, there is no difference in the response from the various premiers and from the treasurers in each state and territory. The reality is that each of the premiers in the states agrees that this is the way to go, this is the way to remove the inequities, this is the way to remove the vertical fiscal imbalance, this is the way to remove regressive taxation right throughout this country. It will put the states in line with a tax system which is going to grow over time and which will meet their various infrastructure requirements for hospitals, schools, roads, bridges and a whole range of services, including police services and social welfare services, that each state is required to provide throughout this country.

Those involved in state governments are aware of how inept and regressive the taxes are at the state level. If you go to any taxation seminar, you will be told very early that the taxes available to each of the states are regressive and are often invisible to the consumer. Yet they provide different levels of regressive taxation. For example, with stamp duty, as you develop an apartment block, each level requires a stamp duty payment. So the overall cumulative cost of the taxation continues to increase. It is, by any count, a very regressive regime of taxes that is available. I am sure many in the business area would like to see the payroll tax included. That was not possible because of the restriction of the rate of taxation to 10 per cent, but there is no doubt that this is the most significant change in the federal-state taxation arrangements since Federation.

Because of that, the Treasurer and the government should be congratulated on introducing these bills into the House. The first bill provides the 30 per cent concession in private medical funding to make it more affordable. The second bill will remove the wholesale sales tax and will provide $13 billion worth of tax cuts. At the same time, it will make our industries more efficient because many of the taxes that currently burden it will be removed, such as the wholesale sales tax. The requirement of taxation will be removed when businesses move into the international marketplace. There are some $4.5 billion worth of tax cuts in the manufacturing and the mineral sectors when they move into the international scene.

This piece of legislation improves the relationship between the state governments and the federal government. The first reason why this legislation needs to be supported is that it removes nine very inefficient taxes. It provides a stable source of revenue for the states and provides them with a growing source of revenue. That is very significant.

Secondly, the states will no longer have to rely on an inefficient range of taxes. They will no longer have to rely on the general purpose grants which they need to line up for every year. There is the great charade of the Premiers Conference when all the state premiers come together and make various demands about the needs of their particular state. The formula for the allocation of grants is based on fiscal equalisation. It will be set out in the formula. There will be three years of transition in putting that formula in place. They will be guaranteed the revenue that they otherwise would have had through the existing system, but it will remove that whole charade we have each year of lining up for the general purpose grants. Instead, we will have a much more efficient system. The whole basis of the GST is efficiency, clarity of understanding and lack of regressive taxes in the tax mix overall.

It is also important to recognise that this tax was not imposed on the state and territory governments but one voluntarily and willingly embraced. At the meeting held last November between the Prime Minister, the chief ministers and the premiers, they agreed to these proposals. While there may be some differences at the edges, there is no doubt that premiers, whether in coalition states or Labor states, very much embraced this. For example, the Premier of New South Wales has been silent on this issue. He would know what a bonanza this is for the state of New South Wales. Premier Beattie would know that this is going to provide him with a growth tax to provide all those roads, hospital requirements, policing requirements and maintenance requirements of government facilities that have been so long needed.

This is about a revolution in taxation arrangements. On this side of the House we are confronting the taxation issues that have been a great challenge for the states for the past 99 years since Federation. They have been grappling with these issues and this government has faced up to these issues and come out with a sensible tax arrangement which is embraced by all the heads of states and territories.

The states can use their grants for any purpose, which of course allows them flexibility. The member for Hotham's claim that, if any change is going to be made, all that is required is a simple one-liner piece of legislation ignores the fact that this legislation requires the agreement of the heads of the states and territories for any change in the GST arrangements. Secondly, it needs to go through the upper house. So you would have an agreement of all the states and territories to any change and an agreement of both houses of parliament. So this whole nonsense that it requires in the late night hours a one-line piece of legislation and all will be changed, ignores the reality of this piece of legislation.

There is no doubt about what this bill provides. It provides for the repeal of nine inefficient state and territory indirect taxes, the assumption by the states and territories of responsibility for the funding of local government and the operation of the First Home Owners Scheme by the states and territories. All this is sensible and appropriate legislation.

It is also important to recognise that, when this legislation comes through, bed taxes around Australia will be removed. This has been one of the principal reasons why we have seen a lot of our international visitors shift out of Sydney and go to other parts of Australia. This legislation will remove those bed taxes not only in Cairns but also in the Northern Territory and Sydney and provide a great incentive to international visitors.

It will remove the FID—the financial institutions duty; the debits tax; and the stamp duties on marketable securities, business conveyances, lease mortgages, debentures, bonds and other loans security. In other words, it is a wide ranging reform, removing a whole raft of regressive taxation measures that apply in the various states. What we are going to have is a sensible, appropriate, equitable system of taxation around Australia, providing a growth tax to all of the states which will ensure that the infrastructure that they require for the provision of services will continue on a strong basis. I commend the bill to the House.