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Wednesday, 31 March 1999
Page: 4823


Mr CAMERON THOMPSON (11:01 AM) —Labor opposes the GST for reasons that are self-serving and small-minded. These measures to share power and sources of revenue more equitably between the states and the Commonwealth bring two of these reasons into sharp relief. The issues are the transparency and simplicity of the GST system and Labor's continuing agenda to centralise power in Canberra for the benefit of its union mates. The member for Wills was a walking, talking example of that. In 13 years in office, Labor relied on the murky recesses of the old tax system to hide its dealings and its deals. It did not want to support the states or share power with them, and it did not want to be accountable.

I am sure that people would want to believe that if there was a realistic alternative to the government's tax reform package it would reside over there with the opposition. It is therefore instructive to consider their proposal, which is to maintain the current system, and their track record of operating the current system when they were in power. In 1985, for example, the then Prime Minister, Bob Hawke, abolished tax sharing agreements and introduced financial assistance grants. He then promised there would be a two per cent real increase in financial assistance grants for each of the next two years. He then reneged. The treatment of FAGs by the Commonwealth over the following three years was completely arbitrary. Funding was actually cut in 1988-89 by 2.8 per cent, in 1989-90 by 2.9 per cent and in 1990-91 by 3.7 per cent. There was also a series of so-called technical adjustments, but all of them were negative.

Labor relied on a compliant and often sycophantic media to force the states to toe the line and to further its agenda for centralised power in Canberra for its own purposes. Labor cannot live with a GST. If ever they were in government, they could not stand the open public scrutiny that would be applied through a system with one tax rate and a transparent administrative structure. State government will be reinvigorated. No wonder Labor shrink from the idea. You would think they had seen a few cloves of garlic or a silver bullet. With these changes, their agenda of centralising power, of abolishing the states and running the country like a giant soup kitchen, a la Paul Keating will be further away than ever.

Members would recall that Labor's agenda for centralisation was thrown into the open during Bob Hawke's last few weeks in power. After systematically ripping off the states year after year and trying his darnedest to diminish their budgetary strength, he finally offered them a whole new contract. It was futile of course. The Keating mates plunged in their knives and Hawke's offer of a new deal, which had been greeted with a shout of acclamation Australia-wide, was never seen or heard of again. In power, Paul Keating set about developing his vision of a nation on welfare, and just about succeeded. Sure, he offered states a three-year rolling allocation of those financial assistance grants, but the states often found themselves facing cuts to general purpose payments. For example, in 1994-95, the states received guaranteed payments, but general purpose capital funds worth $330 million were abolished. That is the way Labor played the game. It is a far cry from the new deal now being offered in the government's tax reform package.

I do not think it is overstating the situation to say, quite clearly, that the GST will save the states. It will save them from irrelevance. It will save Australians from Labor's plan to centralise all power in Canberra. It will save us the continuing embarrassment of state based services being duplicated ad nauseam, and heaven help us from future Labor budgets following the Labor pattern and growing out of control like Paul Keating's piggery. Ask the average Australian where the old concept of trust between Australians and their parlia mentary representatives went wrong and they will name Paul Keating faster than you can write it down.

In my book, the legislation we are reviewing today does more to re-establish a meaningful relationship between parliaments and the people than any amount of huffing and puffing about parliamentary standards of debate. The way to a better relationship, a better representation of democracy, comes by providing parliament with resources adequate to prepare, present and implement a long-term strategy to manage the future. We are talking about the competent management of services, welfare, economic growth and social development in our community by Commonwealth, state and local governments working effectively together. That is precisely what we have not got today.

The GST is a growth tax. The Commonwealth will provide this money direct to the states. They will receive $27 billion in 2000-01, $32 billion in 2001-02 and $33 billion the following year. I believe those amounts are conservative, but what is important is the trend in the amounts provided to the states under this system. They actually increase. That is a revolution in the financial management of the states. For decades, Australian states have managed their affairs based on a system that provided them with less revenue each year—especially under the paternal policies of the former Labor government. Each year, they were more and more reliant on the FAGs and other Commonwealth payments allocated from the Commonwealth soup kitchen. Now I am sure members can go to their state budgets and find, year after year, steady increases in state revenue funding a steady increase in state services.

But that is not the point. The real scandal of public financial administration in this country over the last few years have been the lengths to which state governments have been driven in their efforts to prop up their failing sources of revenue. We have seen speed cameras, tobacco taxes, gaming taxes, toll roads and rules that forbid expenditure on infrastructure that does not generate revenue. We have seen asset sales appear out of the blue. We have seen corporatisation. We have seen the otherwise sensible policies of economic rationalism taken to absurd lengths. These seemingly increasingly crazy short-term and desperate measures have popped up unheralded on budget nights from one end of the country to the other. States starved of a meaningful growth tax have been beating themselves and their residents over the head with downright stupid schemes. They say and do anything just to fill the many new holes in revenue every year. States have hospital construction and road building programs that stretch for years into the future without any current means of paying for them. Without the change that is so long overdue, the only certainty in state planning is the trend to absurd impromptu decision making will accelerate.

We will see more crazy schemes designed just to boost revenue. In Queensland, for example, we have just seen our speed limits lowered to 50 kilometres an hour. Why? I am sure it has nothing to do with road safety and everything to do with the coming state budget. We have the on again off again sale of the Queensland TAB and the stinking absurdity of retrospective state gaming legislation that is so transparently contrived to increase the value of the TAB when it is sold. We have the spiralling state tobacco taxes, and today they remain under the jurisdiction of the Commonwealth and still used to prop up the states' failing finances.

State bureaucrats Australia wide still share the desperate hope that no matter how high those tobacco tax rates are lifted people will keep smoking. It is a joke to present these taxes as a health measure. They raise revenue and nothing else. If it was otherwise and the motivation had anything to do with health, the rates of the tobacco franchise fee would be 10 times its current level. The fact is that traditionally increases in the tobacco tax rate are just enough to maximise the return to state governments. In their own best interests, states have worked to ensure that the number actually giving up smoking is kept to the bare minimum. I am sorry if I sound overly cynical, but it is no wonder that people are cynical with politics and no wonder that for a while people were prepared to grab the dangerous and inept policies espoused by my main opponent in the October election in the federal seat of Blair.

We owe it to our constituents to establish a system of taxation that provides for the present and future needs of Australians without resorting to the cockeyed opportunism that is now trotted out by the states. Sure, year after year they eventually find enough to make ends meet but in the process they regularly insult their residents, local authorities and industries with a whole range of new injustices. I am not surprised people are fed up. I should say that under the current system the Commonwealth is often similarly afflicted. The important difference between the government's proposals and the existing system is the sanity and certainty we will restore to intergovernmental relations in this country. In the future, people sold a 10-year hospital rebuilding program should be able to see at the outset where the money for such an ambitious scheme will come from. If a $1 billion water infrastructure scheme is proposed, the same principle should apply.

The big question today should be to the states: on what will they spend the billions of extra dollars they will receive as the GST grows and the discriminatory pre-emptive state taxes of the past are phased out? The defence minister, the member for Ryan, made this point very well in August last year. Because of the strength of the GST revenue stream, he said that states will be in a position a few years down the track to completely eliminate payroll tax. In Queensland's case, that represents something like 26 per cent of current state revenue which is now being gained through an unfair discriminatory tax on jobs.

The Victorian Premier, quoted by AAP, in response to the member for Ryan stated the date by which states could be weaned off payroll tax. He said that, assuming a five per cent GST revenue growth rate, payroll tax in Victoria could be history by 2006. That is just six years to supplant a major discrimatory tax that is a huge disincentive to employment Australia wide. That is not the only option. Roads, schools, hospitals, seniors' entitlements—all these options—can be finally addressed by states utilising the GST. They can choose where they will spend the dividend. Councils are another option particularly deserving of greater financial support. Fat chance for any of this unless the GST is endorsed.

I pity those, if the GST does not proceed, who will have to put up with the lame excuses and downright lies that will continue to characterise budgetary planning, particularly at the state level. It is a simple choice. It is future planning versus guesswork. It is accountability versus responsibility. It is transparency versus mud.