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Wednesday, 31 March 1999
Page: 4825


Mr EMERSON (11:11 AM) —The GST is bad for the nation, but it is especially bad for Queensland. So I was astonished to hear the member for Blair failing, yet again, to stick up for Queensland in the face of the impact that the GST will have on our state. Queensland did not agree at the Premiers Conference in November to the arrangements that were proposed by the Treasurer. That did not stop the Treasurer standing up here in the parliament at question time asserting baldly that Queensland did agree to those arrangements. I checked as late as this morning to confirm that Queensland did not agree. The member for Cook asserted in this debate that Queensland agreed to these arrangements. That is completely untrue. It does no service to this parliament to have government members of the parliament asserting something as truth which in fact is completely untrue. Evidence was given to the Senate GST inquiry by the Queensland Treasury that they did not agree at all to the arrangements that were proposed last November.

The impact of the GST arrangements on the state budget in Queensland will be to reduce state government revenue effectively by some $465 million. Earlier this week 32 leading businessmen and women in Queensland wrote an open letter to the Prime Minister pointing this fact out and imploring him to look after the interests of Queensland, but I am afraid that has fallen on deaf ears. Authors of the letter included representatives of the Bank of Queensland, Morgan Stockbroking, BHP Coal, Queensland Investment Corporation, the Canegrowers Association, Sir Frank Moore, Bell Morgan Securities, Southern Pacific Petroleum, Ariadne Australia and MIM Holdings. The letter said in part:

Dear Mr Howard

Queensland's business community urges you to treat Queensland with equity and justice when implementing the Commonwealth's tax reform package.

Under the current proposal, Queensland will lose $465 million of revenue generated by the Goods and Services tax during the new tax system's transition period. This revenue will effectively be used to subsidise the removal of taxes and charges in high-tax States such as New South Wales and Victoria.

Because Queensland is a low tax jurisdiction, the implementation of the GST will lead to overall higher per capita taxes being paid in this State. This is because the State taxes that the GST is to replace are considerably lower in Queensland than elsewhere, but all Australians will pay a uniform rate of GST.

The letter goes on. Queensland is the low tax state and therefore will be disadvantaged by these arrangements. In addition, amongst the mainland states, as the member for Melbourne has pointed out, Queensland has the lowest per capita incomes. Therefore, the regressive impacts of the GST will be felt more severely in Queensland than in any other state.

That is not the end of the story, however. Queensland will again be especially hard hit by the impact of the GST on jobs. Even the Prime Minister's preferred modeller, Mr Chris Murphy, has quantified an impact on Queensland five times greater than on any other state of Australia. The Prime Minister's preferred modeller is indicating that Queensland will be especially disadvantaged by the GST. Professor Dixon was commissioned from Monash University to do work on the employment impacts of the GST. He has found that in Queensland job losses of up to 22,680 can be contemplated. In Brisbane alone, there is the prospect for almost 11,000 job losses. The entire GST package is ill-conceived. As I say, in the context of the nation as a whole, Queensland is the big loser from the GST package.

The arrangements that are being debated here today in the legislation also put into grave doubt the future of the Federation. The reason I say that is this: by effectively allocating the $32 billion of revenue from the GST to the states whilst removing the financial assistance grants, what will happen in the future is that when advocates legitimately arguing for increased expenditure in health, education and family services come to the doors of Canberra ministers, Canberra ministers will say, `No. The states have got the GST. Go and see them.'

The pressure will be on the states to deal with these things and in very much a non-uniform way. The pressure that ultimately will come to bear will be a pressure to increase the rate of the GST. As advocates for increased spending on health, education, Medicare and family services approach the states, they will then be saying, `Well, if you don't have enough revenue, maybe we have to increase the GST rate.' That underlines the point that the lock-in mechanism being debated here today is nothing but a sham. We have seen the reality of what happens in nations that introduce a GST. In 22 out of 23 countries with a GST, the rate has been increased.

What about the impact on local government? In my own area, the Logan City Council has had an analysis done by accounting firm KPMG with the Local Government Association of Queensland which indicates that more than 40 per cent of Logan City Council's charges will, or may, bear the GST. Again, local government is going to be disadvantaged by the GST arrangements.

If this is such a great tax, why is the Prime Minister so reluctant to mention those three little letters—GST? I have done a bit of analysis of the Prime Minister's responses to a vast array of questions that have been asked of him in questions without notice in this parliament since the beginning of this year. In response to those questions without notice, the Prime Minister has spoken almost 4,000 words. It may interest this parliament to know how many times he has mentioned `GST'. The answer is that he has let the word `GST' slip just six times. He had a very bad day on 9 March when he mentioned it four times. It is quite clear that his pollster has told him not to talk about the GST and to use the euphe mism of `tax reform'. He did have a very bad day in the parliament in letting it slip, but it is quite clear that the Prime Minister is avoiding the use of the word `GST' because he knows what we know—that is, it is a tax that is bad for the nation. If it is such a good tax, why is he so reluctant to even mention the word?

It reminds me of the episode of Fawlty Towers when Basil Fawlty was told, `For goodness sake, don't mention the war.' After a tragic set of events in the restaurant, he came back at the end of that particular episode and said, `I only mentioned the war once, but I think I got away with it.' That is what our Prime Minister is doing. He only mentioned the GST once, but he thinks he may have got away with it. In fact, he has not got away with it at all.

This is the last day of sitting before the Senate GST inquiry is due to report. I would like to briefly review the evidence that has come forward to the inquiry. Firstly, in relation to the adequacy of revenue under the current arrangements, we hear that the wholesale sales tax is incapable of contributing to generating the revenue needs of Australia's future. In relation to the wholesale sales tax, analysis performed by Access Economics shows that the base of revenue is eroding by only $100 million a year. So we have a $32 billion tax to deal with an erosion of $100 million a year. Indeed, Professor Peter Dixon of Monash University has shown that the revenue projections from the existing system are as healthy as those from the proposed GST arrangements. That completely exposes the myth that we must have a GST to deal with Australia's future revenue needs.

In relation to the economic impacts, there has been a litany of evidence about the adverse economic impacts of the GST. Again, the Prime Minister's preferred modeller has shown that in the most optimistic circumstances the GST will contribute just 65c a week per family—that is, in the absolutely most optimistic situation of no short-term job losses, a full passing through of indirect tax reductions and, in addition, that there would be absolutely no GST paperwork burden. We have heard from Arthur Andersen and other accounting firms that the GST legislation of some 200 pages is far more complex than the New Zealand legislation which is 75 pages. They summarise it as being an administrative nightmare.

We know therefore that the GST fails the test on revenue and fails the test on economic impacts. There will be large-scale job losses from the GST. It is an incredibly complex tax and is difficult to administer. Most of all, it is a very unfair tax. We heard from ACOSS and various church groups yesterday about the unfairness and the unacceptability of the tax package. There is no doubt that this is one of the most unfair proposals ever put before the Australian people. I can assure you that the Labor Party will continue to do everything it can to stop the GST proceeding.