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Wednesday, 31 March 1999
Page: 4828


Mr HOCKEY (Financial Services and Regulation) (11:25 AM) —I am going to take this brief opportunity prior to a vote to point out that the government will not be accepting the proposed second reading amendment put forward by the member for Hotham.

Mr Crean interjecting


Mr HOCKEY —Oh, what a great surprise! Here we see the member for Hotham again going back to the future, as he did last night in an address in Sydney when he talked about the vague, esoteric principles of the new, modern Labor approach to economic reality.

I am here to inform the House that the bunch of proposals put forward in the amendment by the member for Hotham will be rejected because they are inaccurate and because they will not apply, because we have put forward a package which sets out that the GST will be 10 per cent, and that the states will receive all of the GST revenue.

The package replaces nine taxes. Importantly, of those nine taxes, three relate to financial services. They are: financial institutions duty, debits tax and stamp duty on the transfer of shares. If you ever wanted for a moment to be reminded of the insidiousness of some of those taxes, particularly debits tax, then I remind people that, if you have a chequebook attached to your bank account, every time you make a deduction from that bank account you pay debits tax because you have a chequebook attached. That is 30c per withdrawal less than $100. If you have two bank accounts—a chequebook account and a normal savings account—on each withdrawal from your chequebook account you will have to pay debits tax. On each withdrawal from your normal savings account, you do not have to pay debits tax. So there is an incentive not to have two bank accounts, but to have one bank account.

This insidious tax, which so few people know they are paying, raises $1 billion a year. The great irony about this tax is that, during the debate about referral of debits tax from the Commonwealth to the states in the Debits Tax Termination Bill 1990, the then Minister Assisting the Treasurer, said:

This Bill will facilitate transfer of responsibility for debits tax from the Commonwealth to States and Territories. It does this by amending the Debits Tax Act to terminate imposition of the tax by the Commonwealth. The transfer of the tax base to the States has the potential to rationalise the taxation of financial services and provides the states with an additional revenue source.

In 1990, debits tax raised $390 million. In 2001, it will raise over $1 billion. Who was the minister that referred it at the time? Who was the minister in Hansard ? The current member for Hotham. What a surprise!

The current member for Hotham is giving us this gratuitous lecture about the tax base, about revenue stream, about growth taxes. He knows what a growth tax is because he was responsible for the transfer of a so-called `narrowing base tax' from the Commonwealth to the states back in 1990.

The interesting thing is that the states continue to deliver the hospitals, the schools, the police and most of the roads, yet they have a revenue base that is in effect deteriorating overall. That is why the states have started to increase the amount of gambling allowed in individual jurisdictions; that is why they have been searching for new revenue sources to plug the holes of their existing revenue base. That is why we have seen enormous growth in the number of casinos and poker machines in Australia. It is because the states are desperately searching for a revenue base that will support their existing continuing-to-grow expenditure items, such as hospitals, schools, roads and police.

As a result of this, the government is replacing nine taxes with one. We are replacing a narrow revenue stream with a growth revenue stream. Until such time as members of the opposition recognise that there needs to be fundamental reform in Commonwealth-state relations, until such time as members of the opposition recognise that the states cannot continue to rely on a redundant dirt-road taxation system when we have a Ferrari like economy, they have no credibility coming into this House and opposing each of our bills that form part of a package that the Australian people have endorsed—and endorsed overwhelmingly.

An incident having occurred in the gallery


Ms Macklin —That's right.


Opposition member —Hear, hear!

Question put:

That the words proposed to be omitted (Mr Crean's amendment) stand part of the question.

The House divided. [11.36 a.m.]

(Madam Deputy Speaker—Mrs D.M. Kelly)

Ayes . . . . . . . . . . . . . . . . 74

Noes . . . . . . . . . . . . . . . . 64

——

Majority . . . . . . . . . . . . 10

——

Question so resolved in the affirmative.

Original question resolved in the affirmative.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.