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Thursday, 19 February 2004
Page: 25263


Mr HUNT (11:49 AM) —Mr Deputy Speaker, I am delighted to focus laser-like on the A New Tax System (Commonwealth-State Financial Arrangements) Amendment Bill 2003. In speaking to this bill I would like the House to recall the fact that, prior to the introduction of the new tax system following the 1998 election, this new system was predicted to be the source of economic catastrophe, collapse and chaos. We were to face an Australian economy which would sink into the mire, we were to face a situation where individuals would suffer and we would see the collapse of communities. It was an example of outlandish, irresponsible and quite destructive politics standing in the way of genuine national progression.

Governments do not do the difficult things because they like to get kicked; governments do the difficult things if they are good governments and if they have a sense that they are there to govern for the country, not just for themselves. Let me be absolutely frank: the new tax system, the shorthand for which is the GST, as it is more commonly known, was not a popular introduction, it was not a popular thing to do. It would have been much easier not to have taken that reform; it would have been much easier to have continued as before. But this government took that step because it was necessary, because it was an important step forward for the country, because, at their very essence, that is what governments are meant to do—the difficult and not just the easy. At any point in time a government can embark upon a path of sheer populism, which means that they do not do the difficult things, or they can choose to actually govern.

This new tax system is about governing. It came from a mandate which was hard fought for and hard won in the 1998 election. It was a result of a decision by the Prime Minister and the Treasurer to take this new tax system to the people. As a result of that, there have been dramatic changes—but not the dramatic changes which were predicted. As I said before, it was predicted that there would be chaos, collapse and calamity; yet, when you look at the Australian economy, you see that it is a very interesting study in comparison with the international community.

We find that four great national effects have accrued over the last 5½ years. Firstly, we have reached a level of unemployment below six per cent, which is the lowest level for over two decades. We have a two-decade best level of unemployment, with the potential to go still lower because the nature and base of the economy has been changed. This is not some theoretical concept; it is a real concept. It is about real lives. It is about money in the pockets of families in Dromana, Koo Wee Rup, Baxter, Pearcedale, Granville, Rosebud, Rye and other towns throughout Australia. It means dollars in the pockets of families; it means men and women with jobs. It means the self-respect and the dignity and the impact on family lives which come from employment and from income. These are real things. They flow through to our social lives and they flow through to the very basic way in which we interact. Everything about a community can be helped by them. A community can be crushed if there is no economic activity. It is not the end, but it is certainly one of the indispensable means of building communities—and we sometimes forget that. In talking about communities, we must remember that an indispensable means of building them is ensuring that they have a strong economic base.

The second great thing which has happened, apart from low unemployment, is that inflation has been kept well within the Reserve Bank's definition of what is appropriate and desirable for Australia. We were warned that there would be an inflation nightmare, yet that did not occur. There was no inflation nightmare. What we saw was a transition far smoother than had been expected and predicted even by the strong supporters of the new tax system

Thirdly—and here the story is very exciting—Australia has had a level of growth over the last 5½ years which has been unrivalled over that full period of time by any other Western democracy. Other countries have had periods of growth, such as Ireland and the United States, but no country has had the consistent high level of growth that Australia has had. Now, that may have been by accident, but you would not think so, given the causal relationship between what occurred in terms of the taxation reform and the growth. We have had fiscal tightness, monetary tightness and reform of the system. Together, these three elements have worked to create an economy which means jobs and more jobs. That is the outcome.

The fourth of the effects is that we have managed to maintain a low interest rate while going through a period of high growth and low unemployment. That is an outstanding achievement. It is outstanding for home buyers and for people who have mortgages—whether in Somerville, Hastings or any of the other towns throughout my electorate of Flinders or elsewhere—because it has an impact on how much money they have for their own lives and on how they can conduct themselves. These are real effects which flow directly from the new tax system reforms.

In addition, there has been a very important benefit for the states. You can look at this benefit and define it across three fronts. Firstly, for the first time the states have been provided with a deep growth tax. What does that mean in practice? What does it mean for people on the streets? It means that the people who are providing many of the social services at the state level are able to plan for expansion over a multiyear basis. That means hospitals, schools and kidney machines—real things that have a real impact on people's lives—are being supplemented by the GST. The GST equals hospitals, schools and kidney machines. That is the way to think about it, that is what this tax has done and that is what this bill helps to evolve. Secondly, not only is the tax a growth tax but it is also predictable. We have models which allow the states to do their long-term planning.

Thirdly, that flows through to services. Here I want to mention two examples of those services and the way in which the states are funded for those services through this new tax system so that they can deliver them on the ground. Within my electorate of Flinders is Warley Hospital, a bush nursing hospital. It currently receives direct from the Commonwealth $1.3 million per year for aged care services. In addition, it is due to receive a further $1.5 million for aged care services once its new round of beds is built. In comparison with that $2.8 million—which over the next 10 years will rise to close to $3 million, which will make it close to an amount of $30 million in funding for Warley Hospital direct from the Commonwealth over that period—it receives $48,000 a year from the state to run its accident and emergency service. Eighty per cent of the intake of that accident and emergency service is comprised of people who do not live on the island. That service runs as a public service and at a shortfall of $100,000. So while the Commonwealth contributes $1.3 million, which will increase shortly to $2.8 million, the state—even though this hospital is funded under the GST growth arrangements—only gives $48,000. I call upon the state to contribute the additional $100,000 shortfall and note that, even then, it would be putting in approximately $150,000 as opposed to the $2.8 million which the federal government will soon be putting into Warley Hospital on an annual basis.

Similarly—and here is a classic example of the way in which the new tax system should operate—the state is funded so it can establish a dental health care system. Unfortunately, in Victoria that dental health care system has a waiting period that has blown out to over two years. Given that the funds have been provided through this very taxation system that we are debating today, it is critical that an allocation be made by the Premier specifically towards helping to shorten that dental care waiting list. That waiting list for dental care has blown out because of the Victorian government's failure to allocate the portion of GST funds which were paid directly to that state for that purpose.

This, perhaps more than anything else, is a source of stress, a source of concern and a source of deep personal pain for the elderly people in my electorate. Toothache actually transforms people's lives because it can become something so powerful that they can focus on nothing else. That, I say to the Premier of Victoria, is something which must be addressed under the new tax system arrangements—and it is something for which provision has been made.

Having said all those things, I want to refer briefly to the specific provisions of the bill. In essence, the bill facilitates the operation of the A New Tax System (Commonwealth-State Financial Arrangements) Act 1999 and it allows for a reconfiguration of GST payments to ensure that they are more timely and that GST refunds are taken into account in determining GST revenue available to the states. The timing of determinations will be altered to facilitate more accurate calculation of GST revenue. The bill will move forward the due dates for the determinations so that the guaranteed minimum amount that a state receives is calculated in an accurate and timely fashion. In essence, by being more accurate and by being faster with regard to determinations, payments can be made to the states without any uncertainty or inaccuracy so that there will not have to be subsequent fiscal adjustment.

Again, in human terms, the states can plan early for schools, medical facilities and all the basics that people need. That is what the GST means. As I said at the outset, the GST means hospitals, schools, kidney machines, road funding and the basics in human lives. That is what it is about. There are a great many provisions in the bill but they all relate to technical amendments to improve the timeliness and accuracy of payments. Above all else, it is about being able to deliver basic services to people in Mount Martha, Rosebud, Sorrento, Cowes and San Remo.

I am delighted to commend to the House the A New Tax System (Commonwealth-State Financial Arrangements) Amendment Bill 2003, and I do so because, above all else, it actually means that there will be more certainty, whether it is for repainting the primary school in Clyde or to help to build the necessary new buildings at Koo Wee Rup Primary School. That is what it is about. That is what the new tax system and the GST have delivered. This bill will facilitate that and will improve the system still further. To the extent that the GST has had the capacity to improve the hospitals, schools, kidney machines and roads that are provided to people in Victoria and Flinders, it has been an outstanding success and has had a real and practical impact on people's lives in Victoria.