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Thursday, 3 June 2004
Page: 30111

Dr EMERSON (12:59 PM) —I am happy to indicate that Labor will support this omnibus bill, the Tax Laws Amendment (2004 Measures No. 2) Bill 2004, with its numerous sections. But I will respond early in my remarks to the comments from the member for Mitchell, who you might recall convened a group of 40 coalition members of parliament in a very late lunge for the job of Treasurer. They developed a set of proposals around family tax policy but forgot to tell the Treasurer, other than through the media. So the Treasurer woke up one morning and nearly choked on his Weeties when he saw in the newspapers an outline of the plan that had been developed by the member for Mitchell with his 39 colleagues. He held a press conference and slapped it down that day. So a lot of work from the member for Mitchell bit the dust in a most spectacular way, and the Treasurer then resumed his Weeties.

The member for Mitchell also recited spurious numbers about taxes that had been introduced by previous Labor governments and asserted that a very small number of taxes had been introduced by the present coalition government. That is untrue. For my information, I rely on a report from the Clerk of the Senate, current to March 2004, that shows that the coalition, in government, has introduced or increased 144 taxes. The way the government tries to disguise this is by arguing that particular taxes are not in fact taxes but levies, fees or charges—anything but a tax. Members should look at Hansard to see the most humorous reference I can recall—the Minister for Agriculture, Fisheries and Forestry, trying to disguise the fact that the sugar levy was a tax, described it as `an opportunity to contribute'. He wanted to provide all Australians with an opportunity to contribute to the sugar industry through a levy. That is just one of the tricks of this government—redefining the taxes they introduce as levies, fees, charges and `opportunities to contribute'.

The bills before the parliament today are very substantial in volume. That should come as no surprise, and I want to make a number of remarks about the so-called streamlined new tax system for a new century, of which the Treasurer so proudly boasted in 2000 when he introduced a tax that, ever since, the government has been denying ever existed as a Commonwealth tax. I refer, of course, to the GST. The Auditor-General has identified it as a Commonwealth tax, and just about every member of this parliament debated the passage of that tax. Having given birth to it, the coalition government immediately disowned it. In Budget Paper No. 1, in the aggregates in relation to taxation as a share of GDP, you will not find any reference to the GST. It is an orphaned child that the government, having conceived and given birth to it, disowned immediately upon its introduction.

These bills are technically complex. For that reason Labor, whilst supporting them in the House, will refer them to a Senate committee. We welcome in particular the Howard government's belated move—a backflip, in fact—on providing to public ambulance services the same fringe benefits tax treatment as public hospitals. In December last year the government voted against a Labor amendment to Taxation Laws Amendment Bill (No. 5) 2003. That amendment would have provided the relief that belatedly is provided in this bill. In December last year the government said it was a bad idea. Here we are in June—a full seven months later—and the government says it is a good idea.

In that seven-month period, the government has created unnecessary anxiety and uncertainty amongst ambulance officers around the country. We are not talking about small beer: many ambulance officers faced a drop in income of around $200 a week. Yet, for that seven-month period, and for quite a long period before that, the government did nothing. The government only changed its view when the secretary of the Victorian ambulance officers association and the member for Kingston—who is in the House today—appeared on the Neil Mitchell program on 3AW in Melbourne to highlight the issue. The government had been dragging its feet and refusing to move. Yet, within 24 hours of that radio interview, the Treasurer overruled the Minister for Revenue and Assistant Treasurer, Senator Coonan, and announced that an FBT exemption would be granted to public ambulance officers.

On behalf of the ambulance officers of Australia, I take the opportunity to thank the member for Kingston for bringing this to public attention and for embarrassing the government into moving in a favourable way which has meant that ambulance officers are not confronted with an income loss of around $200 a week. Good on the member for Kingston and the ambulance officers association, and faint praise for the government for moving so slowly and creating such anxiety over such a long period of time.

Mr Deputy Speaker, I have with me the explanatory memoranda and the two bills—the Tax Laws Amendment (2004 Measures No. 2) Bill 2004 and the Tax Laws Amendment (2004 Measures No. 3) Bill 2004—which, as you can see, are indeed voluminous. This should come as no surprise, because it is the track record of the government to make the income tax system more and more complex. When the government was in opposition, the Prime Minister made certain commitments in relation to red tape. On 30 January 1996, not long before the election upon which the government assumed office, he said:

... I will be establishing a small business deregulation taskforce. That taskforce will have a specific brief from me as Prime Minister, to report within six months of the new Government taking office. Its main responsibility will be to advise on ways in which the regulatory and paper burden on small business can be reduced by up to 50%.

That task force was assembled, and it met. We are still waiting for any substantial visible evidence of any reduction in the taxation red tape burden on small business. In fact, through the GST—the orphaned child that the government has disowned ever since—a major new paperwork burden was imposed on small business. We see in the taxation law amendment bills before us today yet another amendment to the GST. This is the GST that was the centrepiece of the `streamlined new tax system for the new century', as it was described by the Treasurer.

In those early days after the introduction of the GST, I vividly recall—from memory, it was around January 2001—the Treasurer being asked: `Have you got it right now?' While we were debating the GST, more and more amendments were being brought in, some of them being brought in during the debate with no genuine opportunity for the parliament to consider those amendments. I vividly recall the Treasurer saying, `Now we've got it right; there will be no more amendments to the GST.' In fact, the amendments flowed and flowed—and they continue to flow today in the form of the bills that are here before us.

But, to continue the Prime Minister's set of commitments in relation to income tax legislation: on 24 March 1997—a bit more than a year after his first undertaking to seek to cut the regulatory and paperwork burden on small businesses by up to 50 per cent—the Prime Minister said:

The volume of tax legislation has become a tidal wave which threatens to overwhelm small business.

So a `tidal wave'—as described on 24 March 1997. He also said on 24 March 1997:

During the election campaign we committed ourselves to the goal of reducing the burden of paperwork and red tape on small business by 50 per cent in our first term. I am confident that our response to the Bell report, along with other initiatives that we have already taken, will make a substantial contribution to that objective by the end of our first term.

Small business may have taken some heart from that. They might have thought, `At last we're going to get a bit of relief; the income tax system is going to be simplified for us,' but instead of that they got whacked with a massive $30 billion new tax on small business, which has become a compliance nightmare—as revealed by a recent Australian National Audit Office report on the GST which showed that neither the Australian Taxation Office nor the small business community is satisfied because of the complexity of the GST, which is supposed to be the centrepiece of a `streamlined new tax system for a new century'.

I will now move to specific commitments in relation to the Income Tax Act, to which this legislation provides an amendment. On 14 August 1998, Alan Jones asked the Prime Minister:

Will the number of pages in the Tax Act be reduced by the introduction of a GST?

The Prime Minister answered:

Yes it will because some of the anti avoidance measures which take up a lot of pages are going to disappear.

That was the Prime Minister's undertaking: that the Income Tax Act, rather than being augmented with voluminous amendments, would in fact be reduced and simplified. He was asked whether the number of pages would be reduced and he said that, yes, it would. More than a year later, the Treasurer appeared on the Alan Jones program. Alan Jones asked the Treasurer:

[The] Tax Act ... it's unreadable and unintelligible, there's a massive GST program that's going to overtake us ...

And the Treasurer said:

Well I think that's right. And that's why we've got to get the number of pages of the Tax Act down. That's what we're working on right at this moment.

On 22 September 1999, they were working on getting down the number of pages of the tax act. That is more than four years ago, and yet the Chairman of the Productivity Commission, Mr Gary Banks, gave a speech on 2 December last year in which he said:

The Income Tax Assessment Act—often taken as a regulatory `barometer'—has grown particularly rapidly since its inception. At nearly 7,000 pages, the ITAA (the 1936 and 1997 statutes together) is now nearly 60 times longer than the paltry 120 pages that did the job when it was first introduced in 1936.

He went on to say, quite cheekily:

To take a fanciful turn, were this rate of growth to continue unabated, I am informed that by the end of this century the paper version of the Tax Act would amount to 830 billion pages; it would take over 3 million years of continuous reading to assimilate and weigh the equivalent of around 20 aircraft carriers!

It is the fervent hope of Labor members of this parliament that we are not confronted with an Income Tax Act that is equivalent in weight to around 20 aircraft carriers and which constitutes 830 billion pages.

It is not quite 830 billion pages yet, but it is growing by the day. I have not had the opportunity to count the number of pages here, but they are very substantial. I will not weigh them, in deference to you, Mr Deputy Speaker, and to considerations of occupational health and safety in this parliament, but I will point out that the Income Tax Act grows day by day. And today is a big day! For those who are in favour of growth of the Income Tax Act, today is a celebration, because this is a particularly large addition that we are debating through the Tax Laws Amendment (2004 Measures No. 2) Bill 2004 and the Tax Laws Amendment (2004 Measures No. 3) Bill 2004.

On 15 January there was an interview that related to this very matter. On Life Matters, an ABC program, Julie McCrossin, who was hosting the program, welcomed Michael Inglis, a Sydney based tax barrister—who I think probably does all right, with all due respect to Mr Inglis, out of the complexity of the tax act. Barristers, accountants, solicitors and lawyers—an entire profession—gain a lot of their livelihood out of the complexity of the tax act. Mr Inglis said:

But I can't resist. When I spoke to you last time, April of last year, Income Tax Act, 8,500 pages. Do you know what it is currently?

Julie McCrossin said:

I want you to tell me, because I was disappointed when you arrived today in the studio without the Tax Act, because last time you had a little wheelbarrow to bring it in.

Michael Inglis obliged. He said:

We did a great service last year, we really improved things—

I think he was being a bit facetious—

Currently, in fact it's a few months old, 10,500 pages for your income tax legislation. Add in GST, FBT, super, 13,500 pages, 9.5 million words.

Julie McCrossin finished by saying:

Well, that's worked for you, you're a tax barrister.

So Julie McCrossin was onto the caper: that this is good for barristers and good for accountants—but it is not good for small business. The proliferation and the complexity of the Income Tax Act are not good for small business; yet this government says that it is the champion of small business.

Labor has developed a proposal that, if commonsense had prevailed, could well have formed one of the provisions in this legislation today—there are amendments in relation to the GST in this legislation. A very good amendment would have been to implement Labor's private member's bill on the so-called ratio method. Labor has developed an option for small business that it could choose a ratio method. Upon application to the tax office it would get a single ratio based on its historical GST performance and experience, it would multiply that by its GST sales for the relevant period and, Bob's your uncle, the small business works out its GST obligation with no reconciliation. That would have constituted a genuine streamlining of the tax system in this country.

But when it comes to genuine streamlining the government is absent. Instead of streamlining the new tax system, the government is using taxation legislation such as Tax Laws Amendment (2004 Measures No. 2) Bill 2004 and Tax Laws Amendment (2004 Measures No. 3) Bill 2004 to make it evermore complex. I point out that even the explanatory memorandum—which is supposed to explain some aspects of the government's so-called streamlined new tax system for a new century—runs to 234 pages. There is the commitment from the government to reduce the size of the Income Tax Act. The so-called revolutionary changes of 2000 that introduced the GST were going to produce a streamlined new tax system for a new century. It was going to reduce the number of pages in the Income Tax Act and reduce complexity, yet it takes 234 pages just to explain the content of the two taxation law amendment bills that are before the parliament here today.

When the Australian people analyse this government's record and promises, they will not look at what the government says it will do or at what the government promises to do; they will look at what the government actually does. When it comes to the income tax burden on the Australian people and the tax legislation complexity, this government gets an absolute fail. The income tax burden on the Australian people has risen. It is now the highest taxing government in Australia's history, as revealed and confirmed by Budget Paper No. 1, which shows that over the forward estimates period personal income tax revenue will increase by 25 per cent or in the order of $24 billion. That is a lot of growth. Some of that is income growth but a lot of it is bracket creep.

While the Australian people are being slugged with ever higher income taxation through bracket creep by this government, Australian businesses at the same time are bearing an increasingly heavy burden through the ever increasing complexity of the Income Tax Act and the GST—which is amended yet again here today. The GST was supposed to be a simple tax. It has proved to be anything but that. In the first year following its introduction there were in the order of 85,000 private binding rulings, made simply to clarify the operation of the GST. Senator Ludwig has a question on notice in relation to the number of private binding rulings that have applied since then in respect of the Income Tax Act and the GST. That is now 60 days old. We await the answer to that question from the Treasurer or the revenue minister. I am quite sure that the answer will show that, far from being a streamlined new tax system for a new century, the Treasurer's Income Tax Act is a fiasco. It is a massive burden on the small business community of this country.