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Thursday, 25 March 1999
Page: 3299


Senator MARK BISHOP (3:30 PM) —To pick up on one of the points raised by Senator Gibson, we know that the economy is growing strongly—somewhere in the order of three to four per cent in recent years. Logically flowing from that, the take on wholesale sales tax has been increasing. It is not a declining or dead tax; it is working effectively as there is growth in the economy. Indeed, the latest figures show that as at December 1998 the increase in revenue from the wholesale sales tax was something in the order of 9.1 per cent.

Having addressed that point, what do we know about the black economy in Australia? We know it is variously estimated at being around $15 billion, $18 billion, or indeed up to $20 billion. We know the tax take of a GST on a revenue flow of figures of that type would be something around $1.5 to $2 billion. We know that because various officials from the Australian Taxation Office have advised the Senate committee of that in recent weeks.

We also know that any government take from the GST on the black economy is at best speculative. The government has suggested somewhere between $1½ billion and $2 billion, but that is at best problematic. It may be higher, but in all probability it may be significantly lower. What do we know about current changes that are working their way through the Australian economy? We know that there is an orgy of privatisation going on—outsourcing and deregulation. We know that there is a shift in the employment base of this nation from direct employment to contractors and self-employed persons. We know that a whole lot of industry sectors are moving, or have moved, to contract employment and in particular, self-employment. Examples of those are the home building industry, construction and subconstruction, personal service industries, taxi driving, chauffeur hire, limousine driving and a range of professional employment practices—lawyers, accountants, consultants and architects, to name a few.

We know that in all of those industries the tax at the moment on labour is currently optional and increasingly regarded as more and more optional by a range of persons working within those industries. Indeed, Dr Silberberg, from the Housing Industry Association, told the Senate committee:

We attribute the incidence of the black economy in the building area to the so-called owner-builder sector, where there are less than scrupulous players who seek to circumvent particularly the requirements of state legislation, such as builder registration and compulsory home warranty, and who flirt with householders for householders to take out a building permit. That is not to say that there is not a segment of the population which genuinely is owner building.

He went on to say:

It is going to be exceptionally difficult for anyone to avoid a GST on building materials. They are readily visible . . . Our contention is that there is a significant incentive for people to operate outside of the GST by having no GST on their own labour or labour services.

Another industry talks about incentives to avoid the GST. I refer here to the Australian Taxi Industry Association. During questioning from Senator Bartlett, Mr Gunning from that organisation talked about the nature of the taxi industry—how it is organised, how the remittance process has been put in place, how there are 70,000 people employed in driving taxis around Australia. He addressed the necessity to license each individual cab driver, not just the owner. He said:

We, obviously, as a national association, have worried about our standing in the community, essentially, partly because of the experience that you referred to earlier with tax compliance. We know that at least late last year some problems started to emerge in New Zealand in a way that was not expected by the authorities. To summarise it, some taxidrivers managed to position themselves so that they could opt out. So we have potentially a situation in New Zealand at the moment where customers are paying GST but definitionally that GST is not being past on to the tax office. We think that would be a fairly debilitating thing to happen in our industry, not the sort of image we would like to project and not the sort of image that really encourages the kind of professionalism we are looking for.

There you have the Taxi Industry Association—employing something in the order of 70,000 drivers around Australia—saying that they have been to New Zealand and their observations are that even if the GST is charged in that country, the taxidrivers are not remitting that on to the New Zealand government. So the submissions and the evidence specifically addressed the black economy. (Time expired)