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Tuesday, 20 April 1999
Page: 3844


Senator BOLKUS (12:22 PM) —I start by saying that what we are discussing here is not a new tax, as the legislation would have us believe, but an old tax drawn from an old idea. We are talking about an inequitable tax. We are talking about a tax that has not succeeded in delivering the promises that it was supposed to deliver wherever it has been applied throughout the world. We have a Prime Minister who knows only how to go backwards when it comes to picking up policies. Whatever the policy area, whatever the agenda, this is a Prime Minister who looks to the 1950s and the 1960s. He looks with glowing eyes to the achievements of Thatcher and Reagan. He does not see the downside of those leaders; he sees the ideological fantasy that drove them to introduce taxes such as this. This is a Prime Minister who knows no better.

We are also talking here of a tax which is based on a fiction. The promise was that no-one would be worse off, that all would be winners. But this is a fiction; it is a lie. The Prime Minister knows this is a fiction, as do all but his most gullible of government members. They know it is a fiction because they know this is a tax which is inequitable by its very nature. It is a tax from which there will be millions of losers. Not all will be winners.

The package is no more than a pea and thimble trick. Many have been deceived but more will be losers. Only yesterday, for instance, we had ministers talk in here of extra billions of dollars for the states. But what we find hidden in that is the application and pursuance of another of Howard's agendas—to take Australia as a nation back to the Australia that used to be there before Whitlam in the 1950s and the 1960s. With extra money to the states will go extra responsibilities. Extra responsibilities for the states will mean fewer responsibilities at a national level. Fewer national responsibilities will mean a fragmentation of services. Regions and states will be treated differently. We are winding back the social infrastructure of this nation by adopting a system such as this, a system which will lead to a fragmentation of national responsibilities.

Let us look back to the 1950s and 1960s when national governments did not take such a leading role in social policies. Whether it was schools or hospitals, it is clear that whatever area of social infrastructure you look at was debilitated and fragmented. This is the agenda of John Howard. This is the agenda of a man who was born politically in those days, who glorifies those days but has not left them. He wants to see power back to the states. He does not want to see a national commitment, a national outlook.

As I said, what we are voting for here is not just dollars and cents and a new tax system but a new national framework for the delivery of social services and infrastructure. I believe, with the way the numbers are stacking up here, it is going to be the Democrats and Senator Harradine falling over themselves to do a deal. If this legislation is passed, we will rue the day on a range of different levels. I say to ACOSS, who basically let this tiger out of the cage a few months ago, that they may be seeing a short-term gain but, when an enormous range of national commitments are devolved to states and when they come back bleating for commitments from Labor, we will look to them to fix up the mess that they and John Howard have delivered to Australia.

This debate comes at the end of a long and exhaustive analysis, not just by senators but also by the public—a public which has had the first real opportunity to analyse the detailed implications of this tax package. It must be said at the end of the debate at the committee level that this is a package that has failed the test. It has failed the honesty test and it has failed the equity test. There are many losers, and losers are being identified increasingly as the days go by. It has been born out of an outdated ideology. It will have a negative impact on the quality of life of Australians, not just the financial situation of Australian families.

I say to senators who are thinking about their position on this tax—and obviously it is the minority parties, all but the Greens, we are talking about—that if you had any concerns about this tax package before the process started you have got to have more concerns now. If you had any doubts about this tax package before the committee process started, you should not have doubts now; you should be rejecting it. If anything has been shown over the last three or four months, it is that more and more, on so many different levels, problems are being found with this tax package—problems of inequity and problems of negative impact on the financial situation and on the quality of life of Australians.

What I would like to do today is touch on the two areas of my direct responsibility in the Senate—that is, the environment and representing the shadow minister for Aboriginal affairs. At the end of the committee process of the Senate environment committee, it was clear that the tax package will have a negative impact on the environment and on the quality of life of millions of urban Australians. It will result in the loss of jobs in emerging alternative energy industries. The evidence was that the government's tax package will have a negative impact on a range of areas, including the environment, especially in urban areas, public transport services, the arts—including books and literature—non-profit organisations, information technology and communications. And the evidence coming before other committees was that indigenous communities will be most hard hit by the inequitable impact of this tax.

Although the government claims that this is a package for jobs, the government's taxation reform proposals will cause huge job losses in emerging industries. The government's so-called compensation package will not, in the areas that the committee that I was on looked at, sufficiently compensate for the damage inflicted by the GST and other taxation reform proposals.

An amazing aspect of the whole process was that we identified that in areas such as indigenous communities and the environment the government did not consult with relevant stakeholders about the impact of their tax package. They even failed to substantially consider the impact of the tax system on many industries. This was nothing short of an arrogant disregard of people by government and also an arrogant disregard of other commitments that they have made in a whole range of other policy areas. This is a government on an ideological crusade. At the end of the day, I think Australians will be the poorer for it.

According to the evidence before the Senate environment committee, the government's taxation reform proposals will lead to disastrous, long-term damage on the environment. This will occur mainly through the removal of the diesel fuel rebate and through an increase of diesel fuel pollutants and greenhouse gases. The effect of this package will be to reduce economic incentives to use alternative, more environmentally friendly fuels and technologies. It is an impact that will make it even harder for the government to meet its own watered down Kyoto targets for greenhouse emissions.

Diesel fuel consumption, on the evidence before us, will increase as a result of the tax package—despite attempts by the government to suggest otherwise—and an increase in such fuel consumption will lead to increased environmental degradation. The overwhelming force—if not the universal force—of the evidence to the Senate Environment, Communications, Information Technology and the Arts References Committee was that a cut in diesel fuel excise would result in clear economic incentives to use diesel fuel for transport; a switch from petrol vehicles to diesel fuel vehicles; a significant modal switch from more fuel efficient rail transport to less fuel efficient and higher polluting road transport; and a reduction of the economic incentive to switch from diesel fuel technologies to more environmentally friendly gaseous fuels and technologies such as solar.

Of immediate concern to me, as a senator from South Australia, is the impact that the fuel changes would have on the already fragile economics of the Alice Springs-Darwin and the Melbourne-Darwin rail proposals. My concern is not so much with the latter as with the former. The economics of that proposal are already fragile, and the evidence from experts in the sector, from Australian National to other public transport user consultants, was that the shift in passenger use from train to diesel fuel vehicles would basically mean that once again we would have to go back to the drawing board in terms of the financing of the Alice Springs-Darwin railway line.

In terms of that shift, even the Ford Motor Company and the international engine manufacturer, Caterpillar, were reported in the Australian on 15 April as accusing the Howard government of `being so uninterested in vehicle pollution that it is legislating to destroy the emerging natural gas industry'. One of Ford's most senior international directors, Mr John R. Wallis, said in the Australian on 15 April:

It appeared that the Australian Government was not interested and saw no pressing need to cut greenhouse gas emissions from motor vehicles.

It may be that Australia is not under pressure to cut carbon dioxide emissions as the Federal Government won a funny target at last year's Kyoto conference which allowed an eight per cent increase in CO2 by 2012.

That comes from an international business leader, and that advice and that statement is in accord with, as I say, the overwhelming body of evidence before the Senate inquiry committee.

We have to be concerned about such impacts, because the major impact of the GST package and the fuel changes will be in urban Australia. We do have, and we expect to have, living standards which currently are amongst the best in the world in some parts of Australia, but they are not so good in other parts. The government's commitment should be to ameliorate, not damage, the environment of urban Australia. But this package will ensure that Australia's urban areas will be highly disadvantaged by the environmental impact of the taxation reforms, particularly those leading to an increase in diesel fuel usage.

Such is the concern in the community that, last week, the Council of Capital City Lord Mayors condemned the GST diesel rebate changes. The council met on 16 April in Sydney and, in a statement they put out, the lord mayors of all capital cities in Australia described the diesel rebate as `strategically unsound' and a `flawed policy'. They are showing real concern for their cities. It is a pity that this government has not even considered the impact of its changes on the major cities of Australia.

Higher greenhouse gas emissions and air pollutants from increased diesel fuel consumption will lead to an increase in highly dangerous diesel fuel particulates released into urban environments. The inhalation of such particulates carries huge risks for Australian families. It was the President of the AMA, Dr David Brand, who said:

Medical evidence is mounting on the dangers of fine particles in diesel exhausts. I am particularly concerned by the evidence that these fine particles may lead to the premature deaths of 1,000 Australians every year. My medical colleagues have linked these particles to increased risk of lung cancer and a variety of respiratory disorders. The government should take heed of these medical indicators and take steps to reduce, not increase the use of diesel in our cities.

That is the point. Our responsibility should be to reduce the impact of diesel in our cities and not, as is emerging from this policy, to increase the use of diesel.

The government also claims to be concerned about jobs, and there is a commitment that there will be more jobs and economic activity as a consequence of the GST package. But what we have found across many sectors, in the considerations over the past few months, is that the impact of the GST, particularly in the field of new environmental technologies, new emerging industries and new export industries, will be negative in terms of the growth of those industries and job opportunities as well.

The Australian renewable energy sector, for instance, leads the world in the development of new technologies that will not only assist Australia in meeting our international environmental obligations but also assist others. The renewable energy sector would be disadvantaged by the proposed tax changes, including a GST, with prices rising by six per cent to nine per cent, as compared with 4.6 per cent for coal-fired electricity. We are talking here about solar hot water systems. Pacific Solar Pty Ltd, for instance, sells grid-connected solar photovoltaic systems that generate clean energy. They will be the industries with export potential which would be negatively affected.

Alan Pears, the policy coordinator for the Sustainable Energy Industry Association, highlighted their problems when he said that the renewable energy sector competes with very large, very well-resourced energy suppliers. He said that the `incremental impact' would be greater on his sector. He stated:

At the same time, a number of our important products are at present exempt from wholesale sales tax and, essentially, lose an advantage when that exemption is neutralised.

Industry leader after industry leader is concerned about the impact of a GST package, particularly in these new, emerging, export oriented industries.

Another area which I believe should be of major concern to the Senate is the impact on particular parts of our community. Particularly in this instance I would like to identify indigenous Australians. Indigenous communities are characterised by low levels of income; by heavy dependence on social security payments and CDEP; and, being remote, by high transport costs. They also have expenditure patterns weighted heavily towards food, clothing and footwear—items which are often zero rated under the wholesale sales tax system.

The impact of this package on those communities will be quite debilitating, quite negative, and in many ways would redress some of the achievements and gains that governments have made over the last 15 years or so. When one looks at the submission of ATSIC to the broader Senate inquiry, a number of points stand out. Indigenous people in rural and remote communities have low capital incomes. They have household incomes which are in the lowest quintile for the nation and amongst the lowest in the Australian community.

ATSIC could not rely on the household expenditure survey for accurate evidence but they did embark upon a more direct survey of expenditure patterns of indigenous families. They commissioned a survey and ensured there were samples taken with respect to urban, rural and remote indigenous households. What came out of that survey was also presented to the Senate committee. On page 8601 of evidence of that committee, we find a reference to the cost of food:

A striking feature of the pattern of consumption in rural and remote Indigenous communities is the high share of expenditure on food in household budgets. This share is greater than that associated with the income of lowest quintile non-Indigenous households. Recent studies show that for non-Indigenous households, about 24 of household budgets are spent on food . . . Anecdotal evidence presented in recent studies on this subject suggest that in some cases expenditure on food in rural and remote Indigenous communities can go as high as 50 or even 60 per cent of household budgets.

In fact it ranges from about 40 to about 60 per cent. They will be hit hardest. The poorest will be hit hardest. The conclusion of that report was that indigenous communities spend more on food and they will be hit hardest by this GST.

The report was also concerned about the impact of the tax package on communities' cost of living. The report says on page 8603:

Adding up the contributions to the cost of living increases to rural and remote Indigenous communities from each of the elements of Indigenous household expenditure, results in an increase in the cost of living of 3.7 per cent—almost double the increase in the cost of living the Government has estimated to flow from the tax package for the non-Indigenous community.

That of course is based on the 1.9 per cent figure for non-indigenous communities. You are talking about double the impact on indigenous communities, indigenous families. You are talking about families who, because of the nature of their existence—their remoteness from cities and so on—are dependent quite often on monopoly situations.

There will be absolutely no way that the government will be able to control, with any degree of application of its principles, price increases in rural Australia, particularly with respect to indigenous Australians. They will be hit hardest and, as that report demonstrated, the cost of living increase for rural and remote indigenous communities associated with the tax package will be about twice what it is for the rest of Australia with respect to food. That is twice in terms of the theoretical impact and the fact that there is no capacity to actually apply any price surveillance or price control in those areas because of their monopolistic nature and the remoteness of those communities. We will be hitting those communities hardest. As that report quite clearly said, there will be a significant winding back of any improvements in the lives, welfare and security of indigenous Australians because of the impact of this tax package on them.

So we have a package which has been pursued with blind adherence by the government, a package which is inequitable in so many dimensions, a package which negatively affects both the financial status and the quality of life of so many Australians, and a package which has the inherent danger of shifting so much social responsibility from the Commonwealth to states and at the same time ensures that national responsibility, national commitments are devolved in a fragmented manner.

As I said before, this is not just a matter of shuffling dollars and cents from state to Commonwealth, it is not just a matter of shuffling dollars and cents from the poorest in our community to those on higher incomes—and already we have had mention of members of parliament benefiting quite disproportionately from this package compared to other parts of the community—we are talking here of a fundamentally inequitable package which should be refused by the Senate (Time expired).