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Monday, 24 May 1999
Page: 5145


Senator SCHACHT —My question without notice is directed to the Leader of the Government in the Senate, Senator Hill. Does the minister recall telling the Senate on 18 February 1999 that:

If we went down the Australian Democrats path of taking food out of the GST, it would be so much more complicated, and that would add a new burden of compliance cost to small business.

What estimates has the government received of the additional compliance cost to small business of exempting food from the GST? Does the minister stand by his claim of 18 February 1999 that exempting food `is not the way to go'?


Senator HILL (Environment and Heritage) —Surprise, surprise! Yes, in fact, it was this government's view that it would be better for food to be included. There is no surprise in that. We said it all along. And why did we say it? Because we were concerned about complications and compliance costs. That is true.

But why don't we focus for a moment on the benefits that can flow from a reform to the taxation system that takes taxes off economic growth and puts them on consumption instead—in other words, a reform of the taxation system that will encourage growth and enable us to build upon the growth that we have been able to achieve over the last three years. That is what this tax reform is all about. It is designed to build upon the achievements that we have produced to this date—in other words, bringing back expenditure and reducing interest rates. Low inflation and reform of the labour market have all contributed to the best unemployment figures since before Mr Keating's recession of 1990. But we have said all along that that is only a start, that we have to move forward, and the next great reform will be to reduce taxes on the economic expansion side of the economy.

Senator Cook interjecting


Senator HILL —I am surprised that Senator Cook cannot realise that. If we can do that and give particular benefit to our export sector, then we will have the opportunity to build upon the growth that we have achieved to date.

For Senator Schacht's benefit, we do not shy away from that. That is the purpose of this tax reform. We put to the parliament the formula that we believed was best able to achieve those goals, and we are now in a process of seeing if we can negotiate an outcome that can achieve the fundamental benefits that we want. And what are they? We want to reduce income taxes substantially to provide incentive for economic growth. We want to reduce compliance costs in terms of the range of indirect taxes that currently exist. We want to benefit the states over the long term so that they can meet their commitments in relation to health, education and—

Opposition senators interjecting


The PRESIDENT —Order! I remind senators on my left that persistent interjecting is out of order.


Senator HILL —We want to support the states in providing for their obligations in health, education, housing and so forth, and provide a funding pool to enable that to occur in the future rather than run the risk of that being undermined over time. We want to give particular benefits to the export industry—


Senator Cook —You don't. This is rubbish.


Senator HILL —in order that we can lock into what I hope will be a future growth picture within the region, Senator Cook, and provide an answer to not only the current account problems but also Australian jobs for the future. So I would have thought the benefits in this tax reform would have been obvious, even to the Labor Party. It has been obvious to the Labor Party at times in their past but, for reasons of political opportunism, of course, they do not wish to see it at the moment.

There is no doubt that if we do not go down this path we will be less competitive than the majority of economies in the world that have already adopted this area of tax reform. It is true that we want to do it in a way that is as simple as possible and in which the compliance costs are as low as possible. That is true.

Opposition senators interjecting—


The PRESIDENT —Order!


Senator HILL —So, on balance, we will not move away from an opportunity that enables us to fundamentally reform Australia's outdated, outmoded taxation system in a way which will give real benefits to all Australians.


The PRESIDENT —Order! I remind opposition senators that persistent interjecting is disorderly. Persistent and wilful interjection and disregard for the authority of the chair can have certain consequences.


Senator SCHACHT —Madam President, I ask a supplementary question. Now that the minister has conceded that his view of 18 February is in the past tense—that he has apparently agreed that he has changed his view from February of this year—what now is the government's estimate of the compliance costs to small business of exempting food from the GST?


Senator HILL (Environment and Heritage) —I repeat what I said: we want compliance costs to be as low as possible; therefore, we want the system to be as simple as possible. That remains our desired outcome in any negotiations that are taking place at the moment because we want the maximum benefits to flow to the Australian economy and therefore to all Australians, and particularly to those who are unemployed. That is what Labor cannot seem to understand. By ensuring continued economic growth, we have the best opportunity to provide jobs for Australians who are out of work. That is why we are committed to taxation reform, and that is why we are committed to reform that can be achieved at the lowest possible cost.