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Wednesday, 7 June 2000
Page: 14799

Senator SHERRY (12:29 PM) —In respect of Senator Calvert's contribution, it is well known in this chamber that there is a speakers list. It is agreed to by the whips on both sides. For this chamber to operate effectively, we all know that these informal mechanisms that are agreed to have to be followed. I find it appalling that, because the Government Whip in particular, Senator Calvert, wants to make a point, he should jump the speakers list. I do not object to him making a point; it is where he does it and how he does it that is important. This chamber will not operate effectively unless these informal mechanisms are followed. This is a matter that I am sure our leader and our whip will take up in the appropriate forums. But to come to the legislation before us, which deals with local government financial assistance and relates to amendments—

Government senators interjecting

Senator Vanstone —Mr Acting Deputy President McKiernan, I wish to raise a point of order. I am sorry you have not been here, because you have been in this chamber as long as I have and you will understand that a speakers list is put together in order to give everybody some idea of what is meant to be happening, but speakers go from one side to the other. If someone comes in and they are not on the list, they are entitled to get the call in order. The point is that Senator Sherry was wanting to speak and was not on the list. Now a revised list has come around because he has had himself popped on. Mr Acting Deputy President, I am just asking you to confirm that, if people come in who are not on the list, they can in fact get the call if there is no-one on their side on the list.

The ACTING DEPUTY PRESIDENT (Senator McKiernan)—I understand that the matter was resolved during the course of an earlier series of points of order. I lost the train of the debate from my office to the chamber, and that is why I allowed you to make a more lengthy contribution than I would have normally done. There is no point of order. I call Senator Sherry.

Senator SHERRY —This matter will be dealt with in another forum. It is an important issue.

Senator Vanstone —We're shaking in our boots.

Senator SHERRY —If you want to get through your legislation, Senator Vanstone, I suggest you pay some attention to it. The claim you just made, Senator Vanstone, was incorrect: I am on the speakers list. I was informed by a whip, and you well know how these informal arrangements operate, Minister. If you want to get through legislation—

The ACTING DEPUTY PRESIDENT —Order! Senator Sherry, you should address your remarks through the chair.

Senator SHERRY —in the time that has been allocated—through you, of course, Mr Acting Deputy President—you will not pull stunts like this again. I will return to bill that we are considering. The Local Government (Financial Assistance) Amendment Bill 2000 makes amendments to the Local Government (Financial Assistance) Act with respect to tax reform. Of course, tax reform is a euphemism for the implementation of the goods and services tax. The formula to be applied by the Treasurer each year to determine the increase in the level of local government financial assistance grants is the issue that we are considering. This formula is based on the annual increase in state financial assistance grants and special revenue assistance. Since 1994-95, the state grants—and hence the grants to local government—have generally increased annually in line with both population and consumer price index movements. Under the 1995 act, local governments should receive around $1.32 billion in financial assistance grants in the year 2000-01. I think it is worth while reminding the chamber that Commonwealth government grants to local government were an initiative of a Labor government—the Whitlam Labor government. Up until that time and since the initiative of the Whitlam government, this government and previous Liberal-National Party governments have generally ignored the financial interests of local government.

The bill we are considering has two main effects. Firstly, it breaks the link between local government financial assistance grants and state financial grants. The state financial grants will be abolished from 1 July, consistent with the intergovernmental agreement on the reform of Commonwealth-state financial relations. Secondly, the legislation provides for the continuation of the escalation factor for local government financial assistance.

Senator Vanstone —You're not reading your speech, are you?

Senator SHERRY —Do you want to take a point of order on that, Senator Vanstone, because you will have even more problems in the coming weeks. You dill!

Senator Vanstone —Bully, bully! I might have a heart attack out of fear!

The ACTING DEPUTY PRESIDENT —Senator Vanstone, order!

Senator SHERRY —I will come back to the comments I was making before I was interrupted by Senator Vanstone. There will be the continuation of the escalation factor for local government financial assistance on a real per capita basis for previous years. As with the existing provisions, the amendments provide the Treasurer with the discretion to increase or decrease the escalation factor in special circumstances. This bill also amends the act to implement clause 18 of that intergovernmental agreement to require states and the Northern Territory to withhold from any local government authority that does not pay voluntary or notional GST payments a sum representing the amount of unpaid voluntary or notional GST payments. In other words, it puts the onus on state governments. This is an interesting aspect that I will return to later.

This legislation is a legacy of the government's attempt to shift all responsibility for local government funding to state and territory governments. In the negotiations that have occurred on GST legislation in this chamber, it was in fact the Labor Party and my colleague from Tasmania, the shadow minister, Senator Mackay, who quite rightly led the debate on this particular issue. Of course, in the later stages of that debate, the Democrats finally accepted the points that our shadow minister and the Labor Party were making with respect to this issue. I would note that, like so many other issues on the GST that the Democrats missed, they had to be alerted by the Labor opposition on this matter. So the Commonwealth will still have a direct financial link to local government. I said earlier that the current Liberal-National government were attempting to shift all responsibility in this area to state governments, in the same way as they have attempted to portray the GST as a state tax when clearly the GST is not a state tax; it is a Commonwealth tax. The GST is legislated for under a Commonwealth head of power. If you go to Budget Paper No. 1 at 4.14 and look at note 4, `Indirect taxation', it lists GST revenue as Commonwealth revenue. No matter what pretence this government attempts to make about it being a state tax, it is clearly not. Interestingly, the GST revenue is listed for the year 2000-01 at $24,053 million, rising to $30,737 million in the year 2003-04. What a massive new tax the GST is with respect to the Australian community.

I will deal more directly with the so-called assistance that is being given to states. In the case of my own state of Tasmania, there will be a base allocation of $67,000 and a notional council allocation of $58,000—a total of $125,000. I will come back to that matter a little later. One of the central arguments by the government in the lead-up to the election and since is that local government will not be hurt by the GST. But this is not correct. The direct rate charges of local government will not be subject to a GST, but there is a long list of what are classified by this government as commercial services that will be subject to a GST. This is on the basis of the so-called competitive neutrality principle. The Treasurer, Mr Costello, has defended the application of the GST with respect to a wide range of local government services on the basis of competitive neutrality. I will come back to that issue a little later.

There is an enormous list of areas that local government are involved in where the GST will be applied. The list includes cremation fees, fire maps, sales of bins, sundry rubbish removal, library membership, library fax machine charges, sports grounds and reserve hire fees, catering fees, netball court hire, dog obedience classes, plant and machine hire fees, car parking charges, fire hazard inspection fees, sale of rainwater tanks, swimming pool admission fees, library photocopying charges, senior citizen centre hire fees, recreation centre fees, tennis court hire, basketball court hire, adult day centres and fees for removing rubbish. And that is not an exclusive list.

The competitive neutrality argument is that, where a council delivers a service such as those I read out—and there are others—because there is either in reality or potentially a commercial competitor, the GST should apply. This is not an easy principle to apply in practice, particularly in rural and regional Australia, because in many areas of rural and regional Australia the only organisation in a community that will provide many of these services is local government. The fact is that it is simply not commercially viable for a private sector organisation to provide these sorts of services, so why should residents—particularly in rural and regional Australia—be disadvantaged by the impractical application of the so-called competitive neutrality principle?

I will turn to a couple of examples of particular problems that have arisen on the north-west coast of Tasmania. These were highlighted in an excellent article by my local paper, the Advocate, which did a survey of various problems being encountered by councils on the north-west coast of Tasmania. I acknowledge that this survey was also prompted by our shadow minister and my colleague from Tasmania Senator Mackay. I will go through this survey by the Advocate briefly. I make the point that the people who were asked in local government were not councillors; they were not politically biased or motivated in any way. With respect to the Circular Head Council, the financial services manager, Mr Brett Russell, said that the council was unable to estimate how much compliance would be, but that costs were certain to outweigh the savings. The article goes on. The Latrobe general manager, Mr Grant Atkins, estimated that $40,000 had been spent in recent months. He did admit that this was only a guess, but he is in a good position to know. The accountant of the Waratah-Wynyard Council, Ms Lisa Dixon, said that GST factors were putting pressure on the council's resources. The general manager of the West Coast Council, Mr Paul West, said that he had not kept count of its total compliance costs, but he believed the figure would be very significant. I referred earlier to the allocation made to councils to cover these costs. With an allocation of approximately $2,000 per council, it is obviously woefully inadequate. I think the most revealing comment was from the Burnie general manager, Mr Paul Arnold, who said that the council would lose half a million dollars in productivity costs due to the implementation of the GST. Local government, in some areas, is going to have to wait until 1 July to know what the true costs of the implementation of the GST will be.

I will conclude with a few other remarks. I do attend Senate estimates, usually Finance and Public Administration, and Economics—

Senator Vanstone —Big deal!

Senator SHERRY —It is certainly not a big deal, Senator Vanstone, when you have Senator Kemp before you, let me assure you of that. Senator Kemp is well known for his approach to questions, both in question time and in estimates. Senator Kemp answers by being very evasive or irrelevant. But when you compare his performance, which is very poor, with that of Senator Ian Macdonald, Senator Ian Macdonald is the worst performer. At Senate estimates Senator Ian Macdonald does not even attempt to answer any questions. He tries to shut down the estimates by not addressing any issues at all, particularly on the GST, but when Senator Ian Macdonald comes into question time, he can answer questions posed by his side—dorothy dixers—particularly in relation to local government elections. He has done that on a number of occasions. He answered a dorothy dixer in respect of the Brisbane City Council elections. He was attempting to support the Liberal team that was running in those elections. In doing so, he thought he would increase the profile of the Liberal Party team and increase their vote. Of course, we all know the result. The Labor Party won with a crushing majority. One other aspect of those local council elections, of course, is that the Liberal Party attempted to run a fundraiser for the Liberal candidate. They had to cancel the fundraiser. Guess who was the guest speaker scheduled to attract the Liberal Party faithful to the luncheon? It was none other than Senator Ian Macdonald.

Debate interrupted.