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Tuesday, 9 March 2004
Page: 21115


Senator SHERRY (4:52 PM) —A New Tax System (Commonwealth-State Financial Arrangements) Amendment Bill 2003 amends A New Tax System (Commonwealth-State Financial Arrangements) Act 1999 to do three things. Firstly, it allows the Commissioner of Taxation to account for all GST refunds before distributing GST to the states. Secondly, it changes the date for making financial determinations on the amount of GST payable to the states. Thirdly, it introduces a mechanism for making adjustments to GST payments to the states. Whilst the Labor Party will be supporting these amendments, I make the point that there will now have been—I have lost count, I have got to say—at least 1,600-odd amendments that we have dealt with in respect of the supposedly simplified new tax system, the GST.

Currently, the act does not allow the Commissioner of Taxation to take into account refunds made under the Tourist Refund Scheme and other GST refund schemes when determining the GST collected in a year and, therefore, the amount to be paid to the states. I think there is some irony in the fact that just prior to coming to this bill we were discussing another mess that had to be resolved in respect of the application of the GST to the Great Barrier Reef levy management charge—tax, in another word—and here we are again having to make more amendments to the so-called `simpler tax system', the GST.

The amendment that I refer to results in excessive GST being paid to the states. As most states are now moving off budget balancing assistance this will begin to have a negative impact on Commonwealth revenue and was apparently not the intention of the act. Allowing the Commissioner of Taxation to account for all GST refunds before distributing GST to the states will ensure that the amount of GST actually collected is used as the basis for distributions to the states. This amendment is designed to protect the Commonwealth's revenue, and Labor will support it.

Under the act, the commissioner must make a final determination of GST payable to the states on 10 June each year. However, ABS population statistics and ministerial determinations on hospital grants to the states are also made on 10 June each year and directly impact on the amount of GST which is payable to each of the states. This does not allow sufficient time for final determinations to be made. The bill seeks to defer the final determination of GST payable to the states for up to six days to allow the estimate to be made more accurately, and Labor will support it.

At present, the act has no mechanism to adjust payments to the states as they come off budget balancing assistance to fully account for any overestimate or underestimate of payments for GST collected in the previous financial year. When a state was on budget balancing assistance, overestimates or underestimates did not affect the Commonwealth or state bottom line because the total figure of payments to the states was predetermined. However, as states move off budget balancing assistance, overestimates or underestimates will impact on the bottom lines of both the Commonwealth and the states. By introducing this mechanism the bill will ensure that in these circumstances adjustments can be made.

I understand that Treasury has advised that, consistent with the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations 1999, all states and territories have agreed to the amendments. This government claims that the GST is, after all, a state tax. However, according to the Australian Bureau of Statistics and the Commonwealth Auditor-General and under the definition of the International Monetary Fund, it is a Commonwealth tax—and if it is not a Commonwealth tax why are we here making further amendments to Commonwealth legislation under Commonwealth heads of power in respect of the GST? But according to the almost Orwellian interpretation by the current Howard-Costello government, it is a state tax. Because the GST is allegedly a state tax, the Commonwealth parliament, and not the state parliaments, makes changes to GST legislation. Because the GST is allegedly a state tax, the Commonwealth collects it and then make determinations on how much should go to each state without any connection to how much tax was collected in each state. If it were a state tax and the states were collecting it, then the revenue they each collected in their state would obviously stay in that state.

In the other place a second reading amendment was moved to condemn the Liberal government, the Howard-Costello government—at least, the Howard-Costello government for the time being—for failing to take its own statistician's and its own Auditor's advice and treat the GST as a Commonwealth tax. I will not move that amendment in this chamber, but this bill, while receiving Labor's support, is yet another example of the absurdity of treating the GST as a state tax. We have had the Treasurer, Mr Costello—and I notice on occasions in the last few days in the other place he is attempting to cement his place in the sun to become the Prime Minister of Australia at some future date—repeating an incorrect assertion, as Labor has shown on many occasions, that tax collection under this Liberal government has gone down as a percentage of GDP. But what the Treasurer does not include is GST tax collection.


Senator McGauran —Are you going to increase taxes after the election?


Senator SHERRY —And if we include GST tax collection in Commonwealth revenue, on the basis of the sound advice that I have outlined, we come to a different conclusion from that of the Treasurer, Mr Costello—Prime Minister in waiting, apparently. Senator McGauran is nodding—I don't think The Nationals get a vote on that, do they, Senator McGauran?


Senator McGauran —Jack McEwen had a say once!


Senator SHERRY —Once—the proud and mighty old days of the National Party. I am glad you reminded me, Senator McGauran. He has referred to Black Jack McEwen, as he was known. He was known as Black Jack because he was not easy to tread on, like the current leadership of The Nationals. The poor old National Party, when you think back to 20 or 30 years ago—they have become the total doormats of the Liberal Party in government. They are fading away, losing seat after seat in the other place and senator after senator at each election, and sliding into irrelevance because of their total subservience to the Liberal Party of Australia as part of the so-called coalition.


Senator McGauran —Still got a single desk in wheat.


Senator SHERRY —Senator McGauran reminds us that we still have a single-desk selling organisation in wheat. That is about all you have got left, and we are not even sure you will have that once we start looking at the details of this so-called free trade agreement—but that is a debate for another time and for my colleague Senator Conroy to examine when we get to the committee examination of that agreement. That is all Senator McGauran can point to that is left of the proud legacy of the National Party.


Senator Crossin —The Nationals.


Senator SHERRY —You are right. You cannot really describe it as national; they are shrivelling everywhere. There is not much left of them in Western Australia at a federal level. There is certainly nothing left in Tasmania, although I do not think there was anything to be left. They are shrivelling fast. Senator McGauran, you slightly drew my attention away from the importance of the legislation before the Senate. You slightly distracted me, but you made it relevant by your interjection. The Labor Party will support these amendments on the basis of the arguments I have outlined before the Senate chamber.