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Tuesday, 26 May 1987
Page: 3338

Mr BLUNT(6.05) —We are tonight debating the Sales Tax Laws Amendment Bill 1987 which effectively increases the rate of tax paid by Australians-Australian businesses and Australian families.

Mr Porter —No wonder the Government cannot find speakers on it.

Mr BLUNT —As the honourable member for Barker has rightly pointed out, there are no more Government speakers. A couple of Government members are having a chat, but the Government benches are empty. The place is devoid of Government members. It cannot even supply a matching of speakers for the remainder of the debate. That is not surprising. I do not think if I were a member of the Government that I would be too keen to defend legislation which will have the impact of instantaneously, almost, increasing Telecom Australia charges and the cost of a postage stamp, and reducing the ability of Australians travelling overseas to bring in duty free goods. They are really fairly petty taxes. It is a technique that has been perfected by the Australian Labor Party throughout this country-that is, to introduce tax measures which are disguised in the way in which they impact on the consumer and on the business community.

This is a continuation of a totally unsatisfactory tax system. If we cast our minds back to the bold and, might I say, hairy-chested statements of the Treasurer (Mr Keating) before the so-called Tax Summit a couple of years ago, he talked about option C, the need to rationalise the Australian tax system, to have consistency and a comprehensive policy. Simon Crean and Bill Kelty nobbled him. He did not get option C. He did not get anything that could be described as a coherent tax policy. He got a bit of option A, a bit of option B and not much of option C. For political reasons he had to do something about the oppressive and incentive destroying rates of marginal income tax in this country. There was a need somehow to prop up the revenue, because this Government is profligate in its expenditure. Despite the mini-Budget and despite all the rhetoric, it is not capable of reducing government expenditure.

We have had what the Treasurer euphemistically describes as a progressive broadening of the wholesale sales tax base. That really means that business and consumers will pay more for things, that taxes will be indirect, and that they will be disguised. This Government several years ago adopted a leaf out of the book of the then Premier of New South Wales, Neville Wran, who decided that the best way to raise revenue for his Government was to do it in a way that the average voter did not see. He decided that one of two things could be done: One could index rates of government charges and taxes so that every time the consumer price index went up, so did the State Government's revenue. Treasurer Keating, who comes from New South Wales and is a keen student of political technique, if not sound economic practice, decided that if it was good enough for his colleague and friend in the New South Wales Right, as part of the ALP machine in that State, it was good enough for him. We had the indexation of a couple of Commonwealth excises.

The first excise that was indexed was the excise on fuel, followed very closely by the excise on beer. The excise on beer hits the average Labor voter. I am told that statistically more Labor voters drink beer than do people who vote for parties on this side. That may not be true of National Party voters, but it could possibly be true of Liberal Party voters. The impact of the automatic indexation of the excise on fuel was absolutely horrific. It was the precursor of what we are debating tonight.

The automatic indexation of the excise on fuel fed into the system an increase in the CPI. Fuel is a very important cost component of the Australian economy. It affects people throughout the community, particularly people who live in country areas, because freight is a very large component of the cost of goods that they buy, and fuel is a very significant component of the cost of freight. We now have an ever increasing spiral in the CPI, because the Government has taken one CPI indexed figure and has said: `We will increase the cost of fuel by that amount'. So the cost of fuel goes up. It is an extra cost to the productive process. It has to be passed on because there is a limit to what business can absorb. The final consequence is that the consumer pays more for it.

Of course, when we measure the CPI we measure the increase of the cost of goods that is caused by the indexing of the excise. That is contained in this legislation. There has been a decision to impose sales tax on government instrumentalities. The most notable ones are Telecom Australia and Australia Post. The cost of making telephone calls is significant, not only for consumers-end consumers, people who buy telephone services as a retail product-but also for business, particularly businesses which need to make STD calls. The proportionate increase in Telecom charges for businesses which make STD calls will be perhaps greater than for the average family. It will have two impacts. One impact is that the cost of doing business in Australia on the telephone and on other Telecom provided services will go up. Business has already felt the `tax business and hide it from the consumer' approach of this Government. We have seen it with the fringe benefits tax, we have seen it with a number of other taxes, and now we are seeing it with this wholesale sales tax. So the cost of doing business will go up; the cost of telephoning charges will go up. The cost cannot be absorbed because business profitability is under pressure; so it will go to the consumers in terms of increased prices for goods and services. The consumers will pay it there and they will also pay it when they make their own private calls. The cost will go up considerably.

People who are on limited fixed incomes will also be affected disproportionately. The Government has made great play about how the pensioners of Australia have made enough sacrifices and how they can confidently expect that their pensions will go up in line with consumer price index increases. That CPI index for pensions is in arrears and pensioners will, from the very day that this Telecom increase comes into effect, be paying a higher rate for their telephone charges. As a proportion of their expenditure, the cost of a telephone for pensioners and low income people in Australia is significantly higher than it is for people on average weekly earnings or higher. It means that for at least three and possibly six months they will be paying a higher rate of tax than they normally would have been and their standard of living will be reduced significantly.

There is a fundamental problem with taxing on the basis that this legislation proposes. Australia is an exporting nation. We have a significant balance of trade and balance of payments problem. The Government talks about the J-curve and the need to restore competitiveness and our capacity to export. But it persists in introducing taxes on business which distort the allocation of resources in this country and increase the costs of production. Until we recognise that there is a need to have a tax system in this country that does not distort the allocation of resources and does not increase the cost of the goods produced by Australian businesses that either have to be exported directly or are part of an input to another company's export process, we will never achieve competitiveness. We have to have a tax system that is truly neutral in terms of resource allocation. Until we get to that system we will not be able to compete effectively on an international basis. There is a need for a review and a rationalisation of, and a consistency within, our tax system. There is, of course, a need to move away from the reliance on direct taxes, but we have to move away on a rational basis.

I am told that there are only six people who understand what the sales tax law in Australia is all about and what it means. That does not surprise me because I am told that there are some 25 pieces of legislation which impose sales tax in Australia. Anyone who has seen the Income Tax Assessment Act knows that that in itself is complex enough. The complexity that must be involved in 25 individual pieces of legislation imposing sales tax in Australia is beyond my comprehension. I certainly do not profess to understand how it works. But I do know that it is riddled with inconsistencies and inequities. My colleague the honourable member for Parkes (Mr Cobb) who spoke before me highlighted--

Mr McGauran —An excellent member.

Mr BLUNT —He is an excellent member who is doing a first class job. Although his time was limited, unfortunately, he highlighted some of the inconsistencies. The wholesale sales tax applies tax at 10 per cent, 20 per cent and 30 per cent. There are arbitrary applications of that tax right throughout the system. Different snack foods are taxed at different rates. Different brands of similar biscuits are taxed at different rates. Toys incorporating-this is a classic-musical movements are taxed at a higher rate than are toys without musical movements. What I find most interesting is that individual maps attract tax but books of maps-maps bound together-do not attract tax. Towels made of cloth are taxed at one rate and if they are made of paper they are taxed at a lower rate. Biros and pens are taxed at a higher rate than are pencils and highlighters. Ornaments are taxed at a higher rate than are souvenirs. The list goes on and on. Until we address the inconsistencies of the system and recognise its impact on the business economy generally, we will never achieve any sort of rationality in our tax system.

When talking about the cost of Government decisions on business it is appropriate to consider the approach that this Government has adopted in the mini-Budget. It has said that there is a need for expenditure restraint. I agree wholeheartedly. It is a pity that we did not see any from the Government. What we saw was a very careful manipulation of figures and a very clever passing of the buck. There was a Premiers Conference in this chamber yesterday at which the Prime Minister (Mr Hawke) and the Treasurer called upon the State Premiers to exercise restraint. They said something along the lines of: `We will cut the amount of funds to which you will have access and we want you to tighten your belts two or three notches. The one thing we don't want you to do is to increase taxes or charges because that would not be fair and it would have an impact on standards of living and on the consumer price index. We want you to take a leaf out of our book and show restraint'. We see an example of the Government's restraint in this legislation. It has passed the buck on to Telecom which will now pass the buck on to consumers and businesses.

I will show the House how much influence the Prime Minister and the Treasurer have on the Premiers. Today in the New South Wales Parliament the Labor Premier of New South Wales, Mr Unsworth, talked about the decisions his Government will take as a result of the cuts imposed upon him and his fellow Premiers at the Premiers Conference. He said that transport fares will have to go up, that electricity charges will have to go up, that business tariffs will have to be reviewed at a different rate from domestic rates. That again is an example of the Labor Party's approach. I think it is very anti-business. It charges one rate of electricity tariff in New South Wales for domestic consumers and a higher rate for business users simply because the business users can then pass on that extra cost in extra retail prices. It will not be seen as a Government tax or charge. It will be seen as a business cost, a cost of buying a particular good or service and not what it really is, a differential rate of tax. We also see that with Telecom. Telecom charges one rate for private telephones and another rate for business telephones. If that is not a tax on business and on profit I do not know what is.

The Premier of New South Wales announced-and it is no surprise to any of us-that hospital charges will have to go up. I do not know what that will do to average Australians in detail, but I know what their reaction will be. They know that Medicare is a disaster. They know that they are paying 1 1/4 per cent of their incomes on Medicare. They know that in New South Wales one cannot get into a hospital so one has to have private health insurance to have any sort of security in terms of providing medical care or health care for one's family. The Premier of New South Wales knows that underpinning any decision he takes in terms of health charges will be an increase in hospital charges in New South Wales. That is the way this Government goes. It takes decisions. It tries to hide the impact of those decisions and slips them in under the rug. It tries to get business to pass on the cost of its decisions to consumers because it knows that in terms of the ballot box impact it is better to hide the tax underneath a price rather than expose it for what it really is, which is a tax imposed by Government.

The legislation which we are also considering tonight changes the entitlement of Australians to bring duty free goods back into the country when they have been overseas. As my colleague the honourable member for Mackellar (Mr Carlton) moved an amendment to this, I say, on behalf of the National Party, that we support that amendment. We want to make a few observations about it. The recommendation is contrary to an Industries Assistance Commission report. The IAC recommended that the concession should be fixed at $1,000. The Government has brought in legislation that fixes it at $A400. That is roughly $US280. That does not buy one very much overseas. It includes the tobacco and liquor concession. There is an exemption, of course, for clothing because officers of the Australian Customs Service have said that they will not be able to determine whether people bought the clothing in Australia or overseas. I add that that will apply to many things. I do not know how they will determine whether a watch was bought in Australia or overseas, particularly if the box that it came in is thrown away. It can apply to jewellery and quite a number of other goods. It will also provide an incentive for people to do a deal in Hong Kong, or wherever they buy their goods and services, to get a receipt that writes down the value of purchases.

Customs officers will be turned into tax assessors. They will have a book of assessed values, and if receipt values do not line up there will be the spectacle of travellers who get off overnight flights arguing about whether their receipts are valid and whether they have paid fair prices for the goods that they are bringing in. That will do one thing: It will increase the delays of getting into this country. We have inadequate airport terminals already. Anyone who has arrived at Sydney (Kingsford-Smith) Airport early in the morning when six or seven 747 aircraft arrive and who has to wait in the queue going back into the tunnel to get through customs and immigration knows exactly what sort of greeting we offer tourists coming into Australia. People die in that tunnel. People have actually died while waiting to get into Australia after getting off their plane. The stress of flying over the ocean overnight places some pressure on them. They get off the plane, walk down the tunnel, see the queue and some of them never put foot on Australian soil. The Minister for Housing and Construction (Mr West) smiles, but it happens to be true. I have actually resisted putting a question on notice about this because I do not want to highlight the fact. It is a fact that, because this Government has failed for many years-it has been in office now for four years-to do anything about access to Australia by upgrading terminals, by not allowing people who want to do that work to do it and by not addressing the question of curfews and more runways at Sydney Airport, we have a major problem building. This decision to restrict the amount of goods in dollar values that people can bring into the country will exacerbate the problem. It will also have another impact.

I mentioned earlier that Customs officers will be de facto tax collectors. I thought that one of their main jobs was to prevent the introduction of contraband into Australia-not only narcotics but also goods which threaten our quarantine laws. If Customs officers are busy checking the value of a watch being worn by a tourist or assessing the value of a compact disc player or cassette player, how much time will they spend looking for illegal products, dangerous goods and narcotics-the things which are corrupting our country? While making changes to inbound duty free shopping, why not do it properly? There is an Industries Assistance Commission report which makes a number of recommendations. Some time ago-and I agree with this change-the Government decided that people could buy certain goods duty free after leaving their aircraft but before going through Customs. Initially the goods were limited to alcohol, tobacco and perfume. It was decided that at a later date these would be expanded to the full range of duty free goods. While the Government is fiddling around with duty free concessions, why does it not make a wholehearted change? It would be far more significant to allow people to purchase on leaving an aircraft in Australia some of the hi-fi and hi-tech equipment, bringing jobs associated with the warehousing, selling and servicing of those goods in Australia rather than require people still to buy them overseas. It is logical, if the Government is to change duty free requirements, to be consistent. However, this Government does not do anything consistently-it does things on an ad hoc basis, with an eye to the revenue, and it makes changes because it feels that it can raise an extra $20m here or $5m there or that it can impose another tax which can be slipped into a price to be paid by the consumer.

The reality is that at the present time the average Australian family, as a result of this Government's economic policies and its tax policies, is $31 a week worse off than it was in March 1983. As a result of the mini-Budget and the legislation that we are considering tonight consumers will be even further behind. If we go out into the street or into a supermarket and ask the average person whom we meet-the average woman pushing a shopping trolley, the average person having a drink in a hotel-whether that person is better off under the Hawke-Keating Government than under the previous Government, we will hear a resounding answer: `No, we are worse off and we know we are worse off'. People know that petrol and cars cost more, that interest rates on mortgages are higher and that rents are up, and they know that they cannot afford to take a holiday or go overseas-with these changes it will probably not be worthwhile going overseas any more.

This Government has launched a wholesale attack on the living standards of Australian families. The first target was pensioners through the assets test, and then it moved to families. It is all done to finance the Government's expenditure policies which are designed to buy votes, to curry the favour of the interest groups, to give a sectional advantage and to try to convince some kinky, off-beat group that, if it votes Labor, it will receive a grant and will be able to continue to indulge its personal idiosyncrasies at the expense of the average taxpayer while the average Australian family and average Australian workers pay higher taxes-not just income taxes but taxes which are showing up more and more in the cost of the goods and services that they buy every day.

Sitting suspended from 6.25 to 8 p.m.