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Wednesday, 9 October 1991
Page: 1533

Mr FERGUSON —-My question is directed to the Treasurer. Is it the Government's intention to continue with improvements to tax administration?

Mr KERIN —-That was a much better question, Mr Acting Speaker. One of the proudest claims of this Government is that we fixed up a tax system which when we came to office was in disrepair and disrepute. The honourable member for Blaxland was tireless in fixing up the legacy that we inherited. It was an institutional and administrative cesspit, and the payment of tax was an optional extra for the spivs and the vipers who were allowed to take decent Australians to the cleaners. That was the system we inherited.

Honourable members opposite allowed that because the honourable member for Bennelong and his economic adviser, the current Leader of the Opposition, did not really think it was important, or rejected change because of sterile and narrow ideological grounds, or could not wield sufficient clout to push the change through the Cabinet. In short, when the Leader of the Opposition was advising on economic policy, these were the years of indolence, ideology and incompetence.

We can contrast that shabby, tawdry legacy with the major reforms of this Government--capital gains tax, fringe benefits tax, the abolition of entertainment allowances, dividend imputation, the resource rent tax, substantiation requirements, foreign income taxation reform, removal of the foreign tax havens and cash transactions. The list goes on and on. We fixed up the mess honourable members opposite left us.

In addition, this Government has provided the Australian Taxation Office with the legislative and administrative resources necessary to run a modern taxation system. Simplification, self-assessment and electronic lodgment are the characteristics that will define the tax system in the future.

The whole approach to tax by the Australian Taxation Office has been transformed to focusing on individuals as customers. While the Hawke Government has worked and is still working to make the tax system fairer and more efficient, the Opposition is heading in the opposite direction. What it is doing is proposing the introduction of a manifestly unfair consumption tax. It is proposing to burden every business in this country with the task of tax administration. Every farmer--I must tell this to the Leader of the National Party--every small business, every shop owner and every contractor will be required to collect tax on behalf of the government.

Opposition members interjecting--

Mr KERIN —-The contradiction is breathtaking. The hypocrisy is mind numbing. While the Opposition makes the facile claim that small government equals good government, its agenda is to increase in an unprecedented way the administrative burden of tax collection and compliance.

Since in the perfect computer world of the Opposition's imagination New Zealand exists as such an outstanding model, it is worth while to actually examine the New Zealand experience.

Mr Atkinson —-I raise a point of order, Mr Acting Speaker, under Standing Order 145. The question from the honourable member for Reid asked specifically for improvements to the taxation system that the Government could implement. If the Minister has concluded his response to that, and wants to rabble on about other issues, I suggest that either you direct him to get back to the question or you ask him to sit down.

Mr ACTING SPEAKER —-Order! There is no point of order.

Mr KERIN —-I was informing the House about tax administration, which was the nub of the question. I was talking about New Zealand because there, in terms of administering a consumption tax, the number of taxpayers expanded tenfold. Each return takes about four hours. The compliance cost is assessed at $500 per taxpayer and the cost of collection is about 3.8 per cent of the total revenue collected. As well as that, about 35 per cent of the total tax collected is refunded. Therefore, the auditing procedures are also unduly complex. The New Zealand Inland Revenue Department had to employ an additional 1,000 staff to administer the consumption tax when it was introduced. As I have said, the auditing process has to take account of risk for fraud. As I said yesterday, when the 10 per cent GST was introduced, that increased the CPI by 6 to 7 per cent and through the period of absorbing that tax interest rates went up to 25 per cent and inflation went up to 19 per cent. So the lessons from--

Mr Downer interjecting--

Mr ACTING SPEAKER —-Order! The honourable member for Mayo!

Mr KERIN —-Come on. It is a snigger wrapped in a sneer. The lessons from New Zealand are clear to those not crazy blind with ideology: do not assume away scale; do not assume away time; do not assume away institutions; do not assume away process and, especially, do not assume away people.