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Wednesday, 9 October 1991
Page: 1552

Mr SIMMONS (-Minister for the Arts, Tourism and Territories)(3.50 p.m.) —-I am pleased to join in this debate and to follow the honourable member for Fadden (Mr Jull). Indeed, I must say, on behalf of the Government, that we are extraordinarily gratified that the honourable member for Fadden has seen fit to introduce into this matter of public importance this afternoon a debate dealing with the impact of the Australian taxation system on business costs, the competitiveness of exports and incentives for Australians to work.

It is also rather fascinating that the honourable member for Fadden is the shadow Minister for tourism and aviation, which is part of the portfolio that I represent in this House, yet we heard very little during his contribution this afternoon about those aspects of his portfolio. Perhaps I will have an opportunity later in my contribution to suggest why he was relatively silent on those issues.

I say at the outset that the Government has been extraordinarily conscious of the impact that the taxation system has on business. Any government would, of course, adopt that attitude. But, rather than just talking about the subject with blind rhetoric, we have made some very significant improvements. People on the other side of the House seem to forget that just a few years ago when we came to power in 1982-83, the last year of the Fraser Government, the company rate of taxation was 46 per cent; the current rate is 39 per cent. At the same time as the company tax has been lowered to that figure, we have also introduced a system of dividend imputation to remove the double taxation of share dividends and therefore encourage investment. Clearly, this was something that the business community in particular was calling out for for many years.

In my Department in the area of tourism we are very conscious of the issue of taxation and we are currently conducting a review of the impact of taxation on business operations within the tourism industry. This is a very significant industry. It is Australia's principal export industry. It is an industry that currently generates some $7.3 billion worth of foreign exchange earnings. It employs 441,000 Australians in its work force. It is an industry with total expenditure in excess of $23 billion and it represents 5.1 per cent of gross domestic product.

So it is important in an industry as significant as the tourism industry that we pay particular attention to taxation matters. We recognise the necessity of making sure that we get the system correct so that there are no impediments to further development of this industry during the 1990s and beyond.

The Government in a general sense is also in the process of implementing measures to improve our international competitive situation, particularly through the taxation system. The honourable member for Fadden seems to have conveniently forgotten the rather significant statements that were made in this House just a few months ago in the March economic statement, in particular two taxation measures aimed at trying to improve the business competition situation. I refer to changes to the depreciation arrangements and the decision to widen substantially the exemptions from wholesale sales tax for business inputs used by manufacturers, those in our important primary industries and, of course, in the mining sector.

Competitiveness is not enhanced only by the taxation system. Unlike the Opposition, we do not see any one taxation measure as some sort of panacea for all our economic ills, as a sort of `one solution fits all' policy prescription. I refer to the issue of wages policy which this Government has successfully implemented through the various accord agreements with the ACTU--something that the Opposition has constantly scorned. The productivity and wage-tax trade-offs have allowed business and industry to reduce unit labour costs, to redress the balance between profits and labour, to significantly aid the level of profitability within the business community and, importantly, to enhance our international competitive situation.

Of course, our topic here today for this matter of public importance also deals with incentives for Australians to work. I have already mentioned the issue of the wage-tax trade-offs which were negotiated together with some other very significant changes to personal rates of taxation. Since it has been in power, this Government has significantly simplified the personal income tax arrangements of working Australians. Just a few years ago we inherited a top marginal rate of taxation of 60 per cent. The latest change has meant that the top marginal rate of taxation that currently operates is 47 per cent.

I find it particularly interesting that the honourable member for Fadden is so keen to debate the issue of a goods and services tax on the tourism industry, in light of the fact that the tourism industry, which forms part of the honourable member for Fadden's shadow portfolio, would be one of the most significantly affected industries in Australia by the introduction of such a tax.

As I said at the outset, I find it rather strange, given some of his other comments in recent months, that during his contribution the honourable member for Fadden was relatively silent today about the impact on the Australian taxation system of those measures that are the subject of this MPI. Whilst there has been no confirmation of the treatment of tourism by the Opposition for the purposes of a goods and services tax, there is every reason to suspect that it would more closely resemble the New Zealand model than the Canadian model. The reason for this assumption is the very positive comments that have been made by the honourable member for Flinders (Mr Reith), the Deputy Leader of the Liberal Party, about the New Zealand experience with a goods and services tax and the rather disparaging remarks that he has made about the Canadian model. The Deputy Leader of the Liberal Party was quoted on ABC radio here in Canberra on 15 July this year as saying:

I think the Canadians, with respect to them, their experience shows how not to undertake major tax reforms. . .

The New Zealanders by contrast have probably the purest system in the Western world and have had a lot of acclaim for it because most people think it's much fairer if you treat everybody literally the same and certainly that's the reaction if you just talk to ordinary New Zealanders as I did.

Well, he must speak to rather different members of the New Zealand community from those who often contribute to debates on a goods and services tax. It is significant that in today's Bulletin magazine there is a rather interesting letter from a person talking about the New Zealand experience and saying what a great thing the goods and services tax has been for that community in that person's opinion. The letter states:

For six months, we have resided in New Zealand--a country which has had a consumption tax since 1986--and are just coming to grips with the goods and services tax . . . mooted for Australia. It is pertinent that Australians reflect on this most exacting of taxes, the sharpest of all taxing tools, and the failure of governments worldwide to honour promises of compensatory rebates in conjunction with its introduction.

Later the writer suggests:

Australians must realise that a consumption tax is levied on everything: When you pay your car registration, electricity bill, local authority rates and phone bill, buy a loaf of bread or fuel at a garage, you will be up for this additional levy. Reflect also that GST is like moss: it grows. It will not remain at the opening rate. There is only one direction it heads--up!

The New Zealand experience is rather sobering when one talks about the benefits of a so-called goods and services tax. This has important implications for this most dynamic industry that I have the privilege to represent--the Australian tourism industry. In New Zealand tourism is not zero rated, unlike all other New Zealand export industries.

What clearly is the intention of the Federal Opposition when it comes to the question of a goods and services tax with respect to tourism? The Opposition completely ignores the price impact of a goods and services tax, particularly on international tourism. We are very much a long haul destination and, as such, any long haul destination is clearly a price sensitive destination. It is strange that this fact should now elude the honourable member for Fadden because in the past he has shown a great appreciation of the impact of increased costs on the sale of tourism products.

I have a significant press release from the honourable member for Fadden dated 8 July this year and headed `Bed tax threatens tourism--Jull.' It states:

Any decision by councils in far north Queensland to introduce a bed tax on tourists must be considered very carefully indeed.

He said it was critical that the Australian tourism product did not price itself out of international markets by the imposition of more and more taxes. I think he is absolutely right. Yet this is a man who belongs to the political party which is proposing a major change in the Australian taxation system by the introduction of a goods and services tax.

There also seem to be similar levels of confusion over the impact of a goods and services tax, a consumption tax, a bed tax or some other impost by any other name that the Opposition is trying to sell to the Australian community. It is interesting to note that at a recent convention on the weekend of 14 and 15 September the Queensland Liberal Party passed a resolution. I ask all honourable members to take very clear notice of what the resolution says:

That the Liberal Party vigorously opposes the imposition of any form of tax levy or charges on tourists or tourism operators.

Members of the Liberal Party in this House should take notice of the grassroots of their Party and, in particular, the concerns being raised by people about the impact of a proposed goods and services tax with respect to the tourism industry. The industry has certainly voiced its concern. The honourable member for Fadden and members of the Opposition will continue to voice their concern about the impact of a goods and services tax, particularly on employment levels in the industry.

More members of the Opposition should go to a place such as far north Queensland, which is at the very frontier of our latest tourism boom, and listen to what people in the tourism industry are saying about the proposal of a goods and services tax. I do not think the people in north Queensland will be swayed in any way, shape or form by the rather specious arguments that have been proffered in favour of the goods and services tax by such notables as Queensland Senator Ian Macdonald. In the Gold Coast Bulletin this week he suggested that the goods and services tax would be a very good thing for Australia and that New Zealanders had a GST and they liked it. To support his contention, he stated that the number of New Zealanders migrating to Australia had decreased. It is a rather simplistic argument. I think it is also drawing an extraordinarily long bow to suggest that there is any nexus between the levels of immigration from New Zealand to Australia and the impact of a goods and services tax within that country.

The thing that the Opposition constantly runs away from in relation to the GST and the tourism industry is the fact that the tourism industry is primarily a service industry. As such, it attracts very low levels of sales tax. Again, we constantly hear the rhetoric that there is this hidden consumption tax operating in the system through a wholesale sales tax. The tax on things such as restaurant meals, theatre tickets, accommodation, entertainment--the very things that international and domestic tourists often become involved with--will clearly add to the cost of a domestic holiday and certainly will have a very vicious impact on the international arrivals into this country. This adversely impacts on the profitability of businesses and our international competitive position.

Clearly, I find this matter of public importance presented by the honourable member for Fadden a complete joke. Right through his entire contribution this afternoon, as the shadow Minister responsible for tourism and aviation, he completely evaded any debate on the impact of any sort of proposal with respect to a goods and services tax on this industry. This is one industry which is very dynamic for this country. As such, to introduce a debate on a subject such as this clearly shows that he is way out of step, along with his Party.