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Wednesday, 9 October 1991
Page: 1555


Mr McGAURAN(4.06 p.m.) --The contribution from the Minister for the Arts, Tourism and Territories (Mr Simmons) is typical of the scare campaign being waged by one and all on the Government side. He ignored some vital factors about the introduction of a goods and services tax which will benefit the tourist industry. First and foremost, the abolition of the wholesale sales tax will have a significant benefit to the tourist industry. With the introduction of a GST, the GST on all business imports is refundable. Secondly, the Minister took no account of the drastic reduction in personal income tax rates which will act as a stimulus for all working men and women and allow them a greater level of disposal income.

The Minister's knee-jerk reaction to the introduction of the GST is typical of the very organised campaign being mounted by the Government. The truth is that if members on the Government side doubt the need for drastic tax reform--sadly, there are far too many of them--then quite obviously a report in today's Sydney Morning Herald should dispel that callous and unthinking complacency. Mr Ian Steele-Park, a member of the New South Wales Rural Adjustment Authority, published a report predicting that up to 20,000 farmers, or 12 per cent of the farm community, will leave the land in the next two to three years. Furthermore, he points out that 1,000 farmers had left the land in the past financial year. They are dimensions of an historic crisis. The Government talks about structural adjustment. Well, here it is.

It is very hard to quantify exactly those types of figures; they might be more or they might be less. The truth is that it is generally accepted that figures of that dimension are in the ballpark. They underlie the gravity of the situation our nation finds itself in. It is no better for small business. There are now two job advertisements for every 100 unemployed. Apart from New South Wales, that is the worst situation since the 1982 recession.

We cannot duck for cover any more. We have an economic crisis of unprecedented dimensions which requires courageous and fundamental reform. Small business bankruptcies in the April-June quarter of 1991 totalled 4,225, a rise of 55 per cent over the same quarter last year. Bankruptcies were up 61.6 per cent in Victoria, 58 1/2 per cent in Queensland and 75 per cent in Western Australia. As our small business operators struggle under the weight of high interest rates and a recession and our farmers struggle under a drought, a downturn in commodity prices--particularly wool, wheat and, to a lesser extent, beef--and try to deal with interest rates, increases in government costs and charges and a very high exchange rate, the Government sits still, refusing to consider the fundamental reforms that are so necessary.

The goods and services tax is part of an overall package of reform by the Opposition which will include industrial relations, waterfront reform, government expenditure, fiscal policy reform and micro-economic reform so as to bring down the costs of transport, particularly rail freight and handling.

These things matter to the farming community especially, because in 1990 protection in the motor vehicle sector cost Australians $1.6 billion and added $2,000 to $3,000 per farmer to the farming community's costs. Waterfront efficiencies resulted in a $3,000 impost per export farm. Efficient grain bulk handling would return an extra $10 a tonne to Australian wheat growers. In relation to AQIS, there is a 100 per cent cost recovery but no input into the efficiency and operations.

Let us not be in any doubt that if the Government walks away from GST it is walking away from the benefits to the rural community, small business and farmers. Anybody who says no to this proposal as a reaction to the scare campaign, and at times a sophisticated and coordinated effort by the Government, is turning his back on a chance to create a very pro-export taxation system. I am certain rural Australia is going to be at the forefront of this need to adjust in the economy; it is going to be at the edge of change. To be frank, the rural economy has the most to gain from taxation reform of this kind, and the most to lose if we stand stagnant.


Mr Cadman —-And Simon doesn't care.


Mr McGAURAN —-The Minister for Primary Industries and Energy (Mr Crean) again today demonstrated his complete and utter ignorance of the benefits of a goods and services tax. So the Government cannot stand still. The international market is not going to give us the luxury.

Mr Snowdon interjecting--


Mr McGAURAN —-I cannot expect the honourable member for the Northern Territory to understand, but the game is in motion, Government members have to grab the ball and they have to run with it, because what we have is a need for reform. Will any Government member deny the need for fundamental reform, of which tax reform is an integral component?

The design of the goods and services tax includes with the coalition's proposals a compensation package, which of course nobody on the Government side takes into account in slamming it. When those on the Government side call for compensation measures to be outlined by the coalition, let us look at the present impact of the wholesale sales tax system as it exists. Where is the compensation there? When this Government came to power in March 1983, the wholesale sales tax take totalled $3.1 billion. Last financial year it was $9.4 billion. Where is the compensation for that trebling of the wholesale sales tax, that indirect tax which is hidden away? It is simply milking Australia's businesses and households of desperately needed income.

The Government always cringes at the prospect of reform, the challenge of change, and, quite frankly, it is thereby effectively continuing and approving the black market as it operates--the black economy--where billions of dollars annually are siphoned off from the community by way of tax evasion. So what are the Government proposals to deal with the black economy, which measures at least $20 billion in conservative terms? We hear figures as high as $40 billion.

If the Government wants to create a rational taxation system which gives consumers choices about how much tax they pay rather than have it stolen off them by high levels of PAYE, this is its chance to provide those income tax cuts, this is its chance to put in place offset packages for those on fixed incomes, superannuants and those receiving government benefits.

It is important to stress that the GST is not being promoted as a single initiative. It is part of a package of reforms, only a piece of the action, if you like. The rest of the package is designed to strike out, to eliminate, those other obstacles to an efficient export oriented economy, so that we can stand in those very competitive and very corrupted world markets. By lowering protection against imported vehicles and equipment, as is the coalition's policy, we have an opportunity to smash a hole in those oncosts which are crippling and smothering farm profitability. Why should Australian farmers have to pay twice as much for their basic equipment as their counterparts? Why should the freight transport sector have to pay $12,000 more for a rig than it has to? Why should it be penalised by way of a wholesale sales tax on tyres and parts?

The benefits to the farming community will be dramatic. For the farmers directly there will be the abolition of the wholesale sales tax on two-wheel vehicles or trucks and on a number of those hand-held tools on which they cannot get the exemption because of administrative incompetence by a great many retailers. In respect of fuel there will be a drastic change to their costs, particularly of off-road petrol and diesel fuel. Moreover, indirectly to farmers will be the benefit from zero rating our export industries of between $1 billion and $2 billion. There will be the abolition of wholesale sales tax on the freight industry, where $3.8 billion is paid every year. So farmers stand to gain enormously under GST in conjunction with our other radical reforms, as does small business, where for the first time the working man and woman will have control over a higher level of disposable income than before.