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Wednesday, 11 November 1998
Page: 136

Dr SOUTHCOTT (4:00 PM) —In the spirit of this week, I congratulate the Leader of the Opposition and the Deputy Leader of the Opposition on their unelected succession to the leadership of the party. I also take this opportunity to reflect that we now have two sons of two Whitlam government ministers who are leading the Labor Party. It is, in fact, emblematic of the struggle that is now going on for the soul of the Labor Party that when they look to an icon of economic management they completely pass over the Hawke-Keating years, the years when they actually reformed the economy, and look back to the Whitlam government. It is hard to imagine how the shadow Treasurer would not have been thinking, when he was running around old Parliament House, `One day I would like to run the economy like dear old dad'. He would have, as an emblem, the former member for Melbourne Ports, his father, who was Treasurer in the Whitlam government.

We have also seen that new Labor is old Labor rebadged. In fact, it is a return to an even older Labor in that it has returned to all the politics of envy that characterise 1970s Whitlam-style Labor. We need to say, `What is the firm principle that the ALP stands for? What is the defining principle?' It is that the ALP is against the GST. That means that what it is in favour of is income tax and the wholesale sales tax.

When the ALP left government, they left us with the equivalent of an 8.1 per cent GST. So where is the overriding principle in the Labor Party which says that somehow wholesale sales tax is fair but GST is unfair? Let's face it, the ALP are acting from no higher principle here. In fact, there is a curious thing that goes on. When you look back to 1993, you find that Bob Hogg was running the Labor campaign against the GST. He now crops up in 1998 running a campaign for the GST. Gary Johns, a former minister in the Keating government, who was elected on a platform to oppose the GST, now says that tax reform is essential and any right-minded government would consider it. We now know, from Paul Kelly's book on politics in the 1980s—The End of Certainty—that the only people who supported Keating in cabinet on the 12½ per cent consumption tax were Bob Hawke, Susan Ryan, Kim Beazley and Gareth Evans.

The shadow Treasurer and Deputy Leader of the Opposition, who did oppose it at the tax summit, was not totally pure either because we know from John Edwards' biography of Paul Keating that Crean and Kelty agreed with the Treasurer's diagnosis and felt there was no way to go other than a broadbased consumption tax. What was Labor like in government? We know that in 1985 they went to the tax summit.

The matter of public importance that we are debating concerns the impact on low income earners of a GST. As you know, the government is offering generous compensation. As the indications show from the household expenditure survey and the CPI, people are being overcompensated. So I think it is fair to say, `What did Labor do when they were in government?'

In 1985, without having raised an election campaign, what they did was broaden the base. They increased the tax on biscuits, ice cream and savouries. How much compensation did they give then? In 1993 they went to an election opposing a GST. In the subsequent budget they increased the wholesale sales tax from 10 per cent to 12 per cent; 20 per cent to 22 per cent and 30 per cent to 32 per cent. What compensation was given then? None.

In 1995, they increased the wholesale sales tax on cars from 15 to 22 per cent. What compensation was given then for low income earners? None. When they increased the excise on petrol, alcohol and tobacco, what compensation was given then? None. They even tried to broaden the base, which is the sort of thing that a GST does. They tried to broaden the base by including household building materials, which was knocked off in the Senate.

In 1996, due to the changes that they made in that period—1993-95—an extra $6 billion in indirect tax was raised than would otherwise have been raised. It was the equivalent of Fightback. There was no compensation. In fact, Neil Warren of ATAX has said it was Labor's Clayton's GST. It has no principle on this issue. I do not know what the Labor Party stands for. Its tax policy was a joke. Its employment policy was a joke. Getting unemployment down to five per cent is a good goal, but you cannot do it with the Labor Party's policies. In actual fact, in the system that Labor gave us, the only people who really win are lawyers with a big indirect tax practice.

In a case recently in the Federal Court it was finally decided what the tax treatment of frozen yoghurt should be. This case had been going on for two or three years. It was very difficult. They had to look at the temperature of the yogurt. The problem was that food is exempt but. if frozen yoghurt is a substitute for ice-cream, it should be taxed at 12 per cent. Essentially, what they have found is that it is tax-free if it tastes like yoghurt but, if it tastes like ice-cream, a 12 per cent wholesales sales tax is applied. This is Labor's system. It is not a simple system. It is not an efficient system. It adds something like $4½ billion on exporters and $10½ billion on companies.

The Labor Party have said that they oppose a GST but they want an inquiry anyway. In this country we have had many inquiries on tax. We had the Asprey committee in 1975; we had the tax summit in 1985; we had Fightback, which was released in November 1991 and debated for the 18 months leading up to the 1993 election; and we have the current debate on taxation which began in October 1996. It was joined by the government in May 1997. It went on for 18 months prior to the election and now the Labor Party say they want an inquiry on something they oppose anyway.

We know where they stand. This is a failure of leadership by the ALP in that they oppose it but they still want to have an inquiry. What do the Labor Party stand for? What is their tax policy? They say that pre-1985 assets should be included in capital gains tax. So jewellery, wedding rings and so on, shares, beach shacks—anything that people have been holding in their family for maybe 60 years—will be subject to capital gains tax.

Their only attempt on the indirect tax side was to exempt tomato juice and orange juice from wholesale sales tax and to include caviar and aircraft. The sorts of tax exemptions they left us with give us things like sinks taxed at 12 per cent, but the pipe leading to the sink is exempt. Engagement rings are taxed at 32 per cent but wedding rings are exempt. Aircraft are tax exempt, but TVs, radios and cameras are taxed at 32 per cent. Pet food is at 22 per cent, but if you go and get it from the butcher it is exempt. In 1998 we still exempt horseshoes and horseshoe nails. We exempt scoured wool. We exempt food for non-domestic birds. That is the Labor Party's tax system! In terms of compensation, we are giving $2 billion in family payments and $13 billion in income tax cuts, and all government benefits will be increased by four per cent or 1½ per cent ahead of the price effect of the GST.

Labor has talked about the unfairness of the GST. I wonder whether Labor actually knows how much extra the GST raises above the indirect taxes that are already raised. It is 0.7 per cent of GDP; it is about $3½ billion extra. Just in compensation alone to people who are receiving government benefits we are giving $3 billion. That does not include the $13 billion in income tax cuts; it does not include the $2 billion in family tax payments.

The income tax scales that we have introduced are more progressive than the ones we inherited from the ALP. Under our scales, people on the top 20 per cent of incomes will pay more of the burden of income tax and people on the lower 20 per cent will pay less of the burden of income tax. The low income earners will also have the tax-free threshold increased from $5,400 to $6,000. Single income families, including single parent families, with a child under five will have a tax-free threshold of $13,000. The marginal tax rates will be reduced for everyone below $75,000, which is twice average weekly earnings.

There is also a 30 per cent rebate benefit for private health insurance and that will benefit all Australians with private health insurance, especially the one million Australians on incomes of $20,000 or below who are still holding their private health insurance; and they can get it as a tax rebate or a cash payment. (Time expired)

Mr DEPUTY SPEAKER (Mr Andrews) —Order! The discussion is concluded.