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Wednesday, 5 April 2000
Page: 15333


Mr FITZGIBBON (7:05 PM) —The bill before the House tonight, the A New Tax System (Trade Practices Amendment) Bill 2000, seeks to amend the Trade Practices Act to prohibit misrepresentations of the impact of the GST on prices. Of course, the opposition does not have any problem with that proposition. The GST is nasty enough for the consumer without the additional impact of price exploitation. Indeed, already Australians are facing the inflationary impact of the GST. As we have seen again today, already Australian consumers, Australian families and Australians generally are facing the interest rate impact of the GST, and they are coming to realise that the compensation measures in the Howard government's package with respect to the GST will go nowhere near compensating them for the impact. Again, we have seen that today with another increase in interest rates. Price exploitation is something that the consumer can ill afford.

The opposition does not have any problem with the core principles being put to the House tonight, but we have issue with some of the detail. The first issue goes to the question of what is motivating the legislation before us. There is no doubt that the government is becoming increasingly concerned about the impact of the looming GST out there in the community. No matter where you go, whether you move in large, medium or small business circles, whether you move in the general community or whether you move in the accounting and legal professions, the GST is on everyone's lips. Those on the government's back bench, particularly those in marginal seats, are becoming increasingly nervous.

I think it is fair to say that tonight's bill is about damage control. This is the government in damage control overtime. At the moment, what we are seeing from the government is a set of diversions. They are out there pressing a number of buttons. They are out there pressing the race button and the bigotry button with respect to mandatory sentencing and their offensive submission to the Senate inquiry. They are even out there pressing the sovereignty button again with respect to mandatory sentencing. It is true that the government want to do anything but talk about the GST.

The tactics adopted in tonight's bill are not all that different. They are very similar tactics. Like the other buttons I was talking about, tonight we are talking about populism. Tonight we are talking about the government's conclusion that there are—it is to state the obvious, of course—many more votes in consumer land than there are in business land. There are more votes to be gained by keeping the consumer on side than there are to be gained by keeping Australia's 2½ million businesses on side and Australia's almost one million small firms on side. This is an extraordinary situation. These are the people the government has always claimed as its natural constituency. It has made this simple calculation. Tonight's bill is about reassuring the Australian community that the government will not wear price exploitation and the impact it has on the community, but, at the same time, it has been prepared to jettison its loyalty to its natural constituency, or the constituency it claims as its own, to meet those ends. It is time for the government to puff its chest out and show that it is prepared to get tough on price exploitation. Why would it not? We have already seen a number of instances where some businesses have quite deliberately chosen to take advantage of the transitional arrangements flowing from the GST.

The most extraordinary thing about this bill is how far the government has been prepared to go. An article in today's Daily Telegraph stated:

Retailers have been warned they will face penalties for mistakenly overcharging consumers following the introduction of the GST on July 1.

Australian Competition and Consumer Commission chairman Allan Fels said yesterday retailers not passing on all cost savings under the new regime face action.

“The law simply says if there is overcharging then it's a breach of the law,” Professor Fels said.

“I don't think consumers should pay for mistakes and there is nothing in the law that says if [retailers] have made an innocent mistake they're exempt.”

The point to be made is that the powers are already with the Australian Competition and Consumer Commission. Professor Fels already has those powers. This was a quote today, but the good professor was not factoring in the impact of the bill we are discussing tonight. He was highlighting the fact that those powers are already in his hands. What is tonight's bill about? Exactly what I was saying it is about; it is about taking the big stick to business in an attempt to demonstrate to consumer land that it is serious about protecting it. The big stick to business does not concern me all that much because larger businesses have the resources, have the army of accountants and legal professionals necessary to deal with the transitional arrangements.

Recently, I saw what I thought was an extraordinary letter from Woolworths to some of its small business suppliers. It demanded to know the ABN of the small suppliers by a date that was well in advance of the 31 May deadline for applications and certainly well in advance of 1 July. But, more importantly, it was demanding to be advised by those small suppliers what savings they were likely to pass on to Woolworths as a result of the GST. It gave a pro forma example. It stated, `Name of small business supplier, your ABN number, value of your supplies, savings passed on—that is, X, Y, Z savings.' This is a chicken and egg argument. Woolworths says that it cannot determine its prices until the small business supplier determines what savings it is going to pass on to Woolworths, but the small business supplier is in exactly the same situation.

It has been demonstrated that this is a tax that the Minister for Financial Services and Regulation does not understand. He cannot even explain how the rounding will work or how the GST will affect the price of a can of Coke. Yet small business people are expected to get it right. Tonight, the government is telling them, `If you are unincorporated and you get it wrong you will be looking at a fine of up to $500,000 and if you are incorporated it is a fine of up to $10 million.'

Let us make it very clear: incorporated does not mean big. Many micro firms are incorporated for many varying reasons. So here we have a situation where a minister of the crown in this parliament is not able to adequately explain the GST. When we ask questions during question time on the GST to various ministers with regard to their portfolios sitting on the front bench opposite, what do they do? They flick pass them on to the Treasurer; they have been instructed that no-one in this place will answer questions on the GST bar the Treasurer because the reality is that no-one on that side in this place bar the Treasurer comes close to fully understanding the GST and its impact. Whether it is aged care, small business or caravan parks under community services, all the questions go to the Treasurer. Yet the small business community, which is already facing a myriad issues ranging from the retail inquiry, ABN applications and Ralph next year coming on top of the GST, is expected to get it right.

I want to give the House a very good example of how this government have too high an expectation of small firms as to how they expect them to deal with this tax. It really has become ludicrous that they are waving this $10 million stick over them in a desperate attempt to patch up their political ills and win a few votes in the wider electorate. I want to quote from the Small Business Show, a very good program on the Channel 9 network on Sunday mornings for those who are up at 7.30—an obligation on my part, unfortunately.

The picture is this: the Small Business Show had a number of panellists—representatives from the ACCC, representatives from tax and representatives from the accounting profession—facing a roomful of largely small business people fielding questions from these small business representatives. One of those people was Mr John O'Brien from a company called Poolwerx. John O'Brien was responding to David Cousins, from the ACCC. He was talking about the extent that a firm might have savings, given the extent to which it might be labour intensive as compared to capital intensive, given that many firms provide just a service and will not have any savings from the wholesale sales tax because they do not have any inputs into their operation. John O'Brien said:

David talking on that. In our business we've calculated that it's about 9% ...

So they expect the impact on their charges will be nine per cent. The Treasurer says that nothing should go up 10 per cent. I saw a circular from a tourist authority in my electorate yesterday trying to explain to their members how the GST will affect commissions within that organisation. This was a well motivated circular, but it showed the full 10 per cent going on of course. John O'Brien said it was nine per cent. He continued:

... which is a service business also. And one of the coal face problems for us is that in a lot of service businesses we call back every week, or regularly, and to whack a 9% increase onto our customers could well result in a customer loss. For small businesses that's an expensive replacement factor and that's a worry.

Cousins's response was very interesting. He said:

Well I appreciate what you're saying it was the point that I was making earlier on to some extent in that I think competition will mean that many businesses will absorb some of these increases in costs and many customers will be out there shopping around and they may well be resisting, certainly full 10% increases.

O'Brien not unexpectedly said:

So you're suggesting that small business wears the cost of this?

Cousins quite cautiously said:

Well I'm saying that I think competition will often cause that to happen.

So we have heard it there from the authorities. We have heard that those firms that are service oriented will be expected to absorb the cost of the GST into their profits.


Mr Tuckey —And you're going to fix that, are you?


Mr FITZGIBBON —So there is not too much good news in that for small firms.


Mr Tuckey —And you're going to fix it?


Mr FITZGIBBON —Well, Minister, I do not know how you do fix this mess, but I can assure you of this: we will be giving it a good shot. You should confine your attacks to the women in the government party room.


Mr DEPUTY SPEAKER (Mr Nehl)—Order! The member for Hunter should ignore the minister at the table and direct his remarks through the chair.


Mr FITZGIBBON —There it is from the horse's mouth. That is the impact of the GST on small firms. More importantly, this is the context in which small firms are expected to get it right. Woolworths cannot get it right with their army of legal eagles and accountants until their small business suppliers are able to advise them of their savings, but the small business community does not have that same opportunity, and yet after this legislation is passed—if indeed the Senate allows it, after what I think will be an appropriate inquiry into the bill—that will be the expectation.

This is a bill that has horrendous implications for Australia's small firms—and, as I said, it comes on top of all those other GST start-up and compliance issues we have talked about on so many occasions in this place. It comes very soon before another big bang next year and before the Ralph changes, which I have heard many accountants say will make even the GST transition look like a picnic. Included in that is a real fear amongst small firms that Ralph's option 2 is heading their way as well.

This is not good for small business, and it is rather extraordinary that the government would turn its back on a constituency it has always claimed as its own in an attempt to dig itself out of a very deep political hole. But do not worry: there will be payback and the payback is already on its way. Not only is it on its way in terms of the traditional small business community, it is also on its way in terms of what I call the new small business constituency, the largely service based small business constituency growing out of the contracting out practices of both big business and government departments and also businesses growing out of the new technologies being made available by way of innovation such as the Internet.

In the short time available to me I want to say a few things about the other provision within this bill—that is, some minor amendments to part IIIA of the Trade Practices Act. Part IIIA was a Keating government initiative to allow mandatory access to infrastructure to facilitate competition in a number of important industries in this country. Part IIIA leads me to an issue very dear to my heart—that is, petrol prices. I think the member for Werriwa had a very good private member's bill before the last parliament. That was a proposal to extend the access regime under part IIIA to the country's various petroleum terminals—in other words, to break down the oligopoly we have in this country in order to bring real wholesale competition to the petrol market and therefore to bring prices down, to reduce that totally unacceptable city-country gap and to level out those crazy fluctuations we have in the petrol industry due to the unfettered power of the major oil companies and their ability to control price all the way from the refinery to the bowser and, as a consequence, their ability to take excessive profits wherever and whenever they can.

Part IIIA is one way of achieving that, but there is another way. The other way is to give petrol station franchisees the right to shop around for their fuel—50 per cent to make it fair. It is a very basic concept that has the same effective access under part IIIA, except that the infrastructure is not required to go down to that terminal and to pick up that fuel; the competition point is at the service station itself. We have seen in recent days a very obvious impact of the GST on petrol prices—that is, the fact that the GST is going to send petrol prices, particularly those in the bush, even higher. I have a private member's bill before this parliament that will fix that. It now has the support of the ACCC. It now has the support of the National Farmers Federation. It now has the support of the Motor Traders Association of Australia. It now, as I understand it, has the support of the Democrats. I can suggest to you that if the government wants to bring petrol prices down it should adopt the principles contained within my bill.