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Wednesday, 21 June 2000
Page: 17817


Mr MARTIN (10:43 AM) —As the PM toddles off to the old Dart for the celebration of Federation and for the cricket to the strains of Waltzing Matilda played by the 55-strong Australian Defence Force band, guarded by the 155-strong Federation Guard, back in Australia small businesses will be struggling to understand the complexity of the A New Tax System that is being introduced. As the $2 million is spent on behalf of taxpayers to celebrate an event that should have been celebrated here in Australia, small businesses in Wollongong will be struggling to come to terms with this complex tax system, which this Prime Minister promised would be simpler, easier to understand and that—for their sins—for the equipment needs that they would be required to purchase in computerisation and so on, they would be given $200. I have been talking to constituents in Wollongong about the implementation of this tax. Recently one of them, a close friend of mine who owns a pub, came to see me and he said, `Look, my accountant tells me it is going to cost $50,000 for computers and for the software system that is going to be required.' That is for him to manage his business—and he will get $200 back because he has his ABN and so on, so he has complied with what is required. But he, as one of many people in Wollongong, is saying to me that the promise of a less complex, fairer system is an absolute myth. I think, as has been demonstrated by the Deputy Leader of the Opposition in his contribution today, the fact that we are trying today to rush through another 195 amendments to the tax act—


Mr Emerson —Plus 34.


Mr MARTIN —I stand corrected—195, plus another 34, being rushed through by this government, because they have effectively got it wrong and they have seen that the $430 million that they have been spending on Joe Cocker advertising campaigns and the like is not effective. I cannot help but note as we talk about this tax administration bill this morning that people are awake to the effect that this tax is going to have on them. Mr Deputy Speaker, I am sure that as you travel around your constituency you are amazed at the number of shops—as I am amazed at those in Wollongong, Corrimal, Fairy Meadow and Thirroul and so on in my electorate—that now have ads in their front windows saying `Pre-GST sale'. You see little brochures put out like the one from Sportsco, which has a couple of outlets in my electorate. Its brochure reads `Beat the GST—Pre-GST specials', and it has all these specials on footwear and clothing. And then you remember that no wholesales sales tax applies to these goods at the moment. There is a pre-GST sale to get rid of the old stock because the suppliers know that the consumers are going to be hit with a 10 per cent GST come 1 July. Because of the compliance mechanisms that are going to be required for stock record keeping, if you are someone that has a reasonably large stock of material on hand—in this case, shoes and sporting clothing—there is a clear advantage in getting rid of that to make it a lot easier to implement the GST on your existing stock inventory.

My local newsagent, just next door to my office in Corrimal, has been flooded since earlier this year with letters from the suppliers of things like stamps, filing cabinets and office equipment. As well as his business retailing supplies from his newsagency, he also supplies office furniture and so on. He has been inundated with letters from these suppliers saying that the costs are all going up but that they are all going to be effective well before 1 July. So the products that he subsequently hopes to sell after 1 July, which will have the GST applied to them, are also going to increase in cost so that those people who are supplying it to him, as a retailer, as a small newsagent in Corrimal, will get a greater return from it. He is going to have to pass on those costs. The administration he will have to do to improve his compliance functions, plus its computerisation, means that this small businessman in Corrimal is going to have to put in an exponentially greater number of hours.

These are some of the actions that are taking place at the moment before this tax has even started. It flies in the face of this government's commitment to simplicity. It flies in the face of this government's commitment to having compliance which is easy to understand. Is it any wonder that stories are coming out about people that have been operating small businesses across this nation of ours who have decided to just give it away, saying, `Why should I do all this now? Over the years I have dealt with suppliers and we understand the wholesale sales tax system where it applied to some of those goods. But now, with the application of the goods and services tax to such a variety of areas as of 1 July, it is just going to get a bit too hard'? My brother runs a small business on the Gold Coast selling surfboards and surfing equipment. He is struggling to come to terms with how it is going to apply in his area, particularly in terms of compliance. He is wondering, like so many other small businesses, whether the GST police are going to come knocking on his door to check whether or not he has the ABN, whether or not all the right forms are there and whether or not he is keeping records so that any input tax credits can be properly checked—and so it goes on. This is a real fear, and it is no good this government saying that it will be all right in the morning; it is not going to be all right in the morning, and time and time again we see evidence of that.

It is a similar story with small businesses in Wollongong. My daughter works in the hospitality industry. She knows what it will be like, because this is an industry where wholesale sales tax does not really apply. But as of 1 July in a restaurant the cost of a 10 per cent GST will be passed on to consumers. Additional paperwork is going to be required from the proprietor of the establishment and my daughter in her management function. She has already been told the extra hours that she is going to have to work unpaid to assist in this process of implementation. I have to say to this government that the questions associated with compliance, with simplicity and with the way in which the tax is going to be fair are absolute rank nonsense—



Mr MARTIN —You do not need to take my view on this, as I am sure the honourable minister that is unsuccessfully attempting to harangue me from across the table is doing. The Illawarra Regional Information Service recently conducted a survey among residents in my constituency and more broadly across the Illawarra, including residents in the electorate of Throsby. They found overwhelmingly that in the Wollongong area 54 per cent, as opposed to 20 per cent, suggested that the GST was certainly not going to be good for the economy. To the statement `The GST is going to be good for my household financially', 14 per cent agreed and a massive 62 per cent disagreed. That is the view that has been taken by the constituents of my electorate in Wollongong—a normal, average Australian electorate where people get up and go to work of a morning. They go on public transport or they drive, and they know that the cost of fuel is going to go up. They know that the cost of household goods and services are going to go up. They know that other areas will go up; if they go to see the Dragons play at WIN Stadium on a Sunday, they will have to pay 10 per cent more. Previously no tax was imposed there, but there is going to be one now. They know that the cost of going down to the Hoyts cinema to see a movie on a Saturday afternoon with the kids is going to increase. They know that there will be a 10 per cent increase in the cost of going to the Northern Bowl out at Corrimal where previously none of these things were taxed.

They know that as family people in Wollongong their lives are going to be affected and they can see through this government. They can see through the smirk of the Treasurer when he gets up and says, `This is a great tax system and we have got to go that journey.' Mr Deputy Speaker, I can tell you now that they do not believe that the chains are going to be taken off them. In fact, I think people have sent back their Joe Cocker CDs in droves. They do not believe this is going to help them. It is an absolute nonsense. It has been demonstrated by surveys such as the one I have just referred to by the Illawarra Regional Information Service in my electorate and by opinion polls that have been taken about the popularity of this government which reflect the way people see through this cynical effort of the government saying that this is going to be a much better tax system. All of these things are pointing to a more complex, highly compartmentalised tax system that will benefit only the top 20 per cent. People really are starting to say, `If all of these great things about this great revolution, this great journey down the road to tax reform that the Prime Minister wanted to take us on, are going to give us some benefits, why aren't we seeing them now and why aren't we feeling like things are going well?' People are asking that.

Finally, let me say that one of the other great lies that gets peddled in this whole tax debate is that Labor did not ever do anything about the tax system. As has been consistently pointed out, people opposite have got short memories. In 1983, when we came into government, the tax scales absolutely disadvantaged most people.


Ms Macklin —What was the top rate?


Mr MARTIN —The top rate was 60c in the dollar and the bottom rate was 30c in the dollar, and those who were least well off were paying that.


Ms Macklin —Who was the Treasurer?


Mr MARTIN —The member for Jagajaga asks who was the Treasurer at the time who left us with those tax scales. Was it the current Prime Minister? Yes, it was the Prime Minister who left us with those tax scales. What did we do? We changed them. We dropped the 60c down to 47c and the 30c down to 20c. And then there were all sorts of other changes that came in with the social wage over the 13 years that we were in government and other changes that came about. The last one was in 1993, when again we changed the tax scales. This government turns around and says that Labor did nothing to help the people in the tax system. I tell you what we did do: we did change the marginal tax rate scales; we did bring in a whole range of social welfare measures that assisted those least able to help themselves; we did bring in things like family allowance to help the families of Australia in a genuine way; and we did change the wholesale sales tax rates, yes, and we tried to consolidate those. But what we did not do is bring in a GST that affected everyone's life. That is what we did not do, and we were very proud that we did not.