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Wednesday, 21 June 2000
Page: 17821

Mr RUDD (11:07 AM) —I rise in support of the opposition's amendment to the motion for the second reading of the A New Tax System (Tax Administration) Bill (No. 2) 2000 because I think what we are seeing across the country at the moment is an implosion in tax administration. The Treasurer stands in the parliament often and speaks about his innovations in taxation policy. But part of being Treasurer of the Commonwealth lies in actually giving effect to the implementation of taxation change effectively on the ground. Not just looking at the simplicity of the regime being proposed across the raft of ANTS and ANTS related legislation, including the PAYG legislation, but beyond that looking at the implementation of that legislation and the capacity of the various instruments of tax policy administration to cope, we are seeing fundamental systemic failure. If you speak to business, as I do often, you find that with a couple of weeks to go many businesses out there are still waiting on key determinations and rulings from the Australian Taxation Office on matters which fundamentally and directly affect the capacity of their businesses to operate from 1 July. The government's response is: go to the tax office; go to the GST hotline; ask for a visit from the relevant officers from the Taxation Office.

The bottom line is: they cannot cope. We know they cannot cope. The waiting periods are huge. It is not just the ATO which is suffering all these difficulties. On the other side of the government's hierarchy for the implementation of this whole new system is the ACCC. The ACCC itself cannot cope. The ACCC is faced with this plethora of legislative change, and the total additional staff the Commonwealth has allocated to the ACCC with which to cope is 60 across the nation. The ATO cannot cope. The ACCC cannot cope. The accountants with whom I speak in the accounting profession, those on whom individual businesses rely in order to obtain professional advice about how the tax changes affect their particular businesses, cannot cope either. I am not just talking about suburban accountants. I am talking about the big five—those who dominate the accounting profession in this country. They cannot cope because of the sheer quantity of change making its way through this parliament in one lump—and an undigested lump at that—because of the quantity of amendments that are being pushed on us here as members of parliament and the expectation that somehow we are going to be able to contribute some intelligent observations in terms of their content.

It seems that the government has almost embarked on what could only be described as an `amendment led recovery'. Up until a fortnight ago, we had had 1,000-plus amendments to this particular set of GST bills. Last sitting fortnight we had another 211; today another 195. There is a sheer incapacity on our part as legislators to cope, quite apart from the downstream burden on administrators to cope, quite apart from the further downstream implication for people who actually deliver the advice at the coalface in the accounting profession and businesses which are faced with the fundamental task of survival. This bill is but one example. It refers in part to business activity statements. The Treasurer of the Commonwealth, the master of theatre in this parliament but the travesty of substance, waves around a two-page document and says, `Here is your brand-new simplified business activity statement. All your nirvanas have come at once. Bob's your uncle. You will now have a much more simple system of taxation compliance.' What he does not wave around is the 150-page document which is the fool's guide to how to work your way through the business activity statement.

I would ask you to picture in your mind's eye an average corner store operator out there in suburban Australia. They have just spent from seven in the morning till nine at night running their little local business. They are very tired. They get home and what do they face? In the mail a couple of weeks ago has come Allan Fels's several-hundred-page guideline on the need to avoid any form of price manipulation or price exploitation as a consequence of the introduction of the GST. They have tried valiantly to work their way through that. Then last week the new ATO food guide for wholesalers and retailers of food arrived with what is on and what is off—what is going to affect peanuts whether they are salted or not and yoghurt whether it is frozen or fresh. They have tried valiantly to digest their way through that. Then on top of all that they get the new Peter Costello guide on how to work your way through business activity statements—another 150 pages. I would ask you just to picture what happens on the ground to that particular local small business, the corner store, as they try and work their way through Taxman Pete's simplified tax reform proposals for the Commonwealth. This is quite apart from the fact that this corner store owner might happen to be Vietnamese and not able to read English. Of course the tax office will respond and say, `Of course we have produced some of this literature in languages other than English.' But there are a large number of people who run corner stores in this country for whom English is not their first language. They have a thousand pages of gobbledegook from various arms of government about how simple this new system is going to be. They have just sweated their guts out seven days a week between seven in the morning and nine at night and this is Treasurer Pete's gift to them—

Mr DEPUTY SPEAKER (Mr Nehl)—Order! The honourable member will refer to the Treasurer by his correct title.

Mr RUDD —It is the Commonwealth Treasurer's gift to them in terms of what will constitute the new simplified tax system of the Commonwealth.

Is it any wonder that we are now seeing evidence of small businesses giving up the ghost? We start to see the data emerging in terms of small business insolvencies. We start to see the data emerging in terms of the number of small businesses for sale. For more than a decade, those opposite have preached the message that `the recession we had to have' in the early 1990s laid waste to Australian small business. I simply say this: when it comes to the tax we had to have, the GST, and the number of small businesses it will lay waste, I would ask you to bear in mind in the fullness of time the symmetry of your comments. This tax is an unnecessary tax. The complications it imposes for small business are huge and it will send—and as we speak in this parliament today is in the process of sending—many to the wall.

My message for those opposite is simply this. The National Party have been in this parliament speaking about various difficulties that they are encountering on the ground in terms of the implications of the tax package. The bush is burning. The bush is burning on caravan park rentals. The bush is burning on dairy. The bush is burning on Telstra questions. That is just the National Party. For the Liberal Party I would simply say this: your core constituency, small business, is also burning. The core constituencies which supposedly underpin those parties opposite are on fire. They are looking for an alternative place of political residence out there in the political marketplace because on this key question of the complexity and the workability of the tax administration of the Commonwealth you have deserted them. You have enjoyed the high life of being able to pronounce in this place policy reform for the nation—to the celebration of the big end of town—but have not attended to the detail. You have not attended to what actually happens when people try to translate these questions into workable business solutions on the ground.

We have had in this place the member for Kennedy, the member for Hinkler and the member for Richmond—the van park kid—going on and on about the impact of the tax, bleating in their own electorates about what might be happening there. But my question to the House is simply this: how did they vote when the tax legislation came through this parliament? Did they vote against it? No. Every member opposite voted for it. Often in this place we hear language about walking on both sides of the street. Here we have a classic example of how it is done National Party style.

Of course, it is not just the National Party that is in trouble on this. The Liberals are also imploding on the impact of the GST on local communities. We have Liberals brawling with Liberals. We have Nats brawling with Nats. We have Liberals brawling with Nats. It seems to be one big happy family over there at the moment in terms of how this taxation reform, this new simple system which the Treasurer has introduced for the nation, is going down in community Australia. Today's Financial Review, for example, contained some interesting observations on this question. An article headed `GST jitters spark Liberal brawl' by Lenore Taylor and Louise Dodson states:

Severe pre-GST nerves in the Federal Government yesterday prompted a bruising backbench attack on the Industry Minister, Senator Nick Minchin, and saw Liberal MPs turn on their National Party Coalition partners.

The Prime Minister ... was forced to intervene in the fight between Senator Minchin and the backbench over used-car import rules, after government MPs labelled Senator Minchin a `disgrace' and accused him of lying.

Yesterday's internal brawling came as pressure intensified on the Government over the GST caravan park issue, with the Australian Democrats and Labor threatening to hold up key tax legislation in the Senate if the tax on caravan rentals was not changed.

And in another embarrassment for the Government, it emerged that economic consultant Econtech estimated that the GST would increase all residential rents in the long-term by 4.7 per cent, far higher than the Government originally estimated.

The article continues:

... Liberal MP Ms Christine Gallus lashed National Party MPs for undermining her efforts at selling the GST by publicly opposing it.

She was loudly acclaimed by Liberal Party colleagues and many who spoke expressed anger with their National Party Coalition colleagues for the campaign against the GST on caravan-park residents.

Despite the backbench pre-GST tension, the Prime Minister, Mr John Howard, told the party meeting that there would be `no nipping or cutting' of the package.

In fact, it would hold as it was. So much for that. This tax package is clearly going down a treat with those opposite. As far as the caravan park rentals question is concerned, I think it is fair to observe that those opposite are far from being happy campers at the moment.

The government's solution to all this—and we have already talked at length in this parliament about its $420 million taxpayer funded advertising campaign—is an insult to Australian business, coping with the physical costs of compliance. But the real insult is this: Arthur Andersen have calculated that the cost to the nation of business compliance is something in the order of $24 billion. The cost per business unit across the country is somewhere between $5,000 and $10,000. What has this government, apart from sticking its hand into every mum's and dad's pocket across the country to fund a $420 million campaign, done? It has provided a $200 per business subsidy. That is the travesty of travesties. This set of measures does nothing to simplify the business taxation system of the country. It does the reverse.