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Monday, 26 March 2001
Page: 25628


Mr EMERSON (6:07 PM) —The Taxation Laws Amendment (Excise Arrangements) Bill 2000 implements a series of broken promises on the part of the government in relation to the GST. In particular, it implements broken promises in respect of petrol and it implements broken promises in respect of beer. I will deal with those in turn. In relation to petrol, it was unambiguously stated by the Prime Minister before the last election—not in an obscure radio station interview but in an address to the nation—that the GST would not increase the price of petrol for the ordinary motorist. The Prime Minister told every Australian viewing that address to the nation that the GST would not increase the price of petrol for the ordinary motorist. That commitment was repeated by the Treasurer, also before the last election, when he said in a media release on 7 September 1998:

The Government's proposed New Tax System will not lead to any increase in petrol prices.

Just to reaffirm that commitment, after the election the Prime Minister said, `Yeah, the price of petrol will not go up as a result of the GST.' He said that in an interview with Philip Clarke on Radio 2BL on 28 March 2000. After the GST came into force, the Prime Minister denied in this parliament that he had ever made a promise in his pre-election address to the nation. He said:

The commitment made before the election was that the price of petrol need not rise as a result of the GST.

He said that in this parliament on 15 August 2000. There is the pattern. Before the election the Prime Minister and the Treasurer wanted to maximise the vote by saying to the people of Australia, `The GST will not increase the price of petrol for the ordinary motorist.' Then, after the GST comes in, the Prime Minister says, `I never ever said that.' Where have we heard that phrase before? He denied he ever said that the GST would not increase the price of petrol.

This legislation has the effect of reducing excise by 6.7c a litre and it also gives effect to the government's belated backflip of not proceeding with—in fact, abandoning—the 1.5c per litre excise increase that came in on 1 February. Dealing with the first one—that is, the reduction in excise of 6.7c a litre—that is given effect as of 1 July 2000 by this legislation. The problem is that the reduction in the excise was insufficient to counter the imposition of the GST. At a strike price of 90c per litre, the GST added 8.2c per litre to the price of petrol. The reduction in excise provided for in this legislation was 6.7c. The gap is 1.5c per litre. The government said, `Oh, well, we can explain that. There are industry cost savings as a result of the abolition of the wholesale sales tax and other taxes, for example, the bed tax in the Northern Territory.' Of course, the abolition of that bed tax would have a profound effect on the price of petrol in Sydney! It turns out that very few taxes are being abolished by the government, so these mythical savings from the abolition of these various taxes are not going to eventuate. The government promised before the last election that it would abolish 10 taxes with the implementation of the GST. In fact, it is abolishing only four: the wholesale sales tax; the bed tax in the Northern Territory and in some hotels in New South Wales; financial institutions duty from 1 July; and another minor tax. But it is retaining six of the 10 taxes that it said before the last election it was going to abolish as a result of the deal with the Democrats to bring in the GST.

Where would this 1.5c per litre saving occur? The government said it would occur from 1 July as a result of the abolition of taxes. But many of these are not being abolished at all, and the ones that are being abolished are being abolished from 1 July this year, not 1 July last year. Those mythical tax savings either are not going to occur at all or, to the extent that they do occur, will occur much later. So there is the 1.5c. The government said to industry, `You absorb that because you are going to get all these savings.' Industry said, `We are not going to get these savings. Why? Because on 1 July with the implementation of the GST we are not going to replace the entire tanker fleet; we are not going to replace all the bowsers, the underground tanks and so on. So there will not be any savings as a result of the abolition of the wholesale sales tax.' The government said, `We think there will be. We think these things will happen on 1 July 2000.' Of course, they were never going to happen, and because they were never going to happen that 1.5c a litre saving never occurred. As a result, from 1 July, the government broke its promise that the GST would not increase the price of petrol for ordinary motorists.

To compound the felony, with the February excise increase there would have been four increases in fuel taxes since 1 July last year. The first occurred with the implementation of the GST on 1 July. The second was an excise indexation adjustment in August of last year, which, to some extent, reflected price rises ahead of the GST. The third occurred when, to the extent that the price of petrol exceeded the 90c per litre strike price, which it did when world oil prices increased, the GST automatically collected another 10 per cent of the excess over 90c. The fourth took effect on 1 February 2001. So there were four increases in fuel taxes in just seven months.

The government said, `No, no, the GST will not increase the price of petrol.' It has clearly broken that promise. It was only after sustained pressure from the community, and in particular from the Labor Party, including through the Labor Party's petrol price inquiry, that the government finally realised that it had to do something about its broken promise. What it has done about its broken promise is provided for in this legislation. It has abandoned the February fuel excise increase of 1.5c per litre. But it did not take that back to 1 February; it abandoned it as of the date of announcement. That does not take us back to 1 July 2000. That does not remove the felony. We had the 1.5c increase on 1 July and further GST related increases since that time. The promise is still broken. This legislation, by reducing excise by only 6.7c a litre, continues the broken promise of the Prime Minister that the GST would not increase the price of petrol for ordinary motorists.

It was quite clear in the Ryan by-election that the price of petrol was an issue that affected the way people thought about the government and the way they voted. Many of the suburbs of Ryan are outer urban suburbs. People have long distances to travel. There are quite a lot of four-wheel drives in the outer suburbs of Ryan, where you get into bush suburbs. There has been no relief on diesel. We know now that in recent months diesel has been up to 10c a litre more expensive than petrol, which is the first time in Australia's history that that has occurred. The combination of high petrol prices and high diesel prices adversely affected the view of voters of Ryan towards this government.

If it has adversely affected the views of the voters of Ryan, the 12th most affluent electorate in Australia, I can assure members of this place that it has certainly adversely affected the views of voters in other outer urban seats, including in Brisbane the seats of Longman and Forde, both of which are held by the government. People are very angry about this government's wilful breaking of its promise that the GST would not increase the price of petrol for ordinary motorists. When we go to even more distant locations, when we go to rural and regional Australia, there is another broken promise. That promise was in a document released by the Liberal Party before the last election on 6 September 1998. It says:

Nor will there be any increase in the price differential between city and country areas. In fact, petrol prices should fall and the differential should decrease as a result of the reduced cost of transporting petrol.

The Liberal Party told the voters of Australia before the last election that the price of petrol in the bush would fall as a result of a GST. The GST adds 10 per cent to the base price of petrol. We know that the price of petrol in rural and regional Australia is higher than it is in the cities, because of higher transport costs and also, very significantly, a lack of competition in a lot of those locations. So, to the extent that the price of petrol ordinarily is higher, the GST adds 10 per cent to that, increasing the penalty, increasing the city-country price differential. The government said, `We're going to resolve that. We're going to solve that problem by having a 1c and 2c per litre petrol grants scheme that will offset the increases in the price of petrol caused by the GST,' but of course they have not. The most recent data released by the Australian Automobile Association demonstrates quite clearly that the city-country price differential has widened under the GST, under the so-called streamlined new tax system for a new century.

So, given that the Liberal Party told people before the last election that petrol prices should fall and the differential should decrease as a result of the reduced cost of transporting petrol, it is pretty easy to understand why the people of Australia are so angry with this government: wilful misrepresentations before the election, no intention of keeping those commitments after the election—and the government wonder why people do not trust them. They wonder why the Prime Minister has a reputation for breaking his promises. It is a well-deserved reputation.

Another aspect of this legislation relates to the administration of the diesel fuel rebate scheme. As a member of the petrol price inquiry, I have been going around Australia. We have conducted more than 35 hearings, most of them in rural and regional Australia. We were told time and time again, by people who took the time and made the effort to give evidence to that inquiry, that the diesel fuel rebate scheme and the other grant schemes that were supposed to cut the price of diesel and give a huge competitive advantage to businesses operating in rural and regional Australia have not had that result. They produced invoices which showed us quite clearly that diesel prices are now much higher than they were before the GST came in and before these various grants schemes came in. When we said to them, `Look, there are offsetting grant schemes,' they said, `We do not seem to receive the benefit of those because we can tell you that diesel prices are much higher.'

World oil prices have had an impact on diesel prices. We have never said that the only impact on fuel prices is the GST and other related taxes. We have also said that the increased world price of oil is one factor and the other is the ever diminishing value of the Australian dollar. The government does not seem capable of arresting the decline in the value of the Australian dollar because it hit a new low in the last 12 hours. It certainly is capable of controlling the level of taxation of fuel, but it has not done that. As a result, fuel taxation has increased under this government since the GST came in—breaking those promises and making the people in rural and regional Australia, and in outer urban areas in particular, very angry with the Prime Minister. It has certainly destroyed any reputation he had of being honest John Howard. The people of Australia do not trust him, and with very good reason.

I now turn to alcohol—to another series of broken promises. The government said before the last election that the price of ordinary beer would not rise by more than the rise in the general price level forecast at that time, which was 1.9 per cent. The ANTS package itself referred only to packaged beer, not to draught beer, but the Prime Minister made the general comment about beer—referring to all beer—several times during the election campaign. For example, he said on the John Laws program on 23 September 1998:

There'll be no more than a 1.9% rise in ordinary beer.

And then he said, `No, no, no, I was referring only to packaged beer when I was talking about that; not to draught beer.' I cannot see `packaged' or `draught' in that statement. He is being very economical with the truth—and that is being generous to him. He also said on the Alan Jones program on 14 August 1998:

Across the board there is virtually no change in relation to alcohol. A tiny CPI equivalent rise in relation to ordinary beer.

Again, the Prime Minister said, `Well, I wasn't referring to draught beer.' The reality is that the price of draught beer has gone up dramatically as a result of a decision that is coming into effect today with the passage of this legislation. The Prime Minister clearly broke his promise. We continue to receive representations from hotels, small pubs and clubs that they have been adversely affected by this broken promise of the Prime Minister, because the price of draught beer has increased very substantially. Therefore, the Prime Minister has broken his promise yet again.

Rochedale Rovers—near my electorate in the electorate of Fadden—are a small club that put a lot back into the community and they are now struggling. They are under severe stress as a result of the increase in the price of draught beer. They are experiencing what is, according to the Australian Hotels Association, being experienced all around Australia—a very substantial drop off in patronage because of the increases in beer excise that are contained in this legislation. Rochedale Rovers have asked me as an opposition member to do what I can to give them some relief and some hope that they may be able to survive this drop off in patronage. I ask the government, sincerely, to reconsider these measures—to give effect to their promise that the price of draught beer would not increase beyond the 1.9 per cent promised by the Prime Minister before the last election. I hope that the government will listen to that plea from Rochedale Rovers and from all the other small pubs and clubs around Australia that are struggling under the weight of this broken promise by the Prime Minister.

It does not stop there. In the area of pensions, the government have broken their promise given before the last election that pensions would go up by four per cent. Pensions are not going up by four per cent; they are going up by two per cent, because two per cent of it has just been clawed back in the latest automatic indexation increase. The Prime Minister says, `Oh no, pensioners didn't read the fine print in our document. The fine print in the document said that there would be an initial four per cent increase but that half of that would be taken back in the indexation adjustment of March 2001.' I do not know how many pensioners he genuinely expects would have obtained the document produced by the government, referred to the fine print at the back and said, `Oh, when the Prime Minister said that the pension would go up by four per cent, he didn't really mean that because I found footnote 33 and here in the fine print it is clear to me, as a pensioner, that that is just not going to happen. We are only going to get two per cent.'

The government were fast and loose with the truth and now they are paying the price. And they are very angry at Labor for saying, `Well, you're clawing back some of that pension rise.' They say, `No, we always said it was only going to be two per cent.' They did not. In all their publications they said it was going to be four per cent. The clawback was hidden in the fine print—just as it was in relation to the pension bonus: they diddled the pensioners of Australia on that because it turned out that many pensioners received no pensioner bonus at all and some of them received as little as $1. Yet, before the last election, the Prime Minister on Perth radio on 25 August 1998 said that all people over the age of 60 would get a $1,000 savings bonus. Again, on Brisbane radio on 18 August 1998, he said that for every person aged 60 and over there would be a savings bonus—a one-off tax-free payment of $1,000 in relation to any investment income that they might have. Clearly, he was telling the people of Australia that they were going to get a $1,000 pensioner bonus. After the election he said, `You didn't read the fine print—got you there. We're not going to give you a thousand bucks. We may give you nothing. We may give you $1, if you're lucky.'

That is the problem that this government faces—a problem of credibility; a problem of broken promises; a problem of a Prime Minister and a Treasurer who simply cannot be trusted. That whole lack of trust must be compounded by recent statements by the government in relation to the integrity of the income tax system because, remember, the burden of the GST falls most heavily on pensioners and low income earners. The government said, `Oh, yes, but we're going to reform the income tax system, too. We're going to put some integrity back into the income tax system. We're going to cut out the tax avoidance, cut out the rorts by the big end of town.'

The Treasurer's press release of late last week refers to a business tax reform implementation timetable. That is a euphemism for `We are deferring, either for a year or indefinitely, on the never-never, just about every measure that we promised at the last election that we would implement in relation to fixing up the base of the income tax system and making sure that the big end of town pays its fair share of tax.' I will just draw your attention to one particular measure that has been deferred indefinitely and that is the general anti-avoidance rule where the government said, `We're going to toughen up the general anti-avoidance rule.' That has turned out to be too tough for the government, because the big end of town said, `We like the general anti-avoidance rule just like it is, and we don't want it any tougher.' The government have tugged their forelock to the big end of town and said, `Okay, that's fine; we'll defer that indefinitely, because we know we are getting plenty of revenue out of the pensioners and low and middle income earners of Australia.' The burden of taxation has been shifted by this government onto the shoulders of those people and off the shoulders of big business. (Time expired)

Sitting suspended from 6.27 p.m. to 8.00 p.m.