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Tuesday, 28 August 2001
Page: 30424

Ms GILLARD (8:22 PM) —Prior to the dinner break, I was addressing some remarks to the second reading amendment moved by the member for Wills. I seek to continue and particularly to make some remarks in relation to the first point of that second reading amendment—that is, that the House condemns the government for:

... imposing a complex and cumbersome tax system on Australian businesses rather than delivering the simpler system it promised.

The representations that this government made to deliver a simpler tax system are on the public record and are, I would venture to say, well known. But, for members of the House who might need to be reminded about those representations, John Howard, the Prime Minister, said back in 1996:

It is time to get government off the back of small business and to unlock their true job creating potential. A coalition government will slash the burden of paperwork and regulations on small businesses, with our aim being a 50% reduction in our first term of office.

They are the words of John Howard, the Prime Minister, on the question of business red tape. When the Prime Minister was asked specifically about the GST in 1998 and whether the introduction of the GST would reduce the number of pages in the tax act, he replied simply, `Yes, it will.' We have had the Treasurer making comparable representations. On radio in 1999, the Treasurer responded and said, in relation to the GST program:

Well I think that's right. And that's why we've got to get the number of pages of the Tax Act down. That's what we're working on right at this moment.

So we had clear representations from the leaders of this government that the GST system was going to be fairer, simpler and easier for small businesses, and that it was going to slash the burden of red tape.

Well, here we stand; and that claim is so far away from the reality that it is simply laughable. What we know is that the income tax act has blown out from some 3,000 pages to 8,500 pages. The GST legislation now weighs some 7.81 kilograms—and many babies are born in this country weighing less than that. It has already been amended almost 2,000 times. And, as we have discovered through a parliamentary committee, the number of private binding rulings made in relation to the GST in calendar year 2000 alone was 84,287. We do not know whether they are one-, two-, three- or four-page private binding rulings, but let us give the tax office, the Treasurer and the government the benefit of the doubt and say that each is a two-page private binding ruling. That means you would have more than 160,000 sheets of paper just in the private binding rulings alone to add to the 7.81 kilograms of GST legislation.

This would be bad enough, but perhaps tolerable, if we thought that we were at the end point and could say, `We might now have a tower of paperwork that you can't pick up or jump over and that needs a small truck to move it around.' But we know that we are nowhere near the end of the need to keep amending the GST legislation and that the future, if this government were to continue, would hold more of the same. In relation to that, I do not ask you to rely on my word; I ask you to rely on the word of PricewaterhouseCoopers, who today released their Retail Meter survey, which is an annual survey dealing with the question of retail industry confidence—and I will go into some details of that survey in a moment.

However, the important thing to note at this point of the debate is that, in launching that survey, Kevin O'Rourke—who is the indirect tax partner of PricewaterhouseCoopers, and so is an expert in indirect tax and an expert in goods and services taxes for one of the major accountancy and management consulting firms in this nation—told the launch function that 1,000 GST amendments are now on hold until after the election. This is a man who would be in a position to know. We know that pretty close to 2,000 GST amendments have already been dealt with by this House and, according to Kevin O'Rourke, another 1,000 are in the pipeline, queued up and waiting until after the election. Perhaps the minister at the table, who at least today remains the Minister for Small Business, might want to clarify some of this. But we are told by Kevin O'Rourke, in relation to the GST legislation:

There are large slabs of it which simply do not work, and that is why lots of amendments have been drafted.

Mr O'Rourke goes on:

But they're sitting there because no government at present is going to put those amendments through the Parliament and say that the GST doesn't work pre-election.

This is a very important statement from Mr Kevin O'Rourke. We know that in the last two election campaigns, but particularly in the last election campaign in relation to the GST, the government went out and said that it was going to cut the burden of red tape for small business and that it was going to simplify the tax system. It went out and said that there would be fewer pages in the tax act. But the reality over the last few years has been that all of those things were complete untruths: red tape has got worse, the number of pages in the tax act has got bigger, and small business and even bigger businesses— but most particularly small businesses—are weighed down by the huge volume of legislation. Now we have Mr O'Rourke telling small businesses in this nation, `Whatever representations this government makes today or in the coming weeks as we run up to the election, or whatever representations it makes during the election campaign, don't actually listen to any of them, because the reality on the day after the election will be that, if the government is returned, there will be another 1,000 amendments coming through this House and thudding onto the tables of small businesses around Australia.' That is a very important statement that tells us where we are going with our tax system, should this government continue to hold office.

I think the PricewaterhouseCoopers survey is important to note not only because of the comments that Mr O'Rourke has made in launching it but also because of the snapshot that it gives us as to where we are with economic confidence, and most particularly the confidence of the retail sector, at this time in Australia. As I said, the Retail Meter 2001 is an annual survey released by PricewaterhouseCoopers. Retailers were surveyed and, in this case, 97 retailers responded to the survey. The survey included business of all sizes in all sectors trading in all states and territories.

What did this survey find? It found that only 12 per cent of retailers considered the environment for their businesses in the 12 months to May 2001 to have been either good or very good. So only 12 per cent gave any form of positive response in terms of the business environment in which they are working. When you break those figures down and actually have a look at the details in this survey, you find that that 12 per cent is made up of one per cent who say that the environment is very good and 11 per cent who say that it is good, with the balance saying that it is average, difficult, or very difficult. In that regard, 45 per cent of businesses are saying it is difficult and 23 per cent are saying that it is very difficult. The overwhelming preponderance of businesses are coming along and saying, `We are doing it tough.'

What is almost more concerning is the way in which these figures have escalated over the last 12 months. Experience with the GST is causing businesses to be more negative about the business environment. The number who think that the environment is difficult has escalated from 22 per cent to 45 per cent over the last 12 months and the number who say that it is very difficult has escalated from three per cent to 23 per cent over the last 12 months. That is a 20 per cent increase in the number of businesses that think the environment is very difficult. That is what the GST has done to this economy.

When these businesses are asked, `Why do you think you are operating in this dreadful environment?' the main reason they cite is the difficult trading environment. They say that the attendant poor business performance is related to the GST. These retailers are divided into two categories—those that retail basic spending items and those that retail discretionary spending items. When they are asked to give a reason as to why their situation is difficult or very difficult, 65 per cent of retailers who retail basic items say the GST is the reason and 80 per cent of those that retail discretionary items say that the GST is the reason. Those figures indicate that it is the overwhelming reason. No other reason is given. The number that cite the Olympic Games or the exchange rate does not come anywhere near those figures.

In conclusion, I refer to the second reading amendment moved by the member for Wills. It is clear from the material that is before the House today that the GST has caused economic problems, particularly for the retail sector. Those problems are worsening the longer their experience of the GST. There is a business slow burn on in relation to the GST. There is a voter slow burn on in relation to the GST: the Northern Territory election showed that. I commend to the House that it adopt the second reading amendment as moved. (Time expired)