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Friday, 29 November 1985
Page: 2581

Senator SIDDONS(11.07) —I rise to speak briefly on the Sales Tax Laws Amendment Bill (No. 2) 1985 and related legislation as there are one or two matters that the Australian Democrats would like to bring to the attention of the Senate. First of all, we agree that the rationalisation of sales tax into three categories is a good move. It has simplified the legislation to some degree. Senator Messner made great play about what products should be classified as luxury products and what ones should not. There is no end to that little game. We could go on forever asking what is or is not a luxury item. The fact is that sales tax is always a highly contentious matter. When I first joined the Senate in 1980 the first really lengthy debate was about sales tax, and that went on for about nine months. Sales tax is by its very nature a very unsatisfactory tax. It is an on-cost which Australian industry has to bear. I am advised that very few countries in the Western world have such a tax. It is a very serious on-cost and it is a tax that goes a long way, as does payroll tax, towards making Australian industry uncompetitive with the rest of the world.

The Democrats would be very happy to see no wholesale tax at all. In fact, we brought down a responsible alternative Budget with a responsible deficit that eliminated completely wholesale tax. We did that in a very simple way. We said that if there was a flat value added tax of 10 per cent on all consumption goods in Australia, apart from the necessities of life, it would raise sufficient revenue to give very substantial tax cuts to attack the problem of the 46 per cent marginal rate of tax on average Australians, and at the same time would eliminate payroll and wholesale taxes. That initiative-a flat 10 per cent value added tax-would be a very worthwhile reform. I hope the Liberal Party will take it up one of these days.

Looking at the figures honestly, if we want to get a responsible Budget for this country, something will have to be done about broadening the tax base. We believe that the fairest and most appropriate way that can be done is by a broad-based one value added tax. It is not for nothing that something like 30-odd countries, including all those in the European Economic Community and most South American countries have, and New Zealand will shortly be introducing, a value added tax. It is a tax that is very hard to avoid. It leaves a paper trail so that tax avoiders can be tracked down. It is the fairest broad-based consumption tax that has yet been devised. We hope that one day we will see a flat one value value added tax introduced at a retail level. At least, finally it is a tax that applies at the retail level although it goes right through the manufacturing chain. But it is a tax that is fair and equitable and, in the final analysis, an incentive for industry to be more efficient.

Senator Messner —Is VAT your policy?

Senator SIDDONS —No, it is not our finally voted policy. It is certainly the policy of the Victorian division of the Australian Democrats but the whole question of what is the best sort of consumption tax will be put to our members very shortly. I am glad that the honourable senator interjected. I am speaking as a Victorian member of the Democrats and as a Victorian senator. We would like to see a value added tax. I believe our Party will support that but I do not want to mislead the Senate as it has not yet been voted on by our members. But it is inescapable that there needs to be a consumption tax in Australia if we are to reduce rates of income tax. If there is a consumption tax, we can look to eliminate a wholesale tax such as that we are discussing today and remove a very serious impediment to the cometitiveness of Australian industry.

I make it very clear that this is a Government initiative and we have adopted the attitude that we should not interfere with this tax in any way. But the two areas we have suggested should be amended, namely solar panels and atlases, seem to us to be such glaring anomalies that they at least should be raised. They were not matters on which the Democrats negotiated at any length. They were the least of our concerns, and those of the Government.

But in the solar heater industry, Solahart Solar Hot Water Systems has done a magnificent job in developing a very big export market for solar heaters. Those who visit California will see Solahart hot water systems on many homes in that State. Solahart is the first Australian industry to succeed in getting approval for solar heaters in Japan, which is no mean achievement. It has taken a very large percentage of the Australian hot water industry and we commend Solahart and its staff. I know them well; they are young people who are very keen and very aggressive and they have done a magnificent job. Incidentally, it is an organisation which, when I last looked into it, had a very large percentage of employee share ownership. I am not too sure whether it still does but certainly in the development stages it did when it developed these great export markets. That is a glaring example.

Every Democrat senator supports absolutely the need for, firstly, a sunrise industry and, secondly, the development of renewable energy sources. That is fundamental to the development one day of a sustainable economy. As Senator Norm Sanders mentioned this morning, the resources of our planet are finite. If they do not run out in our lifetime, it will certainly happen in our children's lifetime. We have to develop renewable energy sources if we are to sustain life on this plant. The sooner we get on with the job of finding the economical way of doing that, the better. We certainly have to find a way of harnessing the sun. The problem with that is that it is spread more or less equally all around the plant and in very small quantities. That sun energy is very difficult to harness. It is a deceptively difficult problem to harness the sun's energy. But it can be done and is being done. It is a challenge to do it in an economical way but I am sure that in the next century that will be the way that energy is produced. We do not want to stop new industries which have made a very good start in this vitally new area of developing renewable energy. We agree that in terms of this legislation it is a minor matter, but potentially it is a very important one in the future.

Senator Messner raised the issue of ice cream and the dairy industry. We are also concerned about the dairy industry. We would have liked to suggest to the Government that perhaps ice cream should be exempt. But then one could go from ice cream to chocolate and to goodness knows what else; there would be no end to it. One can make out a very good case why a whole series of products should be exempt from sales tax. I stress again that this is the Government's initiative. This is the way the Government wishes to raise revenue to introduce tax cuts which are absolutely vital. We support the Government's legislation for the reason that it is the Government's initiative; we do not support it in principle.