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Tuesday, 24 November 2015
Page: 8767


Senator BULLOCK (Western Australia) (15:23): It is most disappointing that the GST is once again the subject of debate in this parliament, given the solemn undertakings offered to the Australian people by a previous coalition government that a GST, once introduced, would never, ever be increased. The fact that an increase in the GST is broadly being canvassed suggests that this government is running out of its own promises to break and now has to resort to breaking the promises of previous coalition governments.

For my part, I have always taken a consistent position with respect to the GST. I campaigned against it when it was proposed by John Hewson, when it was proposed by Paul Keating and again when it was proposed by John Howard. I campaigned against the GST on behalf of shop assistants because the GST is a regressive tax measure. It has no regard for capacity to pay. It impacts more severely on those who can least afford it. A poor person or family spends all of their income of necessity. A tax applicable to expenditure, if applied without exemptions, is a tax on all of the income of the poor. In fact, for some working people who are forced for a time to spend more than they earn, a GST is a tax on more than their income. The wealthy, by contrast, have the opportunity to save and invest. While this is a commendable practice, that proportion of their income is unaffected by a GST. As a result, poorer people suffer a proportionately higher level of taxation than wealthy people from the imposition of a GST. This unjust shift in the burden of taxation, away from those with the capacity to pay and onto the shoulders of those who can least afford it, is a measure of which we should be ashamed.

When the GST was first introduced, some of its regressive impact was somewhat ameliorated by the inclusion of exemptions. There are exemptions for fresh food, for health and education expenses. These exemptions make perfect sense. Everyone, even the poor, needs to eat. The poor spend a greater proportion of their income on food than the wealthy, and this exemption directly addresses the GST's regressive nature. Similarly, there is no community benefit in taxing people out of receiving necessary medical treatment. And, in any event, since a large proportion of health expenditure is funded by the taxpayer, the imposition of the GST would largely push up the government's costs.

Education is a less obvious but also important exemption. Many parents struggle to give their children a private school education. Every child educated at a private school saves the government some of the costs associated with public education. Applying the GST to school fees would raise some additional revenue but would force a considerable number of parents to withdraw their children from private schooling and send them to government schools. Given that the additional cost of publicly educating a child is far greater than the 10 per cent of the cost of private schooling, the perverse effect of applying the GST to education costs is that the revenue so raised could be less than the additional government expenditure incurred.

Without these exemptions the truth as to the regressive nature of the GST would be laid bare and undeniable. Yet the advocates of so-called GST reform set the removal of exemptions higher on their list of objectives. Indeed, much of the additional revenue proposed to be raised derives from the removal of exemptions. But what really gets the advocates of change to the GST excited is increasing the rate by 50 per cent to 15 per cent. There is simply no excuse for imposing this great big new tax on everything on the people in the small businesses of Australia, particularly given its regressive impact on the less well-off.

At this time, when real wages are in decline and nominal wage growth is at its lowest level in decades, how can families afford a five per cent increase in the price of everything and a 15 per cent increase in the cost of fresh food, health and education? How can this huge tax impost be justified? This is not tax reform; it is simply a huge tax grab, the burden of which will fall disproportionately on the less well-off.

What happens to the extra revenue raised? The GST was designed to provide a guaranteed income stream to the states. Don't start me on Western Australia's share. Now, however, the sales people who would increase it would have us believe in a magic pudding to fix all of our problems. We can use the GST to give the states money for health and education. We can eliminate the deficit, pay back the debt, compensate the poor, cut income tax and cut company tax. This is, of course, nonsense. Money can be spent only once, and I would not hold my breath if I were a state premier. The extra revenue is likely to be swallowed by the Commonwealth with the possibility of some token income and company tax cuts. The effect will be higher GST for workers and lower tax for voters in Wentworth. Malcolm Turnbull's so-called tax reform is nothing more than a reverse Robin Hood: robbing from the poor to give to the rich.

Question agreed to.