Clare O'Neil (Hotham, Australian Labor Party) Share this | Link to this | Hansard source

Tax policy does not always make for great dinner party conversation, but it is an incredibly important part of what the government does. At its heart, this is about the values that we share as Australians. Tax policy is a reflection of a national conversation about the kind of services that we want the government to provide, and then the critical question of who should pay for them.

This week, while we have been in Canberra, the Labor Party has tried to keep pressure on the Turnbull government as they continue to debate what we see as an incredibly damaging proposal for Australia's tax regime, and that is increasing the GST from its current rate of 10 per cent to 15 per cent, and additionally broadening the base of the tax to things that today are not covered—things like fresh food, health and education.

I want to make it really clear to my constituents in Hotham that Labor is opposed to a GST increase and opposed to broadening the base of the GST. We are opposed to this because these are proposals that would see families pay more for things like groceries and school books. A proposal such as this one would see pensioners having to pay more for their heating costs and for their energy bills. We all acknowledge in the parliament that there are tax issues that Australia faces, but what I wanted to talk about today are the five critical reasons that I think the GST is not the answer to those issues that we face.

The first reason that I wanted to cover for the parliament is that the GST is an unfair tax. It is what economists call a regressive tax, which means the smaller the persons income, the larger share of their income they pay in GST. One of the things about the GST is that is covers off essentials. It means that people cannot afford not to buy the things that the GST is applied to, and that is why households with minimal income, really big families and single parents are the groups of people who will bear the brunt of a tax increase. If these groups sound a little bit familiar it is because they have been the targets of many of the cuts that have been proposed by the Abbott government, and then the Turnbull government, over the last two years.

The unfair nature of the GST is not just economic theory. NATSEM, Australia's premier modelling institution has done the numbers on this one and made it quite clear that it is the families that are least well off that will bear the brunt of the tax. We often talk about the need for fairness across the tax regime as a whole. We know that if a GST proposal is brought to an election there will be plenty of sweeteners put on the table; there will be plenty of compensation mechanisms.

But compensating for the unfairness of the GST is a lot harder than it sounds. When Labor was in government we took a million people out of the tax system by raising the tax-free threshold. That is a million additional Australians who cannot even be compensated through income tax cuts, for example—because they do not pay income tax today. The critical issue about compensation is that it requires us to have a shared view about what fairness is. This, however, is a government, first under Tony Abbott and now under Malcolm Turnbull, which has done things like trying to make university degrees cost $100,000, something that would put university out of reach for many. They tried to put a tax on people going to the doctor, which would mean the sickest and poorest Australians bearing more of the cost of our healthcare system. The idea that we would trust this government to get fairness right, in a delicate area like this is, I think, completely unfathomable.

A GST increase will be bad for the economy. In a consumer driven economy like Australia one of the important drivers of growth is how much money consumers have in their pockets. If we raise the GST that will raise the price on just about everything that consumers in Australia buy, and that just means less money in the pockets of people around the country. That is one of the reasons why I know there are a lot of small business owners around the country who are really concerned about this proposal. Not only will it add to the significant paperwork that they have to deal with through their BAS statements but for grocers, butchers and newsagents—the people who rely on all of us as their customers—this is going to be a really significant challenge.

Labor is opposed to broadening the base of the GST because we do not want to increase the cost of things like health, education and fresh food. Governments should be trying to encourage people to spend on these things that are good for Australians, and increasing the GST would not help us with that. Finally, Labor has a better answer: we want multinational tax avoiders in this country to pay proper tax. We want to make the superannuation system fair. Tax policies are about values and we want the tax system to be fair. The GST is not the way to do it.