Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Trade and Regional Development) Share this | Hansard source

Labor support the Tax Laws Amendment (Simplified GST Accounting) Bill 2007 because it adopts Labor’s policy. I was interested to hear the member for Indi, who just spoke, berating the Labor Party for our approach to small business. This is what we have been recommending should be made available for small business since 2001. This is something the government has consistently said is not necessary and has now adopted. So of course we support the bill. Interestingly enough, we have been accusing the government of a lot of quick fixes in the lead-up to the election. This is no fix; this is sound policy and it is based on something we have been arguing for some time. And it is certainly not quick, as I have just indicated, because we have in fact been making the point, ever since the GST was introduced, that a simpler method of enabling small businesses to collect the GST must be developed to ensure that they are not burdened by being unpaid tax collectors for the government, and the government has found a more effective way for small businesses to collect that tax.

Interestingly, I also note that, as recently as three weeks ago in this chamber, on 28 May, Labor proposed an amendment that would have seen the effect of this legislation being implemented if the government had adopted it. On that occasion, the government voted against that second reading amendment to the bill. So it is an interesting change of heart on the part of the government. It is something they have rejected for six years, it is something they rejected as recently as three weeks ago, and now they introduce it as if it is some new policy thought on their part.

The point I would also like to make is that the government do not really believe this is necessary. We know that from what the Treasurer has said in the past. They are doing it because they are coming under pressure from the small business community, which is burdened by red tape. They know they have to move. They have heard the calls from small business, who have said, ‘Labor are putting forward a perfectly reasonable solution; why don’t you adopt it?’ to which the government have consistently said: ‘No, you don’t need to do what Labor is talking about. It’s not necessary. This is a simple new tax.’ They have resisted these measures until now. They have never believed in them, so why should the electorate believe the government when they say they will do it now? In our view, this is just something to get them through to the next election and, if they succeed, do not be surprised if we see them abolish the process.

I remember the Treasurer railing forth against this chamber on a number of occasions when he has talked about ‘their policy’, ‘their initiatives’ and Labor adopting ‘their solutions’. He proceeds on the basis of saying: ‘Trust the authors of the document, not the imitators.’ I might say, he himself does some very keen imitating of a former Treasurer in this place—the person whose name was just mentioned by the member for Indi—Paul Keating, because this is what he as Prime Minister said of the then opposition, the Liberal Party: ‘Believe in the authors, not the imitators.’ These words rebound on the Treasurer because the authors of this piece of legislation are the Labor Party—the authors who have put this forward for over six years, who have believed in it and who have prosecuted the case against a government who have consistently said, ‘It’s not necessary.’ Labor are the authors and it is in Labor that people should place their trust in relation to this particular initiative.

As I said, Labor have proposed a simplified method of collecting the GST since 2001. At the time we announced it, the Treasurer ridiculed it. He has consistently ridiculed it. When we proposed the ratio method for collecting the GST, a simplified method for its collection, he basically said—and this is a shameless piece of doublespeak—that such an initiative would cost business more and, in the same breath, said it would cost revenue more. How can it do both? It cannot be an additional cost to business and an additional cost to revenue. If there are savings it is certainly a cost to revenue, but it cannot cost business any more to do it. It is just like when the Treasurer shamelessly argued—in relation to their recently announced broadband proposal and in criticising Labor’s proposition to connect the nation—that not one cent of government money has to be spent to implement the government’s proposal, that it would all be done by the private sector. What is the billion dollars that the government has just rolled out of taxpayers’ money if it is not public resources? That is just the doublespeak of the Treasurer.

I remind the House also of the government’s promise prior to the 1996 election. Eleven years ago they said, in the words of the then Leader of the Opposition, Mr Howard, that they would have a commitment to ‘cut red tape for small business by 50 per cent’. That was their promise back in 1996. What have we seen since then? We have seen the review by the late Charlie Bell of small business and the cost impost on them. He did a very good job on reporting to the government. We saw a launch of that report. We saw a lot of words spoken about how the government were going to honour their promise. Then there was no action. Not one iota of change was introduced to lift the burden on small business.

Of course, there was a very important policy implementation in 2001—the GST, which Labor opposed. We said at the time that, if we did not succeed in our opposition to the GST being implemented, we could not unscramble the eggs. But we made a commitment to seeing it made a fairer tax and a simpler tax to collect. What this government did, rather than ease the burden on small businesses, was introduce the mother of all compliance mechanisms, the GST, which has since swamped small businesses in a mountain of paperwork. They have become unpaid tax collectors for the government. They are having to spend inordinate amounts of time, instead of with their families or building their businesses or doing the sorts of things they want to do, sitting down and doing endless amounts of paperwork to comply with the government’s requirements.

The fact is that the government has not reduced red tape by 50 per cent. It has not reduced it at all. It has in fact increased the red tape for businesses. If anyone wants any evidence of that, I refer them to the Productivity Commission research paper which talks about the potential benefits of the national reform agenda. It had this to say about regulatory developments in Australia:

While not all regulation is enshrined in legislation, it still imposes obligations and costs on business.

The recent increase in the burden of regulation impacting on business is well documented (for example, BCA 2005 and RTF 2006).

It goes on to say:

One crude measure of this increase is the growth in the volume of regulation. For example, between 2000 and 2004, as many pages of Commonwealth Government legislation were passed as during the period 1901 to 1969 …

In other words, in four years under this government it passed more pages of legislation and regulation impacting on business than in the 68 years from 1901. This is the government committed to reducing red tape? Give us a break! The same document says:

The Regulation Taskforce noted that there are more than 1500 Commonwealth Acts of Parliament and around 1000 statutory rules in force, as well as an unknown quantity of Commonwealth ‘subordinate’ legislation …

It goes on to say:

While reforms have generated net benefits to the community … the resulting regulation has sometimes been complex to administer and comply with …

And here is the real rub:

The cumulative impact of the growth in regulation is that businesses are subject to a vast and complex assortment of regulation, with a potentially considerable regulatory burden. This burden tends to fall more heavily on Australia’s many small businesses which have less capacity to deal with it. Regulatory burden also imposes broader costs on the government and the economy…

That is what the Productivity Commission’s research paper found, yet this government has ignored those findings.

I said before that we proposed at the time that, if the GST were passed, we would make it both fairer and simpler. We proposed initiatives back in 2001 to address the fairer side of it—to ease the burden in relation to small business. We proposed the ratio method for the collection of the GST. Essentially, it would not be compulsory; it would be an option that small businesses could exercise. It would be an exercise based on their past history of GST remittances. That would determine the ratio required to be used in the calculation. That ratio would then be applied to the quarterly turnover of the business. That is important, because that would take account of seasonal fluctuations in the way in which the business was operating.

This was a simple process. Two boxes only would have to be completed—one box with the ratio in it, based on past history, and the other box with the accurate detail of the turnover for the quarter. You would do the calculation and submit the remittance. You cannot get simpler than that. We said that there would be no requirement for a reconciliation at the end of the accounting period. We also said that the threshold that this approach would apply to would be businesses under the $2 million threshold.

Interestingly, the government ignored that proposal. They ridiculed it. Subsequently, they sneaked into the system their own variant of a simplified accounting method, but it had a very limited application. They introduced what were referred to as SAMs—simplified accounting methods. They were not ratios based on the individual business’s history; they essentially were schedules determined by the tax office.

We supported the introduction of these SAMs at the time but criticised the fact that they were limited in their application because, in essence, the methods could only be applied to businesses within mixed food retailing—in other words, small grocery stores, corner stores, fish and chip shops and bakers. ‘If you are going to introduce the principle of a schedule that businesses with those occupations could adopt,’ we asked, ‘why not any other business?’ It was a perfectly legitimate question, but we never got the answer. We asked the government why they would not extend it. The government commissioned another report. This was the Banks report, and it said, ‘Let’s extend it to other food businesses—restaurants, cafes and catering businesses.’ We asked the question again: why not to all small businesses?

In essence, this legislation does extend the methods to all small businesses. So the fact is there has never been a problem with doing what Labor proposed. The problem has been that the government refused to do it. There is nothing wrong with what we talked about. There was no technical problem, as this legislation now demonstrates, but rather a government refusing not only to honour their commitment to cut red tape but to embrace a solution for a tax they were responsible for introducing, which was not even around at the time they talked about the reduction in the red-tape target.

It is interesting, in relation to the simplified accounting methods that they have adopted, that they have also picked up an initiative which the member for Rankin talked about some years ago—enabling a snapshot method as well as a schedule method to calculate the ratio that small businesses would rely upon. We welcome that but we again pose the question: why not extend it? Why did they not extend it earlier when we were calling on them to do so?

I make the point that the ratio method is still an option we would like the government to consider because it gives choice and it gives opportunities to small businesses in the community. We want to make it as simple as possible for them to comply with the requirements under the legislation but then get on with the business of running their business or looking after their families. We still say that business should be given the opportunities that we have talked of in the past. We have argued consistently that there can be a more simplified method. The government rejected it. We say that the proposals that we have been talking about should be fully embraced by the government, even though we welcome this significant expansion and extension of the simplified accounting method to all small businesses.

I conclude where I began: this is Labor policy. This is something that should have been done six years ago. This is something that this government has been dragged kicking and screaming to embrace. It is something that they have rejected in the past without any valid explanation; it was simply the arrogance of the Treasurer, who did not believe that small businesses needed to have a mechanism for a simpler collection. He was contemptuous of those suggesting simpler ways for small businesses to calculate their taxes. He has been forced to embrace Labor’s proposal in relation to the thresholds, Labor’s proposal in relation to the norms method and a snapshot method, and Labor’s proposals in relation to the expansion of the simplified accounting methods.

When small businesses in this country finally get the opportunity to have a simpler way of paying the GST, they should not thank the government; they should thank the Labor Party. It is the Labor Party that has been arguing for this system despite the fact that we opposed the introduction of the GST. That tax having been legislated for and passed, we then set about the task of ensuring that the method of its collection was much more simplified to assist small businesses. So, when the small businesses of this country find that they have a much simpler way for remitting the GST, thank the Labor Party; do not thank this government. We support the legislation. We support the legislation because it is Labor’s policy.

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