Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Finance) Share this | Hansard source

It pains me to interrupt the member for Mitchell. He was on a roll—an absolute roll. I feel pity for them on that side because the government has come up with an argument that says, 'We're having a conversation, but you're only a serious participant in the conversation if you don't have a view.' That is effectively what the government is saying. The problem that those opposite have is that Labor has a very strong view on what happens if you expand the GST. It might upset them that in a conversation participants will often have a different view. On this one, our view is diametrically opposed to the direction that the government clearly wants to go. We will participate in that conversation for one very simple reason: those opposite should not think for a minute that what they are now talking about with the GST is simply a mere extension of what happened under the Howard government.

When the Howard government introduced the GST, yes, we opposed it then and, yes, there was an inflationary impact then. What they are talking about now is way beyond that and far more regressive than what happened then, and for one very simple reason. Look at what was abolished at the same time the Howard government introduced the GST. There was the abolition of the wholesale sales tax and there was a 7c reduction in the fuel excise. Price pressures were being taken off at the same time as taxation was being overlaid with a GST. It was still inflationary. It was still unfair. We still opposed it. But it has nothing on what they are talking about now.

What they are talking about now is expanding the remit of the GST, expanding the base to areas where it is currently zero and where there is no wholesale sales tax. The full impact of the GST gets added to the price. What happens to people on incomes is that they say, 'We can do the same thing as what happened when the carbon price was introduced in terms of compensation'. Sorry, you cannot. You cannot again triple the tax-free threshold. We took one million people out of the tax system. The member for Mitchell said, 'Oh they did nothing about tax reform for people.' Well, when it is at the bottom end, they just do not count it. They ignore that even at the top end it was Paul Keating who came into office and dealt with the 60 per cent top marginal tax rate when the Liberals gave him that. But at the other end, they will not touch the fact that we had the tripling of the tax-free threshold.

So what does that mean? It means that if you are not part of the payment system, if you do not have children under 13 years of age, if you are in the workforce as a part-timer, and if you earn $18,000 a year, then tax relief means nothing for you. A change in the income tax scale delivers you absolutely nothing. What those opposite then say is, 'We'll get tax reform and we can shift the scales.' Yes, you can, but for part-time workers and people on modest incomes, they will simply feel the full impact of the price increase.

For those in the payment system, the government is saying to them that right now they will cut their payments. The government will go through all the cuts they are talking about at the moment and then introduce a GST and say, 'Hey, we increased your payments', that they had cut only a year before. For people who are not in the payment system, if they are on modest incomes, the room is no longer there for the benefit to be felt for people on low and modest incomes on a tax cut to compensate for a shift in prices. The shift in prices would be more severe, much more severe, than what happened when the GST was first introduced. It would be much more serious than what happened when the GST was first introduced. Added to that, if they want to use the Howard model, look at what happened to the budget. The Commonwealth budget ended up $20 billion worse off after all the compensation was dealt with.

If the government is saying this is about balancing the budget, they can only be saying they will not be doing compensation properly. If they are saying they will do all of the compensation through the tax system, they can only be saying that people on lower incomes are going to be ditched. If they are saying it will all come through in tax cuts and there will be no increase in the net tax take, then they can only be saying there will be nothing done for people in the payment system. When you look at the different proposals that are in front of us, unfairness is there every step of the way. That is why a plan from the Liberals is this transparent.

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