Anne Aly (Cowan, Australian Labor Party) Share this | Hansard source

I do not rise to speak on this bill because I am an economist. Heaven knows, I know very little about economics and do not profess to be a specialist in economics by any means. But I do love shopping and I do love the businesses and retailers in my electorate, and I have watched as many of those small businesses and retailers have closed their doors because they simply cannot compete with the volume of online retail that is out there. So that is where I am coming from when I rise to speak on the Treasury Laws Amendment (GST Low Value Goods) Bill 2017, because the bill is fundamental to the policy issue of ensuring that Australian retailers get a fair deal and are on a level playing field with overseas retailers when it comes to GST.

This policy issue is not new. It has been around for quite a while, particularly since the advent of online retailers, who are able to sell their wares to Australian consumers without incurring the same level of tax that our Australian retailers incur, which therefore puts Australian retailers in a disadvantageous position. I am sure that many members of the House could walk around their electorate and see how many Australian retailers have indeed had to close their doors because they are not getting the same level of business coming in; they could see just how much the online retail industry has affected them. So it is only fair—and also timely; perhaps a little over time—that we start looking at this issue and ensuring a fairer deal for Australian retailers if we are to live up to our rhetoric of supporting Australian business.

Labor have always kept an open mind about the government's proposal on this, and we do indeed support it in principle, as my colleagues before me have reiterated. We support a level playing field for all Australian businesses, which this measure arguably is intended to create, but we have concerns about the details. We want to make sure that we get the details right. We want to make sure that, when this is implemented, it is implemented in the right way. We want to see a model that is workable, that can be complied with and that does not impact adversely on consumers in Australia, but we are concerned about some of the issues surrounding the measure's implementation, particularly with regard to how the GST will actually be collected.

When Labor was in office, the Productivity Commission made it clear that such a bill was something very much worth pursuing, because it was clear that the cost of collecting GST from foreign retailers was outweighed by the actual revenue that we would get in GST from those retailers. In other words—to use an economic term, Mr Deputy Speaker!—it was cost-effective. Labor have been saying this for years and we have on several occasions urged the government to come to bipartisan agreement on the implementation of such a bill. After all, we agree—and I think pretty much everyone in this House would agree—that Australian retailers are 100 per cent correct when they ask, 'Why should we face a GST cost disadvantage compared to overseas online retailers?' I ask myself the same question. But let's just stop and pause for a minute, because I think it is always important to stop and pause when we are doing important policy work that is going to impact not just on businesses, not just on Australian retailers but also on Australian consumers. It is really important to get the detail right. So let's just stop and have a look at some of the fundamental flaws that Labor are pushing to have addressed, and what we can do about those.

The proposed bill applies GST to goods with a value of less than a thousand dollars that are imported by consumers into Australia. Let's say I get onto Amazon because I want to buy a copy of a book on, say, terrorism and the internet—because that is pretty much all the stuff that I read—and I purchase it from the British publisher. That would then incur GST because its value was less than a thousand dollars—although invaluable in its content, I must say! Currently, these goods are exempt from GST. The government is seeking to have this GST on low value imports take effect from 1 July this year, which is not very far away.

But here is the thing. The first fundamental flaw with this is that it is a vendor registration model. That means that overseas suppliers, including electronic platforms like eBay and Amazon and also redelivery services, with an Australian turnover of $75,000 or more in a 12-month period will be required to register and charge GST. In other words, it relies on their compliance. The Senate inquiry found that Treasury expects compliance rates of 25 to 30 per cent in the third year of operation. So by July 2019 the compliance rate will be 25 to 30 per cent, and in 2022-23 the compliance level will hit maturity—its highest level—at just 54 per cent. Any reasonable person can see that 54 per cent compliance does not deliver a level playing field. It simply does not.

The Senate inquiry also made it clear that overseas jurisdictions such as the US or China will not enforce the measure on the tax office's behalf. That means compliance is largely reliant on the goodwill of overseas operators. I do not know about you, but I am just not willing to put that into their hands. What that means is that the very purpose of this bill, which is to achieve a more even playing field for Australian retailers—the kinds of people I want to support; I love buying from Australian retailers and I love buying Australian-made—is already compromised by the government's mishandling of this from the very beginning. And I have to say, it bears a striking resemblance to a lot of this government's other fly-by-the-seat-of-your-pants policy thought bubbles that have not very much substance to them but a whole lot of rhetoric.

I will take this opportunity to reiterate the point made by my colleague the member for Whitlam with regard to the NBN. Since we are talking about online retailing—good luck, if you are in parts of my electorate, even being able to get online to buy something from an online retailer! I will also take this opportunity to pivot momentarily to the bungling of this bill as well as the bungling of the GST redistribution to my state of Western Australia.

But I will come back to this bill, moving on now to whether or not we have a workable model here. Submissions to the Senate inquiry had several issues with the government's preferred model, which is due to come into effect in July. Electronic distribution platforms like eBay, Alibaba and Etsy, for example—all were critical of being liable for paying tax on goods that they only serve as a platform for. They do not hold these goods and they do not own these goods. It is like asking a shopping centre to be liable for GST on the goods that are sold by their tenants. The key problem with this is that it is not platform neutral. In other words, an overseas manufacturer or holder of goods will pay as much tax—that is, if they comply; remember only 54 per cent of them are complying—as a distributor of goods.

Let me explain eBay, because I love eBay. Basically, eBay is where you can go online and buy things from individuals. I have posted things for sale on eBay before. You can buy things from people who no longer need them, or you can buy things from retailers. Since its inception, eBay has expanded to also accommodate online retailers. To have a policy whereby eBay, the distribution platform that is selling my second-hand goods, for example, pays as much tax as an online retailer that produces and holds goods just does not make any sense. It really does not. The other issues online retailers are concerned about are the complexity of the measure and that the low level of compliance would provide a competitive advantage to less-reputable firms.

We have talked about compliance and about the workable model and the fact that it is not a platform neutral. The third issue, which I think is a really important one, is the impact on consumers. The Senate inquiry found that this measure would basically end up in increased prices. In addition, the cost of implementation would be passed on to consumers. There was a concern that some platforms might also close their operations. I note that my colleague the member for Whitlam also addressed that.

So, once again, we see government policy being developed without any thought given to its impact, particularly on consumers. It is becoming quite tiresome to continually have to remind those on the other side that policy is not something you do in marble offices and towers, that policy actually has real impacts on real people. At a time when wages are at an all-time low and underemployment is at an all-time high, and when 700,000 Australians are facing lower wages in just 17 days' time, due to this government's insistence on cutting penalty rates, is this government really going to sit there and say, 'Oh, well!' to an ill-conceived policy that will force Australian consumers to pay more. I really hope not.

Finally, I want to talk about the implementation of the bill, because the Senate inquiry concluded that there would be significant challenges for some parties when implementing this measure. They were pretty much unanimous on the view that the start date should be delayed to 1 July 2018, a year and a bit from now, to ensure that issues around the model—the complexity of the model and the implementation of the model—could be worked out properly and we would actually have a workable, effective model ready to go in a year's time. Government senators made a recommendation for the government's own legislation to be delayed by 12 months, and they most certainly would support the government amending the legislation before the parliament now, to reflect a 1 July 2018 starting date. In other words, we would support a 12-month delay, just as the Senate inquiry did. This delay will ensure that we get the model right. We want to get it right and I am sure that those on the other side also want to get it right. Labor is prepared to work in a bipartisan manner with the government to ensure that we get it right, to ensure that this works.

But we also feel that a 12-month delay is not enough. It helps, but it does not go far enough in addressing some of those fundamental flaws around compliance, complexity and fairness, in allowing this bill to do what it actually has the potential and purpose to achieve, which is a fair and level playing field for Australian retailers. We have been clear on these issues from the very start: create a level playing field for Australian retailers competing with overseas retailers, and ensuring that you have a workable model that is easily complied with by overseas retailers and online platforms, without any adverse impacts on Australian consumers. That in a nutshell is pretty much what we want: a level playing field; a workable model; compliance; and no adverse impact on Australian consumers. We do not need to be hitting them again.

Alongside a 12-month delay to give the government this breathing room, we will also be pushing for an independent Productivity Commission review, not a Treasury review but a Productivity Commission review, into the current vendor registration model, assessing its impacts alongside other models with a view to recommending legislative amendments for the parliament to consider. This gives the government time and process to get the model right. Once again, we support this in principle but we want to make sure that this is right. We want to make sure that those fundamental flaws are addressed and that we deliver something that is worthwhile to the Australian people.

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