Wednesday, 21 June 2017
Treasury Laws Amendment (GST Low Value Goods) Bill 2017; Consideration of Senate Message
That the amendments be agreed to.
This is a matter that the government has been determined to see legislated through this parliament for some time. It is a matter that will enable a level playing field for Australian retailers to be able to compete on the same basis as those who are seeking to sell goods into Australia at low values that do not attract GST. This is an important area of levelling the playing field for small business. I am pleased that we have been able to get to the point where we have, through the Senate, and for these amendments to be coming back to the House that will enable this matter to be determined.
I note that, as part of that arrangement, there was a request and a requirement that a Productivity Commission inquiry be undertaken into the collection methods for this tax to be applied to these low-value goods. The government has gone through extensive consultation in arriving at the method of collection. In the spirit of ensuring that these measures can be legislated to ensure that that certainty is there going into the future, then that commission will be undertaken, consistent with the amendment that is before the House, but I want to make one thing very clear. The government's policy is to implement this collection on the basis of the vendor method. Those involved in this area should understand that. They should take the actions that they now need to take to prepare for the implementation of this on 1 July next year on the basis of the vendor method. The government will not be looking kindly if others come six months from this date or beyond and say, 'It's all getting too hard to implement this again. We're going to have to delay.' There can be no further delay on this. This must be implemented.
I am pleased that we have been able to come to a position through the Senate that will enable this new measure to be put in place and legislated. Now we simply have to get on with it. The sector has to get on with it. The systems have to be put in place. The collection method will provide I think a real model, not just here but in other jurisdictions, as jurisdictions around the world seek to deal with the moving feast that is the tax base of developed economies. This is an important change that will now enable these economies to deal with those significant changes.
This does provide the certainty that I think is necessary. We are pleased to have been the government that has brought these changes into being. It is regrettable that they could not have been done earlier than this time and that they now will not come into effect until 1 July next year. The fact that they are about to become law in this country is a welcome development. We appreciate working with other members of the parliament to achieve that outcome.
The Productivity Commission will look at all of this material and they will report promptly by the end of October. It is very important that we require GST to be paid on low-value goods. It will level the playing field for Australian businesses to compete with overseas retailers. It is an overdue measure. It is important to protect the integrity of the GST base. We have done the work to determine the best model for Australia that balances the needs of consumers, the timeliness of clearance of goods at the border and the impact on businesses in the supply chain. We cannot burden our domestic businesses with the current inequitable arrangements while we wait for the technology to catch up and support other hypothetical models. We do not believe another review will deliver superior models, so it is important that we all get on with the job of implementing.
Other jurisdictions are already taking action and they are focusing on taxation of goods by the vendor at the point of sale. This is why from 1 January 2018 Switzerland will be requiring vendors to collect GST or value added tax on low-value imports. Vendors are already required to charge and collect GST or VAT on sales within the European Union. The OECD and EU also recognised in recent reports that there can be no substantive reform without a focus of taxation of goods by the supplier at the point of sale, so that is what we are taking action on. It will be well received I think by the states and territories. I thank particularly the state and territory treasurers for their support for this measure, which at the end of the day will mean more revenue for them for schools, hospitals and other essential services.
We are glad that the government is accepting the will of the parliament on the Treasury Laws Amendment (GST Low Value Goods) Bill 2017. We are glad that the government is accepting these amendments because these are good amendments moved by the Labor Party. This is a commonsense result. It is a better result than the one the government was seeking. Let me be very clear. As I said in the House the other day and as I have said consistently, the Labor Party support the principle of a zero threshold on the GST. We support it because it is important for the competitive neutrality of our tax system or, to put it another way, to enable Australia's businesses, especially small businesses, to compete on a level playing field. Australia's small businesses are no longer competing with businesses in the same suburb, the same state or the same country; they are competing with businesses around the world, and businesses around the world have had a competitive advantage over our businesses. So we have supported what the government is trying to do.
The Treasurer said in his remarks that it is regrettable that this was not able to be done earlier. Well, the government is the government. This was announced by the previous Treasurer, Treasurer Hockey, in 2015. It was meant to come into force on 1 July 2017 and yet, on 21 June, we are debating this legislation for something which was meant to come into force in just 10 days time. The government is responsible for the delay here, but it is not the only thing the government is responsible for.
We took the in-principle support for this legislation and we consulted with the sector. My friend and colleague the shadow Assistant Treasurer—the member for Fenner—the member for Chifley and our friend Senator Gallacher consulted very widely on this. It became very clear to us that there were valid concerns about the implementation model which should be addressed through a Senate inquiry, and we instigated that Senate inquiry.
I again pay tribute to Senator Ketter and the other Labor senators who got to the nub of the issue in the Senate inquiry, so much so that even Liberal senators thought that this should be delayed by a year and recommended so such was the evidence before the Senate inquiry. The amendments that have been moved in the other house by us—flagged by me in this House and moved in the other house by us—delay this legislation by a year. Once this passes, it will come into force on 1 July 2018—it should be the law of the land. It does that, but it enables more time.
Very importantly, it requires the government to instigate a Productivity Commission inquiry into this. We do not want the commission to delay the matter. We do not want the commission to spend time sorting through issues unnecessarily. We want the Productivity Commission, for which we have respect on this side of the House—as do members opposite—to look at the implementation model. As I have said to those with concerns, if you cannot convince the Productivity Commission, then you will just have to cop the law of the land as it is. If the Productivity Commission recommends a change to the government, we would hope and expect the government to accept those change and come back to the House. So it is a matter for the government.
The amendments do not require the government to take action; they require the government to refer the matter to the Productivity Commission and for the Productivity Commission to examine the model only—not the principle, the model only—because we have had briefings from many affected people who say the model is simply unworkable. The Treasury evidence itself before the Senate inquiry showed that, at peak, this model would collect just over 50 per cent of the estimated potential revenue. If you want our businesses to compete on a level playing field, what you are doing is half the job by saying, 'We're only going to collect just over half the projected potential revenue.' So Australia's small businesses will be very disappointed with that model—that it was only going to fix half the problem.
There are people who say there are superior models. We are not in a position to design a model from opposition without the support of Treasury. We would not seek to do so, but we do have faith that the Productivity Commission can examine the issues and advise the government of a better way, if indeed a better way exists, as to how to implement that. We look forward to that.
It is regrettable the way the government has handled this matter but, nevertheless, I do thank the government for their engagement over the last few days. I thank the crossbenchers in the Senate for supporting the Labor amendments. Only with the crossbench support were we able to carry the day in the other place, which has put the government in a position where they accept these amendments in the House today. I think, very briefly, the member for Fenner is going to add to my remarks. We do not seek to delay this matter. The member for Fenner has a brief contribution to make.
As they said in Oceans Eleven, you had one job to do: you just had to implement a bipartisan reform in order to bring down the GST threshold on low-value imports—something that is supported in principle by this side of the House. We have consistently said: if it raises revenue and it can be efficiently done, then we will back it. But we have come to this point because the government now, with just days to go before the beginning of the next financial year, wants to bring in some significant changes which those responsible for implementing say have serious problems. We have had even threats that Australia might be geoblocked as a result of these changes. Had the government moved with greater lead time, we might not be in the position we are in today. But the reason that not just Labor senators but coalition senators called for a 12-month delay was their concern that the government had botched it.
This is not climate change. It is not industrial reform. It is not dealing with the rise of China. This is the implementation of a reform that has bipartisan support in a way that ensures that we get significant compliance. Labor's concern is that the government's preferred model, when it ripens, when it is at full implementation, will still miss 46 per cent of the low-value goods imported into Australia. That is why we have called for, and why the House will now be supporting, a review by the Productivity Commission—a body which is experienced in dealing with this issue; a body which will be able to look carefully at the model and see whether or not it can be improved. As the shadow Treasurer has said, this will now be the law of the land—this will go through—but we do trust that the government will listen carefully to advice from the Productivity Commission.
As we have seen so often, whether it be superannuation tax concession, cigarette excise or funding of community legal centres, the Abbott and Turnbull governments eventually come around to the policy leadership of Labor. Our focus is on achieving better economic outcomes for Australia. Our measures have always been about trying to ensure the government is able to better achieve the goals that enjoy bipartisan support. We just want them to be able to do the right job.
Question agreed to.