Joe Ludwig (Queensland, Australian Labor Party, Manager of Opposition Business in the Senate) Share this | Hansard source

Section 71DF(b) does stipulate ‘not later than’. I will go back to taws; this has been in place so long. What happened was that the government did put in place a scheme. A bill passed through the parliament. We had a duty deferral system, which was effectively a trading account for 30 days—you get the bill and you pay it. I am sure Senator Murray is familiar with that in business: you get a bill, you have 30 days to pay it and you pay it within that period. It was simple for business to understand, when they could pay the relevant account no later than a certain date.

Now Treasury have effectively come back and said that that was not a flyer, so the minister had to jettison the scheme and come back with this one, which provides for a revenue neutral system, so to speak. In doing so, the government has had to split the way it will operate, so that in each month it is revenue neutral. Originally, you would pay your duty. In the first month you would know what your duty was and you would pay it in the next month—like the operation of any business, where you have a 30-day trading account. For instance, as a tradesperson you go to the hardware store and pick up your goods. A couple of days into the next month—maybe by the 7th—the hardware store sends you the bill and you pay it, so that it rolls through. Each tradesman, business or whatever effectively has a 30-day trading account. I am sure Senator Murray is familiar with that.

That was the scheme that was originally proposed. It came to this place and we looked at it. Treasury said that it would cost $89 million, and therefore they did not want to look at it. As far as I can see, the minister agreed that that system was not going to fly. We have a system now which tries to confine each month in isolation. If it sounds confusing, unfortunately it is. It is terribly confusing, and if I have misrepresented how the scheme works then I am happy for some of that confusion to be swept aside by the minister. It is confusing in the way it is written; it will be confusing in the way it operates, because what they are trying to do now is confine it to each month so you will pay everything within the month.

Let us use the tradesman analogy again. A house builder goes to the hardware store and says, ‘I need this material today,’ and the store provides the material on account. Halfway through the month, on the 15th, the hardware store says, ‘We need you to estimate what you are going to get from here for the next 15 days until the end of the month.’ The tradesman says, ‘I’m not sure what work I might have on or what material I might need.’ The hardware store wants him to guess it, reconcile it and pay it. So you do not end up having a 30-day trading account; you are effectively confining the payment to the month itself.

Businesses do not operate like that, in my understanding. You could have a system where each transaction gets paid for immediately—in a consumer context—but most businesses work on 30-day, 60-day or 90-day credit, depending on the industry and on the business. The system that this legislation will put in place is not even a hybrid; it just does not make sense. It is not explained very well in the EM and I do not know whether it is going to work very well in practice. It is trying to confine it all and businesses will have to guess what is likely to happen, use an estimate, and then reconcile it in the next month. There is provision for it to be done by no later than a certain date. They could do it earlier, but why would they in this instance, because they still have to do a reconciliation with Customs in the next month.

I hope I have been able to add a little to that issue. I will not say I have made it any clearer. For those who might be listening to this, Labor certainly do not agree with the scheme. We think it is going to add red-tape cost to business and will be a confusing and difficult scheme to operate.