Monday, 19 June 2017
Treasury Laws Amendment (GST Low Value Goods) Bill 2017; Second Reading
The Treasury Laws Amendment (GST Low Value Goods) Bill 2017is indeed quite important, yet we see that it is being implemented and debated in this chamber just two weeks before its effective start date on 1 July. It clearly outlines the way in which the government has bungled the management of this very important issue from the outset.
The policy objective of ensuring overseas retailers are on a level playing field with Australian retailers when it comes to the GST has been around for a long, long time. I note that when Labor was in government, the Productivity Commission made it clear that this was something worth pursuing. Therefore, the objective is worthy. That was based on the economics of collecting the tax making sense: namely, that the cost of collecting GST from foreign retailers was outweighed by the revenue from those retailers, which, of course, makes sense. But, when we look at the government's solution to this problem—the legislation that is currently being debated—we see that this measure was announced in 2016 budget. Here we are after the 2017 budget, with the legislation only having been introduced last February.
It is simply unworkable that this legislation be in operation by 1 July this year. As we know, the bill seeks to apply the GST to goods with a value of less than $1,000 that are being imported directly by consumers into Australia. We know that these goods are exempt from the GST and that the government is seeking to have this measure take effect from 1 July. Under this legislation, overseas suppliers including platforms such as eBay and Amazon, and redeliverer services, with an Australian turnover of $75,000 or more in a 12-month period, will be required to register for and charge the GST. We note from the 2016 budget that this measure was due to raise $300 million over the previous year's forward estimates, and yet it still has not passed in this place.
Labor have an open mind on this issue. We are committed to fair taxation, and we support this in principle. It is about a level playing field for Australian businesses, which arguably the government intends to do with this legislation. But the details of it must be right, and plainly they are not. I note that my good colleague Senator Gallagher is moving amendments on behalf of the opposition to try to fix some of the bungles made by the government. We want to see a model that is workable, that retailers are able to comply with and that does not adversely impact on Australian consumers. So we have been concerned for some time about issues regarding this legislation's implementation, particularly how the GST would be collected. Let's talk through what a workable model needs to represent.
We note that submissions to the Senate inquiry raised a number of issues with the government's model. Electronic distribution platforms such as eBay, Etsy and Alibaba were critical of being liable for goods they simply served as a platform for, as opposed to owning or holding them, likening it to a shopping centre being liable for GST on goods sold by its tenants. They believe that the system would be complex and costly to administer, with the costs being passed on to consumers. You can see from this that a key problem with the legislation is that it is not platform neutral. We can see online retailers such as ASOS being concerned about the complexity of the measure, and the low level of compliance would provide less reputable firms with competitive advantage. We heard from freight companies and express carriers strongly opposing a system that required the collection of business numbers and vendor registration numbers, saying it would create complexity, resulting in unnecessary delays and increased costs which would be passed on to consumers. In terms of the impact on consumers, the Senate inquiry found that basically the measure would end up in increased prices. In addition, the costs of implementation were going to be passed on to consumers. There was also concern that some platforms might simply need to close their operations.
Lastly, on implementation, the Senate inquiry concluded that there would be significant challenges for some parties in implementing this measure. There were some submissions that were critical of the 1 July start date, ranging from saying it was impossible—with some vendors taking two or three years and express carriers another year after that—to saying that the time allowed for implementation was absurdly short. Here we are, just two weeks before the start date for this legislation. Ironically, we have the likes of Senator Macdonald here. Clearly the government senators have concerns among themselves, as Senator Macdonald's comments reflect. The Senate committee was in fact unanimous in its view that the start date should be delayed to 1 July 2018 to ensure the issues around the model, complexity and implementation could be worked through properly. So it seems extraordinary to me that it is up to the opposition to move amendments on issues like the start date, but I am pleased that Senator Gallagher is doing so, because it is only with those kinds of changes that this legislation is at all tenable. We can see that government senators made recommendations for the government's own legislation to be delayed.
Importantly, the opposition is also moving amendments that would see this provision reviewed by the Productivity Commission. If you look at the issues that I have already outlined in my speech in relation to a level playing field between different kinds of retailers and some of the complexities associated with it, it is very important that this measure be monitored from the outset and reported on so that further amendments can be made to this legislation in the future. Labor would support the government amending the legislation before parliament to reflect this recommended start date, and I hope they move with us to do so. This is a delay that will help get what we are doing in this chamber today right, and we want to work across the chamber in a bipartisan way to do this. Our principles on this issue have been clear from the outset: we need a level playing field for Australian retailers competing with overseas retailers while ensuring that there is a workable model that can easily be complied with by overseas retailers and online platforms, without any adverse impacts on Australian consumers.
In speaking to this legislation, I cannot let an opportunity to talk about the GST in this place go without mentioning the particular plight of Western Australia and the issues that confront our state's finances. It is directly relevant to this debate because, when we look at the states that are pulling their weight in raising revenue, Western Australia works very hard to do things like invest in its mining industry, which takes expenditure, in order that the Commonwealth is able to raise more revenue. In that context, revenue raising measures like this are also important because they will raise more revenue under the GST but will do so in a way that do not adversely affect people who are trying to pay for things like rent and food et cetera. But when it comes to Western Australia's fair share of revenue raising, it only gets 34c in every dollar of GST raised. The GST allocation system in this nation is broken. It is unfair that, when a measure like this is introduced, Western Australians, in buying online goods, will be paying GST on goods under $1,000 but will not be get any more than 34c back in a dollar to the state's finances and that is outrageous
The current collection and distribution method of GST in this country has a disproportionate effect on Western Australia, specifically in how it is being applied to remote areas and how gambling revenue is not assessed in the calculation. We desperately need a change in how the distribution is calculated so that it does not discriminate against WA. My priority is a better deal for WA whatever way we are able to make that happen.
Labor's priority is clearly about protecting living standards, jobs and providing a secure economic future for our nation, and this means a stronger economy that does not leave the people of my home state of WA left behind. I have to say, the unfairness of the GST distribution system, which was always unfair, is indeed being compounded by the mess made by the previous Liberal Barnett government in Western Australia. The state government is not only facing substantial budget pressures, which are a factor of the bad record of the previous government, but also the unfairness of the current GST distribution system. Reform to this system is desperately needed to alleviate some pressure on the state of WA. We should not bear the burden of paying back more debt and taking on the burden of more debt to cover the shortfall on GST.
The federal government clearly has a major problem with the tax system and it needs to be reformed. We have had a federal coalition government side by side with the previous state coalition in WA for some time that have taken no action on the GST. Liberal prime ministers have been playing a game where they promise Western Australia more GST without any jurisdiction but, ultimately, they have come up with no concrete plan or proposal, so Western Australia is very clearly being short-changed. When Western Australia does well, the nation does well. Currently, we are not getting our fair share of Commonwealth resources. WA is doing the right thing by the national economy by pulling its weight in raising taxes across the state by exploiting its resources in a way that helps the Commonwealth raise revenue and is being unfairly punished for that. The deterioration of iron ore prices and the mess of the Barnett government in Western Australia mean that Western Australia needs a fair go with the GST. Western Australia has done its fair share of the heavy lifting for the national economy, so reform on the GST distribution system is long overdue.
So, in closing, when we look at this issue and the fact that Western Australians will again, on either 1 July this year or 1 July next year, depending on whether the opposition's amendments are successful—and I note that our support for this legislation is contingent on those amendments passing—be picking up more of the burden of the GST. They will be getting back only 34c in the dollar of all the goods they buy that come from overseas that fall under the $1,000 threshold in this legislation.