Tuesday, 24 November 2015
Questions without Notice: Take Note of Answers
Goods and Services Tax
That the Senate take note of the answers given by the Minister for Tourism and International Education (Senator Colbeck) and the Minister for Finance (Senator Cormann) to questions without notice asked by the Leader of the Opposition in the Senate (Senator Wong) and Senator Gallagher today relating to the Goods and Services Tax.
I just want to go through a little bit of a history here if I can. We must go back to the 1996 election, when the then Leader of the Liberals, Mr Howard, said that he would 'never, ever' introduce a GST.
And—through you, Mr Deputy President—in 1998 he did, Senator Sinodinos. He took it to an election. So what I want to ask is: how long is 'never, ever' going to last for? In this case it was two years. So you see there is a trend, Mr Deputy President, because on this side they cannot wait to denounce any talk of a GST, although it is probably the most discussed issue in the papers since the change of leadership from Mr Abbott to Mr Turnbull and is ably backed up by the Liberal states.
While we are talking about the Liberal states, I just want to touch on the state of Western Australia, because one of the biggest—and rightfully one of the biggest—whingers about the GST is the Western Australian Premier, Premier Barnett. We could cut through the crocodile tears, because as a Western Australian I reckon West Aussies get ripped off. Do not worry about that. I reckon we are the engine room of the economy, and we have carried along a number of other states for a number of years. I know that I may get some opposition from my colleagues.
Senator Bullock interjecting—
Thank you, Senator Bullock. I have one on my side. But one must never forget that Mr Barnett, in his previous life when the GST was introduced, was actually the energy and resources minister and education minister in Western Australia. He is up to his neck in the way it was set up. So it is really disingenuous for him to stand up and start whinging about a process that he was very keen to support, vote for and help get through in the Howard government.
But I want to talk about the distinct possibility of a GST increase—not just in schoolbooks, uniforms and that sort of stuff. I want to talk about something very close to me, the possible impost of a GST increase on Australia's trucking industry. I want to talk about my own experiences, which no-one in this chamber could deny. In fact, no-one could even raise their voice and try to argue against the knowledge and experience I have in long-distance haulage in Australia, particularly pulling road trains between Perth and Darwin, because that was my life.
I did some quick calculations. If there were a GST increase from 10 per cent to 15 per cent, what would it mean to Western Australia's truckies? I took what I used to do, and I took a triple road train operator running from Perth to Kununurra. This is a weekly occurrence, and there are a number of our long-distance subbies and truck drivers who every week run from Perth to Broome, Derby, Fitzroy, Halls Creek or Kununurra or even service the Pilbara, doing two trips a week. But, at the end of the week, you can bet your bottom dollar they will cover around the same number of kilometres if they are a two-up operation and they will cover the same number of kilometres per annum if they are a single operation.
If we put a five-percentage-point increase on GST just on their fuel alone, what would it mean to Australia's truckies and to those communities that our long-distance truckies are servicing through the Pilbara and the Kimberley? A typical Kimberley runner—and this could, as I said, go for a Pilbara runner as well—would do about 400,000 kilometres per year on a two-up operation. I did two sums, but I will use the lesser one. I used about $1.30 a litre, because FuelWatch at the moment says diesel is about $1.40 in the Kimberley, and I took off the diesel excise rebate. The sums are quite scary. For an average truckie, a two-up operation, the driver's fuel bill would be $520,000 if fuel were to stay at the current rate. Of that, a five per cent GST on our truckie's fuel bill would be no less than $26,000 a year. I am not making this up. So what I am probably suggesting—
Senator Bushby interjecting—
before some peanut from the other side who does not know one end of a truck from the other says something; I am not suggesting you at all, but you had your mouth open—is that it will get down to this stage for Western Australia and Australia's truckies. You will get the truck. The best thing you can do is to get the number of your house in big, bold, brass letters, put it on your passenger door and cut a slot in the passenger door. Make it about the same size as your average mail envelope. Park it out the front. Turn it into the best, biggest, brightest letterbox in the street because—I have to tell you—it will be a lot cheaper than running it up and down the road if this mob are ever allowed to increase the GST, let alone the impact on shoppers and the communities in our far north. They will be absolutely screwed. (Time expired)
I too rise to take note of answers and to address some of the remarks by fearmongering Senator Sterle. I thought the WA preselection had been done, but clearly it has not. Again he is peddling the 'fact' that this government somehow is asserting that it is going to increase the GST by five per cent. He states that it has discussed the issues in the paper, asserting that it is a big conspiracy of the Liberal states—the Liberal-Nationals states, I might say. The sad fact of it, Senator Sterle—through you, Mr Deputy President—is that it just is not the Liberal states. In my own home state of Victoria, Premier Andrews knows and admitted last week that he has taken his opposition—the 'never, never' opposition—to the GST off the table because he is faced with the reality of running a very, very complex state where the interplay between our taxation system, the GST payment and indeed the cost of running state schools, hospitals, infrastructure et cetera at a state level is incredibly burdensome. He recognises that it is holding us back, and that is exactly what is occurring.
The ALP wanted this year to be the idea of big ideas. I wonder how that is going for you. On this side of the Senate we are not afraid of ideas. In fact, we welcome open debate and discussion around a variety of ideas about how to make our nation the very, very best it can be and how we can ensure that Australia is very well positioned to take advantage of all the opportunities that the 21st century can and will provide us if we rid ourselves of the burden of a complex and outdated taxation system interwoven with the complexities of our federation.
Our government is the best friend that the worker of Australia has ever had. That is because we on this side of the Senate want to grow our economy, to increase job security, to increase job growth. We are backing our potential; we are backing our latent capacity and our creativity, and we are doing it through a variety of means. We have signed off three trade agreements in recent times which mean thousands of jobs for Australians—thousands of jobs, particularly in regional Australia. We are rolling out a $50 billion national infrastructure plan. We are getting spending under control. And what I think is so exciting is that we are putting innovation at the centre of our economic plan. Science is recognised and encouraged and supported to be all it can be and should be to drive our economy and our nation forward into the 21st century. That is exciting stuff. We have some of the best scientists in the world around our country, and our government is the one that is prepared to back their innovation, back their creativity, put money on the table and support them to give us the technology that we need to go forward.
We do know that we have a bit of a productivity problem going on in this country. It has been masked by fantastic commodity prices over the last 10 years, but the sad fact is that we know it and you know it. We have a productivity problem. If we do not get that under control, we are all going to pay the price. In agriculture, for instance, the only way we are going to get any increase in productivity—it is well recognised—is through transformative technology. That means that we have to back our scientists. We have to back technological rollout and infrastructure in the regions so that our farmers can be as productive as they can. It is our government that by putting science at the heart, by doing a research review so that we can restructure and re-examine the way we fund research going forward in this country, will be backing our intellectual capital and our productive and economic future.
The reality is—and you do not like to admit it—that confidence is up. It is up because, unlike you, we are taking a holistic look at tax reform. Poor Ken Henry, constrained with caveat after caveat on what he could look at and what he could not look at! We understand that the relationship between our federation and tax reform in this country is complex. It is only common sense to look at it holistically, and that is exactly what we are going to do, unlike poor Ken Henry. He made 138 recommendations. Those that were implemented were bungled. It is a very, very sad fact. That is why in March last year he called for tax reform as an imperative, and that is exactly what we are doing.
I wish the Labor Party would back our attempts to do this and not be afraid of ideas. If Bill Shorten wants to put them on the table—and this is supposed to be your year of big ideas—let us have the conversation. We are not afraid of ideas. We are not afraid of putting them on the table. We are not afraid of discussion and debate, because that is what we are good at, and that is what we all should be doing in our national interest. (Time expired)
I rise to take note of answers given in question time today, in particular the answers to the questions that I asked Minister Cormann about the impact of the GST on the price of housing. The questions originate from the housing affordability crisis that is underway across our country. In the last two days, two different reports have been released. One, by Moody's, clearly shows that households, particularly in major capital cities, are having to spend more and more of their weekly income on mortgage repayments. The other, by National Shelter, shows the pressure that is on rental accommodation for people. It shows that more people are renting than ever before and that more of those people are experiencing housing stress.
The questions that I put to the minister were not about any particular proposal that they have but about whether the comments from the Housing Industry Association about how a GST would impact on the price of housing were correct. The minister did not answer any of the questions I asked, instead obfuscating around the debate that the Liberal Party has started—let's not pretend anything else—on this campaign around the GST and softening people up for a GST increase, which was started by the Prime Minister last month, in late October, when he agreed that a GST increase is on the table and is being considered by government. That is well-documented fact. Since then we have had other Liberals enter into the fray. We had the previous Prime Minister expressing his views, and we have also had contributions from Senator Bernardi and from others like Angus Taylor and Senator Canavan, who have all entered the debate with their own views about whether or not the GST should be increased and whether or not that is a good idea and how that should all be used. We have had people deciding that the GST could be used for funding the health and education cuts that have been imposed—the $80 billion that is still on the table for states and territories' health and education budgets.
So it is no surprise we have premiers worried about where the money is going to come from when they are facing running hospitals and schools without the level of Commonwealth funding that they were expecting, to the total of $80 billion over 10 years. We have other contributors from the Liberal Party saying that the GST will help deal with debt. We have others saying that it will pay compensation for those who cannot afford the GST. We have others saying that there cannot be any greater tax burden from this proposal. So let us not pretend there is no proposal being talked about by the government. You have a lot of people talking about the GST—
Senator Brandis interjecting—
Not in any detail, I agree, and sometimes at cross-purposes. So it is no wonder that the Labor Party is trying to get some understanding of exactly what the government is considering, and is asking sensible questions about how that will impact on everyday households. We can see in the area of housing, an area I am responsible for, that major industry groups are coming and adding their comments, ahead of firm commitments from the government, about their concerns about what a GST would do should it be added to the price of housing, and it is very clear. My question was: is the quote correct that it will it increase the price of housing by about $60,000? The data is very clear that it absolutely would. Depending on what capital city you live in, there would be significant costs from raising the GST from 10 to 15 per cent.
At a time when people are already struggling to meet the needs of their mortgages and more people are renting and more of those renting are in housing stress and more of those are in severe housing stress and pressure is on homelessness services that have had their funding cut by this government, that is not a very coherent policy position for the government to be in. We do not have a housing minister. We do not have a housing policy. As far as I can find, in the last couple of years none of the senior members of the Liberal Party has expressed a view on housing. We have an affordability crisis that seems to be growing and absolutely no interest from the government, other than a willingness to look at increasing the GST on the price of housing. I will argue that those things do not add up. If you want to address housing affordability you cannot look to the GST as being the solution to that problem. It will escalate the challenges already being faced by everyday Australians, and it should not be part of any consideration by this government. (Time expired)
I find it highly ironic that Senator Gallagher is talking about housing affordability, given her record and the record of the government that she was part of in squeezing tens of thousands of Canberra families out of the housing market. It was achieved through deliberate policies, which colleagues like Bob Day have commented on in terms of other states. The ACT was at the forefront of these deliberate policies. They own a lot of land and they deliberately push the price of land up to keep their profits up as a government, forcing families to take on more and more debt just to get into the housing market. Then they put a massive tax on units for those who rent or for those who want to purchase a unit. It is no wonder that Senator Gallagher would not want to stay and defend her record on this, because the government she was part of and then led was just outrageous when it came to forcing Canberra families out of the housing market.
What I want to do now is talk about the debate we are having about the GST or about tax more broadly, I think it is fair to say—
I am very happy to talk about it, but I will not talk about it in the same context as Labor state premiers seem to want to talk about it, which is, 'Raise the GST and give us more of it. Give as more money.' That is what certainly Andrew Barr in the ACT would like. That is what Jay Weatherill would like. It is, 'Yes, please. Go ahead and raise the GST, but give us the money.' I do not think that is the kind of conversation we should be having when it comes to tax reform. When it comes to tax reform we should not be taking the Labor premiers' or Labor chief ministers' way of doing things. What we should be on about, and what this government needs to be on about, is lowering the overall tax burden on Australians. That is the starting point for any conversation about tax reform. It is about lowering the tax burden. It is not about jacking up taxes so we can give more money to state governments, who often spend it in highly inefficient ways, whilst increasing the burden on Australian taxpayers. But let's not be afraid of the conversation, as the Labor Party appears to be. What state Labor premiers are saying as part of the conversation is effectively that we should just jack up taxes and give them more money. Even if I reject that, at least they are engaging in the conversation. At least they are engaging in a conversation about how we best make sure we lower the tax burden—well, they are not in that part of that conversation, but some state premiers are part of a conversation about the future of taxation in Australia.
I disagree with this prescription of higher and higher taxes for more and more spending. That is not the way to prosperity. The way to prosperity is actually to give Australians more of their own money. The GST of course—
If Senator Conroy believes there is no level of taxation that is too high for him, that is an opinion he is free to express, but it is an opinion I absolutely reject. Certainly I believe, and the coalition believes, that we should always be looking to keep taxes as low as possible to allow governments to do the things that they need to do and to allow citizens to have more of their money to spend on their priorities.
Senator Conroy's position is that if you give a tax cut to someone on $80,000, $100,000 or $150,000 a year then you are giving money to rich people. I reject that. We should be giving those people tax cuts—even if the Labor Party does not want to. We should be giving them tax cuts and we should be giving them more of their own money. Why don't you trust the Australian people to spend their money? Why don't you trust the Australian people? Why do you think you are better at spending their money than they are? This is the fundamental difference: we believe in the freedom of Australians to have as much of their own money as possible so that they can make the best decisions for their families. That should be the framework for any discussion about tax reform, rather than gouging more money out of Australians like Labor premiers and— (Time expired)
It is most disappointing that the GST is once again the subject of debate in this parliament, given the solemn undertakings offered to the Australian people by a previous coalition government that a GST, once introduced, would never, ever be increased. The fact that an increase in the GST is broadly being canvassed suggests that this government is running out of its own promises to break and now has to resort to breaking the promises of previous coalition governments.
For my part, I have always taken a consistent position with respect to the GST. I campaigned against it when it was proposed by John Hewson, when it was proposed by Paul Keating and again when it was proposed by John Howard. I campaigned against the GST on behalf of shop assistants because the GST is a regressive tax measure. It has no regard for capacity to pay. It impacts more severely on those who can least afford it. A poor person or family spends all of their income of necessity. A tax applicable to expenditure, if applied without exemptions, is a tax on all of the income of the poor. In fact, for some working people who are forced for a time to spend more than they earn, a GST is a tax on more than their income. The wealthy, by contrast, have the opportunity to save and invest. While this is a commendable practice, that proportion of their income is unaffected by a GST. As a result, poorer people suffer a proportionately higher level of taxation than wealthy people from the imposition of a GST. This unjust shift in the burden of taxation, away from those with the capacity to pay and onto the shoulders of those who can least afford it, is a measure of which we should be ashamed.
When the GST was first introduced, some of its regressive impact was somewhat ameliorated by the inclusion of exemptions. There are exemptions for fresh food, for health and education expenses. These exemptions make perfect sense. Everyone, even the poor, needs to eat. The poor spend a greater proportion of their income on food than the wealthy, and this exemption directly addresses the GST's regressive nature. Similarly, there is no community benefit in taxing people out of receiving necessary medical treatment. And, in any event, since a large proportion of health expenditure is funded by the taxpayer, the imposition of the GST would largely push up the government's costs.
Education is a less obvious but also important exemption. Many parents struggle to give their children a private school education. Every child educated at a private school saves the government some of the costs associated with public education. Applying the GST to school fees would raise some additional revenue but would force a considerable number of parents to withdraw their children from private schooling and send them to government schools. Given that the additional cost of publicly educating a child is far greater than the 10 per cent of the cost of private schooling, the perverse effect of applying the GST to education costs is that the revenue so raised could be less than the additional government expenditure incurred.
Without these exemptions the truth as to the regressive nature of the GST would be laid bare and undeniable. Yet the advocates of so-called GST reform set the removal of exemptions higher on their list of objectives. Indeed, much of the additional revenue proposed to be raised derives from the removal of exemptions. But what really gets the advocates of change to the GST excited is increasing the rate by 50 per cent to 15 per cent. There is simply no excuse for imposing this great big new tax on everything on the people in the small businesses of Australia, particularly given its regressive impact on the less well-off.
At this time, when real wages are in decline and nominal wage growth is at its lowest level in decades, how can families afford a five per cent increase in the price of everything and a 15 per cent increase in the cost of fresh food, health and education? How can this huge tax impost be justified? This is not tax reform; it is simply a huge tax grab, the burden of which will fall disproportionately on the less well-off.
What happens to the extra revenue raised? The GST was designed to provide a guaranteed income stream to the states. Don't start me on Western Australia's share. Now, however, the sales people who would increase it would have us believe in a magic pudding to fix all of our problems. We can use the GST to give the states money for health and education. We can eliminate the deficit, pay back the debt, compensate the poor, cut income tax and cut company tax. This is, of course, nonsense. Money can be spent only once, and I would not hold my breath if I were a state premier. The extra revenue is likely to be swallowed by the Commonwealth with the possibility of some token income and company tax cuts. The effect will be higher GST for workers and lower tax for voters in Wentworth. Malcolm Turnbull's so-called tax reform is nothing more than a reverse Robin Hood: robbing from the poor to give to the rich.
Question agreed to.