Craig Emerson (Rankin, Australian Labor Party) Share this | Hansard source

That is right. In a short, 20-minute speech, where the member for Moncrieff had already run out of petrol after five minutes, he made several completely false statements. He then asked questions about Labor’s position on excise. The Leader of the Opposition has said that it would not be economically responsible to cut excise on fuel—certainly at this stage when there is no room because of the government’s economic mismanagement to further stimulate the economy. This is because of what I have just said: that further interest rate rises are very much a prospect. There is a 90 per cent probability of an interest rate rise before the end of the year—after the three interest rises we have seen already following the Prime Minister’s statement in the 2004 election that interest rates would be kept at record low levels.

Then the member for Moncrieff said that I should get on the phone to Peter Beattie and tell him to provide an extra subsidy of $1,000 for LPG conversions. In the parliament two days ago the Prime Minister was saying this, just after the Treasurer had said that it is all the states’ fault—that there is this fiscal expansion feeding into price pressures and feeding into interest rate pressures—because they are running deficits. So you have the Treasurer saying the states are not running budget surpluses anymore and that that is a problem and then you have the Prime Minister and the member for Moncrieff saying that they should create bigger deficits by providing a LPG conversion subsidy themselves. It is about time that the coalition got its act together. Who is the member for Moncrieff siding with: the Prime Minister or the Treasurer, because they are at odds? I thought he was the Treasurer’s man; but he has backed the Prime Minister. He comes and goes. He is very flaky.

In relation to the inoperative provisions being removed from the Income Tax Assessment Act, I would point out that, far from reducing the complexity of the Income Tax Assessment Act, far from making it simpler, in just 10 years the coalition has added 100 extra tax breaks to the income tax system—so-called tax expenditures. This is what the Business Council of Australia has said about the increase in complexity of the Income Tax Assessment Act:

Much of this complexity is due to the need to administer tax concessions targeting particular groups, or to prevent large-scale exploitation of existing ‘holes’ in the tax base by administrative means.

What an indictment of this government. The Business Council of Australia is right: this government has made the income tax system far more complex. Removing inoperative provisions does not make it any simpler; it is the operative provisions that make it complex. Now there are a lot more operative provisions as a result of the government poking 100 more holes in the Income Tax Assessment Act. When the government came into office, the Income Tax Assessment Act ran to 3,600 pages. That was back in 1996. It has now passed 10,000 pages. So it has gone from 3,600 to 10,000 pages. What sort of undertakings did the government give in relation to simplifying the tax system in this country? On 31 January 1996 the present Prime Minister, the then Leader of the Opposition, said:

... I will be establishing a small business deregulation taskforce. That taskforce will have a specific brief from me as Prime Minister, to report within six months of the new Government taking office. Its main responsibility will be to advise on ways in which the regulatory and paper burden on small business can be reduced by up to 50%.

After that, on 24 March 1997, in a ministerial statement the Prime Minister conceded:

The volume of tax legislation has become a tidal wave which threatens to overwhelm small business.

He said in the same statement:

During the election campaign we committed ourselves to the goal of reducing the burden of paperwork and red tape on small business by 50 per cent in our first term. I am confident that our response to the Bell report, along with other initiatives that we have already taken, will make a substantial contribution to that objective by the end of our first term.

They did nothing other than add to the complexity of the Income Tax Assessment Act. They added to the burden of red tape on small business. On the Alan Jones program about a year later, on 14 August 1998, Alan Jones asked:

Will the number of pages in the Tax Act be reduced by the introduction of a GST?

The Prime Minister said:

Yes it will because some of the anti-avoidance measures which take up a lot of pages are going to disappear. I don’t know by how many pages but it will be some reduction I understand.

If we go forward another year to see what has actually happened, we see that nothing has happened other than that they started working on this new GST, this new monster tax. So far from simplifying the system, they were massively increasing the complexity of the tax system in this country. On 22 September 1999 the Treasurer appeared on the Alan Jones program. Alan Jones said:

It’s unreadable and unintelligible, there’s a massive GST program that’s going to overtake us ...

The Treasurer said:

Well I think that’s right.

So there is a massive GST program that is going to overtake us. He probably said that ‘that was the Prime Minister’s fault because that was his great big tax adventure, not mine’. On the Alan Jones program he went on to say:

And that’s why we’ve got to get the number of pages of the Tax Act down. That’s what we’re working on right at this moment.

So on 22 September 1999 they were working on getting the number of pages in the Income Tax Assessment Act down. Rubbish. They were working on coming into this parliament every second day with a tax laws amendment bill to further increase the complexity of the tax act, to poke more holes in the income tax base, and to create an extra burden on small business and on anyone who pays income tax in this country. Let us go forward to a quote from Gary Banks, the Chairman of the Productivity Commission. He said on 22 December 2003:

The Income Tax Assessment Act—often taken as a regulatory ‘barometer’—has grown particularly rapidly since its inception. At nearly 7,000 pages, the ITAA is now nearly 60 times longer than the paltry 120 pages that did the job when it was first introduced in 1936.

That quote was made in 2003. So the Productivity Commission was complaining about the size and complexity of the Income Tax Assessment Act. Let us now look at 2004. Appearing on the ABC radio program Life Matters with Julie McCrossin, the host, was Michael Inglis, who is a Sydney based tax barrister. Mr Inglis said:

But I can’t resist. When I spoke to you last time, April of last year, Income Tax Act, 8,500 pages. Do you know what it is currently?

Julie McCrossin responded:

I want you to tell me—

I bet she did. Mr Inglis said:

We did a great service last year we really improved things.

He said:

Currently, in fact it’s a few months old, 10,500 pages for your income tax legislation. Add in GST, FBT, super, 13,500 pages, 9.5 million words.

That was on 15 January 2004.

The government has promised and promised and promised to make the Income Tax Assessment Act simpler. What does it come up with? It comes up with a bill to remove the inoperative provisions, whereas it is the operative provisions of the Income Tax Assessment Act that make it more complex. This legislation does in fact remove up to 50 per cent of the volume of the Income Tax Assessment Act 1936. This legislation is best understood not as a tax policy but as a forest policy. This legislation was designed to reduce the number of trees that are cut down to produce the Income Tax Assessment Act. It is a forest policy, not a tax policy, because it effectively does nothing to simplify the Income Tax Assessment Act.

Another way of thinking of the task of simplifying this legislation is to compare it with the human genome project, which had the goal of identifying all of the approximately 20,000 to 25,000 genes in human DNA and to determine the sequences of the three billion chemical base pairs that make up human DNA. It took 13 years to unravel the human genome. It has taken this government 10 years to try to simplify the Income Tax Assessment Act. More progress has been made on the human genome in 13 years than this government has been able to make in more than 10 years to simplify the Income Tax Assessment Act, and still it has made no meaningful progress. There are virtually no legislative changes in this bill that simplify the Income Tax Assessment Act. How do we know that? We are told that by the explanatory memorandum. This bill simply pulls out redundant provisions and does not simplify the Income Tax Assessment Act at all.

While we are on the subject of simplicity, yesterday the Treasurer announced that he was implementing a new GST-simplified accounting method for restaurants, cafes and caterers. In his statement, he said:

Businesses with an annual turnover of up to $2 million will be eligible for the SAM.

That is the simplified accounting method. The statement ends:

Further information on the new simplified accounting method can be found at www.ato.gov.au.

That is the website of the Australian Taxation Office. When you go to the website, you see that there are no details about the new simplified accounting method for the GST for restaurants, cafes and caterers whose turnover is less than $2 million. This new method is coming in on 1 October. We have had a bit of a debate in this parliament about airbrushing transcripts and on whether they appear or not. The Treasurer has announced a new simplified accounting method for the GST about which there are no details. He just wanted the announcement effect. A new simplified accounting method for the GST reminds me of another proposal—that is, the proposal of the Australian Labor Party called the ratio method. When I developed the ratio method and it was adopted as Labor Party policy, it was warmly received by the small business community. In fact, a spokesperson for COSBOA, on 8 August 2001, said:

I can say with absolute clarity that the members of the association who were in the room were very impressed with the idea because it was simple.

We had a Labor Party proposal to simplify the GST for small businesses with turnover below a specified level. It sounds like that is exactly what the coalition is doing, but we will not know until we see the detail when it is finally posted on the ATO’s website. We do know that in 2001 the Treasurer thought this was a terrible idea. The Treasurer issued a press release on 12 October 2001 headed ‘Beazley’s big BAS bungle’.  In referring to the ratio method, he stated:

... it can only work if businesses pay more GST than they are liable for!

…         …         …

If this—

that is, the ratio method—

amounts to less than the actual liability, then companies will choose it and open up a large revenue hole. But Labor says it has to be revenue neutral. It can only be revenue neutral if Labor can get an equal number of companies to overpay to make up for those that cherry pick the advantage.

That sounds like a critique of the new simplified accounting method—or has the Treasurer had a change of heart? We will only know when that information is posted on the website. But when the ratio method was released, apart from the spokesman for COSBOA saying it was a terrific idea, the minister’s department—the member for Groom was then the minister for small business—did a critique on it which was released by him to the media and which basically said that it sounded like a pretty good idea. The ratio method was described as having the potential to be a vote winner, after the then shadow Treasurer, Simon Crean, unveiled it.

So there was Labor, back in 2001, proposing real measures to simplify the GST, real measures for tax reform. This government has taken 10 years to produce a piece of legislation that does nothing more than remove inoperative provisions, retaining all the complexity of the Income Tax Assessment Act. It fails every test of tax reform. Whenever it sits a test of tax reform, it fails, and it deserves to be condemned for doing so.

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