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

It is $260 billion, Member for Lowe—a lot of moolah. Instead of using at least part of that windfall to buy genuine tax reform, it has spent a lot of it on the buying of increases in income tax thresholds while leaving the rates substantially unaltered.

What has happened under this government? The 17c rate has been cut to 15c, the 42c rate has been cut to 40c and the 47c rate has been cut to 45c. For $263 billion you would think that the government could have done better than that. But it is not, in truth, a government of liberty, freedom and reward for effort. It is a government that is unambiguously the highest taxing government in Australia’s history. It seeks, through manipulating the books, to avoid that very unwanted tag, but it cannot get away with it. I will explain just briefly a couple of the bookkeeping entries that have allowed the government to pretend in the budget statements that it is not the highest taxing government in Australia’s history, whereas in fact it is.

We all remember the introduction of the GST in 2000. The GST replaced the wholesale sales tax. We well remember the Treasurer talking about this tax system that resembled the tax systems of Botswana and Swaziland—the old wholesale sales tax. The Treasurer booked to account the abolition of the wholesale sales tax, giving the appearance of a very substantial reduction in tax as a share of gross domestic product, but did not add to the accounts the much bigger tax that took its place: the orphan tax, the GST. The wholesale sales tax was collecting of the order of $14 billion and was replaced with a tax that then collected $24 billion and is now collecting $39 billion.

The abolition of the old tax was regarded as a tax reduction but the much bigger new tax that was introduced did not exist in the books. Why? Because the Treasurer decreed that it was not his tax at all. It was the orphan tax. He said it was the states’ tax. He asserted: ‘We don’t collect the GST. It’s the states’ tax.’ I was here in the parliament, as were the member for Lowe and the member for Moreton, and we debated the legislation day in and day out. In fact, I brought the legislation into the parliament—a very substantial document indeed. Now I understand from the Treasurer that this is a tax that did not pass through this parliament; it is not a Commonwealth tax. Who believes it is? The Auditor-General has ruled that it is a Commonwealth tax. The Australian Statistician has ruled that it is a Commonwealth tax. Every Australian who is not a member of this parliament knows that it is a Commonwealth tax, but the Treasurer and his party maintain the pretence that it is not. So, No. 1, that was the big bookkeeping trick that allowed him to claim that taxes went down as a share of GDP, whereas in fact they went up.

The second trick is that that tax, the GST, was used in part to fund the abolition of untied grants to the states. Again, $18 billion of untied grants to the states were abolished in the year 2000 and the Treasurer then said, in relation to those untied grants to the states, ‘Here’s a big savings on my outlays.’ So he is booking a big saving on his outlays, to pretend that this is not a big spending government, but not admitting in his accounts that the GST exists at all. If you do either of those things—add back in the payments that were abolished or count the GST—you get a very big taxing, big spending government, and that is the truth. The truth is that this government, by any honest measure, is the highest taxing government in Australia’s history.

We come to the situation where the government has squandered a wonderful opportunity. The windfall in revenue that has come the government’s way is a product of the economic reform program embarked upon by the Hawke and Keating Labor governments. That economic reform program produced a decade of record-breaking productivity growth.

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