Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Finance) Share this | Hansard source

There are a number of national conversations going on at the moment. We have just discovered in the last hour, in an online article from James Massola, that one of them happens in the Monkey Pod room every week or so, where those who yearn for the good old days are plotting the return of the conservative forces on those opposite. But no matter how the conversations in the Monkey Pod room go, the national conversation that every Australian does know they need to be concerned about is the national conversation about the increase to the base and rate of the GST. Be in no doubt that those opposite will have a view that you cannot participate in the conversation if you have a view. They will say, 'You're not part of the national conversation because you say you don't want to do it.' They are happy to have a national conversation so long as you do not believe in anything, so long as you do not put forward a view. Well, Labor is in this conversation and Labor will oppose an increase in the GST. Labor will oppose a broadening of the GST because households cannot afford it, the budget cannot afford it and the economy cannot afford it.

On household impact, we have heard in question time today about the extent to which people in the suburbs are being hit by rental affordability and housing affordability. Whenever those opposite want to talk about the impact, they say, 'We would be able to come up with some sort of compensation scheme.' Be in no doubt that what they are proposing now is more inflationary and has a bigger cost-of-living impact than anything John Howard ventured to do. When John Howard brought in a GST, he removed the wholesale sales tax and reduced fuel excise at the same time. That minimised the inflationary impact. When you go from 10 per cent to 15 per cent, you cannot remove underlying taxes that are already gone. You have a bigger inflationary impact for the areas where the GST already applies and, for those where it does not, it goes straight from zero per cent to 15 per cent in terms of inflationary impact.

What does that mean for people receiving any layer of compensation? If you are in the payment system, if you are getting family payments, the government will say: 'But we will improve your family payments.' The problem is they are cutting them. The same families that are receiving cuts of up to $4,700 get told, 'If a GST comes in, we will give you a little bit back of what we have cut.' Guess what? People are not stupid. They know they are still behind in that equation.

If you are on a modest income, you have already had your income tax scales shifted, massively, because of changes that were brought in when Labor was in government. When we moved the bottom tax threshold from $6,000 to $18,200 we took a million people out of the tax system. Any change those opposite want to make on the income tax scales offers absolutely nothing for people on those sorts of incomes. If you are working in retail for, roughly, 20 or 18 hours a week—as many coupled families have one member of the family working those sorts of hours—you are, largely, already outside of the income tax system. Yet your fixed costs, if you live in a major city, may be completely disproportionate to the income you receive.

Let us not forget the information brought forward in question time today by the member for Parramatta on the first rental affordability index for New South Wales. If you are a family on $500 a week you are spending 65 per cent of your income on rent. Not only does that leave very little room to move, to pay the rest of the bills, the government will not even rule out making the rent dearer as well by applying the 15 per cent to the rent. They will not even rule out doing that.

With the housing boom in Sydney, Melbourne, Brisbane and various other parts of Australia, the difference in housing prices now means that even now people who might be regarded as being on good incomes have almost no room in their disposable income. They will be completely outside any compensation package, but it does not change the fact that if you hit the cost of living these families with big mortgages, in areas like Western Sydney, have almost nowhere to move.

When you increase the GST it means it costs you more every time you go to the supermarket. It means it costs you more to go to the doctor or the hospital. It costs you more every time your kids need schoolbooks and uniforms and when the bills for school fees come in. It means this year's Christmas will be the last that will not have the government's plan, potentially, being threatened against it once they get to admitting the conversation that they know they began. And if they do not want to begin it, they can rule out parts of it at any moment. They have not, because, at their heart, they always believe in providing more regressive taxation.

What are the reasons? The households cannot afford it but also the budget cannot afford what they are talking about. They are suggesting the GST will deliver cuts to personal income tax, cuts to company tax, abolishing stamp duty on insurance, abolishing payroll tax, funding to the states for schools and hospitals, cutting fuel excise and abolishing car rego fees. They say it is also going to pay down national debt.

We have been here before. When John Howard introduced the GST the budget ended up $21 billion worse off. If you go through the numbers and look at what the GST currently raises and how much more you would raise by expanding the base and increasing the rate, and then you look at how much they are willing to spend by doing that, the black hole from those opposite is astonishing. At the moment, in a year, the GST raises $57.3 billion. If you broaden the base and increase the rate to 15 per cent, by 2017-18 you get a further $65.6 billion, more than doubling the GST. On the issues they have said they want to spend it on, what do they do with this $65.6 billion? They spend $128.9 billion. That is what they have done. They have opened up a $63 billion black hole, every year, with the expectations they have set on the GST.

Beyond that, it is not only that the budget cannot afford it, with the expectations they have set up, it is also the fact that the economy cannot afford it. We heard, today, their arguments against wanting to do something on tobacco excise. We heard their arguments about wanting to put a price on carbon. Be in no doubt: if you price something you are putting a marker there that you want people to avoid the tax, that you want people to do less of that. That is when you price a good. That is the idea. The reason you price cigarettes is that you end up with a situation where fewer people smoke.

What is the policy intention of saying they are going to put a price on fresh food? What possible good policy outcome is there from saying fresh food will become more expensive? Medical care becomes more expensive. Education becomes more expensive. At every level, what they are proposing is bad for households, bad for the budget and bad for the economy. The only thing they will say is, 'Yes, but the GST is so efficient.' Yes, it is efficient at targeting people who cannot afford it. It is efficient at putting up every single price. It is efficient at hurting people, in the economy, who have a situation where they have very little financial room to move. And it puts a price on products where you would never have a sensible policy argument in saying you wanted to increase the cost of those goods.

The approach on this by those opposite—I will give them one thing—has been consistent. The only inconsistency is they do not admit to it. But they know, full well, that people on modest incomes get a bad deal out of this. They know, full well, that people who have the cost of living already stretched have nowhere to go. No compensation package will help them. Whatever might come in in compensation, the rule will apply that the compensation will be temporary and the GST cost increase will be permanent and will grow year on year on year. I can see the member for Mitchell looking so distressed. He does not want this to happen. He is swearing across the chamber at me as he goes there now.

The problem is the people who are really going to be pained by this are the people who are the member for Mitchell's targets, who he will never look after. Labor will stand in the way of those opposite, every time they try to hit lower- and middle-income Australians.

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