Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

To continue from last night, I was pointing out to the House that both sides of parliament support, in principle, having a threshold of zero apply to the GST for imports, but that the government has botched the implementation of this measure, which needs to be fixed. I will go into a little more detail about the problems with the government's proposed measure. First, and perhaps most important, is compliance and the government's proposed and projected compliance rates. I mentioned last night that we had referred this bill to a Senate inquiry to allow aeration of the concerns we had and to allow questioning of both the Treasury and interested stakeholders, and I thanked, again last night, Senator Chris Ketter in particular for his excellent work in the committee, because it did confirm a lot of our concerns. Most particularly we asked the Treasury what the compliance rate would be—that is, what percentage of people obliged to pay the tax would actually pay it. The Treasury advised that it expected a compliance rate of between 25 and 30 per cent. That might sound reasonable to start with, 25 to 30 per cent. You might say, 'Well, this will take some time to get going.' But that was the expected compliance rate in the third year, not the first year. The Treasury told the Senate committee that the maximum compliance rate we could expect after three years would be around 30 per cent.

We also learned that by 2022-23 the compliance level would hit maturity—peak compliance under the government's model—and that it would be a whopping 54 per cent. So at maturity just over half of those obliged to pay GST on their imports would be complying. That is the best the government can do.

This is a very important matter not only for revenue for the states but, even more importantly, for competitive neutrality for small business. Small business are relying on this measure to give them a level playing field. Small business have been told it will give them a level playing field, yet under the government's proposed model, at peak, only just over half of the parties obliged to pay the tax would be paying the tax. If this is the government's idea of a level playing field, I think they have got it sadly wrong. The measure would be largely reliant on the goodwill of overseas operators to comply with the law of the land.

It is not a workable model. There were submissions to the Senate inquiry, both written submissions and testimony before the Senate inquiry, from electronic distribution platforms, including eBay, Alibaba and others. I completely accept that of many of these people giving evidence have vested interests. In some cases, they would prefer to see the threshold not change to zero. I completely accept that. But I also say it is incumbent on us to accept that, when they say the model is unworkable, simply cannot be implemented and is not one they can comply with, that should be taken very seriously.

The key problem with this legislation is that it is not platform-neutral. In fact, it would be quite disruptive of electronic platforms. The fact of the matter, I think, is that electronic platforms—and not just the ones I have mentioned—in particular have raised genuine concerns. Amazon and others have also raised genuine concerns. This gets to the nub of why we referred the bill to the Senate committee. It is because those concerns are very worrying to the opposition and I think at the very minimum those electronic platforms have made an arguable case that this proposed method of compliance is not workable.

Then we come to the matter of the implementation. With the best will in the world, if this was the perfect model, if the government had got this right, which I submit to the House that they have not, it would still come into force on 1 July this year. Today is 14 June. So we are talking roughly a fortnight away before the tax law changes quite dramatically when it comes to the introduction of the GST on all imports. This government has given Australian businesses and consumers a fortnight to change their models to implement the new regime before the new tax comes into place. This is a very significant issue because it is not just me who says this; it is members opposite. The Liberal senators in the Senate inquiry recommended a year's delay, and the Treasurer has ignored that recommendation from his own party members who said it is not workable for this tax to come into place on 1 July this year. It is not us saying that; it is members opposite saying that. So I would like to see what senators from the government in particular say when this goes to the other place and if they argue against what they argued for in the Senate inquiry and say it is all hunky-dory and fine—'This can be implemented in a fortnight, no problem. It can all be done.' It cannot be done.

As I said last night, this was a measure not from the 2017 budget. So the Treasurer cannot say, 'We only announced it in May, so we have to rush it through.' It was announced in the 2016 budget. He has had a year to get this right. He has had a year to get the implementation right. He has had a year to get the legislation prepared with necessary consultation, and the Treasurer has completely botched it.

Again, we sometimes get a call for more bipartisanship. But, just like with the bank tax, when the opposition try to be bipartisan and give in-principle support to the government, we find more and more that this government and this Treasurer in particular botches the implementation. The Treasurer has nobody to blame. He cannot blame the Labor Party or the Senate because we actually support what he is trying to do. We just are obliged to point out that the way he is trying to do it is fundamentally wrong.

I put to the House that Labor have developed a very sensible position. That position will be reflected in the second reading amendment I will move. But, more importantly, it will be reflected in in-detail amendments that my colleagues will move in the other place. Those in-detail amendments will seek to amend the bill. I think I can predict the result in this House, so I am not going to move those amendments in this House. I will move a second reading amendment to reflect Labor's position and then in the other place we will move detailed amendments and we will be calling on the crossbench to support these detailed amendments because they are sensible.

The detailed amendments will do two things. They will delay the implementation of the change for a year. We do that reluctantly because we want to see this come in, but we have no choice when the government have botched the implementation and, as I said, even their own senators, Liberal and National Party senators, have recognised it is not workable for it to apply from 1 July 2017. It should apply from 1 July 2018. I would have thought that could be a bipartisan position, given that that is the position taken by the government senators in the Senate inquiry. Alas, it appears not.

That is the first arm of what we will do. But it is not good enough. In the absence of any other action, that is simply kicking the can down the road—saying, 'This is a big problem, but at least it is a problem 12 months away.' We can do better than that. We can do better than simply saying we will delay this very problematic implementation by 12 months. The amendments that we will move in the other place would also require the government to commission a Productivity Commission review into the proposed model, the workability of the proposed model and the workability of alternatives.

Let me be clear: because we are delaying it by a year, it will be the law of the land. The law of the land will reflect that the GST needs to be levied from 1 July 2018. But we are giving the government an opportunity to fix the mistakes and to get the advice of the Productivity Commission, which has looked at these issues before. They come at this with some experience. The Productivity Commission will be able to examine and will be required to examine the government's proposed model and other models. I know and expect that those who oppose the government's model as unworkable will need to provide alternative recommendations to the Productivity Commission. It will not be good enough to simply to say that the government's model does not work. They will need to provide workable alternatives. I have confidence in the Productivity Commission to assess the workability of the government's model and to come up with suggested improvements or alternatives. Then it is up to the government as to whether they accept those not. The amendments do not require the government to accept them. That is a matter that government of the day. But I suggest it would be a very brave government, a very foolhardy government which has a Productivity Commission recommendation before it and chooses to reject it.

The amendments that my colleagues will move in the other place will reflect that the Productivity Commission will need to report back to the government in good order—I would suggest October this year. It does not need to be a lengthy review. That will give the government time to consider its position and if necessary to amend the legislation, and if they are sensible amendments they will have bipartisan support. We would not set up this Productivity Commission inquiry then to ignore its recommendations. It could pass the parliament quite quickly.

So what we are doing is really offering the government to meet them halfway and to say that we will support the GST applying from zero dollars. That is a good initiative. As I said in my earlier remarks, it is no criticism of John Howard and Peter Costello to say that they could not predict the rise of e-commerce in 2000. If they could have, they probably would have made it zero them. Nobody predicted that this would be an issue. It was a sensible threshold in the year 2000, but it is not a sensible threshold now. But we also meet the government halfway and give them away out of this imbroglio, this mess of the government's creation. We give them this way out of the imbroglio by suggesting a sensible way forward, which is an independent review by the Productivity Commission. The ability of the Productivity Commission to recommend to the government is one that I think should be respected.

I know it is unusual to have a Productivity Commission inquiry mandated by legislation. It is normally done by the Treasurer or another Treasury minister. But in this case I think it is satisfactory and acceptable that it be done by legislation. I would hope that the government would support this in the other house; but on the basis that they do not support it in the other house and we were successful, I would hope that they would take in good faith the position of the parliament and, therefore, in due course, the position of the Productivity Commission. So I move the second reading amendment which was circulated in my name:

That all words after “That” be omitted with a view to substituting the following words:

“whilst not declining to give the bill a second reading, the House:

(1) notes:

(a) there is in-principle support in the Parliament for reforming the GST Low Value Threshold, and giving Australian retailers a level playing field with their overseas competitors;

(b) despite being introduced in the 2016 Budget, the Parliament is only debating this bill with less than a month to go before its proposed start date;

(c) the Government has completely mismanaged the implementation of this measure; and

(d) there is wide stakeholder dissatisfaction with the proposed model, with stakeholders saying:

(i) the proposed model will be complex and costly to administer;

(ii) there will be unfavourable impacts on consumers with the costs of implementation being passed on; and

(iii) there will be issues surrounding compliance; and

(2) calls on the Government to:

(a) delay implementation of this measure for one year in order to get the measure right; and

(b) conduct a Productivity Commission review in order to determine the best method to implement this measure, with a report back to the Parliament by the end of 2017”.

I commend the amendment to the House. I commend the principle of the legislation to the House but note the government's very poor attempt at the details of the implementation of what is an important change, which could have sailed through the House in a bipartisan fashion if the government had got the details right.

See this speech in context