Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

My question is addressed to the Treasurer. Would the Treasurer outline to the House the benefits tax reform has brought to all Australians? Are there any proposals that threaten these benefits?

Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I thank the honourable member for Moncrieff for his question. When this government reformed the tax system in 2000, it introduced a broad based goods and services tax to replace a number of inefficient indirect taxes. The taxes that the GST was designed to replace were wholesale sales tax, bed tax, financial institutions duty, stamp duty on marketable securities, bank account debits tax, stamp duty on non-quotable market securities, stamp duty on leases, stamp duty on mortgages, stamp duty on credit arrangements, stamp duty on cheques and stamp duty on non-residential conveyance of real property. Since the Commonwealth introduced the goods and services tax, the states have agreed to abolish nearly all of those taxes. But the states still refuse to abolish stamp duty on non-residential conveyance of real property. As far as the government is concerned, the GST was introduced to get rid of other taxes—not in addition to other taxes. The people of Australia deserve to have all of those taxes abolished. That is something that the Commonwealth will require the Labor states to do.

The Labor states have commissioned a report on federalism and the GST. I managed to get hold of it today. It has been produced by Glenn Withers and Anne Twomey, I believe.

Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

That wasn’t too hard. It was on the front page of the paper.

Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Link to this | Hansard source

Yes, it was on the front page of the paper. And it was a very accurate report on the front page of the paper, too, about a Labor state plan to increase the GST rate. I am glad I was reminded. You will see many of the Labor spokesmen stand with their backs to me at this point.

David Hawker (Speaker) Share this | Link to this | Hansard source

Order! The Treasurer will resume his seat. I would remind all members of standing order 62. Members should resume their seats rather than just stand around.

Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I have got hold of this report, which was commissioned by the Labor state premiers. It says, ‘If the Commonwealth had been serious about giving the states fiscal autonomy, it would have ensured the states had access to revenue that covered and eventually exceeded the loss of state taxes’—which we did—‘the loss of financial assistance grants’—which we did—‘and specific purpose payments.’ A 10 per cent GST covers the abolition of state taxes and financial assistance grants. But the premiers say that that was not serious enough and that it should have also covered the loss of specific purpose payments. Let me inform the House that specific purpose payments from the Commonwealth to the states are at $29 billion. In order for the GST to cover specific purpose payments, the GST rate will have to increase to 17.2 per cent. That is the report which has been commissioned by the state premiers—a report that says we should have been serious enough to introduce a 17.2 per cent GST to cover specific purpose payments.

Le me make this clear: there is only one way that the GST can be increased in Australia. It can only be increased if every state and territory wants it, if the Commonwealth agrees to it and if it is legislated through the House and the Senate. We now have eight Labor state premiers and chief ministers. If there were an increase in the GST, they would get all of the revenue. They have a very strong incentive for an increase in the GST rate. This government will not agree to any increase in the GST because we believe that the states already have sufficient revenue—which they are not properly accounting for—and we are not going to increase it. But if we had a new federal government with a majority in this House—which it would have by definition—and in the Senate, then that new federal government, with the agreement of the states, could increase the rate of the GST.

You would then have the situation, if the Leader of the Opposition becomes Prime Minister, where you would have an inexperienced Prime Minister with eight premiers and chief ministers, all with a lot more clout and experience than him, putting the weights on him for an increase in GST, which they would get the benefit of. There would be no checks; there would be no balances. I have said in this House before: when the state premiers say ‘jump’, the Leader of the Opposition cannot jump high enough.

Whether it is in relation to royalties demanded by the Western Australian government, whether it is in relation to infrastructure demanded for the Gold Coast by his candidate, Eddy, the other day or whether it is in relation to a whole host of other state demands, the risk of Mr Rudd being Prime Minister is the risk of an inexperienced person being beholden to the demands of eight Labor premiers and chief ministers, who have commissioned a report saying that they believe the GST should give them enough to cover specific purpose payments—and that is a 17.2 per cent GST. This is the risk with an inexperienced Leader of the Opposition becoming an inexperienced Prime Minister: that the Labor Party would be able to have its way—and the Labor Party, in government at every level, would be able to increase the GST.