Tony Smith (Speaker) Share this | Link to this | Hansard source

I have received letters from the honourable member for Watson and the honourable member for Fairfax proposing that definite matters of public importance be submitted to the House for discussion today. As required by standing order 46(d), I have selected the matter which, in my opinion, is the most urgent and important; that is, that proposed by the honourable member for Watson, namely:

The real cost of increasing the GST.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Finance) Share this | Link to 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.

Alex Hawke (Mitchell, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

It is like it is 1998 all over again. It is a time warp. It is a bit of Pulp Fiction. It is, 'Let's do the time warp again,' from the member for Watson, because here is today, not articulating of course the magic number 15, which the opposition has been talking about relentlessly, week in, week out, month after month, day after day, 15 this, 15 that, 15 per cent, 15 per cent, 15 per cent, and suddenly today—no 15 per cent. What has changed today? Why don't we hear about the 15 per cent GST that they are proposing today? Why don't we hear about the number 15, Member for Watson? Why did you have to revert to the 1998 debate about why the GST was bad?

The Australian public already know that the Labor Party opposed the introduction of the GST; one of the most retrograde events in Australian political history, opposing what was a sensible reform to the tax system of that opposition. Here we are, almost 17 years later, and the member for Watson is seeking to continue to prosecute the argument against the goods and services tax—a proposal that has been adopted by the Australian people, a proposal that has been adopted by every state and territory, which has worked to broaden the base of the tax system, abolish inefficient taxes and secure the funding base for the states into the future. And there is not one argument today, not a single argument, about why the Australian tax system is in need of reform.

If the member for Watson was serious about contributing to the conversation that we are having, if he wanted to have a discussion, he would have discussed why the 15 per cent is not good in his opinion and what combination of taxes need to be abolished to make it work. That is the conversation that the government is having with the Australian people: what combination of tax reform is needed to ensure that we have a tax system that is fit for purpose for the 21st century?

If you really wanted it, if you were really serious about opposing the GST, when you came to office in 2007, you could have taken action to reduce the rate of the GST. You could have had that conversation with the Australian people. But we know and every member on this side knows that the Labor Party did have a conversation about the GST while they were in office from 2007 to 2013. They did have a conversation. But it was not a public conversation. It was not a conversation with the people listening or the people in the gallery; it was not a conversation with the government. It was not a process about 'What can we do to reform the tax system?'

The shadow Treasurer Chris Bowen had modelled three scenarios for the increase to the GST, not a conversation with the Australian people—and the member for Griffith would be interested in this, because she was not here; it was the former member for Griffith's government that modelled this. There were three scenarios to increase the GST modelled by a Labor government, modelled by a Treasury at the direction of the shadow Treasurer. We do not have scenario 1; we do not know what scenario 1 was. We do not know what scenario 2 was. No-one in the Australian public knows what scenario 1 was or what scenario 2 was. What was the rate that the government of the day was considering—the Labor government? What was the increase to the base they were considering? But we do know what scenario 3 was. We have part of scenario 3 here, and I am happy to read from scenario 3 of the secret Labor modelling, commissioned by the shadow Treasurer on increasing the base and the rate of the GST, 'Scenario 3, increase the GST rate to 12.5 per cent'. You can see the relief over there that it is not 15. They do not want to talk about 15 today. They are very relieved.

Scenario 3 says, 'increase the GST to 12.5 per cent and broaden the base'. Would that be for food, Member for Watson? What were you intending when you were modelling 'broadening the base' of the GST when you were in government? What did you mean by 'broadening the base'? Did you mean fresh food? Did you mean education? Did you mean health? Did you mean rents? Because here is a document produced by your Treasury, produced out of your government, 'Scenario 3, increase the GST rate to 12.5 per cent and broaden the base'.

This document shows the estimated price impact on households. I am happy to record this for the Australian public, because the Labor Party did not want to have this conversation with the Australian people. The Labor Party held this conversation in secret with Treasury and its ministers but would not release this modelling for the Australian people.

Let's examine the impacts of an increase to 12.5 per cent on fiscal year 2014 to 2015—secret Labor modelling: increase in the rate, increase in the base. The estimated price impact on a two-income household with no children was modelled at $93.90. Would the member for Watson stand at the dispatch box and tell the House what his view in Cabinet was when the impact on a two-income household with no children was $93.90 on every household. Did you discuss compensation arrangements in Cabinet? Did you raise compensation arrangements when you considered scenario 3 when you were in government? The impact on one income household with no children was $69.90 every single week. That is $70 a week, every week, on a one-income household with no children, every single week. Did you in Cabinet raise the fairness or the equity of $70 a week for a one-income household with no children when you and your government proposed an increase in the rate and an increase in the base to 12.5 per cent as part of scenario 3?

Mr Burke interjecting—

The member for Watson is saying they did not propose it and they deny it. I table scenario 3 so the Australian public can have a look at the modelling that was proposed by the then Labor government. Scenario 3 is now permanently in the record of the Australian parliament, as proposed by the then Labor government and the former shadow Treasurer.

The Labor Party comes in here today and says, 'What is the real price impact of the GST?' That is your matter of public importance for today. You know what the real price impact of the increase in the GST is. You know what the real price impact is, Member for Watson, because you modelled it.

What we do not know is what scenario 1 is or scenario 2 is. But you can bet your bottom dollar that 15 per cent figured in scenario 1 or scenario 2. If that is wrong, if I am making an outrageous slur on the member for Watson or the shadow Treasurer, they can come to the dispatch box and correct the record, because I would assert that scenario 1 or scenario 2 of the secret Labor modelling to increase the GST modelled a 15 per cent GST. That is my assertion in this House. Stand at this dispatch box after this and make a personal explanation if I am wrong, member for Watson. Get up and say, 'No, that is outrageous and I never modelled a 15 per cent GST—never, ever.'

It is absolutely pathetic for you to come here today and suggest that this government is doing something to the GST that any reasonable, rational government would not consider doing—looking at the tax mix. As the Prime Minister says day in and day out, in response to every one of these ridiculous questions from the Labor Party: no government would consider altering the GST in isolation. There is no Commonwealth government that would not consider the compensation arrangements for what is a generally regressive tax. There is no government that would not consider the income tax deductions needed to go hand in hand—well, maybe a Labor government. But no coalition government would not consider what other taxes had to be reduced so the overall tax burden came down.

But there is no doubt—and most Australians know—that future Commonwealth governments need to consider the tax mix in Australia. We need to continue to get the tax mix right. We need to control expenditure—absolutely. We need to get control in the growth of expenditure. But we also need to consider the tax mix to ensure that we have an efficient tax system that is fit for purpose in the 21st century. That is the genuine conversation that the Turnbull government is having with the Australian people. We are not closed to options. We are not ruling out the GST. The member for Watson today lectured us against the GST altogether. If you have never done anything to remove a GST at all, or have no idea how to replace that revenue, why would you waste this House's time today? Why would you come in here and lecture us about how bad and how wrong a GST is, especially when you were part of a government that modelled scenario 3 to increase the rate and the base to 12.5 per cent? Although, we do not know all of the details yet.

Finally, in rounding out this MPI which, of course, is a waste of this parliament's time, I just say to the member for Watson: please, do not come into this House and lecture us on housing affordability. Many people in here may not know, but I will never forget that you were a member of the Bob Carr state Labor government. It was the Bob Carr state Labor government that proposed that Sydney was full and that we should put green zones in my electorate and in all other electorates to slow down and stop development completely. That created the largest single bubble in housing in terms of supply and demand in Australia's history. It was deliberately manufactured and created by a state government. It has taken over a decade for the market to even slightly rebalance that decade of undersupply. It was deliberately created by his Labor government. He comes in here and says, 'I've discovered housing affordability. I feel for people who cannot afford their rents.' Well, when you were in the New South Wales Labor government, you could have stood up to Bob Carr and said, 'No, Sydney is not full, and we have something that we need to do about housing supply.'

This MPI is completely a waste of this parliament's time. It is the case that this government is, of course, going to— (Time expired)

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for External Territories) Share this | Link to this | Hansard source

Today, during question time and again now, we have heard the government, through the member for Mitchell, say very little about the importance of tax reform. But they have tried to defend their position on proposing the increase in GST by arguing that, because the Labor Party modelled the then opposition's position on the GST, somehow or another that was our position. That is clearly not the case. We never proposed an increase in the GST. It is very clearly not the case.

Honourable Member:

An honourable member interjecting—

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for External Territories) Share this | Link to this | Hansard source

I have just explained why we modelled it. Even a young person like you, member for Mitchell, might start to understand the realities of Australian politics and understand it is prudent to look at what the opposition proposes. It might well be that you actually do need to cost it and find out what it means for the budget.

What we have heard today from the member for Watson is that the government's own proposals would cost $123 billion. That is the total cost of this exercise on the budget. It would mean that they would be $63.5 billion out of pocket. That is what the black hole would be for them to pay for their compensation measures. Nothing will compensate the people of my electorate for the stupidity of proposing a 15 per cent GST—an increase in the GST by 50 per cent. I do not understand why any member of the National Party or any regional member in this House is not saying to the government, 'It's improper, inappropriate and bad news for us if you increase the GST on regional Australians.' Regional Australians are the poorest of Australians; they are sickest of Australians. They are the ones who will pay more as a result of an increase in GST on every aspect of their lives, and yet National Party members sit here and say nothing, except that they support it. Let's just say this: we understand precisely what they mean.

In my own electorate of Lingiari, where the poorest of Australians live, the NT government's Department of Health publishes the Market Basket Survey, which compares prices in each region of the Northern Territory with the prices in the major centres of Alice Springs and Darwin. For comparison, both the major supermarket price and the corner store price were used. The results are very sobering. The average cost of the food basket was $824 in remote communities, $726 in district centre corner stores and $558 in district centre supermarkets. If you add an extra 50 per cent for an increase in the GST, the average cost of the food basket would become $865 in remote stores, $762.30 in district centre corner stores and $585 in district centre supermarkets. That means, on average, a family living in a remote area of the NT—there are close to 200 remote communities across the NT—will be paying an extra $280 for the same basket of goods that would be purchased by their brothers and sisters in Darwin or Alice Springs. The difference would be even greater for those who live in Sydney or Melbourne. These are the people who suffer as a result of an increase in the GST to 15 per cent. These are the sickest of Australians.

We all know that the AMA and every other reputable health organisation in this country has said that we should not be contemplating an increase in the GST because of the health impacts. An increase in the GST by 50 per cent is a massive health tax. It is a tax on the health of every Australian, particularly those who live in the poorest communities and those who are the most vulnerable to illness. You do not have to be Einstein to work out where they are. As a former minister for Indigenous health, I can tell you. They are sickest of Australians. They need food security. They need to be able to buy good food at good prices. What we are seeing here is an exercise that would increase the likelihood that they would become sicker and would die earlier because they could not get access to good food as a result of this GST increase. That is the likelihood here.

Let's be very clear about it: this is not something which should be just brushed off. If you do not want to have this GST, if you are not going to increase the GST by 2½ per cent or five per cent, or whatever you might be going to do, say so. And for the Prime Minister to stand here in such an arrogant way as he did today—smug, arrogant and patronising: what he ought to do is take the Australian people into his confidence. If you do not intend to increase the GST, tell us now, and let's make sure we do not live with the pain of wondering how much it will be and what it will mean to those poor Australians living in remote and regional areas.

Michael McCormack (Riverina, National Party, Assistant Minister to the Deputy Prime Minister) Share this | Link to this | Hansard source

I have a bit of regard for Simon Crean—and you might wonder why I am starting my contribution in that way. Simon Crean, of course, is the former member for Hotham, and back in November 2003 he recorded the lowest percentage for popularity of Labor leaders in memory—14 per cent. The member for Maribyrnong, the current opposition leader, will, if he keeps going the way he is, actually go lower than that—pretty soon, probably in the next Newspoll.

Luke Hartsuyker (Cowper, National Party, Deputy Leader of the House) Share this | Link to this | Hansard source

He'll win the Gold Logie!

Michael McCormack (Riverina, National Party, Assistant Minister to the Deputy Prime Minister) Share this | Link to this | Hansard source

Well, I don't know whether it will be gold, but it will be some sort of Logie, some sort of award that he certainly will not want to receive. But Simon Crean at least stood for something. Simon Crean was somebody who actually understood regional Australia. Not many members opposite actually get regional Australia, but, I have to say, Mr Crean did. The opposition leader does not understand regional Australia. I fear that he does not actually stand for much at all, and that is such a shame. In 2015, this year of big ideas from Labor, what have we seen? Not too many big ideas. We have seen a proposition to put up the cigarette tax, but we have not seen too much else. The only proposition the opposition is putting forward is a result of the fact that in their own minds they feel that we are going to put up the GST.

We have not said we are going to put up the GST. The one thing that was not mentioned in question time today is '15 per cent'. In yesterday's question time, in the very first question, the member for Maribyrnong mentioned 15 per cent twice. In question three, the member for Maribyrnong talked about 15 per cent again. In question five the deputy opposition leader, soon to be opposition leader, the member for Sydney, talked about GST at 15 per cent—twice. Then in question seven, another contender for the position of leader of the Labor Party, the member for McMahon, also talked about a 15 per cent GST. So, there are six references to the GST being at 15 per cent.

Why wasn't there any reference to 15 per cent in today's question time? Why didn't we hear about that magical figure of 15 per cent? I can tell you why: it is because in today's Newspoll the opposition leader's popularity—or lack thereof—slipped to 15 per cent, the lowest since Simon Crean recorded 14 per cent popularity, or lack thereof, back in November 2003. And what happened at the end of November 2003? He left. He finished up. He resigned. And the member who is currently leading the Labor Party is also running very short of petrol. The only 15 per cent people are interested in today is Bill Shorten's lack of popularity.

But the member for McMahon came to the dispatch box and asked question after question about the sale of S. Kidman & Co. Well, that is interesting, given the fact that when he was the Treasurer of this nation he wanted absolutely nothing to do with the Archer Daniels Midland buyout proposal for GrainCorp, which sat on his desk for months and months. And, knowing full well that Labor was going to lose the 2013 election—and they did—he left it as a potential booby trap for the incoming Treasurer, the former member for North Sydney. But he did the right thing by this nation. He did the right thing in the national interest by rejecting that proposal by that American company—

Terri Butler (Griffith, Australian Labor Party) Share this | Link to this | Hansard source

Really?

Michael McCormack (Riverina, National Party, Assistant Minister to the Deputy Prime Minister) Share this | Link to this | Hansard source

The member for Griffith can yell out all she likes, but she does not understand the wheat belt areas of Australia. But we in the Nationals know full well, and our regional Liberal members know, that the grain industry does not need to be dictated to by a board in Illinois. And certainly when it came to S. Kidman & Co. the right decision was made, in the national interest, because we know that Kidman is Australia's largest private landowner and represents a significant proportion of Australia's total land area—approximately 1.3 per cent. We know that Australia's agricultural land is represented by Kidman at approximately 2½ per cent. We cannot afford to have that going to foreign interests. If Labor had their way, they would increase the foreign takeover threshold to $1 billion before it reached the Foreign Investment Review Board's threshold. Against the national interest? Labor is against the national interest.

Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Link to this | Hansard source

Let me remind the member for Riverina that we are debating the real cost of increasing the GST. I did not hear him talking too much about the cost-of-living and GST increases in his contribution.

Jenny Macklin (Jagajaga, Australian Labor Party, Shadow Minister for Families and Payments) Share this | Link to this | Hansard source

Proposed by the National Party.

Tony Zappia (Makin, Australian Labor Party, Shadow Parliamentary Secretary for Manufacturing) Share this | Link to this | Hansard source

Absolutely. Now, on the weekend I was speaking to a mother in my electorate. She is a working mother who works in the aged care sector. Her husband is a tradie and a subcontractor and they have three adult sons, all in the workforce. She raised with me two critical issues that she has been confronted with in recent times. The first was how difficult it is for her sons to get a job given what has happened in South Australia, thanks to the coalition government firstly destroying the South Australian economy by driving Holden out of South Australia and secondly procrastinating over the awarding of the submarine contracts. The second thing she talked to me about was the rising cost of living. She referred to the essential rising cost of living that she and her family are continuously confronted with. This is a matter that has been raised with me by people in my electorate on a regular basis, particularly those people who are genuinely at the lower-income end of society. It is not surprising that they are raising it with me, because they will be the worst affected if there is a GST increase, and they know that. And it is not surprising that they are affected by the rising cost of living, because if you look at recent figures the general cost of living has gone up by 29 per cent. For health and education it has gone up by above 60 per cent, and the cost of fruit and vegetables has gone up by more than 40 per cent.

Those are very simple figures that paint a picture of what people are being confronted with on a regular basis. You then have the other half of that equation, which is that those people who have work in South Australia at the moment are likely, like this woman's husband the tradie, to be working at lower rates. Overtime is non-existent for anyone who does have a job, or there is very little of it. Wage increases are minimal, and if you have kids at home who cannot get a job then that adds to your living costs at home. When you combine that with an increase in the GST you can understand why people are genuinely concerned about a GST increase on everything they have to buy and pay for in their daily lives.

The Prime Minister comes into this place and dances around the issue. He will not rule the GST in or out but simply keeps talking about things such as fairness. He does not define 'fairness', but he talks about compensating people that might be affected by the tax system, if it is to be changed. The Prime Minister has had plenty of opportunity to come into the House and clearly state whether he supports an increase in the GST or whether he does not, whether he supports increasing the base or whether he does not, or what he intends to do with it. It is no good talking about fairness by saying, 'We are going to compensate people for any possible GST rise.' The truth of the matter is that, if GST is added, it is done to increase government revenue. There is no purpose in raising the GST if it does not raise the total revenue for the government, because this is a government that does have a revenue problem. Therefore, no amount of compensation is going to fully offset or compensate for the increased tax that people will have to pay. Even if it is the people or businesses at the top end of society and the like, the reality is that they have no choice, ultimately, but to pass that increased tax on to the lower income people. Even worse, we know that part of the reason why the government wants to increase the GST is so that it can provide a lower rate of tax for companies in and around Australia.

We know full well that an increase in the GST not only will hit the most vulnerable people in our society but also will have direct negative effects on the health of the nation. The AMA president, the Rural Doctors Association president, the Public Health Association of Australia president, the Heart Foundation CEO—we have seen all of these people come out and be very critical about raising the GST, particularly because of the impacts it will have on health across the nation.

If time permits me to do so, I want to make one last point: it also adds to the complexity of people who run their small businesses, like the tradie who I referred to earlier on. They will, obviously, be hit with additional paperwork to deal with—taking time that they do not have—and face additional costs in order to manage their books. There is nothing fair about increasing or broadening the GST. The Prime Minister should stop dancing around the issue, as he has done today, and let the Australian people know exactly where he stands on this issue once and for all.

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

It is always a pleasure to stand in this place and talk about tax reform, because it is only members on this side of the House who are actually having a genuine debate about tax reform. The only idea of tax reform that those opposite have is to increase taxes. I would just like to reflect briefly on some of the comments made by those opposite in their contributions. I will start with the member for Watson, seeing as it was his MPI to begin with.

The member for Watson talked about the increase of the tax-free threshold to $18,000 and taking a million people out of the tax system. In reality, that is not quite correct. These people were moved from paying income tax to paying the carbon tax. That is why the tax-free threshold was increased to $18,000: not out of the goodness of the hearts of those opposite, but as compensation for paying a different type of tax. So they were still in the tax system. In addition—and what was far worse—those that were below the previous threshold of $6,000 went from paying no income tax to now also paying income tax. They slugged everybody with the carbon tax; they did not miss anybody. It was this government, members on this side of the House, who truly removed those one million people from the tax system by removing the carbon tax, to the benefit of all Australians.

But now we see, today, another bright idea from those opposite raised up the flagpole: the notion of increasing the cost of a packet of cigarettes from roughly $30 today to something like $40—an increase of some 33 per cent. It is interesting—and this applies to the member for Lingiari's contribution to this debate as well—to reflect on the increase in the cost of living. I agree with the member for Makin that the cost of living is an issue for many Australians, but the member for Lingiari might be interested to know that, according to the Department of Health and their latest tobacco key facts and figures, updated as of August this year, those living in remote communities, specifically Aboriginal and Torres Strait Islander Australians, are 2½ times more likely than non-Indigenous Australians to smoke on a daily basis. So what is increasing the cost of a packet of cigarettes to $40 going to do for the people in those communities who are already struggling to make ends meet?

The proportion of Aboriginal and Torres Strait Islander people who smoke is around 32 per cent of the population. I think it is going to have a tremendous impact on their cost of living. It is interesting that the member for Lingiari purports to represent those communities, and yet I have not heard him say anything publicly against this proposed tax increase on cigarettes that would directly affect his community. People in remote communities are twice as likely to smoke daily as those in the major cities, and so, again, there is going to be a direct impact on those in his communities. In addition, people who live in the lowest socioeconomic areas—those who Labor purports to represent—are actually three times more likely to smoke daily than people in the highest socioeconomic areas.

Again we see, in the entire argument of those opposite, that they are not assisting the very people they purport to assist; they are actually going to hurt them more. In addition to that, they plan to sneak in a carbon tax again if they come into government.

It is only the coalition government, this side of the House, that is prepared to engage in a genuine debate about the important structural reforms that we need in our tax system to have an economy that can grow, provide jobs and be productive for the future of this country. We need economic growth to build this country for the future. That increases the tax revenue that the government receives. Therefore, we can continue to provide the services and facilities the Australian people expect our governments to provide. It is this side of the House that will provide that for this country, not those opposite.

Terri Butler (Griffith, Australian Labor Party) Share this | Link to this | Hansard source

The problem with the Turnbull government's plan to increase the GST is that it will push up the price of everything. If the Liberals increase the GST to 15 per cent, that will put even more pressure on households already finding it hard to make ends meet. That is why Labor will fight any attempts to increase the GST and to expand it to cover health, education, childcare fees and fresh food. Under the Liberals' plan for the increase to the GST, every single Australian would pay more. For families already struggling to keep their heads above water, that means their childcare fees, school fees, doctors' fees, electricity bills, gas bills, groceries and all other bills—which are already hard to pay—will go up. It will cost you more every time you go to the supermarket. It will cost you more every time you visit the doctor. It will cost you more every time your kids need new schoolbooks and uniforms, and every time the bill for school fees comes in.

Households are already finding it hard to make ends meet. Consumer group Choice has published research on the households who are doing it particularly tough. Renters and families with kids are included in the people who are feeling the squeeze. More than a third of the families in my electorate of Griffith have kids under 15, and nearly half the homes in my electorate are rentals. A GST on rent, child care, school fees and food, along with every other bill, will make it even harder for people to make ends meet.

Older Australians are under pressure too. With this government's attacks on retirement incomes—cutting the low-income superannuation contribution, freezing superannuation contributions, trying to cut the indexation of the pension and cutting the part pension by agreement with the Greens party—it is pretty clear that people over 50 should be very concerned about a tax increase that would increase the price of everything. A recent survey from the FiftyUp Club suggested nearly two-thirds of over-50s suffer stress in paying household bills.

Mr McCormack interjecting—

I care about the over-50s, Parliamentary Secretary—perhaps you ought to as well. Upping the GST would add to the stress that the over-50s already suffer. The GST is a regressive tax. That means raising it, or expanding it to cover things like food, education and health care, will hurt the families who can least afford it.

People on low and middle incomes will lose out with a higher or broader GST, compared with people on high incomes. The Australian Council of Social Service has released modelling indicating that, if the GST were increased to pay for personal income tax cuts, that would leave 64 per cent of people worse off. But people in the highest income households would actually be better off.

What would Menzies think? Here is a government that is from a party that used to care about the middle class. But this idea of upping the GST to make middle-class households pay more to fund tax cuts for the rich certainly would not have found favour with the party that Menzies founded, and it is certainly not something that ought to be supported in this parliament now. Asking middle-class households to pay for tax cuts for others is unjust. It fails the fairness test.

Putting a handbrake on spending fails the economic management test, too. Australia's small businesses, which create nearly half of all private sector jobs, rely on people spending money. Putting up prices at a time when wages growth is so slow that it is at record lows—the lowest wages growth we have had in this country since the wage price index began being kept in the 1990s—will be bad for this nation's small business owners, bad for their employees and bad for consumers. That is why Labor will not support Mr Turnbull's plans to raise the GST, because it will push up the price of everything and hurt the very families who can least afford it.

Deputy Speaker, I do not know what it is like in your household at Christmas, but I tell you what: in most households across Australia, people are thinking about prices right now. Think about this Christmas as being the last one without a 15 per cent GST on all the presents you have to buy for all your family members, the last Christmas without a GST on the fresh food that you buy to make Christmas lunch and the last Christmas where you are not looking at a return-to-school season with a 15 per cent GST on books, on pencils, on rulers—on all the things that kids need every year to go back to school. And, frankly, axing the schoolkids bonus is not going to help with that either. Think about this being the last Christmas that households are facing without having that 15 per cent GST on everything, which is exactly what those opposite want, what the Turnbull government wants. Why do you think this government is cutting $80 billion to the states' funding for health and education over the next decade? It is to put the pressure on the states in respect of the GST.

Despite the Prime Minister's cute games, saying, 'We don't have a plan,' or should that be, 'We don't have a plan but it's an excellent discussion—good idea, good idea,' and despite the Prime Minister's attempts to play coy on this, everyone in Australia knows that if this government gets its way then we will be paying more for everything every day of the week. It is wrong, and we will fight it every step of the way.

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

This afternoon's MPI in relation to the real cost of increasing the GST is very curious. There is intrigue around why the member for Watson is leading this debate, when the member for McMahon was sitting there watching, I must say, with some disdain. Why was he not up there leading the debate? The shadow Treasurer sat there with a look of disdain while the Manager of Opposition Business led the debate. Why would this be so? I think it is because, when it comes to Labor Party leadership, all options are open. They are happy to have a freewheeling discussion about that issue. As a matter of fact, we are starting to see little groups in the corridors, where they are having a very freewheeling discussion: 'What should we do with the member for Maribyrnong?' Well, we are not interested in the politics of the Labor leadership.

Opposition Members:

Opposition members interjecting—

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Order! The member for Wannon has the call.

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

No, let them yell, Mr Deputy Speaker. Let the shrill yells come from the other side. I am quite happy for it to occur. Let them have their discussions. I am obviously touching on a bit of a sensitive subject when I mention what is occurring on the other side. If they want to have a freewheeling discussion about leadership issues, fine. We want to talk about a very serious issue on this side—we want to talk about the taxation system. We want to talk about having a taxation system that will grow jobs and growth the economy. We know that we need to set up our economy so it will remain competitive in the 21st century. Sitting still and doing nothing will not deliver that. We need to look at the tax mix to see whether it will deliver us the type of economy, the type of jobs growth and the type of GDP growth that we need in a globalised world. And that is what we are doing.

What we are seeing is real economic leadership, and that leadership is not fearful of a campaign of fear about change. We are seeing real economic leadership, where everything is put on the table in the best interests of this nation. We want to see a tax mix so that not only the current generation will have an economy which sets us up in a globalised world, but our children and our grandchildren will also benefit from strong economic growth that comes from strong jobs growth. What does that mean? It means that you do not have a personal income tax system that shackles the economy and that shackles growth. It means a personal income tax system which can be compared to our near neighbours like New Zealand and other countries like Canada or the United Kingdom with which we compete.

When you look at our company tax rates and compare them with those of New Zealand, Canada and the UK, we are competitive. We want to set up our economy so that as Martin Parkinson said—and I think that Martin Parkinson served that side as well is he served our side—we have indirect taxes which help to produce a higher standard of living and not direct taxes which actually shackle our standard of living. That is what we are all about. Rather than looking at the reintroduction of the carbon tax or the mining tax, I would suggest that those on the other side look at other suggestions and alternatives. Rather than having your little conversations in the corridors about Mr 15 per cent, do some real work and have real discussions on real issues that matter to the mums and dads in this nation—and not only to the mums and dads, but to their kids and their grandkids. That is what our government is about—real economic leadership and real discussions on our tax mix.

Lisa Chesters (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

For a bunch of old boys, it appears they have forgotten the first rules of debate. You have to have an opposition that asks questions and challenges policy that is being put forward. You would think that with all the private school education there is on the front bench, they would understand the first rules of debate. This government is the one that started the debate on GST. Look at the headlines that they created all on their own: 'Changes to the GST back on agenda', West Australian, 22 September 2015; 'Turnbull might take GST hike to next election', The Age, 17 September 2015; 'Rise in GST signalled for next election', Sydney Morning Herald, 17 September.

This government is now saying, 'No, we're not going to have a debate with the opposition. We can't possibly have a debate with the opposition.' Maybe they want to debate themselves. Maybe it is a standing-in-front-of-the-mirror exercise. Maybe the Prime Minister has been standing in front of the mirror and maybe there has been a bit of 'Mirror, mirror on the wall, who is the fairest of them all?' Maybe that is what the Prime Minister has been up to, because he will not answer a question in this place from the opposition, which is responsible for asking questions on core government policies. And this is one of those policies. Perhaps it is because his backbench has been quick in there to say, 'This is a stinker. This is a policy that will cost us our seats.' Perhaps the reason the government is now pretending that it did not raise the issue of the GST is that it is unpopular.

The mums and dads that the member for Wannon talks about know what it will cost them. Country electorates and regional electorates like mine are worried. They are concerned about the fact that this government has refused to rule out GST on their rents. Housing affordability is a real issue, and yet this government tries to say that it is a state responsibility. Well, rule out GST on rents then. This government has also refused to rule out GST on rates. Country electorates like mine have councils which have increased rates by 18 per cent over three years, and that is why the state Labor government is talking about rate capping. You can imagine the shock and horror of local governments when faced with rate capping, and now this government wants to increase the GST by five per cent so that any benefits of rate capping are lost. They are lost because this government wants to increase the GST, but it will not give that back to local government. No, the local government assistance grants are still frozen. The government has upset local government by failing to rule out GST on rates.

What about a GST on fresh food? You would think that the member for Wannon and all the other country MPs, particularly the national MPs, would be up in arms. How is this going to help the farm-gate prices? They keep saying over and over again that an increase in farm-gate prices is what will save this country. You whack 15 per cent on that, and you see whether people can afford their grocery bills when they go to the checkout. Now let us go to fuel. When John Howard was in government and introduced the GST, he said that we had to freeze the fuel excise because we were introducing a 10 per cent GST. What did this government try to do in its first budget? Increase fuel excise! Eventually, they got their wish: they have increased fuel excise and less than six months later they are talking about whacking another five per cent on to fuel. What does this government have against country people? We drive further in the region; we spend more on fuel because we drive further; and now we are going to have to pay more to this government in GST.

Then we get to schools. This government abolished the Schoolkids Bonus and it is introducing more and more cuts which they are pushing on the families by changing the family tax benefit. And now they want to increase the GST. Mums and dads know this government for what it is—it is only going after them. Those in the government are not going after their mates in business, they are not going after the big end of town's multinational tax avoidance; they are going after the hip pocket of mums and dads. Let's not forget about Christmas. This has to be one of the meanest governments to go after Christmas. Now the Christmas ham, the great Aussie prawns, the turkey and all the trimmings will go up as result of this government's plan to increase the GST.

Fiona Scott (Lindsay, Liberal Party) Share this | Link to this | Hansard source

In this most unscary scare campaign it is remarkable that the Labor Party is even thinking that Christmas is going to be cancelled. I do not know where the Grinch is but it must be every single one of those members on the other side. They are all about scare and bluster. You know they have nothing when they have to go to the point of saying Christmas is going to be cancelled. That is absolutely ridiculous. Every single member on this side knows that is ridiculous. Today we are talking about a very important issue. It is a genuine debate about our tax system. The Australian tax system has to be one of the most complicated internationally. Our companies compete internationally and bring business to Australia, and dealing with a very convoluted and complicated tax system hinders their ability to do business here in our country. We need an efficient tax system; we need a tax system that helps the Australian economy. Responsibly, we on this side want to debate this. We want to discuss how our tax system needs to be for the future. We would all like to see an efficient tax system that is going to help grow and boost the Australian economy. But, no, those on the other side do not want to have a productive conversation about tax—they just want to cancel Christmas. That is all they want to do.

Nobody likes to increase taxes, but the whole policy agenda of those on the other side is about increasing taxes. Labor want to bring back the carbon tax and supercharge it—this would again cost jobs. Labor want to bring back the mining tax, which will drive away investment and also cost jobs. Labor also want a multinationals tax—a tax policy that the Treasurer has said will cost jobs if ever it is implemented. Labor also want to rely on an old-style cigarette tax. Labor should release the costings on these things—if it is a health measure, what is the impact on the reduction in the number of smokers? Labor has even had secret modelling done on the GST. It is not like they have not been down this alley themselves to look at what it would all mean. Labor reviewed the tax system when they were in government—the Henry review. If you are going to have a full taxation review, all taxes should be on the table—the entire system should be on the table. But, no, they just omitted a few and at the end they cherry-picked new taxes they should add rather than providing proper, real reform to our taxation system.

I would ask Labor to come clean and reveal how they plan to raise the money to help our budget. They have no plans for these things—they have no plan at all. Even in my area they talk about infrastructure investment that they have no plans for—they do not even know where projects would go. For instance, we are building a plan for the south-west rail links that would come through from Leppington, through Lindsay and out to the north-west sector. We are having a comprehensive review of where these rail lines will go, what they need to cost and what the corridors will be. But, no, Labor do not have plans—they just go off, announce policy, shoot from the hip and have no idea where they are going. Then they apply more random taxes everywhere, not even thinking about how this is going to affect the efficiency of our taxation system.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

The time for the discussion has concluded.