Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Link to 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.

Mark Coulton (Parkes, Deputy-Speaker) Share this | Link to this | Hansard source

Is the amendment seconded?

Ms Catherine King (Ballarat, Australian Labor Party, Shadow Minister for Health) Share this | Link to this | Hansard source

I second the amendment.

Trevor Evans (Brisbane, Liberal Party) Share this | Link to this | Hansard source

I rise to speak strongly in favour of the Treasury Laws Amendment (GST Low Value Goods) Bill 2017, in the form that the government has proposed, and the scrapping of the GST low-value threshold. When I became the CEO of the National Retail Association, about five years ago now, this reform was one of the big three priorities described to me by the industry, by retailers large and small. This was holding back their international competitiveness, harming their growth, and hindering their ability to employ more Australians. Some small businesses I spoke to, especially in certain categories of products, saw this problem as the number one reason that they would have to close their doors. For some businesses that was undoubtedly and unfortunately their true and lived experience. Yet I do not want to convey a sense that this reform in any way represents a silver bullet for all of the challenges faced by the retail industry. It is one of a number of reforms, improvements and opportunities that need to be managed for the future of that sector.

I see this bill firstly as about closing a growing loophole in the tax system, about the integrity of the tax system, and, secondly, about fairness and a level playing field for Aussie businesses. It speaks volumes for some of the challenges of reform in today's world that in essence this policy debate was effectively had and won and over in less than two years and it then took a further two years for the political cycle and political interests to align sufficiently for the reform to proceed. Changes to the GST obviously do require the unanimous support of all of the states and territories, as well as the Commonwealth. In reality, that means that it requires bipartisan support, and this reform does have that. We should ignore some of the posturing and comments the shadow Treasurer made just then—honestly, a review to tell us what we already know. They are going to support this bill.

If I reflect on some of the conversations that I had with treasurers past in my previous role—and I will not breach any confidences—I will just say that I am well aware of what Labor's position has been on this reform at the highest levels, and it makes a mockery of some of what the shadow Treasurer just said. Not only is this bill long overdue but its passage is actually a positive reflection on the quiet achievements of this government. The Turnbull government has succeeded in achieving collaboration and reform, again and again, in areas where reforms have evaded so many former governments.

On the policy itself, let us be clear about why this reform debate was settled so quickly. The GST, when it was designed, was always supposed to apply to the products that we are talking about. You can like or dislike the rate of the GST or its scope, but the point is that the question of whether we have a GST, and the products that it applies to, was debated in this country almost 20 years ago. That debate is over. It was had and it was won. The GST was always intended to apply when Australians purchased and consumed the goods we are talking about right now.

At the time the GST was established online shopping did actually exist, but it was not the mainstream phenomenon that it is today. As the shadow Treasurer rightly pointed out, the issue of how the GST would be collected on small imports was basically relegated to a second-order issue. There were so many other priorities to consider in the design of the GST, so this $1,000 low-value threshold, I understand, was basically plucked from another place in the border and customs arrangements, without extra thought going into what might change in the future. But in the years since then online shopping has become a mainstream phenomenon and this low-value threshold has increasingly become a loophole, and a growing loophole, that undermines the integrity of our GST by stopping it from covering what was always intended to be covered.

It is worth pointing out at this time that the Commonwealth does not get the GST dollars we are talking about—those tax dollars go directly to the states and territories—but we must accept that it is and always has been a Commonwealth responsibility to ensure the ongoing integrity of the GST system. When loopholes become apparent or when the GST shows signs that it is no longer working as originally designed, it is up to the Commonwealth to lead the charge to mend it.

I go on to the issue of fairness. This is about a level playing field for Aussie businesses. As the phenomenon of internet shopping grew and as the international competition for the dollars of Aussie consumers has grown, the GST low-value threshold has started to operate essentially like a reverse tariff wall. In other words, it is making Aussie businesses less competitive compared to their international competitors, it is giving overseas competitors a financial leg-up compared to Aussie businesses, and the pricing advantage is not necessarily just the 10 per cent of the GST. When the low-value threshold kicks in, not only does the GST but so do tariffs, excise and customs charges. We have to remember that many of the types of goods that we are talking about—clothing, shoes, fabrics, sporting goods; you name it—are subject to a tariff or an excise too. So, depending on those tariffs, excises and customs charges, the differential can be as much as 20 per cent or even higher. So the 10 per cent to 20 per cent or even higher differential is the price disadvantage being placed on local businesses just because the world has changed and our local regulations have not kept up. We cannot allow our tax laws to be used in a way that entrenches competitive disadvantages against our own local businesses. This is about a level playing field for Aussie retailers. It does not give anyone a leg-up. In fact, it puts a stop to the leg-up that we are currently giving offshore competitors. This will ensure that local businesses at least are competing on a level playing field and are facing exactly the same taxes and regulations as their offshore competitors.

The amendments proposed in the bill are actually modest and simple. We are imposing exactly the same requirements to collect and remit GST, which are already being complied with by local Aussie businesses, onto similar companies that are selling exactly the same goods from offshore to Australian consumers. But I want to note—and I pick up on some of the comments of the shadow Treasurer—how the perfect has been the enemy of the good in achieving this reform and the reason for the delays to date. Different complex schemes have been raised by different parties at different times that might forensically examine all of the parcels coming in over the border or might be integrated with our mail system or with the parcel businesses or similar, and those schemes should continue to be explored, but they are not what is being proposed in this bill.

Occasionally I still hear the arguments around the cost of collection of the GST being outweighed by the GST collected, and that is completely incorrect to apply to this bill. That argument does not apply because, firstly, those estimates come from the more complex schemes that have been explored occasionally, but we are not proposing those schemes here. Secondly, the entire point of this reform is not to increase GST revenues; it is to fix the integrity of the tax system and close a loophole. We do not just give up on collecting income taxes because some people only pay a small amount of income tax or are difficult to collect it from. We certainly have not given up on collecting company taxes just because the world has changed and all sorts of new international schemes and corporate structures are possible. In fact, I see this reform sitting very neatly, side by side, with the government's other recent multinational tax avoidance laws which have clawed back almost $3 billion, and counting, this financial year. They are taxes which should always have been paid, consistent with the intention of our existing tax laws.

No tax is perfectly enforced—I will come back to that thought in a moment—yet efforts are made and should always be made to ensure that taxes are applied and enforced equally across the intended scope of taxpayers. Certainly, government should never publicly say that we will not even bother to try to collect tax from some activities or businesses just because the costs of collection are high or difficult. What sort of message does that send to mainstream taxpayers who are left shouldering the remaining tax burden? Under this reform, it will be up to the regulator to best direct their enforcement and compliance efforts to collect the GST from those intended to be within the scope of it, as it is with every other tax and every other regulator. No tax is perfectly enforced, as I said just a moment ago, and that should not stop us from making reforms like this to substantially close loopholes or weaknesses that become apparent over time. We do so clear eyed about the fact that it does not achieve 100 per cent enforcement and we do so clear eyed about the likelihood that these are probably not going to be the last reforms that we have to make on this journey. These reforms are timely—they are overdue, in fact. They are proportionate to the problem, and they are fair. These reforms will not cause the GST to suddenly be perfectly applied or enforced, but they will make it better. More reforms may well be considered. Indeed, the future for all of our major tax structures will continue to be explored.

I note the Senate review of this bill and its recommendation about the start date of this reform: pushing it back to 1 July 2018. I must say that I would have disagreed with that recommendation if I had been sitting on the committee. Again, here the perfect is being the enemy of the good. The Senate committee was responding to claims from mostly offshore large online website operators, which the shadow Treasurer acknowledged. He acknowledged that their interests are being served by ongoing delay. It was a shame to hear the shadow Treasurer just then parroting their lines. Their complaint generally has been that there has been insufficient time to consider and to comply, but that claim flies in the face of the fact that the state and territory treasurers had agreed to the collection model almost two years ago. Yes, the legislation has only been drafted more recently, but, honestly, how many different paths could this really have taken, given what the state and territory treasurers agreed to? This is always where these reforms were likely to land. Are these innovative online platforms capable of responding to the changing world or not? Do they already comply with similar obligations for different sales taxes and consumption taxes all around the world or not? Are their existing online platforms already collecting and remitting taxes for different states and territories in the US and the EU and other places based on the delivery addresses of their customers or not?

Nonetheless, I strongly support this bill and I commend it to the House. It does ensure a level playing field for businesses. It is fair, it is overdue and it upholds the integrity of our tax system by closing a growing loophole. It sits, as I said, very neatly with the government's other initiatives in multinational tax avoidance laws as we try as best we can to keep our tax laws up to date in what is a rapidly changing world. Most importantly, and very dear to my heart, the level playing field that this creates breaks down one of the many challenges and barriers being faced by our small business sector. They are the backbone of our economy as they continue to create the opportunities, the jobs and the prosperity that our country so critically needs. I commend the bill to the House.

Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

As we debate the Treasury Laws Amendment (GST Low Value Goods) Bill 2017, a significant transition is occurring in retail across advanced countries. In the United States, Macy's is due to close 100 stores and sack 10,000 employees. It will soon have nearly a fifth fewer stores than it did just a year ago and is anticipated to have to cut even further. As one analyst from Morgan Stanley notes, 'this is just the start'—in the future, Macy's expected to shrink even further. This is just one of the many traditional bricks and mortar retailers that is shrinking in the current environment. A principal reason for this is the rapid growth of Amazon, now the world's fifth most valuable listed company, which accounts for about half of e-commerce in the United States. Not only is Amazon large, but it is projected to grow significantly larger. Morgan Stanley expects its revenue to rise from $136 billion last year to more than half a trillion dollars by 2025, which would be the most rapid growth in corporate history. The success of Amazon is based not only on its distribution centres but also on its use of robotics in packaging—the Kiva robots—and on rapid shipping, with Prime now offering two-hour shipping as well as its standard two-day shipping.

Amazon has announced that it is going to enter Australia sometime in the near future, which will again affect the Australian retail environment. Australians already do a significant share of their shopping online. According to a recent report by National Australia Bank, growth in online retail sales accelerated in March at 0.8 per cent, meaning that Australians spent $22 billion over the previous 12 months in online retail—about seven per cent of the traditional bricks and mortar retail spending. Breaking that spending down across online domestic and online international sales, NAB estimates that, of the growth, about nine per cent has been domestic and about nine per cent has been international, and about 80 per cent of total online spending continues to be domestic.

The other challenge facing the Australian retail environment is the fragility that record high household debt levels have created. In a speech last month, Reserve Bank Governor Philip Lowe noted:

In earlier periods of rising housing prices, the household sector was withdrawing equity from their housing to finance spending. Today, households are much less inclined to do this. Many of us feel that we have enough debt and don't want to increase consumption using borrowed money.

That debt exposure is a challenge for the Australian retail sector. The traditional retail sector is facing tough times, with significantly tougher times yet to come. It is vital that we acknowledge that context as we debate this bill. As others in this debate have noted, if we were starting from scratch today, knowing what we know about e-commerce, the GST would not have been designed with a $1,000 low-value threshold. When Labor were in government, we commissioned work from the Productivity Commission to look at lowering the GST low-value threshold on international imports. We made it clear that, if it raised more revenue than it cost, we would be open to reform.

The government assures us that this reform does that. But, as I will outline, Labor has significant concerns about the way in which the government has bungled the attempted implementation of this attempted reform. We are now debating changes which, if they were to pass the House unamended, would take effect in a matter of weeks. It is extraordinarily unusual to be debating tax changes of any scale which take effect in a matter of weeks, but it is all the more unusual when what Australia is seeking to do is lead the world. There is nothing wrong with leading the world and being the first in the world to make a change, but it ought to give you pause when you are attempting to lead the world by getting large online retailers to change their behaviour with just a couple of weeks notice.

Australian retailers are right to say that they are being placed at a cost disadvantage by the current GST low-value threshold. But it is important that we get the reform right. The model the government has put forward is a vendor registration model. This requires overseas suppliers which have an Australian turnover at a platform level of over $75,000—including the electronic platforms eBay, Amazon, AliExpress and the like—to register and charge GST. The analysis of this which has been done by the Senate Economics Legislation Committee—and I commend Labor Senator Chris Ketter for his work on that committee—has uncovered significant concerns about the workability of this model. The Senate inquiry found that Treasury expects a compliance rate of 25 to 30 per cent in the third year of operation. On the government's current timetable, by mid-2019 there will be around three-quarters of transactions which do not fall within the net. And when the system hits maturity, which is estimated to be in the fiscal year 2022-23, the government anticipates a compliance level of just 54 per cent. In other words, at its best, this current model is estimated by the boffins in Treasury to miss nearly half of the low-value imports.

The Senate inquiry made it clear that getting other countries to enforce this is going to be a challenge—whether it is the United States or China. We are concerned by the submissions made by those who will need to implement the model that it is not workable. Submissions from eBay, Alibaba and Etsy were critical of the government for putting in place a model which effectively requires them to collect tax in a way that they have not done in the past. Amazon has noted that while in the United States they currently collect state sales taxes for products sold by Amazon when they are shipping their own goods, they do not currently collect state sales taxes in the same way for Amazon Marketplace—that is, where they are acting as a platform reseller. That is what the government is intending to do in this change.

There have been concerns from freight carriers and express carriers about a system that requires the collection of business numbers and vendor registration numbers. They have said that would create complexity, unnecessary delays and increased costs. There have been concerns from peak consumer group Choice about the impact on consumers and, as the Senate committee has unanimously acknowledged, the government's timetable is too short. Coalition senators and Labor senators called for a delay in the start date of 12 months, until 1 July 2018, to ensure that the problems in the model could be sorted out. It is not just Labor senators; it is coalition senators as well who want a delay so as to get this right.

Labor's view is that we should not just put in place a delay, but we need a rigorous independent assessment of the model. The government tell us that their model is perfection personified, that the best we can hope for is a model that, when it ripens, will still miss 46 per cent of low-value goods transacted and which they say it is possible for platforms such as Amazon and eBay to implement within a matter of weeks. Let us have a delay, let us put it to the Productivity Commission to carry out an independent review, assessing the current vendor registration model and testing whether or not that model can be improved. It will provide the breathing room that we need in order to get this important reform right. Labor is in principle supportive of bringing down the low-value threshold; we are in principle supportive of boosting GST revenue and providing tax neutrality to Australian retailers. As I noted at the outset, they face a tough environment and it is getting tougher. But it would not be responsible, it would not be in keeping with our status as an alternative government, for us not to take the opportunity to look at whether or not this legislation can be improved, which is why the shadow Treasurer has foreshadowed the amendments that Labor will be moving in the other place.

We note, too, the fact that the Turnbull government, while talking a lot about the importance of getting the red tape burden right, did not put in place a regulatory impact statement for this bill. That is, itself, in breach of Office of Best Practice Regulation guidelines. We note that the call for a delay has come from the Conference of Asia Pacific Express Carriers and the Freight & Trade Alliance. We note, as well, that the government has throughout this process been unable to provide clear answers to the concerns that have been raised by platforms about how implementation will take place.

I suspect the coalition will eventually come around to Labor's way of thinking on this, just as they did with superannuation tax concessions, cigarette excise and funding community legal centres and as perhaps they will do one day even with climate change. Labor sets an evidence based agenda and the Liberals follow. We want to get the details of this right. We want to ensure that we have competitive neutrality, but we also want to ensure that Australians continue to gain the benefits of engagement with online platforms. There is massive consumer surplus to be had from online retail.

Online retail is not just about purchasing final products. Many Australian businesses rely on inputs that they source online. They might be stores that are buying technology that assists in their sale process. They might be factories purchasing machines that they use in order to produce final products. They might be home offices and small businesses purchasing their inputs online.

Access to online retail brings terrific benefits and will continue to do so as we move into a new world of Australia-based Amazon, with many Australians taking advantage of Prime, of the rapid ordering facilities—potentially even the use of drones. This raises important competition challenges down the line. As shadow minister for competition I am acutely aware of the importance of making sure that we have a competitive retail environment as we move to these online platforms, but we need to make sure that we have tax neutrality right and that we do so in a manner that is workable.

Australia is not the only country that is looking at the taxation of online retail. Other countries are exploring this issue. Other countries are watching what Australia does. In that sense, if one is concerned with global tax compliance, it is even more important that Australia gets this right and that we work with the technology companies—not for them, but cooperating with them—to ensure the Australian model is workable. It is important that we set a standard for others to follow to show that it is possible to collect value-added taxes in a way that does not raise a massive compliance burden on Australian consumers, that ensures tax neutrality and that ensures that, while changes in retail are inevitable, those changes are not driven off an unfair playing field because online retail is getting an unfair tax advantage. That is not the way in which competition ought to work.

Everyone has an obligation to pay their fair share of taxes: corporate taxes, income taxes and value-added taxes. Labor wants to see this measure succeed, and that is why we are proposing a 12-month delay and a Productivity Commission inquiry. It is in the government's interests to support Labor's changes, because in the long run that will ensure that we have a model that is workable, that is fair and that ensures that Australian consumers and taxpayers get the right outcome.

Ted O'Brien (Fairfax, Liberal Party) Share this | Link to this | Hansard source

The Labor Party yet again, as indicated by the member for Fenner, is paralysed when it comes to taking action in support of small businesses in Australia. It is always the coward's way out to say that in principle we agree, but we do not like the detail. Do we have an alternative proposal? No, we do not. The Labor Party has no alternative other than their usual kick-the-can-down-the-road approach of let's just have analysis and paralysis, and maybe one day we can take action to help small business.

Well, the coalition thinks otherwise, and I rise today in support of the Treasury Laws Amendment (GST Low Value Goods) Bill 2017. Let's make no mistake: this is indeed a profoundly important change to our tax system. It is a world first, in fact—a change that will level the playing field and deliver competitive neutrality for our more than two million small businesses across Australia. This bill is a commitment to Australia's small businesses, and the retail sector in particular, as outlined in the 2016-17 budget.

Importantly, this significant tax reform is supported by the Council of Australian Governments, COAG, with the unanimous agreement of the states and territories, and represents a rare opportunity to address longstanding challenges to revenue and service delivery. This reform is also supported by the retail and business sectors themselves, including the Australian Retailers Association. I commend the Treasurer for his commitment to amending the GST model to reflect a modern-day global economy and to ensure the viability and future of Australia's small business sector. The goods and services tax is a fundamental function of the Australian economy. It must be fair, equitable and reflect the consumption habits of our country. That is why this bill is so important. It extends the goods and services tax to low-value goods importations under $1,000 by removing this arbitrary threshold. It is no longer relevant today, and it is suppressing small business economic growth and distorting the integrity of our GST base. This change will ensure that goods imported by consumers will face the same tax regime as those which are sourced within Australia. This evens the playing field for our businesses and, particularly, our small business owners.

According to Treasury's 2016 Small business data card, small businesses account for 97 per cent of Australian businesses and employs 4.8 million Australians. In 2015, small businesses accounted for $379 billion of our nation's economic output, an increase of $37.6 billion on 2014 levels. And let us not forget that in that wonderful place the Sunshine Coast in Queensland there are over 37,000 small businesses that are keeping the economy alive. That indicates why the Sunshine Coast is such a booming economy today—due to small businesses. They are truly the engine room of regions and of this country.

What is more, amending the GST laws to better reflect today's retail market is good economic policy. As we all know, retail spending is no longer locally based. In fact, you can purchase anything any time from the comfort of your own lounge room. When the GST was introduced in 2000, we, as consumers, did not generally purchase goods located overseas. In the 17 years that have since evolved, our spending habits and the retail environment have changed dramatically. In the year 2000, only 37 per cent of households had access to the internet. That is 46 per cent of the population. Today, it is 93 per cent. In the year 2000, only four of today's top 20 largest online Australian websites had been established. Based on sales, Australia is ranked as the second biggest e-commerce market in the Asia-Pacific region and the tenth in the world, and is expected to surpass $24 billion in 2018, a rise of 21 per cent. Australians love buying things online. Staggeringly, nearly 70 per cent of these buyers make cross-border purchases from overseas locations, primarily the USA, China and also the UK. This bill ensures that the unfair benefit enjoyed by these international sellers since the year 2000 is stopped. By ensuring the same taxation measures apply to everyone who sells to Australia consumers, we level playing field for our Australian businesses.

This bill forms part of the coalition government's commitment to a fairer tax system and, what is more, it signifies a world first and recognises the need for a multifaceted solution fit for today's modern and globally interconnected economy. The vendor registration model proposed in this bill has been endorsed by the Council on Federal Financial Relations and is supported by a simplified online GST registration system to assist non-resident suppliers to comply. I acknowledge the responsibility placed on vendors and others. This does not come without cost or inconvenience as they redesign processes for their companies, and I thank them from doing their bit to ensure this reform is indeed a success.

This bill allows for review in two years to ensure that the changes are operating as intended, and it takes into account any international developments. This is an important aspect of the reform and recognises the complicated nature of cross-border trade, imports and the ever-changing nature of our global economy. Despite the member for Fenner expressing concerns that Australia is leading the pack and implying that Australia is going alone, in actual fact Australia is not going alone. Others are looking beyond their own borders and recognising a similar issue that needs to be addressed.

In 2015 the OECD delivered an international standard for the collection of taxes and cross-border sales, including low-value goods, to ensure they are paid in the country where they are consumed. Also in 2015 the European Commission announced its strategy for the European Union's EU digital single market. As with the OECD model, this strategy seeks to move the collection of taxes, including for low-value goods, to the location of the final consumer. The EU strategy will see tax charged under the rules of the originating country on sales that are made across the border. In the United Kingdom changes are being proposed which compel overseas entities to appoint a tax representative and hold online marketplaces responsible for unpaid taxes on overseas products sold to UK consumers. What we are proposing here, contrary to the claims made by the member for Fenner, is in fact consistent with strategies adopted elsewhere internationally, and we should not be afraid that Australia is taking the lead.

I close with a simple reminder that this bill, which extends the GST to low-value imports, is a crucial reform, one which supports our small businesses, one which delivers fairness and equity to our tax system, one which restores integrity to our GST regime, one which recognises the global nature of today's retail and consumer markets and one which sees Australia lead unashamedly from the front in establishing a new law that is right for now and even more right for the future. I commend the bill to the House.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

Labor supports the Treasury Laws Amendment (GST Low Value Goods) Bill 2017 in principle, but we do emphasise the need to get the details right—in particular, the execution of this. Like many policies from this government, it appears they have messed up the execution and the procedures associated with the implementation of what is a very necessary and sensible reform.

Small and medium businesses are the backbone of the Australian economy. As such, it is important to ensure that Australian business is given a level playing field when competing against global players. Over recent years, the increase in online businesses has changed the landscape for many. This has allowed businesses to set up basically anywhere in the world and still be able to penetrate markets where they have no physical presence. This month we have seen a feverish discussion about the expectation around the arrival of Amazon into Australia after the company advertised for 100 jobs in Sydney and Melbourne. But it is also a reality that Amazon has been selling products into Australia for quite a while, and this is not unusual. Australians love technology and they love using new technology platforms, particularly to interact around social media but also to buy and sell goods on the internet. Australians have been quick on the uptake of online shopping, gaining the title of some of the world's most prolific cyber consumers. The annual World Internet Project found that the number of online purchases made by Australians between the years 2011 and 2013 grew by more than 46 per cent, whilst the monthly value of online purchases per person grew by nearly six per cent, to $218. During the 2012-13 financial year Australians spent more than $7 billion on shopping at overseas online shops. About 85 to 95 per cent of that was estimated to be for consumer goods.

This bill aims to level the playing field between those overseas sellers and local businesses when it comes to accounting for, and being liable for and paying, the goods and services tax. The amendments make supplies of goods valued at $1,000 or less at the time of the sale connected with Australia if the goods supplied are offshore low-value goods. This ensures that such supplies are subject to GST, consistent with equivalent supplies here in Australia. This model is the vendor registration model, and overseas suppliers—including electronic platforms like eBay, Amazon and the like, and redelivery services—with an Australian turnover of $75,000 or more in a 12-month period will be required to register to charge the GST. This measure follows the application of GST to the importation of digital services, passed in the Tax and Superannuation Laws Amendment (2016 Measures No. 1) Act last year, but also comes into effect from 1 July this year.

Australia's current $1,000 GST low-value exemption on imported goods is significantly higher than that in comparable countries such as the United Kingdom, where it is set at $25; Canada, at $20; Singapore, at $330; and New Zealand, at $320. However, previous Productivity Commission and Low Value Parcel Processing Taskforce reports note the difficulties in lowering the threshold. The commission found that, although the threshold was not the main factor affecting the international competitiveness of Australian retailers, there are strong in-principle grounds for it to be lowered significantly on the basis of tax neutrality.

Labor has been listening to some of the voices of industry and some of the stakeholders that have been involved in the bringing of this bill to the parliament and the consultations associated with that. It is fair to say that there are some concerns about the implementation of this system and the effects that it may have on small- to medium-sized businesses. Those concerns relate not to the principle of charging GST on goods to this value but to the method that the government has chosen to execute it and to ensuring that the liability is passed on to the government through the procedure that I outlined earlier.

Labor is of the view that, if we are going to do this properly, there should be some inquiry into the stakeholder voices and the concerns that some people have. So we are asking that the government consider due diligence to ensure that the measure is cost-effective and that it answer questions on enforcement and oversight, details that are currently quite vague. In particular, we are suggesting that an inquiry should look at the practicality of, and uncertainty about, the short time frame for implementation—it comes into effect in mere days, on 1 July 2017; whether any overflow from overseas suppliers not initially targeted by the legislation will be enforced at the border; whether all sellers, including Australia based sellers otherwise below the revenue threshold which may make them exempt from GST collections, are included in electronic platform provisions; oversight and compliance overseas, particularly for electronic platforms not paying GST; and ATO resourcing.

We are also asking the government to look at any enforcement issues that have arisen in preparation for the similar GST measure for the importation of digital services, which comes into effect on 1 July 2017. And we are asking the government about the alternative postal collection point model—this is something that has been suggested by many in the industry—and the reasons why it was not more thoroughly assessed and progressed by Treasury, particularly given the relative platform neutrality of a model like that. Some are of the view that the current model will be difficult to administer and that many overseas businesses that are not based in Australia but are selling goods into Australia will simply say, 'We're not going to pass on the GST; we're simply not going to do it.' It will be up to Australian government then to spend additional resources in seeking to enforce that GST collection with those businesses. Many of those organisations and many experts within the field have recommended that the alternative postal collection point model is something that should be considered as an alternative.

There is hardly a more important task than ensuring Australian businesses are treated fairly and with compassion to overseas interests, which, in turn, serves to ensure the security of Australian jobs. Once again, we are asking that the government consider some form of short inquiry to ensure that those issues are ironed out, that the integrity of the tax system is protected and, ultimately, that we maximise the revenue that should come from businesses who are liable to pay GST by ensuring not only that they are paying their fair share of tax and that that is delivered to government coffers but also that it is enforceable in the longer run. Once again, Labor offers its in-principle support for this bill, subject to the amendment that has been moved by the shadow Treasurer.

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

I am very pleased to speak on the Treasury Laws Amendment (GST Low Value Goods) Bill following the member for Kingsford Smith, who so graciously agrees with the government on this bill. I must admit that, at first blush, when we introduce a bill in the parliament and it increases a tax, I am sure many of us are concerned. The last thing we want to do on this side of the House is bring in legislation that increases taxes. But there is a very fundamental, important point that needs to be made on this. We need to ensure that every policy that we legislate in this nation at the very minimum gives Australian businesses a level playing field to compete.

We cannot have legislation that puts Australian businesses at a competitive disadvantage. That is what the current system does. If I am shopping for a good, and I look online or I look in a catalogue—it does not have to be online; it can be in a catalogue—and I can find an Australian retailer selling an equivalent good to what the foreign retailer is selling, at the moment we are forcing the Australian retailer to charge 10 per cent GST and remit that to the government, yet the foreign retailer does not have to pay a cent of GST. So our policies are currently putting Australian businesses at a competitive disadvantage. This is something that none of us can accept.

We need to try and give our businesses at least a competitive advantage. But, when there are things that make it difficult for Australian businesses, especially small Australian businesses, we have to take a stand. That is why our government and the minister sitting at the table, Minister McCormack, should be congratulated for his work on this, because many in the retail sector have been calling out for government to take action on this. We have seen how hard it is to earn a dollar in the Australian retail sector. We have seen many businesses in the retail sector close down over the last several years. So we just want to tell them: we want to give you the opportunity to compete on a level playing field, and that is what we are doing.

Although we have support from the Labor government on this, I would hope that they would support us in some other areas where we can give smaller Australian retailers a competitive level playing field. Of course, the first one we start with is the company tax rate. How can we expect Australian businesses to compete head-on directly against their foreign competitors if they are forced to pay a fee or a 28½ per cent company tax rate, yet their foreign competitor may only be paying 15 or 17 per cent? Again, it is putting our businesses at a competitive disadvantage.

But the most concerning thing about the competitive disadvantage that those on the other side of the chamber want to put on Australian businesses is the cost of energy. We have seen plans from the other side of the chamber that will simply force the cost of energy up even higher than it already is. Already we see small Australian businesses paying some of the highest electricity prices in the world. The Labor opposition says that that is not enough. They say they want to wipe out Australia's coal-fired power stations, drive them out of business—the lowest-cost producer—and bring in intermittent, unreliable, high-cost renewables to drive the price of electricity up and to put Australian businesses at an even greater competitive disadvantage than they already are.

On this side of the House, I for one am not going to stand by and see that happen. So with that, I commend this bill to the House. We must give our Australian businesses, at the very minimum, a level playing field to compete on against their international competitors. I commend this bill to the House.

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

I have enjoyed listening to the number of coalition MPs who have been talking about world firsts.

Peter Khalil (Wills, Australian Labor Party) Share this | Link to this | Hansard source

I have not!

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

The member for Wills rightly points that out. Please work with me, Member for Wills—I will get to a valid point at some point. It has been interesting to listen to them beat their chests talking about this world first that they are doing and world's best practice. What they have been able to achieve is world's best practice in stuffing up. They cannot do anything right on that side. This bill is beset with problems. It is not like they were not warned. In 2009 the Productivity Commission said, 'This is a good idea in principle, but you have to work out the way to do it.' Along the way, when they made this announcement, the Treasurer, who says that he is all pro-innovation, was refusing to meet with the companies that have to implement this, having to be dragged to meetings to consult with companies that will have to bring to life the measure we are debating today, and refused to meet with them and work with them on it.

I have heard a lot on that side talking about how they are pro small business and how this is important to small business. I have gone through my own journey on this issue. I have always been concerned, as someone who is pro-consumer, about the fact that online purchasing gave consumers more power. For years we have seen price discrimination in this country work to the detriment of consumers. Consumers can go online and compare products that are being put on offer on retail here in Australia compared to overseas, and they have been ripped off. The internet gave them one mechanism, a small mechanism, to be able to say: 'Do you know what? I deserve to be able to get the product I want at the price I want, instead of seeing all the mark-ups.'

In saying that, let me make the point that I do not for one moment think that it was small businesses leading the charge on this. These were big companies who operate across jurisdictions charging differently for the same product in one jurisdiction from another, and then using geoblocking to stop a consumer from being able to buy from a US website instead of the Australian website. This is when our dollar was as strong as anything. People are going to have their disagreements and concerns about that, and I certainly appreciate the impact that a high dollar has on retailers in Australian business and in agriculture, as the minister rightly points out. But for consumers it strengthened their purchasing power. At that point in time they were trying to work out how it was that the same product cost a different amount in different markets. It was the same thing. The internet has been able to provide that difference.

Obviously, what was also driving some of the differential was the application of taxation on the purchase of those products. While I was certainly pro-consumer, as I said, and wanted to see consumers being able to access products at cheaper prices, and this experience of itself allowed for the injection of competition in the Australian retail market as well, to make them a lot more responsive to consumer demands, the reality is that we cannot have a system where you get a cheaper price simply because the taxation is not being applied on the final sale. It is important that we do harmonise that. I think the Australian public and consumers get that. They obviously want to be able to get their bargain and get a product at a cheaper price, but they also know that they are not going to cut their nose off to spite their face, insofar as if we are not charging the proper tax rate, then obviously we are all losing out as taxpayers. We are not just consumers—we are taxpayers as well.

Making this change is important in that respect. But in making the change, as well as what is being put forward, a lot of those companies that I mentioned earlier had been seeking to have their input early on with the Treasurer, who basically shoved the earplugs into his ears and was refusing to listen to any reason or argument about how implementation would work. So we get to this stage. This is the stage where the opposition has put forward the amendment as advocated by the shadow Treasurer to have a look at the implementation and see how it is done.

Having said that, I understand the concerns of some players within the tech space, who are saying this will be difficult, but I do not necessarily subscribe to them 100 per cent. I am not saying they are saying the wrong thing; I am just saying, 'You can find a solution to the issue of how you factor in taxation within the final sales price on a website that is a marketplace.' From my perspective, they do it at the moment. If you have various state sales taxes that exist in the United States and you have an online marketplace that is already charging, they are already factoring in the tax on the final sale anyway. The tech players in this space that have online marketplaces, with my deepest respect and great admiration for many of them, know this and can factor this in. This is not too hard, but we have to find a way to do it.

These online marketplaces will become the way in which a lot of consumers interact. A lot has been made about the entry of Amazon. A lot of people have been worried about how this player, as big as it is, may impact on business in Australia. Yes, there will be impacts for sure, and obviously we want to make sure that our competition laws are adequately safeguarding competition. In the case of some these online marketplaces like Amazon, where they even provide for rival sellers to sell product on their marketplace, this is a good thing. I am not so much interested in Amazon. They will shake things up, and I think that is good. It is going to be important. The bigger thing for those on the other side, who are going on about how they are pro small business, is: why aren't you helping small business digitise their operations?

It has been recognised time and time again. I do not know how many studies have pointed out that digital transformation within Australian SMEs is going at a slow pace and is short-changing small business. The more they move onto digital platforms, the greater number of customers they can reach and the more efficient their operations can be. It can provide for greater longer-term growth. It is something that they need to do, and the tools now are not as complex as what they once were. A lot of people are extending assistance to small businesses, but government can also play a role in working with small business, digitising their operations and embracing digital platforms. Why do we not see the same level of advocacy?

It is easy to run the line, 'We're small business,' but translate it into something meaningful. This legislation, as we have rightly pointed out, has a stack of holes in it. The detail needs to be worked through, and the Treasurer can take the lion's share of responsibility for the stuff-up in the way this has all been shaped up, but I do note the presence of the Minister for Small Business. From time to time, when planets align, he and I manage to get on, sometimes.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

Get to the point.

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

I do not want to say I get on with you too much, because I know you have to work with your colleagues.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

Be kind, be kind.

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

I am not going to do a group hug over the dispatch boxes, but I would urge the small-business minister, if I could influence your agenda—and I am sure that you take great note of everything I say, Minister—

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

I do.

Kate Ellis (Adelaide, Australian Labor Party, Shadow Minister for Education) Share this | Link to this | Hansard source

We all do.

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

Thank you very much, colleagues—it would be this: small businesses do not need a degree in IT to embrace digital platforms, involve themselves in digital engagement and change the way they work. As I said, a lot of this stuff already exists, but it will be better and make it much more efficient for them to operate, to reach new customers and to move product. This will be really important.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

Watch this space.

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

I take the observation made by the small-business minister: 'Watch this space.' I will be very supportive, Minister, and very interested to hear what you are doing. This is something that we should do from a bipartisan perspective, because, as everyone rightly observes—and we hear the line often—'Small business is the engine room of the economy.' It absolutely is. The more we can do to make this sector work more efficiently, the better. But, instead of the platitudes, let's have some practical, tangible assistance to help small business in this area, because it is for our long-term interest in terms of the economy, and others are doing it.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

You should have supported our tax cuts.

Ed Husic (Chifley, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Treasurer) Share this | Link to this | Hansard source

I might add that we have supported tax cuts directed at small and medium enterprises, but we are not just shuffling over $65 billion to the biggest end of town and then sacrificing investment in an area that is required—an area where even big business say they need to see more. How is it that we can have big businesses say, 'We need to see more talented people in this country,' yet we divert funds from the very thing that helps invest in the development of those skills—education. You are willing to argue for a $65 billion corporate tax, and then cut $22 billion out of schools, cut $600 million out of TAFE and cut $4 billion out of universities. Everyone knows that for the development of skills in this nation we need to make that investment and make it now, because it is a longer term game plan.

In particular, what gets me is National Party members who, when you look at the socio-economic breakdown of their electorates, should be arguing for greater investment in schools, not less. They should not be following the Liberal line—the Liberal line that goes, 'You don't chuck money at education,' yet so many of them would be putting their kids through some of the most expensive schools in the country. Of course money does not mean anything when you are doing that. Then they deny money from the very schools that we need to see bringing in new talent, bringing in new skills and making sure that we have a longer term investment in young Australians. The Nationals just accept what the Liberal Party is doing. Those people who will end up potentially running their own enterprises, running their own small businesses and being involved in the future decisions of the nation are being denied. Why? All because, again, the National Party wants to toe the Liberal Party line of, 'Yeah, it is a better move to put $65 billion into a tax cut instead of investing in the regions and investing in the young people within those regions.' It makes no sense.

I come back to the point that, with small business, there are things this government can do. They can certainly take on board the amendment, and I certainly encourage support of the amendment put forward by the shadow Treasurer. Speaker after speaker on this side, including the shadow Assistant Treasurer, have articulated the types of things that need to be done to fix this bill up, but it should not have got to this point. The Treasurer should have taken advice on and should not have been so arrogant as to ignore the views expressed by the people who would have to implement this decision. We are here now because of that arrogance. We are here now because of that pigheadedness that has been exhibited. I have seen it in the laws that he has been putting forward, particularly with respect to the innovation space, where he will not listen to good advice. If we have to go through this process that has been advocated through the amendment put forward by the shadow Treasurer, then so be it. We would rather get this right than rush and stuff it all up, which is, basically, what the government is trying to argue the House accepts today.

Andrew Wallace (Fisher, Liberal Party) Share this | Link to this | Hansard source

It was nice while it lasted to have a little bit of bonding over the fence from the member for Chifley. This government is committed to delivering fairness and opportunity for all Australians. Fairness is about treating everyone the same way under our laws. It is about applying the same standards to a large multinational that you would apply to the man or woman in the street. On this side of the House, we appreciate the contribution made by big business, the one-third of Australian workers they employ and the 73 per cent of them that innovate and take our economy forward.

However, we demand that the big end of town play by the same rules as everyone else, and we are acting to ensure just that. We are making sure that they give Australian workers a fair go and pay them the wages they are entitled to with the Fair Work Amendment (Protecting Vulnerable Workers) Bill. We are making sure that they do not strike any dodgy deals with the unions with the Fair Work Amendment (Corrupting Benefits) Bill. And yes, in this Treasury Laws Amendment (GST Low Value Goods) Bill and other bills we are making sure that they pay their fair share of tax. We are introducing a levy on the big four banks, because we want to make sure that they do their bit to get the nation's finances back on track. We are ensuring that multinational corporations do not get away with shifting their profits, with the Treasury Laws Amendment (Combating Multinational Tax Avoidance) Bill. We are demanding that the big end of town do the right thing and pay their taxes just like every hardworking Australian. Fairness is about treating everyone the same and making sure that, whoever you are, you operate on the same level playing field. The bill before us today is another example of this government enacting that principle.

In preparing for this speech, I reviewed just one of the hundreds of websites that sell millions of dollars worth of goods into Australia every year—Amazon.com. Most of the kids up in the gallery have probably been on that site. This website has almost 100 separate departments. Handmade furniture, vinyl records, fine art, golf clubs, car tyres and mascara are all among their offerings. For every low-value product on the site, from the beachball to the ball gown, Amazon gets an unjustifiable price advantage over our Australian made products because it does not collect GST. How are Goodyear Autocare in Kawana Waters supposed to compete fairly with American tyre exporters when they start with a 10 per cent disadvantage? How is Corelli Books in Mooloolaba supposed to compete with Amazon? How are Surfware Australia or SPORTFIRST in Caloundra supposed to compete with international sports equipment suppliers in the US, the UK or China? Competition is fierce in low-value consumer goods. A 10 per cent disadvantage is not a margin that can be made up by working a little harder. Who benefits from this imbalance? It is overseas businesses that do not employ Australian workers, invest in Australia's future or pay Australian taxes to support our service delivery. It is them that will receive that imbalanced benefit.

The Turnbull government is committed to supporting Australian small businesses, as I am in my electorate Fisher. After the government passed our tax cut for small businesses last month, I went out into my electorate and walked the main streets of Mooloolaba and Caloundra, meeting with some of our local business owners, as I often do. I note the great efforts that the small business minister has made with my people in Fisher, having recently attended and hosted a small business forum in Fisher, for which I am extremely grateful. When I was out of talking with small business owners, we talked about what these owners intended to do with the additional income for their business that the government is now allowing them to keep.

I spoke to one man, Martin Kralovic, the owner of CK Coffee Bar & Wholefoods in Mooloolaba. Martin operates a fantastic coffee shop just a two-minute walk from the beach which supports our local farmers and encourages healthy eating. When I spoke to Martin what he said encapsulated perfectly what so many business owners in Fisher have told me over the past year. He said: 'There's always something in the business to reinvest in. You are trying to accommodate as many people as possible, and to do that you need as many staff as you can get. Having extra dollars will allow us to put more staff on so that we can provide a better service, and that's the way we look at it.' Martin from CK wholefoods has an extremely busy coffee shop and I know that he is always trying to find new ways of providing services to more and more locals and tourists in Mooloolaba.

When you give Australian small businesses a level playing field, you give them the chance to compete for the extra dollars that they need to reinvest. When you help a small business to succeed, you create local jobs. You help to build coherent communities and you generate more tax revenue for our public services. This bill is yet another critical part of the Turnbull government's march for more fairness and opportunity in our economy, and I commend the bill to the House.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Treasury Laws Amendment (GST Low Value Goods) Bill 2017 and support the amendment moved by the member for McMahon. I wish to make it abundantly clear from the outset that Labor, of course, support the collection of GST on low-value imports in principle. However, obviously, we want to see a model that is workable. Any changes to this process should have a high degree of compliance and not result in significant adverse consumer outcomes. To ensure this occurs, there must be a 12-month delay to the commencement of the legislation. That means moving the start date back from 1 July 2017, only a couple of weeks away, to 1 July 2018. That is our recommendation.

To get this important change right—which I know has not come out of the blue; Labor governments have looked at this—we still need to have a Productivity Commission review of the proposed legislation to consider all alternative models, not just a vendor registration model. We also need to report on the possible compliance mechanisms and provide recommendations for changes to allow parliamentary consideration well ahead of a start-up date of 1 July 2018.

The bill before us amends the A New Tax System (Goods and Services Tax) Act 1999 to ensure that GST is payable on certain supplies of low-value goods that are purchased by consumers and then imported into Australia. This bill defines 'low-value goods' as being $1,000. These products will now be subject to GST collected on behalf of the government by online platforms, just as they would be if they were sold in one of the shops in Sunnybank, in my electorate.

When the GST was first introduced, it was not normal for too many domestic consumers to purchase goods from overseas from online retailers, who have blossomed in recent years. Sadly, it has become increasingly common for Australians to choose to make purchases in this way. That is the market reality we are left with today. People are shopping overseas while they catch the bus home from work. People are shopping overseas while they mute an ad during a TV show. That is how easy it is to shop nowadays with modern telephones. This represents a risk to the integrity of the GST system and has the potential to place Australian suppliers at a competitive disadvantage. Of course, Labor will always support a level playing field for Australian businesses. We will do all that we can to champion Australian businesses. But it is vitally important that we get the details right. The devil is in the detail.

Before I continue to look further at this legislation, I think it is important that we consider it in the context of it being a revenue measure. In doing so, let us have a look at this government's record in the run-up to the start of its fifth year in government—a time for reflection. Shortly after that 2013 federal election, I think it was, I vividly remember that Treasurer Joe Hockey, disgraced former Treasurer Joe Hockey, released his 2013 mid-year economic update. Mr Hockey and the Minister for Finance, Senator Cormann, declared that gross government debt was set to reach the unthinkable level of $667 billion. They reassured us, saying that this was okay because the Liberals were here and they were ready to fix the 'debt and deficit disaster'. Remember those trucks driving around the place, telling us about that debt and deficit disaster? So let us look at the contrast between that 2013 MYEFO and the Liberal budget delivered last month.

A couple of question times after the budget, the Treasurer admitted that gross debt would actually continue rising, to $725 billion, on the coalition government's watch. In case anyone listening at home is unsure of those numbers, I repeat: yes, gross government debt has skyrocketed on the coalition's watch. The gross debt figure is bad and has blown out under the management of the Liberal Party and their partners, the National party. How about net debt? This is often used as the more reliable indicator of the health of the national balance sheet. Well, the budget papers confirm that net debt will rise to 20 per cent of GDP. Not since World War II has net debt been that high. The last Labor government never had net debt reach 20 per cent of our economy.

The Treasurer's budget shows that new record net debt for the next three years as continuing into the fifth and sixth years—and, hopefully, the final years—of this government; a deficit for the coming 2017-18 year which is 10 times bigger than what was predicted in the Liberal's first budget; and gross debt equivalent to $20,000 for every man, woman and child in Australia. This is from the party that claim to be the better economic managers. That is a complete furphy. Those opposite lectured the Labor Party for years while in opposition about how they were going to reach surplus. I think Joe Hockey said that they were going to reach surplus in his first budget. I remember their first budget, that 2014 budget. I think the member for Lilley might remember it as well. How did that go? We now have a government with increased taxes and increased spending. The party of supposedly responsible spending and taxing have shown that they have totally lost control of the economic situation.

It would be remiss of me to reflect on the inability of the government to effectively manage the economy without discussing the 2017 budget. The Treasurer mentioned 'fair', 'fairer' or 'fairness' 10 times during his budget speech, but just because he uses those words does not make the budget fair. It is unfair to cut the tax of high income earners while at the same time increasing the tax for low and middle income earners. It is unfair to make hard working Australians pay for a $65 billion tax giveaway to big business. It is unfair to cut the take-home pay of 700,000 workers by up to $77 a week. But this is what the Turnbull government has either announced or stood by and allowed in its unfair 2017 budget delivered just one month ago.

This government is so out of touch that they do not understand it is fundamentally unfair to give a tax cut to millionaires and a tax hike for everyday Australians. This budget demonstrates that the Turnbull government's priority will always be to look after the top end of town—the big corporations, many of them foreign; the conglomerates; and the millionaires and billionaires—and not the everyday Australians, not the battlers, not the middle class with aspiration. There is no other way to interpret a budget that is so fundamentally unfair to ordinary working Australians, especially at a time when the costs of living are getting out of control and wages are stagnating or dropping. The Turnbull government are so out of touch they just do not understand that real wages of Australian workers have effectively gone backwards. The annual wages growth of hardworking Australians is now at the lowest level since the ABS first published data back in 1997.

Hardworking Australians, whose take home pay shrunk in real terms, are being asked to pay more in tax while millionaires will pay less from 1 July. If you earn $60,000 a year you will have to pay an extra $300 in tax; but if you earn $1 million a year you get to pay $16,400 less. How can that be fair in the Australia of 2017? The reason millionaires will be paying less is that the government is refusing to continue the deficit levy. Remember when the deficit levy was introduced—that was the levy brought in by former Treasurer Hockey to repair the budget. Is the budget repaired? Far from it—it is now 10 times worse. So this is the very worst time to be removing this levy.

So how is that for some revenue measures the government can consider? They could not go ahead with the $65 billion corporate tax giveaway. They could maintain the deficit levy. They could not cut the taxable income of 700,000 Australians who rely on penalty rates and who then spend that money in the economy. Or how about Labor's reforms to negative gearing and capital gains tax concessions? There are many other options available from the Labor Party, put forward by the member for McMahon and the opposition leader, Bill Shorten.

In the Labor Party, we are not prepared to be a small target opposition. I say that proudly. We have been prepared to take on budget repair—in fact, we have no choice when faced with gross economic mismanagement from the Liberal government. With the botched economic management we have seen under those opposite, you might forgive me for not having blind faith that the government is best placed to enforce this GST legislation change.

Following the Senate Economics Legislation Committee public hearings and report into the bill, Labor still has significant concerns with the legislation. These are mainly about the implementation design, the lack of consultation by the government and Treasury, the low compliance rate and the lack of a regulatory impact statement. The change to these GST arrangements was announced in the 2016 budget and slated to commence on 1 July 2017. Hearings by the Senate inquiry into the bill unearthed significant concerns amongst stakeholders that a commencement date of 1 July would not enable enough time for preparation. Even if this was the best bill in the history of the parliament being planned for commencement from 1 July, why are we here talking about it on 12 June? There are only a few days until this kicks off. The government is allowing no time for businesses to adjust and to allow the systems to be put in place to see this rather significant change implemented. In fact, the government-dominated Senate Economics Legislation Committee also recommended the bill's implementation date be delayed by one year—I stress, that is the government-dominated Senate Economics Legislation Committee.

So who is there left to convince that the commencement has to be pushed back? If this extra year were agreed to by the government, it would allow the government to better engage with stakeholders to address concerns raised specifically about implementation and other matters of concern with this piece of legislation. While the government often chooses to lecture us about bipartisanship, here is an example of where the Labor Party has offered bipartisan support, agreed to the principle of the legislation and asked for greater consultation about the implementation of this significant change. It looks as though this olive branch has been rejected by the government and the Treasurer, who have both managed to completely bungle the implementation of the GST threshold changes.

This brings me to the next area of policy change, and that is enforcement. In short, in the Senate committee inquiry, eBay claimed that Treasury officials had told them they expected a 25 to 30 per cent compliance rate from the model set out in this legislation. Treasury officials later stated that they expected this compliance rate in the third year of operation and for it to reach maturity in 2022-23 at 54 per cent. I am not familiar with the modelling. However, how can this bill in its current form purport to level the playing field while only having a 54 per cent compliance rate target? The Senate inquiry made it clear that overseas jurisdictions—for example, the United States and China—will not enforce the measure on the tax office's behalf. So compliance with these measures will largely be reliant on the goodwill of overseas operators. Clearly, that is not good enough.

I now want to go to the final area of this legislation that the government has managed to bungle. As everyone is aware, the Treasurer likes to talk about reducing the impact of red tape. Yet in this case he has failed to produce a regulation impact statement. I remember that in the 44th Parliament we had those grand occasions called the red tape repeal days. That was the member for Warringah's great achievement and great gift to the nation! We had a conga line of backbenchers lining up to talk about the red tape they were reducing. Sadly, this Treasurer is cancelling the red tape reduction parties. Instead, he has chosen not even to consider the impacts of this legislation.

Wayne Swan (Lilley, Australian Labor Party) Share this | Link to this | Hansard source

They are having a tea party instead!

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

That is right, member for Lilley; they are having a tea party instead. They are talking about climate change and all those things about the future of the world—sadly, a story we saw play out 10 years ago with the same actors but in different roles. Labor's principle on this issue has been clear from the start. We believe in creating a level playing field for Australian retailers who compete with overseas retailers, while ensuring that we have a workable model that can be easily complied with by overseas retailers and online platforms without any adverse impact on Australian consumers. To achieve this we must delay the commencement of this legislation by one year to ensure greater consultation and analysis of the vendor registration model. Australia needs to get this right. We must conduct a proper review of the proposed changes to ensure that we can get the changes right. Any measure must have a high degree of compliance and not have significant adverse consumer outcomes.

As I made clear at the outset, Labor supports the collection of GST on low-value imports in principle. But I have little faith in this government properly considering all of the moving parts in making this important reform. Unfortunately, that will mean my constituents in Moreton will suffer accordingly.

Wayne Swan (Lilley, Australian Labor Party) Share this | Link to this | Hansard source

I think it is fair to say that the government has bungled the management of this bill and this issue from the very start. The policy issue of ensuring overseas retailers are put on a level playing field with Australian retailers when it comes to the GST has been around for a long time. And I do think Australian retailers are 100 per cent right when they say they should not face a GST cost disadvantage to overseas or online retailers. Labor MPs—and, I am sure, government MPs and the Treasurer's office—have experienced a parade of stakeholders criticising this bill from every angle. In fact, it is pretty hard to find anyone who thinks this bill is in its entirety worthwhile, although people do support the objective of the legislation.

We are concerned about issues surrounding the implementation of the measure, particularly as to how the GST should be collected. We want to see a model that is workable and is able to be complied with, one that does not impact adversely on consumers. That, of course, is one of the reasons we are moving in our amendment that the bill should be delayed for a year. But it is true that there is in-principle support for this proposal, I think across the entire parliament. Labor does support a level playing field for Australian businesses, which this measure intends to do. We simply do not have the details right.

I think this bill will pose many dilemmas—dilemmas in terms of implementation and dilemmas in terms of compliance. These will be faced both by the boards of companies and by the tax office. For example, the government expects a compliance rate of only 25 per cent. This is a very significant law and it will place the tax office under a lot more stress when it is at a moment in history where it has bigger fish to fry. Surely, the tax office must have some higher priorities as it grapples with rampant multinational tax avoidance, for example, such as we have seen from companies like BHP, Rio and others. Over the last 18 months, for example, it has become very clear that BHP's management has engaged in activities for over a decade that can only be described as tax evasion. How will this bill relate to their activities in that area? Two weeks ago BHP CEO Andrew Mackenzie was questioned on 7.30 about BHP's tax evasion and why, given the revelations of recent times, the Australian public should take BHP's calls for lower tax seriously. As we have come to expect, Mr Mackenzie did not address the question, instead choosing the excuse that BHP already pays a lot of tax in Australia. Well, Mr Mackenzie, you do not get to choose how much tax you pay. You don't book $5.7 billion in profits through a Singapore tax shield and then get to call yourself a responsible corporate citizen. Quite frankly, paying a lot of tax is not good enough. If you operate businesses here and you benefit from the institutions, human capital and infrastructure provided by and nurtured by the government of Australia then you have an ethical obligation to pay all of your tax, to pay your fair share of tax. When I first called out BHP's activities, in 2015, I did not blame the CEO or the board. Fierce competition and the pressure of the market can drive people to make many poor choices. But, now, almost two years later, BHP remains defiant in its refusal to accept any responsibility or acknowledge any wrongdoing.

This brash, arrogant and self-righteous attitude, which we see too frequently in too many of our boardrooms, is typical I think of a malignant culture that has emerged in corporate Australia. Why should the Australian parliament and the Australian public accept being talked down to by corporate Australia, which, over the past 10 years has not only engaged in rank short-termism and shameless selfishness but in some cases outright corporate negligence and malpractice. Take BHP, which, under the leadership of current CEO Andrew Mackenzie, former CEO Marius Kloppers and board chair Jac Nasser, has undertaken projects that have destroyed capital on an absolutely massive scale. Accordingly to our advisers, in recent years BHP's management has undertaken projects that have reduced shareholder value by US$40 billion: US$23 billion in write-downs in their US petroleum venture; US$8 billion spent on petroleum exploration, with no apparent value created; and US$9 billion spent on share buybacks at inflated prices. Unfortunately, the self-righteous leadership of BHP shows no sign of remorse or contrition and has instead opted for a public relations exercise, spending $10 million of shareholders' money rather than reforming their corporate governance and recognising their corporate responsibility.

If BHP were serious about corporate leadership, about meeting their ethical obligations, they would immediately shut down their Singapore marketing hub. There could be no clearer signal from BHP leadership that they are willing to close this chapter and begin a new one were they to embrace their role as 'the big Australian' and lead by example. I have previously called for BHP to do this, and I was rejected on the grounds that BHP's marketing hub does provide value. However, even an aggressive tax arbitraging hedge fund like Elliott Advisors says that it ascribes 'no value' to this structure and notes that 'the termination of this structure would be in line with efforts to regain the trust of its various stakeholders'.

BHP has once again rejected this assertion. As I see it, this means that there are two scenarios. Either Elliott Advisors is correct, and BHP's Singapore marketing hub creates no value and therefore should be shut down, or BHP's marketing hub does create value through tax evasion and should therefore be shut down. In either scenario the only responsible action from BHP's corporate leadership is to shut down its Singapore marketing hub. But BHP has failed to come clean on the evidence that its boardroom culture is selfish and rank with malpractice. Like other multinationals, it has been involved in a deceptive race to evade tax, to suppress wages and to casualise its workforce.

Now, at some point the directors of BHP have to accept responsibility for the actions of the company. Earlier this year I called on those who had been found guilty of tax evasion to be stripped of their Australian awards. This Queen's Birthday Honours, early in the week, brought the whole issue of corporate ethics and Australian honours into very clear focus. Not every Australian honour is created equal. If you asked the person in the street who is more deserving of an award, would they choose the couple who fostered 380 children over 40 years or a business person who has paid millions and who is recognised for their services to business?

There are many worthwhile people recognised in the awards announced earlier in the week—worthwhile business people who have donated a lot of money to charity and have worked hard to make our community better, and I acknowledge their efforts. But I think it is beyond the pale when the chairman of a company that is in dispute for more than $1 billion to the Australian taxpayer receives the nation's highest honour. BHP has been systemically avoiding tax through the creation of its Singapore marketing hub, depriving the Australian people of their just returns on their taxes and royalties on the minerals they own 100 per cent. This structure sends a signal to every other Australian business that it is okay to create offshore structures to cheat the Australian Taxation Office. It is high time we asked the Honours Committee to check in with the ATO before handing out gongs to business people. Anyone without the cleanest of clean sheets from the ATO should have their awards deferred until they are certified as having a clean bill of health.

So, this whole issue of enforcement, this whole issue of compliance which is raised in the bill before us today is so critically important. If the Australian people are to have faith in the government of Australia and if they are to have faith in the administrative systems and particularly the tax system, then they need to see that everybody is paying their fair share. And when they see people who are worth billions not paying their fair share, they lose trust in the political system, they lose trust in the processes of politics and we see the polarisation of and disillusionment with the political system get worse and worse. Therefore it is very important that on these issues of evasion and compliance the Australian government puts in place the best systems to ensure that everyone is treated equally. Sadly, this bill today, with such a low compliance outcome, is not up to the task either.

Stephen Jones (Whitlam, Australian Labor Party, Shadow Parliamentary Secretary for Regional Development and Infrastructure) Share this | Link to this | Hansard source

It is a pleasure to follow the member for Lilley in this debate on the Treasury Laws Amendment (GST Low Value Goods) Bill 2017. He has dedicated a great deal of his time in this place to dealing with issues of inequality, particularly inequality within the tax system. This is a debate about amending our tax laws as they apply to low-value imports and low-value goods.

It is important to locate that in a context, and the context is: the Commonwealth government needs the revenue to ensure that we can provide the infrastructure and the services that the Australian people have made very, very clear they expect any Australian government to provide, whether it be Medicare, funding for education and our universities, or providing rail, road and bridge projects to ensure that we have the productive infrastructure fit for this century. The Australian people expect us to get on with this job, and we need the revenue to do it.

An important part of any responsible government's job is to ensure that we are removing the inequalities to ensure, as the member for Lilley has just pointed out, that everyone is paying their fair share, so that, whether you are a wage or a salary earner on a very modest income, or the captain of one of our largest national or multinational companies, you are paying the tax that you are required to under Australian law and thereby making a contribution to this great country of ours.

One of the areas that has been under review for many years now is the exemption for low-value imports that currently applies under our GST laws. The current low-value threshold is $1,000. So, if you are customer going to an online site or going directly to a supplier overseas and importing a good that is worth $1,000.50 then you are paying a GST impost on that good on import, but if you are purchasing a good worth $99.99 then you are not paying a GST impost on that good. There are many large and small retailers who are saying that this puts them at a competitive disadvantage—and there is some truth in this. What the bill before the House does is look at all of those importers with an Australian turnover of in excess of $750,000, makes them tax collectors for the Commonwealth and removes the exemption that currently exists on goods worth less than $1,000.

This provision has some history. Labor looked at it when we were in government. In fact we set up a task force under the Productivity Commission to have a look at it, and the Productivity Commission did indeed say that there was merit in us removing the uneven playing field that exists for retailers competing in Australia with imported goods of low value. The overwhelming majority of those low-value imports are not goods, as I described in my opening example, worth $999.99. They are less than $100. People are going online purchasing a CD, a DVD—I am told that people still purchase those things—an item of clothing or some small electronic goods for under $100 and importing them. There are many Australian retailers that complain that they are put at a competitive disadvantage because of that.

When the Productivity Commission looked at this in 2012, amongst its many findings it found two things: firstly, the driver for people to go to an online site and purchase a good, as opposed to going to a bricks and mortar establishment, was not just price; it might have been convenience; it might have been the capacity to browse across a range of different retailers to compare prices and do that from the comfort of their own lounge room, or once the kids had gone to bed at hours when the majority of bricks and mortar retailers simply are not open. So there are many factors, apart from price, that are driving consumers to go online, as opposed to going indoors, to purchase their low-value products—and, in fact, goods of any value.

The Productivity Commission made that important finding, and it said that this alone should not be a reason for us not to act. It did, however, say that the effort—the burden to the Commonwealth—at the taxing point should not be greater than the revenue that was going to be brought in as result of introducing these measures, and there was deep concern at that point in time that the compliance cost was going to far outweigh the cost of bringing that revenue in. That should be a concern to any responsible government. If, in implementing a measure such as this, it is costing taxpayers of Australia more than the reward they are getting in revenue, to enable the Australian government to provide for the goods and services that Australians expect, then we should think long and hard about doing this. One of the important reasons why Labor did not act upon receipt of the report in 2012 was that it was going to cost more than the revenue that we were going to gain.

That does not mean that the issue should not be under constant review. We welcome the fact that the government is looking at this issue and has announced an intention to legislate. But we have deep concerns, which have been outlined in the member for McMahon's second reading amendment, about the time lines and the engagement with stakeholders that the government has committed to as a result of this measure. That is why we have called for a review, and we ask all members of the House to support the amendments that the member for McMahon has moved in this place in this debate to ensure that we can have a thorough look at it. I have engaged with some of the online retailers who are concerned about the time lines. This has a few short weeks before it is supposed to be implemented. Most Australians would not know that, I dare say. Most Australians would not be aware that in a few short weeks time, on 1 July, this measure is set to be implemented.

There are some other issues that need to be looked at, which is why the review of the provision makes militant good sense. There is a concern that has been expressed by some of the stakeholders about the interaction between these new provisions, which are specifically put in place to allow vendors to be a taxing point for low-value goods—that is goods under $1,000—how that interacts with the existing arrangements for goods which are over $1,000. If you are direct importer and you have had any experience in this, as I have, you will know that you will get a phone call from Customs and they will tell you that your goods are here ready to be collected as soon as you pay the GST which is due to the Commonwealth on those goods. There are some who are asking what the interaction is between these two systems. Is it going to be cumbersome? Is it going to force retailers to push the prices up so that we only have one efficient system operating, as opposed to two? Or are retailers going to game the system to ensure that they are operating in one of the regimes as opposed to the other? These are all legitimate concerns that are worthy of being looked at.

I do not accept the threats that some of the large vendors have been making in the context of this debate. It is simply not good enough for a large multinational operator to say that if the government intends to impose a tax on their goods, just as applies to every other retailer in the country, they are going to shut up shop and not operate in this country. No government can allow itself to be bullied and threatened in such a way. That is not a reasonable way to engage with a government of any stripe and not a reasonable way for an operator to propose to respond to a reasonable proposition.

But we are deeply concerned with the time lines and some of the unintended consequences. That is why our second reading amendment calls for a review of these arrangements. None of this should be taken as a message to Australian businesses, and particularly small businesses, that they do not need to get into the online space.

As I said at the outset, there are many reasons why consumers are going to an online retailer as opposed to a bricks-and-mortar retailer which are not going to be changed by the mere imposition of a 10 per cent GST on that competitor. There are many reasons why people are going to an online version of a store as opposed to bricks and mortar version—convenience being one of them and shopping habits being one of them. So that is why Australian businesses, and particularly small businesses, have to have an online presence.

Recently, the member for Cunningham, Labor's shadow spokesperson for small business, Senator Katy Gallagher, and I opened a digital garage event in the Illawarra hosted by the Illawarra Business Chamber. I am very pleased to have Google providing training and information that goes to this very issue to small businesses in our electorates. A point made quite clearly by the providers of that information and training was that, if you are not online, you are not in the game and there is simply not an option for a business not to have a very strong online presence as part of their business strategy.

I also had the benefit this weekend of meeting with the Highlands entrepreneurs for regional development in Bowral in my electorate. They are setting up a new business incubator in the middle of a facility that was once a hardware store for close to a century on Bong Bong Street in Bowral. They are a group of innovators who are keen to ensure that start-up businesses have a facility and the networks necessary to operate in regional Australia. I am very excited about what they are proposing to do. They face some challenges. One of those challenges, as indeed every business in regional Australia is challenged by, is the unreliability of and, in many instances, the costs that they are paying for their broadband services.

The Highlands entrepreneurs for regional development are a group of entrepreneurs who are planning on a technology upgrade to ensure that their facility has broadband available to service the entrepreneurs and the start-ups that want to operate out of that business. The point I made to them quite clearly is that they should not have to do that. Under Labor's plan, this premises would have been connected by fibre to the premises. Under the absolute mess that the Prime Minister has made of the rollout of the National Broadband Network, they are connected by copper from the node, which is simply not going to be able to deliver the download and upload speeds that those businesses and those start-ups need if they are going to operate out of that incubator in Bowral.

That is just one example. There are hundreds and hundreds of other businesses who are suffering because of the absolute mess that this government and, in particular, this Prime Minister has made of the rollout of the National Broadband Network. A man who could not leave well alone and who thinks he is always the smartest man in the room, particularly when it comes to technology, has made an absolute cock-up when it comes to the rollout of the National Broadband Network. It is why, when I talk to businesses small and large and when I talk to households around my electorate and around regional Australia, they say: 'NBN doesn't stand for "National Broadband Network." It stands for "no bloody network."' They say that because they are suffering from service dropouts, unreliability, cancelled appointments and, in many instances, going for weeks and weeks with no phones and no internet services because of the mess that this government has made of the rollout of the National Broadband Network. So fixing the inequalities with GST is a part of the solution, but dealing with the cock-up that the government has made on the NBN is a big part of it as well.

Anne Aly (Cowan, Australian Labor Party) Share this | Link to this | Hansard source

I do not rise to speak on this bill because I am an economist. Heaven knows, I know very little about economics and do not profess to be a specialist in economics by any means. But I do love shopping and I do love the businesses and retailers in my electorate, and I have watched as many of those small businesses and retailers have closed their doors because they simply cannot compete with the volume of online retail that is out there. So that is where I am coming from when I rise to speak on the Treasury Laws Amendment (GST Low Value Goods) Bill 2017, because the bill is fundamental to the policy issue of ensuring that Australian retailers get a fair deal and are on a level playing field with overseas retailers when it comes to GST.

This policy issue is not new. It has been around for quite a while, particularly since the advent of online retailers, who are able to sell their wares to Australian consumers without incurring the same level of tax that our Australian retailers incur, which therefore puts Australian retailers in a disadvantageous position. I am sure that many members of the House could walk around their electorate and see how many Australian retailers have indeed had to close their doors because they are not getting the same level of business coming in; they could see just how much the online retail industry has affected them. So it is only fair—and also timely; perhaps a little over time—that we start looking at this issue and ensuring a fairer deal for Australian retailers if we are to live up to our rhetoric of supporting Australian business.

Labor have always kept an open mind about the government's proposal on this, and we do indeed support it in principle, as my colleagues before me have reiterated. We support a level playing field for all Australian businesses, which this measure arguably is intended to create, but we have concerns about the details. We want to make sure that we get the details right. We want to make sure that, when this is implemented, it is implemented in the right way. We want to see a model that is workable, that can be complied with and that does not impact adversely on consumers in Australia, but we are concerned about some of the issues surrounding the measure's implementation, particularly with regard to how the GST will actually be collected.

When Labor was in office, the Productivity Commission made it clear that such a bill was something very much worth pursuing, because it was clear that the cost of collecting GST from foreign retailers was outweighed by the actual revenue that we would get in GST from those retailers. In other words—to use an economic term, Mr Deputy Speaker!—it was cost-effective. Labor have been saying this for years and we have on several occasions urged the government to come to bipartisan agreement on the implementation of such a bill. After all, we agree—and I think pretty much everyone in this House would agree—that Australian retailers are 100 per cent correct when they ask, 'Why should we face a GST cost disadvantage compared to overseas online retailers?' I ask myself the same question. But let's just stop and pause for a minute, because I think it is always important to stop and pause when we are doing important policy work that is going to impact not just on businesses, not just on Australian retailers but also on Australian consumers. It is really important to get the detail right. So let's just stop and have a look at some of the fundamental flaws that Labor are pushing to have addressed, and what we can do about those.

The proposed bill applies GST to goods with a value of less than a thousand dollars that are imported by consumers into Australia. Let's say I get onto Amazon because I want to buy a copy of a book on, say, terrorism and the internet—because that is pretty much all the stuff that I read—and I purchase it from the British publisher. That would then incur GST because its value was less than a thousand dollars—although invaluable in its content, I must say! Currently, these goods are exempt from GST. The government is seeking to have this GST on low value imports take effect from 1 July this year, which is not very far away.

But here is the thing. The first fundamental flaw with this is that it is a vendor registration model. That means that overseas suppliers, including electronic platforms like eBay and Amazon and also redelivery services, with an Australian turnover of $75,000 or more in a 12-month period will be required to register and charge GST. In other words, it relies on their compliance. The Senate inquiry found that Treasury expects compliance rates of 25 to 30 per cent in the third year of operation. So by July 2019 the compliance rate will be 25 to 30 per cent, and in 2022-23 the compliance level will hit maturity—its highest level—at just 54 per cent. Any reasonable person can see that 54 per cent compliance does not deliver a level playing field. It simply does not.

The Senate inquiry also made it clear that overseas jurisdictions such as the US or China will not enforce the measure on the tax office's behalf. That means compliance is largely reliant on the goodwill of overseas operators. I do not know about you, but I am just not willing to put that into their hands. What that means is that the very purpose of this bill, which is to achieve a more even playing field for Australian retailers—the kinds of people I want to support; I love buying from Australian retailers and I love buying Australian-made—is already compromised by the government's mishandling of this from the very beginning. And I have to say, it bears a striking resemblance to a lot of this government's other fly-by-the-seat-of-your-pants policy thought bubbles that have not very much substance to them but a whole lot of rhetoric.

I will take this opportunity to reiterate the point made by my colleague the member for Whitlam with regard to the NBN. Since we are talking about online retailing—good luck, if you are in parts of my electorate, even being able to get online to buy something from an online retailer! I will also take this opportunity to pivot momentarily to the bungling of this bill as well as the bungling of the GST redistribution to my state of Western Australia.

But I will come back to this bill, moving on now to whether or not we have a workable model here. Submissions to the Senate inquiry had several issues with the government's preferred model, which is due to come into effect in July. Electronic distribution platforms like eBay, Alibaba and Etsy, for example—all were critical of being liable for paying tax on goods that they only serve as a platform for. They do not hold these goods and they do not own these goods. It is like asking a shopping centre to be liable for GST on the goods that are sold by their tenants. The key problem with this is that it is not platform neutral. In other words, an overseas manufacturer or holder of goods will pay as much tax—that is, if they comply; remember only 54 per cent of them are complying—as a distributor of goods.

Let me explain eBay, because I love eBay. Basically, eBay is where you can go online and buy things from individuals. I have posted things for sale on eBay before. You can buy things from people who no longer need them, or you can buy things from retailers. Since its inception, eBay has expanded to also accommodate online retailers. To have a policy whereby eBay, the distribution platform that is selling my second-hand goods, for example, pays as much tax as an online retailer that produces and holds goods just does not make any sense. It really does not. The other issues online retailers are concerned about are the complexity of the measure and that the low level of compliance would provide a competitive advantage to less-reputable firms.

We have talked about compliance and about the workable model and the fact that it is not a platform neutral. The third issue, which I think is a really important one, is the impact on consumers. The Senate inquiry found that this measure would basically end up in increased prices. In addition, the cost of implementation would be passed on to consumers. There was a concern that some platforms might also close their operations. I note that my colleague the member for Whitlam also addressed that.

So, once again, we see government policy being developed without any thought given to its impact, particularly on consumers. It is becoming quite tiresome to continually have to remind those on the other side that policy is not something you do in marble offices and towers, that policy actually has real impacts on real people. At a time when wages are at an all-time low and underemployment is at an all-time high, and when 700,000 Australians are facing lower wages in just 17 days' time, due to this government's insistence on cutting penalty rates, is this government really going to sit there and say, 'Oh, well!' to an ill-conceived policy that will force Australian consumers to pay more. I really hope not.

Finally, I want to talk about the implementation of the bill, because the Senate inquiry concluded that there would be significant challenges for some parties when implementing this measure. They were pretty much unanimous on the view that the start date should be delayed to 1 July 2018, a year and a bit from now, to ensure that issues around the model—the complexity of the model and the implementation of the model—could be worked out properly and we would actually have a workable, effective model ready to go in a year's time. Government senators made a recommendation for the government's own legislation to be delayed by 12 months, and they most certainly would support the government amending the legislation before the parliament now, to reflect a 1 July 2018 starting date. In other words, we would support a 12-month delay, just as the Senate inquiry did. This delay will ensure that we get the model right. We want to get it right and I am sure that those on the other side also want to get it right. Labor is prepared to work in a bipartisan manner with the government to ensure that we get it right, to ensure that this works.

But we also feel that a 12-month delay is not enough. It helps, but it does not go far enough in addressing some of those fundamental flaws around compliance, complexity and fairness, in allowing this bill to do what it actually has the potential and purpose to achieve, which is a fair and level playing field for Australian retailers. We have been clear on these issues from the very start: create a level playing field for Australian retailers competing with overseas retailers, and ensuring that you have a workable model that is easily complied with by overseas retailers and online platforms, without any adverse impacts on Australian consumers. That in a nutshell is pretty much what we want: a level playing field; a workable model; compliance; and no adverse impact on Australian consumers. We do not need to be hitting them again.

Alongside a 12-month delay to give the government this breathing room, we will also be pushing for an independent Productivity Commission review, not a Treasury review but a Productivity Commission review, into the current vendor registration model, assessing its impacts alongside other models with a view to recommending legislative amendments for the parliament to consider. This gives the government time and process to get the model right. Once again, we support this in principle but we want to make sure that this is right. We want to make sure that those fundamental flaws are addressed and that we deliver something that is worthwhile to the Australian people.

Julie Owens (Parramatta, Australian Labor Party, Shadow Parliamentary Secretary for Small Business) Share this | Link to this | Hansard source

There is something really wrong here. We are standing here on 14 June discussing a piece of legislation on tax law, the Treasury Laws Amendment (GST Low Value Goods) Bill, which begins on 1 July 2017, just two weeks away. We are in here talking about a tax law which, in two-weeks time, businesses overseas will have to apply. They will have to change their systems in order to implement it. It has not been to the Senate yet. It has not passed the parliament, and it is still due to start on 1 July in two-weeks time. For any piece of legislation, that is extraordinary. But for tax law and something as complex as this for the businesses that will have to implement it, there is just something really wrong about this. This simply should not be happening.

Let us look at what it is. In principle, what this bill does is try to level the playing field so that Australian businesses that sell goods in Australia do not have a tax disadvantage relative to overseas companies that sell goods into Australia. So it attempts to level the playing field. I will talk later about whether that actually works, but its intention is good. We, on this side of the House, have been aware for some time of the growing size of the market of goods coming into Australia and that, eventually, the low-GST threshold would have to be addressed when the cost of collecting it was less than the amount that it cost, because it is quite difficult to collect.

So the intention of this bill is actually quite good, even though the time frame is ridiculous, but one has to ask whether or not it achieves what it sets out to do. What it does, in an operational sense, is this: currently the low-value goods threshold is $1,000, and it lowers that. It is a vendor registration model, so overseas suppliers, including electronic platforms like eBay and Amazon, that re-deliver services into Australia with an Australian turnover of greater than $75,000 in a 12 month period will be required to register and charge GST. It puts the onus on the vendor and it lowers that threshold, so that companies in Australia that are selling to the Australian market do not have a tax disadvantage. Again, this is all good in principle until you start to look at the detail and the extraordinary lack of consultation that there was on this bill, even though it was first put forward in the budget in 2016 over a year ago, the legislation was first introduced in February and it is being debated now, two weeks before its start date. But the level of consultation on this has been minimal, both prior to the presentation of the legislation for the first time in this House and since. Virtually everybody that will have anything to do with this has criticism of it—virtually anyone has criticism of it.

It is as if the government have picked up some of the language of the start-up communities and think that they can apply it to government. The notion of a minimum viable product when you are start-up means that as soon as you have something ready to sell you get it out there—you are still embarrassed—but you get even the minimum viable product out there as fast as possible and you change and improve it as you go. That is the model. The word 'agile' is actually about the sector out there being able to come together and put together new ideas and new solutions and move forward very quickly. But 'minimum viable product' and 'agile' are not necessarily words you would apply to government. Governments need to be able to apply frameworks in which others can be agile. Governments need to provide a level of certainty so that others can work their path through the government policy. This is 'minimum viable tax policy'. It is not finished, it is not ready, it is too early and they are getting it out as quickly as possible. When they have to change it and change it and change it again, through the agility which they think is so great, there are businesses out there that will struggle incredibly hard to try and meet that compliance burden as this government changes its mind, as it gets at its minimum viable tax policy on two-weeks notice. If the government were a start-up, you would be congratulating them for this, but, as a government, this is completely in the wrong space. Governments provide certainty and frameworks so that others can be agile and solve the problems of the world; they do not do this. This is quite absurd.

There are threats to Australian bricks and mortar retailers and to Australian companies online. There are many, many threats at the moment, and one of those threats is the tax discrepancy between the different markets. But the threats are there because there are opportunities in the world at the moment and someone else has stepped into them. It would be foolish for any Australian government or opposition to look at the circumstances that we have now—the rapid growth of the online international goods market, as well as in the service market, and the fragmented supply chains and the growth in international movement of labour through online platforms—and to only be concerned about the threat that is well understood because it threatens existing businesses. And that is what we have here. We have a government that has not considered what this piece of legislation will do to emerging companies in Australia that set up their online sales businesses in Australia and then have a tax discrepancy with businesses elsewhere.

The government is not actually considering the growth of the sector and what the opportunities are. There is no policy for getting Australian businesses online, and we are lagging behind. We have an NBN which is failing dismally and which will not provide businesses with the opportunity that they need to be online in a major way, and we do not see policies and incentives that actually encourage the large numbers of businesses in every one of our communities that are not yet online to get online and compete internationally. The threat that Australian businesses face in this market is an opportunity in every other one, and we are fooling ourselves if we think we can stimulate or even protect growth in Australia without addressing the opportunities that are there and only looking at the threats. As much as that has to be done, it is a very small part of making Australia competitive—a very, very small part—and, unfortunately, it is not particularly competent.

If I look at stakeholders across the board who have criticisms of this measure, they come from every single area: consumer organisations, new businesses and, of course, the businesses themselves that will have to collect the tax.

There was a very good Senate committee inquiry into this that did really great work, and the government senators on that committee also recommended a 12-month delay to this legislation because it is just not feasible that this will be ready for a 1 July start. What they found in that Senate inquiry is that Treasury expects a compliance rate of 25 to 30 per cent in the third year of operation. So, by July 2019, on the current timetable—assuming the government can get it off the ground in two weeks time—we are looking at a 25 to 30 per cent compliance rate in the third year of operation, but only for companies that turn over more than $75,000 in here. On top of that, there will be a whole range of other companies that resell goods that they do not actually have any ownership in, they will be platforms rather than retailers in the conventional sense, and there will be a whole range of models that we have not even thought of yet that will grow in this space. The large warehouse based retailers are not the only model. There will be many, many more that will sit outside of the rules that this rather poorly drafted bill imposes—many more. Even those that we can think of now, the couple of dozen or however many large-scale retailers that sell more than $75,000 a year worth of goods into Australia, will have only a 25 to 30 per cent compliance rate because other jurisdictions, like the US and China, will not enforce the measure on the Taxation Office's behalf. So I assume that compliance will be largely voluntary for overseas operators.

It also means that overseas operators within Australia will face a competitive disadvantage here, because 100 per cent of operators in Australia, even if they do not turn over $75,000 in this market, will be collecting GST. So, if we want Australian businesses to open up here, establish themselves here and compete in the international field, perhaps we need to consider making the tax regime competitive for them as well. They are in many ways the future, and if we want to take advantage of the opportunity that caused the threat to Australian retailers then we need to actually make sure that those that are finding new ways to do it can base themselves in Australia rather than do what this bill sort of incentivises them to do, which is move offshore: move your headquarters offshore and then you will not have the tax disadvantage you will have if you are based in Australia. That part of this bill, that contradiction—that it attempts to improve the competitiveness of Australian businesses but does not actually protect the new ones—is quite alarming.

There have also been a number of submissions from eBay, Alibaba and Etsy, who have all been extremely critical that they would have to collect GST on goods that they simply serve a platform for. As you know, if you buy a good on eBay in Australia, you do not pay GST on it because you are buying it from another person. It is a trading platform, not a conventional retailer, as is Etsy and Alibaba. They are incredibly successful business models, but they do not fit into the old bricks-and-mortar model retailer who is now selling online. They are something else altogether. For them it is hugely problematic because the platforms that they built are quite specific and, according to some of them, these are quite major changes in their platform and they now have two weeks. It is quite extraordinary. We have also heard from some of them that they will geo-block Australia. They will just not sell here. That is also alarming because Australian businesses sell their products through these platforms as well. Again, the businesses that are at the forefront and are using platforms like Etsy, for example, to sell right around the world might find their efforts to get into the international market stifled because of this particular piece of legislation.

Labor wants the government to delay its legislation for 12 months. We do not think that is enough, but we believe the government should do that, and the government's own backbenchers who sat on the Senate committee said that they should. We have heard people opposite saying it is Labor kicking a can down the road. If it is actually a bad can with holes in it that will leak all the way down the road, it is probably a good idea to take it off the road for a while and fix it. I would absolutely prefer that a government gets its tax policy right and does the consultation before it actually imposes it on people who do not have to comply anyway because they are in a jurisdiction where they will not be compelled to do so. If we are going to expect these companies to do it voluntarily, we would want to make it as easy as possible for them.

The delay might seem extreme. The issue is getting greater month by month, but for people like me who were in the copyright industry back in the 90s this has been coming for a long time. In fact, in 1993, 1994 and 1995, US universities had to shut down their servers and ban the downloading of music because 60 per cent of all downloads in the US were music. Napster had 80 million customers by the time the GST was introduced. The online platforms that deal in the sale of labour were well and truly formed in the late 90s and were going gangbusters by the year 2000. I remember when John Howard first introduced the GST. I was sitting around with some of my colleagues in the copyright sector. We thought it would not even be relevant in 10, 15 or 20 years time—that the time for that kind of geographically based tax collection on the sale of goods and services was actually over. Even in 1998, we thought it was over. We were a little early, but the world is changing. The way that goods and services, inputs into manufacture and labour will be traded in the next 10 years requires a comprehensive look to ensure that Australian businesses can benefit from the opportunities created in the world market.

What we do not need is a government whose only focus is on the quickest possible fix of a problem that we have known about for a decade, particularly when their solution disadvantages those who are trying to move into the new world and are trying to break into international markets, and particularly when it disadvantages our consumers and some of our most innovative businesses who are finding new ways to sell to the world. This bill says, 'If you want to do that, move offshore because you get a tax advantage.' I really urge the government to have a serious look at this. This is backward thinking. We really need to engage with the people who work in this field and have serious consultation. Delay it for a year and get it right.

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

As a student of Australian history I can just feel Ben Chifley, John Curtin and Edward Theodore turning in their graves: 'Is this the Labor Party we produced?' In the most extraordinary statement, the previous speaker in this debate on the Treasury Laws Amendment (GST Low Value Goods) Bill 2017 said that this will force businesses to go offshore. What businesses? Perhaps I could ask the chair for an answer: what businesses will go offshore? I will tell you what businesses have already gone offshore. There is a clear-cut situation here. A foreign seller, a company selling clothing out of America, gets an order and sends the order via the internet to Australia. It gets an order for a hair dryer, or whatever, and it sends the product to Australia.

Previously, before the enlightened free marketeers of the Labor Party, the Labor Party was formed on the major reason it came into existence: to protect the workers' jobs, not to export the jobs overseas. But the member for Parramatta is talking about some people sitting in an office with a computer in front of them—and oh, there are thousands of them! There are not thousands of them. There might be hundreds of them, but whole industries—the whole white goods industry of Australia—closed down. And whose fault was it? The Labor Party's. They removed all the protection the Australian businesses had and exposed us to competition from people who work for $5 a day.

If you walk into this place you will walk past a magnificent portrait of the first member for Kennedy. That member for Kennedy ranted and raved against cheap labour being brought into Australia, because we had fought and died—quite literally—in the strike at the station property where Waltzing Matilda was written two months later. That strike and occupation of the woolshed led to three people being shot dead. That was not fun. The entire executive of the AWU was jailed for three years with hard labour for holding a strike. And when we got those hard-won decent conditions and decent pay, the plantation owners in the sugar industry brought in the Kanaks. And the mining magnates—corporates—brought in the Ceylonese from overseas to work the mines, and the coolies; it was mainly coolies.

And we had the great Charlie McDonald, the second or third Speaker in this place and one of the founders of the labour movement, ranting and raving. But here we have a lady getting up and pleading the cause of the importers. She represents the importers to Australia, the people she represents—the exporting of Australian jobs and the importing of foreign products. Now, I am not one of those who comes in here and praises the rich and powerful. But I am one who acknowledges people such as Gerry Harvey. Gerry said, 'I will have to close businesses everywhere and put, quite literally, thousands of people out of work if this is allowed to go on.' He estimated—and he produced the figures publicly—that the real cost difference was 30 or 40 per cent. If he was to provide what they call in the car industry a floor plan, if he was to provide a shop with all of these goods that you could go in and look at and evaluate, then that would cost a lot of money. If people were all going to buy on the internet from overseas, there was not much purpose in him having the shops anymore. He fought like a tiger to try to keep this at bay, and when he got attacked—'Oh, the poor people; they can get these things really cheaply from overseas'—he thought, 'Well, if you can't beat them, you have to join them.' So he just went ahead and joined them. So, thousands of jobs vanished.

I do not know where the shop assistants union is in all of this. I mean, shop assistants pay their dues to the shop assistants union. Where is the union defending the jobs here? We are all a bit sick and tired of unions going on holidays when the fighting needs to be done. They are like a lot of other peak bodies that I have had dealings with in the agricultural industry.

This place is characterised by nobody ever having battled for a quid for themselves. I seem to be one of the last of the Mohicans who actually comes from a business background. Joh Bjelke-Petersen had a saying: 'If you haven't backed your judgement with your own money, you shouldn't be making decisions with other people's money.' The last speaker is a classic example of that! No wonder that in a recent poll in Townsville we 'others' were on 35 per cent, the Liberal Party was pretty close to 30 per cent and the Labor Party was on 25 per cent. If the people in Townsville heard that speech Labor just gave, Labor would be down under 20 per cent. People are desperate for their jobs, and all we have heard from the Labor Party is constant and continuous attacks upon the coal industry.

One-quarter of Australia's income comes from coal. Without a coal industry you will not be able to buy anything because everything is now foreign produced. We have no whitegoods industry in Australia. We have very little textile, footwear and clothing manufacturing in Australia. So we have to import all these things. That is all very well. If you want to import watches, biros, mobile telephones and pads from overseas, that is fine; but you have got to sell something to be able to import things, and we do not sell anything anymore. We do not mine. Mining is when you dig it out of the ground and sell a product, a metal; when you dig out the ground and sell the ground, that is called quarrying. So we have just two sources of income—a coal quarry and an iron ore quarry. There are people in the Liberal Party who are against coalmining. Certainly, the overwhelming bulk of the Labor Party are against coal. All right, where are you going to get the money to buy all these things from overseas? You are not going to get it! The country is going to go bankrupt at 100 miles an hour—which, of course, it is.

I am not an important person. But Paul Keating most certainly was—whether I like to admit it or not. John Howard and Paul Keating between them were either Prime Minister or Treasurer of Australia for a period of over 30 years. Between the pair of them, they controlled the Australian economy for 30 years. The people of Australia voted for both of them, so it was the people's choice to put them there. When the current account deficit hit $15 billion, Paul Keating said we were in danger of becoming a banana republic. When the current account deficit hit $23 billion, John Howard reminded him of that. John Howard said the continuing current account deficit was the overwhelming problem above all else. Those were the statements of the two people who ran the Australian government, if not the Australian economy, for over 30 years: we were going to become a banana republic and the continuing current account deficit was the overwhelming problem above all else.

But the budgerigars on this side of the House do not think there is any problem at all. They say, 'What's the problem?' There is an old joke about input and output: the electrician says 'overload' and the politician says, 'What problem?' This is a classic example of it. 'What problem?'

Already our purchasing power, in spite of being propped up by outrageous interest rates, completely out of step with the rest of the world—our interest rates have been a thousand per cent higher than the rest of the world—

Mr Littleproud interjecting—

There is a gentleman laughing over here. I will have to give him a little economics lesson, because he obviously did not spend much time at school! The average interest rate throughout the world for 10 years was under 0.3 per cent, and the average in Australia was over three per cent. If you do not believe me, go and check it, but do not keep opening your mouth here. We know you are a galah, but you do not have to keep opening your mouth and proving it.

The gentleman over here has questioned that our interest rates were out of step with the rest of the world. I cannot ask the question of him, but I would like to ask him what the interest rates were, and he can tell us what they were: what were the prevailing interest rates in the rest of the world for the last 15 years and what were they in Australia for the same 15 years? If he had been in this place, he would have heard some people commenting upon it. If you hold interest rates up, people are going to put their money here, not overseas, so the dollar is going to rise. So we had a policy of a high dollar.

I do not know what his name is, but I think he is a bloke that represents a rural electorate. A rural electorate is dependent upon exports. Let me be very specific, because I do a lot of research on this. When Keating free floated the dollar, the dollar went down to 49c. Shame on me, I heaped great praise on him for allowing the dollar to free float. Doug Anthony got me aside as a very young man—I had the great honour of knowing and having spoken to and met with Jack McEwen and Doug Anthony—and he said, 'Don't worry about the substance of tariffs. That's not what we die in the ditches over. What we die in the ditches over is the value of the dollar.'

Those who have little bit of age on them—not like this little fledgling galah over here—and who have bit of experience will remember Bill McMahon, the Prime Minister, announcing a revaluation of the dollar, and the next day Doug Anthony announcing a devaluation of the dollar. Of course nine days later it was devalued, because no-one was going to fool around with the Country Party of those days. They had walked out of office three times and brought the government down, and they left Menzies out in the cold for eight years. Menzies was elected Prime Minister, and he announced a revaluation of the dollar. Again, two days later, Jack McEwen announced that it was going to come down, not up, and nine days later it went down. Those were the great days of a great party called the Country Party.

Now we have a gentleman over here that thinks it is good to have a high dollar. Every time I say that it is bad he starts laughing and thinks it is funny. Well, he cheated his people out of 50 per cent of their income, because when Keating allowed the dollar to free float it went to 49c. Then he propped it up. I am ashamed that I praised him. In comes Costello, and he does the same thing. He free floats the dollar, so the dollar goes down to 51c. So I would submit to the House that that is obviously where it should have been—at 50c. When it was allowed to free float on both occasions that is where it went. Then Costello, for reasons best known to himself, propped it up. We have been propping it up ever since.

For the last two or three years, at long last, we have put our interest rates—because other nations have put theirs up a bit—down a tiny little bit. The margin is not so great, so the free market has started to take over, and the dollar has come down. But this is no thanks to the budgerigar that is squawking over here. It is no thanks to the likes of him. He, in fact, is the architect of the dollar being at 90c instead of where it should have been at 50c. (Time expired)

Michael Sukkar (Deakin, Liberal Party, Assistant Minister to the Treasurer) Share this | Link to this | Hansard source

I thank all members for their contributions to this debate, including the member for Kennedy. I want to give a shout out to the member for Maranoa too for being here in the chamber. Thank you for being here and making your contribution.

This bill amends the goods and services tax law to apply GST to goods imported by consumers valued at $1,000 or less. With this bill the government is levelling the playing field for Australian businesses. We are removing the loopholes in the tax system that we inherited so that we force foreign multinationals to remit tax to Australia on Australian sales. Under the current law, GST does not imply to the supply of low value imported goods, which self-evidently creates an unlevel playing field. The government is absolutely committed to stopping this unfair and distortionary benefit enjoyed by foreign sellers, and in the process strengthening the integrity and fairness of our tax system.

The state and territories, I note, unanimously support this bill. We reached agreement back in August 2005 at the Council on Federal Financial Relations meeting. They chose to adopt this model—the vendor collection model. Earlier this year all state and territory governments formally wrote to the Treasurer signing off on the policy reflected in the bill. Under the vendor collection model, vendors of offshore goods with an Australian GST turnover of $75,000 or more will be required to register for, collect and remit GST on goods valued at $1,000 or less that they supply to consumers in Australia, just like any Australian seller has to do. This measure will also apply to online marketplaces, also known as electronic distribution platforms. It is essential for the success of this measure that it applies to these types of entities, since they facilitate the majority of low-value imported goods sales in Australia.

Obvious to everyone is the fact that we live in an increasingly globalised world, where online cross-water shopping is now the norm and low value imports will continue to rise. Collecting GST at the border, as we currently do for goods over $1,000, is too costly and inefficient for the tens of millions of low-value parcels that come into Australia each year. Indeed, in 2011 the Productivity Commission estimated that applying GST to goods worth $20 or more at the border would raise $550 million but, perversely, cost over $2 billion to implement and administer. Further, goods would be physically stopped at the border, causing lengthy delays and creating bottlenecks. That is obviously not good for consumers, taxpayers or our economy.

Another alternative considered was the logistics model, whereby transport companies would charge and collect GST. This model could provide a high level of coverage, but it would be very expensive to implement. Transport intermediaries would be required to gather additional data on the taxable or exempt nature of goods, as well as the consumer or business status of the importer, and then calculate the GST. Currently, transporters are removed from the point of sale and do not have complete information to assess the GST payable in that way. High costs are also involved with system changes and storage of the goods at the border if the GST is not being paid by the importer. Adopting this model could mean creating bottlenecks at the border, and Australian consumers may be charged additional handling fees. Again, such a model would not be good for consumers, taxpayers or our economy more broadly.

We also considered the financial intermediary model, which requires financial intermediaries to charge and remit the GST on low-value goods sales that they process. Again, this model was ruled out because financial intermediaries would find it difficult to determine if the transaction involves goods that attract GST and whether a good purchased from overseas would eventually enter Australia. This model would also require reform of international payments system mechanisms, which is really beyond the power of any single jurisdiction such as Australia to mandate. We cannot burden our domestic businesses with the current inequitable arrangements while we wait for the technology to catch up. Another review will not deliver new information and will only delay reform by at least another two years. We must act now.

Other jurisdictions are already taking action, and they are focusing on taxation of goods by the vendor at the point of sale. This is why, from 1 January 2018, Switzerland, for example, will be requiring vendors to collect GST, or VAT, on low-value imports. Within the European Union, vendors are already required to charge and collect VAT on sales within the EU. The OECD and the EU also recognised, in recent reports, that there can be no substantive reform without a key focus on taxation of goods by the supplier at the point of sale. The vendor collection model is already being used by other countries to collect a GST on cross-border digital products and services. This includes Japan, South Korea, New Zealand, member states of the EU—Switzerland and Norway—South Africa and now Australia.

In this new world of increasing cross-border online trade, we need to take action so that Australian businesses and jobs are not left behind. This bill fulfils that objective. It will level the playing field for Australian businesses to compete with overseas retailers and, importantly, protect the integrity of the GST base. I commend this bill to the House.

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

The original question was that this bill be now read a second time. To this the honourable. member for McMahon has moved as an amendment that all words after 'that' be omitted with a view to substituting other words. The immediate question is that the amendment moved by the member for McMahon be agreed to.

Original question agreed to.

Bill read a second time.