Gavin Marshall (Victoria, Deputy-President) Share this | Link to this | Hansard source

A letter has been received from Senator Moore:

Pursuant to standing order 75, I propose that the following matter of public importance be submitted to the Senate for discussion:

The Abbott/Turnbull Government's plan to impose a 15 per cent GST.

Is the proposal supported?

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

The proposal is supported. I understand that informal arrangements have been made to allocate specific times to each of the speakers in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.

Anne Urquhart (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Today I rise to condemn the Turnbull government's plan to increase the GST, which is a plan that would stretch millions of household budgets to breaking point. This is a plan that would hit the poorest people the hardest and a plan that would only serve to further entrench growing inequality in this country. Of course, the Prime Minister has refused point-blank to be honest with Australians about what he is cooking up. Instead, he will only give us a nebulous and completely unhelpful platitude: 'Everything is on the table.' We are told that we should not be concerned because we have a massive table piled with stuff so we really need not worry ourselves about exactly what that stuff is.

The reality is that everything is on the table is just code for, 'We refuse to tell the Australian people our policy.' Some commentators have taken this to mean that the government has not got a plan at all. I will admit that this is a concern that is entirely possible, but I actually do not think that is what is going on here. No, I actually think the government has a very clear plan but they just do not want to let Australia in on it. Because if everything truly was on the table and if every outcome was just as possible as another, then we would be hearing about these possibilities from the government. But that is not what we are seeing, and that is not what we are hearing.

There are a wealth of options available to the government in the area of tax reform but the words of those opposite have been dominated by three small but very significant letters: GST. It is the recent, sustained kite-flying campaign on GST that clearly reveals the real agenda of those opposite. In fact, the Prime Minister himself has said:

…it certainly has to be a part of a suite of measures…

Of course, Australians are not stupid. They can see the nonsense of pretending that every outcome is just as possible as another while at the same time directing virtually all the discussion to just one item. Those opposite like to talk about the 'new government' but their behaviour on GST shows that the core agenda has not changed—they have just become more sneaky about how they go about enacting it.

You only have to look back to that toxic and deeply unfair 2014 budget to see that tinkering with the GST has been the plan from the beginning. Then, just as now, those opposite were not honest with the Australian people about their plans. Rather than putting their case and admitting that their true intentions were to put the GST up, we saw Mr Abbott and Mr Hockey set out to try to starve the states into submission. We saw them gut the state health and education budgets to the tune of $80 billion in a transparent attempt to force an outcry. Not willing to face the Australian people with their clear intention to increase the GST, Mr Abbott and Mr Hockey tried to force the premiers to be the fall guys. Instead of being honest with us, they tried to blackmail the premiers into a state of desperation where calling for a GST increase would be their only option. This bullyboy behaviour was sneaky, dishonest and to the detriment of millions of Australians.

And now, here we go again. Despite saying that everything is on the table, we hear that the government's economics committee had been asking business to make a case for a GST hike. No-one is under any illusions about what the government wants: their real agenda is to hit the most vulnerable Australians through a regressive tax. Modelling from the highly respected outfit NATSEM shows that even if a GST increase came with a five per cent reduction in every tax rate, our tax system would become more regressive and two-thirds of households would be worse off. Whether the government wants to increase the rate or widen the base of the GST, the result would be the same: Australia's lowest income households would bear the brunt.

Clearly, even though we have a new lead singer on the other side, the band is still singing the same harsh and tired songs. From the people that brought you cuts to health, cuts to education and cuts to pensions, we now have a plan to create an extra tax burden for the majority of households. Those who brought you the $100,000 degrees, which would see a generation of our young people locked out of education, are now cooking up a plan to make our taxation system even more regressive. The same people who wanted to see young people go without an income for six months have now turned their minds to a plan that would further increase inequality.

So not only are they trying to hide their true intentions from the Australian people but they are also too cowardly to even make their own case. Mr Morrison even went as far as to say that an increase in the GST would not result in an increase in government taxation revenue. Of course, our current Treasurer is in denial about what most respected economists understand: Australia's revenue base has dropped dramatically in recent years. When considered as a whole, revenue over the past eight years was 20.5 per cent of GDP below the 2000-01 to 2007-08 average. In contrast, cumulative spending has been just 8.6 per cent of GDP above the average.

But rather than addressing this blatantly obvious fiscal reality, the Treasurer seems to have decided to revert to the tried and true Liberal strategy of hitting those who are doing it tough and rewarding those who are well-off—with no accompanying benefit to the budgetary challenge he should be addressing. Instead, Mr Morrison is reducing a progressive tax in order to increase a regressive one. Of course, in doing so, he would further entrench the inequality that is already as high as it has been in the past 75 years. If the Prime Minister had been true to his word and genuinely believed in fairness—and not just the perception of fairness—then he would immediately have rejected such an obviously unfair suggestion by his Treasurer.

Hiking the GST is not taxation reform. It is lazy, it is unfair and it will disadvantage those who spend the highest proportion of their income on week-to-week living—and that is not a plush week-to-week living; it is a survival week-to-week living. It will do nothing to address the budgetary challenges, and it will only serve to increase inequality, which we know creates a drag on productivity. If the government is serious about actual reform, it needs to start addressing the loopholes and perks that are benefiting the richest people and companies in the country. When will the government commit to addressing the perks for high income earners in the superannuation system? When will the government get serious about addressing multinational tax? And when will they stop trying to levy greater burdens on the poorest and most vulnerable people in the country? Despite the Prime Minister's spruiking about his lovely table and everything he has on it, the only thing they have shown the Australian people so far is a great big regressive tax.

Jo Lindgren (Queensland, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on this matter of public importance on the goods and services tax. We need a taxation system that allows the government to build a strong economic plan that supports a national platform for economic growth and jobs that backs Australians who are out there every day making their way in the world, working hard, saving for their future and investing in their capabilities and opportunities—backing Australia and Australians to earn more. Currently there is no proposal for an increase to the GST; however, there has been talk amongst the state governments and former Labor premiers and individual members of parliament. The government has no proposal or policy to change the goods and services tax. As South Australian Premier Jay Weatherill says, talk of increasing the GST needs to be part of an open and honest wider discussion between the states and the federal government on taxation. Mr Weatherill went on to say the prospect of GST changes presented a chance for sensible discussion on how future costs of health care could be met. Former New South Wales Premier Kristina Keneally, Queensland's Peter Beattie and Western Australia's Geoff Gallop—all Labor premiers—have outlined the conditions under which the tax change could be implemented as part of a reform package.

I think it is ideal that we can actually have a discussion about not only the GST but also tax reform in general, and that is what this government is prepared to do. The Prime Minister, the Treasurer and the Minister for Finance have all openly stated that we will pursue all discussions on tax reform, because this country needs to address the taxation system for all. I have heard for over three weeks now the Treasurer openly commenting on this on all forms of media. The Treasurer and this government are about encouraging people to work hard, to make money, to save and to enjoy their lives in Australia. We are considering all options in looking for the best possible tax system.

The Turnbull government is committed to tax reform; looking for lower, simpler and fairer taxes for all Australians whilst focusing on tax reform that increases revenue for the government. It also needs to ensure that it reduces red tape and supports small businesses, as well as pursuing an ambitious innovation package. Income tax has become a silent tax for many Australians, particularly young Australians. As a proportion of total tax revenue, personal income tax in Australia is the second highest amongst OECD countries. This means that next year the average wage earner will be taxed up to 37c in the dollar on what they earn. If there were no tax cuts for 10 years, nearly half of all taxpayers would be in the top two tax brackets—an increase from around 27 per cent today to about 43 per cent in 10 years. They do not need to be paying the second highest bracket of tax on their weekly earnings, so what is the answer? The answer is simple—let us have a mature discussion about tax and see what can be done. Let us look at each and every aspect of our tax system and see what is working and what is not.

Critical to this government is a better tax system, with a better mix and a better combination of taxes at state and federal levels that helps us to grow our economy. This process includes engaging and working collaboratively in good faith with state and territory governments to examine how we can improve our tax system to better support jobs and growth. Economic leadership is what this government is about and it is economic leadership that is needed to grow jobs and the economy: engaging in processes where we are talking to the states and territories as well as other stakeholders; communicating with the Australian people not just about the challenges that they are facing in our tax system but about how services are delivered right across the economy.

So there has been discussion about personal income tax but there has been discussion about other areas of tax as well, and our next meeting with state and territory treasurers may focus on state and territory taxes and charges. That is what was agreed at the last meeting and the Commonwealth Treasury has been doing work with the state treasuries around a broad array of state taxes and charges. They are collecting almost $85 billion in annual taxes and charges, and they can discuss how a better mix of taxes, freeing people to work, save and invest, could be created. Let us not forget that the states on balance, as was reported in The Australian today, are broadly in surplus. This will be an important part of an ongoing discussion. However, economic leadership is not about rushing into any decision. Good economic leadership is about communication, listening to those around us and being collaborative with people, understanding the problem and ensuring that we can solve it so Australians are much better off.

These discussions also include competition policy reform, because the Australian people will expect that any changes in the tax system should result in better services, more choices and better spending. We are having a conversation about how we grow the economy and how we grow jobs. There are many elements to this. The tax system is one of the things that can hold Australians back. Prime Minister Turnbull is right: we need a tax system that is the 'minimum handbrake on economic activity'.

It is important to note that to control expenditure there is the need to address budget issues, and then you can grow the economy to grow revenues. Australia's problem, at the moment, is that we are not earning enough, and that is why the trade agreements are so important. That is why ensuring that people can realise their full potential in their businesses or as employees is just as important. That is what productivity is about. It allows you to grow real jobs, lifting revenue. You do not lift revenue by just taxing people more. That is why our objective on this is very clear: we do not want to increase tax burdens on Australians. We want to grow the economy and to grow jobs. That is the only reason we are engaging in this discussion. It is a good discussion. I think it is a positive discussion and it is a task that the economic leadership really needs to engage in, positively and collaboratively, to try to draw together where there is a meeting of minds and a consensus on key issues.

Let me summarise why it is important to have a discussion on GST. We need the right tax system to generate growth and people want a tax system that will bring them together rather than hold them back. The purpose of any taxation system is to improve jobs, hospitals and education, and that is what this package does.

Richard Di Natale (Victoria, Australian Greens) Share this | Link to this | Hansard source

It is remarkable that here we are with a government that spent years campaigning against a great big new tax on everything—which is what it called the price on pollution—and the same government is planning to genuinely introduce a great big new tax on everything by introducing an increase to the GST.

Hypocrisy in this place is the currency of this government, but it is just remarkable that we could have a party that has claimed so explicitly—touring the country, fluoro vests, out at pie factories, out at truck stops—that a price on pollution would wipe towns off the map and, here they are, planning to introduce a GST, which would have a far greater impact than the price on pollution did. In fact, we had some modelling done by the Parliamentary Library, which suggested that with the price on pollution—a price on carbon of $28 a tonne—we could raise as much revenue as an increase in the GST of 2½ per cent or, if we were to exclude the things that are currently exempted from the GST, have the same effect. We would raise the same amount of revenue. But the big difference is this: the impact on households from a GST would be, at least, three times greater than a price on pollution. A price on pollution delivers the double dividend of bringing in revenue but, most importantly, goes some way to addressing the great challenge of this generation: the challenge of tackling global warming.

One thing I do appreciate is that finally—after years of this government suggesting that the problem with the budget was on the spending side of the ledger—their campaign to increase the GST is an acknowledgement that we also have a revenue issue. It only took them two years to come to that decision, but better late than never. The Treasurer let the cat out of the bag because he said, 'We want to see an increase in the GST but we do not think there should be an overall increase in the tax take, and what that means is cuts to income tax.' The same thing was said in the previous contribution to this debate—that we should increase the GST so we can cut income tax.

That is not tax reform. That is just shifting the tax take from those people on high incomes to those people who can least afford it. That is not tax reform; that is just tax shifting. It is unfair for a government to propose cutting income taxes for those people on high incomes and to introduce a GST, which we know would have its greatest impact on those people who can least afford it—all at a time when there is growing inequality in Australia society, where the gap between the haves and the have-nots is growing and is greater than at any time in Australian history.

This government loves it and big business loves it. Big business loves it because it is a tax that everybody else pays that they do not need to pay. That is why they like it. What we need to do is ensure that we start tackling the real tax reform issues that lie ahead of us. For example, why not end those huge tax breaks that go through the superannuation system and favour people on super-high incomes? Why not address negative gearing and capital gains tax reform? They are responsible for, at least in part, an overheated property market, and reforms would bring in $10 billion of revenue over the forward estimates. Why not end subsidies to the fossil fuel industry? Why should Gina Rinehart pay less for her tax than an ordinary punter who has to fill up at the bowser?

They are the sorts of reform challenges we as a nation should be embarking on. Instead, we have a government that wants to shift the burden onto those people who can least afford it. Bring it on, because I am sure the Australian community will join with those of us who understand that the challenge is to make this country fairer, rather than increasing the gap between the haves and the have-nots. This is about the sort of society we want. Do we want an Australia that is committed to its egalitarian traditions? Do we want an Australia that can fund health care and schools, or do we want to favour our mates at the big end of town and squib the real challenges that lie ahead of us?

Helen Polley (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Aged Care) Share this | Link to this | Hansard source

I welcome the opportunity to condemn this government for, yet again, another broken promise. It was the finance minister who, before the last election, said there would be no cuts to education, there would be no cuts to health and there would be no increase in the GST. Quite rightly, the Australian people are seeing how arrogant and out of touch Malcolm Turnbull is, as they did for that short period of time when he was opposition leader. There is nothing that is going to hit the Australian community—and those low-income earners, those families in our communities—harder than an increase to the GST of 15 per cent.

This is going to hit families every time mum makes lunch for the kids going to school. Every time she puts a piece of fruit in the lunchbox—whether it is an apple or a banana—it will be there, as it will with the sandwiches. If she has to take the kids to the doctor there will be GST on the doctor's visit. Education, including school uniforms, will be hit by an increase in the GST. That is an outrageous attack on Australian families. On top of the budget the government brought down in 2014 and on top of the budget they brought down this year, this is a total disgrace.

My home state of Tasmania unfortunately has a very high unemployment rate, and there are people in the workforce who are on very low incomes. They are going to be disproportionately affected by this increase in the GST. That is unfair, when people are already struggling to pay their bills, whether on a weekly or fortnightly basis. But those on the other side of the chamber are so out of touch, so arrogant. We have a new Prime Minister who, as my colleague said, is singing from the same old song sheet. Nothing has changed, except his arrogance. He has an idea in his head and he is going to push forward with that without knowing its implications.

As has already been mentioned, you can move taxes around a little bit, but this government will not increase the GST by five per cent to 15 per cent without putting more and more pressure on state governments. This government is screwing them to ensure that they will have to agree to the increase to the GST, otherwise they will not be able to meet their obligations to health and education. This is an unAustralian attack on Australian families being led by the so-called innovative Prime Minister. There is nothing innovative at all about increasing the GST. It demonstrates to me that there is no vision and no capacity to lead good government policy.

Malcolm Turnbull's idea of fairness will become a nightmare for every Australian, who will have to pay more for everything. It is not a choice. These are everyday basics, not luxury items. This affects the everyday cost of living. Already pensioners in Tasmania are having to go to bed at night with their electric blankets on because they cannot afford the power bills. This is only going to increase. Quite frankly, I know this government is out of touch, but it should listen to the people out in our communities. There is increasing demand on those who provide good support in our community, like the Salvation Army and other not-for-profits. People who have never before had to go and seek assistance are knocking on their doors—not because they waste their money, not because they gamble it away, but because they are doing it tough. This government's only response to that crisis is to increase the GST.

I have to admit that there are a few in the coalition who are as appalled as we are on this side about what their government is doing. They should talk to their colleagues, they should talk to the Prime Minister, they should talk to the hopeless Treasurer they have now and they should talk to the finance minister and explain to them the things they are hearing when they move around their electorates. I cannot believe for one moment that, as government members and senators, they are not getting the same sort of feedback, the same concerns raised with them, as we are on this side. If they are not, it is quite clear they are not out talking to real people in the community—people that are doing it tough, people that are concerned already about the cost of going to see a GP.

We have a health minister who says she does not want to talk about the cost of the GST on fresh food because she does not want to muddy the waters. What an outrageous statement from a health minister—not to be concerned about a new cost on fresh vegetables and fruit. We have issues in this country around obesity. When we were in government we did something to help people stop smoking. But what does this health minister do? She turns tail and runs. It is quite outrageous that a health minister cannot stand up for the Australian people, because the impost of the GST on fresh food is going to mean that families who are already struggling will struggle even more. We should be doing everything we can to get more families to eat fresh fruit and vegetables. This is an outrageous attack. (Time expired)

Linda Reynolds (WA, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on this matter of public importance relating to the GST. I agree that this is an important issue for our nation. It is important because, over the past one to two decades as a nation we have lost the ability to discuss policy in a meaningful way to come out with the best possible outcomes for Australians. It would be great if we could have this discussion now on tax reform. I think we have lost the ability to have a good old-fashioned policy ding-dong in this place and outside this place on tax reform—about all of the options—so that we can come up with the best possible outcome for this nation.

Contrary to what those opposite have asserted, the government is implementing a wide-ranging strategy to enhance Australia's economic growth and employment. The government has no proposal or policy to change the GST at present. But the world economy does not stand still, and good government is about realising this and constantly re-engaging and understanding our external environment to make sure our current policy settings are meeting, if not delivering, much more than this nation requires to stay ahead of the game internationally.

We on this side of the chamber want to explore tax system reform, and of course the GST is a component of that. But this is just one of the elements of our strategy to strengthen and diversify Australia's economy—a fact that those opposite, in 1998, when we had this debate, and again now, are conveniently ignoring. It is not just a debate about the GST; it is a debate about comprehensive tax reform. Under this government's comprehensive national plan for economic growth, we are investing in infrastructure, we are deepening our regional trade ties and increasing and improving competition policy, and we are encouraging a more innovative and entrepreneurial spirit in Australia's economy.

But, to fully realise our nation's potential in a rapidly changing world, we have to look at tax reform—including the GST, which, back in the late 1990s and again today, is an absolutely critical part of our economy-wide growth strategy. We cannot truly realise the potential of our nation as a modern economy in the world if we are tying our policy hands behind our backs and keeping this nation shackled to a tax system that is, quite frankly, holding this economy back. In 1998 the previous government did not have the political courage to attempt this reform, and hence we are now probably a decade behind where we should be on tax reform. Instead, they asked the former Secretary of the Treasury to conduct a wholesale review of the tax system but, almost unbelievably, exempted the GST from the analysis. How can you possibly have a sensible tax reform discussion in this country if you exempt the GST from that debate? It is impossible, and the nation will be the worst for it.

This government is starting a real tax reform debate with the Australian community, to ensure our budget remains sustainable and enables us to continue to deliver important services like the NDIS, Medicare and pensions to Australians tomorrow, next year and the year after that and in the next 10, 20 and 30 years. Currently, it is terribly disappointing to hear the debate from those opposite. All they are doing is rerunning tired old fear campaigns. I was around in 1998 and, if you shut your eyes and listen to what those opposite are saying, you hear that they are trotting out the same old tired, very shallow, scare campaigns that they trotted out 15 years ago.

It is 15 years since the GST first came into operation. Despite the claims from those opposite that the sky would fall and our economy would fail, we know that, after the GST was introduced and we had other tax reform, the economy underwent 10 years of unprecedented growth in productivity, growth in jobs and growth in the economy. But that was 15 years ago and today we live in a very different global economic environment. We are an economy in transition, one which is becoming more and more open to international trade across the board, and we have some amazing opportunities ahead of us. But, to really take advantage of those opportunities and to create more jobs and a greater tax revenue base for this country, it is time to review in full our taxation arrangements.

This is a critical discussion, not just for today but also for our children, our grandchildren and the generations that follow. Therefore, it is extremely disappointing to see that those opposite are rerunning their very well-worn and very shallow scare tactic campaigns. They are saying the same things today that they said in 1998. Those harbingers of doom opposite, said in 1998 that there would be a national collapse, inflation would blow out, unemployment would increase and small business would be destroyed with the tax changes 15 years ago. All of the things that those opposite are saying today were things that were said in 1998. The electorate did not believe them in 1998. The electorate in 1998 knew that we needed tax reform.

I know, from going out and about in Western Australia, that people realise that our taxation system needs reform. But it does need to be done fairly. It needs to look after those who need assistance the most, it needs to empower our businesses and empower trade opportunities and it needs to ensure that we can afford to fund our services into the future. This government recognises that steady revenue will come from a stronger economy where Australians earn more, not by imposing a greater tax burden. As was the case in 1998, any final policy position will ensure that the overall tax burden on Australians is not increased. When we did that in 1998, the economy boomed and the sky did not fall in.

The debate around tax reform must occur not in a vacuum but with the whole system and the whole nation in mind. This is simply good government. Any genuine review must look at all taxes, direct and indirect, to establish the best mix to assist our economy to grow. As a proportion of total tax revenue, personal income tax in Australia is the second highest amongst OECD countries—and I do not hear those opposite talking very much about that fact. Income tax has become the silent tax for many Australians. As a result of fiscal drag, next year the average wage earner is forecast to move into the second highest tax bracket, paying up to 37 cents in the dollar on what they earn. As supposedly the party of the worker, I would have expected the Labor Party to be talking much more about the impact of this bracket creep on those they purport to represent.

For that reason and many others, it is time to revisit tax reform—so that we can deal with bracket creep and make sure that people can keep as much of their hard-earned pay as they can and so we can encourage the economy to grow in the 21st century. (Time expired)

Jacqui Lambie (Tasmania, Independent) Share this | Link to this | Hansard source

I rise to contribute to the matter of public importance before the Senate—namely, the Abbott-Turnbull governments plan to impose a 15 per cent GST. The first point to acknowledge in this debate is that the Abbott-Turnbull government plans to increase the GST after the next election. So the next election will essentially be a referendum on whether the Australian people want to pay more for their food, health care, education, fuel and rent through an increase in the goods and services tax or whether they want the GST to remain at the promised 10 per cent. For the record, I would like the people of Tasmania and other states of Australia to know that the JLN will never support an increase in the rate of the GST—not ever. However, in saying that, I do not want members of the Liberal and National parties to put words in my mouth and suggest that I do not agree with tax reform. I believe in tax reform—indeed, I believe in spending reform—and I have presented to this Senate in the last almost year and a half many new ideas and reforms relating to spending and tax reform.

Why should the government even think about increasing the GST when we could have an FTT, a financial transactions tax, which will target the super-rich and powerful in our society, instead of the poor, disadvantaged and vulnerable, as any amendment to the GST must surely do? Any increase to Australia's GST will hurt Tasmania more on a proportional basis than other states, because every social indicator shows we have more poor and disadvantaged people in Tasmania.

Strangely, a tax reform debate in Australia is being carried out by many high-profile media and politicians, without the inclusion of a financial transactions tax, as part of a range of credible fiscal measures to solve our looming tax revenue and spending crisis. Why are a significant portion of Australia's media and political representatives deliberately avoiding even talking about or mentioning a financial transactions tax? Are vested interests using their commercial, political and media influence to limit a community debate about the introduction of a financial transactions tax in Australia?

Many advanced countries, including most of the European Union, from 2016, will raise revenue from a range of financial transactions taxes. The tax is very flexible and can be as little as 0.001 per cent to 0.1 per cent and, as the name suggests, is levied on a variety of financial transactions. Publicly available reports indicate that an official study by the European Commission suggests that a flat 0.01 per cent tax would raise between 16.4 billion euros and 43.4 billion euros per year, or 0.13 per cent to 0.35 per cent of GDP. If the tax rate is increased to 0.1 per cent, total estimated revenues are between 73.3 billion euros and 433.9 billion euros, or 0.60 per cent to 3.54 per cent of GDP.

JLN will not support an FTT designed to have an adverse impact on Australia's real economy. JLN, like most European Union countries, will oppose an FTT on day-to-day financial activities of average Australian citizens and businesses, such as loans, payments, insurance and deposits. However, it is important to note that a financial transactions tax could be designed to target large national and multinational companies which have been proven to minimise or avoid tax by shifting profits to overseas tax havens and create a fairer, simpler and more efficient Australian tax system.

One of the best indicators that a financial transactions tax would thoughtfully target those who can most afford to pay a fairer share of tax is the reaction of bankers when the subject of a financial transactions tax is brought up in policy conversation in my office. And I can assure you that bringing a banker and a financial transactions tax policy together is like dragging a vampire into sunlight: there is a lot of hissing and wailing. Most bankers look as if they are about to burst into flames and melt into a pile of dust the moment I say that Australia needs a financial transactions tax. There is a similar reaction from most Liberal members of the parliament, but that is to be expected, because they are very similar to bankers and share common blooding-sucking world views. I will always oppose an increase in the GST, because there are better ways of reforming tax and spending.

Sue Lines (WA, Australian Labor Party) Share this | Link to this | Hansard source

Here we have a government backed up by its business mates talking up a massive hike in the GST—a whopping five per cent hike. And it is not just a hike; they are talking about broadening the base of the GST—a big, fat new tax. On a day when the Financial Review has a headline that Chevron paid only $248 tax on a $1.17 billion profit, the government tries to tell us that it wants to have a conversation about tax reform. But the subtext of that is that it is all about the GST, it is all about imposing a big hike in the GST to 15 per cent—when Chevron pays a miserly, tiny $248 tax on a massive $1.7 billion profit.

It is easy to see just who the Turnbull government is looking after here. As usual, they are looking after their mates at the big end of town, the mates who line their coffers with donations. That is who they are looking after. If Mr Turnbull was true to having a tax system that is fair, he would never contemplate introducing a GST, because a GST is never fair. You certainly cannot compensate your way with a GST to make it fair. It does not work. Again, it just demonstrates how out of touch the Turnbull government is. They have changed their leader but their harsh, cruel policies, inflicted on working Australians, on Australians who are on benefits, on families, on young people, remains in place. For someone who works in aged care, or an early childhood professional, who is earning poverty-line wages—about $21 an hour—and is struggling to get full-time employment, working about 30 hours a week, how does an increase in the GST provide prosperity? Of course it does not. It just drags them further into poverty.

And the government wants to have a conversation about penalty rates. They want to reduce Sunday penalty rates. So, along with increasing the GST by five per cent, they want to slash the Sunday penalty rate, because, again, somehow their business mates cannot survive. I heard the BCA's Jennifer Westacott on the radio the other day. I challenge her to walk a day in the shoes of a low-paid worker. It should be mandatory for all those in government to do the same, because if they did then the talk about GST reform—a big, fat hike to 15 per cent—or a reduction in penalty rates would suddenly disappear from their conversation, because, quite frankly, they could not survive on those wages.

Along with ripping off the Sunday penalty rate, they say, 'We're just having a conversation.' Well, we know that with this government the minute they start talking about something their intention is to do it. We have had government member after government member come in here and say, 'Yes, let's knock down the Sunday penalty', and we have had government member after government member talk up why it is good to raise the GST. Well, you tell that to someone who is on $21 an hour and who is heading up a family. You tell that to a pensioner. You tell that to someone who is on an unemployment benefit. It makes no sense.

The only people talking up a hike in the GST to 15 per cent and broadening out the base are the big end of town. If you had heard the BCA on the radio the other day, you would have thought that somehow business could no longer survive, because they are so desperate for more tax relief, when we have Chevron paying $248 tax on $1.7 billion profit. Let's have that conversation. When we hear the words, 'We need to have tax reform in this country,' let's start there. No—they do not want to start there, because they are looking after their mates at the big end of town. It is the Turnbull government and the big end of town that are talking about the GST. It is not Labor. We are opposed to this. We have always been opposed to an increase in the GST and we will continue to be. Why is that? It is because we understand that this is a regressive tax. It hits those who spend all of their income on their daily living expenses—something that the Liberals and Nationals do not understand. They do not understand that people scrape to buy a litre of milk. They do not understand that people scrape to buy fresh fruit and vegetables.

Yes, we are up for a conversation on tax reform. Let's start at the big end of town. Let's ask ourselves how Chevron managed to only pay $248 on a profit of $1.7 billion. That is a disgrace. You will not hear those opposite talking about it, because they are the ones that are advising them. Their business advisers are at the big end of town and their business advisers want to just increase their profits at the expense of working Australians, those on benefits and Australian families. It is a disgrace, and Labor does not stand for an increase in the GST.

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

I have been in this chamber for most of the debate and I noticed Senator Lines' contribution. She is up for a conversation on tax reform. I welcome that position. But in the next breath she says, 'We rule out an increase in the GST in any form.' What is disappointing about that is that there is so much detail to any kind of tax reform. It is not right to say that you should be against something or for something; you need to know what the detail is and what the proposal is before you form a position. But the Labor Party are not interested in a conversation about our future. They are not interested in a conversation about a stronger tax system that can support a stronger economy, because they are just ruling out any change without seeing any detail or any specific proposal.

There is no proposal at the moment, for an increased GST, from this government. There have been suggestions and support for an increase in the GST by some state governments. Some former Labor state premiers have also given support to that increase. They have supported an increase, but the government has not yet taken that decision. But even before we see a report on a tax white paper, even before there is a particular position on tax reform, the Labor Party have come to their position. They have done no consideration of that. They are just reflexively opposing and blocking anything that might be better for our tax system in this country because they see a political purpose in it, not because they see the national interest in it.

I take Senator Lines's points about the potential impact of any tax change on lower- and middle-income families. I am very mindful to ensure that any changes in our tax system are done in a way that make sure that those who are less fortunate in our society are not made worse off. I am not usually down this end of the chamber. I usually sit down that end of the chamber, and in that little corner of the chamber, down there, is the National Party. We are not big in numbers but I think we are big in strength. The small number of us down there actually represent the poorest households in this country. When you look at the data on who votes for different parties in our political system, yes, the Labor Party also represent low-income households, but the National Party voters are actually lower in income. Next is the Labor Party, then the Liberal Party, then, of course, the Greens—they are up in stratospheric income levels that none of us could dream of. So we actually represent the poorest income households, and I am very mindful of any changes that might happen.

They have not seen a proposal yet. In the original introduction of the GST, low-income and middle-income households were substantially better off—thousands of dollars a year better off—because of the related changes to our income tax system and the removal of some inefficient taxes, like the wholesale sales tax. That is what we need to see, that is what is important and that is what I will be fighting for. I am sure my National Party colleagues will be making sure that that is a component of any tax reform, whatever that might be.

This is one of the fundamentally important attributes of any government in our nation. We really have two economic tasks. We should be making sure that everything we do strengthens our economy and that everything we do helps to spend our money appropriately and to, ultimately, balance the budget. On the latter part, the government has tried many things to rein in our spending and balance our budget, but at every step of the way the Labor Party have opposed. Indeed, they have opposed savings that they originally proposed themselves while they were in government. They did not get around to putting them in place but, coming to opposition, suddenly they had a change of view and blocked them as well. Now they are seeking to block changes that possibly could strengthen our economy as well. They are a party of blockers, at the moment, and that does a great disservice to our nation. They are not truly engaged in a conversation about how we can become a stronger country; they are simply reflexively opposing everything this government may want to propose.

In making a stronger economy, tax reform has to be the centrepiece. Our tax system is crucial to determining how strong our economy is because it dominates so much of what we do in our lives. Most of us would probably go to work Monday to Friday. Most of us end up in a job where we get paid by an employer and the employer pays a component of that pay to the tax office. We often do not see how much that is. We might know at the end of the year when we get our tax return from the tax office how much we have paid in tax but, generally, we do not think of it from day to day.

One way to think about it is that at the moment the average Australian would work for two and a bit days a week for the government. That is two and a bit days to pay taxes. The average Australian works five days a week, Monday to Friday. I know that is probably not the case for many people, these days, but for illustrative purposes let's say five days a week, Monday to Friday. You spend two and a bit days working, to pay taxes, to run the Commonwealth government. It is becoming increasingly concerning that some Australians—indeed, the average Australian—will be pushed up into tax brackets where it is even more than two and a bit days. They will be pushed up into the second highest tax bracket. Indeed, next year the average taxpayer, the average income earner in Australia, will pay 37 cents in the dollar as their marginal tax rate.

And taxing someone at that high rate is going to have an impact. To put that into perspective: 37c in the dollar is higher than the top tax rate in New Zealand, which is 33c in the dollar. We will have people earning the average wage in our country paying a higher rate than the highest income tax rate in New Zealand. That is going to have an impact on incentives, it is going to have an impact on entrepreneurship in this country and it is going to have an impact on how many jobs are created. One thing we should be focusing on in this country now is working out how we can bring that level down, unlock people's potential and allow them to keep a bigger proportion of what they generate. If they want to start a business, create wealth and make a go of it, and they make a return, we should not be taxing someone who is just making the average amount 37c in the dollar on the return. We need to find a way to bring it down.

As I said earlier, some have suggested that we should try to do this by increasing the GST. Of all the OECD countries, we are the second most reliant on income tax. Our direct taxation, which includes taxes like the GST, is a low proportion of our tax base. Some state governments—Mike Baird in New South Wales—and former premiers such as John Brumby, Peter Beattie, Geoff Gallop and Kristina Keneally have suggested that the GST is one way we can deal with the taxation issues this country faces. I welcome that discussion. I think it is an important discussion. But I return to what I said at the start, and that is that the devil will be in the detail. Before any tax reform will be successful, there are some important details which we must ensure we get right. That is why it is important that this tax system is developed. It is important that any tax changes also coordinate with broader strategies to bring the budget under control and create an innovative and competitive economy. All of these reforms are very important for economic growth in this country and to create more jobs.

There are lots of things to discuss and we should discuss them and get them right before we announce them. What we should not do is rule out any particular areas of change before any decisions or proper discussion. We saw that approach from the previous government. The Labor government had a big tax reform process that was chaired by former Treasury Secretary Ken Henry. And right through that process they ruled something out—and there are no surprises for guessing what that was. They ruled out all consideration of the GST from the get-go. They did not want to hear about it. They did not want to hear any recommendations to do with the GST the whole time. There was no report on the GST. If you look up the Henry tax review, there was not even a chapter on the GST. It is one of the biggest taxes we raise and they were not even allowed to look at it. And ruling out even considering changes to a really important part of our tax system led to a disastrous tax reform process where, because of an absence of other ideas, the government relied on the proposed mining tax—which in my view was ill thought through and was not going to work. And ultimately, of course, it did not work. It raised very little money and its compliance costs were very high. It has since been rescinded by this parliament, and there isn't any credible suggestion of bringing it back and reincarnating it. That was one approach to tax reform: close off areas of debate; do not even think about it; hear no evil, see no evil, speak no evil. That was one approach, and it did not lead to such a good outcome. The other approach is that we have a full discussion on all elements of our tax system so that we can promote growth and create jobs in this nation.

Chris Ketter (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

The Abbott-Turnbull government is itching to slug lower income Australians by raising the GST to 15 per cent and extending it to food, health and education. It is quite clear that the coalition government is addicted to tax increases. I heard Senator Seselja talking earlier today about the fact that the coalition seems to trade on the mythology that they seek to tax at a lower proportion of GDP than Labor. But the ABC's Fact Check in 2013 put that mythology to rest once and for all: over the Howard years the tax to GDP ratio was at 23.5 per cent as opposed to 21.4 per cent over the Labor period to 2012-13. That is a clear 2.1 percentage points lower. There may have been a number of reasons why that was the case, but the coalition will never let the facts get in the way of a good myth. So instead of actually tackling the real issues facing Australia—reforming the tax system to address the tax cheats and close the loopholes through which wealthy corporations and individuals avoid paying tax—the government has once again focused on hitting the least well-off in our society.

Over the Howard years we saw the introduction of several structural changes to the tax system which over time have disproportionately benefitted those at the top end of the income spectrum. The tax treatment of superannuation is one area which comes to mind. If we are looking for the most glaring examples of where there is a need for reform to our tax system where there is unfairness in place, we need go no further than the superannuation tax concession arrangements. The top 10 per cent of income earners receive about 38 per cent of all super tax concessions. This reinforces inequality in our society, and we know that inequality has been shown to be an impediment to economic growth.

We know also that Australians will pay an additional $68 billion in GST from 2017-18, costing the average family an additional $5,000 a year. Recent modelling by NATSEM reveals that increasing the GST to 15 per cent would hit people in the lowest 20 per cent of income bracket with an extra seven per cent in tax. In contrast, those in the highest 20 per cent income bracket would pay just three per cent more of their income. The government's intention to offset the GST increase with a personal income tax cut does nothing to redress this shift.

In looking at, for example, a five per cent reduction in income tax across all tax brackets being applied to offset the GST, the NATSEM modelling shows that income tax reductions will make the overall system even more regressive. Indeed, two-thirds of households will be worse off. To put it another way, the bottom 60 per cent will be paying more as a proportion of their incomes, while the top 40 per cent will be paying less. We need to look and think about what paying that extra $5,000 will mean to the average family. Between 1975 and 2014, real wages in Australia rose by $7,000 for the bottom 10th of income earners. At the same time, the top 10 per cent of income earners increased their real wages by $47,000. This is more than the total pay received by the bottom tenth. What we have here is rising inequality. In addition to increasing the GST, extending it to food, health and education is a further assault on our fair society.

I ask: where is the innovation that Mr Turnbull promised when he took over as leader? Why doesn't he tackle the myriad shady loopholes and offsets that the rich have used to avoid paying their fair share of tax? Why doesn't he tackle the rorts that multinational companies use to avoid paying their fair share of Australian taxes? Why doesn't he look at the way our superannuation tax concessions reinforce inequality? Why doesn't he get down to the real business of fixing our broken tax system? Rather than taking the opportunity to innovate our tax system and achieve true tax reform, Mr Turnbull has simply limited his sights to the simplest and most regressive tax of all, the GST.