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

I move:

That the Senate opposes the plan by the Turnbull government to increase the goods and services tax rate to 15 per cent and broaden its base to include fresh food, education and health.

I was going to quote the former Acting Deputy President, Senator Bernardi, who has just left the chair. So I will start with that quote before he leaves the chamber! Senator Bernardi has, in fact, come out against the proposed increase to the GST:

Electorally, it's unpopular.

…   …   …

Wherever I go, no-one is saying yes, we should be putting taxes up …

I agree with Senator Bernardi, and it is not always that unusual. There are a number of issues that I agree with the good senator on.

He is right on this occasion, because every Australian knows what an increase to the GST is going to mean to them and to their families. To have an increase to the GST that is going to apply to everything—that is everything that we consume: any services, fresh food, fresh vegetables, education and health—is going to hurt those who are most vulnerable in our community.

There are other colleagues of Senator Bernardi who have also come out, and I would like to quote Senator Canavan. He also has admitted that there is only so much that raising the GST could achieve and that it is only going to raise a finite amount of money. Again—I agree with him.

Even from my home state of Tasmania, the federal member for Lyons, Eric Hutchinson, has also been quoted through the media today. He said that an increase to the GST will do nothing for his constituents. Again, I agree with a member of this government.

But it appears to me that the Prime Minister, Malcolm Turnbull, has a plan to increase the GST to 15 per cent. He said only this week that it is on the table. Those who come into this chamber and the other place, saying that this is just scaremongering from the opposition and others, are quite wrong. The Prime Minister could very easily dismiss the notion of increasing the GST by saying there will be no increase to the GST, just as Labor has said we will never, ever agree or support the increase of the GST to 15 per cent. We cannot be clearer. The Australian people understand very clearly where the Labor Party sits on this issue. I think that after two years a government should have its own plan for reforming the economy and the taxation system, but we are still waiting for those opposite to come forth with any sort of strategy other than a lazy policy which would be the quick and easy way for them to slug the workers and most vulnerable in this country by increasing the GST to 15 per cent.

I would like to remind the Prime Minister that we will not be at the forefront of innovation if we cannot ensure that every child in this country has equal access to good education outcomes. Getting a good education in this country should never rely on how big a credit card your parents have. Every child in this country deserves the best education that we can provide to them. Every child should have the opportunity to reach their full potential. If the GST is increased to 15 per cent and goes across the board as far as education is concerned, there will be some children who miss out on the opportunities that they deserve. If people in this country do not have the best education that we can provide to them and that we have the responsibility to provide, will not get the high-paying jobs, they will not have equal opportunity and they will not have the opportunity to fulfil their potential.

An increase of the GST to 15 per cent will diminish equal opportunity and do nothing to create jobs for the economy. This is the kind of economic leadership being painted by the Liberal government, and I have to say it is a pretty awful-looking picture. Those on this side know that the consequence of raising and broadening the GST will be an increase to the price of everything. Every single one of my constituents will have to pay more. Every single one of my constituents who are struggling now to make ends meet will have to pay more. It will cost my constituents more every day to put food on their table and to buy their kids schoolbooks. It will cost them more to go to visit their GP and other doctors. We know that electricity and gas prices will increase. We also know about the attack that this government has already made in trying to make it more difficult for those people who need to have regular pathology tests. We know the risk to the Australian community if people have to think twice about whether or not to go see their doctor, have their pathology tests or go to the pharmacy to get the medication that they want. This will have an enormous impact on our community.

With my responsibility as shadow parliamentary secretary for aged care, it astounds me that this government continues to show a disregard for older Australians. Since the time they took government two years ago, they have never put their priority onto aged care and ageing issues in this country. We have had enormous changes when it comes to aged care in terms of payment now for services to keep people in their homes. We all know older Australians want to stay in their own home as long as possible. We know it was the Labor government that did the hard work and the heavy lifting to bring about real policy change around secure the future of older Australians when it comes to residential care and care while keeping people in their homes. If they now have to turn around and adjust to having to pay more for their services in their home and then on top of that a 15 per cent GST on that care, that will in some cases make it extremely difficult for those people to have the care that they need. They will think twice about having those services provided to them. It will cost more to go into residential care with an increase of 15 per cent for GST.

That is without the impact that it will have on every Australian who receives a pension. They are already on a very limited income. They juggle their budget on a daily basis to make ends meet. This government, because they are lazy when it comes to having any vision or taxation reform plan, will just slug those who can least afford it. Why should those people who are already working and are sometimes already referred to as the working poor, who find it very hard to manage their budget and support their family the way they would like to even though they are working hard every single day, have to pay more? They have to find more money to be able to put fresh fruit in their children's lunchboxes. To me, that is a burden that our community will not accept.

I have spoken before in this place about the experience of previous Liberal governments who first wanted to introduce the GST and then the ramifications for their members around this country after they did. That is why we now have the backbench showing a little bit of fortitude by coming out and speaking against the government's plan. But it is not enough to speak up because you think you might be under threat; you need to have that argument within your caucus.

In my home state of Tasmania, we have disproportionately more low-income households, so the impact on Tasmanian families and individuals is going to be felt very hard, with the cost to those individuals and families being up to and perhaps in excess of $6½ thousand. As I said, Mr Turnbull's 15 per cent GST on everything will disadvantage those who can least afford it. If you earn a good income, like I do in this place, you can afford to pay a bit more. That is fair enough. But why are those on the government benches protecting multinational companies? Why are they protecting them and making them their best friends, as usual, while at the same time attacking ordinary, hardworking Australians? Why are they are attacking older Australians? Why are they continuing to attack Australian pensioners? Why aren't they going after those who can afford to pay more and should be paying more taxation in this country? I have not heard an argument from those opposite that holds any weight.

We have issues in this country around health. There is never enough money that we all want to spend. It does not matter what persuasion you are on the government benches when it comes to health. Health costs continue to rise. But to put a 15 per cent GST on health services is blatantly wrong. And, as I said, the size of your credit card should not determine the educational outcomes that your children have. The size of your credit card should not determine whether or not you have pathology tests. The size of your credit card should not determine what health outcomes you have. We have an increase in obesity in this country, and we had the Minister for Health not so long ago saying, 'I don't want to get involved in the debate about the GST.' Well, she should be involved, and I am disappointed that she has not said anything about the impact that a 15 per cent GST on fresh food will have, when we should be encouraging people to take better care of their health, eat healthily and have regular check-ups with their GP. She is failing the Australian people on all fronts.

We have said time and time again that we will not support the GST increase. In opinion polls that people refer to from time to time in this place, the Australian community are voicing their concerns and saying that, no, they will not accept a GST increase. We hear those opposite in this chamber talking on a regular basis about being an innovative, adult, nimble government. Well, show that you are an adult government by coming up with some decent tax reform so that we can have a debate. Rule out, once and for all, that there is going to be an increase to the GST, on everything. Listen to your electorates. I urge the Prime Minister to listen to the Australian community, because we on this side will continue to campaign every day till we stop any notion of this government bringing legislation forward to increase the GST or putting more and more pressure on the states to agree to a GST increase because they are starving them of funds for health and education in this country. Show some vision. Show some leadership when it comes to taxation in this country. Show some compassion for those in the community who are doing it the toughest.

David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

I rise to make some comments on this motion by the Labor Party, but I have to say it is a bit hard to defend something when it is a bit like a threat that is not actually there. I think paranoia is what it is called when you are afraid of something that is not actually there. The basis of this motion is 'the plan by the Turnbull government to increase the goods and services tax rate'. Well, no such plan exists, so I am going to be talking about the general topics. In terms of relevance, I can talk about taxation, the economy, political parties and their records, but I cannot talk about that plan, because there is no plan. So I will have a bit of a look at what I can talk about.

What I can talk about is the tax white paper that was announced by Treasurer Hockey in March 2015. What he said then was that every aspect of our taxation system would be up for review. I speak here as somebody who has spent most of his career in the world of flight tests. In experimental test flying of aircraft, you have to look at every element of a system, because if you just play with one part you can have dreadfully bad unintended consequences elsewhere. So you need to look at every part and not arbitrarily rule things in or out at the start. So that is what the coalition are doing: we are not ruling out or ruling in anything. That is where the Labor Party are coming up with this scare campaign that they are trying to take to the public.

When we look at things like the Henry tax review, which then Treasurer Swan and Prime Minister Gillard responded to back in September 2010, they did go down this path. In response to some nervousness and a bit of pressure from the media, they ruled out certain things and they ruled in other things. Immediately they limited the potential of that review to actually have a positive impact on the taxation system for Australia.

It was not the first time that the ALP have had some issues internally in terms of taxation. Right now, when we look at the GST, we have Premier Weatherill, in my state of South Australia, who is out there advocating for an increase in the GST, much to the chagrin of members on that side. Clearly the ALP cannot quite reach a position on it. But it is also interesting to look at what the Labor Party have done in the past. In 2001 Mr Crean and Mr Beazley, who were then the leadership team, were saying very clearly that, when Labor were elected, they would roll back the GST and they would save billions of dollars for families in GST. But, when Labor were elected, under Prime Ministers Rudd, Gillard and Rudd, there was no roll-back of the GST. Nothing changed. They accepted that that was part of the system. In fact, when the Henry tax review came through, they were insistent that there would be no change. They were not getting rid of it and they were not increasing it. There would be no change. They accepted that that was part of the system. So, clearly, despite what Labor had said they would do, what they did do in government was quite different.

When they were in government, after they were elected in 2007, what did they do about taxation?

People may be able to cast their minds back to a mining tax. How about a tax that has structural spending associated with it that means in net terms the country actually lost money as a result of a tax that was brought in?

How about the carbon tax? There has been a lot of talk about the carbon tax and a lot of people have talked about whether it is positive or negative. But there is one impact on South Australia that I think we should consider. As we look at the wealth that is tied up in the north of South Australia in the mining sector, and we look at the plans that BHP had for Olympic Dam, and if you consider when they chose not to go ahead with that, and you have a look at the forecasts of the then Labor government's mining tax just at the time when BHP were hoping to start to recover the significant investment they were going to make in that mine, the carbon tax was planned to go up to $350 per ton. If you look at the most significant cost in copper extraction, it is electricity. So, in a global market where capital can go wherever the cost of production is going to be lowest and returns to their shareholders are going to be most significant, is it any surprise that BHP decided not to go ahead with operations in South Australia? If you look in the various documents, there was work in Laos, South America and other places where these kinds of taxes were not imposed. So what you see there is that when Labor were elected they actually imposed tax that hurt the economy, that decreased the amount of money that was coming into the pie to pay for all the services such as health, education and things that people value.

What is the coalition's record in this? Unlike Labor, who promised under Mr Crean and Mr Beazley to roll back the GST and then did not, the coalition went to the election in 2013 promising that we would get rid of the mining tax and we would get rid of the carbon tax, and that is exactly what the coalition government has done. It has removed that impost not only on individual households but also, significantly, on the small business sector and the manufacturing sector, all of which helps contribute to the viability and growth of Australia.

Again, if you look at the whole system, taxation is one side of the equation—that is money coming into coffers—but spending is the other side. If you allow your spending to be ill disciplined—and there are always good things and important things that we can be spending more money on than the government will ever have—and if you do not control it then you end up with structural spend which locks the government in for some years.

In many debates here, particularly during question time, we hear members opposite call out to the government, interjecting, saying that the spending under this government is increasing and that it is higher than it was under Labor. There is a reason for that, and that is the fact that when in government the ALP locked in structural spending that the government was committed to, and time and again, when this government has sought to say we want to be responsible and we want to have spending that the country can afford, those attempts to rein in that structural spending have been blocked by the Labor Party and quite often by the party of the Greens and the crossbench at various times in this place. So the structural spend that is there and is growing is a legacy from the Rudd, Gillard and Rudd governments.

This government still seeks to be responsible in terms of constraining that expenditure, not because we are mean and not because we love to put people down or make life hard for people but because—just like any parent responsibly running their household, being prepared to make some sacrifices for their children, the next generation—we recognise that, if we just continue to run up debt with undisciplined and uncontrolled structural spending from the government, it is the coming generations that will have to repay that. Money does not grow on trees. If we are not prepared to exercise some discipline now it is the future generations that will be impacted by that. Despite our desire to control that spending, we are actually spending money on the things that people think are important.

Again, members opposite have made a big deal about health spending and particularly things like education spending with the Gonski program. They frequently say: did we mean it when would match dollar-for-dollar funding? If you look through what the coalition promised we said, 'Yes, where funding's been committed in the forward estimates we will match that dollar for dollar.' Why is that clarification important? It is because if somebody said to you, 'I promise in 100 years time I am going to pay you this amount of money,' to quote Darryl from The Castle, you would say, 'Tell them they're dreaming.' If you said 80 years, you would say, 'You're dreaming'. If you said 40 or even 10, it would be the same. In fact, over many years in the Australian parliamentary and government system, four years has been the cut-off where we have said you cannot really estimate your income beyond it and you probably cannot realistically estimate your expenditure, and so the forward estimates which go out to four years are the period where responsible governments can actually make commitments and things are considered to be funded. So, when the Labor Party makes outrageous promises in what we call the out years—so things beyond four years—they are not actually funded. It is a promise. They are dreaming.

So what this government has done is to say, 'Yes, we will not only match but actually replace, in that four-year period, the funding which was not provided to the children and families in some states and territories of Australia.' In my home state of South Australia we have seen an increase. Despite the claims from Premier Weatherill and Minister Snelling in South Australia and the opposition here that somehow we are cutting funding, if we just look at health funding as an example, in the 2013-14 budget—which was the last budget under the Rudd-Gillard government—there was $983.3 million in hospital services and $23.1 million in public health, so just a little bit over a billion dollars, and in the 2014-15 budget it was $1.07 billion to health, and over the forward estimates, by the time we get to the 2017-18 budget, it is $2.188 billion. It is a continuous, year-on-year rise that is funded. It is actually in the forward estimates. So the coalition government has continued to fund the important things, such as health and education.

We have also funded important things such as defence. We made a promise coming in to the last election that we would fund national security and our Defence Force at two per cent of GDP. This government have followed through on that and made appropriate appropriations in the budget and the forward estimates to put us on a path to see us funding our national security at that two per cent.

That is in stark contrast to what Labor did when they were in government. They treated the defence department as an ATM. They deferred programs. They shifted expenditure. They reduced the budget. We were left with not only a range of deferred programs for new equipment but, importantly, some $16 billion worth of other deferrals, including remediation works for things like fuel farms that are essential to our operational capabilities and which needed massive investment to get them back up to a safe operating state. There were things like asbestos in buildings. There were IT systems that needed refurbishing. There were a whole range of things that never make the headlines but are at the core of operating an effective military organisation. Yet the Labor Party cut and cut. Whereas the coalition government have kept our promise to increase that funding.

Not only have we kept our promise to increase the funding but, in line with being good managers, we have implemented the first principles review, which is doing a grassroots, root-and-branch review of the defence department to ask, 'How can this organisation run more effectively so that we can lift the capital productivity of the funds that are given to it by the taxpayer?' That means that rather than the funds that are being put into Defence being wasted, we are saying that the money that will go there will deliver more capability for Defence because the management will be more effective.

Lastly, the point that I would like to talk about to do with the coalition's approach to revenue income streams and expenditure is that we would prefer to see the size of the pie increased. The bigger our economy, the less need there is, in absolute terms, to have a high rate of taxation. That is because the pure size means that in absolute terms the take for government would be large, which would mean there would be more that could be spent on the services that people need—things like social services, health services and national defence.

As a part of that, the coalition's policy, which has included things like getting rid of negative taxes like the carbon tax and the mining tax and included things like encouragement for small business to invest and expand, has seen some 315,000 jobs created in the last year. We are on track now, well and truly, to meet the commitment that then Prime Minister Abbott gave to create a million jobs in our first term of government. People laughed at that. Why did they laugh? It is because the Labor Party had performed so poorly in their job creation and in shaping the environment to give business the confidence to invest and grow their workforce. But the policies of the coalition are being demonstrably effective in starting to grow the workforce, which means we will then grow the size of that pie.

There is more economic activity now. Real GDP has increased by some 2.5 per cent across the past year. That is twice what Canada has grown by. It is more than the G7 and more than the average across the OECD. Net exports have increased. Exported services have increased by some 4.6 per cent, which is the strongest they have been in 15 years. The free trade agreements that have been signed up to by this coalition with Korea, China and Japan and the TPP are some of the mechanisms and levers which will enable business to have the confidence and the avenues to grow their worth. Domestically, retail sales are 3.9 per cent higher than a year ago, and turnover has increased in 11 of the last 12 months.

So the ALP can come forward with their motions and try to create fear about a plan that does not exist, but if we look back we can see that the coalition have a good record in this area. Yes, we are having a tax white paper and all options are on the table. We are concerned to take a mature, holistic look at our system of taxation but also expenditure. We are committed to reducing the structural spend. But we do not have the numbers here to do just what the coalition wants, so we need the Labor Party, the Greens or the crossbench to get on board and actually take some responsibility for the black hole that they have created through their mismanagement of the Australian economy. It is a bit like saying, 'You haven't yet turned the ship.' The Titanic took a while to turn.

If the Labor Party are hanging on and preventing us moving the tiller because they have the numbers in the Senate to block these sensible moves then the Australian people need to take that into account when we come to an election later this year and ask, 'Do we want a government that has a track record of growing the economy, sensible management of taxation, sensible management of expenditure and investment in the important things that count, like education and health?' If they do, they need to look not just at the lower house; they need to look at the Senate and ask, 'Who are we going to vote for so that we can make sure the government has a workable Senate?' Rather than all these measures being blocked by the Labor Party, the Greens and the crossbench—the minor parties—the Australian people need to say, 'We will vote for the party that will put the interests of Australia first and grow the size of our economy so our children have jobs.' We have a vision and a hope for the future where we do not have to be increasing the size of the taxation take because the whole pie will be bigger, there will be more people working and there will be more revenue flowing to government that can be put to use in sensible ways, not on pink batts, school halls or mining taxes that in net terms actually cost the country money. People should go to this next election asking, 'Who do we trust to run this country wisely, to make investments that will benefit not only us but, more importantly, our children and our grandchildren?' There is only one clear answer to that. That answer for the people at the election later this year is to vote for the coalition not only in the lower house but, importantly, in the Senate.

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

I rise today to speak to the issue of the Turnbull government's plans to increase the rate of the goods and services tax to 15 per cent and to broaden its base to include fresh food, education and health.

In the discussion around the goods and services tax, we have lost touch with the central idea of why it is that governments raise revenue. Governments raise revenue to pay for the services that the Australian community want and deserve. Governments raise revenue to ensure that our society prospers together, and the choices that we make about how we raise that revenue are an expression of our values. They are an expression of the things that we as a society believe are the foundation of what it means to live in a decent, more caring society in which we look after the people and the planet that sustains it.

It is a question of values. When it comes to those values, the key principles of the Greens are fairness, social cohesion and ensuring that we as a society collectively understand that being able to fund things like health care, education and a decent social safety net are indeed the pillars of a decent society. We must remember that this is a battle that has continued in our national parliament since the federation of Australia. A consensus has emerged that says, 'We are better when, together, we are able to fund services like education and health care.' That not only means that we deliver those services efficiently—because we know that the collective provision of universal health care is not just an equity measure; it is also an efficiency measure. When you look at countries like the US, which has adopted a user-pays system in areas like health and education, you see that it is a much more expensive way of delivering those services. But there is also an important principle of fairness and equity here. We understand that, in a society like ours—one that is founded on the principle of egalitarianism—everybody should be able to access a doctor and get a decent education.

Our tax system reflects those values. Our tax system also reflects the key principle of egalitarianism: we want a society where there is not a huge gap between the super-rich and the ordinary people. And that is why we have developed a system of progressive taxation. I will talk about that in a moment. Often these debates are abstract debates. They are debates where we throw numbers around and talk about GDP and about tax take as a percentage of GDP, and it becomes an abstract and, sometimes, theoretical exercise. But let's talk about some real-world examples. Let's start with Mark.

Mark is a man who earns $290,000 a year. He has enough equity in his home so that he can leverage that to buy investment properties. That enables Mark to drive his taxable income down. He claims 100 per cent of the losses against his income, and only half of his capital gains will be assessed for taxation purposes. He gets a further 32 per cent discount on his super contributions, and, because Mark has just turned 60, he does not pay any tax on super earnings, while the rest of us pay 15 per cent. He is also churning $35,000 of his salary through super and drawing the same amount out the other side, saving him a further $10,000 a year in income taxes. He spends about four per cent of his disposable income on GST. Let's contrast that with Louise.

Louise is someone who works full time. She is a healthcare worker, and she is on a median income of $63,000. But she is not a baby boomer, so she cannot afford to buy a house. She is renting. She is helping, in fact, to pay down Mark's investment property and, each year that she does that, the gap between her income and house prices gets bigger and bigger. She is saving what she can for a house, but the amount that she needs for a deposit keeps inching upwards faster than the savings, while she is getting taxed on her savings. Even if she has enough to reach a deposit, she is going to find it tough to outbid other investors who get all the tax benefits that she doesn't. She only gets a 17 per cent discount on her super contributions, and she has no capacity to make voluntary contributions, due to her disposable income. She pays about seven per cent of her disposable income on GST.

These two real-world examples demonstrate how our tax system is benefiting those people on high incomes, providing them with huge tax breaks, at the expense of ordinary people, people on the median wage, who simply do not have the disposable income or indeed the capacity to grow their wealth in the same way that somebody on the high end of the income scale can do. That means that in Australia we are saying one per cent of income earners receive 10 per cent of all income. The top one per cent get 10 per cent of all income. You can drill down on that a bit further: the top 10 per cent of all income earners get one-third of all income. So what we are seeing is that the gap between those people at the high end of the income scale and those people on the median wage is growing.

You will find that those in the top decile of income earners spend about four per cent of their disposable income on GST. When you are in the lowest quintile, you are talking about spending 13 per cent of your disposable income on GST. That is why we call the GST a regressive tax. The wealthier you are, the less you spend on GST as a proportion of your income. The less well-off you are, the more money you will contribute through an increase in the goods and services tax.

NATSEM modelling showed that lifting the GST rate to 15 per cent would see the bottom income earners paying seven per cent more, while top earners would be paying an additional three per cent of disposable income. At a time when the gap between the rich and the poor is growing, we are considering implementing a tax that will make that problem much, much worse.

We had achieved consensus on this issue, and the post-war era saw the greatest narrowing of income inequality in human history. That post-war era saw a consensus that said, 'The huge gap between the rich and the poor is not something that we as a civilised society should accept', and we made huge progress towards that end. It was due in part to steeply progressive income tax rates, where you had high marginal rates for people on very high incomes. It was in part due to the work of those people who came before us in this place, and of course the Labor Party were a significant part of that story. The problem is, of course, that the trend is reversing. Some prominent economists argue that this worldwide trend to reduce income tax rates is very closely correlated with the issue of income inequality.

Inequality was low when income rates collected more off wealthy people, when societies valued strong wages at the expense of huge super profits, and when the power yielded by wealthy interests over our political class was much, much less than it is today. One of the first lessons that I learned when I was elected to the parliament was that it was the power of those vested interests, those large corporations who spent day after day in this place arguing for their share of profits to increase, all the while knowing that the cost of that was that the gap between the rich and the poor would continue to grow. The problem is that inequality is now built into our system. It is an in-built problem within the system and we have to challenge it. We have wages that are growing at one to three per cent a year, while those people who are already on high incomes look at investments that return six to eight per cent a year.

Wealth creates more wealth, and the problem is that those ordinary Australians on the median wage are struggling to stay afloat. A report from ACOSS, Anglicare, the Salvos and Vinnies last year showed how that trend was playing out. It showed that the wealth of the top one-fifth of households grew 28 per cent since 2004 while the bottom fifth grew just three per cent.

It is our tax and transfer system that allows us to reduce this inequality. It is one of the reasons we have a progressive taxation system and a decent social safety net. The tax and transfer system has as its principle the notion that income inequality is unacceptable. It is true of the way we decide to give preferential tax treatment to things like housing and other forms of investment, and it means that we are locking out a whole generation of young people from home ownership—making them much more susceptible to poverty later in life, without a house paid off that they can live in. Isn't it remarkable that here we are at a time when we are seeing the sale of luxury cars like Maseratis and Ferraris increase at record rates, close to a 50 per cent increase in 2015, and we have over two million people living in poverty. One in 10 new cars sold today are luxury vehicles. In 2000, it was one in 20 cars.

The government says that the revenue from the GST gain will go towards two key priorities: one, to cut income tax rates; and, two, to cut the company tax rate. Theirs is not a solution that says the foundation of a decent society is to pay for health care, to pay for education and to pay for income support to look after people on pensions. Theirs is a recipe that says: 'We want to raise the GST, a regressive tax that targets those disproportionately on lower incomes so that we can give a tax cut to those people on high incomes and so that we can cut the company tax rate'. True, you can ameliorate some of the regressive impacts of the GST from compensation. You can do that through the income tax system, but that is not what this government is trying to do. It is ironic that when we saw the introduction of a price on carbon through—as the government liked to call it—'the great big new tax on everything' that we now have a government that is looking to introduce a great big new tax on everything. And isn't it remarkable that when the government at the time criticised the carbon tax for being a merry-go-round because of the compensation that was applied, it is now considering a great big new tax on everything and a great big tax merry-go-round through its reported efforts to compensate people who will be impacted by an increase of the GST. What we will see as a result of the GST is a widening of that gap: greater income inequality at a time when the rich are getting richer and those ordinary people are struggling to make ends meet. If income tax cuts from the GST were not exclusively focused on low- to medium-income earners, all we would be doing is exacerbating that long-term trend.

NATSEM modelling did show that when you have a straight five per cent tax cut for each marginal income tax rate as a result of the GST, two-thirds of households earning less than $100,000 are going to be worse off. The third above that would be better off with GST increases and income tax cuts. It is going to be a hard, hard thing to sell to the public, let me tell you.

Yesterday the PBO revealed that the government's harsh cuts to public spending, which are now languishing in the Senate, are adding another $9 billion to the budget deficit. What we need from the government is a plan B. We need them to recognise that their plan to cut essential services, to slash Medicare, to reduce spending in education, to reduce spending on family supports and to reduce spending on income support is not going to address the budget deficit because it is not going to get through the Senate, because this Senate is reflecting the will of the Australian community. Instead, it has an opportunity to look at ending unfair tax breaks that disproportionately favour those on higher incomes.

The member for Melbourne, Adam Bandt, commissioned research from the Parliamentary Library which showed that a GST of 12.5 per cent would raise the same amount of revenue for the government as a carbon price of $28 but that the GST increase would cost households three times more. We had this government mounting a relentless campaign against the implementation of a price on carbon. A price on carbon did so many other things apart from its impact on raising revenue. It was designed with the central purpose of reducing emissions and driving innovation in the Australian economy. The government was relentless in its criticism of the impact—you remember Barnaby Joyce's $100 roasts—yet it is proposing to increase the GST—a GST which, at 12.5 per cent, would cost households three times more than the price on carbon ever did.

If the government wants to boost economic growth in new areas, if it wants to create a 21st century economy, a new economy with new jobs, attracting international investment and encouraging innovation, as a first step it would put back a price on pollution and set some ambitious climate targets to help attract that international investment—those innovators and entrepreneurs—to Australia and drive the transition that is so desperately needed.

The Greens have been leading the debate about how we can address that critical issue of income inequality but also raise revenue to pay for services like health care, education and a decent social safety net, which we think are the foundation of a decent society. Before the Mid-year Economic and Fiscal Outlook the Greens released four measures that would reduce those unfair tax breaks and close the budget deficit by $38 billion over the forward estimates. Let us go through some of those.

We would make superannuation more progressive and end the huge concessions that disproportionately benefit those on higher incomes. That would bring in close to $9 billion. We would remove negative gearing for anyone considering a future purchase of a property while grandfathering existing properties. That is $4½ billion over the forward estimates. We would do something about the unsustainable growth that has occurred in the housing market, which is locking people out and fuelling the housing bubble. We would look at removing capital gains tax discounts. There are different models for how that would be achieved. We have costed a range of models. A reduced capital gains tax discount would bring in $2½ billion over the forward estimates. We have costed removing those huge fossil fuel subsidies—subsidies, in the form of the diesel fuel rebate, that mean that people like Gina Rinehart, one of the richest women in the world, get subsidised fuel for their operations, while other people have to pay the full rate of excise on their fuel. Abolishing that tax break would bring in $20 billion over the forward estimates.

We can do that. The tax take to GDP ratio in Australia is lower than in most other OECD countries; certainly much lower than it was under John Howard. By raising the tax take to GDP ratio, through ending those unfair tax concessions, we would be able to pay for services like Medicare and schools and make sure that people on income support are looked after. We would continue to build the foundations of Australian society. We would create the investment settings that drive investment in productive areas of the economy, rather than distorting our economy by further fuelling investment in areas like mining and the housing market. We would get Australia back to its core belief that as a wealthy society the gap between rich and poor needs to narrow.

Joe Ludwig (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

What an extraordinary argument put forward by Senator Fawcett. I only want to touch on it briefly. The argument effectively is that there is no plan; the plan does not exist. The motion before us highlights the fact that the Senate opposes the plan by the Turnbull government to increase the goods and services tax rate to 15 per cent and broaden its base to include fresh food, education and health. Ultimately Senator Fawcett ended with the clear view that it is us over on this side, and perhaps the Greens, that are running a scare campaign.

How far from the truth this is. The truth is that the coalition are running their own scare campaign. Here are the words that were put on 3AW on 6 October. Neil Mitchell asked:

… everything is on the table—superannuation, negative gearing, capital gains tax—everything. The GST, everything is on the table.

The response from the Prime Minister, Mr Turnbull, was:

Everything is on the table. That's right.

The presenter, I think, was somewhat taken aback by that. He was asked the further question:

I think everyone understands that an efficient, incentivising tax system is the Holy Grail … even looking at increasing or broadening the base of the GST. Can you be clear with us now—

This was on the ABC RN on 1 October 2015. The answer from the Prime Minister to Fran Kelly was:

Fran, everything is on the table.

What we have now is quite clear: a backbench in revolt from their own scare campaign. It is clear you do not have to put everything on the table. You can have a tax review which is progressive and which talks about how you are going to deal with it. You do not have to put everything on the table. Of course, in putting everything on the table you have created a plan—a plan which effectively means that any review can come back and say, 'We should increase the GST.' How are you going to deal with that? You have let the cat out of the bag. You have put the dead cat on the table. Who is going to take it off? I dare Mr Turnbull to take the dead cat off the table, because you will be stuck with it. You have already run your own scare campaign. You have already started your scare campaign. How are you going to end a scare campaign that you have created amongst your own backbench?

But what is really damaging in this whole debate is that the Prime Minister, Mr Malcolm Turnbull, has refused, time and time again, to rule out increasing the GST to 15 per cent. He has also refused to rule out broadening the GST and charging it on fresh fruit and vegetables, education and university costs, medicines, grocery bills, child care, nursing home payments, rent and the cost of a new home. An increase in the GST would mean that every single Australian would suffer as the price of everything is pushed up. It would cost more to visit the supermarket, go to the doctor or buy your kids what they need to get a good education. But unlike the time the GST was first introduced, when wholesale sales taxes were withdrawn and there were reductions in other areas, this would be a flat, straight increase of five per cent in the GST without those moderating influences—and it would come at a time when low- and middle-income earners are already struggling to keep their heads above water.

The GST, in and of itself, is a regressive tax, which would see the lowest income earners paying 20 per cent of their income while the highest income householders pay a mere nine per cent of their income. This government looks like it is insisting on punishing low- and middle-income earners. All of those household bills that are already causing families much financial strain, including electricity, gas and grocery bills, would go up. The Australian public can rest assured: Labor does not support an increase in the GST rate or applying it to fresh food, health care or education. It is a regressive tax and would have a disproportionate impact on low- and middle-income earners. We will continue to fight the coalition on their plan that would see every Australian pay more.

I will give you an idea of how severe this GST increase could be. An average family with a household income of $86,000 would pay an extra $6,200 if the GST were broadened to apply only to fresh food, health care, education, water and sewerage. They would pay an additional $3,200 a year more if it were increased to the 15 per cent, with no change to the base. They would pay $3,000 a year more if it were applied to fresh food, health care and education but remained at the current rate of 10 per cent. They are leaving the GST on the table as part of the review and whichever way you cut it if it were picked up it would be a huge slug to low- and middle-income earners. The refrain from the other side is, 'There is no plan,' or, 'Even with a GST increase, we will provide offsets.' They might lower income tax rates and they might hold out a carrot, but they will never compensate sufficiently for a flat rise of the GST in the order of 15 per cent.

It seems that the Liberal Party under the leadership of Mr Malcolm Turnbull would be happy to see low- and middle-income earners pay more while refusing to go after multinationals. They would be happy to see low- and middle-income earners slugged with this tax while multinational companies get off scot-free. It is not fair, and this government wants those who can least afford it to effectively subsidise multinational companies' operations in this country. They could have taken the opportunity to close those tax loopholes for multinationals, but instead they wimped on that. I hate to say what the Greens also did on that. They could have been a little stronger, but as usual they rolled over.

The Liberal Party are also concerned with only looking after the big end of town, so it should come as no surprise that they have taken this view that they could increase the GST and slug low- and middle-income earners whilst at the same time ensuring that the big end of town and high-income earners are well looked after. That is how they intend to operate. Labor simply will not support Mr Turnbull's plan to hurt the families who can least afford it. Labor understands that families are finding it harder and harder to make ends meet. Wage increases are not keeping up with the rising cost of household bills—not to mention that those who are unemployed are finding it harder to find and keep a good job.

It is not only low- and middle-income earners that this GST would hit. Small businesses, which are the engine of growth in Australia, would suffer significant losses as a result of an increase or broadening of the GST. As business confidence and retail spending take a hit, supporting small business is crucial to driving growth and employment opportunities in this country. The role of small business in driving our prosperity has never been more important than now. However, it seems that this government does not understand what the knock-on effects of such a knee-jerk policy change would be. By merely allowing the issue to run, to not scotch it, but to let it float out there to be considered and be part of their overall strategy is poor form for small business. It knocks business confidence. It knocks consumer confidence and, as a consequence, small businesses are already feeling the effects of it.

You do not have to go far. You only have to go to the coalition backbench to see how this impact is playing out. They talk to their constituents. They know their constituents are revolting against their plan to increase the GST. They are hearing it loud and clear, just as we hear it. We have heard from families, from workers and from fixed income earners. They all understand how an increase in the GST to 15 per cent will hurt them so much. Small businesses do not need the complexity that this will create. They are already weighed down by red tape and cash flow pressures. A recent NAB SME survey showed that a lack of consumer demand is the No. 1 constraint on small business profitability. Labor understands that times are tough and that the Australian economy is in transition. The last thing small businesses need now is another blow to consumer confidence created by this government and bigger BAS payments. They need to let small businesses get on with their job of working hard, running their businesses and turning a profit.

Coming back to how they might structure their package, modelling has shown that, even if the carrot of a five per cent income tax were offered, as suggested by those opposite, the lowest 60 per cent of households will still be worse off and the top 40 per cent would gain at their expense. It seems that the government cannot escape punishing low- and middle-income earners. If history has taught us one thing, it is that the coalition government cannot be trusted to implement any promised tax cuts. Some of the taxes they promised to scrap when the GST was introduced are still in place 15 years later, and voters have not forgotten about that. There have been plenty of opportunities for state governments of Liberal persuasion to follow Mr Howard's lead, but they have never taken it up. Families do not need to be slugged with more tax. This government should stop frightening its own backbench and focus on going after those big companies that are avoiding paying tax in this country.

The Prime Minister simply cannot be trusted on the subject of the GST. Even in parliament, you can look at Hansard and see that Mr Turnbull has refused to rule out an increase or a broadening of the GST. When asked in parliament, Mr Turnbull refused to rule out increasing the GST to 15 per cent not once, not twice but three times. He has also refused to rule out broadening the GST and charging it on the cost of fresh fruit and vegetables, education and university, medicines, grocery bills, child care, nursing home payments, rent and new homes. It is an enormous scare campaign that this coalition government are running against themselves, if ever I have seen one. It is an extraordinary that they would contemplate such an outcome. It shows their inability to manage the economy and provide leadership for small business and consumer confidence, and it demonstrates once and for all that this government are only looking after the interests of big business. If they were serious about looking at how they could lead this debate, they certainly would not do it the way that they have led this one.

Of course, it does not stop there. Families do not need to be slugged with a 15 per cent tax. This government, as I said, should be more focused on managing the economy, but the Prime Minister has already belled the cat on this issue. The cost of living is already at an extreme high, and every time a person pays a bill, stands at the supermarket checkout or takes their kid to the doctor, they will pay more. Absolutely everything will cost more under this government. Mr Turnbull's plan—he only has one plan—is to raise the GST, which will slug families and those on fixed and lower incomes.

If you look at the seriousness with which this issue has been taken—for example, by ACOSS in Tax Talks 5: The effects of a higher GST on householdsI do not think this coalition government can simply argue, 'We don't have it as a plan.' What are they doing? Maybe it is a thought bubble. Well, ACOSS take your plan very seriously. They have commissioned a report from NATSEM to see how would impact the Australian economy. Their summary states:

Increases in the Goods and Services Tax … are being advocated to help fund services provided by the States such as health care; to replace other indirect taxes such as Stamp Duties or Payroll Taxes; or to pay for income or company tax cuts.

It goes on to say:

Many people are concerned about the impact of a higher GST on low and modest income households …

So they did the work that this government should have done before it started a thought bubble which crystallised into a plan. They looked at how they could assess the equity impacts of changes to the GST. ACOSS commissioned the National Centre for Social and Economic Modelling, with support from the Carnegie Foundation, to model the impacts of a number of scenarios. The scenarios provided a key insight into how this would impact those on low and modest incomes:

The GST is regressive, raising almost twice the share of household income from the lowest 20% of households compared with the top 20% (13.4% compared with 5.9%).

That says it all. In short, if you are on the lowest 20 per cent of household incomes, you will pay a disproportionate share of the tax burden through the GST. You will not and cannot be compensated sufficiently for that tax slug that you will pay. For those on higher incomes, bigger incomes, in dollar terms it has less of an impact. So of course it is not surprising that you find those on the other side thinking it is a good idea.

The modelling reports that extending the GST to health or water would make it even more regressive and points out that extending the GST to education would have a similar impact across the income distribution for all groups. So it negatively impacts students, those who are on modest incomes and those on low incomes. Under 'policy implications', they highlight that this:

… confirms that while the current GST is needed to help fund State Government services, it is a regressive tax. Raising more revenue from consumption taxes rather than income tax would reduce the overall progressivity of the tax system.

So what the coalition are advocating for ultimately is a less progressive tax system by increasing the GST burden on the ordinary low-income or modest-income person.

I have to say that the ACOSS modelling could not find much joy in an increase in the GST no matter how hard they looked and no matter how many scenarios they went through. It would of course impact differently on many different households but there were always going to be significant losers out of this system, and those losers—(Time expired)

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

The Labor Party work on the principle that, if you tell enough bare-faced, blatant lies time and time again on every news item—ably assisted, I might say, by the ABC—that someone might eventually start to believe them.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Mr Acting Deputy President, I rise on a point of order. Senator Macdonald has been here a long time and he knows that he cannot accuse senators of lying. So he should withdraw.

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

I did not hear it, but if you did, Senator Macdonald—

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

Mr Acting Deputy President, on the point of order, so that you are aware: I said, and I repeat, 'The Labor Party'. I did not mention anything about senators or individual senators; I said, 'The Labor Party work on the principle.'

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

'Lying' is unparliamentary. You know that. He should withdraw.

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

There is no point of order.

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

You can understand why the Labor Party will do everything to prevent me from exposing the truth.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Mr Acting Deputy President, could you explain to me why 'lying' is now parliamentary? If that is the case, this is a ruling that I am unaware of. If you are now saying that to make accusations of lying is parliamentary we will go with it.

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

Senator Cameron, Senator Macdonald did not refer to anybody. 'Lying' is in the dictionary, the last time I looked. He did not refer specifically to or reflect on anybody in this chamber.

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

I might point out to those who might be listening to this debate on radio that it is interesting that, when I have 10 minutes left to speak, Senator Cameron and the Labor Party will do everything possible to prevent me from having my 10 minutes, because they know I will expose the Labor Party for the misrepresentations and the blatant lies that are part of the Labor Party strategy on this issue. I am no new comer to GST debates.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

Mr Acting Deputy President, I rise on a point of order again on this issue. It is quite clear that what Senator Macdonald is doing is not accusing the Labor Party of lying, but he is accusing of lying senators who have made contributions in here. You should apply the standing orders. This is unparliamentary, and Senator Macdonald should not be allowed to do it. I have not heard this type of language being used against senators for some time.

Sean Edwards (SA, Liberal Party) Share this | Link to this | Hansard source

Senator Cameron, I will repeat what I said before. Generally, the word has to be attributed to an individual or a person in the chamber or somebody from the other side. I would ask you, Senator Macdonald, if perhaps you could rephrase your statement so that you can actually get through your contribution here today. There is no point of order.

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

Thank you, Mr Acting Deputy President. But, if I deal with that, they will find some other reason to stop me exposing the Labor Party for what they are. The Labor Party as a group have no interest whatsoever in tax reform and have no interest in the truth. I am no new comer to GST debates and discussions. This is the third GST debate that I have been involved in. With the first one, I was the only senator here around when the Labor Party told all sorts of lies and made misrepresentations about John Hewson's 'Fightback' package. They succeeded then. I was around when the Labor Party took the same approach against John Howard's GST. That time it was taken to the people of Australia and the people Australia endorsed it. This is the third debate.

Despite what the Labor Party keep misrepresenting to the people of Australia, this is not a government plan. The only person who has a plan publicly for a 15 per cent GST is the Labor Premier of South Australia. He is the only politician who has talked about a 15 per cent plan for the Labor Party. The Labor Party are telling us all the detail of modelling for a 15 per cent rise. I do not know, but it seems to me that perhaps the Labor Party have a secret plan that they are doing work on, and that is why they know all this detail about the GST—because no-one on the coalition side in this parliament has ever spoken about the GST. I am sorry; there is one exception to this. Many months ago, when the Labor Party first raised this—abetted by the ABC—I said publicly that I would not be supporting a 15 per cent GST. I publicly said that I would write to the Treasurer and tell him that if it came forward in this parliament not to rely on my vote. That is not new news; that is something I mentioned at the time.

And why did I do that? As I said, I was around when the GST debate occurred in the 1998 election, when John Howard courageously took that proposal to the electorate. At that time, from John Howard down, right down to me, we all promised that it would only be a 10 per cent GST. The Labor Party at the time, first of all they told all sorts of mistruths about it, which you are hearing again now. They also said—again a complete fabrication—that it would only be 10 per cent for the while and then it would be increased to 15 per cent. And from John Howard down, we all swore in blood that it would never increase beyond 10 per cent—for all of the right reasons—and that is why I indicated my position to the Treasurer several months ago.

Anything the Labor Party say, the fabrications that come out from the Labor Party campaign unit, are not new to me. This happened in the GST era of John Howard. The Labor Party pilloried it. It was the worst thing that was going to happen; the world was going to come to an end if we had a 10 per cent GST. I remember all of those debates in this chamber. Of course, it went ahead because the Australian people agreed with it—agreed that the compensations were good; agreed that Australia needed a better and fairer tax system, which happened as a result of the 10 per cent GST—but Labor opposed it, foot and mouth, all the way through. And then Labor came to power, as happens in this country. The Labor Party became the government and, after all of their years of bagging the GST, what did they do about abolishing it? This was the tax that the Labor Party said was going to destroy the world, and yet when they got into power, did they do anything about getting rid of the GST? Of course not, because they understood that this was an essential part of a tax package for a modern country.

I remember—not quite the names, but I remember that during the 1998 campaign it was pointed out that there were only two countries in the world that did not have a value-added tax. One was Botswana and I think the other one might have been some central European country—perhaps Bulgaria, but I am not sure about that. But there were only two countries in the world that did not have a value-added tax, and yet the Labor Party said it was going to destroy Australia. As we know, during the time of the Howard government, with that great boost to the economy that followed from the 10 per cent GST and the tax cuts that occurred, the Australian economy went ahead in leaps and bounds.

I could not help but think that Senator Ludwig—when I talk about fabrications, Senator Ludwig had the hide to say all the tax cuts that were promised when the 10 per cent GST came in were not actually taken off by the Howard government. The reason why was most of the state governments at that time were run by the Australian Labor Party. They agreed that if we had a 10 per cent GST—and of course the GST goes straight to the states; it does not come to the Commonwealth—then all of the state Labor governments would get rid of payroll tax, tax on insurance levies, transaction taxes. They promised that a raft of state taxes would go when the states got their hands on the 10 per cent GST. We did our part of it; we got the 10 per cent GST that went to the states. But, as I said, at the time nearly every state government was a Labor government. So we gave them the 10 per cent, and what happened? Most of them reneged on their promises to reduce state taxes, which was part of the agreement. So for Senator Ludwig to get up and say the Commonwealth government did not remove all of the taxes it promised is wrong. Every tax that was within the power of the Commonwealth government to remove, like export taxes, import taxes—

Richard Colbeck (Tasmania, Liberal Party, Minister for Tourism and International Education) Share this | Link to this | Hansard source

Wholesale sales tax.

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

wholesale sales tax particularly—all went as promised. But the state taxes that the Labor state governments promised they would repeal, they did not. They just took the 10 per cent and kept their economy-destroying taxes.

The Labor Party have never had any credibility when it comes to taxes and the economy. I can tell you that Mr Keating's Labor government actually legislated for a tax reduction before an election. He said, 'I'm legislating for these tax reductions', and it went through parliament, supported by us. The first thing he did when he got re-elected was repeal that reduction of income tax. That is how much you cannot trust Labor on anything to do with taxes at all.

Thanks to Senator Cameron taking up my time with puerile points of order, which he knew were not valid, I have run out of time, which is a great pity because I would love to continue exposing the Labor Party for the frauds and charlatans that the party and their strategies are. Full of issues, full of making up stories that they know are not true; blatant misrepresentations by the Labor Party. No-one is talking about a 15 per cent GST except the Labor Party and the ABC. They are the only ones, and of course the only one who has come forward with a real plan for a 15 per cent GST is the Labor Premier of South Australia. You do not need to be terribly clever to work out who is telling the truth when it comes to questions of tax and the economy. It is certainly not the Labor Party.

Debate interrupted.