Goods and Services Tax Motions

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.