 |
Legislative
Council |
|
 |
||
| Mike Elliott Leader Australian Democrats Member of the Legislative Council |
Parliament Index |
|
|
Legislative
Council |
|
|
||
| Mike Elliott Leader Australian Democrats Member of the Legislative Council |
Parliament Index |
|
The Hon. M.J. ELLIOTT: I rise on behalf of the Democrats to support the second reading of the Bill. I will make some comments about the Bill itself and then perhaps about the general context—as did the Hon. Paul Holloway in his contribution.
This Bill will increase stamp duty rates on high value properties. As I understand it, it is proposed to be a short-term initiative and that stamp duty should be abolished by the years 2005-06 as part of the phasing in of the GST. The Bill, which amends the Stamp Duties Act 1923, will increase stamp duty from 4 per cent to 4.5 per cent for properties over the value of $500 000, and from 4.5 per cent to 5 per cent for properties over $1 million. It will raise $7.5 million in 1999-2000 and $8.1 million over a full year. It is argued that the Bill will have the greatest impact on commercial property and not residential properties.
The Labor Party continues to play a game it has played, I think to its shame, ever since it has been in Opposition this time around; that is, to attack the Government for anything that resembles a tax increase and to attack the Government for any cuts in expenditure. You cannot really play it both ways, as far as I am concerned. The Democrats have made it quite plain that, whilst it is fair to question the Government about whether or not it is spending its moneys efficiently (and I think a case can be made that it has not been efficient in its budgetary process), nevertheless we recognise that the State budget is under great stress. The stress is not just due to the Labor Party alone and what happened with the State Bank: the stress is also due to the vertical fiscal imbalance between Federal and State Governments suffered in this country—that, indeed, we are dependent upon moneys from the Federal Government for a large part of the budgetary process. I recall that, in the budget papers last year, the Government provided figures that showed that Federal moneys coming to the States from 1992-93 up to the previous budget had been reduced by $1.2 billion a year. That impact on the State budgetary process is three to four times as great as the impact of the State Bank debt. I am amazed that the focus has remained on the State Bank debt over recent years when, in fact, cuts by the Federal Government to the States have put even greater pressure on the State budget—the sort of pressure that has led to cuts in public services and increases in taxes.The Democrats have said consistently since the Liberal Government came to power in the election before last that we were prepared to support tax increases so far as they guaranteed the quality of the public sector being maintained. Unfortunately, we have seen a decline in the public sector because not enough revenue has been raised, as well as, I think, inefficiencies in the way in which the Government has run its budgetary process. It is not all the Government's fault, but it does share some of the blame.
I am one of many Democrats who do support the GST package. In fact, all the State Democrat MPs here in South Australia support the GST package. One of the reasons why we support it is that it does offer real hope for a growth tax being available to the States. The GST, for the first time, rather than just taxing goods, will tax services, and that is the part of the economy that is growing. So, there has been an increase in tax pressure on the production side of the economy, which has probably accelerated its decline, while at the same time the sector of the economy which should be growing very rapidly—the services sector—is not being taxed at all.
So, that has been one of the reasons why at a Federal level there has been increasing pressure on income taxes and why bracket creep has been allowed to continue to work in the way it has. It is certainly true that, in the GST package which was negotiated and to which the Democrats agreed, State Governments will not be able to get rid of some of the taxes that would have gone immediately. But the GST is a growth tax and, as the services sector and economy grow, it will deliver increasing amounts of revenue to State Governments so that they will be in a position to start abolishing a number of these taxes that cause real problems.
I would have to say, however, that there is still some truth in what the Hon. Paul Holloway says—that one can never predict what future Federal Governments might do. However, what I have not heard from the Labor Party is what it would have done instead. What is its proposal about handling the vertical fiscal imbalance between Federal and State Governments? I have heard nothing at all about its alternative to the GST package. The Hon. P. Holloway interjecting:The Hon. M.J. ELLIOTT: It is true that it will be marginally negative for the first couple of years, and I am sure the Treasurer will provide more accurate figures on that, but there are offsets. As I recall, originally the States were to be responsible for moneys to local government, and that will no longer be a responsibility out of GST moneys. There were a number of offsets within the package, and that meant that the only matter of any consequence that had to be made up for was the GST lost on food. However, because this is a growth tax, within a very short number of years, whatever gap remains (and part of that shortfall would have been moneys spent paying for local government) will be made up for quite quickly.
So, I call on the Labor Party to stop complaining about tax increases whilst complaining about cuts in the public sector. If it has a different solution to the vertical fiscal imbalance it is about time it put that solution on the table. It is a major challenge for all of us, regardless of Party and regardless of politics, that constitutionally the States still have most of the important responsibilities. States still have to deliver most of the services that are important to people. It is the States that deliver health, education, roads, police and so on, yet the States themselves do not have the ability to raise the revenue to pay for them. Is the answer for income tax to come back to the States?
I note that in last year's budget papers the Government was even entertaining the thought of introducing a levy on income tax as a way of starting to correct that imbalance. It needs to be done; otherwise, we face the sorts of difficulties that emerged in the Advertiser this morning, with the National Competition Council telling us that it will cut moneys to the States unless we do what it wants. The States have increasingly lost their ability to make decisions on behalf of their own constituency.
As I recall, it was under Federal Labor that we saw the first real attempt by Federal Governments to tell State Governments what they could do. I recall very clearly that, when I came into Parliament, we had a vibrant public housing sector. What happened to that public housing sector? Keating and Hawke told the States how they could spend Federal and grant moneys and, in particular, they restricted their ability to spend it on public housing. That is why public housing disappeared in this State. Increasingly during those years the Federal Government started directing how the States could spend their moneys on behalf of their constituents. That process has accelerated under the recent Federal Liberal Governments, but it was certainly flowing very strongly at that point.
Until States have more control over their revenue, that will be an ongoing problem, and I suspect that the Hon. Mr Holloway and I can probably agree on that. Ultimately, the challenge for all of us who actually believe in three tiers of government—and I am one of those people—is to ensure that each tier has a great deal of financial independence. At this stage we do not have it, and I recognise that some increases in taxes, such as this increase in stamp duties, is a necessary evil at this point.
