Democrats Act to Prevent Price Exploitation in New Tax System

Extract from Hansard

Legislative Council
4 August 1999

Mike Elliott
Leader Australian Democrats
Member of the Legislative Council

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The Hon. M.J. ELLIOTT: On behalf of the Democrats I indicate support for this Bill. Clearly in the whole GST package there will be swings and roundabouts and gains and losses. The way in which the political game is played, the Labor Party has focused on things which will become more expensive, but the fact is that a large number of things will be less expensive. I am pleased to say that we are already seeing—

The Hon. M.J. ELLIOTT: The honourable member can play that game as much as he likes—

The Hon. M.J. ELLIOTT: That is why we are having this debate right now, for goodness sake. It became important that, because prices were going to go down, there was not a long lead time, otherwise people would stop buying. In fact, there was a fair bit of evidence that during June sales of some electrical goods did start to decline because people anticipated that eventually prices would decrease. It is noteworthy that a number of outlets now have been advertising the fact that prices have decreased, for instance on electrical goods, and they have now seen a significant increase in sales.

Of course it is important that price increases are handed down, and that is what this legislation is all about. I think it is fair to expect that, indeed, some people in the market will make a decision that people have been prepared to pay a certain price and that they may attempt to try to stay near that price regardless of the drop in tax. That is the reason why this legislation is necessary. I have spoken with people in business who have a concern that, for those who are applying a tax for the first time, they will not be able to put the price up by the price that the tax suggests because there will be market resistance. I think that in this area there will also be swings and roundabouts.

I think it is probably true that some things will not drop as far as they should because of changing tax rates, but I also argue that, because of market pressures, a number of items will not increase in price by as much as the tax rate would suggest that they might. That is an inevitability I would argue on both sides of the equation. I guess that this legislation will never pick up that sort of thing happening at the margins but, where it can be clearly demonstrated that a significant price drop was possible and should have occurred because of a significant drop in taxation and it has not been passed on, it is important that some action be available. It is for that reason that the Democrats support the Bill.

The CHAIRMAN: I point out to the Committee that this clause, being a money clause, is in erased type. Standing Order 298 provides that no question shall be put in Committee upon any such clause. The message transmitting the Bill to the House of Assembly is required to indicate that this clause is deemed necessary to the Bill.