Bills - Treasury Laws Amendment (GST Low Value Goods) Bill 2017 - Second Reading


Senator IAN MACDONALD (Queensland) (10:05): This is a bill whose time has at last come. The Treasury Laws Amendment (GST Low Value Goods) Bill 2017 is a bill that I believe should have been introduced many, many years ago, to ensure that imported goods under $1,000 had the same tax on them as those same goods would have had if they were sold by an Australian retailer within Australia. For too long, our small businesspeople in Australia and the retailers in our country have had to put up with this very unfair competition; that is, they could sell a good—an item of clothing or some other well-used good in Australia—but they would always start 10 per cent behind the price that a foreign dispatcher of that same good could charge. Over the years, so many constituents who are in small business would complain to me about how our fellow Australians would go into their shop, have a look around, see the particular good they wanted and the statistics of that particular good, then walk out of the shop, go home, and order it online from overseas for at least 10 per cent less than my constituents in Queensland could charge.

To a degree, this is an issue that has impacted upon small businesspeople, particularly in Australia, for a long period of time. In our wisdom, the parliament in the past decided that goods over $1,000 in value would be subject to the GST, but we gave this exemption for lower value goods mainly, I suspect, because it was always thought to be too hard to collect money on hundreds of thousands—perhaps even millions—of goods that were acquired by Australians from overseas retailers at relatively low values. I can understand the concern that the Treasury and the public service would have had with that, but I come at this from the position of my constituents and the people who support our party—small business people—who have been unfairly disadvantaged for a long period of time now. I am delighted that this bill is at last going to address that. I tell somewhat humorously that the first person who raised this with me, three or four years ago now, was a local businessman in Townsville who had a number of businesses, but one of them was an adult shop. He came to me and he said that people were no longer using his shop because they could get the same goods much cheaper from overseas because he had to comply with Australian moral laws, but, more importantly, he had to comply with the GST laws. His sale items were always 10 per cent more than those of his competitors who were overseas, who could ship the goods in. According to him and others of my constituents who have raised it with me, within three or four days the goods would be at the residence of the buyer. In his business, that was another attraction. I only mention that because that was a graphic example of why reform was needed in this area.

I will briefly refer to Senator Waters' speech, in which she addressed a particular item on which she is introducing a second reading amendment. It would be good if we could remove the GST from everything. Australians would generally love that, but unfortunately the state governments—who get all of the revenue from the GST—would not be very keen on that. That is because the GST is the main revenue of the states. I say to Senator Waters: if she has an important issue there, I would think the first port of call for her would be to see the states and to see—

Senator Waters: I have done that, Senator Macdonald.

The DEPUTY PRESIDENT: Order. Please continue, Senator Macdonald.

Senator IAN MACDONALD: It is another case where there is one rule for everybody else and one rule for the Greens. If I dare interject when Senator Waters is talking, you have everyone in the Greens political party taking a point of order. But as I say, there is one rule for everybody else and a separable rule for the Greens.

I do not want to spend a lot on that particular part of the debate. I simply say that if Senator Waters came with the agreement of every state government to that reduction in their GST revenue, then I think it is something perhaps the Commonwealth should look—although I doubt that it is in this bill that you would address something like that. Perhaps it needs a piece of legislation that is more specifically to the point. But I would be interested to hear from Senator Waters if all of the states have agreed to forfeit the revenue in the manner she proposes.

That does lead me just to emphasise that this is a GST bill. So far as the Commonwealth is concerned, the revenue raised is not particularly relevant—and I emphasise 'particularly'—because all of the money raised from this will go to the states. My own state of Queensland is a classic example. That state, which has been very poorly managed financially for a long period of time, certainly needs every cent it can get from whatever sources. The revenue raised from this bill, should it be passed, would be going straight to the state government.

I do have one concern with this bill that I may pursue further in the committee stage: that is, the method of collection. I have raised this with both the finance minister and the Treasurer. They have been courteous in their responses to me, but I find it difficult to understand why we have a method of collection on goods above $1,000 that I will refer to as the vendor method of collection. According to Treasury estimates, if we use the vendor method of collection—which is that vendors overseas will collect the GST and pay it to Australian government—then that would raise $300 million over the forward years. But I wonder whether every vendor in every country around the world is going to do this, particularly the little vendors. I can appreciate that the big vendors, the people who are in this as a major part of their business, would do the right thing, and if they are of the vendors they will charge the tax, will collect it and will send it to the Australian government. But, if for a little backyard operation sending goods by post to Australia, one wonders how that is going to be enforced. Will these smaller vendors in backyards in America, South America and Europe say, 'Yes, we're obliged to collect a 10 per cent tax on behalf of the Australian government, so we will collect it and, hand on heart, we will send that tax to the Australian government by the next post'? I am sure it does not work like that, but the principle does worry me.

It would seem to me far easier to get the logistics companies who bring these goods into Australia, be it Australia Post or any of the international transport organisations, to add the GST, collect it and pay it to the Australian government. Arguments have been raised that this would be very onerous for them, but they already do it, as I understand the system, on goods of over $1,000. They have their computers set up and they have their processes in place to add the GST at the delivery stage—to press a button on their computer, charge the additional GST, press another button to collect it all together and press another button to send the GST to the Australian government. I am not sure why we are changing the system for those goods under $1,000; I have not been convinced that it is a better way to go.

KPMG, obviously, are employed by those vendors who do a lot of work in Australia. I acknowledge that have a purpose for it, and I am sure KPMG have been around to see everyone in this building, but I think they have a point: if we do it for goods above $1,000 with the delivery model, why not below $1,000? I find that difficult to understand. According to KPMG—and I make the qualification that they are a reliable organisation—if it was the logistics model, the delivery model, the revenue collected would be $1.8 billion, as opposed to Treasury's estimate of just $300 billion over the forward estimates. It would seem from the point of view of Australian governments' revenue collection that that would be a better model for the states. Again, this is not a matter for the Commonwealth government to be too concerned about in relation to revenue raised because all of the revenue goes to the state governments. But a collection of $1.8 billion as opposed to $300 billion over the forward estimate seems to me to be another reason why the government should seriously look at what is called the logistics model for the collection of this tax. My main concern is that we do it on goods valued above $1,000, and in that way we use the logistics model. But, for goods below $1,000, we are now going to say it is up to every individual vendor around the country to do the right thing by the Australian government.

The big vendors—and again KPMG are working on behalf of the big retailers whose business is delivering goods into Australia—have indicated to us that they will comply with the rules, whatever the rules are, and I believe them. But what they are concerned about, of course, is that their competitors will not do the same thing, and there will be lots of little organisations set up that will sell the same goods as the big vendors but that will not be collecting the 10 per cent GST, and therefore the big vendors will become uncompetitive. I can understand that. I do need—and I will in the committee stage, if I get the opportunity—to try and clarify those issues.

Can I point out that the Treasury say in their submission that, even when this scheme is fully implemented, the collection rate will only be 54 per cent. I understand that to be saying the Treasury expect that 46 per cent of small retailers who sell into Australia will not be charging and forwarding the GST collected to the Australian government. That in itself is a concern and makes me wonder about the efficacy of the arrangement. Perhaps I have this wrong, but, as I have said, I have spoken to both the Treasurer and the finance minister. There are a number of reasons that I would like the government to seriously consider whether the logistics model would not be better than the vendor model. I make this contribution as I always do: relying on my understanding of these things—not always accurate, but that is as I understand it. I am a little concerned at the way this is going.

Having said that, I conclude where I started: this legislation is long overdue. It will put a little bit of balance back into the competition between the small retailers in Australia who were unfairly competing against retailers overseas, in that Australian retailers had to collect the 10 per cent GST, whereas their overseas competitors did not have to do that. Therefore, the overseas competitors could sell goods at commencement at 10 per cent less, and that gave them an unfair advantage over small businesses in Australia, many of whom are currently struggling for survival.

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