Page 3 - Week 01 - Tuesday, 16 February 1993
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MS FOLLETT: You should not have asked the question. In the ACT, where so very many of our businesses are service businesses, or service industries, the effects of the goods and services tax on industries such as tourism would be quite dramatic. There is no doubt about that. I want also to say that the abolition of payroll tax in the ACT would affect some 11 per cent of Canberra employers. For that 11 per cent, we would be abolishing a tax of 7 per cent, which is the rate of payroll tax, and they would be forced to bear the imposition by a future Hewson government of a 15 per cent tax. I cannot possibly see the advantage of that.
I ask members to bear in mind also that Dr Hewson has not given a guarantee on two very important matters. The first is that he will retain his goods and services tax at 15 per cent. We have heard him say before that he would resign if he changed his mind, and that is the line he is using here. He did not resign last time, he will not resign this time, and he will increase the rate; there is no doubt about that. The other important guarantee we have not had from Dr Hewson is that we would get 100 per cent compensation for our payroll tax. Our payroll tax currently runs at something over $90m a year. It is one of the most significant sources of ACT-raised revenue. It amounts to up to 25 per cent of our revenue. If Mr Kaine looks at our forward estimates, he will see that we have built a growth factor into that, which is only reasonable. Not only has Dr Hewson not guaranteed 100 per cent compensation; he has not guaranteed that there would be any growth.
I believe that the proposed abolition of payroll tax and the imposition of a goods and services tax can be seen only as the ultimate in retrograde steps for Canberra business. Mr Kaine has asserted that there would be increased business activity, that there would be increased employment and investment. Why would that occur? Businesses are not in business out of philanthropy. They are in business to make a profit, and quite rightly. I support that. It has never been proven to me that the abolition of payroll tax would lead to the creation of one extra job. Why would any business employ more people than it needs to do the task? I think that is a gross leap of faith or, if you prefer, an untested and unfounded assertion that the Liberals are using as part of this campaign. I believe that it is as likely that the abolition of payroll tax would result in increased profits as it is that it would result in increased employment, and why not? That is what businesses are there for.
Madam Speaker, I seek to differ from Mr Kaine's point of view. The figures simply do not bear out the Liberals' assertion on this question. However, if it comes to the crunch, and I have said this publicly before, clearly we cannot stand alone because I am not in a position to protect our local businesses from the goods and services tax, which is impost enough on them.
MR KAINE: I ask a supplementary question, Madam Speaker. Since the Chief Minister is going to have to cope with the changes that flow from a Hewson government after the 13th of next month, and since she has spoken of such misconceptions as the compounding of the GST, and she has incorrectly stated Dr Hewson's position in terms of the growth of the payroll tax compensation, can the Chief Minister tell us what, in her opinion, is going to be the net effect on the
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