HOST:
David Bradbury is the Assistant Treasurer and the Member for Lindsay. Good morning David, how are you going?
BRADBURY:
I'm great Linda, how are you this morning?
HOST:
Not too bad, not too bad thank you. Now Wayne Swan has steadfastly kept the GST away from any discussion on reforming the tax system. Are you of a mind now, though, to have another look at that, particularly where online purchases are concerned?
BRADBURY:
We've been very clear that we have no plans to increase the rate of the GST, nor do we have any plans to broaden its base, but let's be clear about the process we've been working through. You've been referring to the taskforce report that was released publicly yesterday and I had the opportunity to talk directly with some of the key retail industry stakeholders that are a part of our new Retail Industry Council, and we had our meeting yesterday. I know this is an issue that generates a lot of interest, from retailers, consumers and the public at large. I guess the point that I would be making, and we've got to be very careful about how we characterise the recommendations and the content of the report yesterday. Some people are out there saying there was a clear recommendation to lower the threshold. Well, let's be clear, that's not what we asked the taskforce to look at, the taskforce was focused on having a look at what can be done particularly around customs processes and handling processes that might reduce the costs of, if we did go down the path of ensuring that parcels below that $1000, perhaps at another threshold below that, were subject to GST.
Now that all arose because the Productivity Commission had previously undertaken a very comprehensive inquiry at our request into the retail industry and one of the key points they were making at the time was that, on the face of it, there might seem to be a good argument as to why there should be a level playing field between Australian businesses and foreign suppliers, and the way to achieve that might be by lowering the threshold, but they noted that their estimates were that if you did lower that threshold it might collect an extra $600 million worth of tax, but the cost to the economy could be in the order of about $2 billion.
HOST:
Okay, but the latest report that we're talking about, the Low Value Parcel Processing Taskforce, is that not suggesting that that may not be the case, that in fact it could be that you would get more in the takes than you would in the cost of the implementation?
BRADBURY:
Look, the taskforce has been suggesting a number of things, and one thing they have indicated is they think that the costs may not be as high as that which was cited by the Productivity Commission, but they've also very clearly said that the actual quantification of the costs was not something that was directly within the scope of what they were engaged in and they think that ultimately Government has to make a judgement based on some sort of benefit analysis, a cost-benefit analysis of what this would mean.
But can I just make this point Linda, anyone who has read this report that the taskforce handed down I think would agree that there are no silver bullets when it comes to addressing this issue and I heard a couple of your listeners earlier talking about their experiences with online retail and it seems to me that some of the evidence they were giving you supports the proposition that the Productivity Commission did make, and that is that this a significant issue for the sector, the retail sector, but it's not the most important and some of the callers you heard from a bit earlier were even indicating that even if a GST were applied to some of the imports they're currently bringing in that they'd still be cheaper than the cost of the product that's being delivered here in Australia. So I think we should just acknowledge that it is a significant issue, it's not the only or the most important issue in the retail sector but we are committed to working with all the relevant stakeholders to work through this and see whether or not a more level playing field can be achieved in a way where the costs of doing that do not grossly outweigh the benefits.
HOST:
David Bradbury's with us, the Assistant Treasurer and Member for Lindsay. Yeah, I mean as you say the question of whether Australians are being gouged is one question, the question of the GST and its application is another. But Mike Baird's point is a valid one isn't it, the broad point that the GST, the tax system generally needs to reflect the realities of the changing economy and you're saying there the usual lines we hear from politicians, 'we'll work with the stakeholders and see if it's worth doing'. You'd acknowledge then, this sort of consideration, how you apply a GST to online purchases, is one of those areas where you might actually make change.
BRADBURY:
Look, we welcome Mike Baird's contribution to the debate and obviously part of any attempt to address this issue involves discussion with the states, so we welcome Mike Baird's contribution in that sense, but can I be really clear about this. The reason why this is difficult to do, and why the report released yesterday demonstrates just how complex this is, is that the way the GST normally works is that the company supplying the goods and services is located here in Australia. They're registered for GST and they have a voluntary obligation to comply with GST laws and if they don't comply then the tax office goes after them. The problem we have here is that the company supplying the goods and services is located offshore, so even if we pass a law and say you have to register for GST, the difficulty we have is when they thumb their nose at us and say, well we're not going to, at that point we have an enforcement issue, and that's why principally the way in which goods that are coming in as imports to Australia have been dealt with is at the Customs gate, but that's a very complex issue in terms of managing the flow of those physical items into the country, and that impacts on Australia Post, on Customs, on all of the freight forward and handlers.
HOST:
Sure. Good of you to join us David, thanks very much.
BRADBURY:
Great to talk to you Linda.