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Bills Digest No. 54 1999-2000
Appropriation (Supplementary Measures) Bill (No. 1) 1999
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details
Appropriation (Supplementary Measures) Bill (No.
1) 1999
Date Introduced: 26 August
1999
House: House of Representatives
Portfolio: Finance and Administration
Commencement: Royal Assent
The Bill provides for the appropriation of money from
the Consolidated Revenue Fund for the Book Industry Assistance Plan, and
additional funding for the Supported Accommodation Assistance Program.
Book Industry Assistance Plan
The tax reform package announced by the Prime Minister
in August 1998 proposed the replacement of the wholesale sales tax and
nine State and Territory Government taxes with a uniform Goods and Services
Tax (GST) of 10% on a broad base of goods and services. Under this proposal
books, which have in the past not been subject to the wholesale sales
tax, will be subject to a 10% GST. The Government has resisted claims
for exemptions on the grounds that these would introduce complexity. In
response to those advocating that books be GST free it has argued that
the price rises will not be significant, that the tax cuts offered in
the tax package will mean that consumers have more money to spend on goods
and services, and that the price of books will not rise relative to other
competing goods and services.(1)
The proposed Book Industry Assistance Plan is the outcome
of negotiations between the Government and the Australian Democrats in
return for their support in the Senate for the tax reform package. Though
opposed to a GST on books(2), the Australian Democrats have accepted the
plan by way of compensation for the GST on books.
The plan primarily focuses on compensation for the increase
in the cost of books used specifically for educational purposes, but also
provides some direct support to the book industry. It commits $240 million
over four years commencing in 2000-01 ($60 million per annum) and includes:
- An educational textbook subsidy totalling $117m to be paid to retail
sellers. The subsidy is for books which appear on designated reading
lists, and is equal to the amount refunded but capped at 8% of the price
of each book
- $48 million to enhance the Printing Industry Competitiveness Scheme
which includes an Innovation, Infrastructure and Development Fund and
a Skills Development Program
- $38 million for a scheme to provide further support to Australian
authors - the Educational Lending Rights scheme (ELR) - which will extend
the libraries' lending rights scheme currently applying to Australian
books held in public libraries, to those held in educational libraries
- $1.2 million to enable the Australian Bureau of Statistics to collect
annually, data on book publishing and retail sales
- $8 million for a marketing campaign to promote books, reading and
literacy, and
- $28 million in grants to all primary schools to upgrade their holdings
of Australian books.(3)
Supported Accommodation Assistance Program
The Supported Accommodation Assistance Program provides
transitional supported accommodation and a range of related support services
in order to help people who are homeless or at risk of homelessness to
achieve the maximum degree of self-reliance and independence.
The additional funding of $15m per year for four years
was part of an agreement reached between the Prime Minister and Leader
of the Australian Democrats, Senator Meg Lees in the context of discussions
over the tax reform package.
Position of significant interest groups/press
commentary
Booksellers, publishers, and authors represented by the
Australian Booksellers Association (ABA), the Australian Publishers Association
(APA) and the Australian Society of Authors (ASA) ran a campaign against
the introduction of a GST on books. Educational institutions and libraries
also expressed their concerns. Issues raised have ranged from concerns
about the potential adverse effects on education and literacy and the
development of an information/knowledge economy, to concerns about the
effects on the book industry - the creators, producers and sellers of
books.
These concerns are largely based on overseas research
which suggests that the demand for books is highly price sensitive; that
for every percentage point increase in the price there is an equivalent
drop in demand.(4) It has been argued that a drop in demand will affect
reading and learning, that Australian authors already surviving on low
incomes will be further disadvantaged, that Australian printers and publishers,
particularly smaller establishments, will be unable to compete, and that
the profitability of booksellers will be affected. In support of this
line of argument the point has often been made that the majority of the
major industrial nations either have no tax on books or a reduced tax
on books.(5)
Despite their strong opposition to the introduction of
a GST on books the APA and the ASA have welcomed the compensation package.
The APA believes it will go 'some way to alleviating the impact that the
GST will have on the book industry',(6) and the ASA is pleased with the
introduction of the Educational Lending Right which they have long advocated.(7)
However, while the ABA has welcomed the book marketing initiative, book
retailers have been critical of the book subsidy on textbooks arguing
that it will introduce an added administrative burden on booksellers,
and that it will do little to compensate for the increase in the cost
of the 70% of book sales which are made to consumers rather than to educational
institutions.
Pros and cons
The package includes a number of positive measures, which
address some of the concerns of the various interest groups. The most
significant measure, the subsidy on textbooks places the primary focus
of the plan on educational concerns. At the same time however, there is
also further direct support for the Australian printing and publishing
industry, a book promotion and marketing campaign which has been welcomed
by booksellers and the ELR which will now pay writers a fee for their
books held in educational institutions.
However, there is still considerable concern that the
package will not significantly redress the expected reduction in the demand
for books resulting from price rises associated with the GST. In the first
instance there is some debate as to whether the subsidy will actually
compensate for price rises. Though the subsidy has been set at 8%, twice
the original Treasury estimate of the likely effect of the GST on book
prices of 4%, this represents the APA's best case scenario(8), and some
have calculated the real cost to be as high as 15%.(9) Perhaps more significantly,
Australian Bureau of Statistics data does appear to support the claim
that over 70% of book sales do not fit within the education category and
are therefore unlikely to be covered by the subsidy.(10)
It should also be noted that the details regarding the
implementation and administration of most of these initiatives are yet
to be negotiated with relevant groups, and the likely significance/impact
of specific funding initiatives remains unclear. Booksellers have already
expressed concern about the complexity of claiming the subsidy which requires
'proof of the number of textbooks sold, the percentage of price refunded,
and a copy of the reading list...'.(11)
ALP/Australian Democrat/Greens policy position/commitments
The Australian Labor Party (ALP) has opposed the introduction
of a GST. In response to the proposed plan the ALP spokesperson, The Hon.
Bob McMullan, MP is reported to have said that Labor will not oppose the
package, and that though it views the package as a minor improvement it
is concerned about the administrative complexity for the book industry.(12)
- Clause 3 provides for appropriations from the Consolidated
Revenue Fund in respect of each of four financial years commencing with
1 July 2000, for additional funding of $60 million for the Supported
Accommodation Assistance Program and new funding of $240 million for
the Book Industry Assistance Plan.
- The objectives for the Book Industry Assistance Plan are set out in
Clause 4.
- Clause 6 allows for grants to be made to a State or a person
or a body other than a State and does not prevent a grant under this
plan from being a grant by way of a bounty within the meaning of paragraph
51(iii) of the Constitution.
- Clause 9 refers to Schedule 1 which provides for an amendment
to A New Tax System (Goods and Services Tax) Act 1999 in respect
of undefined and foreshadowed arrangements referred to in that Act for
the Book Industry Assistance Plan, and the Supported Accommodation Assistance
Program respectively. It repeals subsection 1.2(2) a condition precedent
to the commencement of the A New Tax System (Goods and Services Tax)
Act 1999.
- Australian Society of Authors Newsletter, No. 7, Oct. 1998.
- Senator Meg Lees, Leader, Australian Democrats, Media release,
98/752, 28 Sept. 1998, 'GST on books is just not smart: Lees
launches anti-GST on books campaign for Australian Publishers Association'.
- Senators Meg Lees and Lyn Allison, Parliamentary Leader and Schools
spokesperson, Australian Democrats, Media release, 20 Aug. 1999,
'$240 million books plan will cut textbook prices, assist authors,
printers and schools', Letter from the Prime Minister, The Hon. John
Howard is attached to the Media Release.
- Australian Publishers Association, Media release, 27 July 1998,
GST is a tax on literacy, a tax on education and a tax on knowledge.
- ibid.
- Australian Publishers Association, Media release, 20 Aug. 1999,
'Publishers welcome GST book industry compensation package'.
- Australian Society of Authors, Media release, 20 Aug. 1999,
'Australian authors welcome the introduction of ELR'.
- op. cit., Australian Society of Authors Newsletter, No. 7,
Oct. 1998.
- McCalman, Janet, 'The real cost of GST on books is 15 per cent', The
Age, 30 Sept. 1998, p A19.
- ABS, 'Cultural trends in Australia: a statistical overview', 1997,
ABS No. 4172.0.
- Prime Minister's letter to Senator Meg Lees, in op. cit., Lees and
Allison.
- Peake, Ross, Subsidy on educational books to counter GST, The Canberra
Times, 21 Aug. 1999.
Carol Kempner
1 September 1999
Bills Digest Service
Information and Research Services
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ISSN 1328-8091
© Commonwealth of Australia 1999
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Published by the Department of the Parliamentary Library, 1999.
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