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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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