1998-04-013816REPS205901998-04-01Mr SPEAKER(Rt Hon. Ian Sinclair) took the chair at 9.30 a.m., and read prayers.Bills2059r4612059Bill presented by Mrs Moylan, and read a first time.205909:31:002059Moylan, Judi, MPMrs MOYLAN4V5PearceLPStatus of Women10—I move:That the bill be now read a second time.The Telecommunications (Carrier Licence Charges) Amendment Bill 1998 provides for the imposition of annual charges to recover costs incurred by the Department of Industry, Science and Tourism in monitoring telecommunications industry development plans prepared by carriers under the Telecommunications Act 1997.Part 3 of the Telecommunications (Carrier Licence Charges) Act 1997 provides for the imposition of an annual charge on a carrier licence that is in force at the beginning of a financial year beginning on or after 1 July 1998. The amount of the annual charge is ascertained in accordance with a disallowable instrument determined by the Australian Communications Authority. The act provides for a limit on the total amount of this charge on carriers having regard to the amounts attributable to the ACA's and ACCC's telecommunications functions and powers for the immediately preceding financial year, the proportion of the Commonwealth's contribution to the budget of the International Telecommunication Union for the calendar year that is to be recovered from carriers and an estimate of the grants likely to be made by the minister during the financial year to fund consumer representation and research in relation to telecommunications.Currently, the licence charge payable by telecommunications carriers does not recover costs incurred by DIST. The bill provides that, in addition to the amounts mentioned above, the total charges imposed on carrier licences in force at the beginning of a financial year may include an amount determined, by a written instrument made by the Minister for Industry, Science and Tourism, to be the proportion of DIST's costs for the immediately preceding financial year that is attributable to the administration of the industry development plan requirements contained in part 2 of schedule 1 to the Telecommunications Act 1997.The cost associated with the administration of part 2 of schedule 1 to the Telecommunications Act 1997 is expected to be in the order of $600,000 in the first year and is likely to grow as the number of carriers increases. The bill will enable these costs to be recovered by the Commonwealth. I present the explanatory memorandum to the bill.Debate (on motion by Mr Crean) adjourned.Miscellaneous2059205909:34:002059Crean, Simon, MPMr CREANDT4HothamALP00—I move:That so much of the standing and sessional orders be suspended as would prevent the Prime Minister coming into the House and fully disclosing his association with the Menzies Research Centre Limited, in particular:(1) why he failed to declare his directorship on the Register of Pecuniary Interests;(2) whether in presiding over the Cabinet meeting which agreed to grants totalling $400,00 to the company whilst still a director, he declared his interest and absented himself from the meeting;(3) whether in presiding over the Cabinet meeting which agreed to allowing tax deductions for gifts of the value of $2 or more made to the company whilst still a director he declared his interest and absented himself from the meeting;(4) the connection between the Short-Gibson-Moore shares affair and his decision to resign as director and the reason he failed to declare his resignation; and(5) the extent of the direct personal benefit he has gained, as Leader of the Liberal Party, from the work of the Menzies Research Centre Limited. It is April Fool's Day, and the Prime Minister (Mr Howard) has again made fools of the members of his front bench.WI4REITHMr Reith—I raise a point of order, Mr Speaker, in which I will obviously foreshadow that we will be moving that the member for Hotham be not further heard.UNKNOWNOpposition membersOpposition members—It's a cover-up!10000SPEAKERMr SPEAKER—Members of the opposition will remain silent.DT4Crean, Simon, MPMr CREAN—Howardgate!WU5O'CONNORMr O'Connor—Menziesgate!RH4KERRMr Kerr—You can't sweep this one under the carpet.10000SPEAKERMr SPEAKER—The honourable member for Corio will remain silent, and so will the member for Denison if he wishes to remain in the House.WI4REITHMr Reith—Oh, no, he is just a member of the Liberal Party. My point, and I think you have raised this matter before, Mr Speaker, is that this is a another example of a motion which is drafted essentially as a mini-speech.Mr Kerr interjecting—10000SPEAKERMr SPEAKER—I warn the honourable member for Denison.WI4REITHMr Reith—For many years when we were in opposition, we were advised that long motions which are used as a disguised speech are not appropriate and, therefore, out of order. Mr Speaker, I put that point of order to you. This is April Fool's Day and they have the No. 1 fool leading the motion for them.Motion (by Mr Reith) put:That the member be not further heard.A division having been called and the bells being rung—MG4LEEMr Lee—Mr Speaker, I rise on a point of order. My point of order is that you did not rule on the point of order by the Leader of the House.10000SPEAKERMr SPEAKER—I do not have to rule on a point of order when the question is that the member be not further heard. There is another motion before the chair at the moment.09:42:00The House divided. (Mr Speaker—Rt Hon. I. McC. Sinclair)76Abbott, A. J. Anderson, J. D.Andrew, J. N. Andrews, K. J.Anthony, L. J. Bailey, F. E.Barresi, P. A. Bartlett, K. J.Billson, B. F. Bradford, J. W.Broadbent, R. E. Brough, M. T.Cadman, A. G. Cameron, E. H.Cameron, R. A. Causley, I. R.Cobb, M. R. Costello, P. H.Downer, A. J. G. Draper, P.Elson, K. S. Entsch, W. G.Evans, R. D. C. Fahey, J. J.Forrest, J. A. Gallus, C. A.Gambaro, T. Gash, J.Georgiou, P. Grace, E. J.Halverson, R. G. Hardgrave, G. D.Hawker, D. P. M. Hicks, N. J. *Hockey, J. B. Jeanes, S. B.Johnston, R. Jull, D. F.Kelly, D. M. Kemp, D. A.Lieberman, L. S. Lindsay, P. J.Lloyd, J. E.McArthur, F. S. *McDougall, G. R. McGauran, P. J.McLachlan, I. M. Miles, C. G.Moore, J. C. Moylan, J. E.Mutch, S. B. Nehl, G. B.Neville, P. C. Nugent, P. E.Prosser, G. D. Pyne, C. M.Randall, D. J. Reid, N. B.Reith, P. K. Ronaldson, M. J. C.Ruddock, P. M. Scott, B. C.Sharp, J. R. Slipper, P. N. *Smith, A. C. Somlyay, A. M.Southcott, A. J. Stone, S. N.Sullivan, K. J. Taylor, W. L.Thomson, A. P. Truss, W. E.Tuckey, C. W. Wakelin, B. H.West, A. G. Williams, D. R.40Albanese, A. Baldwin, P. J.Beddall, D. P. Bevis, A. R.Brown, R. J. Crean, S. F.Crosio, J. A. Dargavel, S. J.Ellis, A. L. Evans, G. J.Evans, M. J. Ferguson, L. D. T.Ferguson, M. J. Fitzgibbon, J. A.Grace, E. L. *Griffin, A. P. *Hatton, M. Hollis, C.Jenkins, H. A. Kerr, D. J. C.Latham, M. W. Lawrence, C. M.Lee, M. J.Macklin, J. L.McClelland, R. B. McLeay, L. B.McMullan, R. F. Melham, D.Morris, A. A. Morris, P. F.Mossfield, F. W. O'Connor, G. M.O'Keefe, N. P. Price, L. R.Quick, H. V. Sawford, R. W. *Sercombe, R. C. G. Theophanous, A. C.Thomson, K. J. Willis, R.Bishop, B. K. Smith, S. F.Fischer, T. A. Brereton, L. J.Howard, J. W. Beazley, K. C.Smith, W. L. Martin, S. P.Wooldridge, M. R. L. Tanner, L. J.* denotes tellerQuestion so resolved in the affirmative.10000SPEAKERMr SPEAKER—Is the motion seconded?09:45:002061McMullan, Bob, MPMr McMULLAN5I4CanberraALP00—Mr Speaker, now we know why—Motion (by Mr Reith) put:That the member be not further heard.09:46:00The House divided. (Mr Speaker—Rt Hon. I. McC. Sinclair)76Abbott, A. J. Anderson, J. D.Andrew, J. N. Andrews, K. J.Anthony, L. J. Bailey, F. E.Barresi, P. A. Bartlett, K. J.Billson, B. F. Bradford, J. W.Broadbent, R. E. Brough, M. T.Cadman, A. G. Cameron, E. H.Cameron, R. A. Causley, I. R.Cobb, M. R. Costello, P. H.Downer, A. J. G. Draper, P.Elson, K. S. Entsch, W. G.Evans, R. D. C. Fahey, J. J.Forrest, J. A. Gallus, C. A.Gambaro, T. Gash, J.Georgiou, P. Grace, E. J.Halverson, R. G. Hardgrave, G. D.Hawker, D. P. M. Hicks, N. J. *Hockey, J. B. Jeanes, S. B.Johnston, R. Jull, D. F.Kelly, D. M. Kemp, D. A.Lieberman, L. S. Lindsay, P. J.Lloyd, J. E.McArthur, F. S. *McDougall, G. R. McGauran, P. J.McLachlan, I. M. Miles, C. G.Moore, J. C. Moylan, J. E.Mutch, S. B. Nairn, G. R.Neville, P. C. Nugent, P. E.Prosser, G. D. Pyne, C. M.Randall, D. J. Reid, N. B.Reith, P. K. Ronaldson, M. J. C.Ruddock, P. M. Scott, B. C.Sharp, J. R. Slipper, P. N. *Smith, A. C. Somlyay, A. M.Southcott, A. J. Stone, S. N.Sullivan, K. J. Taylor, W. L.Thomson, A. P. Truss, W. E.Tuckey, C. W. Wakelin, B. H.West, A. G. Williams, D. R.41Albanese, A. Baldwin, P. J.Beddall, D. P. Bevis, A. R.Brown, R. J. Crean, S. F.Crosio, J. A. Dargavel, S. J.Ellis, A. L. Evans, G. J.Evans, M. J. Ferguson, L. D. T.Ferguson, M. J. Fitzgibbon, J. A.Grace, E. L. *Griffin, A. P. *Hatton, M. Hollis, C.Jenkins, H. A. Kerr, D. J. C.Latham, M. W. Lawrence, C. M.Lee, M. J.Macklin, J. L.McClelland, R. B. McLeay, L. B.McMullan, R. F. Melham, D.Morris, A. A. Morris, P. F.Mossfield, F. W. O'Connor, G. M.O'Keefe, N. P. Price, L. R.Quick, H. V. Sawford, R. W. *Sercombe, R. C. G. Theophanous, A. C.Thomson, K. J. Willis, R.Wilton, G. S.Bishop, B. K. Smith, S. F.Fischer, T. A. Brereton, L. J.Howard, J. W. Beazley, K. C.Smith, W. L. Martin, S. P.Wooldridge, M. R. L. Tanner, L. J.* denotes tellerQuestion so resolved in the affirmative.Motion (by Mr Truss) put:That the question be now put.09:49:00The House divided. (Mr Speaker—Rt Hon. I. McC. Sinclair)76Abbott, A. J. Anderson, J. D.Andrew, J. N. Andrews, K. J.Anthony, L. J. Bailey, F. E.Barresi, P. A. Bartlett, K. J.Billson, B. F. Bradford, J. W.Broadbent, R. E. Brough, M. T.Cadman, A. G. Cameron, E. H.Cameron, R. A. Causley, I. R.Cobb, M. R. Costello, P. H.Downer, A. J. G. Draper, P.Elson, K. S. Entsch, W. G.Evans, R. D. C. Fahey, J. J.Forrest, J. A. Gallus, C. A.Gambaro, T. Gash, J.Georgiou, P. Grace, E. J.Halverson, R. G. Hardgrave, G. D.Hawker, D. P. M. Hicks, N. J. *Hockey, J. B. Jeanes, S. B.Johnston, R. Jull, D. F.Kelly, D. M. Kemp, D. A.Lieberman, L. S. Lindsay, P. J.Lloyd, J. E.McArthur, F. S. *McDougall, G. R. McGauran, P. J.McLachlan, I. M. Miles, C. G.Moore, J. C. Moylan, J. E.Mutch, S. B. Nairn, G. R.Neville, P. C. Nugent, P. E.Prosser, G. D. Pyne, C. M.Randall, D. J. Reid, N. B.Reith, P. K. Ronaldson, M. J. C.Ruddock, P. M. Scott, B. C.Sharp, J. R. Slipper, P. N. *Smith, A. C. Somlyay, A. M.Southcott, A. J. Stone, S. N.Sullivan, K. J. Taylor, W. L.Thomson, A. P. Truss, W. E.Tuckey, C. W. Wakelin, B. H.West, A. G. Williams, D. R.41Albanese, A. Baldwin, P. J.Beddall, D. P. Bevis, A. R.Brown, R. J. Crean, S. F.Crosio, J. A. Dargavel, S. J.Ellis, A. L. Evans, G. J.Evans, M. J. Ferguson, L. D. T.Ferguson, M. J. Fitzgibbon, J. A.Grace, E. L. *Griffin, A. P. *Hatton, M. Hollis, C.Jenkins, H. A. Kerr, D. J. C.Latham, M. W. Lawrence, C. M.Lee, M. J.Macklin, J. L.McClelland, R. B. McLeay, L. B.McMullan, R. F. Melham, D.Morris, A. A. Morris, P. F.Mossfield, F. W. O'Connor, G. M.O'Keefe, N. P. Price, L. R.Quick, H. V. Sawford, R. W. *Sercombe, R. C. G. Theophanous, A. C.Thomson, K. J. Willis, R.Wilton, G. S.Bishop, B. K. Smith, S. F.Fischer, T. A. Brereton, L. J.Howard, J. W. Beazley, K. C.Smith, W. L. Martin, S. P.Wooldridge, M. R. L. Tanner, L. J.* denotes tellerQuestion so resolved in the affirmative. Original question put: That the motion (Mr Crean's ) be agreed to.09:52:00The House divided. (Mr Speaker—Rt Hon. I. McC. Sinclair)41Albanese, A. Baldwin, P. J.Beddall, D. P. Bevis, A. R.Brown, R. J. Crean, S. F.Crosio, J. A. Dargavel, S. J.Ellis, A. L. Evans, G. J.Evans, M. J. Ferguson, L. D. T.Ferguson, M. J. Fitzgibbon, J. A.Grace, E. L. *Griffin, A. P. *Hatton, M. Hollis, C.Jenkins, H. A. Kerr, D. J. C.Latham, M. W. Lawrence, C. M.Lee, M. J.Macklin, J. L.McClelland, R. B. McLeay, L. B.McMullan, R. F. Melham, D.Morris, A. A. Morris, P. F.Mossfield, F. W. O'Connor, G. M.O'Keefe, N. P. Price, L. R.Quick, H. V. Sawford, R. W. *Sercombe, R. C. G. Theophanous, A. C.Thomson, K. J. Willis, R.Wilton, G. S.74Abbott, A. J. Anderson, J. D.Andrew, J. N. Andrews, K. J.Anthony, L. J. Bailey, F. E.Barresi, P. A. Bartlett, K. J.Billson, B. F. Bradford, J. W.Broadbent, R. E. Brough, M. T.Cadman, A. G. Cameron, E. H.Cameron, R. A. Causley, I. R.Cobb, M. R. Downer, A. J. G.Draper, P. Elson, K. S.Entsch, W. G. Evans, R. D. C.Fahey, J. J. Forrest, J. A.Gallus, C. A. Gambaro, T.Gash, J. Georgiou, P.Grace, E. J. Halverson, R. G.Hardgrave, G. D. Hawker, D. P. M.Hicks, N. J. *Hockey, J. B.Jeanes, S. B. Johnston, R.Jull, D. F. Kelly, D. M.Lieberman, L. S. Lindsay, P. J.Lloyd, J. E.McArthur, F. S. *McDougall, G. R. McGauran, P. J.McLachlan, I. M. Miles, C. G.Moore, J. C. Moylan, J. E.Mutch, S. B. Nehl, G. B.Neville, P. C. Nugent, P. E.Prosser, G. D. Pyne, C. M.Randall, D. J. Reid, N. B.Reith, P. K. Ronaldson, M. J. C.Ruddock, P. M. Scott, B. C.Sharp, J. R. Slipper, P. N. *Smith, A. C. Somlyay, A. M.Southcott, A. J. Stone, S. N.Sullivan, K. J. Taylor, W. L.Thomson, A. P. Truss, W. E.Tuckey, C. W. Wakelin, B. H.West, A. G. Williams, D. R.Beazley, K. C. Howard, J. W.Brereton, L. J. Fischer, T. A.Martin, S. P. Smith, W. L.Smith, S. F. Bishop, B. K.Tanner, L. J. Wooldridge, M. R. L.* denotes tellerQuestion so resolved in the negative.Bills2063r4842063Bill presented by Mr Truss, and read a first time.206309:56:002063Truss, Warren, MPMr TRUSSGT4Wide BayNPCustoms and Consumer Affairs10—I move:That the bill be now read a second time.The Australian Science, Technology and Engineering Council Repeal Bill 1998, in part, implements the changes announced by the Prime Minister (Mr Howard) on 18 December last year to his high-level science, technology and engineering advisory arrangements.Upon coming to office, the government identified as a priority the need to examine how Australia's science and technology system might be improved. The then Minister for Science and Technology commissioned the Chief Scientist, Professor John Stocker, to investigate and report on certain aspects of Australia's science and technology arrangements.In his report to the then minister, Professor Stocker identified several strengths and a number of structural weaknesses in the current science and technology advisory arrangements. Professor Stocker spoke very highly indeed of the role played by the Prime Minister's Science and Engineering Council. He observed that PMSEC provides a unique forum for the Prime Minister and other senior ministers to be informed of recent developments in science and technology and their application to the national needs and opportunities.Professor Stocker noted also the difficulties which the Australian Science, Technology and Engineering Council faces in respect of undertaking the complex tasks of consultation, analysis of issues and in the synthesis of its findings. Professor Stocker suggested there would be an advantage in drawing ASTEC closer to PMSEC, but at the same time, allowing ASTEC to keep its independent perspective on the issues which it examined.The government has acted on Professor Stocker's recommendations in regard to the Prime Minister's high-level science, technology and engineering advisory arrangements. In so doing, the government has sought to capitalise on the strengths, and to address the weaknesses, of the former arrangements.A new advisory body known as the Prime Minister's Science, Engineering and Innovation Council has already been established. It will supersede the former PMSEC. The new council reinforces the vital role which the government sees for science, technology and engineering in the creation of Australia's future. The name of the new council also emphasises the importance which the government places on innovation as a primary driver of industrial competitiveness.This new arrangement has created a science, technology and engineering advisory body that is able to conduct studies as ASTEC has done in the past. But, in addition, the new advisory body has the benefit of being able to draw upon the best expertise and experience available in this country, while at the same time having a mechanism that can deliver the outcomes of these studies direct to the ministry. This is a considerable enhancement over the previous arrangements in that it does maintain the conduit for independent advice, while adding a delivery mechanism that ASTEC has never had.The new council will meet in full session, generally twice in a year, to discuss major issues in science, technology and engineering and their contribution to the economic and social development of Australia. It will be chaired by the Prime Minister and will include ministerial and non-ministerial members. Ministerial members will comprise ministers for whom science, technology and engineering are particularly relevant to their portfolio responsibilities. Non-ministerial members will be drawn from key representatives of the business and scientific communities.The non-ministerial members of the new council will constitute a standing committee. This standing committee will oversee and contribute to studies and research to improve the understanding of Australia's science, technology and engineering capabilities and the effectiveness of their organisation and utilisation. As such, the standing committee will have similar functions and responsibilities to ASTEC. It will also have a similar capacity to ASTEC to undertake work on its own initiative, as well as work identified for it by the government.With this new and significantly enhanced advisory council established, the government is acting now to remove the largely redundant ASTEC from the statutes. In repealing the Australian Science, Technology and Engineering Council Act 1978, the new council will become the government's main independent source of advice on science, technology and engineering. The government is therefore concerned to see that the new council is provided with adequate resources to underpin its important advisory role. The resources which are currently allocated to ASTEC will be transferred to the new council and its secretariat once the ASTEC Act has been repealed.The government values ASTEC's current work and wishes to see it completed before the ASTEC act is repealed. I believe that adequate provision has been made in the bill to ensure that this may be the case.The government also wishes to see that provisions in the ASTEC Act to protect council members and others associated with the council, both past and present, against actions, suits or other proceedings, are maintained. Similarly, secrecy provisions comparable to those in the ASTEC Act must be maintained to ensure that confidences are kept in respect of information and data that might have been provided to past and present council members and others associated with the council during its existence. The bill carries forward both the protection from actions and the secrecy provisions of the ASTEC Act.I commend the bill to the House and present the explanatory memorandum.Debate (on motion by Mr McMullan) adjourned.Bills2064r4922064Bill presented by Mr Miles, and read a first time.206410:03:002064Miles, Chris, MPMr MILESBI4BraddonLP10—I move:That the bill be now read a second time.Overview of the billThe common law has long recognised the principle of set-off between an insolvent company and its creditors. Where a company is insolvent there would be an injustice if the law allowed the liquidator to insist upon receiving 100 cents in the dollar on the whole of a debt due to the company, while insisting that the creditor must be satisfied with less than 100 cents in the dollar in relation to a debt owed by the company to the creditor. To address this, the law has allowed liquidators and creditors to set-off the debts, so that only the net amount becomes payable or provable, as the case may be, in the liquidation. This important principle has been taken up into section 553C of the Corporations Law.However, the common law in this area has not kept pace with technology. Improved communications technology and computers have made it possible for large institutions to enter into many transactions in the course of a day, and to be able to identify precisely the time each day each transaction was entered into.Taking advantage of this technology, the major financial institutions have many dealings each day with each other and their customers, usually for very large sums of money. Further, instead of paying each other the gross amount owing on each of these transactions, the parties have agreed to set-off the debts owed to each other at the end of each day. As there are several participants in the system, the parties commonly agree to a form of multiparty set-off, known as multilateral netting.Multilateral netting has three significant advantages for the parties. First, because only the net amounts are actually paid, it reduces their liquidity requirements. Second, an institution does not have to wait until it receives funds from one transaction before entering into another transaction. Third, there is a reduction in risk should one of the other parties become insolvent, because only the net amount is at risk, rather than the gross amount owed to the insolvent party.However, because the common law has only recognised set-off between two parties, there is some doubt about the effectiveness of multilateral netting on the insolvency of one of the parties. The bill will overcome that uncertainty.In particular, the bill will provide legal certainty for multilateral netting currently undertaken in the Australia payment system overseen by the Reserve Bank. This will enhance the stability of the Australian financial system. The bill will also provide certainty for netting undertaken in connection with the trading of derivatives, known as close-out netting, and for netting undertaken in accord ance with the rules of a stock or future exchange or an associated clearing house, known as market netting.In addition, the bill will provide legal certainty for transactions undertaken through the real time gross settlement system to be implemented by the Reserve Bank at around mid-1998.These measures will enhance the integrity of the Australian payment system and the international competitiveness of Australian financial institutions. They will make a significant contribution towards the government's commitment to establishing Australia as a major regional financial centre, and bring to Australia new business and employment opportunities in the financial sector.Integrity of netting in the payment systemThe Australian payment system currently comprises a number of separate systems for transferring funds in Australia between banks, other financial institutions and their customers. The multilateral netting system currently operating in the payment system produces a result reflecting a participant's overall debit or credit position vis-a-vis all the other participants. The system sums the exposures of each participant in the system and calculates a multilateral net position at the end of the day for each participant.In the present framework of banking and insolvency law some uncertainties attach to the effectiveness of these multilateral netting arrangements. These uncertainties focus on the application of the law concerning unfair preferences in relation to multilateral netting arrangements. While insolvency law confers a statutory right of set-off in certain circumstances, there is some uncertainty about whether multilateral netting arrangements are enforceable in an insolvency. The bill will ensure that multilateral netting arrangements in the payment system that are approved by the Reserve Bank will survive the insolvency of a participant in the arrangement.Integrity of the real time gross settlement systemThe Wallis report recommended that the Reserve Bank give high priority to promoting cost-effective control of domestic and international settlement risks. The Reserve Bank, the Australian Payments Clearing Association Ltd (APCA) and the major national banks have participated actively in the establishment of a sound framework to support enhanced clearing and settlement systems in the payment system. As part of this process, high-value payments—which account for more than two-thirds of the value of cleared payments in Australia—are to be settled on a real time gross settlement basis.Under real time gross settlement, the processing of payments will only occur if the paying institution has funds available in its settlement account with the Reserve Bank. At the same time as the funds are debited to the paying customer's account and credited to the payee's account, the corresponding entries are passed to their institutions' accounts with the central bank. In this way the transaction is completed in all its elements—including settlement—immediately and irrevocably. The Reserve Bank and Australian Payments Clearing Association Ltd are working towards implementing real time gross settlement at around mid-1998.However, because of the zero hour rule, some uncertainties attach to the effectiveness of real time gross settlement arrangements. When a court-ordered liquidation commences, any payments or transfers of property made by the company thereafter are void, subject to certain exceptions such as payments made by the liquidator. It has been suggested that a court-ordered liquidation may be taken to have commenced at the beginning of the day on which the order was made—this possibility is known as the zero hour rule. Accordingly, payments made through the real time gross settlement system could be void if the paying party enters into liquidation. This would undermine the irrevocability of those payments and create severe liquidity problems in the payment system. To prevent this possibility from arising, the bill will exempt real time gross settlement payments from the possible application of the zero hour rule.Integrity of netting for close-out and market contractsIn June 1997, the Netting Subcommittee of the Companies and Securities Advisory Committee recommended the enactment of legislation to clarify a number of issues arising in netting in financial market transactions. The subcommittee was particularly concerned to ensure that the appointment of a liquidator to a party to a netting contract does not affect the validity of the contract.In its discussion paper `Electronic Commerce', released as part of the corporate law economic reform program in December 1997, the government indicated that it would be legislating along the lines recommended by the subcommittee to provide a more certain and robust legal framework for close-out and market netting. These reforms have received strong support from the financial sector.To allow the existing legal uncertainties to remain would leave Australia well behind international best practice in financial market reform. These uncertainties have already been addressed or are presently being addressed in a number of other jurisdictions, including the United Kingdom, France, Canada and New Zealand, and at the international level by the Basel Committee on Banking Supervision, to promote the legal enforceability of netting arrangements.The bill will therefore take up the subcommittee's recommendations and provide legal certainty for close-out netting in the financial markets and for netting undertaken in accordance with the rules governing stock and futures exchanges and the associated clearing houses. It will put the Australian legal system supporting financial market netting on par with that in a number of OECD countries.Enhancing the integrity of close-out and market netting will make it easier for financial institutions and their customers to obtain all the benefits of transactions which are generally regarded as an essential part of sound financial management, such as interest rate and currency swaps and other arrangements which hedge exposures. It will also assist Australian financial institutions to join Exchange Clearing House Ltd, an international clearing house for foreign exchange transactions. Ministerial Council for CorporationsThe bill will alter the effect, scope or operation of the Corporations Law. Accordingly, as required by clause 510 of the Corporations Agreement between the Commonwealth, the states and the Northern Territory, the Commonwealth has notified the states and the Northern Territory of the bill. I present the explanatory memorandum to the bill and I commend the bill to the House.Debate (on motion by Mr McMullan) adjourned.Bills2067r4492067Debate resumed from 5 March, on motion by Mr Williams:That the bill be now read a second time.10:13:002067Melham, Daryl, MPMr MELHAM4T4BanksALP00—The Privacy Amendment Bill 1998 represents a breach of a core promise by this government. It also represents an embarrassment for the Attorney-General (Mr Williams). More importantly, it represents a failure by this government to protect the right to privacy of every single Australian. In his speech on 24 March 1997 which released the government's small business package More Time for Business, the Prime Minister (Mr Howard) stated:A tangible demonstration of the Government's determination to avoid unnecessary increases in the regulatory burden on industry was our recent decision not to implement privacy legislation for the private sector at the Commonwealth level. I also raised this matter at last week's Premiers' Conference. I have asked the Premiers and Chief Ministers not to introduce such legislation at the State level. Queensland and the Northern Territory have already agreed to our request and the other States will consider the Commonwealth's request further. I will be writing to the States to set out our concerns.That announcement was in direct breach of the government's pre-election commitment. As the Liberal and National parties' law and justice policy stated:A Liberal and National Government will as a priority, and in consultation and development with the states and Territories, ensure the implementation of a privacy law regime in Australia comparable with best international practice.As part of achieving this goal we will: . work with industry and the states to provide a co-regulatory approach to privacy in the private sector;. conduct a comprehensive Parliamentary inquiry into the state of Australia's privacy laws. Amongst other things, the inquiry will examine and review legislative and administrative regimes for the protection of privacy, examine public interest and statutory exemptions, the extent of data-matching practices, compliance with international transfer standards, and the need for legislative protection of the right to privacy for individuals in respect of the media;. review and, where appropriate, implement the recommendations of the report of the House of Representatives Standing Committee on Legal and Constitutional Affairs In Confidence ;The report In Confidence was tabled in this House in June 1995. It was a report of the House of Representatives Standing Committee on Legal and Constitutional Affairs. Importantly, membership on that committee, of which I was proud to be chair, included the deputy chair, Mr Alan Cadman MP; a former Attorney-General, the Hon. Michael Duffy; a former minister, the Hon. Wendy Fatin; the Hon. Clyde Holding, a former minister; Mark Latham MP; Christopher Pyne MP; the current Speaker, the Rt Hon. Ian Sinclair MP; Mr Peter Slipper MP; Mr Peter Staples MP, a former minister; Mr Lindsay Tanner MP; and Mr Daryl Williams QC, MP, the current Attorney-General. That was a substantial committee. The report In Confidence that was presented to this parliament was a unanimous report. The current Attorney-General was a member of that committee. The current Speaker was a member of that committee.What were the conclusions at pages 172 and 173 of that committee report? I quote from page 172:The Committee considers that the protections provided by the Information Privacy Principles should be extended to all confidential third party information by way of a national privacy code. The Committee notes that if such a code is affected by way of extension of the Privacy Act, consequent changes to the FOI Act would be necessary.Recommendation 38:The Committee recommends that the protections provided by the Information Privacy Principles should be extended to all confidential third party information by way of a national privacy code.It goes on:As this proposal would have wide coverage in the Australian community, including application in state and territory government operations, the Committee considers it is desirable to have the proposal considered in the forum of the Council of Australian Governments.In recommendation 39 the committee:. . . recommends that the proposal for a national privacy code be placed on the agenda for the earliest possible meeting of the Council of Australian Governments.That is why that recommendation found itself in the Liberal and National parties' law and justice policy. This Attorney-General, with the concurrence of this Prime Minister, put it in there, and now they walk away from it.On 12 September 1996, the Attorney-General began to implement this election commitment by releasing a discussion paper on privacy in the private sector. In his press release of that date, the Attorney-General said:. . . [t]he Discussion Paper will form the basis of the development of a comprehensive policy regime comparable, if not better, than international best practice.The Discussion Paper proposes a comprehensive co-regulatory approach to privacy protection which is designed to provide maximum flexibility for the private sector.. . . . . . . . .I intend to be in a position to develop legislation for introduction next year.The Attorney-General quite rightly justified this announcement by saying:Protecting privacy is no longer an issue for the public sector. With today's technology and data bases, there is unchecked potential for information to be used improperly.As a result of that discussion paper, the government received a number of submissions. Those submissions were overwhelmingly supportive of the government's proposed policy and acknowledged that there would be only minimal costs to business arising out of the legislation.As an indicator, Price Waterhouse conducted a corporate privacy survey, published in May 1997, that showed that more than 70 per cent of companies supported the introduction of privacy legislation. Mr Stephen Woolley, Price Waterhouse's privacy and information security partner, said:Business supports the introduction of national privacy legislation by the federal Government because they are confused as to what their responsibilities are on the privacy front.Mr Woolley went on:They are not sure what they can and can't do and want the Government to tell them.Price Waterhouse's report found that 75 per cent of companies would require only minor computer or administrative changes if the legislation was introduced. Yet, despite this, the first signs of a policy backflip occurred on 13 January 1997. Whilst still supporting the government's policy and still stating that any costs to business involved in implementing these laws would not be excessive, the Attorney-General conceded to the Australian Financial Review that he had no passion for this issue. He indicated that:. . . there are a variety of pressures, some quite unrelated, that have forced—I repeat `forced'—the Government to move on privacy.So much for the Attorney-General's commitment to this supposedly core commitment. Then, on 24 March 1997, the Prime Minister announced that this core commitment—a commitment that the government had already begun to act upon—would be broken. As the evidence demonstrates, this broken commitment has nothing to do with saving business from red tape. It is simply about denying Australians the protection they need of their fundamental human right to privacy.Is this another instance where the Prime Minister has rolled the Attorney-General? Unfortunately, I suspect so. The government, despite repeated requests in the Senate estimates process, has failed to come up with any credible defence of the Prime Minister's assertion that privacy red tape will choke Australian businesses. The evidence of many of our trading partners, such as New Zealand, Hong Kong and Taiwan, all of whom have introduced privacy regimes covering the private sector, is that these controls have minimum compliance costs. As the Privacy Commissioner, Moira Scollay, said in her most recent annual report:It remains my view that a legislatively based `co-regulatory' approach would best achieve privacy protection for individuals at minimal cost to business . . . Indeed, there is much evidence that improved data management procedures resulting from the introduction of improved privacy regimes have led to greater efficiency and expanded business opportunities for business. Damage will also be caused to Australia's businesses in other ways.In October 1998, the European Union will enact yet to be determined privacy standards covering the international transfer of personal information. It is expected that these standards will prevent European companies from engaging in data exchanges with overseas companies that are not subject to adequate privacy regimes. It is still unclear whether companies will be able to voluntarily comply with these standards—say, through the adoption of the privacy principles recently released by the Privacy Commissioner. May I digress for a moment and congratulate Ms Scollay on the excellent work she is doing in that area.There is also a reasonable prospect that companies, regardless of how good their individual privacy standards are, will be able to comply only if the law of their nation of origin also complies with the proposed European standards. Assuming voluntary compliance is sufficient, Australian companies wishing to engage in data exchanges with European companies or which are competing for information services work in Europe will be placed at a significant commercial disadvantage by reason of having to establish their compliance with the standards required by the European authorities. If state based compliance is required, then Australian companies will simply be unable to compete for work and important sectors such as banking and finance could be locked out of important international markets. The ramifications of such a decision would clearly be significant.But through all this we must not forget whom privacy laws are really there for—the Australian people. The Australian people will not forget this government's betrayal of them over this issue. As polling conducted by Roy Morgan Research on behalf of the Privacy Commissioner shows, nearly 75 per cent of Australians rank the confidentiality of personal information as very important, ranking it second only to education and ahead of even the economy and the environment.The government ignores the will of the Australian people at its peril. The Labor Party on the other hand will not. Unlike the government, the Labor Party has a long history of commitment to protecting the privacy of ordinary Australians. Item 71 of the constitutional and legal section of the 1994 national platform stated:Labor believes in the protection of the individual's right to privacy.The 1998 platform restated that commitment and more particularly said that Labor will:. . . legislate to extend the operation of privacy protection to cover both the public and the private sectors in accordance with international privacy principles and the best international standards.Labor also committed itself to updating those laws to meet the needs arising from emerging technologies. When we were in government, the Labor Party had acted on this commitment. On 10 December 1995, the then Attorney-General, Michael Lavarch, and the then Minister for Justice, Duncan Kerr, announced that the previous Labor government would extend the operation of the Privacy Act 1988 to the private sector. In keeping with those announcements, I am pleased to inform the House that the shadow Attorney-General, Senator Bolkus, has announced that Labor will continue our commitment to the privacy of ordinary Australians by amending this bill to ensure that its scope is extended to the entirety of the operations of the private sector and not just to those private businesses that have been contracted out government work.The exact form of those amendments will not be released today. Instead, we will further develop our proposals in light of the evidence to the Senate's expected inquiry into this legislation. I do, however, indicate that Labor will, as we proposed to do in 1995, draw upon the international experience of privacy protection as evidenced by the highly successful adoption of similar laws in New Zealand.Although this bill is an improvement on the current regulatory environment, there is no doubt that it falls well short of what is required. Nor does the government have any genuine commitment to this legislation. Once again it has been forced to act on the issue of privacy through its own incompetence. It was only under increasing Labor Party and community concern about the government's outsourcing of its information technology functions and employment services that the government has produced this bill.In May 1997, the Privacy Commissioner, Moira Scollay, submitted to the Senate inquiry into the contracting out of government services that the Privacy Act did not cover contracts for government services performed by private sector agencies, nor did the penalties that apply to the misuse of private information by public servants under the Crimes Act or the Privacy Act similarly apply to those contractors and their employees. Yet the government did not originally propose to adopt such legislation. Rather, when the Minister for Finance and Administration (Mr Fahey) announced the government's decision to outsource its information technology services in the middle of last year, he initially stated that only contractual protections would be put in place. However, after an embarrassing story in the Sydney Morning Herald, he said that cabinet had now decided to amend the Privacy Act 1988 to require independent contractors to comply with the privacy principles.The government's initial failure to act in this regard is demonstrated by the fact that it has since come to light that the Minister for Finance and Administration ordered his department to enter into negotiations with IBM-ISSC to outsource the department's information technology services from July last year, well before he knew that any amendments to the Privacy Act were being considered. This bill is another example of this government making policy on the run and the bill shows many of the hallmarks of that approach. Schedule 3 of the bill excludes 2½ pages of government funded services from the operation of this bill. These include a vast array of government services such as medical and health care services, services provided by a volunteer or community based organisation for the Department of Human Services and Health and the like. No reason has been provided by the government for many of these exclusions.We are particularly concerned about the exclusion of medical records from this list. We currently have the anomalous situation where, in many cases, patients are either entitled or not entitled to access their medical reports depending upon whether the doctor in question is employed in a public or private sector medical clinic or hospital. This is clearly ludicrous and nationally consistent legislation should be introduced to protect the rights of patients in this regard.Enforcement regimes under the bill also seem to be highly deficient. No consideration appears to have been given to the extension of criminal penalties for the misuse of personal information. Even the conciliation regime appears to breach the requirements of the Brandy decision by purporting to give the Privacy Commissioner the power to make binding determinations, including the power to award compensation against errant contractors. As the government well knows, as a result of the Brandy decision, these sorts of orders are only enforceable when made by a court vested with power under chapter III of the constitution. What the government is seeking to introduce in this bill is an enforcement regime similar to that which currently applies to other human rights legislation but in relation to which there is universal agreement that changes need to be made as are currently proposed in the Human Rights Legislation Amendment Bill. On the face of it, this is a very sloppy piece of legislation. The Labor Party looks forward to the opportunity that will be afforded by the Senate committee's consideration of both this bill and the wider issue of privacy protection and the private sector to examine this legislation in greater detail. Accordingly, I move:That all words after "That" be omitted with a view to substituting the following words: "whilst not refusing to give this Bill a second reading, the House:(1) notes the Government's failure to keep its election promise to extend the Privacy Act 1988 to the private sector; and(2) in particular, notes that this breach of a core commitment will:(a) leave Australians open to continued violations of heir basic human right to privacy; and(b) damage the trading prospects of many Australian information technology and information management companies, particularly in respect of trading opportunities with the European Union, resulting in the loss of Australian jobs in these vital emerging sectors of the economy".I indicate that the Labor Party will be dividing on this second reading amendment.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Jenkins)—Is the amendment seconded?MG4LEEMr Lee—I second the amendment and reserve my right to speak.10:34:002071Slipper, Peter, MPMr SLIPPER0V5FisherLP10—I am pleased to join the debate on the Privacy Amendment Bill 1998 and to support the bill and to oppose the amendment moved by the honourable member for Banks (Mr Melham) and seconded by the honourable member for Dobell (Mr Lee). Interestingly enough, the honourable member for Banks represents the shadow Attorney-General, Senator Bolkus, in this place. On every item of legislation, he comes in here and delivers a speech which has no doubt been written for him by Senator Bolkus. He does, however, sound like a broken record on very many occasions. Every time he comes into the parliament to talk about bills, he claims that the Attorney-General (Mr Williams) has been rolled by the cabinet or by the Prime Minister (Mr Howard). He does not take into account the fact that we have an excellent Attorney-General, someone who is well and truly in control of this portfolio. I think it is demeaning of one of the best Attorneys-General we have had in this country to have the honourable member for Banks come into the House of Representatives bill after bill after bill and claim that he is not really putting forward his own point of view and that he has been overruled by others in the government.The member for Banks was also hypocritical when he claimed that this is a core promise which is being broken as a result of this bill.4T4MELHAMMr Melham—This was a non-core promise, was it?0V5Slipper, Peter, MPMr SLIPPER—The honourable member ought not to interject. He has made his contribution, and a very poor contribution it was. He has clearly forgotten the fact that the Labor Party was in office for many years and that it was responsible for a litany of broken promises. Mr Deputy Speaker Jenkins, you were also here. You would also be aware of the l-a-w tax cuts which disappeared and the 1993 no new tax promise made by the then Prime Minister, Mr Keating. Mr Deputy Speaker, you would also know of the promise made by the Labor government not to increase the Medicare levy, the broken promises in relation to pensions, company tax and so on.The honourable member for Banks and indeed his colleagues in the opposition should very much be the last people to refer to any promise which has been broken. The Labor Party in government brought dishonesty to a very high level. The Labor Party in government shredded promises like confetti. They were prepared to do anything or say anything prior to elections and then, having secured the votes and the treasury bench yet again, the promises passed their use-by date and they were discarded time and time again. What the honourable member for Banks does not do is give adequate emphasis to the privacy principles announced by the Privacy Commissioner and the Attorney-General's response to those principles in a press release dated 20 February. For the benefit of the honourable member for Banks and everyone else listening, I want to point out that in that media release the Attorney-General said on behalf of the government:The Government welcomes the release today of privacy principles which provide a basis for businesses to develop practices to ensure that the privacy of individuals is protected.He went on to say:The Government believes that the imposition of a heavy-handed regulatory approach to addressing privacy is not necessary and accordingly the principles are not intended to be legalistic rules.Rather they are intended to provide practical assistance to business—the principles will allow business to develop protections that meet privacy concerns.So, far from walking away from proposals for privacy, we have achieved the same end by another means, one which does not impose more red tape and extra compliance costs on the business community.The Labor Party clearly are not at all concerned about red tape and compliance costs. In fact, during their 13 years of government they burdened business to an incredible degree and they had absolutely no regard to the fact that it was very costly for business, particularly small business, to observe the multiplicity of requirements by governments at all levels. Whenever small business turned around it found that yet again it was being entangled in more and more Labor red tape. The record of the Labor Party over the 13 years of office is nothing short of disgraceful. I have a very voluminous document here setting out details of the red tape brought in by the Labor Party and the compliance costs imposed on business, particularly small business.Mr Hatton interjecting—0V5Slipper, Peter, MPMr SLIPPER—The Labor Party ought to apologise for what they did to small business. I hope that the honourable member who just interjected, the honourable member for Blaxland, will indeed do so. This government will not apologise for the fact that we are supporting a regime for privacy which is balanced, fair and reasonable. We seek to achieve through the privacy principles announced by the Privacy Commissioner a regime where the protections in the private sector are extended to people but in a way which does not impose extra burdens, stresses and difficulties on business.What does the Privacy Amendment Bill 1998 seek to achieve? Obviously it seeks to amend the principal act, the Privacy Act 1988. That act came into being on 1 January 1989 and it requires government agencies with information about individuals to deal with it in a way that protects their privacy. This is appropriate because the public, in dealing with government, clearly have rights to privacy.As the honourable member for Banks himself conceded, the bill currently before the chamber actually extends the coverage of the Privacy Act 1988 to personal information held by contractors including subcontractors under or for the purpose of a contract with the Commonwealth or a Commonwealth agency to provide services. In the pursuit of increased efficiency this government believes, and its predecessor to a certain extent concurred, in outsourcing. We believe that people in the private sector can often carry out services which have hitherto been provided by government in a more efficient and cost-effective manner.It would be perverse if that outsourcing meant that there was a diminution in privacy to members of the public. That is why this government has not hesitated to bring in the Privacy Amendment Bill 1998 to extend that privacy to people dealing with contractors on behalf of the government. The honourable member for Banks suggested the government has been dragged kicking and screaming to introduce this legislation into the chamber. Nothing is further from the truth. The Liberal Party and the National Party in coalition have a commitment, a real commitment, to privacy. We believe in a civilised society, particularly with technology galloping along, where people do have a right to privacy. That is why we support the principles of the Privacy Act 1988 and that is why we have brought in the Privacy Amendment Bill 1998 . It is interesting to note that the former government did not actually proceed with this particular bill.The honourable member for Banks also spoke about a majority report of the House of Representatives Standing Committee on Legal and Constitutional Affairs. I was a member of that committee, as he pointed out, in the last parliament. He claimed that it was a unanimous report and because it was a unanimous report the government ought to seek to implement the report of that committee. The honourable member for Banks himself was chairman of that committee and he ought to recognise that he has come into the parlia ment on recent legislation that has been debated and opposed the majority report of the committee which he chaired in government. So what governments must do is to look at the reports of standing committees and consider them in accordance with the circumstances of the day and formulate an appropriate response.So the honourable member for Banks on yet another count is being hypocritical in so far as he is saying that we were part of that majority, therefore we should be supporting everything that was in that report. The fact of the matter is that Labor members like the honourable member for Banks chaired and controlled those committees, made reports, yet we have found that they have come into the chamber and done a somersault.The response contained in this bill is reasonable, it is appropriate and it is balanced. It must be taken into account when one considers the privacy principles which have been released by the Privacy Commissioner. Of course the privacy principles were referred to as the National Principles for Fair Handling of Personal Information. The government is prepared to have privacy in all areas of the economy, but what we want is not a heavy-handed and bureaucratic approach but a regulatory regime included in the Privacy Act 1988, as amended by this bill, which extends the coverage of the act to contractors who are in fact carrying out services on behalf of the Commonwealth.Equally, we support the principles outlined by Ms Scollay in her report. We believe that when one looks at the bill referring to, on the one hand, government departments and the extension of those requirements contained in this bill and, on the other hand, the privacy principles announced by the Privacy Commissioner we do have a situation which is appropriate in all the circumstances.It ought to be noted that the act does not apply to what is referred to as `excluded funded services', which include those traditionally delivered by the private sector or by volunteer and community groups. The excluded funded services are listed in the new schedule 3. Complaints about breaches, quite appropriately, can and should be made to the Privacy Commissioner. The Privacy Commissioner can conciliate and, if necessary, make a determination. So, far from this government running away from privacy, we are putting in place a regime which I believe we ought to have.The legislation will also extend the role of the Privacy Commissioner to the provision of education assistance and guidance to contractors. Therefore, if contractors doing outsourced work on behalf of the government are uncertain as to what the law is, or as to how they ought to approach a situation, then it will be available for them to approach the Privacy Commissioner to receive assistance and guidance. Individuals will continue to have the right to know why personal information is being collected about them and they can be confident that that information is secure and is not being disclosed inappropriately.Some people say, `Now that we are extending the regulatory requirements through this bill, what extra costs will be borne by the government?' Bearing in mind that we inherited a $10.3 billion deficit from the former government, clearly we have to be very aware of the costs of any amendments to legislation. I am happy to advise that the compliance costs ought not be great, as many of those have already been met by contractors under contractual requirements in accordance with current government competitive tendering and contracting policy. Government agencies will be required to provide assistance and support to prospective contractors regarding their obligations. So there ought not be any substantial extra burden on the taxpayer.What is the Labor Party going to do finally in relation to this? Do they want to give the government yet another double dissolution trigger? Who knows. What we do know, however, is that at this stage the honourable member for Banks has moved a second reading amendment, which the government will reject, the honourable member for Banks has foreshadowed further amendments which will be moved in the other place and the opposition have said that this bill does not go far enough.The opposition have failed in their approach to date to take into account the extra costs and burdens that their approach would impose on small business. It was Keating who said that small business basically should get out of the field because `this is as good as it gets'. This government is making no apology at all for its policies assisting small business because we know that, if we can continue to create the environment where small business can grow and invest, we create extra jobs. It is not too late for the opposition to support what the government is doing and to remove the amendments, which are simply seeking to frustrate what this government is attempting to achieve.I am very pleased to support the bill before the chamber. It is an approach that I believe will receive the backing not only of business but also of the general community. Once this bill becomes law, people dealing with government departments and government agencies will have their privacy protected, and those people who are dealing with outsourcing contractors will be protected as well. That is eminently reasonable and I believe very desirable. We have the privacy principles announced by the Privacy Commissioner which will deal with the protection of the individual when dealing with the private sector. The government has said, in the Attorney-General's media release:Consultation will continue in assisting business to implement the principles, and the Privacy Commissioner has stated that she intends to review the principles in six to twelve months to ensure any issues which arise in practice are taken into account.The honourable member for Banks believes that the government has not taken this matter far enough. The honourable member for Banks comes into the parliament and criticises the government whenever we seek to make amendments in the Attorney-General and Justice portfolios. The honourable member for Banks is suggesting that the government has left private individuals dealing with the private sector unprotected and unshielded by all of the protections which apply to those dealing with government contractors and government departments. I would commend to him a perusal of the Attorney-General's media release and statements made by the Attorney-General. The government has said that we will continue to assist small business to implement the principles. The Attorney-General himself has supported the privacy principles, and the Attorney-General has noted that the Privacy Commissioner herself:. . . has stated that she intends to review the principles in six to twelve months to ensure any issues which arise in practice are taken into account.If in six to 12 months the Privacy Commissioner believes that the private sector has not embraced the privacy principles, given the fierce independence of the Privacy Commissioner, there is absolutely no doubt that she will make a further statement as to what she believes is necessary in all the circumstances. I suggest to the honourable member for Blaxland, the honourable member for Dobell and the honourable member for Banks, and colleagues opposite, that they should go out and take a cold shower. They ought not come in here and huff and puff and claim that this legislation is disastrous, inadequate and a very poor response.MG4LEEMr Lee—You're the one huffing and puffing.0V5Slipper, Peter, MPMr SLIPPER—No, you are. What they ought to do is to come into the parliament and say this is a fair and balanced approach. They ought to say that they are prepared to await the further review of the Privacy Commissioner in six to 12 months and then express an opinion.The Attorney-General has brought this legislation in. This legislation is a firm indication of the coalition's very strong support for the principles of privacy. It is sad that the Labor Party, having broken just about every worthwhile promise that they made in government, are seeking to criticise us for implementing our promise in another way. The Attorney-General believes very strongly in the importance of privacy and this bill before the chamber is an appropriate response.The opposition ought not play politics. People have had a gutful of Labor Party politicians in opposition strutting across the national stage. What about being a constructive opposition? What about getting behind this bill? What about not moving your amendments? And what about giving this government credit for extending the privacy regime to make sure that more people are protected? I commend the bill to the House.10:53:002075Hatton, Michael, MPMr HATTONLN6BlaxlandALP00—What a dopey government we have got. If this bill before us today, the Privacy Amendment Bill 1998, was just an April Fools' Day joke, we could walk out of the place thinking that they had tried another one on, that they were going to bung this through, that they were going to play an April Fools' Day joke before the whole Australian community—MG4LEEMr Lee—Before midday.LN6Hatton, Michael, MPMr HATTON—Before midday, as the member for Dobell said, and before all of the private companies in this community. The member for Fisher (Mr Slipper) made great play of the costs and burdens to small business that would have been occasioned if the government had legislated for privacy legislation to cover all of the Australian community.I am going to go to that key question of costs—not just compliance costs and burdens—and relate that to the question of why we are in the situation today where we have this amendment legislation in which the Prime Minister (Mr Howard) has broken yet another promise and broken it a couple of times. The reason, we have heard, is that compliance costs would be too great on small business. But it is rumoured there is another agenda in relation to this as well—that is, that a number of very large companies had the ear of the government in relation to this and that those companies are ones that presently gather for themselves a lot of information about people's private lives and then on-sell it. Privacy legislation covering the whole of the Australian community and every private company in Australia would prohibit those private organisations on-selling that information about people's private lives.So I have to wonder whether that was the key reason for the government moving not to fulfil its pre-election promise. We know that the Prime Minister has a thing for non-core promises and core promises. This turned out to be a non-core promise—one that you could flick away—but it was an absolute pre- election commitment. He committed himself and his government to extend privacy regulation to the private sector, and the Attorney-General (Mr Williams) announced in September 1996 that the government would be legislating to extend the Privacy Act to the private sector. It is not surprising that there were quite enthusiastic responses Australia wide to the fact that privacy would be guaranteed—not just within government departments and agencies and not just, as with this amendment bill, to those who are undertaking contracted out services but to every organisation within Australia. So it was promised prior to the 1996 election. In September 1996 the Attorney-General confirmed that promise, indicating they would be legislating and that that coverage would be there.What interposed between the promise and that confirmation by the Attorney-General—that they would be fully legislating on a federal basis one set of laws for privacy to cover all of the Australian states, every private company within Australia, all government instrumentalities and all companies that you could outsource government business to—and March 1997, just one year after they had been elected, when the Prime Minister said that it was not going to be legislated? He said that the government was not going to extend the Privacy Act to the private sector. At the very time he did it—linked as the member for Banks (Mr Melham) said to the introduction of their small business package and an argument that they did not want to burden small business with great compliance costs—what else did the Prime Minister do which shows the very ideological nature of this coalition government and the fact that they are still stuck in 1947, not 1998? They are still stuck with a vision of federalism which says that the states should have their rights and duties and, basically, the states should do just about everything and the federal government should get out of the game.But here is a twist. In March 1997 the Prime Minister said that he had made efforts to dissuade state and territory governments from introducing privacy legislation that would impact on the private sector, citing concern for the implications in compliance costs. This is from the background paper prepared by the Parliamentary Library. Not only had he broken a pre-election commitment and promise, which was added to and reinforced by the Attorney-General in September 1996, and said that the federal government would not be taking action; he had attempted to twist the arms of every Premier of every state and every Chief Minister of every territory in this land to stop them bringing in privacy legislation.So what did he choose to do instead? He chose to seek a soft option—a soft option which would appeal to his constituency in small business and which would appeal to all of those people who thought the government should stay out of the business of governing, the government should not be regulating this area at all and the government should leave it to private industry and to voluntary codes. Those voluntary codes were a matter for the Privacy Commissioner to try to put together. The Privacy Commissioner undertook to look at this area and suggested that she had quite a number of problems in dealing with these matters, because there were fears within the community concerning just how broad the coverage might be and how effective that might be.I will quote here from the February 1998 paper from the Office of the Privacy Commissioner entitled `National Principles for the Fair Handling of Personal Information'. Just one month ago, the Attorney-General in conjunction with the Privacy Commissioner came down with these national principles. The Privacy Commissioner gave some background as to why she had to do this job, and the paper states:In March 1997 the Prime Minister offered my services to help Australian businesses to develop voluntary codes of conduct to meet privacy standards. I subsequently held informal consultations with business and consumers and in August 1997 I issued a consultation paper that addressed options for the content and implementation of a national scheme for fair information practices in the private sector. The scheme presented in this paper attempted to provide a viable self-regulatory option but was designed to be compatible with existing Commonwealth privacy laws and any further legislation which might be considered necessary in particular sectors, States or Territories.She did the job that she was asked to do. The Commonwealth government, through the mouth of the Prime Minister, said that they would not take action and have one law for one country. The Privacy Commissioner was given the task of trying to complement what was happening at the federal and state level. When she undertook those consultations, this is what she found:In the broad consultations that followed, it quickly became clear that the major issue is the need for national consistency in privacy standards. Everyone wants to avoid a patchwork of different standards applying across industries, technologies and State and Territory boundaries.The message to the Prime Minister and Attorney-General is to amend this legislation to introduce privacy legislation in the private sector for the entire continent of Australia. What came out of the consultations the Privacy Commissioner had? People do not want a patchwork. They do not want to be in a situation where they do not know what the dimensions of their coverage are; they do not want six different states having their own individual regulations and statutes; they do not want a pre-Federation horse and buggy approach to this problem; they do not want a patchwork of voluntary codes across different industries with different levels of compliance. Being in federal government means governing. Being in federal government means that when you approach a situation which is as significant as the privacy laws of this country you do act and you do legislate; and that will be supported by the community at large—except for the ideological crazies.What was the commissioner forced to do when she came up with these principles? She was forced to put a set of principles together which she hoped would be relevant and flexible and which would cover those standards. She states:Overseas developments, especially in Europe, make it important that these principles meet international best practice. Pressure for a national approach is building and it is critical that we take this opportunity now to work together to get it right.Just one month ago, in February 1998, the Privacy Commissioner is saying, `I have done the job.' The first section is to put down the basic privacy principles. The second is to go to the much harder job of attempting to implement them. But there are significant problems and the key problem in this area relates directly to what is happening in the European Union. Over the last 20 years in the European Union, national governments have acted. Acting nationally, they have put in strong privacy regulations and they have done it in such a way that every company in Germany is covered by their privacy regulation. Every company in Germany and every country covered by the European Union—because they have strong privacy laws—is in a position where they can trade information amongst themselves, in the full knowledge that the privacy rights of their individual citizens are protected.There have been indications that Australia was not going down that track; one year ago the Prime Minister broke his promise and backtracked. The European Union has indicated that there could be severe problems not just for any country but for any sector of an economy that does not have strong and strict privacy regulation because they simply may not deal with them. That is why the second part of our amendment states:. . . this breach of a core commitment will:(b) damage the trading prospects of many Australian information technology and information management companies, particularly in respect of trading opportunities with the European Union, resulting in the loss of Australian jobs in these vital emerging sectors of the economy".The reality is that over the past 20 years members of the European Union have moved towards absolutely protecting the rights of their individual citizens. The European Union will not allow a situation where information about their individual citizens goes to another country or another sector where that information could be traded freely without protection from strong privacy legislation. There are two articles that deal with this. Information sheet No. 3, the European data protection directive, put out by the Human Rights and Equal Opportunity Commission states:The European Commission has reportedly confirmed that Article 25 can, in principle, be applied either to a whole country or to a sector.What does article 25 say? It sets out the principle that data should not be transferred to a non-EU country unless that country ensures an adequate level of protection. It is specific—`should not be transferred'. There is a get-out clause in article 26. This government will be hoping the get-out clause would be there so that, if companies voluntarily sign up to a particular code, they will be covered by article 26. Article 26 allows for transfers of data to non-EU countries that do not have an adequate level of protection but where other specified conditions are in place.The member for Fisher and other members on the government side have noted the Prime Minister's deep concern about compliance costs to small business. This is a key reason that he broke his pre-election promise in relation to this privacy legislation being federal and covering all of the private sector.The problem here is with the European Union. Company by company, sector by sector, and possibly on the basis of the country as a whole, the compliance cost for companies attempting to do business with the European Union could be enormous. If the companies want to sell smart cards into the European Union or they want to sell other advanced products into the European Union and the European Union are not satisfied that the privacy of their own citizens is protected, they will make them line up, one by one, and the companies will have to go through the rigours of the European Union process in order to get a guernsey to trade with European Union countries. That is why this is a dopey amendment bill.A promise was made before the 1996 election that the bill would cover the entire private sector. But, because the bill pulls back and looks for voluntary codes, the potential compliance cost and the potential loss of business is enormous. This is dumb stuff. The federal government can regulate this area once and for all, end of the section. Once the legislation covering the entire private sector is through, none of our companies will have any problem with matters covered by this privacy bill.I will not implore the government to stop now and to do it; I will ask them, just for once, to be entirely sensible about this. The information economy that the 21st century will be built upon is here now and it is growing. The information economy is an enormously significant part of our gross domestic product. If the government want to really damage it, if they want to cripple it, if they want to increase the compliance costs and the worries and the concerns of small and medium enterprises in Australia, they should go ahead and put through this dopey amendment bill which covers only the outsourced companies that are doing work for the federal government; they should back off and leave it to every individual company in Australia to decide whether or not they will sign up to a voluntary set of principles. What do you think the European Union will say about that? They will say, `What a bunch of dopes. How dumb are they? Why didn't they just do the job in one go?'The Australian states of Queensland and Victoria—not Labor states, I might add—are so concerned about this matter that they have indicated they will put in their own privacy legislation unless the Commonwealth government puts in a system that works. The principles provided by the Privacy Commissioner are fair and reasonable, but effectively it is has been left to individual Australian businesses to make their determinations.Some of those businesses do not want to enter into those undertakings. They do not want to make the changes because the compliance costs that would be involved will cost them money. Also, the businesses do not want to enter into those arrangements because they already sell and onsell information that they have gathered. A bank might gather information about its clients and onsell that information to an insurance company or to a health company when the individual has not been asked whether or not they can do that. They make money out of the present situation. They do not want to do away with these profits by being roped into a federal act which says, `You cannot do this. You have to respect the individual rights of all Australian citizens.' So the money and the profit could be swept away.The compliance cost issue is not the only issue here. The national businesses that do not do as much business with the European Union or with other countries that are signing up to the European Union approach have a vested interest in not signing up to this voluntary code; they have a vested interest in slipping out of it or only partially signing up to it. This is the core reason, the rumoured reason, why this change was made and the fact that the government did not line up and put in a national bill.Companies in Australia stand to lose an enormous amount because this government did not have the sense, the courage and the straight sensible balance to act in the national interest by providing federal legislation. Not only that; the Prime Minister (Mr Howard) pressured the states and said, `Let's put a new flip on federalism. You stay out of this area altogether. This will be the great and shining example of what the Howard coalition government is doing in relation to privacy in Australia. We'll cut the cost to private companies. We'll look at their compliance costs. We'll make sure they haven't got red tape.' They might also not have the business—not only locally but also overseas.If there is one area in which Australia—a rich, natural, talented, clever country—can expand its earnings in Europe and the rest of the world it is in the information sector. This bill should deal with that issue. (Time expired)11:13:002078Smith, Tony, MPMr TONY SMITHSK6DicksonIND00—The previous speaker, the member for Blaxland (Mr Hatton), touched on concerns he has with certain aspects of the Privacy Amendment Bill 1998.The government is, of course, mindful of concerns that the contracting out of services, particularly information technology services, could, if not properly controlled, lead to personal information being transferred offshore.An individual whose privacy is breached overseas may, it is recognised, have great difficulty in obtaining a remedy from a contracted service provider who is not present in Australia. The government does not consider it appropriate for personal information to be processed overseas and has included provisions in its outsourcing contracts under the IT infrastructure initiative to require contractors to provide services under the contract in Australia. However, the government also recognises the importance of ensuring that legislative privacy protection continues should any personal information be handled overseas by a contracted service provider. Privacy protection is ensured by the bill deeming anything done outside Australia by a contracted service provider in relation to personal information to have been done in Australia.The bill also goes on to protect individuals if a contracted service provider is not resident in Australia—for example, if the service provider closes down an Australian operation—when it breaches an individual's privacy rights. In that case, any breach by the service provider will be attributed to the contracted service provider resident in Australia, or the Commonwealth agency, responsible for the information. An affected individual will, in such a case, be able to seek compensation or other remedies under the act. Additionally, where the contracted service provider ceases to exist or goes into liquidation or becomes bankrupt or is wound up, the bill does allow the relevant Commonwealth agency to be substituted for that service provider and to be required to pay compensation.So a number of saving and protective provisions have been introduced to ensure that the privacy rights in the circumstances to which I have referred are protected. As is envisaged, circumstances may well exist where those sorts of matters may come up, and to have the adequate protection within the bill itself to deal with those exigencies may indeed provide a remedy. There will never be a complete answer to this issue, of course, because circumstances change from time to time.Since 1989 when the act was promulgated, government agencies that hold information about individuals are required to deal with that information in a manner that protects individual privacy. Privacy is a right, in my view, in the real sense of the word. We hear a lot of things bandied about about rights. But legislative protection for privacy has never kept pace with the advances of technology which promote the invasion of that privacy—and that can be clearly seen in this technological age in which we live.Obviously, there are state and federal aspects to be considered. In Queensland, for example, there is the Invasion of Privacy Act, and there are other acts which deal with this area which complement parts of the federal legislation. But at the same time, dealing as it does with federal issues within the realms of the constitutional power, it is limited to an extent.As I said before, it is a right, a right not to be interfered with by the state, except in particular circumstances. It is a right not to have corporations peer into your private life. It is a right not to have the media peering into and exploring people's private lives. In the 10 years since the federal act was promulgated, there seem to have been many experiences of invasion of privacy in one way or the other. There have been, of course, the checks and balances that I have indicated, but it seems to me that situations arise from time to time where these checks and balances have an effect that is not intended—and I will refer to that shortly in some of my remarks.Generally speaking, there has been a plethora of royal commissions and inquiries that have gone beyond mere inquiries into particular circumstances and have developed a life of their own. The Fitzgerald inquiry was an example of that. Quite rightly, it weeded out and exposed a systematic and orchestrated web of corruption but, as in all crusades, there was a certain spiritual oil spill that flowed from the sometimes evangelical zeal with which this crusade, amongst others, was processed. People got carried away with their own rhetoric. Instead of trying to detect a dereliction of virtue, these things developed into virtue testing. The agent provocateur process used in drug undercover work has become the norm across a whole spread of industries trying to uncover corruption.The Criminal Justice Commission in Queensland did, unfortunately, get very carried away with this process in recent times. Following the Fitzgerald inquiry, the Office of the Special Prosecutor adopted at times a prosecutorial zeal that led to mistakes and to aborted investigations. In turn, privacy invasion considerations were frequently turned on their head.No more clearly was this seen recently than in the case of Mr Matthew Heery in Queensland. Heery was working in North Queensland in an election campaign for a particular seat. He was working for a political party. During the campaign, certain allegations were made about promises and other matters involving the persons who were keen to ensure that the election was won. As a result of that, the CJC commissioned an inquiry. And during the inquiry the CJC made an application to a judge in chambers and obtained permission to bug Mr Heery's house. The commission operatives recorded hours and hours of private conversation within that house. They invaded Mr Heery's life and that of his family.This apparatus was permitted by the state legislation. This is why I say we have to be careful with this sort of legislation. Frequently what it is designed to do can effect great mischief. That example is an outrageous one. As a result of those bugs and the hours and hours of very private conversations that were recorded and noted, Mr Heery was eventually tried for an offence in the district court in Townsville, I think. The jury threw the case out in record short time. It is great to know that 12 commonsense people in the community will not tolerate this sort of state invasion of people's lives. It is a salutary warning to state authorities that the community does not tolerate the excesses that can occur as a result of a zeal in trying to use an invasion of privacy act for a purpose that—while it may have started out quite innocent—just blew out out of all proportion and caused great harm.I would argue that, in Mr Heery's case—I have never met Mr Heery; I have never spoken to him—he and his family deserve significant compensation for what happened to him as a result of that matter. One would hope that his legal costs would be picked up as well as an amount for his pain and suffering as a consequence of that over-the-top behaviour by the CJC.We are seeing another example of this overseas—the Kenneth Starr investigation into President Clinton. What started as a Whitewater inquiry into property dealings has now gone right to the heart of the presidency of the United States in terms of virtue testing. People's virtues are being tested and then, if the virtue does not line up, the consequences can be a prosecutorial inquiry of a nature which we have not experienced.President Clinton's politics and mine probably do not have terribly much in common, but he does not forfeit the right, because of his office, to the same protections as everybody else in society. I will defend that right while I have breath in me. No matter what politics or extremes of politics may be involved, every person has a right to be protected from that sort of state invasion of their lives. It behoves all of us in this House to remember that and to ensure that, when we deal with these sorts of matters, we bear in mind the rights of that individual to privacy and the rights of all individuals to privacy.Privacy legislation is important. I do not for one moment suggest that the particular ways of detecting crime, the particular methods that government agencies use in order to ensure that people are not ripping off the system, should not be available to government agencies. However, we must use great caution in this area and we must provide very strong checks and balances. I believe the bill does that, but we must be ever vigilant to ensure that it continues to do so.I refer very briefly to the experiences I have had in my electorate of parents trying to track down children who have left home. The children have told a pack of lies as to why they have left home and have come back and admitted to their mothers and fathers that they told all those lies just to get the homeless youth allowance. Parents are being worried out of their minds and are trying to go through government agencies, such as the former Department of Social Security offices, now Centrelink, to find out where their children are, but they are being told by bureaucrats that the privacy provisions are protecting the children from being `harassed' by their parents.I have not met any parents who want to harass their children. I have met parents in this situation through Tough Love, a group in my electorate who desperately love their children, who are terribly worried about their children living on the street and are extremely annoyed and irritated about the agencies that are stopping them from trying to find out how their children are. I do not think that is a proper use of the system.Recently, a mother who does not live in my electorate came to see me. She had been everywhere and had written to everybody. I was so touched by the letter I received that I invited her to come and see me. We discussed what we could do in relation to getting her daughter off the street, trying to find out where she was and getting her to come home. She was 14 and she was running around with a 20-year-old male who was getting into all sorts of criminal and drug related behaviour. The system frustrated this lady at every turn, but we are certainly still pursuing avenues to try to assist her.I can refer to other areas. There are children of age who have disabilities. There are children with anorexia nervosa. One lady came to see me about a child with that disease aged 21 and the attempts she has made to try to break down the barriers in order to have an input into that child's life, fragile as it was because of the disease. She was frustrated by the bureaucracy on privacy grounds.We really have to get that bureaucracy broken down. We have to help parents in this situation. Surely, there must be a dividing line when it comes to somebody with a disability, be it an intellectual disability or a physical disability who, in a sense, unwittingly is being used by the system to keep the parents' input out of it. Let the parent have input, but please bear in mind the heartache and pain that parents feel in these sorts of matters. The system of privacy that is in place can inflict even more pain on them for no real, logical social purpose.At the end of the day, this is an area that must be constantly reviewed. I refer to the mass of information that is collected in regard to the computer age—the ability of computers to effectively plot people's movements and lifestyles. All of these things need direction. The legislation needs to be ever vigilant in protecting the privacy of individuals.At the same time, the government recognises the need to provide for better government to ensure that public resources are used effectively and efficiently and to ensure that the best possible use of those resources is manifested by effective service delivery methods which are continually improved. That has led to the introduction of this legislation. I support the legislation, but again warn of the dangers of privacy rights being affected by over-the-top actions of governments and others.11:29:002081Brown, Bob, MPMr ROBERT BROWN5A5CharltonALP00—I am pleased to join this debate to assist in reinforcing the concerns which are being expressed by my colleagues in the opposition about the inadequacies of the Privacy Amendment Bill 1998 and, as well, to express our concern that there is absent from this legislation provisions which quite clearly and firmly had been part of undertakings given by the present government, particularly by the present Prime Minister (Mr Howard), prior to the last election.The Privacy Act, which this legislation proposes to amend, was enacted in 1988, which of course means that it was a Labor initiative. The act at present provides privacy provisions which relate only to Commonwealth government agencies and agencies of the Australian Capital Territory. In addition to those which are the primary purpose of the act, the privacy provisions also relate to or extend into a number of other areas, including for example tax file number information, consumer credit information and more recently it was amended to apply to contracted case managers for the long-term unemployed.This amending legislation is designed to ensure that the privacy provisions also extend to contractors who enter into arrangements with Commonwealth agencies, but our chief concern is that it does not honour an undertaking that was given by the Prime Minister to extend the provisions of the Privacy Act, modified and amended as they may need to be, to deal with questions of privacy within the private sector itself. An interesting thing about this is that the government's own explanatory memorandum provides in large part the case for an extension to the private sector.The explanatory memorandum refers to three possible options in dealing with the circumstances to which this amending legislation relates. Option 2 suggests that the circumstances of contracting arrangements with Commonwealth government agencies could be dealt with by self-regulatory measures. We need to keep in mind the fact that the intention of the government is to leave private sector privacy considerations to precisely self-regulatory measures, but in this legislation the government, in its explanatory memorandum, says what some of the costs of this approach will be. It says that, for business, there will be compliance costs. If these contractors to whom this amending legislation relates were left to self-regulate privacy requirements, it says those compliance costs would be involved in `designing and implementing systems and procedures'. That is precisely the problem which will be experienced by the private sector because the private sector is not part of these provisions. It says what some of the costs will be for the community and says that `there may be inconsistencies between standards'. By excluding the private sector and leaving the private sector to self-regulate, there will be inconsistencies between standards. It also says, `The Privacy Commissioner would have no jurisdiction over the acts or practices.' That is precisely the situation in which the private sector will continue to find itself.Option 3 applies the Privacy Act to contractors supplying services to the government, that is, applying this act which we are now in the process of amending. The government says in relation to that, as among the benefits, to do that `would achieve certainty and consistency'. We say yes, it would. Extend it then to the private sector in order to achieve certainty and consistency. It says that it would apply `the same standards'. We say yes, indeed it would, so apply it to the private sector. It says it would involve `the same consequences'. Yes, it would, so apply it to the private sector. It says, `Any administrative costs . . . would be certain and quantifiable . . . ` Yes, they would, so apply it to the private sector. Do not exclude the private sector. In relation to businesses themselves, it says, `Contractors would have clear consistent standards . . . ' Yes, they would, so apply it to the private sector. In addition, it says those standards `would be known to be acceptable to government'. Yes, they would.In the face of the fact that the government promised to apply the provisions of the Privacy Act to the private sector, and the fact that it here provides arguments in support of that approach, why then does it repudiate it? I will make some suggestions further on about why I feel it has repudiated it. As far as the community is concerned, it says as well that option 3 is to apply the Privacy Act to contractors and for the community the benefit would be that `The Privacy Commissioner would have jurisdiction'. Yes it will. If it were applied to the private sector generally, then the Privacy Commissioner would have jurisdiction there. So as I say, in the government's own publication, the explanatory memorandum, the government makes out a case in favour of it acting where it promised to act but has failed to act.I said that the legislation, as it was enacted in 1988, was a Labor initiative. The provisions within the act are based on the Organisation for Economic Cooperation and Development guidelines of 1980 on the question of protecting privacy, and Australia is a signatory to those principles. I said that the government had repudiated its own pre-election position. After that pre-election commitment to extend the privacy regulation to the private sector, the Attorney-General (Mr Williams) then announced in September 1996—a few months after the government came to office—that the government would be legislating to extend the Privacy Act to the private sector as it had undertaken to do in opposition. Then, in March 1997, the Prime Minister announced that the government would not legislate to extend the Privacy Act to the private sector. Presumably, that was another non-core promise.What happened between the time when the Prime Minister, speaking on behalf of the coalition, which was then in opposition, and March 1997 to cause the government to suddenly decide that there was no need for any government intervention in the private sector to ensure that Australian citizens would have their privacy protected? Was it to advantage 18 million Australians who could have had their privacy protected? I think not.Who may have been advantaged by that reversal, that repudiation of a firmly adopted former position? If it is not 18 million Australian citizens, who are the other parties to that? Private business? Why then did private business prefer that no protection be imposed by the government in terms of the types of provisions which exist within the existing Privacy Act? Why did they decide that they would be better off being excluded from those requirements? In what way was pressure brought to bear on the government to repudiate its former position?Of course there are going to be suspicions surrounding that issue—and, by the way, I am not suggesting for a moment that it implies any corruption, but obviously there would have been pressure, discussions, negotiations, understandings reached between prominent organisations and operatives within the private sector and the government to bring about that change.Our concerns are contained in the second reading amendment that was moved by the member for Banks (Mr Melham), who represents the shadow Attorney-General in this House. I referred to the government's failure to keep its election promise; that is the first item to which we have drawn attention in our second reading amendment. The second item includes a reference to possible damage to the trading prospects of many Australian firms, particularly those trading with the European Union, unless suitable types of private sector privacy provisions are put in place.The business sector itself needs to be perfectly aware of this fact and of this danger. They are the ones whose position can be prejudiced as a result of inadequate provision being made within privacy legislation for the private sector. There is a threat by the European Union that it will not trade with countries that do not have strong privacy laws. On Thursday, 17 April 1997, the AM program dealt with the concern about Privacy International, which is a private sector organisation concerned about privacy matters. Privacy International threatened to push for the European Union to impose economic sanctions on Australia after Europe's privacy laws came into effect in October last year. So Australia needs to give serious consideration to the circumstances and the possible dangers to which it leaves itself open as a result of a failure to move in this area.In Lateline, on 17 April last year, reporters Bronwen Reid and Maxine McKew made a number of comments. In her introductory comments, after referring to some of the excesses of privacy invasion of individuals, Maxine McKew said:Now, this trend so alarmed the Federal Coalition that in the lead-up to the 1996 election it promised a major extension of privacy legislation. Twelve months on that promise has been broken. After furious lobbying from some sections of business, the Government agreed that any extension to the current legislation would be costly and unnecessary. It was a smack in the eye for Attorney-General, Daryl Williams, who'd supported change, and it outraged privacy campaigners.Now they've found a major ally in the European Union. The EU has issued an ultimatum to all countries, including Australia, that it will not trade with them if they do not have strong privacy laws. For many of our major companies, this could effectively become a trade embargo.In the same program, Bronwen Reid said:Companies wanting to trade in Europe's common market first have to show they can protect personal data. They must demonstrate that they can be trusted with the vast rivers of information on citizens so routinely collected, stored and traded. It sounds abstract, but the Europeans recognised that in the course of daily life citizens impart enormous amounts of personal information.That was spelt out then. Now, in this month of this year this legislation is coming here, legislation which leaves Australia and Australia's overseas trading and business interests seriously exposed. I have already referred to Privacy International. Simon Davies is head of that watchdog group. During that Lateline program, he said:This isn't a national issue at all. The information market is a global market. What affects one country affects another country. So if, for example, my data is accumulated in, say, France, it can find its way and will find its way to the United States or Australia. So this is an issue which affects all citizens globally, and what we've sought for many years, and almost achieved, is a harmonious global set of rules. And all we're doing is calling on Australia to agree to that harmony.If we fail to do so, we need to know the reasons for that. We need to know what the motivation is behind it. I also refer to an article in the Sydney Morning Herald on Wednesday, 17 December 1997. This was a joint article by Tony Vinson, who is Emeritus Professor of Social Work at the University of New South Wales and Director of Research at the Uniya Jesuit Social Justice Centre, and Karl Langheinrich, who is a social work student. When they were dealing with questions of surveillance standards, privacy and so on as part of that article, they said:The onus should not be placed on individuals whose rights are infringed to defend them. Rather, it should be placed on those who violate the right to privacy to defend their actions.That is where governments have a responsibility, particularly national governments with their national responsibilities. They went on further to say:. . . there must be sanctions for the breach of the standards and a confirmed regulator in the form of a Privacy Commissioner to ensure the application of the standards.Because, obviously, without having such a responsibility with such a commissioner, there is no guarantee that those types of obligations on the part of the private sector would be honoured.I know that one of my colleagues referred to Moira Scollay, the federal Privacy Commissioner. Ms Scollay addressed the National Medico-Legal Conference in Sydney in February this year. I know that some of her claims were disputed, but I leave it to others to judge whether or not they are plausible. She told the conference:. . . once current research mapping all 100,000 human genes is completed, there will be `enormous financial pressure'— financial pressure; business pressure—on the life insurance industry to discriminate on the basis of people's genetic make-up.She said:They already do, . . .—You see there is a difference between the premiums charged for males and females based on their expected longevity. She also said:Genetic testing would raise issues within families about who should be tested and who should be told the results, `particularly if there are then financial benefits or disincentives accruing as a result of that knowledge', . . . There are matters of extreme importance, extreme community, cultural, social and personal importance in the whole question of the explosion of modern technology which make possible serious intrusion into the privacy considerations of individuals. There is an urgent and growing requirement, an absolute necessity, for governments, which are the only authorities with national responsibilities of the kind that should be brought to bear on questions like this, to respond to them. To just say that this is an area where self-regulation is sufficient, is simply not adequate. (Time expired)11:49:002084Pyne, Chris, MPMr PYNE9V5SturtLP10—The honourable member for Charlton (Mr Robert Brown) is a wise man and has been here for many years, so I do not wish to go through his entire speech and talk about many of the subjects that he raised. But I make the point that it is awe-inspiring the number of times the Labor Party has stood up in the last two years and said how the government is doing outrageous things too late or that the government is doing things that should have been done a long time ago, when for 13 years they had the opportunity to introduce legislation just like this or, if the opinion of the member for Charlton can be believed, go much further in introducing privacy legislation.It is just one of the litany of issues that were left to the Liberal and National parties to do in government that were ignored by the Labor Party for 13 years. Ones that leap to mind are the fact that we have increased pensions to 25 per cent of average weekly earnings—a promise made by the Labor Party for 13 years and never achieved. We are the government that created the Natural Heritage Fund for fixing up the environment—something the Labor Party, supposedly the great environmental party, could not do in 13 years. We are the party that is doing major infrastructure projects like the Alice Springs to Darwin railway. I notice the opposition claiming to up the ante with respect to the Alice Springs to Darwin railway by saying they would spend $300 million on that instead of the $100 million that the federal government has promised. But, for 13 years, Bob Hawke and Paul Keating promised the railway, which was never achieved. We are the government that is cracking down on the trafficking in trust losses. We are the government that is amending the Copyright Act to try to ensure that we can achieve cheaper CD prices. Yet we have speeches such as that today, delivered in such a wise and clever fashion by the member for Charlton. However, it missed the fundamental point: if the Labor Party regarded these issues as so important, why did they spend 13 years doing absolutely nothing about them?Among the crystal clear messages delivered by the electorate in March 1996 was the public's expectation of greater efficiency by government. The former Labor government demonstrated an unenviable ability to pour billions of dollars into programs which yielded minimal or negligible results. When these programs failed, Labor responded by inventing more hidden taxes, increasing public expenditure or putting the nation further into debt. On the other hand, the coalition government remains committed to ensuring that public resources are used efficiently and cost effectively.In achieving the public's expectations of accountability, the government has acknowledged that funding alone is not the sole criteria for better government. This government has heard the concerns of the public and recognised that, to ensure optimum utilisation of public resources, service delivery methods must be continually improved without compromising the expectations of the public. A feature of this performance evolution is the introduction of market discipline into the delivery of various Commonwealth services through competitive tendering and, where appropriate, the contracting of services.In achieving these higher standards and greater efficiency, the government recognises that it is essential that performance improvement be delivered without compromising the privacy of individuals. The protection of individual privacy is paramount. The coalition government recognises this and the Privacy Amendment Bill, which we are debating today, demonstrates that recognition.It is universally accepted that we are living in a more intrusive world. It is the voluntary price that we as individuals pay when we avail ourselves of the technology that is now available to us, which the member for Charlton touched on. The convenience of using automatic teller machines is to a certain extent tempered by the knowledge that all the details of the transaction—just to use one example—the time, the location, the withdrawal amount and the account balance, have become a matter of record. The passive sounding term `browsing the web' belies the privacy intrusions that a web browser is potentially exposed to. Again, with the convenience of the Internet come inevitable intrusions on our daily lives.Ever since the 1950s when the United States government began entering individuals' data on to enormous mainframe computers there has been a public suspicion of the collection of personal information. There exists a substantial body of anecdotal evidence to suggest that these fears are not without foundation. In the United States, a Maryland banker abused his position on the state health commission by accessing a database of cancer patients which was then cross-referenced with his bank's database of loan customers. In cases where there was a positive match, the banker revoked the loans.In the United States, technology has clearly outpaced protective legislation. In Australia, striking a sensible balance between the social benefits of technological advancement and an individual's right to privacy has been the challenge of successive governments. It is a challenge that this government has accepted. The Privacy Act provides that government agencies in possession of personal information about individuals are legally required to protect that individual's privacy. This fundamental expectation is legally extended by this amending bill to include services delivered under a government contract. This bill also regulates privacy standards for the practice of subcontracting such services.The information privacy principles embodied in the Privacy Act require personal information to be collected solely for lawful purposes which are related to the functions and activities of the information collector. Under the act, a duty exists on the information collector to ensure the person providing the information is aware of the nature of the purposes for which the information is collected. This principle includes both the compulsory disclosure of information and information voluntarily disclosed. Subject to certain exceptions, such as law enforcement and the preservation of life, information collected under the scope of the Privacy Act may not be used for a purpose other than that for which it has been collected. Disclosure to another person, except with the consent of the individual concerned, is also protected under the provisions of this act.There are several important functions of the Privacy Act. Perhaps the key function is the requirement that agencies store personal information records securely from theft, loss or misuse, and the requirement that agencies are to provide details about the type of personal information they hold. Further, subject to the exemptions provided for by the Freedom of Information Act 1982, agencies are required to provide an individual with access to his or her personal information records and to make appropriate corrections for accuracy, relevance and completeness. This amending bill requires that these same fundamental rights are applied to the practices of contracted service providers.One such effect is the role of the Privacy Commissioner in the monitoring and auditing compliance of the information privacy principles to contracted service providers. This monitoring and auditing role has cultivated a self-regulating role in public sector agencies as to the obligations and requirements of the Privacy Act, effectively educating the public sector and the public alike as to rights under the act. The coalition government expects that this bill will have the same effect on contracted service providers. By applying the legislative principles of the Privacy Act directly to contracted service providers, this bill will encourage greater consumer confidence. Similarly, service providers will be in no doubt as to what is expected of them by both government and their clients.This bill provides that an individual consumer of these services has the right to lodge a complaint to the Privacy Commissioner regarding suspected breaches of the principles of the Privacy Act by a contracted service provider. Accordingly, the Privacy Commissioner has the legal capacity to investigate such complaints and assist in the conciliation process to reach a settlement where it has been established that a breach has occurred.In the event that a satisfactory conciliation or settlement cannot be reached, the Privacy Commissioner has the legislative capacity to make a binding determination. Options that are legislatively available to the Privacy Commissioner include the requirement of a formal apology by the contracted service provider to the consumer, a change in administrative and/or management practices, or payment of appropriate compensation for any damage that has resulted from the breach of privacy.This bill also makes the qualification that there are some services for which it is inappropriate to apply these amendments. It has become the practice of successive Commonwealth governments to fund community and volunteer organisations which provide their services to local communities. Although many of these funding programs are described as grants, there has been a trend for organisations in receipt of such funding to enter into service delivery contracts. These service delivery contracts are to ensure that program expectations are clear and that proper financial and service accountability exists.Funding is also provided for the delivery of some services that have traditionally been delivered by the private, rather than the public, sector. This bill does not place addi tional obligations on organisations delivering services traditionally delivered by the private sector. Rather, this bill assures the continuation of existing protective measures.Contractors who provide excluded funded services under schedule 3 of the act do not come within the scope of this bill. Due to the continually evolving nature of these social programs and the time frames under which they operate, this bill allows for regulations to ensure that services are not inappropriately excluded by references in the schedule. In addition to their binding contractual responsibility, including their administration and conduct, this bill also provides that contracted service providers and their Commonwealth agencies remain accountable for the contracts they enter into.The government has ensured that outsourcing agencies will be informed of any complaints against their contractors and the Privacy Commissioner will have the discretion to be able to recommend changes in contracting practices in appropriate circumstances. Consequently, Commonwealth agencies will, as an essential aspect of entering into contracts for the delivery of services, need to ensure that prospective contracted service providers are aware of and able to meet their obligations of the act. Existing contractors should be operating in accordance with accepted privacy principles. The extension of the act should therefore require them to make few, if any, changes to current administrative practices. In the drafting of this legislation, the government also recognises that Commonwealth agencies are expected to provide assistance and support to contracted service providers in the development of appropriate systems and practices for the delivery of services under contract. In addition, the Office of the Privacy Commissioner will be able to provide service, advice and assistance to contracted service providers to facilitate that meeting of community expectations under the Privacy Act.Broadening the Privacy Act to make it applicable to contract service providers will not have any financial impact on the taxpayer. The contracting agency will retain a degree of responsibility for the acts and practices of the contracted service provider. However, these are costs which the government would otherwise have borne if that function had not been contracted out. Similarly, any costs for contractors associated with the compliance of the privacy obligations of this bill may be taken into account when negotiating the contract price of the provision of the contracted service. Indeed, many of these costs may already be taken into account in current contractual arrangements which include privacy requirements in accordance with current government competitive tendering and contracting policy. This government remains committed to the principle that individuals are entitled to have access to personal information held by agencies about them and to have that information amended if it is established to be inaccurate. The existing mechanisms for implementing these fundamental principles are contained in the Freedom of Information Act 1982. Accordingly, the government will complement this bill by introducing a bill to amend the Freedom of Information Act to extend it to apply to requests by individuals for access to personal information under the control of contracted service providers. The fundamental principles of this amending bill are complemented by several safety net provisions. This bill takes into account that the contracting out of services, particularly information technology services, could, if not adequately controlled, lead to personal information being transferred offshore. This bill also recognises that an individual whose privacy is breached overseas may be left without a legal remedy from a contracted service provider who is beyond Australia's legal jurisdiction.Privacy protection is ensured by provisions of this bill which provides that any act performed outside Australia's legal jurisdiction by a contracted service provider in relation to personal information is deemed to have been committed in Australia for legal purposes. In extension of this principle, this bill also provides protection for affected individuals if a contracted service provider is not a resident of Australia. This bill also recognises situations where the service provider ceases its Australian based operations and breaches an individual's privacy rights. The breach by the service provider will be attributed to the contracted service provider resident in Australia or the appropriate Commonwealth agency responsible for the information. In such circumstances, an affected individual will have the legal right to receive compensation or other appropriate remedies under the Privacy Act.Individuals whose privacy has been compromised by a contractor in circumstances where the contracted service provider ceases to exist, becomes bankrupt, insolvent or has wound up are also protected under the Privacy Amendment Bill. In such instances, an affected individual has the right to complain to the Privacy Commissioner and to receive a remedy if appropriate. If a remedy, financial or otherwise, is appropriate, this bill provides that the relevant Commonwealth agency is to be substituted for the contracted service provider and is required to pay any compensation owing. This bill not only demonstrates this government's commitment to protecting individual privacy but also acknowledges that privacy legislation must continue its evolutionary cycle if it is to keep pace with technology. It is a challenge for government and the expectation of the public. I commend the bill to the House.12:04:002088Ferguson, Martin, MPMr MARTIN FERGUSONLS4BatmanALP00—I rise in the debate on the Privacy Amendment Bill this afternoon to support the second reading amendment moved by the member for Banks (Mr Melham). In doing so, I suggest that other members of the opposition have made clear that this bill does not extend protection of privacy into the private sector when it should. More importantly, I wish to make some points about how this bill does not even do enough to extend protection of privacy to contractors in the new employment services market, which is supposedly one of its express purposes and which I think is fundamentally important at the moment in the face of the government's changes with respect to the employment delivery services market.I also suggest that this bill is a belated and inadequate response to a long process of complaints about how the government has failed to protect the privacy of information about unemployed people. As if they do not have enough difficulties when they are out there looking for a job. The government first announced its intention to privatise the provision of employment services in the August 1996 budget. What a mess it made of that decision. I also remind the House that when it made that announcement it even dared to suggest that there were some unemployed people who would have to meet a capacity benefit test to be entitled to a free and universal employment service.Ever since then there have been major unresolved concerns about the effect of these changes upon the privacy of information about unemployed people. When the government presented its Reform of Employment Services Bill 1996 to the Senate, it sought, among other things, to change the law regarding the protection of information about unemployed people. That was something that was fairly instrumental in former decisions of the parliament in ensuring that, as we created a competitive model, people's privacy was protected. When the bill was debated, the opposition raised a number of concerns about the government's bill at the time. Unfortunately, Senator Vanstone, who was then the minister, was not prepared to take on board these concerns. Rather than fronting up to a fair and reasonable debate, she decided to withdraw the bill and to, in essence, take her bat and ball and go home. In that debate, opposition senators set out these concerns in detail in a minority report of the Senate Community Affairs Legislation Committee.Clearly, the issues that we sought to raise were properly considered and developed in consultation with a Senate committee following community concerns. These concerns included the need to ensure that legal requirements for privacy and secrecy were effectively enforced in relation to the new employment placement enterprises. Part of our consideration included that that be through the scrutiny of the Privacy Commissioner. This followed clear evidence, without a satisfactory answer from the Minister for Employment, Education, Training and Youth Affairs (Dr Kemp), that at least one private employment agency had been going around headhunting case managers.Our concerns also followed evidence that some people inside the Department of Employment, Education, Training and Youth Affairs had been using access to confidential data. They were using their inside knowledge of how local labour markets operated and the success rates of various case managers to benefit personally in the new employment services market. Our concerns also followed evidence that many employees had in fact been disciplined for trying to set up tendering rolls for new employment placement enterprises. I might remind the House that some of these issues were raised in the Senate in the form of questions to the then minister.I believe that the clear conflict of interest between those actions and their responsibilities as public servants to guard privacy made it all the more important to pursue amendments to the government's bill to protect privacy in the future. Accordingly, the opposition did pursue several amendments. These included putting a new objectives section into the bill which suggested a number of principles. One was that the employment assistance services should be provided in accordance with high ethical and professional standards. I know that is not a requirement under the tendering out process of the government's decision to privatise the old employment service delivery market. If anything, probity has gone missing and one cannot suggest that some of the successful tenders operate on the basis of high ethical and professional standards. I need only refer, for example, to the Khadar Roude story which has been raised in successive questions in the House.Another concern was that employment services should be provided with respect to the right of users of the services to privacy. What happened when this amendment to insert a new objectives section succeeded? Strangely, the government withdrew the bill. It was not interested in a fair and proper debate. It proceeded towards implementing its new employment services market without proper legislative underpinning. So much for accountability by this government to the people. So much for a willingness to debate issues of major concern in the parliament. It denied, in essence, the national parliament its democratic opportunity to moderate a major and harsh change in social policy—Dr Kemp's cruel experiment on the unemployed.A number of further serious concerns were subsequently raised about the implications of the government's course of action for privacy, including possible breaches of other Commonwealth laws. I suggest that we are entitled to raise those concerns because I have also raised in this House questions, for example, about a company in South Australia that has been selected by this government to deliver employment services, a company that is associated with the presentation of dud cheques, a company that cannot meet requirements with respect to provision of disabled employment services to workers with a disability, a company that has had difficulties with respect to meeting its requirements to pay its bills for electricity. That is the type of company selected by this government with the privatisation of employment services in South Australia.It all goes back to the very debate that occurred in the Senate about a certain level of quality to be required with respect to the companies successfully selected through the tender process and also proper accountability with respect to that selection process to the parliament. In that context, these concerns were set out in a detailed paper by a former senior officer of the Department of Employment, Education, Training and Youth Affairs, a Mr Tom Brennan. Following the issue of the employment services request for tender in August last year, Mr Brennan identified a number of significant legal issues arising from the tender.The first of these was that the system provided for flows of information to providers of FLEX 1 could be in breach of criminal provisions of the Social Security Act. The second was that the Crimes Act protections of information held on behalf of the government in computers might not effectively extend to conduct of employees of contracted providers. The third was that the Crimes Act prohibitions on communication of personal information might not effectively extend to staff or subcontractors of contracted providers. The fourth was that information privacy principles in relation to collection of personal information will not apply to contracted providers. Fifthly, Mr Brennan, who had extensive experience in the case management competitive model developed by the former government, expressed concern that the Privacy Commissioner would appear to have no role in investigation of complaints about conduct of providers.There were clearly very serious legal issues hanging over the entire tender of employment services due to the government's failure to properly underpin the new arrangements with legislation acceptable to the national parliament. Subsequently, the Deputy Privacy Commissioner also expressed grave concerns that the privacy rights of the unemployed were being undermined by the new tendered out employment service arrangements. On that basis, the commissioner on 8 March this year pointed out that under the new arrangements unemployed people who seek work through private agencies will risk having their details traded to debt collectors.He then went on to highlight the fact that the new private employment services would not be directly covered by the Privacy Act. He pointed out that the Privacy Commission, which was established to prevent personal details being misused by government departments, was not able to directly investigate any breaches of private employment agencies. It confirmed that the level of privacy protection for unemployed people using private employment services was lower than that which applied to government agencies.With this new bill the government is belatedly trying to give the impression—and that is all it is, an impression—that all these problems will be resolved. The Attorney-General said in his second reading speech:. . . the bill also extends coverage to cases where Commonwealth agencies contract for the provision of services to people other than the Commonwealth. He then said:For example, where a Commonwealth agency contracts with a company to provide job seeking assistance to unemployed individuals, that company will be covered by the act.He then went on to say:This means that those who have previously received services delivered directly by Commonwealth agencies can be assured that the protection of their personal information continues at the same high standard required by the Privacy Act if those services are provided by contracted service providers.The real question is: is he right? Are all the big and serious questions about privacy under the new employment service arrangements which have been raised by the opposition, by Mr Brennan, a former senior officer of the Department of Employment, Education, Training and Youth Affairs, by the Deputy Privacy Commissioner and by others over the last 18 months answered by this bill? I suggest to the House that I do not think so. In particular, this bill does nothing to address the questions raised as to whether systems proposed or flows of information to providers of FLEX 1 could be in breach of criminal provisions of the Social Security Act, nor does it do enough to ensure that privacy principles generally are respected.I have been consistently raising, inside and outside this House, concrete examples of how successful tenders for employment services under the government's new arrangements have not operated with high ethical and professional standards. I have also referred today to what amounted to, in essence, insider trading within the department in the lead-up to the tender process, and the trading of information with potential employers in the private sector on the basis of which certain departmental officers were seeking a guarantee of employment in the new privatised employment services market.I have also raised in this House the question of the capacity of some of those companies selected to actually deliver the services which they have now been given a tender by the government to deliver. For example, I need only refer in passing to Mr Roude in Western Sydney: a contract of the order of almost $1 million, no real experience in the delivery of employment services, and not even an office, let alone a computer, a telephone and a fax system. Yet this government expects us to believe today that the amendments to the Privacy Act are, in essence, going to put this person in a straitjacket and ensure—when there are serious questions over his head about his capacity to deliver and, frankly, the probity of the selection of him for a tender—that the privacy and information on the unemployed—their personal details—are properly protected.The experience of the last few weeks suggests that there are significant questions over the whole tender process. The nature of the people selected also raises serious questions as to their requirement and their capacity to guarantee the proper protection of people's personal information. On that basis, I suggest that, far from guaranteeing the necessary protection, it raises serious ongoing question marks about the capacity of this government and the employment services market to actually give that necessary and vital protection to the unemployed, who are entitled to the same protection as other people in the Australian community. I will, therefore, continue to raise in the future how privacy laws and principles are not being protected in the new employment services arrangements.It is an absolute disgrace to think that the major winner in South Australia is a company that presents dud cheques and cannot even pay its bills when it comes to electricity costs. That is the type of company that the member for Sturt (Mr Pyne) is associated with in South Australia. After all, he is a close confidant of the former minister, Senator Vanstone, who was responsible for the initial phasing in of this new employment services market.9V5PYNEMr Pyne—I rise on a point of order, Mr Deputy Speaker. The member for Batman has just suggested that I am associated with companies which he has been accusing of the most pernicious behaviour, which I regard as quite unacceptable, and I ask him to withdraw the suggestion that I would associate with crooked companies.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Andrews)—Does the honourable member for Sturt find the words offensive?9V5PYNEMr Pyne—I find the imputation offensive and the words offensive that were used to make the imputation.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—I invite the honourable member for Batman to withdraw the words that the honourable member for Sturt finds offensive.LS4Ferguson, Martin, MPMr MARTIN FERGUSON—Mr Deputy Speaker, I understand why the member is so sensitive.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—No. I invite you to withdraw the words.LS4Ferguson, Martin, MPMr MARTIN FERGUSON—And I withdraw the personal reference, but in doing so clearly indicate that he is a member of a government and a close confidant of the former minister responsible for this tendering process that has clearly selected companies without standing in the community—companies that have got question marks over their performance and companies that I suggest are not capable of delivering these employment services. For that reason the member for Sturt and his government are condemned for walking away from their responsibilities to protect Australia's unemployed and to create decent opportunities. He stands condemned and he ought to hang his head in shame because he is part of a collective that has no standing itself.As I said, it is too little, too late. We require action. We necessarily must have an ongoing campaign to ensure that the government is required to take the necessary action. This government has been shamed into taking this bill, but has seriously not taken into proper consideration the legal and ethical questions that have been raised about the new employment services market. They will not go away. The member for Sturt knows it. His close friend, Senator Vanstone, the former minister, knows it. The new minister, Dr Kemp, knows it. The truth of the matter is that there are still serious question marks about privacy and the question of protecting personal information of Australia's unemployed when it comes to the employment services market and the operation of the Privacy Act.For that reason I support the second reading amendment and clearly indicate that we are not satisfied, as an opposition, that the privacy information of Australia's unemployed is properly protected as a result of the privatisation of the employment services market.12:21:002092Evans, Martyn, MPMr MARTYN EVANSN36BonythonALP00—We are here this morning to note the passing of another Howard government promise from the core pile to the non-core pile. We are here to note the breaking, in effect, of some very clear election promises which the coalition put to the electorate prior to the last election in which they indicated their strong support for privacy principles and in which they indicated their intention to ensure that privacy was regulated in the private sector in Australia. They were going to to ensure that Australia was very much a part of the international community in respect of privacy principles, privacy law and privacy obligations for the private sector. But, of course, as we see from the actions of the government following the election, and as we see from the very words of this bill itself, the government has chosen to move that promise from core to non-core. That promise, in the words of another infamous government in the United States 20 or 30 years ago, is now inoperative and we have other policies which will be substituted in their place.Mr Deputy Speaker, this has become so commonplace that you may wonder why we have raised it specifically in respect of this bill. It is because privacy is very important. Privacy is so important that many of the governments around the world and international bodies who are responsible for views on these matters have taken particular steps to ensure that we are aware of their importance. Article 12 of the Universal Declaration of Human Rights states:No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.The International Covenant on Civil and Political Rights includes a provision for privacy protection similar to the article in the universal declaration. The OECD has pub lished substantial primary documents and guidelines for international privacy protection. They were set out as far back as 1981 and they talk principally about stored data but are relevant across the board.The Council of Europe has a convention on privacy protection which also dates back to the early 1980s and is binding on all the signatory countries. The EC has issued a privacy directive which will take effect in October this year. That is the one to which my remarks will be further directed and in which Australia now has significant interest. If that directive is enforced, Australia's trading practices will be at risk. We will run the risk of Australia being a non-conforming country with that directive, with significant consequences for companies here.The threats to privacy have changed dramatically in the last 10 or 20 years. Privacy has always been an issue in Australia and has always been an issue on an international basis. Several hundred years ago, the United States saw fit to enact the Fourth Amendment to its constitution, which guarantees the right of people to be secure in their property and in their person. That threat to privacy was very much in the minds of the framers of the American constitution when they enacted the Fourth Amendment and ensured that people were secure in their property and in their private lives. But that, of course, is not something which this government has chosen to take heed of.Privacy in the digital age is very much another matter. Digital technology, computer technology, not only allows us to find the proverbial needle in a hay stack; it allows us to find particular specified needles, and that is the part which is so very fundamentally different and which the government's response to privacy fails to address.To give an example: we all know how easy it is to find a phone number in a phone book if you happen to know the name of the person concerned. If you take the substantial phone directories of Sydney, published in several very thick volumes, it is very easy, given the name of a subscriber to the telephone system, to find their phone number because all of those names are listed alphabetically in the directory. However, if you wish to find the name of a person given only their phone number, it is almost impossible on a manual basis to go through the phone directories and seek out that name. That was an almost impossible task until very recently and it ensured that people's privacy was protected—if not by law, then certainly by the sheer physical impracticality of breaching their privacy because of the vast amounts of data involved.However, it is now possible on the Internet to simply enter a phone number on an Internet site and have the name and address of the subscriber instantly reported to you. That can take place even in the United States, where the number of subscribers is vastly higher. The power of reverse searching, given computerisation of data records, is enormous. It allows you to breach the privacy of the telephone subscriber almost instantaneously. Not only that, it will also show you the address of their house on a map which will be brought up on the screen and it will then give you street by street directions to find that house from wherever you might be located. So information technology has put into the hands of every citizen the power to breach the privacy of almost every other citizen.There are commercial advantages in this as well. The company Lexis-Nexis, which is a very substantial database provider, has recently started offering a database known as P-TRAK. This provides for some 300 million residents in the United States not only a person's name, address and telephone number but also their social security number, birth date and the names and birth dates of other people living at the same address. This data can be incorporated to include real estate records with data on neighbouring properties, approximate household income, plane and boat ownership, motor vehicle records, voter registration records, any law suits in which they have been involved, any liens or judgments which are outstanding against their name, any past criminal records and any relevant credit information.All of that is available by simply entering the name of a person that you have chosen into the Lexis-Nexis P-TRAK database and out will come some or all of that information. That represents a massive breach of privacy made possible by technology and by the commercial interests which that technology responds to, and it is a situation which we must as a parliament address. It is a situation which Europe and the United States are struggling with at the moment. Europe has a very substantial legal response to that. The United States is still working through that legislation, as we are here, but when this government promises to address those issues and then withdraws that promise, I think we have a sufficiently different situation which warrants people being very concerned about the trend of this government's interests.Although I have highlighted the activities of the Lexis-Nexis P-TRAK database, there are many hundreds of other similar databases in use throughout the world, particularly in the United States, which provide that kind of information. Government itself often has very substantial databases of information which it now finds profitable to sell to the private sector so that data matching can take place. Sometimes that information is made available as a result of freedom of information requests—which are perfectly reasonable—but when that is combined with the opportunity for data matching with private sector records, we have an issue of very serious concern. Once that starts to extend to unauthorised access to government records, the situation becomes even far worse because governments then have access on databases to criminal information, electronic medical records, Medicare records, pharmacy records, a whole range of information on employees, life insurance data and marketing returns. All of that is available in digital form and, increasingly, it will be converted for profit to accessible form to those who are prepared and able to pay.If we look at the scale of this digital traffic in data, it becomes quite an incredible amount of information flowing now in digital form. Because this is often hidden, it is useful to aggregate the effect so that we can understand the enormity of its impact. For example, in 1994 there were some 776 billion e-mail messages in the United States alone—not data; simply e-mail, which is the equivalent of private telephone conversations or letters. By 1997, that had risen to 2.6 trillion e-mail messages, and by the year 2000 it is expected to be some 6.6 trillion messages in the US alone. On a world scale it would be substantially greater. So the privacy issues raised by that are very substantial. We must address them or people will find that their privacy is at risk, even without their knowledge.The issue of the Internet raises a whole new spectre for people, because increasingly information is transmitted over the Internet. There is even the opportunity for children who are interested in Internet surfing, which is often the case, to divulge information which their parents would not wish divulged, such as telephone numbers, addresses and data about the family. All of that needs to be contained in a legal way or we will find that family privacy is significantly more at risk than we would tolerate as a society.One of the principal things which is before us at the moment in a commercial sense is the EU directive, which comes into effect in October 1998. The government, having originally promised to address the issue of the legal protection of private sector databases and private sector information, having reneged on that promise, has left Australia exposed in relation to the EU directive. This is a very powerful privacy directive. In a very serious way, it addresses the kinds of risks which we face as a society in the digital age. It requires a number of privacy principles to be observed by countries and by private sector organisations within EU countries. One of the most powerful principles is that the subject of a data record must give informed consent about the way in which that record is to be used. The EU directive ensures that individuals are aware of the impact of the use of their data records, they are aware of what will be done with them, and they are aware of the purpose for which they are being collected and manipulated. The EU protections are quite substantial. They address the kinds of issues which I have raised in this debate.In the absence of any effective regulation in this country, our businesses will find themselves not, as the government would have you believe, relieved of a burdensome obligation of red tape; rather, they will be subjected to lost business opportunities, because the EU will not deal with countries which do not have adequate privacy standards in place. Australia probably would have met those standards if the government had implemented its election promise. Because it has not, Australian business is at risk because of this government's failure to act in this very important area.New Zealand have acted. New Zealand have appropriate legal standards in place for the private sector, and they will be able to participate in EU trade. But Australia will find itself at risk of being out in the cold in a privacy sense if we do not have adequate legal standards to address these issues. Not only do we need a privacy regime in place in a legal context; we also have to make use of some of the technology which is appropriate to address privacy concerns. Although it is technology which in many ways has fundamentally undermined our ability to keep information private about ourselves, it also delivers a number of potential solutions to the privacy question.In an era where information technology and electronic commerce are very much in the public eye, the government has followed the opposition's role in having a spokesman on information technology. Senator Alston is the Minister for Communications, the Information Economy and the Arts. At a time when the information economy is before us and privacy is so critically important, the government must provide the lead to business and private citizens in using technology to ensure that privacy is maintained. I speak here particularly about cryptography, which, although it is an esoteric subject, has within its ambit the technological ability to not only deliver some very substantial protections for citizens' privacy but also underpin the whole information economy.Cryptography delivers—it keeps information secret as it passes from computer to computer or as it resides on computer databases and also has the potential to ensure that that information is checked for integrity, that the author can be validated, that the author can ensure that the recipient of that information has received it and that only the recipient has the ability to decode it. It also very clearly has the power to keep that information confidential, no matter who ends up having access to the computer system or to the computer records.Cryptography is a technology for the digital age, although it has been around for thousands of years. Our ability and our need to use cryptography have come together in the 1990s to form the foundation of an information economy, an information society, which not only allows electronic commerce to flourish but also ensures that the reasonable rights to privacy of its citizens are respected. The potential for electronic commerce to open up vast areas of fraud is also negated by the widespread use of encryption technology.There has been substantial debate in the United States about cryptography policy. Like the American administration, this government—and some previous governments of my own persuasion—has not understood the value of cryptography in ensuring that electronic commerce, which we see growing around us in leaps and bounds, is protected in a very stable way. We have seen governments attempt to use the digital era and the way in which it allows governments to maintain electronic surveillance, but we have not seen governments quite so enthusiastic to embrace those aspects of information technology which will protect the privacy of its citizens and the security of electronic commerce.To give an example, we recently approved in this parliament a bill to ensure that law enforcement agencies are able to make use of telephone tapping technology in a digital age. That is not objectionable in itself. We all know that law enforcement will sometimes require access to telephone conversations, and that this has become very difficult in the digital age. But the reality is—and figures from the United States bear this up—that, in 1996, 2.2 million US telephone conversations were tapped by the government—that is legal tapping I assume; I do not know what took place on an illegal basis. Of those 2.2 million conversations, 1.7 million were deemed to be innocent by the law enforcement agencies involved. Digital telephone tapping has now made it very convenient, very easy, for governments to tap telephones and to mount electronic surveillance operations in ways that were very expensive and very inconvenient on a practical level for governments previously.This is becoming all too easy and all too possible for government. I understand why government is reticent about the options which cryptography offers, but it is because of these reasons that the public should demand that the government adopt and promote in society a reasonable policy, a strong policy, in relation to cryptography. At the moment, the United States and Australia both prohibit the export of strong encryption products. People can gain a licence, but it is not easy to do. These cryptography products are regulated by government in much the same way that munitions might be, because in some ways governments fear secrecy, fear privacy, almost as much as they fear munitions.Law enforcement has some very reasonable basis for its requests for access, but we should not allow these to overshadow the vital importance of cryptography—and strong cryptography, at that—for citizens who are participating in the information age. If electronic commerce is to underpin Australia's economy in the next century, we have to ensure that private individuals and government are able to adopt strong cryptographic techniques or we will find that many more criminal opportunities are opened up than law enforcement is able to attack through its access to electronic communication. Many of the crimes of the next century will be electronic crimes. We will find ourselves in a situation where banks are under threat from virtual robberies rather than physical armed robberies. It will become much easier to steal from financial institutions and from those who put credit card information and other financial data through the electronic format than it will be to steal from them in a physical way. Strong cryptography will protect us from some of these potential hazards.The situation is that our national security could well be more threatened by our failure to adopt strong cryptography than by our insistence on suppressing that technology. Terrorists might well find it more practical to undermine the telephone system of a nation, to undermine the electricity distribution system of a nation, to undermine the ability of a nation to respond to attacks to national security, by undermining the very technological basis of that society itself. Unless government agencies, utility companies and substantial private sector corporations are encouraged and allowed to adopt strong cryptography, they may well find themselves under threat from those who would break the law, from those who would undermine democratic societies through terrorists acts—not the other way around.I suspect that our attitudes will have to change very substantially. This is an issue for government. We are now in a digital era and government must act accordingly. I support the second reading amendment because it addresses the very real failure of this government to ensure the privacy and security of its citizens in the information age.12:41:002096Williams, Daryl, MPMr WILLIAMS7V5TangneyLPAttorney-General10—I propose to close the debate on the Privacy Amendment Bill 1998 and, in doing so, I would like to thank those members who contributed to it: the member for Banks (Mr Melham), the member for Fisher (Mr Slipper), the member for Blaxland (Mr Hatton), the member for Dickson (Mr Tony Smith), the member for Charlton (Mr Robert Brown), the member for Sturt (Mr Pyne), the member for Batman (Mr Martin Ferguson) and, lastly, the member for Bonython (Mr Martyn Evans).To some extent it has been an interesting debate, and it is obvious that members of this House have a keen interest, as does the community, in the subject of privacy protection. But to a large degree the debate has been irrelevant to the bill. The reason it is irrelevant to the bill is that most of the speakers, particularly from the opposition, have been addressing the second reading amendment moved by the member for Banks which does not address the bill but addresses what the bill does not do. This is, as I said, interesting, but it is not particularly helpful in considering the bill. In fact, I think only about two issues were raised in relation to the subject matter of the bill itself. Let me say at once that the government oppose the amending motion of the member for Banks and we propose to vote against it.I also want to comment again on the manner in which the opposition deals with bills in this House, and in particular bills in my portfolio. We have, yet again, the member for Banks coming in, unprepared to move amendments to the bill but prepared to foreshadow that the shadow minister in the Senate will move amendments. This is a continuing and constant insult to the House of Representatives. The member for Banks must accept responsibility for it, although the ultimate responsibility rests with the shadow Attorney-General, Senator Bolkus. Senator Bolkus must be just about the laziest shadow minister that there ever has been. He is never prepared to state what the opposition position is on a bill. He is never prepared to allow amendments to be considered in this House. We do not even know until the very last minute what amendments Senator Bolkus proposes to portfolio bills in the Senate.I think the Leader of the Opposition (Mr Beazley) really ought to take a long hard look at the position of his shadow Attorney-General and just ask, `Is he doing anything?' He is certainly not assisting the member for Banks, as his representative, to do his proper job in this House. I repeat: it is a continuing insult to the House of Representatives that it is treated in this way by the opposition.The government is acting on privacy protection in the private sector as a whole. On 20 February, the Privacy Commissioner and I launched national principles for the fair handling of personal information. These principles were developed by the Privacy Commissioner through a process of intensive consultation with business, privacy, consumer and government representatives. The Privacy Commissioner will now continue her consultations to assist business to implement the principles and to work out means by which they may be enforced. In this way, the government believes that privacy protection in the private sector can be ensured without imposing heavy-handed regulation on business. I can add in this context that the privacy principles received the support of some 14 peak body organisations at the time of their release. Those bodies were largely involved in the consultations resulting in their development and they will be involved in the consultations relating to the development of implementation mechanisms.The government took the approach of seeking a self-regulatory regime for privacy protection in the private sector following extensive consultations with the private sector. The member for Banks has mentioned the release of the discussion paper in September. This resulted in a significant number of formal submissions, formal representations, and the submissions revealed concern about the cost implications for business of a heavy-handed regulatory approach. The government was committed in its election policy and continues to be committed to reducing the regulatory burden on business and particularly on small business. The government firmly believes that privacy protection can in fact be achieved in the private sector without imposing unnecessary legislative burdens on business.A number of speakers have referred to the European Union directive and have raised a spectre of alleged adverse trading consequences for business in Australia if that directive is not complied with. The government has had a number of discussions with European Commission officials about the directive. Although the directive refers to limitations on transfers of personal information to countries that do not have `adequate levels of policy protection', it is unclear what the precise, practical impact of the directive will be. The commission is at this stage still developing an approach to assessing adequacy.It should be noted that the EU directive contains a number of exceptions which will allow transfers of data to non-EU countries in certain circumstances, even if they are not considered to have adequate levels of privacy protection. In addition, an EU member country may authorise a transfer or set of transfers of personal information to a non-EU country that does not have an adequate level of privacy protection where there are adequate privacy safeguards in place under appropriate contractual clauses.The government believes that the national principles on fair handling of personal information which were released by the Privacy Commissioner on 20 February provide a good basis for Australian businesses which handle personal information to develop practices to ensure that the privacy of individuals is protected. The government is discussing the Privacy Commissioner's principles with EU officials in the course of its discussions about the EU directive. The government will of course continue to monitor the directive both domestically and internationally.It has been suggested by the member for Banks that the bill sets up a regime inconsistent with the principles laid down by the High Court in its decision in the Brandy case. This is incorrect and, regrettably, demonstrates a lack of understanding on the part of the member for Banks of the Brandy decision and of the mechanisms which would apply under this bill. The impact of the Brandy decision has been taken into account in the construction of the determination and enforcement regime.The opposition has also suggested that the privacy of unemployed persons is not respected by the government. I draw it to the attention of the opposition—and in particular the member for Batman—that this bill will apply to providers contracted by the Department of Employment, Education, Training and Youth Affairs under the new employment services market.The member for Banks may in fact recall that it was a committee of which he was the chairman and I was a member when the ESRA scheme was introduced which saw that privacy principles were respected and the legislation was improved by the committee's determination. Unlike the then government, this government has already taken those principles into account.Since 1 January 1989 when it came into operation, the Privacy Act has required government agencies that hold information about individuals to deal with that information in accordance with a specific set of private standards. It has also provided a specific regime for dealing with breaches of those standards and monitoring compliance generally. The government is committed to ensuring that where its agencies contract for the delivery of services those same specific standards and that same compliance regime continue to apply. That is the purpose of the amendments proposed in the bill: to preserve the same protection that the personal information had when the government performed the service. The act will apply only to those organisations who choose to contract with government to provide services to government. This is very different from imposing privacy legislation on the private sector as a whole.The question of privacy laws for the private sector generally is a separate issue which should not be used by the opposition to delay passage of the Privacy Amendment Bill. The government knows that individual Australians want the parliament to deal with this legislation expeditiously, and the government expects the opposition to stop playing obstructive games with this important legislation.One matter I do want to mention specifically is the one raised at the end of his speech by the member for Bonython—the subject of encryption, or cryptography. The government is aware of and is acting in relation to cryptography. There has been established for some time a committee of the OECD in which Australia participates. In fact, a senior officer of my department chairs the committee. It has developed some principles which ensure the meeting of different objectives while using encryption.The member for Bonython expressly mentioned law enforcement. You could add to that security and intelligence. One of the principles expressly deals with that subject. The government has adopted as broad policy objectives the achievement of the principles determined by the OECD as a result of the work of the committee on which the deputy secretary of my department participates. So the member for Bonython can rest assured that the government is well aware of the issue and is acting on it.I repeat that the government will oppose the second reading amendment moved by the member for Banks and supports the bill as is. Question put: That the words proposed to be omitted (Mr Melham's amendment) stand part of the question.12:57:00The House divided. (Mr Deputy Speaker—Mr K.J. Andrews)74Abbott, A. J. Anderson, J. D.Andrew, J. N. Anthony, L. J.Bailey, F. E. Barresi, P. A.Bartlett, K. J. Billson, B. F.Bradford, J. W. Broadbent, R. E.Brough, M. T. Cadman, A. G.Cameron, E. H. Cameron, R. A.Causley, I. R. Charles, R. E.Cobb, M. R. Downer, A. J. G.Draper, P. Elson, K. S.Entsch, W. G. Evans, R. D. C.Forrest, J. A. Gallus, C. A.Gambaro, T. Gash, J.Georgiou, P. Grace, E. J.Hardgrave, G. D. Hawker, D. P. M.Hicks, N. J.* Hockey, J. B.Jeanes, S. B. Johnston, R.Jull, D. F. Katter, R. C.Kelly, D. M. Kemp, D. A.Lindsay, P. J. Lloyd, J. E.Marek, P. McArthur, F. S.*McDougall, G. R. McGauran, P. J.McLachlan, I. M. Miles, C. G.Moore, J. C. Moylan, J. E.Mutch, S. B. Nairn, G. R.Nehl, G. B. Neville, P. C.Nugent, P. E. Prosser, G. D.Pyne, C. M. Randall, D. J.Reid, N. B. Reith, P. K.Ronaldson, M. J. C. Ruddock, P. M.Scott, B. C. Sharp, J. R.Slipper, P. N.* Smith, A. C.Somlyay, A. M. Southcott, A. J.Sullivan, K. J. Taylor, W. L.Thomson, A. P. Truss, W. E.Tuckey, C. W. Wakelin, B. H.West, A. G. Williams, D. R.39Albanese, A. Beddall, D. P.Bevis, A. R. Brown, R. J.Crean, S. F. Crosio, J. A.Dargavel, S. J. Ellis, A. L.Evans, G. J. Evans, M. J.Ferguson, L. D. T. Ferguson, M. J.Filing, P. A. Fitzgibbon, J. A.Grace, E. L.* Griffin, A. P.*Hatton, M. Hollis, C.Jenkins, H. A. Lawrence, C. M.Lee, M. J.Macklin, J. L.McClelland, R. B. McLeay, L. B.Melham, D. Morris, A. A.Morris, P. F. Mossfield, F. W.O'Connor, G. M. O'Keefe, N. P.Price, L. R. Quick, H. V.Sawford, R. W.* Sercombe, R. C. G.Theophanous, A. C. Thomson, K. J.Willis, R. Wilton, G. S.Zammit, P. J.Bishop, B. K. Smith, S. F.Fischer, T. A. Brereton, L. J.Howard, J. W. Beazley, K. C.Smith, W. L. Martin, S. P.Wooldridge, M. R. L. Tanner, L. J.* denotes tellerQuestion so resolved in the affirmative.Original question resolved in the affirmative.Bill read a second time.2099Leave granted for third reading to be moved forthwith.Bill (on motion by Mr Williams) read a third time.Bills2099r4182099Debate resumed from 4 December 1997, on motion by Mr Reith:That the bill be now read a second time.13:01:002099Thomson, Kelvin, MPMr KELVIN THOMSONUK6WillsALP00—It is entirely appropriate that we are debating the Workplace Relations Amendment (Superannuation) Bill today, April Fools' Day, because, by introducing this bill, fools are what the government must be taking Australian workers for.Let us make no mistake: this is a bill which will leave thousands of Australian workers and their employers worse off because it will remove a mandated right to superannuation and the protection of an independent arbitrator to make award determinations on superannuation matters. If the government believes that Labor and the Australian people will take that lying down, this is an April Fools' joke which is about to blow up in its face like a joke cigar.Let me say at the outset that Labor will be opposing this bill. In opposing this bill, we will be exposing it for the vitriolic and unwarranted attack on thousands of workers' superannuation entitlements that it is. It is a nonsense claim that employers will be better off because of this bill. In addition, we intend to refer this bill to the Senate Select Committee on Superannuation for a thorough examination by the public and by the Senate.I want to respond to what the Minister for Workplace Relations and Small Business (Mr Reith) said in his second reading speech when he introduced this bill. Although it was a short speech, it was very indicative of the way this government treats Australian workers. The minister said that this bill will remove a layer of complex detail from awards and relieve employers of the burden of complying with an extra set of obligations. He is dead wrong. The fact of the matter is that many employers benefit from the administrative simplicity that award-based superannuation arrangements provide. For example, employers benefit by having to pay employee superannuation contributions into only one fund rather than having many funds into which to pay those contributions. Imagine the increased compliance costs that an employer of 100 people would have if that employer had to pay superannuation contributions into 100 different superannuation funds. In addition, employers benefit in general by having an independent third party, the Australian Industrial Relations Commission, resolve disputes in relation to superannuation—something which this bill will specifically and deliberately take away.Employers also benefit from knowing that, where their employees are members of industry funds, they are generally getting the best superannuation product that exists in the market. Industry funds operate on a not-for- profit basis and they have continuously out-performed the rest of the market in both returns on investments of members' funds and, importantly, on fees and charges.Industry funds in general are tailored to suit the specific needs of workers in particular industries. For example, the C+Bus industry fund covers workers in the building industry and provides a range of specific features which building workers most need. This bill potentially will see thousands of building industry workers lose their automatic membership in the C+Bus industry fund or be lured away by funds which do not really meet their specific needs, whatever the claims of the glossy brochures may be.Industry funds in general have outstanding insurance cover for death and disability at a price which would be impossible for any one individual to negotiate directly with an insurance company. So it is generally through award-based superannuation that employers are able to fulfil their common law duty of care provisions to their employees.The minister also said that this bill complements the new choice of fund arrangements in Taxation Laws Amendment Bill (No. 7) 1997 . The implication from this is that employers will get a dual benefit—that the removal of superannuation from awards and the choice of fund will be like Christmas come twice for employers. On the government's own admission, the explanatory memorandum of Taxation Laws Amendment Bill (No. 7) states that employers will face increased compliance costs to the tune of up to $21 million in the first year of implementation and up to $15 million every year thereafter. And that from the government which promised small business a 50 per cent reduction in red tape. That does not include any estimate as to the cost to employees as a result of the government's model.The minister also said in his second reading speech that this bill will prevent the Australian Industrial Relations Commission from dealing with disputes about superannuation by arbitration. He said that the commission will not be able to prevent or settle disputes about superannuation by making awards or orders, or maintain the settlement of such disputes by varying awards or orders.The government has been accused on many occasions of seeking to deliberately provoke confrontation between employers and employees in the workplace. No better example exists than in its current attitude to the waterfront dispute, where all the evidence which is emerging suggests that the government has been an active provocateur—it is not simply some disinterested bystander, but is actively doing its best to promote and maintain that dispute.This bill is the next secret ingredient in Mr Reith's special recipe for creating industrial disharmony in Australia. It is not enough for him to ram through draconian industrial relations laws which have undermined the legitimate rights of workers; it is not enough that he has since tried, on numerous occasions, to fiddle with that legislation—which he boasted, in the first instance, was fantastic—by altering the rules which apply to unfair dismissals to make it easier for employers to sack people. No, that is not enough for this minister. Now, as well, he wants to throw superannuation into the pot and to give it a good stir in the special way that only he knows how. This concoction that he has planned for Australian workers, particularly for part-time and casual workers who will be worse off if this bill is passed by the parliament, leaves a very bad taste in the mouth indeed.It is my belief that if we remove the role of the Industrial Relations Commission from the settlement of disputes concerning superannuation we will go back to the days in the 1980s when there were quite a few disputes concerning superannuation. As someone who is Melbourne based, I can well recall the dispute between the storemen and packers and Woolworths when the catchcry of the workers was `choice of fund'. They said, `We want the right to choose where our superannuation money goes.'It was only through the later involvement of the Australian Industrial Relations Commission and through the establishment of industry funds with their joint employee-employer representation that these disputes were resolved. But this government wants to turn the clock back on all that. I foresee, anticipate, predict, that there will be more industrial disputes if this bill is passed.Currently, employers must comply with both award superannuation obligations and the Superannuation Guarantee Act 1992 obligations. This bill will amend the Workplace Relations Act 1996 by removing superannuation from the list of allowable award matters and also by expressly precluding the Australian Industrial Relations Commission from making what is called an exceptional matters order about superannuation.The amendments will make current enforceable superannuation provisions in awards unenforceable from 30 June this year, and they will remove the Industrial Relations Commission's jurisdiction to prevent or settle disputes about superannuation by making awards or orders or varying any awards or orders.Why are workers, particularly part-time and casual workers, going to be worse off under this bill? The answer is simple. When Labor introduced the superannuation guarantee in 1992, it was always intended as a minimum standard for employers to follow in paying superannuation contributions on behalf of employees. For example, the superannuation guarantee requires employers to pay superannuation contributions to those employees who earn more than $450 per month.It also requires superannuation contributions to be paid by 28 July, following the end of the previous financial year—that is, it effectively requires employers to pay superannuation contributions once a year by that date or lose the many incentives that paying superannuation contributions provides, one of which is tax deductibility. Those minimum conditions are just that: they are the minimum conditions which employers have to meet. But, when Labor introduced the superannuation guarantee, we made it possible for employers to meet both their superannuation guarantee minimum obligations and their award-based obligations where the two differed.The reason for that was that some industrial awards provide employees with superannua tion entitlements which are better than the superannuation guarantee minimum conditions. For example, many awards prescribe that employees should receive more frequent superannuation contributions than just once a year. This could mean more frequent payments on a monthly, or perhaps even on a quarterly, basis. This issue of how frequently superannuation contributions are paid is no small matter. For example, if a company becomes insolvent, there is a real prospect that, if the superannuation contribution has not been paid, the employees will miss out for that period, despite it being a legitimate entitlement.The issue of employees missing out on their legitimate entitlements is one that has arisen very recently with circumstances such as Cobar and Woodlawn, and it is something that I know you, Madam Deputy Speaker, are personally concerned about. Employees should not miss out on their superannuation entitlements and, if we have payments on a monthly basis or on a quarterly basis—better arrangements in awards than are provided for by the superannuation guarantee—that will represent a greater protection for workers. It is a protection which they should not be deprived of.The other point about more frequent payments is that it actually adds value to your superannuation at the end of your working life. The Australian Institute of Actuaries has done some modelling on the issue of frequency of payments. It has calculated that employees who receive payments on a more frequent basis than annually are significantly better off in terms of higher income on retirement. For someone who spends, for example, 40 years of their life in work, the difference between annual payments and more frequent payments could mean the equivalent of two years worth of age pension.I need to remind this government that superannuation is about providing retirement incomes for workers. The government is obsessed with the idea that this is about strengthening trade unions, but it is about providing workers with decent retirement incomes. The government needs constant reminding that superannuation is about pro viding a better standard of living for all Australians, not just the privileged few who used to have access to superannuation before award-based superannuation was introduced by Labor.Before Labor's superannuation reforms, only about 30 per cent of Australians had access to superannuation. I think now—and it is a figure that I note the Assistant Treasurer (Senator Kemp) uses from time to time—some 90 per cent of employees are covered by superannuation. The reason for that is award-based superannuation and Labor's superannuation guarantee. They are figures that we all ought to be proud of. The government, rather than trying to turn the clock back on these things, ought to be taking pride in the fact that in this country over 90 per cent of workers have superannuation.Many awards specify better than superannuation guarantee minimum contribution levels, particularly for casual and part-time workers. It ought to be noted that the superannuation guarantee does not require contributions for workers who earn less than $450 per month. There are over 26,000 employees in the hospitality and textile, clothing and footwear industries who earn less than $450 per month.Obviously many are part-time and casual workers and many are women. Under the relevant industrial award, those 26,000 workers receive superannuation entitlements at the rate of at least three per cent of their wage. So they are getting some superannuation from their award even though they get no superannuation under the superannuation guarantee. That translates into a modest accumulation of superannuation but, when taken over the long term and allowed to compound, could translate into a healthy account balance used to supplement a retirement income. The passage of this bill would immediately remove the entitlements of these workers unless they can be secured in an Australian workplace agreement or a certified agreement.That means all those part-time and casual employees in the textile, clothing and footwear industry, the hospitality industry and many more in the retail industry will not be getting any superannuation paid on their behalf by employers. I mentioned earlier that many of the workers who tend to be concentrated in these particular industries are women and they are often employed on a part-time and casual basis which puts their earnings below the superannuation guarantee minimum threshold.It should come as no surprise that the Howard government is happy about introducing another policy which disadvantages women. That is consistent with the attitude it has taken in areas such as child care, employment programs, aged care and the like. We saw the Prime Minister (Mr Howard) announce with some fanfare on International Women's Day what was described as a policy on superannuation and divorce. When we looked at it we found that it was a policy to develop a policy. It is quite clear when you look at the fine print that they are further behind where Labor was in 1995 when we were considering these issues. This government, after two years and having in its platform the idea that it was going to do something about superannuation and divorce, has in fact made no progress whatsoever in this regard.This bill also removes the role of the industrial umpire. It places the onus on employees to negotiate superannuation entitlements, above the superannuation guarantee minimum, directly with their employer and have these incorporated in their terms and conditions of employment. How are employers going to do this? If an employer is no longer required to pay a part-time or casual worker superannuation they are not going to. It is that simple. Those workers will not get superannuation payments at all. It is worth noting an article in the Adelaide Advertiser on Friday, 27 March. It stated:More than 50,000 South Australians could lose a total of $50 million in superannuation entitlements under federal legislation being considered by parliament this week.. . . . . . . . .Awards which cover areas including banking and finance, universities, the gas industry and local government involve provisions on superannuation which include a 3 per cent extra entitlement granted in the late 1980s in lieu of a wage increase. Many employers operating with these awards have paid this extra 3 per cent on top of the Superannuation Guarantee Contribution of 6 per cent which is paid to all Australians workers, usually as part of a corporate fund to which employees also contribute.The risk here is that that three per cent which is currently being paid to all those workers—50,000 in South Australia—will simply disappear. The article quotes industrial relations consultant Mr Paul Acfield as saying:. . . the erosion of employees' benefits may be an accidental—I think he is being charitable—consequence of the changes.Some employers may continue to pay the 3 per cent . . . but for those who lose this 3 per cent, it will in effect be a 3 per cent wage decrease—the cutting of a wage rise granted 10 years ago.Absolutely right. We have a situation where, employers having paid that three per cent on top of the superannuation guarantee, those workers in South Australia stand to lose that contribution and in the order of $50 million in legitimate entitlements as a result of this legislation.The abolition of the Industrial Relations Commission's role creates an imbalance in favour of the employer by requiring those who lack negotiating power to negotiate with those who have negotiating power. I have already mentioned the benefits that employers get from knowing that their employees are in an outstanding product, in the form of an industry based superannuation fund. This bill will also undermine the position of industry super funds which operate as not for profit organisations and have consistently outperformed most other market based superannuation products in all facets—fees, charges, returns, insurance coverage.It is clear that this bill, introduced by a government intent on dismantling the rights of ordinary Australian workers, will disadvantage a great number of employees, particularly those on low incomes. The government has not put up any credible argument that employees will benefit from the introduction of this bill, because there is none. The minister stated in his introductory speech that the proposal to remove superannuation from awards is not a new proposal but a part of the first Workplace Relations Bill introduced in May 1996.That is true. However, amendments to the bill negotiated with the Australian Democrats added superannuation to the list of allowable award matters with the qualification that an examination of moving to a single superannuation regulatory regime was worth considering. The minister glibly makes reference to that in his second reading speech as if it is a foregone conclusion that the Australian Democrats will support this bill. But what the minister neglected to tell the House in his introductory speech was that the Australian Democrats had qualified their observations with the proviso that `workers are not made worse off as a result of any overriding or repeal of award superannuation clauses'. If passed, this bill will result in many thousands of workers, particularly casual and part-time women workers, being made worse off. The minister and the Australian Democrats need to be aware of this.The minister made an extraordinary observation and claim in his second reading speech that award based superannuation provisions have `done nothing more than add to the complexity of superannuation administration'. What an extraordinary claim. Without award based superannuation we would not have the superannuation coverage that we have today.It has extended the benefits of superannuation to many employees who did not have coverage previously. We have seen thousands of employees have access to additional funds to supplement their retirement incomes. It has provided employees with death and disability insurance coverage at a low cost, which low and middle income employees would never have been able to afford otherwise. It has extended superannuation coverage to part-time and casual employees. It has benefited employers through productivity wage trade-offs which were paid into superannuation accounts. These are just some of the benefits that award based superannuation has provided to workers.So for the minister to claim that award super has done nothing than add to administrative complexity is ludicrous. It is laughable. Superannuation is a major achievement of the previous Labor government with support from the trade union movement. This bill reveals starkly just how this government plans to treat ordinary Australian workers. The House ought to have its attention drawn to the hypocrisy that the government are displaying in introducing this bill. They want to scrap super in awards, but they want to allow employers to continue to use the notional earnings basis—where do you find this; in awards—in order that they do not incur additional costs. This is an example of the government's hypocrisy on these matters.This bill comes in association with legislation being brought forward by the government to implement what they describe as choice of superannuation. They want to introduce a situation where employers are required, forced, to offer a range of different superannuation products—they might turn out to be identical superannuation products—to their work force.The experience in other countries where this has been tried, such as the United Kingdom and Chile, has been that workers have been persuaded to move into second-rate and third-rate superannuation funds and to move away from funds to which employers were contributing: for example, to personal superannuation schemes which clearly could not deliver the same kinds of outcomes. There has been outrage in those countries when the results of these sorts of policies have become known.The background on superannuation is that back in 1983 less than 40 per cent of the work force were covered and probably less than 15 per cent benefited because often the schemes were not portable and if you did not get to retirement age with a particular company—and they were based on individual companies—you missed out on superannuation. The schemes were heavily biased against women, heavily biased against blue-colour workers and heavily biased against the private sector. Australia faced at that time, and we still face, some socioeconomic imperatives. We need to provide for a rapidly ageing population and we need to create a much larger pool of domestic savings in order to reduce our reliance on foreign debt and loosen the external trade imbalance constraint.During the 1980s we saw industrial disputes, skirmishes, such as the storemen and packers dispute I mentioned before, and pulp and paper workers, meat workers, seafarers and crane drivers. In 1984 the campaign for occupational superannuation was stepped up in the building industry and it spread from there to metals and transport. In 1986 the Industrial Relations Commission intervened in a significant way to try to regulate the campaign and to resolve disputes concerning choice of fund. Ultimately, the government legislated to create a truly universal system of employer funded superannuation. The union movement had by the end of the 1980s secured industrial awards and agreements covering some 80 per cent of the work force. It had done that with the involvement of the Industrial Relations Commission—the very thing that this government is trying to wind back.Total superannuation fund assets have grown from around $60 billion in the mid-1980s to $300 billion today and should exceed $450 billion by the end of the decade. To put that in perspective, it is approximately the total current market capitalisation of all the companies listed on the stock exchange. That means that the assets of Australian businesses and governments are, to a very large degree, owned by employees and held in their superannuation funds. Against this background, industry superannuation funds are a recent phenomenon, a uniquely Australian phenomenon, increasingly providing a model for social policy developers around the world. They are providing fully portable benefits in industries where just 15 years ago that was considered impossible—industries like hospitality, building and construction, and retail where casualisation and lack of continuity are endemic.Those funds succeed because they are simple. The employer contributes to an account maintained in the name of each worker and receives interest based on fund earnings. They succeed because they are supported by unions. Increasingly also, they thrive due to cooperation from employers and employer associations.You would think, given that kind of background and track record, that the government would be delighted to allow it to continue, to allow Australia's superannuation to build up to give us greater savings individually for our retirement and collectively as a nation. But what has been the government's strategy? It has been to abolish the Labor promise of government matching co-contributions, so diminishing superannuation from 15 per cent down to nine per cent, which we estimate will cost workers on average of the order of $100,000 on retirement. It has introduced the superannuation surcharge, which was said to be an attack on high income earners but is something which impacts on low and middle income earners as well. It has introduced opting out for part-timers and casuals and increased the threshold for opting out. It proposes to introduce the compulsory fund choice environment. Here it says, `We are going to do away with award based superannuation, we are going to do away with the role of the Industrial Relations Commission and we are going to leave it to workers to negotiate individually with their employers over superannuation.'This contradicts all the objectives of an appropriate national retirement incomes model. We have had an excellent system which Labor has built up—something which has been envied by other countries—and the fact that the government has attacked it in the way that it has, notwithstanding the Prime Minister's promise that no worker would be a dollar worse off, leads commentators inevitably to conclude that government policy on superannuation is being driven simply by resentment of success of the labour movement in terms of its involvement in superannuation and the process of capital formation in Australia.We are absolutely opposed to this bill. We are absolutely opposed to withdrawing from workers the right to have superannuation included in awards. We believe that the steps that both the Labor government and the trade union movement took during the 1980s were very much in the best interests of both work ers and the Australian nation. This government's steps, including the bill before the House, represent a retreat back to the past, a retreat back to circumstances where workers will be worse off, will not have the money to fund their retirement incomes for which they are entitled and will be dependent on the pension. We will be opposing this bill and we look forward to the support of parties in another place to ensure that it is defeated.13:31:002105Evans, Richard, MPMr RICHARD EVANS3V5CowanLP10—In starting my contribution in this debate on the Workplace Relations Amendment (Superannuation) Bill 1997 I should pass comment on the contribution by the previous speaker, the member for Wills (Mr Kelvin Thomson). I sat for half an hour trying to write down some of the key points in this speech. I took down about half a dozen or so. The example of the old Labor thinking is very typical of the member for Wills—the longing for the days of the 1980s when they had the glory of being in power in state parliaments all over Australia and being in power federally, where they could, as he quite rightly said, promote the labour movement and all things Labor. It is industrial age thinking, if you like.Since the early 1980s when the member for Wills was working on his value system things have changed rapidly. We have moved away from an industrial aged system and into information systems and technology—the new age—with information and skill based and knowledge workers. We have to learn to be a bit more flexible and focused on what employees and employers want rather than what the labour movement wants. He said that it is okay to have two systems in place for superannuation for workers. Why not only one? We have one. It is law. By implication what he wants to do is increase the cost for employers. So, although he is concerned about the employees, he shows little concern for the employers who are there to provide jobs in partnership with employees.He also talked about the lack of power. He made some spurious claims about women and part-time workers. There was no substance to support his claims. He did say that the Labor Party model is the best. I think it was deter mined at the ballot box at the last election that it was not the best. The electorate quite resoundingly decided that the Labor Party model was not the best.The amendments we are discussing today ensure that, notwithstanding the bill's removal of superannuation as an allowable matter in federal awards, employers will be able to continue to use the notional earnings bases of employees determined by reference to federal industrial awards. This will enable employers to continue to use these notional earnings bases for the purpose of calculating their liability, if any, to pay the superannuation guarantee charge. The amendments also make a further minor amendment to the superannuation guarantee law consequent upon the removal of superannuation as an allowable matter in federal awards.Is there a financial impact to the taxpayer on this particular legislation? The answer is clearly no. Is there a compliance cost impact? The answer is clearly no. What this all means and the reason we are putting this through is for simplification. The press release of the Minister for Workplace Relations and Small Business (Mr Reith) issued on 25 November last year stated:Today there are two sets of prescription for the superannuation, namely, the superannuation guarantee legislation and awards.The government's initiative will remove another layer of unnecessary red tape, whilst preserving the level of contributions for employees.He went on to say:With the passage of the legislation the AIRC will no longer have the jurisdiction in respect of an industrial dispute cover superannuation in the workplace and employers will only have to deal with a single set of obligations under the superannuation guarantee legislation.The previous speaker, the member for Wills, did talk about disputation 15 to 20 years ago. Clearly there was disputation. There was not enough access to superannuation in those days. However, the Labor Party introduced the superannuation guarantee legislation which removed the need for disputation in that regard.The removal of superannuation from the awards has long been government policy and was subject to negotiation with the Democrats in 1996. At that time, the Democrats signalled that they would be `prepared to support the consequential amendments to the Workplace Relations Act to repeal award coverage of superannuation' subject to a satisfactory legislative package being developed. It is here today.To give you an example of how this new arrangement will operate, allow me to give you an example the minister has supplied. Immediately before superannuation is removed as an allowable matter under federal awards a fictitious company, say, ABC Ltd, was contributing to the ABC superannuation fund on behalf of an employee, say, Ryan in accordance with a federal award. The award was in place before 21 August 1991 and requires the employer contributions to be equal to six per cent of any employee's gross salary at the last birthday.Ryan's notional earnings base is therefore determined in accordance with section 13 of the SGAA. Under this section, the notional earnings base is the earnings of the employee by reference to which contributions are calculated under the award—that is, the employee's gross salary at last birthday. In addition, ABC Ltd's charge percentage for superannuation guarantee purposes is reduced under subsection 23(2) of the SGAA since ABC Ltd is required by an industrial award to contribute superannuation for the benefit of any employee as a specified percentage of the employee's notional earnings base. Once superannuation is removed as an allowable matter under the federal awards—that is, when this bill receives royal assent—ABC Ltd continues to contribute to the ABC fund for the benefit of Ryan in the same manner as it had contributed before. No new arrangements or agreements relating to superannuation are entered into.In this circumstance, Ryan's notional earnings base will still be determined under section 13 of the SGAA as if ABC Ltd were contributing in accordance with the industrial award and the terms of the award relating to superannuation contributions had not been varied. ABC Ltd's charge percentage reduction will still be calculated under subsection 23(2) of the SGAA as if ABC Ltd were required by the industrial award to contribute for the benefit of Ryan and the requirements of the award relating to contributions had not been varied—and this is covered under new subsection 12(a)(4).Therefore, it is clear this new arrangement does not affect employees but has a substantial impact upon reducing the employers' needs of maintaining a system for the same result. This is quite contrary to the contribution from the member for Wills. If you had listened to the member for Wills's contribution, you would imagine that there will be a severe impact on employees, yet that example I have just given suggests that there will not be.This amendment amends the Workplace Relations Act, and it allows me to talk about the particular act in some broader terms, as did the member for Wills. Since the government introduced this act, industrial relations has really been transformed. As we go through the industrial age into the information technology age, there is no need for the old industrial age thinking of the need to have confrontation between the employee and employer. There is no need for that under a new era of industrial relations.We are moving towards 21st century workplaces. We are getting away from this `us' and `them' sort of thinking. We are moving into cooperative thinking with employers and employees. We need an industrial relations system that is able to cope with this flexibility, so we need to move away from the old, archaic industrial age thinking, which the Labor Party in particular is so keen to go back to.The new act has placed wages and conditions in the hands of those who really matter. Previously, it was in the hands of the courts, union negotiations and industry negotiations, but with this act we have moved it to those who really count, and those people who really count are the employees at an enterprise working with their partners, the employers. Without either one, the enterprise does not exist. In Australia, we—in particular, the broader work community—have come to terms with the fact that information and knowledge based workers are a severe asset to an enterprise. So the enterprise then has to negotiate quite openly with its employees to keep that information and knowledge with that particular enterprise.Within the new age workplace we have information workers. An information worker has a different range of skills now from the industrial age worker. They now have delegated authority. They now work in work groups. There are no more hierarchical structures, to which the ALP wishes us to return. Rather, it is more cooperative groups, and they require different skills. They need decision making skills, planning skills and independent thinking skills. They need to be able to participate in the process of an enterprise. They are working in partnership with their employers, and smart employers understand the importance of knowledge based and information based employees and, therefore, will work in partnership with them.What are the ALP, the opposition, who would like to come into government at the next election, putting forward? They would like to go back to the confrontationalist past—the centralised approach to wage fixing industrialisation. But now we need to go enterprise to enterprise, and the new act allows for that. The new act has also boosted productivity because now that employees are having a say in their enterprise, having a say in what they can earn for the work they are doing, their productivity is increasing, which obviously is helping economic growth. Much more importantly, though, the employee has a much more valued say in the enterprise.Workplace relations going into the 21st century means that it will be better for employees, better for enterprises and better in fact for employers. No-one likes giving up their power at all. Of course, the current union structures would not like this way of thinking for the 21st century. They would be very reticent to give up the power they have developed over the years and years of industrial confrontation.There is a place for the new age with the unions in the new workplace, but they have to change themselves. We are going through massive change through our communities, our education systems and a whole range of different things. So too should the union movement change their way of thinking, their way of servicing their membership, and get away from this confrontation and centralisation approach and move more into enterprise representation. They have to adopt, change and move away from confrontation.The industry awards have been developed over many years. Quite rightly, they were a major benefit for many employees over those years during the industrial age, but they are not suited to the 21st century. They really need to start thinking about how they can adapt their important role in the 21st century. With our act, we have allowed them to start thinking about that and representing employees a bit more effectively.This is not just one-sided. It is not just the responsibility of the employees and their representatives—the union movement—to change but also the responsibility of management to change. They have to pass greater responsibility to their employees. They have to learn to trust their employees and provide them with the skills and the knowledge for them to be able to apply themselves within the enterprise. That is a real challenge for new managers, but those managers who are moving towards the 21st century are accepting these challenges and working with employees in partnership to ensure the enterprise operates.If you do not have the investment in the first place, you do not have the enterprise. But, if you do not have the knowledge based workers, the information based workers, you still do not have the enterprise. It is a clear partnership, and those modern managers and modern employees today are learning that it is a partnership and they have to work together. It is going to be a challenging time for everyone but, in a competitive world and with the breaking down of national boundaries—there is a competitive world out there—people have to become more and more competitive. We cannot take things for granted as we used to, say, 20 or 30 years ago. We have to apply flexibility, and the Workplace Relations Act allows that to happen.As the Workplace Relations Act evolves, as it becomes more well known and as people get used to dealing with this, it will be accepted within the business community as a flexible way for enterprises to work with their employees in a partnership relationship and to develop. There are too many memories of the past—union confrontation, employer confrontation, management confrontation, not dealing with one another, thick barriers between the managers and employees, not talking to one another, not sharing information and not sharing information about how well the enterprise was going. Those things really have to reduce in this new age.It is worth while remembering that at the very core of the act is the agreement between employers and employees. As I said before, this is the modern age thinking. You have to deal with your employer. You have to deal with your employee. If you are working in a partnership, you come to an agreement and you move forward from then on.The act also has a protection for the low paid. Last year, we had a $10 increase for the low paid. We also had a 3.2 per cent increase for the metal trades in a low inflation environment, which I think everyone would think was a good move. The act has also meant a typification of awards. It has allowed effective representation and freedom of association. It has banned the closed shop regime that we had for so long: unless you were a union member, you could not go and work for that enterprise. It has stopped all that, and I think that is a good move. There are also strong compliance measures, and the unfair dismissal claims that were in the old Labor Party act, which they want to go back to, have reduced by 51 per cent. That means that employers can now employ with confidence and employees can get on with their partnership with the employer.Resulting from the act, employees now have a vital say in the enterprise. Some may reject this notion right now—and I am sure we will have a host of other speakers from the other side saying what a lot of rubbish that might be—but, as it evolves, employees will have a greater say in the operation of an enterprise. We have seen fewer industrial disputes. I believe that industrial disputation now is the lowest since the First World War, and I think everyone in Australia would be very happy about that. We have also seen over the last year or so real wage increases. That is a great benefit for the community, and it is something that the act has provided. Now that we are all focused on productivity and the success of an enterprise, this can be done through the operation of the act and the flexibility that allows employers and employees to work together in partnership.Let us look at the opposition's position on this issue. We should never forget that the Labor Party's industrial relations system shrunk take-home pay packets and put real jobs at risk over the period they were in government. Under Labor, agreement making was complicated, highly regulated, time consuming and allowed excessive intervention by third parties. We do not want that. We want people at the enterprise to be working together. Under Labor, sanctions against irresponsible industrial actions were complicated, time consuming and frequently flouted and employers were averse to using them. Under Labor, employees and employers were restricted in the agreement outcomes they could opt for, and reform of work practices for improved pay were also limited.Labor legislated to abolish junior rates in awards as from June 1997, which would have jeopardised 200,000 young people's jobs. Why would you jeopardise young people who were starting out in their jobs by abolishing those award rates? Under Labor, unions became distant and aloof from workers and formed large super unions which functioned like monopolies. They really did not get down to the grassroots. They forgot what they were all about, and that was representation. To move into the new world, they need to change their thinking.Under Labor, employees were not able to make a free choice as to whether or not they wished to be a member of a union. Under Labor, non-union workplaces were subject to open-ended union right of entry. Labor's unfair dismissal cost jobs and broke the confidence of employers to hire new staff. It also introduced suspicion and antagonism into the workplace. Along with the Australian Democrats, Labor opposed the government's legislation to exclude small businesses with fewer than 15 employees from the unfair dismissal system. They did that for the second time just two weeks ago, allowing us, if we want to, to move to a double dissolution on that particular issue.Under Labor, awards remained a complicated and detailed means of regulating workplaces. Under Labor, employers and employees were not able to deal directly with one another without a third party presence. That gives you an indication that Labor are really all about industrial age thinking. They have not modernised. They are old Labor. They want to move us back to the 1970s of super unions and confrontation. They have not quite woken up to the idea that it is all about discussion, communication and modern age thinking. They are still trapped in this old notion of union power. You cannot trust anything Labor say. They make one promise at election time and then break it a couple of weeks later. Who can remember the l-a-w tax cuts that never came and, of course, `We're not going to increase our taxes'?Labor have no plans. They have no vision for the future. They have no policy for the future. They do not even think about the 21st century. They are locked into the past. They are locked into ACTU dominance. They really do not have an idea of the 21st century and what it is all about. It is time they allowed some of their new thinkers to step forward. (Time expired)13:51:002109McMullan, Bob, MPMr McMULLAN5I4CanberraALP00—Unlike the previous speaker, the member for Cowan (Mr Richard Evans), I intend to actually talk about the Workplace Relations Amendment (Superannuation) Bill 1997 , which is before us. Let us remember what this bill before us is about. This is an amendment to the workplace relations legislation, but it is a specific amendment dealing with, in effect, one matter. It is saying that the Industrial Relations Commission will no longer have the power and people at workplaces, if they agree, will no longer be able to have that agreement reflected in an award either made by the commission or agreed between the parties that covers superannuation. That is what this change to the law says.The most important new savings vehicle for the 21st century is superannuation—that great equalising force in savings in this country. The recent changes to superannuation through the award system and through the superannuation guarantee legislation have combined to take what was a privilege of the few and extend it to all working Australians. This law winds that back. It does not wind the core of it back because the core of it is the superannuation guarantee legislation, and that is not affected by this.It takes the extra elements, which some people have been able to win in their awards, for superannuation not covered by the superannuation guarantee legislation away from those Australians, with no compensation, with no additional benefit to replace what they lose. It will simply be taken away. If it was their property, the constitution says it could not be taken away from them without compensation. But, because it is their superannuation entitlement, it can be taken away by this government with no compensation.It is serious because it takes away benefits for working Australians and, as I will provide evidence for, the weakest working Australians, those in greatest need. It is serious because it is a profound broken promise by this government. It breaks three commitments the government made in the lead-up to and since the election. It is an indication of the pattern of events and of the direction in which industrial relations is going and might go in the future were this government to be re-elected.Let me turn, firstly, to the extent to which it is a broken promise. Remember that this bill says: if you have in your award superannuation provisions that are greater than those in the act, if you have entitlements over and above the superannuation guarantee legislation, they will be struck from the award on 1 July and you will no longer have them. They will go. No compensation, no consideration—they will go. Remember the first promise that relates to that, the promise which said, `I give you my rock solid guarantee that no Australian worker will be worse off.' That was the Prime Minister of today and the then Leader of the Opposition, John Howard. They are worse off.SD4CADMANMr Cadman—Where are they worse off? Come on, identify them! Identify them!5I4McMullan, Bob, MPMr McMULLAN—I will, thank you very much. There are 16,000 people in the hospitality industry, 8,000 in the textiles, clothing and footwear industry, for a start. You are supposed to be the parliamentary secretary in this area, so why don't you go and do some research? There are at least those 24,000 people, first and foremost.SD4CADMANMr Cadman—But what about the employment figures? We had more jobs than you ever had.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Nehl)—Order! The member for Mitchell!5I4McMullan, Bob, MPMr McMULLAN—I enjoy his interjections.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—No, ignore his interjections.5I4McMullan, Bob, MPMr McMULLAN—Proof of ignorance is always better than knowledge of it, so I value his interjections always. As I have just proved—and there are many more cases—there are two matters that are established and not contested even by the government; that is, there are 24,000 low paid Australian workers who will lose their superannuation under this. There are actually tens of thousands more, but those are the two that are on the record. They said no-one will be worse off. Go and tell those 24,000 workers that the superannuation they have now will be taken away but, in some magical way, they will be no worse off.Even more directly, there was the commitment before the election that no Australian worker would lose their award entitlements. The Prime Minister is having a lot of difficulty with the word `entitlements' at the moment. In question time yesterday and the day before when we talked about pensioners' entitlements, the Prime Minister had a great deal of difficulty with that word, trying to find how he could say that dental benefits were not entitlements. The entitlement, the right, that people had before the election to free dental service has been taken away, and the Prime Minister tries by redefinition to say that it was not an entitlement.Let us have a look at the award entitlements of these Australians. Today, when the Prime Minister made that statement, these people had an award entitlement to superannuation set down in binding, legal award decisions made by the commission or agreed between the parties. But, on 1 July, as a result of this legislation, they will lose those entitlements. What happened to the promise that no-one would lose their award entitlements? These tens of thousands of Australian workers will lose.Are they the richest Australians? People earning less than $450 a month are losing. In fact, 26,000 employees in the hospitality and textiles, clothing and footwear industries who earn less than $450 a month receive superannuation because of the relevant award and will lose it under this legislation. They have it today, but they will lose it. Where is their compensation? What do they get in return? They get nothing. They just get it taken away from them. In fact, the government explicitly previously said that if you had superannuation entitlements they would be retained.We know the government always wanted to do this. The one thing about this legislation is that it might be a broken promise, it might be three broken promises, but at least it has consistency. Right from the start, when the government first introduced the Workplace Relations Bill, they sought to take superannuation entitlements away from working Australians by taking it out of the award system, but they failed. It was defeated in the Senate, so they are coming back again.What does it mean? It affects people, overwhelmingly women, who work part time and casual in the two industries that I have specified, the hospitality industry and the textiles industry—there are others, but let me just give you these two examples—earning less than $450 a month. These are not fat cats. These are low paid Australian workers battling to make a living. At the moment, they get superannuation not because of the act—the act does not cover them—but because of the award.If this bill is passed, those people will lose that entitlement. It is the law, they are entitled to it and the government wants to take it away from them. Why? It is sheer unadulterated prejudice. There is not one skerrick of economic or social argument as to why these Australians, these low paid Australians, these Australians battling to save for their retirement, should lose this entitlement which they have won, earned and deserve.10000SPEAKERMr SPEAKER—Order! It being 2 p.m., the debate is interrupted in accordance with standing order 101A. The debate may be resumed at a later hour.Ministerial Arrangements21112111Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—Mr Speaker, I inform the House that the Minister for Health and Family Services (Dr Wooldridge) will be absent from question time. He is in Sydney fulfilling a major commitment. The Minister for Family Services (Mr Warwick Smith) will answer on his behalf. I also inform the House that the Minister for Defence Industry, Science and Personnel (Mrs Bishop) will be absent from question time today. She will be addressing the 1998 Defence Export Outlook Seminar in Sydney. In her absence, the Minister for Defence (Mr McLachlan) will answer questions on her behalf.Questions Without Notice211121112111Beazley, Kim, MPMr BEAZLEYPE4BrandALP00—My question is to the Prime Minister. Prime Minister, when you resigned as director of the Menzies Research Company on 15 October 1996, was it a coincidence that it was just two days after the resignation of Senator Short for a breach of your code of conduct, one day after John Moore's Bligh Ventures shareholding was exposed, and the same day Senator Gibson resigned for breaching the code? Prime Minister, how can you expect us to believe that, in the middle of a crisis centring on declarations of pecuniary interest, it was a mere coincidence that you resigned a company directorship and did not tell anyone? Aren't you guilty of a deliberate cover-up?2112Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—The answer to the question is no.RH4KERRMr Kerr—So you were not?10000SPEAKERMr SPEAKER—The honourable member for Denison should remember he is already under warning.21122112Gambaro, Teresa, MPMs GAMBARO9K6PetrieLP10—Can the Prime Minister inform the House what actions the government has taken to improve the living standards of Australian families?2112Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—I know there are many members on my side of the House who are interested in benefits for the ordinary Australian people. I take the opportunity at this question time, as I will at future question times, of reminding the Australian public of the many things that we have done. For example, take a family with one breadwinner earning $40,000 a year and with two children, one of whom is under the age of five. The following facts in relation to the member's question are relevant. That particular family is eligible for the government's family tax initiative which reduces the tax by $200 a child and by a further $500 a child if that child is under the age of five years. Through that alone, the annual benefit is $900. That measure was promised by the coalition in the last election campaign and it was delivered on time, in full and without qualification by the Treasurer with effect from the beginning of 1997.If the family has private health and ancillary insurance, they would be eligible for the maximum private health insurance rebate of $450 a year, a rebate incidentally that the member for Dobell would abolish the day he becomes health minister in any future Labor government.From 1998-99, the working partner may receive the savings rebate. Once it takes full effect, this rebate will be worth a maximum of $450. The working partner might also receive the rebate for spouse superannuation contributions up to a maximum of $540. Moreover, if the family, like many Australian families, has a mortgage of $100,000, the reductions in interest rates which the government has brought about translate into an annual interest saving of no less than $3,800 a year.If you add all of those together, you would get a grand total of $6,140. They are but some of the examples of the benefits that have been brought to Australian families by my government and the continuation of the policies that we have followed will guarantee that there are further benefits for wider sections of the Australian community under my administration.21122112Crean, Simon, MPMr CREANDT4HothamALP00—My question is addressed to the Prime Minister. Prime Minister, you claim not to have declared your directorship because you thought it a trivial matter. If directorship of a company in receipt of $400,000 of taxpayers' money and significant tax concessions is too trivial to declare, wasn't honorary membership of the International Fellowship of Cricket Loving Rotarians and receipt of, and I quote from you, `various books, key rings and biros which are either in a Canberra office or in the library at the Lodge' even more trivial? Prime Minister, do you really expect us to believe that a man who declares key rings and biros simply forgot to declare both his directorship and resignation from a public company which benefited directly from decisions that he took in its favour?2112Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—Mr Speaker, I do regard this matter as being trivial, but given the amount of time and energy that the honourable member for Hotham and others in the Labor Party, with varying degrees of intensity and confected outrage, have put into it, let me take the honourable gentleman through the circumstances. The first and most important point to make is that at no stage did I have any personal pecuniary interest in this company. The second point I ought to make is that I held the position by virtue of the fact that I was leader of the federal parliamentary Liberal Party—hardly a closely held secret. This is a great revelation: the Labor Party have discovered I have a closet association with the Liberal Party of Australia! It is extraordinary. It is an amazing thing. Shock, horror! I am undone; I am exposed! I am the leader of the federal parliamentary Liberal Party. Even more importantly, a lot of reference has been made to the fact that this is a public company.8K6FITZGIBBONMr Fitzgibbon—The job is yours, Peter.10000SPEAKERMr SPEAKER—The honourable member for Hunter will remain silent.ZD4Mr HOWARD—The Leader of the Opposition and Mr Oakes on his program last night and in his Bulletin comment this morning, and others, have made great play upon the fact that this is a public company. Let me point out to the House that the words in the ministerial code—and this is the basis of my rejection of any claim that there is a conflict with the code—8K6FITZGIBBONMr Fitzgibbon—You are looking better, Peter.10000SPEAKERMr SPEAKER—I warn the honourable member for Hunter.ZD4Mr HOWARD—The words `public company' are not defined in the code as carrying the meaning given to that expression under the Corporations Act. Indeed, Mr Speaker, if you go to The Australian Concise Oxford Dictionary , you find that a public company—and I repeat this for the benefit of all of those who have sought to claim that I was in conflict with the code—is defined in the Oxford dictionary as a company that sells shares to all buyers on the open market. Let me repeat that: sells shares to all buyers on the open market. The reality in relation to the Menzies Research Centre is that it has no shareholders. If it doesn't have any shareholders it is a bit hard to sell any shares, isn't it?4T4MELHAMMr Melham—You are from the Melbourne Club. That is what you are—the Melbourne Club.10000SPEAKERMr SPEAKER—The honourable member for Banks will remain silent.8K6FITZGIBBONMr Fitzgibbon—Well, why did you resign only of the—10000SPEAKERMr SPEAKER—I have already warned the honourable member for Hunter. If he wants to stay here, I suggest that he remains silent.ZD4Mr HOWARD—Mr Speaker, let me quote from the letter written to me by the Federal Director of the Liberal Party—and I would be very happy to table it—dated 31 March 1998. It spoke of the Menzies Research Centre—and it is called the Menzies Research Centre, not the name given to it by the honourable member for Hotham. Freehill Hollingdale and Page had this to say:A company limited by guarantee has no shareholders. Such companies are limited companies because a member's liability to contribute to the company is limited to the amount of the guarantee. In the case of the MRC, the amount is $10—4T4MELHAMMr Melham—You'll be a trivia question in history. That's what you'll be.10000SPEAKERMr SPEAKER—I warn the honourable member for Banks.ZD4Mr HOWARD—The quotation continues:Such a company has no issued shares, but has administrative advantages such as simplifying procedures for admission to membership.It goes on to say:While technically a public company, for the reasons described above, a company limited by guarantee can be distinguished from a public company which consists of shareholders whose shares are traded on the stock exchange and which has as its primary function a commercial and trading purpose.It goes on to say this:At the time of the MRC's creation, a number of individuals closely associated with the Liberal Party of Australia became directors—and I have to confess that I was one of them, because I was closely associated with the Liberal Party—Some of these became directors pursuant to their positions within the party. For example, Tony Staley as federal president became a director—LS4FERGUSONMr Martin Ferguson—All weasel words—weasel words!10000SPEAKERMr SPEAKER—The honourable member for Batman will remain silent.ZD4Mr HOWARD—The quotation continues:John Howard became a director as leader of the Federal Parliamentary Liberal Party.7T4CROSIOMrs Crosio—Why did you not declare this?10000SPEAKERMr SPEAKER—I warn the honourable member for Prospect.ZD4Mr HOWARD—Freehills go on to say:We understand that this is one of the many responsibilities which the leader of the Federal Parliamentary Liberal Party takes on as part of his official role within the wider party organisation. Other responsibilities of the leader include being a member of the federal executive of the Liberal Party—and so on. Let me go on to say that article 4.3(a) of the articles of association of the centre provide that directors must not be paid fees for acting in their capacity as directors. Article 4.3(b) provides that directors are entitled to be paid all travelling and other out-of-pocket expenses. But, because I didn't undertake any on behalf of the centre, I have to say the I did not claim anything. It goes on to say:The MRC is a non-profit organisation formed for public policy purposes and operates on a not-for-profit basis. At the time of its establishment, we understood the MRC to be an offshoot of the Liberal Party of Australia, established to advance the liberal philosophy supported by the party. Given its nature, the MRC may be distinguished from that of a popularly understood conception of a public company run for profit motives. This is because there are no shares to be traded, it is not involved in activities for profit, and its members and directors do not gain any financial benefit from their role with the company.I not only reject the honourable member's question, but also reject the claim that I am in any way in conflict with the code of conduct.10000SPEAKERMr SPEAKER—I call the honourable member for Eden-Monaro.MG4LEEMr Lee—Could he table the document?ZD4Mr HOWARD—I table the document.21142114Nairn, Gary, MPMr NAIRNOK6Eden-MonaroLP10—My question is addressed to the Treasurer. Can the Treasurer inform the House of the retail trade figures for February released this morning? What does the trend indicate about the government's economic policy and the outlook for the current account deficit?2114Costello, Peter, MPMr COSTELLOCT4HigginsLPTreasurer10—I thank the honourable member for Eden-Monaro for his question. You may be aware that retail trade figures for February released this morning show that retail trade has been growing at a trend rate of about 0.3 per cent a month since November, and has risen by a very healthy 4.3 per cent over the year to February. Seasonally adjusted figures in February, whilst showing a one per cent fall, taken together with a 1.9 per cent increase in January show a total growth of 0.9 per cent over the two months. Trend data continues to point to a healthy but not excessive growth in private consumption.I indicated yesterday in the House that, in relation to the current account deficit, where Australia faces adverse external challenges in relation to exports, one of the advantages we have in relation to the cyclical position on the current account is that demand in the domestic economy is sustainable. A healthy consumption growth, while not too excessive, taken together with good inflation and a budget moving into surplus, means that Australia has a sustainable position in relation to its current account as well.I think most people will acknowledge the fact that good retail figures have been driven by the low interest rate policy of this government, including benefits now starting to flow to business lenders, with margins coming down in relation to business overdrafts. As far as the government is concerned, the issues that are of concern to the Australian public are still the issues of concern to this government.We are interested in families and delivering benefits to families. You won't get much interest from the Labor Party about that. We are interested in the tax system and in a decent debate about tax and how we can improve the Australian taxation system. You won't get much talk out of the Labor Party over that. We are interested in bringing down Australia's debt and making our waterfront more productive, but you won't get question from the Labor Party over that. We are interested in low home rates for Australian mortgage payers, but you don't get much interest from the Australian Labor Party in that.Here you have a campaign by the Australian Labor Party trawling through the trash cans, doing everything they can to keep the debate off issues of national importance. As far as the government is concerned, we will get on with good government. We will get on with delivering benefits to Australian families and we will get on with helping home buyers.Distinguished Visitors211510000SPEAKERMr SPEAKER—On behalf of the members of the parliament, I extend a warm welcome to the representatives of the Japanese Diet who are in the House on a political exchange program.UNKNOWNHonourable membersHonourable members—Hear, hear!Questions Without Notice211521152115Beazley, Kim, MPMr BEAZLEYPE4BrandALP00—My question is to the Prime Minister. I ask the Prime Minister whether he recalls telling a media conference on 15 October 1996:I have had a lot of talks with a lot of my colleagues in recent days and I have very forcibly reminded them of their obligations.Prime Minister, when you were very forcibly reminding your colleagues of their obligations, did you also tell them that you had already slipped in the back door to divest your own directorship—the very divesting of which, I would have thought, would have indicated you thought you had a conflict of interest but had no intention of declaring it.2115Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—I completely reject the motive imputed to me by the Leader of the Opposition. It is completely phoney. It is false, it is inaccurate and it bears no relationship to the fact. This is an absolutely insubstantial claim. It lacks any merit. You are wasting your own time and you are wasting the time of the Australian people. You are utterly determined on a course to ignore the true interests of the Australian people. There is no substance in this claim and you can ask me all the questions you like. There is no merit and no substance in this claim whatever.21152115Causley, Ian, MPMr CAUSLEY4K6PageNP10—My question is addressed to the Minister for Employment, Education, Training and Youth Affairs. Is the minister aware of claims about universities funding and access to university places? What are the facts of the situation?2115Kemp, Dr David, MPDr KEMPBT4GoldsteinLPEmployment, Education, Training and Youth Affairs;Minister Assisting the Prime Minister for the Public Service10—I thank the member for Page for his question. I am aware of claims about university funding. In fact these claims are coming from the member for Werriwa, who seems to have taken a couple of hours off from promoting his book to shoot out a press release. I can only assume that he was stung by comments in caucus yesterday. This article in the Sydney Morning Herald is entitled `Hard line Latham unnerves Labor'. A number of members of parliament expressed their concerns about the risks involved and about his performance in the education portfolio. When you read the press release, those concerns are well justified. This press release put out by the member for Werriwa is replete with inaccuracies and false statements. The press release says that universities this year are facing the biggest funding cuts, the greatest cut in student places and the introduction of up-front fees.Let us see what the facts of the situation are. There are no cuts to university funding this year. In fact, Commonwealth funding for universities is up $40 million over last year. This is an increase, but to the member for Werriwa it looks like a cut. It makes you wonder about some of those footnotes in the book. Total university revenue over the last two years, government and non-government—of course, our policies are designed to give the universities the ability to raise funds from alternative sources as well—WU5O'CONNORMr O'Connor—Mr Speaker, on a point of order: standing order 59 suggests that the minister should be directing his answer to the chair; as he has his back to you, could you bring him to order please?10000SPEAKERMr SPEAKER—The honourable member for Corio will resume his seat. Can I say to all members that the point of order does have relevance. There is far too much cross-chat across the chamber.8K6FITZGIBBONMr Fitzgibbon—And tell the truth!10000SPEAKERMr SPEAKER—The honourable member will withdraw that statement.8K6FITZGIBBONMr Fitzgibbon—I withdraw.10000SPEAKERMr SPEAKER—The minister will resume answering the question but direct his remarks through the chair.BT4Dr KEMP—Mr Speaker, you will be particularly interested to know that total revenue for the universities is $550 million higher this year than it was in the last year of the Labor government. Commonwealth-funded student places, far from falling, are increasing. There are 10,000 more Commonwealth-funded student places in universities this year than there were in Labor's last year. In fact the total number of undergraduates is up by 19,000. But the member for Werriwa is going around telling people that places have been cut. In fact, funding per fully-funded student place from the Commonwealth is now the highest for eight years. When it comes to compulsory up-front fees, the champions of compulsory up-front fees are the Labor party, because they have been insisting on compulsory up-front fees for student unionism for many, many years. Those compulsory up-front fees are to fund their union mates. We may well ask the member for Werriwa whether they are included in the up-front fees he intends to abolish. The fact is that, when it comes to his own portfolio, the member for Werriwa is just as weak in standing up to the union pressures on the Labor Party as every other member of the front bench, including the dinosaurs he is trying to get rid of. It is very revealing that, as he said in his speech at the ALP Hobart conference early this year:I look forward to working closely with the leadership of the two unions, the AEU and the NTEU—the National Tertiary Education Union—to turn the contents of this platform chapter into the programs and policies of a Beazley Labor government.There will not be a Beazley Labor government and the reason there will not is that, when it comes to any portfolio policy, the only policy they have is the one handed out to them by the unions. That is why he is out there today talking to his union mates who are organising this day of action. This day of action is totally unjustified. It is an example of the Labor Party/union strike ethic eroding the culture of learning and rational debate in the universities. There is only one group in this parliament committed to pursuing the interests of students in this country, and that is the coalition.21162116Evans, Gareth, MPMr GARETH EVANSVD4HoltALP00—My question is to the Prime Minister. I refer to the Prime Minister's emphasis on the non-profit status of the Menzies Research Centre Ltd as an explanation for his actions. Is the Prime Minister aware of the decision in the court case of Commonwealth Bank v. Friedrich in which it was held that there is nothing in statutory common law to suggest that the standard to be expected of a part time non-executive director of a company not for profit is different from the standard expected of any other director of a profit-making company? Does he still stand by his assertion, in the light of that status of the law, that he did not have a conflict of interest in Menzies Research Centre Ltd because it was a not-for-profit company, or will he now admit that he was in serious breach of his own ministerial code of conduct from March until he scuttled away from that directorship in October 1996?10000SPEAKERMr SPEAKER—The question goes very close to being—DK6HOCKEYMr Hockey—On a point of order, Mr Speaker: I put it to you that that question is asking for a legal opinion and should be ruled out of order under standing order 144.10000SPEAKERMr SPEAKER—The question related to whether some facts pertaining to the Prime Minister's responsibility are true or not. In that instance I, therefore, call on the Prime Minister to respond to the question.2116Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—The answer to the question is, no, I am not aware of that case, but it does not make any difference to what I said earlier.21162116Andrews, Kevin, MPMr ANDREWSHK5MenziesLP10—My question is addressed to the Minister for Workplace Relations and Small Business. Minister, recent media reports on the waterfront say that the training by P&C Stevedores is inadequate. Could you advise the House of the level of training necessary to operate a portainer and what the efficient operation of this equipment on the waterfront would mean for Australia's importers and exporters?2116Reith, Peter, MPMr REITHWI4FlindersLPWorkplace Relations and Small Business10—Part of the union campaign against Patrick is to attempt to discredit the training operation which PCS is running at Webb Dock. They are doing that really as a blind and as a disguise to the inefficiencies on the Australian waterfront. A typical example of this sort of campaign by the MUA was the radio interview of Dave Cushin, a member of the MUA, just a few days ago. He said:When our trainees—we've had some trainees last year who came on. They took three months to be fully operational, fully operationally trained; in safety, every safety aspect in getting up and running, being trained properly and everything.Safety is an important issue. Unfortunately, when you look at the record of the stevedoring industry, it is a very poor record indeed. The evidence for that is available in a report prepared by Michael Easson, a former executive of the ACTU, who demonstrated the fact that this industry had one of the worst safety records of any industry in Australia—in fact, worse than the coal industry where a lot of effort has been made to improve safety, but which has had, unfortunately, a poor record for a long time.There have been a number of people trained now to run this heavy equipment on the Australian wharf. I think their personal stories are interesting to give people a more balanced appreciation of what it is like. For example, in the paper today there is a story of a young woman who is 22. She is a science graduate who was raised on a Victorian dairy farm. She says that, for her, training has been a ball. Security people and fellow trainees have been very friendly and safety has been a high priority.She began at Webb Dock in early March and she reckons it is a pretty good deal. She is working a 35-hour week for $900. There are a lot of Australians who would be prepared to put in a decent day's work for an annual salary which she is able to obtain. She has now completed three weeks of training and, as she says, she has now been sufficiently trained for her to go on and be able to train others, subject to having a supervisory position in place.Carmel Egan is another young woman. In one sense she is the face of the future on the Australian waterfront because she has also been working on the waterfront. She is an independent person, a journalist, who went down to see what it was like. She said in the paper: The wharfies claim they deserve their pay and conditions because their work is dangerous, difficult and highly-skilled.Yesterday I gained 100 per cent in the theory assessment for my national certificate of competency to operate a portainer crane.It was neither difficult nor easy.Lastly, there was a very interesting article in the Daily Commercial News a couple of days ago by the bloke who is the president and managing director of the company—I think, it is a Norwegian company—which actually makes portainer cranes. So he is sort of one of the world's experts in what it takes to run one of these machines. The article states:While stressing complete neutrality in Australia's waterfront problems—he wants to keep out of those—Mr Gustavson said today's portainer cranes are basically operated by two joysticks and it would take an average person a fortnight to learn to operate the machine.If someone has not mastered the skills involved in that time, he or she should not be there, he said.There is a dispute going on in Brisbane today. Industrial action is being taken by the MUA and supported by a weak leader unable to—DT4CREANMr Crean—Mr Speaker, I am forced to take a point of order about length. If you are not going to make these ministers bring their answers quickly to an end, we will continue to get up drawing your attention to it.10000SPEAKERMr SPEAKER—The honourable member will resume his seat. As the honourable member knows, ministers some times take longer than others in answering questions. I suggest that the Leader of the House is drawing his answer to a conclusion.WI4Mr REITH—I am, Mr Speaker, because I have been four minutes and five minutes is enough. The point I make—UNKNOWNOpposition membersOpposition members—Boring! Boring!10000SPEAKERMr SPEAKER—Honourable members of the opposition will remain silent.WI4Mr REITH—The point I make in conclusion is that the MUA—UNKNOWNOpposition membersOpposition members—Boring! Boring!10000SPEAKERMr SPEAKER—The Minister will resume his place. When members of the opposition remain silent, the minister will conclude his answer.WI4Mr REITH—In conclusion, today in Brisbane we have industrial action being run by the MUA against Patrick because they have taken a commercial decision to sublet their property. It is time for some real competition. The people who will benefit from real competition are the farmers, the exporters and the business community in Brisbane and Queensland that for far too long have waited for a more efficient waterfront.21182118Crean, Simon, MPMr CREANDT4HothamALP00—My question is to the Prime Minister. Prime Minister, do you recall saying: `Unless the parliament is assured that Senator Richardson either disclosed his interest as a director of the radio station whenever he participated in cabinet discussions on broadcasting matters or absented himself from those discussions, he must in accordance with accepted cabinet practice resign from the ministry'? Prime Minister, didn't you chair the cabinet meeting on 1 October 1996 which decided to provide the Menzies Research Centre with a grant of $400,000? Can you assure the parliament that you declared your directorship when this matter was discussed or did you absent yourself from that part of the cabinet meeting?2118Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—I could say a few things about Senator Richardson. Naturally, in accordance with my longstanding and prudent practice, I will check the words attributed to me by the honourable member for Hotham before acting in total reliance. The honourable member comes to the decision that was taken on 1 October 1996 by the government to grant $100,000 to the Menzies Foundation and also to grant $100,000 to the Evatt Foundation.HT4McLACHLANMr McLachlan—The Evatt Foundation!ZD4Mr HOWARD—Hang on, it gets better. We also granted tax deductible status to the Menzies Research Centre. Let me say a couple of things about that and then I will come to the issue of declaration which has been asked by the member for Hotham. The first thing I would report to you is that, on the day that cabinet met, I happened to ring the Leader of the Opposition. I rang the Leader of the Opposition and I said, `Kim, we have it in mind to give $100,000 to the Menzies centre. In the interests of political balance, we will give $100,000 to the Evatt Foundation and grant tax deductibility to the Menzies Research Centre because Evatt has already got it.' I might add in parenthesis that I was the Treasurer who, in 1981, granted tax deductibility to the Evatt Foundation.CT4COSTELLOMr Costello—Oh, you did that!ZD4Mr HOWARD—I apologise to my colleagues for the decision that I took.CT4COSTELLOMr Costello—They've never forgiven you for that.ZD4Mr HOWARD—No, they have never forgiven me for that.DT4CREANMr Crean—Mr Speaker, I raise a point of order, and it goes to relevance.Government members interjecting—10000SPEAKERMr SPEAKER—The answer has been entirely relevant.DT4CREANMr Crean—The specific question was: did he declare or did he absent himself? That is what he has to answer. If he does not, we will keep asking it.10000SPEAKERMr SPEAKER—Order! The honourable member for Hotham will resume his seat. The honourable member for Hotham goes way beyond the bounds of propriety in raising a point of order. The Prime Minister, as he knows, is answering his question in exactly the same way that successive ministers—7T4CROSIOMrs Crosio—He is not relevant.10000SPEAKERMr SPEAKER—It seems that the honourable member for Prospect does not really want to stay in this House. I would suggest she remain silent. The Prime Minister is answering the question in exactly the same way as ministers from governments of all persuasions have done so for many years.ZD4Mr HOWARD—I relayed that to the Leader of the Opposition and I said, `That's what we have in mind. We were wondering if you might be able to support the decision.' He said, `That sounds terrific. I'll take it.'PE4BEAZLEYMr Beazley—Yes. So what?ZD4Mr HOWARD—That was the response of the Leader of the Opposition. I have said before that I do not report what is discussed in cabinet, but I would make the statement that I had no personal private interest to declare.21192119Hockey, Joe, MPMr HOCKEYDK6North SydneyLP10—My question is addressed to the Minister for Immigration and Multicultural Affairs. Can the minister inform the House of the importance of the government's policy of maintaining proper skill levels in our migration program? Can he also inform the House what impact there would be on skill levels if the program was expanded by 50,000 places per year?2119Ruddock, Philip, MPMr RUDDOCK0J4BerowraLPImmigration and Multicultural Affairs10—I thank the honourable member for North Sydney for his question particularly in relation to the importance of maintaining skill levels in the migration program and the impact that any significant further increase might have upon the skill levels that now pertain. I say first of all that the government has been working very hard to regain public confidence in the migration program and the way in which it is conducted. As part of restoring that public confidence, we have been putting in place a proper balance between skilled migration and the family migration stream.LS4FERGUSONMr Martin Ferguson—Why did you cut training for Australia's unemployed?10000SPEAKERMr SPEAKER—The honourable member for Batman will remain silent.0J4Mr RUDDOCK—When we came to office, family migration was 70 per cent of the program. Skilled migration was a mere 30 per cent.LS4FERGUSONMr Martin Ferguson—You have duped the apprenticeships.10000SPEAKERMr SPEAKER—I warn the honourable member for Batman.0J4Mr RUDDOCK—We now have a situation where the skilled proportion of the program is 50 per cent. We have raised the overall skill level of migrants, and I think it is important to understand that. When we came to office there was a queue or a pipeline of some 60,000 people seeking to access places where 10,000 were available, so it was a queue for about six years. The overall skill level was not as high simply because the pass mark which was required to be met was at a very low level. We raised the pass mark to what is now a historic high level. We have prescribed a wider range of occupations that require English for them to be able to be recognised in Australia. We have also reassessed the range of occupations that can be accepted. Australia now receives a younger, more highly skilled migrant stream who are providing a net benefit to the Australian economy and who are clearly a group of people who, in the main, are not welfare dependent. It ought to be recognised that, even under the lower skill levels that pertained when Labor was in office under the longitudinal survey that was being conducted, the participation rate for skilled migrants was high and the unemployment rates, even 18 months after arrival, were relatively low. I think they were, in most of the categories, well below the Australian average and about the same in the independent category. It is interesting that there are some people who want to talk about population policy. Those who talk about population policy are speaking in code, the code being either they want a significantly larger population and thus arguing for it or they want a significantly reduced population and arguing for that. The natural consequence of that would be either a significantly larger migration program or a smaller program. It is important that those who want to talk about population questions are prepared to tell us what they have in mind. Mr Kennett is prepared to tell us what he has in mind. He argues that we ought to increase the skilled migration program by 50,000.While we obviously welcome support for a larger skilled program, it ought to be understood that, if you are going to obtain the sorts of numbers that he was speaking of, you would have to significantly degrade the overall skill level. That would mean that you would be getting migrants who were either significantly older, would have a lower level of recognised and professional skills, and probably would not have English language capacity, which is the major factor that will determine their success in the Australian labour market.QJ4THEOPHANOUSDr Theophanous—What is your evidence for that?0J4Mr RUDDOCK—Well, there is.10000SPEAKERMr SPEAKER—The honourable minister will answer the question, not answer interventions.0J4Mr RUDDOCK—The longitudinal survey shows that people without English language skills, for instance—10000SPEAKERMr SPEAKER—The minister will address his remarks through the chair.QJ4THEOPHANOUSDr Theophanous—You produce the evidence.0J4Mr RUDDOCK—I am producing it for you. The longitudinal survey shows—DT4CREANMr Crean—He is calling you to order.10000SPEAKERMr SPEAKER—Address your remarks to me. Do not respond to questions on the other side of the House, please.0J4Mr RUDDOCK—Mr Speaker, let me make it clear, through you, that the longitudinal survey shows that people who come without English language skills have unemployment rates of the order of 50 per cent. That is one of the reasons that where you can use English language for selection, and you can in the skilled areas, it produces a far more beneficial outcome.LS4FERGUSONMr Martin Ferguson—How long is this answer going to be?10000SPEAKERMr SPEAKER—He is entirely within order.0J4Mr RUDDOCK—Let me make it clear that if the states view were to be accepted it would require them to adopt views in relation to recognition of skills. It would require them to look at a different approach to regional migration, particularly on the part of Victoria.10000SPEAKERMr SPEAKER—The minister should draw his answer to conclusion.0J4Mr RUDDOCK—I will, Mr Speaker. I have one final point to make. One of the points I would make in relation to Victoria is that, while it has being arguing for a 50 per cent increase in skilled migrants to Australia, when it was given the opportunity to fill a mere 200 places within a designated regional migration program where all they would have to do is make the appropriate designations they could not fill one place. I have to say that if you cannot fill 200 places—10000SPEAKERMr SPEAKER—The minister should conclude his reply.0J4Mr RUDDOCK—I don't know how you can argue to fill 50,000 places.21204G4DOWNERMr Downer—Here comes Mr Smut again.2120Crean, Simon, MPMr CREANDT4HothamALP00—Don't worry, Fishnets. Prime Minister, did you declare your interest or absent yourself—4G4DOWNERMr Downer—At least I'm not smutty.DT4Mr CREAN—Don't lead, Glass Jaw.4G4DOWNERMr Downer—You have not made a serious point for two years.10000SPEAKERMr SPEAKER—I suggest that the honourable member and the Minister for Foreign Affairs stop making exchanges across the bar table and the members of the government should allow—GK6KELLYMiss Jackie Kelly—What have you got against fishnets?DT4Mr CREAN—He's got nothing against them.10000SPEAKERMr SPEAKER—When you remain silent on both sides, the honourable member for Hotham has the call.DT4Mr CREAN—My question is directed to the Prime Minister. Prime Minister, did you declare your interest or absent yourself when you presided over the October cabinet meeting which gave benefits to a company of which you were still a director?2120Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—As I said before, I had no private personal financial interest in the company. Therefore, I had no interest.ET4BEVISMr Bevis—Guilty as charged.10000SPEAKERMr SPEAKER—The honourable member for Brisbane will remain silent!21202120Neville, Paul, MPMr NEVILLEKV5HinklerNP10—My question is addressed to the Minister representing the Minister for Communications, the Information Economy and the Arts. Minister, can you inform the House of the benefits which residents of my electorate and that of my colleague the member for Wide Bay will receive as a result of a grant which is to be made out of the Commonwealth governments regional telecommunications infrastructure fund—Networking the Nation? Minister, can you further advise what other benefits will accrue to regional Australia?2121Smith, Warwick, MPMr WARWICK SMITHGJ4BassLPMinister for Family Services10—I thank the member for Hinkler for his question. Indeed, there has been an announcement by my colleague the Minister for Communications, the Information Economy and the Arts about additional grants under the regional telecommunications infrastructure fund—that $250 million fund—to address the improvements of telecommunication services in regional Australia. Indeed, in your electorate and in the electorate of the member for Wide Bay there are two specific programs. I should draw attention to those.The Wide Bay electorate will receive $680,000-odd for the implementation of the 2020 growth management project, information access. The project will establish a digital network covering some 10 local shires in the Wide Bay and Hinkler electorates providing local call Internet access to all residents. Local councils will be encouraged to use the network to provide public access to the Internet within their localities. Information training and awareness will be a feature of this project. It will take the importance of the Internet right around those two electorates.Also in the shire in your electorate there will be another $392,000 for the provision of five public access and training centres across a region of 15,000 square kilometres. What needs to be understood is that the distances in this nation need to be combated. We can do that only by successfully improving the communication services. These two projects specifically target in on that particular area and help that immensely.Honourable members should be aware there are some 93 projects that have already been approved. The amount of $50 million has been expended to address these types of projects. I might draw attention to other projects that have been announced by my colleague today. The amount of $3.2 million in the Northern Territory for an electronic outback project which will involve a roll-out of satellite infrastructure. I cannot over emphasise the importance of satellite infrastructure to the development of linking regional and remote Australia to the rest of the world. It is exceptionally important. Fourteen remote communities will benefit from this project.Another interesting one is $1.3 million for the women's justice network in south-west Queensland—16 locations for a three-year pilot to assist women needing independent legal advice through video conference sites, training for community workers and connections to the legal aid information database, taking legal aid in a practical way, utilising new technologies, to people who need it in remote Australia. There is also a project in Queensland where some $2.65 million will be expended to establish Internet service provider points. That will cover an area of 28 per cent of Queensland. It covers the electorate of my colleague the Minister for Veterans' Affairs from Roma to Charleville right down to the South Australian border.Finally, one project that I am particularly pleased to see has been released is a telehealth Tasmanian network—$5.5 million to assist with a network of 50 telehealth facilities to improve health access to health services for regional and remote Tasmania. It takes in the two Bass Strait islands, Flinders and King Island, in the most decentralised state in this nation.These are the sorts of projects that you people opposed. You opposed these projects to enhance the opportunities for regional and remote dwellers in this nation to connect with the rest of the nation. These are decisions that are about connecting all of Australia to the future. You opposed it. You should be ashamed of it.21212121Beazley, Kim, MPMr BEAZLEYPE4BrandALP00—My question is to the Prime Minister. Prime Minister, your consistent defence of Senator Parer, who also concealed his interest, has been that we should not show `that Senator Parer made specific representations on behalf of companies in which he had an interest'. Prime Minister, now that we have established that you presided over meetings of cabinet when you were still a director of a company, meetings which directly benefited that company, have you not breached your own code?2122Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—No.21222122McArthur, Stewart, MPMr McARTHURVH4CorangamiteLP10—My question is addressed to the Minister for Workplace Relations and Small Business. Minister, are you aware of reports in today's media that the government is prepared to establish a framework for redundancy payments for wharfies? Are these reports accurate and how would the government's system differ from that of the Waterfront Industry Reform Authority model?2122Reith, Peter, MPMr REITHWI4FlindersLPWorkplace Relations and Small Business10—I thank the member for Corangamite for his question. I have said repeatedly that in the maritime industry generally there is a significant problem of overmanning, and the more obvious symptoms of that are the fact that there are a lot of rorts and inefficiencies, a lot of idle time and very poor productivity levels. For example, in the blue water segment of the industry there is no question that there is overmanning. I discussed that with the MUA, the representative union, before Christmas and they acknowledged that there is overmanning, and there have been ongoing discussions about how that issue needs to be dealt with. For example, the government has taken a step to withdraw the Australian Maritime Safety Authority from the management of the pool.Similarly, in the stevedoring industry there is no doubt that there is significant overmanning. That is not, of course, acknowledged publicly by the union. But there is no doubt, again from the evidence of the restrictive work practices and the like, that something needs to be done to improve the efficiency of the industry.I think it is fair to say that the industry generally is unique in respect of the stevedoring aspect. That was really recognised by the previous Labor administration when they set up the Waterfront Industry Reform Authori ty—the WIRA process. In that process a lot of taxpayers' funds were expended—something like $160 million—Mr Albanese interjecting—10000SPEAKERMr SPEAKER—The honourable member for Grayndler!WI4Mr REITH—And the end result, as we have demonstrated in this House day after day, is that we did not get the significant reform that we obviously need on the Australian waterfront.DT4CREANMr Crean—That is two minutes.WI4Mr REITH—If it is two minutes, I have two to go. Thank you very much. To have you marking time sitting there, Simon, is about all you are good for, I would have to say.DT4CREANMr Crean—Well, at least we have got that from you.10000SPEAKERMr SPEAKER—The honourable minister will direct his remarks through the chair. The honourable member for Hotham will remain silent.WI4Mr REITH—Thank you, Mr Speaker. Triviality is his specialty.DT4CREANMr Crean—We'll hold you to that!10000SPEAKERMr SPEAKER—The honourable minister will direct his response through chair.WI4Mr REITH—The Labor Party oversaw the spending of something like $430 million and basically got nothing for it. The last thing I would say is that in this circumstance, obviously, where there is an overmanning situation—Mr Albanese interjecting—10000SPEAKERMr SPEAKER—The honourable member for Grayndler!WI4Mr REITH—and where the companies take action to address that problem, where there are people leaving the industry, then their entitlement should be fully paid out. I have said that repeatedly—last month, the previous month and all the way back to December. The two differences between our approach, I suppose, and the Labor Party's approach are that our view is that, where there is a cost, that cost should be borne by the industry.Mr Albanese interjecting—10000SPEAKERMr SPEAKER—The honourable member for Grayndler will remain silent.WI4Mr REITH—As to the mechanism for that, that is a secondary matter, but a cost associated should be met by the industry.UNKNOWNOpposition membersOpposition members—Boring! Boring!10000SPEAKERMr SPEAKER—The honourable members of the Labor Party will remain silent.R36ALBANESEMr Albanese—But it is boring.10000SPEAKERMr SPEAKER—I warn the honourable member for Grayndler.WI4Mr REITH—And, secondly, we look to the industry for genuine reform and genuine restructuring so that we can finally see for Australia a far more efficient waterfront.21232123Zammit, Paul, MPMr ZAMMITZK6LoweIND00—My question is directed to the Minister for Transport and Regional Development. Minister, you will recall my question to you on 23 March regarding your government's increase of jet departures over residential areas of Sydney by 300 per cent—and, incidentally, I accept your belated withdrawal and apology in this House two days later.10000SPEAKERMr SPEAKER—The honourable member will direct his question.ZK6Mr ZAMMIT—Will the Minister inform the House what is the government's response to the recent British paper in the Journal of Epidemiology and Community Health which found that children who were born and reside near airports and under flight paths are 20 per cent more likely than their peers who are not aircraft noise and pollution affected to die of leukemia and solid tumour non-blood cancers before they reach adulthood?2123Vaile, Mark, MPMr VAILESU5LyneNPTransport and Regional Development10—I thank the honourable member for Lowe for his question. Just by way of correction, there was not an apology the other day.10000SPEAKERMr SPEAKER—The honourable minister will respond to the question and not engage in other debate.SU5Mr VAILE—I am not aware of the report that the honourable member refers to, but the honourable member raises the point about air traffic movements around Sydney. I do not know where he gets his 300 per cent from, but obviously the government's targets as far as the long-term operating plan is concerned are still in sight at 55 per cent of movements to the south over water, 17 per cent to the north, 15 per cent to the west and 13 per cent to the east. With regard to the environmental conditions that surround major airports such as Sydney and in the Sydney basin—ZK6ZAMMITMr Zammit—On a point of order, Mr Speaker: my question—10000SPEAKERMr SPEAKER—What is your point of order?ZK6ZAMMITMr Zammit—My point of order relates to relevance. My question was specific in regard to the matter I raised about the results of the tests that were conducted in the UK.10000SPEAKERMr SPEAKER—The minister is entirely in order in his response. The honourable member will resume his seat.SU5Mr VAILE—I was just about to make a comment with regard to the environmental impacts around airports, such as in the Sydney basin where there is a lot of conjecture and different attitudes and levels of misinformation about the level of pollution. The important thing that members should note, particularly the member for Lowe, is that my understanding is that about two to three per cent of the pollution in the Sydney basin is from aircraft, about 70 per cent from motor cars and the balance from industry. It is not emanating from use of airports. I think the member for Lowe should recognise that in his further questions.21232123Nugent, Peter, MPMr NUGENTUT4AstonLP10—My question is addressed to the Minister for Foreign Affairs. Can the minister inform the House of the results of his recent talks in Washington with the IMF, the World Bank and the United States administration and the measures Australia is taking to relieve the present difficulties in Indonesia? Can the minister further inform the House of the response from Indonesia to Australia's role?7T4CROSIOMrs Crosio—This should be a ministerial statement. 2124Downer, Alexander, MPMr DOWNER4G4MayoLPForeign Affairs10—I thank the honourable member for his question. Indeed, in response to the interjection from the member for Prospect, I point out that it is nice to know that there is a member in this House who is interested in serious policy issues—being, in this case, the member for Aston—because the fact is there is not one on that side of the House apparently.The Australian government does regard the relationship with Indonesia as one of our most fundamental relationships. We do not go out of our way to assist Indonesia simply because we want to help other people from the goodness of our hearts, although we do have good hearts. We also do it because we wish to promote our national interest, and it is in our national interest that Indonesia is both a prosperous country and a stable country. We have, therefore, been very concerned about the economic crisis that has beset Indonesia and we are doing everything we possibly can within the limits of our resources to assist that country maintain stability and rebuild its prosperity.In that context, in response to the member for Aston's question, I visited Washington a couple of weeks ago and had discussions with the International Monetary Fund, the World Bank and senior United States officials about this situation. There were really three main focuses of my discussion—the IMF program, the private debt situation in Indonesia and the food security issue.I can say that in my discussions with Mr Camdessus, the managing director of the IMF, the views of the Australian government were very well received. It is pleasing to see that there are positive signals now emerging that Indonesia and the International Monetary Fund are working constructively together and we would expect an announcement soon.I also, as I mentioned, did take the opportunity to discuss the private debt situation in Indonesia because, clearly, until a way can be found through the restructuring of private sector debt, the economy is going to find it difficult to stabilise. It was an opportunity to discuss those issues with senior United States officials and also subsequently, when I was in Japan, to talk to the Japanese about that issue. Again, on the issue of private sector debt, we are optimistic that a statement will be made in the near future which should take the whole of that issue further forward.Finally, let me say that, while I was in Washington, I had the opportunity to meet with Mr Jim Wolfensohn, the President of the World Bank, and I discussed with him a proposal that had been put forward by the Prime Minister to Mr Wolfensohn that the World Bank should coordinate a meeting of international aid donors in order to provide direct emergency assistance to the people of Indonesia—in particular, the poor people of Indonesia, who are suffering the most at this very difficult time. We on our part believe that we do have a humanitarian as well as a national interest responsibility to help the ordinary people of Indonesia as best we can at this time.Mr Wolfensohn, I am very pleased to say, agreed that he would coordinate a meeting of donors in Washington on 1 April—that is today—so that meeting will be taking place today. Australia will be represented by Trevor Kanaley, the Director-General of AusAID, and a number of other governments will be represented at senior levels. Mr Wolfensohn himself will be there.So over and above the assistance we have given with trade credits and the assistance we have given through the IMF package, the Australian government has given very significant diplomatic support to try to help with the resolution of the very difficult problems that Indonesia faces. It is important that members understand that it is in the national interest that we do that. We are not just doing it out of the goodness of our hearts; it is in the national interests we do that.PE4BEAZLEYMr Beazley—That is true, but why don't you make a public statement?4G4Mr DOWNER—I know the opposition does not wish to hear any of this. They are no longer interested in serious policy issues; they are only interested in childish tactics.QJ4THEOPHANOUSDr Theophanous—Mr Speaker, on a point of order: this should have been a ministerial statement so that we could have had the opportunity to discuss this issue. That is the point that has been made by the opposition.10000SPEAKERMr SPEAKER—The honourable member for Calwell will resume his seat. I would point out that—Opposition members interjecting—10000SPEAKERMr SPEAKER—When the House resumes its silence, including the honourable member for Prospect. I would point out that the minister's response related to a meeting taking place today and, as a result, it seemed to me that the answer did have real relevance and answered the question without notice.21252125Crean, Simon, MPMr CREANDT4HothamALP00—My question is again to the Prime Minister. Prime Minister, do you recall in defending your secret directorship last night that you claimed that the difference between you and Senator Richardson was that he held the directorship whilst minister for communications? Prime Minister, didn't Senator Richardson resign as director of 2HD just six days after he was appointed communications minister and three months before you raised it in the parliament, but didn't you retain your directorship for six months while Prime Minister? Isn't the only difference between your behaviour and that of Senator Richardson that he saw the potential conflict and acted to remove it while you did nothing until you thought you might be caught and then you hid it?2125Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—My recollection is that I said there were a number of differences and one of them, which the honourable member did not refer to, was the fact that 2HD was a commercial operation.VD4EVANSMr Gareth Evans—Non-profit.ZD4Mr HOWARD—Oh!VD4EVANSMr Gareth Evans—There is no difference.ZD4Mr HOWARD—He says there is no difference. I think most Australians know the difference between a non-profit organisation and Coles Myer, and that is what is involved in this. You are once again wasting time on trivial issues. It is now one minute to three and there has not been one question from the Australian Labor Party on any issue of any relevance. CT4COSTELLOMr Costello—No policy.ZD4Mr HOWARD—No policy, no interest, no concern. You are utterly indifferent to the interests of ordinary Australians, and the longer you go on with this trivial muckraking, the more damage you do to yourself.21252125Pyne, Chris, MPMr PYNE9V5SturtLP10—My question is addressed to the Minister representing the Minister for Communications, the Information Economy and the Arts. Will the minister inform the House of the benefits which will flow to young Australian music lovers from the government's decision to break the monopoly of multinationals in the compact disc industry?2125Smith, Warwick, MPMr WARWICK SMITHGJ4BassLPMinister for Family Services10—I thank the member for Sturt for his question. He is regarded as one who has a passionate interest in this particular issue and who has prosecuted the case on behalf of young Australians getting realistic pricings for CDs for some time, to the extent that he appeared on the Midday Show , quite successfully. I am quite envious of that.10000SPEAKERMr SPEAKER—The minister will respond to the question.GJ4Mr WARWICK SMITH—You did a very good job. Recent evidence provided to the Senate Legal and Constitutional Legislation Committee clearly dispelled the myth advocated by multinational record companies that Australians will not get cheaper CDs under the government's proposed legislation to introduce parallel importation of sound recordings. Indeed, several witnesses to the committee, including representatives of the ACCC and the Australian Consumers Association, believed that prices would actually come down and that there would be a greater range and choice of CDs as a result of breaking down the exclusive arrangements and distribution arrangements controlled by the current suppliers. Woolworths, a major operator in this country and one of the nation's largest retailers of CDs, told the committee that, if the government's plans were put in place, a 25 per cent to 30 per cent reduction in the retail price of CDs would flow. Indeed, that flows from the analysis done by the ACCC and the Bureau of Transport and Communications Economics.Of great concern was the prediction by the Australian Consumers Association, which said there was considerable risk that CD prices would go up by another $2 if these amendments were not passed. Indeed, there have been surveys where 83 per cent of consumers believed that CD prices are in fact too high in this country. They are artificially high because of the current Copyright Act, which gives the big five foreign record companies an effective monopoly on imports and distribution of CDs. Those same companies exported payments of about $166 million in royalties in 1994-95, the bulk of that going to the United States and the United Kingdom.I think it is fair to say that the arrangement at the present provides large profits to foreign companies and that those profits are a direct result of the current importation restrictions which allow those firms to set their own prices and to restrict the range of music available to Australian retailers. That is the nub of the problem. That is why we want to have a system of parallel importation—to break down the monopoly arrangements that currently exist. The opposition to parallel importation by the two lobby groups ARIA and AMRA is basically shoring up their interests at the expense of consumers. That is why this issue is passionately advocated on both sides—the government admits that—but we believe that our responsibility is to develop legislation to protect and further the interests of the consumers, the purchasers of CDs. Allowing parallel importing is the only way this can be achieved. Smaller retailers will be able to import a much wider range of CDs, and therefore the pricing points as they are reflected at the retail point of sale will provide a much better deal particularly for the young people of Australia.It is interesting that the Democrats, along with the Labor Party, have indicated that they are going to oppose the government's legislation. We think that is particularly regrettable. We think that is interesting from the Democrats' point of view. The senator responsible for this area has been promoting herself as the protector of young people's interests and now, of course, has gone along and endorsed a position which will see prices go up. It will certainly see a situation where prices will not come down. That is why I think the Democrats' position on this matter is particularly regrettable.10000SPEAKERMr SPEAKER—The minister will draw his answer to a conclusion.GJ4Mr WARWICK SMITH—I will, Mr Speaker. That flies in the face of what another member of the Democrats, Senator Murray, has said. He said he believed that, if the outcome was an increase in prices, that would be something that is regrettable. I do not believe the Democrats are united. I think it is a shame for Australia, particularly the young people and purchasers of CDs, that this matter has not been able to proceed.21262126Beazley, Kim, MPMr BEAZLEYPE4BrandALP00—My question is addressed to the Prime Minister. I refer to the Prime Minister's defence that he has not breached the guidelines because he did not stand to profit from his directorship of the Menzies Research Centre public company. I ask whether the Prime Minister recalls a statement by Senator Hill that:Any reading of the Register of Ministers' Interests reveals that it is a statement of registrable interests, not pecuniary interests.Indeed, it says here, `Statements of Registrable Interests.' Prime Minister, don't the same standards apply to you?2126Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—I repeat the defence that I gave at the beginning of question time in relation to the ministerial guidelines: it was based upon the argument that, by any plain meaning of the language, I was not a director of a public company.21262126Barresi, Phil, MPMr BARRESIZJ6DeakinLP10—My question is addressed to the Minister for Employment, Education, Training and Youth Affairs. Minister, people in my electorate of Deakin have been very supportive of the government's job pathway program. Can the minister inform the House of the success of the job pathway program in assisting young Australian school leavers into jobs, including the success of the Maroondah Careers Network which is assisting school leavers in Melbourne's outer east to find jobs?2127Kemp, Dr David, MPDr KEMPBT4GoldsteinLPEmployment, Education, Training and Youth Affairs;Minister Assisting the Prime Minister for the Public Service10—I thank the honourable member for Deakin for his question. I acknowledge his great interest in helping young people in the electorate of Deakin to move successfully from school into employment. The Labor Party turned their back on the 70 per cent of young people who are not going from school to university. The apprenticeship system essentially dried up. The number of young people in apprenticeships and traineeships as a proportion of the work force was the lowest for three decades during Labor's last year and youth unemployment, as we know, hit a record 34 per cent.The job pathway program has been one of the government's most successful initiatives for young people. It involves extra funding for schools so that schools can take a proactive role in helping their school leavers get jobs. At the present time, more than 1,000 high schools across Australia are involved in job pathway and more than 20,000 school leavers will be helped by job pathway this year.One of the most successful projects in the job pathway program is the consortium of 29 schools in the Mooroondah area in the electorate of the member for Deakin. In fact, this project, this consortium of 29 schools, also extends into parts of the electorates of Casey, Menzies, McEwen, Aston and La Trobe. Already, this project has had a 100 per cent success rate with school leavers at the end of last year. It contracted to place some 240 young school leavers in jobs and it has placed 240 in jobs in the retail, hospitality and construction industries.One of the really interesting and important aspects of this success has been that 80 per cent of these placements have been in the government's new apprenticeships. These schools have provided counselling and individual support to 1,200 students at risk of leaving school early and have had very considerable success in encouraging these young people to stay on at school. These are practical initiatives to make a difference to the lives of thousands of young Australians. The government is not stopping there. At the end of January, the Prime Minister announced that the job pathway program would be further expanded with $13½ million of additional funding over the next two years.8K6FITZGIBBONMr Fitzgibbon—Nobody is listening.BT4Dr KEMP—You should be listening. It is very interesting that only one state government prohibited its government schools from participating in that program—ZD4HOWARDMr Howard—Yes, New South Wales.BT4Dr KEMP—And that was New South Wales. That was the Carr Labor government. That shows how little commitment the Labor party has to helping these young school leavers actually get jobs. If the Leader of the Opposition had any spine and backbone at all, he would go and tell his colleague the Premier of New South Wales, for the Labor party, to allow school leavers in that state to benefit from the job pathway program.ZD4HOWARDMr Howard—Mr Speaker, I ask that further questions be placed on the Notice Paper .Censure Motion2127212715:10:002127Beazley, Kim, MPMr BEAZLEYPE4BrandALP00—I ask leave to move:That this House censures the Prime Minister:(1) for breaching Ministerial standards in relation to (a) his own Guidelines on Ministerial Conduct and (b) the House of Representatives Register of Members' Interests in that:(i) he failed to disclose his directorship of the Menzies Research Centre Limited, which he held for the first seven months of his Prime Ministership; and(ii) he placed himself in a position of conflict of interest between his public duty and his directorship of that company;(2) for presiding over a Cabinet meeting which agreed to $400,000 worth of grants to Menzies Research Centre Limited, as well as agreeing to tax deductibility for donations to the company, whilst he was a director of the company in a clear conflict of public duty and private interest;(3) for his weak and secretive attempt to avoid both public scrutiny of his directorship and the need to reveal his breach to former Ministerial colleagues he had forced to resign for similar breaches of his Guidelines on Ministerial Conduct; and(4) for his latest contortions and re-definition of the meaning of his own guidelines to suit his political needs, again doing so in a manner which has no regard to the standing of those guidelines, or to their consistent application, credibility or transparency.10000SPEAKERMr SPEAKER—Does the government accept the motion?WI4REITHMr Reith—We will take your suspension motion and then you can move the censure.10000SPEAKERMr SPEAKER—The question is that standing orders be suspended. Those of that opinion—PE4Beazley, Kim, MPMr BEAZLEY—Sorry, hang on. I did not actually move that.WI4REITHMr Reith—Didn't you move the censure?PE4Beazley, Kim, MPMr BEAZLEY—No, I asked leave to move a censure motion.WI4REITHMr Reith—If you are asking for leave, you can have leave to move the censure motion.Leave granted.10000SPEAKERMr SPEAKER—Could I say, before I call the honourable Leader of the Opposition, that I know that there has been a practice in this House of drafting extraordinarily long and complex motions. That one is extraordinarily long and raises questions of whether it is entirely within the standing orders. I suggest that all members, when they are raising matters of this sort, be careful that motions are entirely within the standing orders and the practice of this House.15:12:002128Beazley, Kim, MPMr BEAZLEYPE4BrandALP00—I move:That this House censures the Prime Minister:(1) for breaching Ministerial standards in relation to (a) his own Guidelines on Ministerial Conduct and (b) the House of Representatives Register of Members' Interests in that:(i) he failed to disclose his directorship of the Menzies Research Centre Limited, which he held for the first seven months of his Prime Ministership; and(ii) he placed himself in a position of conflict of interest between his public duty and his directorship of that company;(2) for presiding over a Cabinet meeting which agreed to $400,000 worth of grants to Menzies Research Centre Limited, as well as agreeing to tax deductibility for donations to the company, whilst he was a director of the company in a clear conflict of public duty and private interest;(3) for his weak and secretive attempt to avoid both public scrutiny of his directorship and the need to reveal his breach to former Ministerial colleagues he had forced to resign for similar breaches of his Guidelines on Ministerial Conduct; and(4) for his latest contortions and re-definition of the meaning of his own guidelines to suit his political needs, again doing so in a manner which has no regard to the standing of those guidelines, or to their consistent application, credibility or transparency.We have here the guide on key elements of ministerial responsibility. This document has about the same amount of relevance now to Australian political debate as do the Dead Sea scrolls. This is a useful piece of archaeology; it is a useful piece of archaeology which lends us an understanding of what time was once like in this country when governments exercised some degree of restraint in relation to themselves and some level of public accountability.Like the Dead Sea scrolls, it is a document full of spirit which will enable archaeologists and historians to discern the attitudes of various sects at the time and to speculate interestedly on whether or not they have any relevance to a discussion of the head of state of the land or are in any way responsible for the politics of the time.Like the Dead Sea scrolls, these things have become things of the spirit rather than things of actuality and of practical relevance to the considerations of the parliament today—that is, to everybody except those on this side of the House. For us this is a living document. For us this is a set of standards which our ministers adhered to. For us this is a set of standards against which we tested ourselves. For us this is basically what is expected of a standard of honour in this place for members of governments and members of parliaments. Without it, the very substantial reputation for honesty that federal politics in this nation exercises around the globe for an almost unique honesty and integrity goes down the tube. The Prime Minister (Mr Howard) has set an exercise in rendering black white when it comes to dealing with these standards of ministerial conduct, both in relation to Senator Parer and in relation to himself. As he redefines and finds himself trapped, he redefines again; he finds himself trapped, and redefines himself again. For example, he has said in the course of his remarks here today that, because he exercised no pecuniary interest in this, it actually has no meaning as far as he is concerned. I will get on to how much he obviously actually believes that, by his practical actions, a little later.Suffice to say at this point, as I took that statement of Senator Hill and as I indicated in my question, this is a statement of registrable interests. Registrable interests have, for the Prime Minister, included everything from biros to membership of Rotary clubs. He has understood thoroughly, he has firmly fixed in his own mind, that the standard requires registrable interests, not just simply a pecuniary interest.He was asking of us last week, `Ignore everything in my guidelines in relation to Senator Parer. What you in the Labor Party have to do is to demonstrate that he did that action in connection with this interest and as a result produced a conflict of interest.' So low is the moral sensibility now on that side of the House that they think that in those circumstances what you are actually discussing—particularly when it comes to a matter in which you are actually earning something from it—is a conflict of interest. In actual legal terms what you are discussing there is not a conflict of interest—perceived, real or actual. You are discussing corruption. So conflict of interest propositions went right out the window as far as the Prime Minister was concerned.But, having established that test last week, that test was run across him on this matter here today. And on this matter we can identify two clear-cut breaches: first, a requirement for declaration was breached—that is a declaration to all of us—and, second, a requirement for declaration to the cabinet and for absenting yourself from a discussion that is directly relevant to matters of interest that you enter tain was also breached. So we have had those two breaches even under his own redefined standards.What do we find today? We find it finally reduced to the point: `Unless you can prove that I put a bit of dough in my back kick, nothing matters, absolutely nothing else matters.' You can bring this very lengthy guideline down to one sentence: `Ministers may not make decisions that put dough in their back kicks.' End of story. That is the end of it.DT4CREANMr Crean—But they worry about it only when they're caught.PE4Beazley, Kim, MPMr BEAZLEY—And then, as the honourable member for Hotham says, only when they're caught.DT4CREANMr Crean—And that's corruption.10000SPEAKERMr SPEAKER—The honourable member for Hotham will remain silent.PE4Beazley, Kim, MPMr BEAZLEY—The Prime Minister said in his little episode in question time that what the opposition should be concerned about in question time is a whole range of issues that he says are of relevance to the Australian people. And so they are. And, if you ask me to evaluate this thing in the great scheme of life as to what is relevant to the average Australian, what puts bread on the table is more relevant in the daily life of the average Australian than the enforcement of ministerial codes of conduct.What is relevant to the average Australian is the question of the removal—as was pointed out by us in question time yesterday—of a whole range of entitlements, in clear breach of election promises by the Prime Minister. That is of far more relevance to the elderly Australian than questions of breaches of the code of conduct. The destruction of educational opportunity for a range of young people in relation to university is far more relevant to them than a ministerial code of conduct. The proposition of the privatisation of Telstra and the consequent likely disbenefits that are going to flow to a whole range of Australians, particularly those in the bush, is far more relevant than the ministerial code of conduct.If the Prime Minister wants us to make a statement about that fact, we will. We are cheerful to own up to the fact that in our judgment—and no doubt in the judgment of the people of Australia—those things are far more relevant to them. And we have therefore been providing you with an opportunity to answer for yourselves on all those matters in question times and in MPIs over the last couple of weeks.But there is one task that is uniquely performed in this chamber that cannot be performed by the average Australian, cannot be performed by somebody whose devotion of their daily attention is to their struggle for survival, the needs of their families and the jobs that they do. They are not in this place. They elect us to this place. They expect us to establish a set of standards that are broadly publicly acceptable, they expect us to adhere to them and they expect us at the end of the day to hold governments and each other accountable as far as those standards are concerned.Indeed, when the Prime Minister was gallivanting around the Old Parliament House, as I do well recollect, at the time when he discovered that the then minister for education I think he was, Mr Dawkins, had in fact failed to declare that his mother was a shareholder in BHP, what did we get from the Prime Minister? Did he ask for the establishment of the fact of the minister of the day reaching into the pockets of BHP and putting into his own pocket as the standard? Did he want us down at that bottom line? No, he was prepared to go on with arguments about the appearance of that situation. He had very high standards then he did. He had very high standards which he was pleased to announce to the rest of the Australian people would be the standards that he would apply when he came into this place.And what have we seen from this Prime Minister since then? Just as he has weaseled out of his commitments to the elderly of this nation as far as dental health is concerned, just as he has weaseled out of his commitments to the people of this nation as far as their access to nursing homes is concerned, just as he had weaseled out as far as the access of the unemployed people of this nation to decent support when it comes to labour market programs is concerned, just as he has weaseled out of his commitments to the young people of this country in relation to HECS, university places and a whole range of other activities, just as he has weaseled out on his promises on tax—as we see his massive increases in superannuation tax arrangements proceeding though here—just as he has weaseled out of his commitments to maintain spending as far as the environment is concerned, just as he has weaseled out of just about everything that Australians do regard as relevant to them in their daily lives, so he has weaseled out of this set of commitments. And there is only one place where he can be held accountable as far as that is concerned.I have here a question that the Prime Minister asked in relation to former Senator Richardson. He dragged Senator Richardson's political wraith around him in his defence of himself on the Channel 9 show the other night. I never thought I would live to see the day when Richo was called to defend the reputation of a member of the government when I think of the hard things the Prime Minister had to say about Richo from time to time in this place and in other places. I want people to reflect upon this question that he asked the Prime Minister of the day:My question is addressed to the Prime Minister. I refer to the Prime Minister's claim that it was common knowledge that Senator Richardson was a director of 2HD . . . I repeat: `common knowledge that Senator Richardson was a director of 2HD.' What was the first answer to a question he gave here in this place? `Oh, it was common knowledge, Mr Speaker. I was leader of the Liberal Party. As far as everybody in this country was concerned, of course that would find them immediately identifying the fact that I was a director of the Menzies Foundation.' That was a marvellous defence as far as he was concerned. His question continued:. . . when he participated in broadcasting discussions and decisions of the Cabinet. Was this statement by the Prime Minister not just an expression of personal opinion, or has the Prime Minister been personally assured by all Ministers present at the Cabinet discussions that they knew of Senator Richardson's directorship? Well, Prime Minister, were you assured by all your ministers at the time that they knew about your directorship of your particular company on this occasion, and a declaration of it? He went on:Is it not, therefore, the case that unless the Parliament is satisfactorily assured that Senator Richardson either disclosed his interest as a director of the radio station whenever he participated in Cabinet discussions or decisions on broadcasting matters—and not jut those relating to licence fees, but all broadcasting matters—or, alternatively, absented himself from those discussions, he must, in accordance with accepted Cabinet practice, resign from the Ministry and in default you ought to remove him?That was the standard of the Prime Minister at the time. What is the difference between the Prime Minister's situation and Senator Richardson's? Senator Richardson sat in that cabinet for six days as a director of 2HD. The Prime Minister sat in it for six months. There is no evidence in that six days that there was any broadcasting matter before cabinet. There is every evidence, and the Prime Minister has effectively fessed up to it, that there was a matter precisely concerning the Menzies Foundation put before the cabinet during the Prime Minister's consideration of those concerns.Furthermore, not only was there evidence of that but there is the evidence that the way in which he conducted himself around it was a representation of a pattern of deliberate deceit, and I will get on to that in a minute.Let me finish with the Graham Richardson example, because there was a conclusion to the Graham Richardson example. It did not simply conclude with Graham Richardson—or me, as Leader of the House, or the then Prime Minister—standing up and defending himself and just flicking it off by saying, `These are trivial matters; it doesn't matter. I didn't get any pecuniary interest. I didn't benefit this particular company from any decision I took. It wasn't a public company.' You never got that as a conclusion from Senator Richardson. You got that as a conclusion from the current Prime Minister.What did you get from Senator Richardson? He stood up in the Senate and made a substantial and clear-cut apology to the parlia ment for having, in his mind, inadvertently misled them. There was an apology to the parliament and an apology to the Prime Minister. What we get from this Prime Minister, who can never admit he is wrong and will destroy every standard that governs parliamentary activities, every rule that governs parliamentary activities, is that he can breach them; the rule is wrong, he is not wrong. He alone, uniquely, exercises the authority to redefine the rules every time he stands on his feet. Today, in question time, we had those rules redefined, I would suggest, at least four or five times as he retreated from or failed to answer every question that was put to him.Let me turn to another aspect of this matter, in case people think it is a matter of some trivia or of no importance for us to consider. Consider what he was doing at the time. The Prime Minister, of course, had the lowered eyebrows, the sadness on his face, as he punted one minister after another during that period of time, as he clothed himself in the rock-ribbed armour of self-righteousness and the significance of these rules that he put down that he is prepared to uniquely claim. He got up and speculated for the people as to how he had so frequently had cause to remark to his ministers that they must observe these laws to the letter, even if it was just a bit inadvertent, even if it was trivial. Remember that he punted poor old Senator Short, one of his flatmates, for trivia. What a lousy cook he must have been and what a terrific one Senator Parer must be! An indication of a career afterlife when he has finally dealt with it.What did the Prime Minister say about them during that period of time? Well, they had to go. But what was he doing at that point in time? Remember, he has had the cabinet meet on his Menzies Foundation and make a determination. That does not provoke anything from him at all. He has rung me. He has said, `Look, I intend to give a hundred grand to the Menzies Foundation and I'm going to give to you a hundred grand for the Evatt Foundation.' This was supposed to be one of his defences here—the fact that he rang me. I can tell you this, Prime Minister: I was perfectly cheerful to see resources given to the Menzies Foundation, I was perfectly cheerful to see them given to the Evatt Foundation, but you never told me you were a director of it. And you are going to be taking that to the cabinet—well, really!First, he attempted to clothe himself in the wraith of Senator Richardson and then he attempted to clothe himself in my all-too-real presence. On both occasions, he did not manage to drag down what he desperately hoped for himself—that body over himself in the trenches so that none of the flak may hit him. We have both jumped up and moved away as far as that is concerned.How must his colleagues feel? How must those colleagues who were humiliated by him feel? Those colleagues who obviously did not fully comprehend all the aspects of detail as far as these considerations were concerned—how must they feel about it? How must they feel about a Prime Minister who clearly understands the full range of things which he must declare and then, above all, how do they feel about a Prime Minister who is dragged kicking and screaming into this place to explain these matters because of exposure, because, even if inadvertently, he had not actually seen what was expected of him or remembered what was expected of him? He certainly did recognise it ultimately. One would have thought that what would have flowed from that was a correction when that revelation came to him, but there was none. And why? Obviously because he knew that, if he put this into the register of interests at the time when we were considering these other matters, we would have pointed it out and he would have suffered a massive degree of embarrassment.What sort of Prime Minister is that? I would say it is a Prime Minister who is weak and sneaky. That is how I would describe a Prime Minister of that demeanour: weak and sneaky. He now seeks to defend himself—and I notice the bloke who is going to speak next, the Leader of the House (Mr Reith), also seeks to do that—saying that somehow or other you do not actually have to declare any of these things in business dealings related to your job if you happen to be leader. I am afraid that you do have to make those declarations. That is part of your job and your duty.The fact that you happen to be leader and that that automatically puts you onto a public company or a company of any description has to be declared. That has to be in here. That has to be there so that it can be seen because decisions are taken by governments that benefit those particular companies from time to time. If I were a director of the Evatt Foundation, I would have to declare it and you would expect that I would have to declare it. If I were a director of anything, there would be an expectation that it would be declared in this place because the rules—this piece of archaeology that is left for us to use—demand it of you.This Prime Minister is deserving of censure. This Prime Minister has scuttled out from this, but he will not scuttle out from the judgment of the people of this country on this matter. (Time expired)DT4CREANMr Crean—I second the motion and reserve my right to speak, Mr Speaker.15:32:002132Reith, Peter, MPMr REITHWI4FlindersLPWorkplace Relations and Small Business10—This motion deserves to be thrown out and to be dismissed for the triviality that it is. It says a lot about the opposition that they would even have the hide, the impertinence, the gall to move such a motion today. It just shows you what muckrakers they are. You can pat him on the back as many times as you like, Simon. But the read-out in the Australian community will be that, when there is a major waterfront dispute going on and when you have major problems within your own side because one of your own front benchers is about to launch a book attacking his own leader, people will understand that this is just an old tactic.How many times have you seen a political party that has its own internal problems struggle to find an attack on the government, their opponents, as a political distraction. It is telling indeed: here we are in the second or third burst of industrial strike action by the wharfies, yet the Labor Party is unable to ask one question on an issue which really is important and of substance. I have seen many weak, pathetic, irrelevant performances in my time, but that one certainly takes the cake.To hear the Labor Party talking to us about standards: what a joke! It is April Fools' Day and the fools are out in full strength. It was 14 years ago that Mal Colston was fiddling the books and who were the ministers in charge of covering up Mal Colston? None other than Kim Beazley, now Leader of the Opposition, then minister in the Hawke government. Who was the other part of the Mal Colston defence team? It was none other than the deputy leader, Gareth Evans, the then Attorney-General. What did these great upholders of standards do? They were advised to send the Colston matter to the police; they buried it and kept paying him for years and years. And you have the impertinence to move a motion in this House today about standards.No-one has done more to maintain standards in this parliament than the Prime Minister (Mr Howard). No-one has been prepared, more often, more regularly, more courageously to stand up and talk about standards and to maintain and enforce standards. You blokes would not know a standard if you fell over one. No-one has done more to enforce standards and to apply a commonsense approach to the whole issue of standards. A commonsense approach is something which you would have a lot of trouble understanding.This motion today is just a distraction. It is a triviality in the extreme coming from an opposition that basically have absolutely nothing to say about the significant issues. They have just drummed this one up as a political distraction. The incredible impertinence and gall of these people! The Prime Minister today revealed that a decision was made to provide some dollars—less money than most wharfies earn, or a lot of them earn. It is not exactly big money we are talking about here—$100,000. I can show you wharfies earning more than that on the Australian waterfront, thanks to the Labor Party. This is all about the fact that when you become the leader of the Liberal Party you also become a director, a member of the Menzies Foundation.DT4CREANMr Crean—Read the articles.WI4Reith, Peter, MPMr REITH—I have the articles. I will read some of the articles to you.DT4CREANMr Crean—Well, read that one.10000SPEAKERMr SPEAKER—The honourable member for Hotham will remain silent if he wishes to make his contribution in this place.WI4Reith, Peter, MPMr REITH—There are two think-tanks, policy groups associated with the two major political parties. The Labor Party have the Evatt Foundation. They have named theirs after one of their greats, old Doc Evatt, and we have named ours after the greatest parliamentarian Australia has known, Robert Menzies—the Menzies Foundation.Mr Fitzgibbon interjecting—WI4Reith, Peter, MPMr REITH—For many years, when Labor was in government, the Labor Party looked after the Evatt Foundation. The Labor Party also looked after the unions—talk about conflict of interest. Thank you for reminding me about that.For many years, the Labor Party looked after the Evatt Foundation. When the Liberal Party came in, the Prime Minister said that there ought to be fair and equal treatment between the two parties and that each of them ought to have $100,000—which was a cutback for the Evatt Foundation, which was fair enough—and that there should be tax deductibility. When the Prime Minister became leader of the Liberal Party, he automatically took on the role of being involved in the Menzies Foundation.As the leader of a political party, you get involved in lots of aspects of your organisation. You get involved in the think-tanks, the advisory committees, the executive of the party, and you get involved because you are the leader and you are expected to be involved in each and every part of the organisation. Part and parcel of being a senior member of a political party in this country is that you are involved in your party. Like it or not, we have a party system.5M6DONDASMr Dondas—A strong party system.WI4Reith, Peter, MPMr REITH—And on our side we have a very strong party system, and it is part of the success of our side of politics that we work the party system and we make sure that we have a strong and viable party system. The accusation against the Prime Minister essentially is that he is a member of the Liberal Party. That is their real complaint.What was revealed today was that when we got in we said that we wanted fair treatment for both sides. Before or at the time that the cabinet made the decision, the Prime Minister rang up the Leader of the Opposition and said, `Kim, your side has been creaming off the top very nicely over the years. Now that we have a change in government and we are controlling things, we will treat both sides equally and fairly. What do you say about that?' What was his answer? His answer came back, `That is a good idea. Thank you very much.'Now Mr Beazley says, `That's no answer because you didn't tell me that you were a director.' So what! The accusation is that the Prime Minister is not associated with that Liberal Party when he rings up to have a discussion about funding for the Evatt Foundation and the Menzies Foundation. What a ridiculous, stupid, juvenile, pathetic claim to make. It is like saying, `Oh, I spoke to Kim Beazley about whether or not there should be funding for the Evatt Foundation, but of course I assumed that this was a matter beyond his interest because, as leader of the Labor Party, his interest in the Evatt Foundation was totally irrelevant.' It makes no sense.Kim Beazley's interest in the Evatt Foundation is exactly the same as the interest in the Menzies Foundation that is held by the Prime Minister. As leader of the Labor Party, Mr Beazley is interested in what happens in the Evatt Foundation; Mr Howard as leader of the Liberal Party is interested in the circumstances and the arrangements for the Menzies Foundation. Quite frankly, that is all there is to it. I think I should just put my papers down and go and have a cup of tea and leave you lot to carry on.DT4CREANMr Crean—Do it.10000SPEAKERMr SPEAKER—I warn the honourable member for Hotham!WI4Reith, Peter, MPMr REITH—Look at the Menzies Foundation—look at the things that it is not. Mem bers of the Labor Party say that it is a public company like BHP or Coles Myer—they are trying to suggest that this is a breach of the rules which refer to public companies. This is not a public company as everybody else understands a public company. Why? Because with a public company like Telstra you can buy and sell shares. Can you buy and sell shares in the Menzies Foundation? No, you cannot, because it is not a for-profit or trading corporation. It is a think-tank, for heaven's sake! It is not BHP. He is not trading in BHP shares here, Simon. This is a think-tank. This is a policy group that has nothing to do with any commercial operation.The first thing to say about the Menzies Foundation is that it is not a public company. That is the end of your case. Your case just disappeared. You do not have a case. There is no case. It is not a public company. It is not a for-profit company. There are no shares traded. What was the Prime Minister's involvement in it? Quite frankly, he didn't have much of an involvement in it. He never went to a meeting, unlike Richo—Senator Richardson, the former minister for communications—who attended at least a couple of the six meetings of his company. He was actively involved in the commercial trading operations of a radio station. That is a very different proposition to the circumstances of a policy think-tank.Is there any conflict of interest? Of course there is not. How could there be any conflict of interest? Firstly, it is not a trading organisation but, even more comprehensively, the fact is that the PM did not have any interest in it anyway. Is this a matter of great importance? Is this a matter which should displace the matter of public importance? Is this a matter which is a hanging offence? Of course it is not. This is ridiculous. Even Richo, the great Sydney radio commentator—and Labor Party ex-minister—says:Now, I'll disagree with the Labor Party here. I do not believe you should have to resign for breaching your own Code of Conduct. The breach is a minor one. And as far as I'm concerned, the Labor Party is wrong to suggest that you should resign.Simon, your mate, your mentor, your great numbers man is telling you that it is a joke to be moving this. This is pathetic. Even Richo, a paid-up, fully operational member of the Labor Party is telling you that it is ridiculous that you should even raise the issue.Have we had these issues raised before? As a matter of fact, we have. For example, in October 1983 there was some issue about ministers not dotting their i's and crossing their t's—and this was nine out of 27 ministers. What did Bob Hawke say about that? He said:These mistakes were obviously made in good faith. I regret that they were made, but they were made in good faith. It will be clear from the amendments that they do not include anything that could lead to a potential conflict of interest.In the present we have Richo, a voice from the past, telling us today that there is nothing in this; and 15 years ago Bob Hawke was telling us that this whole thing is trivial in the extreme.What is the Prime Minister's crime? His crime is that he is the leader of the Liberal Party. They are moving a censure motion against the Prime Minister because he happens to be the bloke who runs the Liberal Party. You think it is a matter of censure. We might as well censure the Labor Party because Kim Beazley is the leader of the Labor Party. We may as well have a debate about party politics. We may as well have a debate to reveal it entirely. This is trivial in the extreme, so what is it really all about? The fact is, it is all about the Labor Party's problems. That is what it is about. This is about the failure of the Labor Party to start developing real policies.A very interesting story which has been building up in the last few days is the story of the writings of the member for Werriwa (Mr Latham). He is the Young Turk. I know about this because—sadly, I have to say—I was there for the whole time our side was in opposition. I know what happens—it takes a while for you to realise that you have lost the election and then, when you lose the second election, you realise that you have to change your approach. These are the words of the member for Werriwa:History tells us that whenever federal Labor has lost heavily at the polls it has had to fundamentally reinvent itself to regain office . . . the cause of Labor is never weaker than when the party has nothing more progressive to offer the electorate than a revival of ideas long past.Dinosaurs they are, Mr Speaker. How relevant it would have been if he had said, `When the party turns to muckraking as an alternative to policy development, then as a party, we, the Labor Party, are going nowhere.' Paul Kelly, in his piece this morning in the Australian , said:Mark Latham, a Gough Whitlam protege, has just smashed the myth of contemporary Labor politics. In a 390-page book that could be called a heavy read, Latham dares the ALP to forget the politics of nostalgia and follow Bill Clinton—I do not know whether that is such a good idea—and Tony Blair to invent a new position.Mr Speaker, they do not have a new position. What they have are fractures within their own side which are opening up, so a weak leader who has got no case comes in to mount a case of triviality in the extreme—the most trivial I have ever heard.It reflects on you, Leader of the Opposition. You are a weak leader; you have no policy position; you cannot put the member for Werriwa back in his box; you are unable to provide any leadership; and you cannot address the issues like the waterfront because the waterfront unions have got you tied hand and foot to their policy position. Ultimately, this is a reflection of a weak Labor Party, unable to find a position to adopt and unable to develop policies. In the end, we have the muckraker—the member for Hotham—basically running the Labor Party, being attacked by the member for Werriwa and with a failing Leader of the Opposition unable to give any direction to their side. We reject it, and I look forward to the contribution from the member for O'Connor (Mr Tuckey). (Time expired)15:47:002135Crean, Simon, MPMr CREANDT4HothamALP00—The code of the Prime Minister (Mr Howard) is rotten to the core, and now it has engulfed him. The Prime Minister has now breached his own code of conduct. He has been deceitful with the Australian public in failing to disclose the directorship not only as his code requires but as the members' register of interests in this parliament requires. He, like Senator Parer, has been deceitful with the Australian public in trying to hide what they knew should have been declared. In Senator Parer's case, it is a significant breach because he failed to disclose that, as coal minister, he had $2 million worth of shares in a coal mine.The Prime Minister was director of a company that he presided over and that benefited, in a cabinet meeting of which he was chair, to the tune of not $100,000 but now $400,000—benefited to the extent to which it has been extended tax deductibility for tax donations to it. But was there any declaration of that by the Prime Minister? Was there any declaration in the cabinet? The Prime Minister has been asked that question time and time again today, and he has refused to answer it.He was specifically asked: did he declare his interest; did he absent himself from the meeting? The fact that he will not answer that question `Yes and yes' means, I am afraid, that he did not. That is where the opposition is saying the conflict of interest has occurred. He has failed to declare in the parliament his interest, according to his own code. There has been a direct benefit to the company of which he was still a director. And what have we got? We have now got him invoking Richo as his defence—the man that he maligned because he said, `Do whatever it takes.' Now the Prime Minister is doing whatever it takes to save his motley hide. John Winston Howard—Winston the weasel; that is what he is—is a person incapable of coming into this place and fessing up; a person who was given the opportunity this morning to come into the parliament and squibbed it; a person who sat down at every question he was asked, bar one, today, after he went to some lengthy answer that had been prepared for him by his lawyers.But let us go to that question of the company. The Leader of the House (Mr Reith) has made great play of this—that it was not a company that traded in shares. It does not matter. In the case of Commonwealth Bank of Australia v. Friedrich, this is what the court said:There is nothing in company law to suggest the standard expected of a part-time non-executive director of a company not for profit is different from the standard expected of any other director of a profit-making company.In other words, the court said that the Prime Minister has not got a defence, and that is what the Leader of the House spent five minutes defending him on today. He is ruled out by the court.Don't come in here and quote the Macquarie Dictionary when you have the Federal Court of Australia against you. This is how stupid the Prime Minister is, Mr Speaker. He thinks he can weasel his way out of what he has got himself into by relying on the dictionary definition, when he has his code against him, he has the declaration of registrable interests against him, and he has the Federal Court of Australia against him. Yet he says, `I didn't know nothing.' This is the Prime Minister of Australia—dumb struck when confronted with irrefutable evidence. He says, `I didn't know nothing.' What a brave man this wimp of a Prime Minister is. Where is he today? Defending himself? He is nowhere to be seen.John Winston Howard, the Prime Minister of this country, was appointed a director to the Menzies Foundation on 29 September 1995. He was appointed a director five months before he became Prime Minister. He signed the articles of association. His signature is here. On page 23 of the articles, John Winston Howard signed the articles of association of the company.No wonder the Leader of the House did not go to the articles of the association—I interjected to him that he said he would. What do the articles of association say? They do not automatically put the Prime Minister as a director of the Menzies Foundation. The Leader of the Liberal Party has the clear opportunity to appoint a nominee. So let us have none of this argument about automaticity. Let us have the argument about the state of knowledge and knowledge in the signing of the articles of association, but failure to declare to the public and to the parliament.We know the Prime Minister knows his guilt. Why else would he go and resign in secret? Because he was guilty of failure to disclose. That is why he resigned in secret. If the penny has not dropped, we will keep repeating it for you. Members should understand the time sequence of this because it is very important. On 15 October John Winston Howard secretly resigned from the Menzies Foundation. Two days before he had lost two ministers—Jim Short and Brian Gibson. The minister for industry was embroiled in a real controversy associated with the mess with his family companies and his share trading. He was on the rack too. So foremost in the Prime Minister's mind would have been the fundamental significance of complying with his code. That is two days before.He resigned secretly on 15 October 1996 and did his press conference the next day where he made those famous admonitions to his frontbench. He went bravely before the Australian public saying, `I'm Honest John. I'm enforcing my code. I have had lots of talks with a lot of my colleagues in recent days and I very forcibly reminded them of their obligations.' That is John Winston Howard, Winston the weasel. That is what he said. But at the same time as he was reminding them of their obligations, what was the weasel up to? He slipped in the back door, divested himself of his directorship and did not declare it.3K6CAMERONMr Ross Cameron—On a point of order, Mr Speaker: the member for Hotham continues to refer to honourable members with derisive epithets that are both inaccurate and unparliamentary. I ask that he be required to refer to honourable members by their correct titles.10000SPEAKERMr SPEAKER—This is a censure of the Prime Minister, but I think the honourable member for Hotham needs to bear in mind the admonition of the honourable member for Parramatta.DT4Crean, Simon, MPMr CREAN—I remember when the member for Brisbane (Mr Bevis) got up and objected to me being referred to as a grub and you said that was fair play. Perhaps you can give us a list of the animals that are in and those that are out.10000SPEAKERMr SPEAKER—The honourable member for Hotham will resume his remarks.DT4Crean, Simon, MPMr CREAN—And I would be enlightened.10000SPEAKERMr SPEAKER—If the honourable member wishes to persist in that remark, I will order him to sit down. Continue your response to the censure.DT4Crean, Simon, MPMr CREAN—Here we have the Prime Minister of Australia reminding his ministers and colleagues of their obligations yet he sneaked in the back door, tendered his resignation and did not tell anyone about it.On this question of the so-called trivia, the Leader of the House says $100,000 is not worth anything. I suppose when you have got a frontbench over there that is into family trusts and 16 shares that are worth $2 million, then I suppose $100,000 is just petty cash, it is just what you might draw out on the weekend to look after yourself and your family. One hundred thousand dollars is not much money? What sort of an April fool is that Leader of the House to come in and make that assertion? But it is not just $100,000; it is $400,000. That is what they have benefited from.The Prime Minister says it was trivial that he was director of a company when he sat in a cabinet meeting, chaired it and gave them what is now worth $400,000, plus all the benefits of the tax deductibility. He might think that is trivia; we do not. Let us understand the Prime Minister's version of trivia. In his declaration of interests, the one where the directorship of the Menzies company does not appear, what does he declare? This is what he says—these are his own words:I am writing to advise you that I have accepted honorary membership of the International Fellowship of Cricket Loving Rotarians.I would have thought that that is absolute trivia, but he chose to declare it. How can he choose to declare that and not the fact that he is a director of a company that benefits to the tune of $400,000? It beggars belief. What have we also got?Opposition members interjecting—DT4Crean, Simon, MPMr CREAN—Yes, a couple of bottles of Grange Hermitage. Then in his declaration he mentioned the Gladesville RSL Club, the Lords Taverners Australia Cricketers Association, City Tattersalls, Sydney Cricket Ground, Ravenswood Fathers Association, Shore Parents Association, Earlwood District Rugby Union Club, Balmain District Cricket Club, but not director of the Menzies company. Talk about trivia.Just to get again this point of the state of mind of the Prime Minister in what he knew he had to declare in the declaration of interests, he wrote:It will be obvious that some of the above organisations are ones to which I have belonged for some time. They were not included in earlier returns as I had not appreciated that membership of charitable/community organisations were ones that should be disclosed. However, it is apparent from a strict reading of the explanatory guidelines that they might need to be.Who said that? John Winston Howard when he declared everything else except his directorship of the Menzies company. It is a sham to come in here and say that he did not have to declare. He was required to declare in accordance with his code and in accordance with the parliamentary register and he did not do so. He sought to cover it up and as consequence not only have we identified the conflict but he has also misled this parliament because he told this parliament in putting that declaration before them that he was not a director of any company. He misled the parliament. He is guilty on three counts. Let us go to the exercise of his defence last night. He did not come into the parliament today to give his defence. He had the opportunity at 9.30 a.m. today and any time thereafter—after question time today. He has not added to an answer. He still has not answered the question as to why he did not disclose and why he did not absent himself from the meeting. This is what he said. Apart from the cover-up, apart from the non-disclosure, apart from the misleading of the House, these are his own words:. . . unless the Parliament is . . . assured that Senator Richardson either disclosed his interest as a director of the radio station whenever he participated in Cabinet . . . decisions—not the specific conflict but any discussion about communications; this is the John Howard test then—on broadcasting matters . . . or . . . absented himself from those discussions, he must, in accord ance with accepted Cabinet practice, resign from the Ministry . . . We are asking no more today of John Howard, the Prime Minister of this country, than that he applies the standards he himself was laying down for other people. Why should the standards change just because he is caught out? In these circumstances—a code of conduct rotten to the core, tatters flapping in the breeze, corpses all over the place—the Prime Minister of Australia says, `Oh, there's nothing different.' We had thought the reason he was sticking by Senator Parer was not that his wife could cook a decent meal; it would cause a domino effect with Max Moore-Wilton, the departmental head who cleared them. The reason John Winston Howard, the Prime Minister of this country, has been sticking by Senator Parer is that he knows he has been caught. The Prime Minister has been caught. The Prime Minister cannot continue to lay down standards which he himself has breached and not cop the consequences of that. That is what we have today. It is the next dimension in the argument. The dominoes will fall—Senator Parer, Max Moore-Wilton; they lead right to the oval office in this case. The code of conduct is rotten to the core, the Prime Minister of the country engulfed in it. No wonder he is sticking by Senator Parer, but the longer he does the more his standing will diminish. (Time expired)16:02:002138Tuckey, Wilson, MPMr TUCKEYSJ4O'ConnorLP10—As I have a good recollection of the history of the Labor Party in this place, let me commence by reading a quote from page 3973 of Hansard on 28 November 1986. It was stated:At no point has the Treasurer indicated other than that this was a mistake and one which he regrets. There is all the difference in the world between a Minister, in this case the Treasurer, making a mistake of this kind, readily admitting it and immediately rectifying it and some suggestion that a question of propriety is involved. By any standard or criterion one would wish to apply to this matter there is no question of ministerial propriety involved. There is no question of a pecuniary or any other gain involved.They are the words of Prime Minister Hawke defending his Treasurer, Paul Keating. On what charge? Failing to lodge two tax re turns—not one but two. The then Treasurer of the country failed to even respond to the very polite correspondence that he was receiving from the Commissioner of Taxation—`Treasurer, do you think you could send your tax returns in?' At that time it was a scandal throughout Australia that there were half a million unclaimed group certificates in the tax office, primarily the property of moonlighters. What did the then Prime Minister say? `It's not really a problem. There was no act of impropriety. There was no conflict of interest that the poor old Commissioner of Taxation had to put his job at risk.' Yet we know how brutal that Treasurer could be with other people's employment if he crossed their path. The reality is that they were pleading with him to put in a tax return. It was a massive conflict of interest.What was the response of the Labor Party? There were questions asked. And that was the then Prime Minister's answer. But there was also a censure motion in which the then Prime Minister said:What I said was a factual statement of the position, that is, that for an ordinary pay as you earn taxpayer this would not be a matter of immense consequence.He is excusing his Treasurer on the grounds that maybe the tax commissioner would not punish an ordinary taxpayer for failing to put in a tax return—not much, but what a defence! What happened at the end of all this? As is traditional, we had a vote. There are still a few people sitting in the House—not many from the Labor Party side. I am sure I can find Bob Brown's name on that list. I can certainly find the name of the now Leader of the Opposition—Beazley K.C. I can certainly find the name of someone who had a shot at me as I stood up—McLeay, Leo. There is also Martin S.P.; Morris, Allan; Morris, Peter; O'Keefe, Neil; Hawke, R.J.L., the Prime Minister at the time; and Theophanous, A.C.—you would remember him, Mr Speaker, he keeps taking points of order on you. All of those people and all of the Labor Party came in here and voted to support the then Treasurer after it had been said that there was no conflict of interest, that it was nothing worse than some ordinary PAYE taxpayer. What does that come down to? Gross hypocrisy. There were no standards in the Labor Party. We had the Leader of the Opposition (Mr Beazley) pontificating today. The way he rewrites history has to be the most outstanding effort in the world. `We were perfect,' he said, and of course the list is legion. I remind the House of Mick Young and the Ivanov affair—a situation where state secrets were leaked in a car park. The then Prime Minister even misled us. He said that Keating offered up honestly. That is a fact. After Jim Carlton wrote him a letter asking if a copy of a letter he had from the tax commissioner saying, `Treasurer, please lodge your tax returns' was true, he came in here at half past 10 one night with Mick Young standing behind him and said `Yes, it's true,' and Mick Young closed the parliament.Yes, tell me about it. I remember the history in this place and so do you, Mr Speaker. The realities are that on another occasion I raised a question of pecuniary interest. The whole nation was afire because an entrepreneur called Holmes a Court, the major shareholder in Bell Group and Bell Resources, had a takeover offer that was just about imminent over Australia's biggest company, BHP. It is not surprising that the government of the day, the Labor government, put together a secret cabinet subcommittee to consider the government's position. What were the rules of that subcommittee? Whatever they considered, whatever information they had, would never come out. But the caucus was going to be told what to do by that committee. It was a massive situation.There was a group of people there, including the Prime Minister. There was a fellow there called Senator Button. Of course, Senator Button had done the right thing, as we were told by the Leader of the Opposition, `in keeping with their high standards'. On 12 September 1983 he wrote to the Prime Minister saying:I confirm that I have resigned any directorships in public companies, cease to engage in professional practice or in the daily work of any business, that I accept no retainers and derive no income from personal exertion other than arising from my duties as a minister and a member of parliament. That is pretty clear. But what do we find on 11 April 1986, just three years later? An admission in the parliament that Senator Button is a director. Of what? A company, of course, that he did not think was a public company. But today we have been told the Menzies Trust is a public company. He is a director of a public company that just happened to have 58,000 shares in BHP. They were worth at that time some $371,000 and, if the takeover offer had been accepted, their value was going to jump to $452,000 and the $80,000 profit was tax free. He was sitting on this cabinet subcommittee making decisions about whether or not there would be a takeover of BHP and he was a representative of this company. I should find the name of the company because it is of great importance to us. I will come back to that in a minute.I thought we should also have a look at who the shareholders in that company were—the beneficiaries of his actions. The beneficiaries are the Transport Workers Union of Australia, the Australia Post and Telecommunications Union, the Federated Gas Employees and Industrial Union, and the Australian Labor Party. Everyone in that cabinet subcommittee was a member of the Australian Labor Party. We had our Prime Minister today accused of having an association with one of these things. They were all shareholders in BHP. They were sitting there in judgment. But the irony gets better, because there was another fellow there. His name was John Dawkins.I had—and it is all on the record—the pleasure of drawing to the parliament's attention how, through the operations of a company called Coomel, Mr Dawkins and his brother had practised every tax minimisation device available. By the way, what was the process they used? They were trusts. At a time when probate death duties were still around, to make sure they were going to pay none of that, they went so far as, on the day their father died, to liquidate the company, pulling it all out.They went further. They sold a major property. In fact what had they done? They had actually capitalised the interest. They sold the property on terms but there was no inter est mentioned. The fellow made them an offer of X. The actual purchase price three years later was X plus a large amount of money, which worked out at 11 per cent, or whatever the current interest rate was at the time, but that was in the price. Of course in those days there was no capital gains tax. Dawkins was the liquidator of the family company. In all the distributions and for other reasons his mum just happened to have 250,000 shares in Bell Group. Please remember what the takeover was. It was Bell Group or Bell Resources—it was one or the other—taking over BHP.So we have this secret cabinet subcommittee. The Labor Party is a beneficiary of 58,616 shares worth $371,000. They are all sitting there and in comes Dawkins. Of course he had been a great scourge on tax avoiders. He was the one who demanded of us in government under Fraser that we bring in retrospective legislation. He was going to fix up everything. Of course, every weekend he went home and worked out through Coomel how to protect his family from anything that was happening. He was also a great moralist. So he walked into this cabinet subcommittee and said, `I hope everybody here has declared a pecuniary interest.' What did they say? `We haven't got any.' Button did not have one. He was a director. He was a trustee of this fund.Of course, what was the situation with Dawkins? We are told in the Hansard when we had another censure and Mick Young got up to defend him that the realities were that you could not possibly expect Dawkins to know everything his mum had. Well, we expect Senator Parer to know everything his kids have got, and we blame him for every bit of it!ET4BEVISMr Bevis—That's because he is running the trust, you dill.SJ4Tuckey, Wilson, MPMr TUCKEY—And Dawkins was running the trust, too, you bigger dill—and you hypocrite.10000SPEAKERMr SPEAKER—Order! The honourable member for O'Connor will direct his remarks through the chair.SJ4Tuckey, Wilson, MPMr TUCKEY—The reality is that you and your mob condoned all these things. You condoned a Treasurer who did not put his tax returns in and you voted in this place to say that he was honest and right and did not have a conflict of interest.ET4BEVISMr Bevis—Calm down!10000SPEAKERMr SPEAKER—The honourable member for O'Connor will direct his remarks through the chair.10000Tuckey, Wilson, MPMr TUCKEY—You carry on and you tell us what the Prime Minister should have done, but you had a cabinet subcommittee—nothing bigger. The joke of it was, and I reminded the government at the time, that a tame caucus took their recommendation. They all had a pecuniary interest through their membership of the Labor Party. Senator Button was a director of the company three years after he had told his Prime Minister he had resigned all those directorships. Any suggestion that Dawkins did not know that mum had shares in Bell because they originated from the old Albany Woollen Mills, of which his uncle, Sir Ernest Lee-Steere, was of course the chairman of directors, defies reality. That was your argument at that time, but of course you are too big a mob of hypocrites today. You come in here and you have redefined yourselves. Is it not amazing that it was the Leader of the Opposition that accused us of redefining the issues? You never sacked anyone for a pecuniary interest. Of course, you did not sack too many anyhow; you came in and you defended them. Ros Kelly: what an outrageous arrangement—and you defended her for six months until public opinion demanded she had to go.In all of these cases the defence was by the Prime Minister, and you all came in here and you voted to back him. I will read you the names again. When Dawkins was censured in this place, Mr Beazley, the Leader of the Opposition, was in here in fact defending that outrageous situation. You cannot get much closer to a pecuniary interest than to own shares in a company or have your mother, whom you are very close to and whose business affairs you were conducting, owning shares. You go in and you say, `Has anyone got a pecuniary interest?' and they all say no.The reality was that you were up to your eyebrows in it. You just make fools of yourselves by coming in here and trying to rewrite history. It is all in the Hansard; go away and read it. But do not come in here and tell me there is any difference between the Prime Minister's almost arms-length involvement in a research trust when in fact your people sat with hard dollars on behalf of the Australian Labor Party and went on and took secret cabinet subcommittee rulings. And you are still doing it—you are all members of your unions. You are all in here arguing industrial relations legislation. When have any of you put your hand up? (Time expired)10000SPEAKERMr SPEAKER—The question is that this House censures the Prime Minister. Those in favour of that motion? I think the noes have it. There are two members here and they require a division.DK6HOCKEYMr Hockey—On a point of order, Mr Speaker: are two members enough for a division?10000SPEAKERMr SPEAKER—Yes, two members are sufficient. Question put: That the motion (Mr Beazley's ) be agreed to.16:22:00The House divided. (Mr Speaker—Rt Hon. I. McC. Sinclair)42Albanese, A. Baldwin, P. J.Beazley, K. C. Beddall, D. P.Bevis, A. R. Brown, R. J.Crean, S. F. Crosio, J. A.Dargavel, S. J. Ellis, A. L.Evans, G. J. Evans, M. J.Ferguson, L. D. T. Ferguson, M. J.Fitzgibbon, J. A. Grace, E. L. *Griffin, A. P. *Hatton, M.Hollis, C. Jenkins, H. A.Kerr, D. J. C. Latham, M. W.Lawrence, C. M. Lee, M. J.Macklin, J. L. McClelland, R. B.McLeay, L. B. McMullan, R. F.Melham, D. Morris, A. A.Morris, P. F. Mossfield, F. W.O'Connor, G. M. O'Keefe, N. P.Price, L. R. Quick, H. V.Sawford, R. W. *Sercombe, R. C. G.Theophanous, A. C. Thomson, K. J.Willis, R. Wilton, G. S.87Abbott, A. J. Andrew, J. N.Andrews, K. J. Anthony, L. J.Bailey, F. E. Barresi, P. A.Bartlett, K. J. Billson, B. F.Bradford, J. W. Broadbent, R. E.Brough, M. T. Cadman, A. G.Cameron, E. H. Cameron, R. A.Causley, I. R. Charles, R. E.Cobb, M. R. Costello, P. H.Dondas, N. M. Downer, A. J. G.Draper, P. Elson, K. S.Entsch, W. G. Evans, R. D. C.Fahey, J. J. Forrest, J. A.Gallus, C. A. Gambaro, T.Gash, J. Georgiou, P.Grace, E. J. Halverson, R. G.Hardgrave, G. D. Hawker, D. P. M.Hicks, N. J. *Hockey, J. B.Howard, J. W. Jeanes, S. B.Johnston, R. Jull, D. F.Katter, R. C. Kelly, D. M.Kelly, J. M. Kemp, D. A.Lieberman, L. S. Lindsay, P. J.Lloyd, J. E.Marek, P.McArthur, F. S.* McDougall, G. R.McGauran, P. J. McLachlan, I. M.Miles, C. G. Moore, J. C.Moylan, J. E. Mutch, S. B.Nairn, G. R. Nehl, G. B.Nelson, B. J. Neville, P. C.Nugent, P. E. Prosser, G. D.Pyne, C. M. Randall, D. J.Reid, N. B. Reith, P. K.Rocher, A. C. Ruddock, P. M.Scott, B. C. Sharp, J. R.Slipper, P. N. *Smith, A. C.Smith, W. L. Somlyay, A. M.Southcott, A. J. Sullivan, K. J.Taylor, W. L. Thomson, A. P.Truss, W. E. Tuckey, C. W.Vaile, M. A. J. Vale, D. S.Wakelin, B. H. West, A. G.Williams, D. R. Wooldridge, M. R. L.Worth, P. M.Brereton, L. J. Fischer, T. A.Martin, S. P. Anderson, J. D.Smith, S. F. Bishop, B. K.Tanner, L. J. Ronaldson, M. J. C.* denotes tellerQuestion so resolved in the negative.Personal Explanations214216:26:002142Lee, Michael, MPMr LEEMG4DobellALP00—Mr Speaker, I wish to make a personal explanation.10000SPEAKERMr SPEAKER—Does the honourable member claim to have been misrepresented?MG4Lee, Michael, MPMr LEE—Yes.10000SPEAKERMr SPEAKER—Please proceed.MG4Lee, Michael, MPMr LEE—During question time today, the Prime Minister claimed that, the day I am appointed minister for health, the private health insurance tax rebate would be abolished. That is not true. What I have said is that the Labor Party believes that the $1.7 billion should have been spent directly on patient care, rather than being used to subsidise private health insurance.Documents21422142Ruddock, Philip, MPMr RUDDOCK0J4BerowraLPImmigration and Multicultural Affairs10—Papers are tabled as listed in the schedule circulated to honourable members. Details of the papers will be recorded in the Votes and Proceedings and Hansard.The schedule read as follows—Human Rights and Equal Opportunity Commission Act—Human Rights and Equal Opportunity Commission—Federal Race Discrimination Commissioner—Report—The CDEP scheme and racial discrimination, December 1997.Inquiry into the detention of boat people—Report No. 5—Preliminary.Petition not in accord with standing and sessional orders of the House—Request for a comprehensive review of the child support legislation (Mr Campbell, 150 petitioners).Treaties—Text of—Multilateral with national interest analysis—Convention for Establishing Facilities for Finding Employment for Seaman, done at Genoa on 10 July 1920 [International Labour Organization (ILO) Convention No. 9, Placing of Seamen, 1920].Convention for Protection of Children and Co-operation in respect of Intercountry adoption, done at the Hague on 29 May 1993 Matters of Public Importance2143214310000SPEAKERMr SPEAKER—I have received a letter from the honourable member for Brand (Mr Beazley) proposing that a definite matter of public importance be submitted to the House for discussion, namely:The obligation placed upon the Prime Minister of the day to enforce proper ministerial standards and to personally observe those standards, as set out in the guidelines on ministerial conduct.I call upon those members who approve of the proposed discussion to rise in their places.More than the number of members required by the standing orders having risen in their places—Motion (by Mr Ruddock) agreed to:That the business of the day be called on.Miscellaneous21432143Motion (by Mr Warwick Smith)—by leave—agreed to:That so much of the standing and sessional orders be suspended as would prevent notice No. 18, private members business, being called on forthwith.16:28:002143Andren, Peter, MPMr ANDRENKL6CalareIND00—I move:That the Carrier Licence Conditions (Vodafone Pty Limited) Declaration 1997 (Amendment No. 1 of 1997), made under subsection 63(5) of the Telecommunications Act 1997, be disallowed.The purpose of this disallowance motion is to stop the federal government giving a huge financial bonus to a foreign owned company which is standing in the way of the analog mobile phone service being maintained for the people of rural and regional Australia. In 1992 the then Labor government made an agreement with Vodafone which allowed the British owned company to enter the Australian telecommunications market as the country's third mobile carrier providing an exclusively digital service. That privilege cost Vodafone a mere $140 million. Under that deal, the government agreed to phase out analog mobile phones by the year 2000, while in return Vodafone agreed it would take on majority Australian ownership by 2003.When the Labor government made the decision in 1992 to phase out analog phones, it was not to know that the digital system would be so disastrously ineffective. It was a naive decision—how could any reasonable person predict technology and its impact eight to 10 years out? But now this government says that it cannot reverse the decision because it would have to pay compensation to Vodafone. At the same time, it is letting Vodafone back out of its side of the deal, meaning that it will no longer have to take on Australian ownership. What is this deal worth? Some who know more about this than I estimate that it could be worth as much as half a billion dollars. Vodafone does not have to shed half its value onto a glutted Australian telephony market, but is left free to sell to AT&T or British Telecom or whomever else down the track.How much compensation would the government be liable to pay Vodafone if it moved to break its side of the deal and maintain analog? Again, it is guesswork—but some say it could be worth between $100 million and $200 million. Even allowing for a certain amount of misestimate, there is a big difference between the two figures: the off-the-hook bonus for Vodafone and a payment, which I believe could be defended in the High Court if necessary, in the interests of community services. The government wants to give Vodafone a half billion dollar concession, but says it cannot ask the company for anything in return, because it might have to pay a couple of hundred million dollars compensation.The analog system is worth $3 billion alone; that is what Vodafone wants us to throw away. I put it to you that the government is deliberately misleading the Australian people on this issue. Members are going around the bush saying, `It was the Labor government that agreed to phase out analog, the government is now stuck with the decision, but because we'—that is, the government—`understand, we have now made a decision which will allow analog to be retained in areas where there is no "reasonably equivalent" digital coverage.' However, the analog will only continue in these particular rural areas if Telstra, Optus and Vodafone agree to it.This undertaking is the biggest con job and the most hollow promise ever made to people in regional Australia. Let us take a look at my electorate. I seek to table these maps prepared by independent consultants which show the difference between analog and digital coverage from Mount Canobolas in the centre of my electorate. They are prepared by Tele Resources and used, in fact, by the Australian Communications Authority. I should point out that they give a much more accurate picture of the digital coverage compared to the highly exaggerated coverage maps put out by the phone companies themselves. These publicly available coverage maps from Telstra are a joke—you just have to compare the digital map with the public ones.If you look at the map which I have sought to be tabled you will see the analog has a range of about 100 kilometres and more, reaching almost out to towns as far away as Bathurst, Wellington, Crookwell and Cowra from Mount Canobolas. Importantly, it covers little places like Hill End, Canowindra, Carcoar, Barry, Garland, Mullion Creek—all of which cannot be reached with digital. If you look at the digital map, you will note that the range is only about 30 kilometres—and there is nothing at Molong, where I live: I can vouch for that. There is nothing several kilometres east of Orange. I can also vouch for that, having tried, any day of the week, to contact my office and other constituents only a kilometre or two out of Orange. The digital transmitters on Mount Canobolas do not even provide effective coverage to parts of the city of Orange itself, let alone along the highway to Bathurst—despite what these pamphlets say.Let us just take a look at the scenario that is certain to unfold in the next 12 months when the Australian Communications Authority starts negotiating to maintain sections of the analog network. It contacts Vodafone, which—remember—is the only carrier without analog and therefore the company with most to lose. It writes to Vodafone and says, `Do you mind if we keep the analog transmitter in operation up on Mount Canobolas?' By this time Vodafone has spent hundreds of thousands of dollars installing digital transmitters on Mount Canobolas, as well as putting others in a number of nearby towns, including Orange, because of course the one on Mount Canobolas really only provides effective coverage to the orchards and farms around the base of the mountain.I might add at this point that Vodafone has outraged residents of Bathurst because, after installing a transmitter on Mount Panorama, it has found the coverage to be so inadequate that it has had to put another one on top of the post office dead in the centre of town, and it is right next door to a pre-school. Despite a big campaign by concerned residents to have the tower moved away from the pre-school, Vodafone has completely ignored the requests of the residents and the Bathurst City Council. So much for the community service obligations from telephone companies. And here we have a government prepared to do this company favours, to give them a huge financial windfall and say, `We'll leave it up to you to decide which areas of regional Australia can continue to have analog phones.' What an absolute farce of a telecommunications policy!Of course Vodafone is going to say that the analog service on Mount Canobolas has to go, because it has what it would no doubt call a `reasonably equivalent' digital service there. Likewise, the analog service at Mount Panorama should also go. Vodafone would have spent hundreds of thousands of dollars on its digital network throughout the electorate. But as I've already pointed out, it doesn't even provide adequate coverage in the major regional centres.Mr Deputy Speaker, take another look at those coverage maps—I invite all members to do so—and see how far the analog service does, in fact, go. The story is the same in every rural electorate and many metropolitan electorates right across the country. Some like to describe analog as inferior technology to digital. But what good is the better technology if you can't get a signal? We will probably see the same sort of disaster as we introduce digital television, because it is going to need a crowd of transmitters. It is going to cost an arm and a leg—far beyond the sort of money that the regional television stations are quoting at the moment. They have not even begun to work it out.Analog phones have become an essential business tool to hundreds of farmers and rural business people in my electorate. We all know that farmers cannot afford to hire employees to help them these days. They are increasingly having to work on their own, doing business from the tractor seat, using mobile analog phones. Farming is one of the most dangerous and lonely occupations. Here is one tool that has made that job a little safer and more viable, and a Liberal-National Party government wants to take that technology away.Andrew Prior, who runs a fertiliser spreading business based in Bathurst, is typical of those in my electorate who are alarmed by the way the government has handled this issue. He carries a mobile—an analog mobile—not so much to conduct business, but more as an emergency tool. He says his job has become increasingly isolated as farmers take on larger property holdings, while many also take on jobs in town during the day. He says:If the analogue system is closed and a single efficient system is not introduced to replace it, then the safety of myself and many others is placed at greater risk.On occasions, I am 8 paddocks from the nearest public road. In the event of an emergency I rely on my mobile phone to obtain personal assistance.I am often 20 minutes drive from the nearest occupied house, say 40 minutes walk, assuming I am capable of walking.He notes he uses his phones in rural areas like Paling Yards, Fosters Valley and Trunkey. None of those areas have any hope, I would say, of getting a digital signal. They are too far away from the major regional population centres and the highways, and there are not enough regular mobile users in the areas to warrant the expense of installing more digital based stations to provide the same coverage. Telstra is likely to deliver cable to these sorts of people and say, `Do it yourself,' for a normal phone service. That has happened in my electorate. That is why this decision to phase out analog has to be reversed. Unless technology is developed to improve the signal strength of digital, it will never be an adequate replacement for analog.We have a ratio of at least four to one in digital to analog transmission points. That could rise to 10 to one in certain circumstances. Certainly it was Labor that made the decision. The coalition has the power to change it, but I wonder if it has the will. Rather, it has opted for a con job that will do absolutely nothing to help the farmers and agricultural workers like Andrew Prior in my electorate. I am sure there are others in other rural and regional electorates.Another part of this deception is this weird promise that new satellite phones will soon be here and that they can be used anywhere. This is another deception because anyone with a passing knowledge of mobile phones can tell you this technology has not even been fully developed. Even when it is, the handsets will cost several thousands of dollars. The Iridium system, which is one of those being talked about, has handsets costing $US3,000. I do not believe that is a cost-effective replacement, even given reasonable take-up of this technology down the track. It is still moons away for the sort of people who can afford and rely on analog.It might be okay for big mining companies and the like, but not for a struggling farmer, his wife driving a lonely rural road alone with the kids or the bush fire brigade captains who use analog throughout Calare. Forget about digital; they cannot even rely on the inadequate radio communication system for their fire control, but they can rely on analog, to a large degree.Why do we have to wait for a system that is untried and expensive when we already have a system in place that is cheap and effective? It is because of this ridiculous promise made to Vodafone back in 1992 that this government says cannot be broken. I urge members not to fall for this con job by Vodafone. Vote with me to disallow this give-away to Vodafone so we can force this company to come to the negotiating table for the benefit of the people of rural and regional Australia. Recently, we were visited by the very successful technological wizard, Bill Gates, who reminded us that we were only at the very start of the communications age. It is all very well for the majority of Australians, who live in capital cities and who have fibre optic cable laid to their front door, to pat themselves on the back and say, `Wow! We're leading the world. We're right up at the coalface. We're at the edge of technology. We're right in amongst it.' Compare this situation to that of many farmers in my electorate, given Telstra's dreadful service record of late—which I was accused as late as this morning of exaggerating. In his report to the parliament yesterday, the minister at the table, the Minister for Family Services (Mr Warwick Smith), who represents the Minister for Communications, the Information Economy and the Arts (Senator Alston) in this chamber, detailed some of those shortcomings. I have had a litany of complaints, not necessarily from within my electorate; some have been from outside my electorate. Compare this to Telstra's dreadful service record of only using copper wire. They believe that that is enough; that that is an adequate service. To many of these people out in the remote areas, having a fax or a computer or a transmission via modem seems little more than a pipedream. Now they are being told they will lose their mobile analog service.From day one in this country the people of rural Australia have had to fight for equal access to communications. As we enter the communications age, there is a very real risk with the imminent sale of Telstra looming in the background that these people will be left behind unless the federal government makes the right decisions in this crucial policy area. These people are opposed to the further sale of Telstra because they know that, if it is purely left up to market forces to deliver services in the bush, there will not be an adequate service.I urge the government members to consider, as we prepare to head into the next century, what sort of message they are sending to the people of rural and regional Australia when they start switching off what has become a crucial means of communication to satisfy a foreign owned company, a British company, which could never have any understanding of the distances, the isolation and the unique needs of the Australian bush, such as the scattering of people across vast distances. The make-up of our geographical spread of population and our particular needs do not bear any resemblance to any country in the world that I can think of. I commend this motion to the House.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Jenkins)—During his speech the honourable member for Calare sought leave to table certain documents.Leave granted.16:45:002146McLeay, Leo, MPMr LEO McLEAY4I4WatsonALP00—I second the motion. The opposition supports this proposal for somewhat different reasons from those of the member for Calare (Mr Andren). We are in accord with the fact that this instrument should be rejected.DK6HOCKEYMr Hockey—You gave it away.4I4McLeay, Leo, MPMr LEO McLEAY—And if we do not have to deal with those sorts of echoes on the line on the other side, we can go on with this.Mr Anthony interjecting—ZJ6BARRESIMr Barresi—How did you vote on this in 1992, Leo?10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Jenkins)—The honourable member for Deakin and the honourable member for Richmond are not assisting, especially when they are interjecting out of their places.10000McLeay, Leo, MPMr LEO McLEAY—I think the problem that the honourable member for Richmond (Mr Anthony) has is that he has all these terrible guilt feelings, because the National Party got tripped up by the Liberals on all these policy issues on which he, as National Party Deputy Whip, has to come in here and dragoon the National Party members into putting their hand up for things they do not want. They will be putting up their hand for this motion, which is to keep analog out of the bush. That is what they will be doing in a few minutes. They will be putting their hand up to do precisely the opposite of what the honourable member for Calare has said that people who represent rural electorates should do. So we do not want to hear too much about hypocrisy from the National Party. In their little junior relationship with the government at present they are in terrible strife, because the Prime Minister (Mr Howard) does not bother telling them what he is up to and all these telecommunications issues trap them terribly. They did not even get told that the Prime Minister was going to sell the rest of Telstra. And they have no idea of the effect that that is going to have on them in the bush but they come in here willy-nilly and put their hand up, because basically they are mugs.The reason that the opposition is in support of this proposal to reject this matter is that we think that when both Vodafone and Optus are floated they should be in majority Australian ownership. We think that the amendments that the government wants to make to allow both of these companies to be foreign owned is just going down the wrong path. What the government is doing with Telstra and with these two companies will ensure that very little of the Australian telecommunications industry will be owned here in Australia by Australians. The government is allowing a fair amount of foreign ownership in Telstra.XJ6ANTHONYMr Anthony—What about the abattoirs and the slaughterhouses?RH4KERRMr Kerr—There'll be blood in the bush over this.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—Order! The honourable member for Denison is not assisting at all.4I4McLeay, Leo, MPMr LEO McLEAY—When there is a 30 per cent—I think that is that the government is allowing—foreign ownership in Telstra you will see that Telstra will come together with the other institutional owners of that company—ZJ6BARRESIMr Barresi—How did you vote on this in 1992?Mr Anthony interjecting—10000DEPUTY SPEAKERMr DEPUTY SPEAKER—Order! The honourable members for Deakin and Richmond. My earlier admonition does not allow them to return to their places and then interject. They will remain in silence.4I4McLeay, Leo, MPMr LEO McLEAY—Thank you very much, Mr Deputy Speaker. They seem to have attracted the same problem as the member for Makin (Mrs Draper). She seemed to have one of these garrulous problems the other night, and that was the end of her. I suspect that the member for Richmond has contracted the same disease.The reason that the National Party are selling out the bush is something for them to salve their conscience over—not us. But our belief about both these companies is the same belief we have about Telstra, which is that we should ensure that these private companies are majority Australian owned. And we believe the government should maintain its ownership of Telstra so that we will ensure that we have a viable telecommunications support industry here in Australia. We make no apology for the fact that when we brought in this legislation part of the provision was that Vodafone had to become majority Australian owned.We are surprised that the Treasurer (Mr Costello) has approved amendments to Optus's articles of association that have the effect of removing any references to foreign ownership in their articles of association, which effectively means that Optus could become and stay 100 per cent foreign owned. Indeed, were Optus to be floated, you could find that there was very significant foreign ownership there. So we believe that when Optus is floated there should be the opportunity given to Australians to purchase a majority of the shares in that company.Those people in the National Party who are railing and ranting against this proposal should be aware of the fact that at the time they were supportive of the then government's proposal that Vodafone should be a digital network. And it was very clear at the time when Vodafone were given a licence that they were going to be a digital operator. Indeed, that was part of their licence conditions. The agreement, on giving them that licence condition, was that the AMPS system would be closed down. Vodafone have said that if the government—be it the current or a successive government—reneges on that arrangement they will sue the government. They will sue the government for loss of business and loss of equity in their company. That means they would be suing the government for hundreds of millions of dollars.The National Party might try to tell us that they want to do something about that. Well, they have not tried to do anything about that at present. The member for Calare has quite rightly said that he has frequently spoken against the proposal to phase out the AMPS system. He has honestly stood up and said that. The National Party members of this House get up and say that the government should not close down the AMPS system but their problem is that they try to pretend that sometimes they are part of the government and sometimes they are not. The Prime Minister knows that they are not really part of the government, because he does not tell them anything, but they end up having to support government policy. The government's policy on this is the same as the previous government's policy, which was to close the AMPS system down, because that was the agreement which was made with Vodafone when they brought in the first fully digital licence.I have no doubt that if the coalition had said at the time that they were not going to close down the AMPS system, the price that Vodafone paid for that licence probably would have been considerably less. Indeed, Vodafone or some other operator may not even have been willing to take up that licence, because there would not be too many digital operators who would put themselves in a position where the reach, cost and complexity of their telecommunications system would be more than that of their competitors who were using a cheaper form of technology—a form of technology that has a broader reach with fewer base stations.That is a point of difference between the opposition and the member for Calare, but the point of congruence between the opposition and the member for Calare is that we believe that when these companies are put on the market they should continue to maintain majority Australian ownership.DK6HOCKEYMr Hockey—What rot! When have you ever said that? What about Qantas? What about the Commonwealth Bank?4I4McLeay, Leo, MPMr LEO McLEAY—The member for North Sydney obviously does not believe that these companies should be Australian owned. Of course, the National Party minister at the table, the Minister for Veterans' Affairs (Mr Bruce Scott), like his colleague the National Party Deputy Whip, has never learnt anything so he cannot forget anything. But I would have thought that the member for North Sydney (Mr Hockey) did at least learn to read and write, so he would have known that part of the legislation at the time which provided for diversity of telecommunications in this country was that the operators, after a period of time, had to become majority Australian owned. That was part of the legislation.There might be a bit of guilt on the Liberal Party side, too, because what they obviously do not understand—and they are going to speak in this debate—is that what these instruments allow is the watering down of that provision by the previous Labor government that these utilities had to stay in majority Australian ownership. If members of the government do not understand that, they should not bother speaking in this debate.I am glad to see that the member for Bass (Mr Warwick Smith) has returned to the chamber, because he will be able to explain to his colleagues who do not understand that what the government's instrument seems to be about is doing away with the provision of the previous Labor government that Vodafone must become majority Australian owned. He might let the member for North Sydney know that. He thinks the Labor government said that Vodafone never had to become majority Australian owned. He is wrong, and you might tell him that later—whisper in his ear or explain it to him; don't embarrass him publicly. But tell the dope sitting next to you, because he has been shouting out and obviously does not understand any of it.GJ4SMITHMr Warwick Smith—Mr Deputy Speaker, on a point of order—10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Jenkins)—The honourable member will withdraw the comment that has caused offence.4I4McLeay, Leo, MPMr LEO McLEAY—I will withdraw, Mr Deputy Speaker, but I thought it was very interesting that the dope never took offence to it; the fellow sitting next to him did.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—No, the honourable member knows better. He will withdraw unequivocally.4I4McLeay, Leo, MPMr LEO McLEAY—I withdrew the reference to his being a dope. The problem which the member for Bass has is that he does not want to sit next to a dope.YT4SCOTTMr Bruce Scott—Is he going to withdraw?10000DEPUTY SPEAKERMr DEPUTY SPEAKER—The honourable member will simply withdraw.4I4McLeay, Leo, MPMr LEO McLEAY—I did that.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—You have withdrawn unequivocally?4I4McLeay, Leo, MPMr LEO McLEAY—I did. I can understand why the member for Bass never wants to sit next to dopes, because they make him look silly. Show me your friends and I will tell you your character. This is the problem which the National Party have: they do not understand what this policy is about; they do not understand what the government is trying to do here; and they do not understand the history of this issue.The history of the issue is that Vodafone was required, under the legislation of the previous Labor government, ultimately to become majority Australian owned. We think that is a good thing. We think that this regulation which will take away that provision should be disallowed. We also think that the decision made by the Treasurer to approve amendments to Optus's articles of association, which had the effect of removing reference to foreign ownership in their articles of association, is wrong. We believe that when Optus is floated it should become a majority Australian owned company. If that could happen, Australians might buy the shares. But it probably would have been better if the provision was not taken out of their articles of association.As far as the analog system is concerned, I will be very interested to hear how the National Party attempt to weasel out of this. The problem for the National Party is that part of the agreement made by the previous government, and no doubt supported by the current government, is that if the government does not ultimately switch off the AMPS system, Vodafone will sue the government. If the government does not intend to switch off the AMPS system, I will be happy to hear them say that in this debate. Maybe the Chief Government Whip, the honourable member for Wakefield (Mr Andrew), the chairman of the government parties communications committee, the raucous National Party Deputy Whip, or the dopes in some other parts of the chamber, might get up and tell us—YT4SCOTTMr Bruce Scott—Along your front bench.4I4McLeay, Leo, MPMr LEO McLEAY—There is no-one else over here, just those in other parts of the chamber. What we might hear from one of them is: does the government intend to let the AMPS system go? The truth is that they will not, because they know that Vodafone will sue them. The fact is that all the rhetoric and palaver which the National Party want to say around the bush are fibs, because the government will switch the AMPS system off, otherwise they will have a big court case coming up. I would be happy to hear them say today that they are going to keep it going. (Time expired)17:00:002149Hockey, Joe, MPMr HOCKEYDK6North SydneyLP10—I have just had the privilege of walking into the Parliament House shop where I purchased a copy of the book by the member for Werriwa (Mr Latham) titled Civilising global capital: new thinking for Australian Labor. When he subtitled it `new thinking for Australian Labor', I do not think he thought he was providing information and creating debate in a vacuum. The vacuum has been endorsed here by the member for Watson (Mr Leo McLeay), who seems to forget that in 1992, when the licences were issued, it was the Labor Party that set down the phase-out timetable for AMPS. It is hypocritical for the member for Watson to come into this House, pretend that he is holier-than-thou and second a motion that can only be described as a cunning stunt. Why is this motion from the member for Calare (Mr Andren) a cunning stunt? Because it is totally unrelated to the phase-out of AMPS.I put this question to the member for Calare. The new Telecommunications Act of 1997, which was debated in this House, laid down in broad terms, in part 19, the phase-out arrangements for AMPS. It was debated in this House. Did the member for Calare even speak on the bill? No. How did the member for Calare vote on that bill? It was that bill, debated in detail by this House, that set down in legislation the phase-out arrangements for AMPS. Yet the member for Calare has the hide to come into this place today and to use ownership restrictions as a method in which to score a cheap, totally unrelated political point. The member for Calare and the Labor Party are in bed together because, from a socialistic point of view, it is a good thing to try to restrain and control commerce from the grave. The grave in this instance is the House because it is the Labor Party that is being entirely hypocritical on this issue.Where was the Labor Party about foreign ownership restrictions when they were selling the Commonwealth Bank? Where was the Labor Party about majority foreign ownership restrictions when they were selling Qantas? Where was the Labor Party when they were talking about the sale of ANL and the sale of all the other assets, including TAA? When did it come down to foreign ownership restrictions being a part of the legislative intent at the time? Now the Labor Party has the hide to come into this House to preach holier-than-thou attitudes and to say to us, `Well, in this instance, we think that a wholly privately owned company should be restricted by the Commonwealth as to who should and should not own the shares.' They are doing that behind the guise of a cunning stunt from the member for Calare about whether or not the AMPS phase-out should be related to the ownership restrictions in relation to Vodafone.Vodafone is headquartered in my electorate of North Sydney. They employ hundreds of people in my electorate. They have made major capital contributions to the Australian telecommunications market. I do not apologise for coming up here to defend Vodafone. I do not apologise for foreign capital coming into Australia, investing in Australian jobs, creating new Australian jobs, giving us the best telecommunications infrastructure in South-East Asia, arguably in the Western world. I do not apologise for that for a second. I do not apologise for the fact that rural Australia has better telecommunications under the Liberals and the Nationals than it ever had under the Labor Party. How ironic that the turncoat of the Labor Party should stand up to take a point of order!CF4CAMPBELLMr Campbell—Mr Deputy Speaker, on a point of order: I have brought this up on previous occasions. I do not think it is within the standing orders for speakers to be accompanied by drumming. It is very hard on the ears and I wish you would tell the member for North Sydney to stop the drum accompaniment.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Andrews)—There is no point of order.DK6Hockey, Joe, MPMr HOCKEY—That was a winner! You hit me there, right between the eyes. That was a killer! Let me point out something to you. The people in Kalgoorlie have never had better telecommunications infrastructure than they have now. People such as you have sold out the people from Kalgoorlie by supporting a cunning stunt, the motion by the member for Calare, to try to tie up in an intricate web the ownership restrictions of Vodafone with the AMPS phase-out, the same AMPS phase-out that went before this House last year. The member for Calare was not in the House at the time. The member for Calare did not debate the bill. The member for Kalgoorlie (Mr Campbell) probably did not debate the bill. The member for Oxley (Ms Hanson) probably did not debate the bill. But all of a sudden, when a cunning stunt comes on they are there for the headlines. When a serious policy debate is before the House, you people are nowhere to be seen.KL6ANDRENMr Andren—On a point of order, Mr Deputy Speaker: I have sat here—10000DEPUTY SPEAKERMr DEPUTY SPEAKER—What is your point of order?KL6ANDRENMr Andren—My point of order is that I regard that as an attack on me personally.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—There is no point of order.DK6Hockey, Joe, MPMr HOCKEY—You can bet it is an attack on you personally. I am calling this a stunt.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—I invite the member for North Sydney to address his remarks through the chair.DK6Hockey, Joe, MPMr HOCKEY—Mr Deputy Speaker, I can assure the member for Calare that it is a personal attack on him because I do not like the hypocrisy of someone coming in here and—RH4KERRMr Kerr—On a point of order, Mr Deputy Speaker: the honourable member was doing quite well until he confirmed that it is a personal attack.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—What is your point of order?RH4KERRMr Kerr—The standing orders provide that a personal attack on a member of parliament requires a substantive motion and, the member having so confirmed, is disqualified from continuing in that vein.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—The honourable member has made his point. I ask the honourable member for North Sydney to take cognisance of the remarks of the member for Denison.DK6Hockey, Joe, MPMr HOCKEY—Mr Deputy Speaker, I am making a very simple point. When the issue relating to the phase-out of AMPS was before this House, the member for Calare was nowhere to be seen. When the substantive policy issue, which he says justifies this disallowance motion, was debated by this House, the member for Calare and the Australian Labor Party were nowhere to be seen on this fundamental issue of the phase-out of AMPS. What they are doing now is using the most deceitful and crass mechanisms to try to undermine the worth of a great company, a company that is making a substantial contribution.QT4FILINGMr Filing—I rise on a point of order, Mr Deputy Speaker. As you know, it is an offence against the standing orders to reflect on the motives of another member in this place. As someone who is speaking on this matter—10000DEPUTY SPEAKERMr DEPUTY SPEAKER—The honourable member for Moore will resume his seat. There is no point of order.DK6Hockey, Joe, MPMr HOCKEY—Obviously I am hitting the mark, because the bottom line is that this is nothing more than a stunt. The hypocrisy of the Australian Labor Party—RH4KERRMr Kerr—On a point of order, Mr Deputy Speaker: the standing orders are there to prevent ad hominem attacks in the form of debate. This is an ad hominem attack; it is not debating the issue.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—There is no point of order. The honourable member will resume his seat.DK6Hockey, Joe, MPMr HOCKEY—I am obviously hitting a raw nerve with the Australian Labor Party as well, because it was nowhere to be seen when the substantive policy issue about the phase-out of AMPS was debated by this House. I put it to you, Mr Deputy Speaker, that this is a stunt. It seeks to undermine investment in a great Australian company. It seeks to undermine the investment made in Australia by foreign organisations, investment which goes towards creating Australian jobs, which goes towards the creation of new infrastructure in Australia and which, at the end of the day, means jobs in my electorate, means jobs in the electorates of the member for Calare and the member for Watson, and means jobs for all Australians.If the members of the Labor Party are going to support such a base motion from the member for Calare then they are letting down the people that they seek to represent. They are, in a sense, throwing out their own rules. They are throwing out everything that they seek to claim in this instance because they cannot abandon, they cannot jettison, the history that they created. We are onto them about their history. We are onto the member for Calare about his policy backflip—but, in fact, it could not be a policy backflip because he had no policy today. When it really counted, the member for Calare was nowhere to be seen. Quite tragically, he has let down all the people in Calare, because when the substantive policy issue was debated by this House he was nowhere to be seen. He is trying to cover his tracks now, and we are onto him.17:10:002151Filing, Paul, MPMr FILINGQT4MooreIND00—In rising to support the member for Calare's motion for disallowance of the Carrier Licence Conditions (Vodafone Pty Limited) Declaration 1997, I would like to point out a couple of things to the member for North Sydney (Mr Hockey). If he were being to true to his philosophy of liberalism, which I am sure he would like to think he is, then he would in fact support this motion because it is quite clear, if one were to take the trouble to do any research or to study the issue of telecommunications policy, that it would be in the best interests of the liberal philosophy in relation to market and supply and demand, in particular in services like telecommunications, to allow for the fullest possible competition in service delivery in telecommunications.DK6HOCKEYMr Hockey—Absolutely.QT4Filing, Paul, MPMr FILING—That would be, of course, allowing for there to be, simultaneously, digital and analog mobile phone services. The point is that the agreement that was made in 1992 by the then Labor government was for the withdrawal of the analog mobile phone service, a decision that at the time was wrong, in my view, and a decision that has been compounded by the regulations enacted with the telecommunications legislation. The point is that you have compounded the original mistake.DK6HOCKEYMr Hockey—How did you vote?QT4Filing, Paul, MPMr FILING—The member for North Sydney substitutes lack of knowledge with a big, loud, booming voice. At the time when we were debating the telecommunications legislation, he stood there and accepted without demur the argument of the minister that Telstra would honour its community service obligations. We now find that the minister himself has had to concede that that particular commitment was not substantial enough to match consumer needs, and now they have to legislate in order to beef that up to satisfy consumer needs.I might also point out to the member for North Sydney, who represents one of the smallest geographical electorates in this country, that there are people in this place who represent larger electorates who have people in remote communities who are the victims of the failure of your government, the coalition government, to enact legislation that would have forced Telstra to honour its community service obligations.I now turn—as I wanted to in the first instance, but unfortunately we have been distracted to a certain extent by what was an absence of argument from the member for North Sydney—to these telecommunications regulations that turn on the agreement made by the Labor government; a mistake that has been compounded by the regulations that were enacted by this government. The purpose of this disallowance motion is to stop the federal government giving what is, in effect, a huge financial bonus to a company providing a service in our community in telecommunications which is standing in the way of the analog mobile phone service being maintained for people in rural and regional Australia.In broader terms, what we are talking about is the replacement of a mobile telephone service with another mobile format on the understanding that no-one will get a lesser service. The opportunity to deliver the new digital service was based on a commercial incentive offered to a company to enter the Australian communications sector. What has eventuated is a mobile telephone service which for many Australians is either an inferior service or non-existent. This is the nub of the argument relating to this disallowance motion.This situation obviously cannot be allowed to continue. It is incumbent on this government, which was elected allegedly to govern in the interests of so many of the Australians affected by the loss of the analog network, to act decisively and to retain the analog network indefinitely. I am arguing that both networks should be maintained simultaneously. There is no reason why they should not, other than the agreement with Vodafone. That is the only reason why there is a restriction or an obstacle in the way of that. There are no technical obstacles—none whatsoever.DK6HOCKEYMr Hockey—Yes there are.QT4Filing, Paul, MPMr FILING—The member for North Sydney says that there are, but I ask him to prove one of them. He certainly did not during his 15-minute opportunity to do so. He certainly did not do that under any circumstances or any observations of the rules of debate. It is not good enough to claim that the government is simply bound by a poor decision by the previous government in the first place. That is one of the most facetious arguments I have ever heard. For somebody who purports to represent liberal philosophy in the coalition government to support such an argument is a dereliction of his duty to his constituents. This coalition was elected by people who thought it would listen to their concerns and act on their behalf.HE4ANDREWMr Andrew—Here we go; the usual silly things like that.QT4Filing, Paul, MPMr FILING—The Chief Government Whip is responsible for making sure that his members toe the line. That is his job; that is all he does. His is that responsibility, and we expect him to say silly things like that.CF4CAMPBELLMr Campbell—More of the old school.QT4Filing, Paul, MPMr FILING—Yes, more of the same—Tweedledum and Tweedledee. My electorate is a case in point. Moore is a metropolitan electorate in Perth's northern suburbs; it is not even a country electorate. About one-third of my electorate has no digital mobile telephone service. The service providers presumably do not cover the whole electorate because they do not consider it economical. This is at the crux of the flaws in this government's approach. Most of my constituents have an analog alternative at present, but of course under the current arrangements—these plans—that will not continue for much longer.Amongst other things, government exists in our tradition to provide essential services to the community. Communications are an essential service. During the years that digital mobile telephone communications have been available in Australia governments have allowed a commercial rationale to dictate who gets coverage. It has not ensured that the community service obligations related to mobile telephony coverage are raised and enforced to benefit all Australians. This obligation on government to ensure that a service is provided fairly, equally and as best as possible to all members of our community is at the base of this particular problem. That is their No. 1 objective and their No. 1 duty.The digital mobile service providers have not been without blame in this area. Telstra, the potentially private corporation this government seeks to control through legislation, unfortunately has a poor record in service provision. Telstra's honesty in advertising has been less than good. It claims to cover 90 per cent of Australia with its digital service and implies in its hard-sell telemarketing that anyone switching from analog to a digital service will be getting better coverage. What it fails to say, and what it should be made to say clearly, is that it covers 90 per cent of the static telephone numbers in Australia. The vast majority of those are in close proximity to the central business districts of the capitals and major cities of Australia. It does not cover even outer metropolitan areas like my electorate, and it certainly does not cover most of regional Australia.The problem is that if you are not standing in one of those areas serviced when you try to make a call, you might as well be on the moon. Telstra is displaying the concept that terra nullius is not dead. It wants us to believe that Australia is an empty, cavernous entity once you leave the central business districts of major cities, and it has been allowed to get away with pushing this view commercially. How can this government claim to be able to control a privatised Telstra when it clearly cannot restrain Telstra while it still owns a majority interest in it?I want to talk about a specific example in my electorate. I have a number of constituents in the northern suburbs of my electorate, that is, in the northern suburbs of Perth, who are cray fisherman. They have a requirement to be able to communicate with each other at sea. Previously they used the analog system and used it successfully—it gave them good coverage. But the only drawback it had in the case of cray fisherman was when they were ringing each other to describe where the crayfish were. Obviously their competitors monitored their phones and they would start converging where most of the crayfish were located. Telemarketing by Telstra, and in this instance aggressive telemarketing, assured them that they could change to digital, get the security they needed and have coverage at least as good as the analog network. My constituents identified that they needed cover age out to sea, which is presently available through the analog network. They were reassured by the Telstra marketers, and the Telstra agent fitted the high-powered, expensive digital telephones to their cray boats.After spending many thousands of dollars between them, they now find that there is no reliable coverage. Often the phones do not work more than 200 metres offshore and, when they do, the calls drop in and out without warning. As Professor Julius Sumner Miller would ask: why is this so? It is because the transponders in Western Australia do not face out to sea. Telstra then say, quite clearly once they have sold the equipment to these people, `Oh, but our maps show that it doesn't in fact provide a service out to sea.' Of course, with their heavily stylised maps, it is very hard to understand where their particular service boundaries are. If you look very carefully at them and their relationship to the maps and the stylisation of those maps, you will see that it is very difficult to identify where those boundaries occur.Telstra is very happy to keep the analog network. Perhaps the member for North Sydney (Mr Hockey) does not know this, but it is. In fact it has such a huge capital investment that it would see such a decision as preventing a huge capital waste. It is also a question of competition. By allowing Vodafone to operate exclusively within the digital environment, the government is actually reducing competition in the mobile phone sector. True competition would see both digital and analog systems operating side by side. They are different. Each has different strengths and weaknesses. They each bring different things to customers, and if this government were true to its own philosophy it would keep the analog network operating on the basis that competition between the networks is good for customers.I thought that was one of the principles upon which this government based its policies until, of course, I saw it introduce its digital television decision, which I have to say has reinforced a somewhat jaundiced view about this government's commitment to true competition. It will drive technological advancement; it will provide better service; and it will drive prices down. This is the whole point of having the two networks side by side. I might also point out that in the United States, at one of the cutting edges of the telecommunications markets, analog and digital services will exist side by side. In fact American consumers will be able to choose. They will be able to use a system that allows for the merging or the interrelationship between the analog and the digital networks.The Minister for Communications, the Information Economy and the Arts, Senator Alston, was quizzed on this on a radio program. He was asked precisely about this particular facet of digital versus analog networks in the United States, and he made what was in fact a totally inaccurate comment that there was going to be a phone that could be used in both analog and digital networks within Australia. No such telephone exists.KV5NEVILLEMr Neville—It does exist.QT4Filing, Paul, MPMr FILING—No. You have to carry two phones. I am sorry, you produce one for me; I would like to see it. That was a problem with another recent piece of legislation, the child care amendment legislation—which the minister is familiar with—where the technology was not quite available to be able to deliver the promised legislative change. He agrees with that and he knows that that was one of my criticisms then.As part of my contribution to this debate, all I am asking is for the government to think again. I do not think that is a particularly difficult thing for them to do, surely. All we are asking them to do is to review a decision made by the Labor government. It was a decision that was wrongly based; it was a decision that was not in the best interests of customers; and it was a decision not in the best interests of service delivery and fundamentally, and the member for Deakin (Mr Barresi) might want to be aware of this, it was a decision that was inconsistent with the coalition government's own philosophical commitment to competition and market forces because it restricts competition.In the last few minutes of my contribution in this debate, I will deal with a couple of issues that were raised by potential customers, clients, when talking to one of the experts from the ACA's analog closure education program, Mr Warren Duncan, who appeared on 8 January 1998 on 3AW in Melbourne. He made some observations in response to questions, one of which was when the interviewer said that a knowledgeable caller suggested that the digital coverage would never cover the whole of Australia, that it was impossible. Mr Duncan conceded:That could very well be the case.He is the expert. Ask the expert. He says:That could very well be the case, but the difference really is that . . . it's because of the nature of the technology, Doug. Analog can stretch out over quite considerable distances whereas, dependent upon where the base station is, digital may not cover the same extent, but that's why the government has gone for digital because in the future, in the areas even where there isn't analog at the moment, satellites will be covering these areas in a much more cost-efficient way than analog even is now because y'know we will be able to have dual handset . . . dual mode handsets which will enable people to talk via satellite . . . I have to make an observation here: this is talking about technology that is not actually available to the Australian marketplace right now.YT4SCOTTMr Bruce Scott—Rubbish. It's out there now. I've got a rural electorate.QT4Filing, Paul, MPMr FILING—If the member had any idea of what he was talking about I would argue the case with him, but I do not think you can argue with an expert from the government's own agency. In fact, when asked the question about a preference in terms of the technology, the expert conceded:No, I really don't have a preference in terms of the technology. You'll find at any one mobile phone forum you'll have any different number of speakers who will stand up and support any different type of technology . . . In the United States, the majority of mobile phone service consumers opt for analog. When they are given the choice of different levels of analog service, including encrypted analog, most of them go for standard analog service because it is more reliable, it has better coverage and, in many instances, it is cheaper. In this country we have restricted competition, made the marketplace more restricted, driven prices up and restricted the services to people who live in remote and regional areas. In actual fact, that is totally contrary to the philosophy of this government. (Time expired)17:25:002155Neville, Paul, MPMr NEVILLEKV5HinklerNP10—I am sure the member for Calare (Mr Andren) is motivated by the best intentions, although I would echo the words of the member for North Sydney (Mr Hockey): if he felt so passionately about this at an earlier date, why was he not in here to challenge the legislation when the government brought it into the chamber?QT4FILINGMr Filing—Because these are regulations; they are not actually in legislation.KV5Neville, Paul, MPMr NEVILLE—Okay, but he may have indicated some concern for his electorate at that time.QT4FILINGMr Filing—That is why we've got a disallowance motion.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Andrews)—Order! The honourable member for Moore has had his opportunity.QT4FILINGMr Filing—Yes, but they interrupted me, Mr Deputy Speaker.KV5Neville, Paul, MPMr NEVILLE—Very little, I might add, Mr Deputy Speaker. However, I will just get on with the text of this. There is a bit of history involved with this, and it goes back to 1992 when the Labor government, to attract new players into the Australian mobile phone regime, agreed to turn off the analog network on 1 January 2000. Despite the fact that that was a very poor decision, there was one thing they did have to get right: sovereign risk. If you were going to ask people like Optus and Vodafone to come into the market with a new digital technology, there would have to be some certainty that they would have a share of the market and that, by the year 2000, the old technology would be removed.The member for Watson (Mr Leo McLeay) went into a lot of glib asides about being interested to hear what the National Party had to say about this. The National Party was saying things about this from the very minute we knew the analog system was not going to be overtaken by the digital system by the year 2000. We were out talking about it more than a year ago. We got the ear of the Minister for Communications, the Information Economy and the Arts (Senator Alston), and the minister has put an interim measure in place. That interim measure is that, in those areas where the digital signal is not adequate, the analog signal will be extended to provide a reasonably equivalent service.I did not hear the member for Calare at that time, or the member for Moore (Mr Filing), expressing those doubts. We knew what it was going to mean, but we also knew that there was a matter of sovereign risk involved, that there was a whole range of technologies coming to Australia in the next four or five years and that any government in the future—be it of our persuasion or the opposition's—would have to take into account the consequences of some ill-conceived idea that destroyed the credibility of the government's guarantee of sovereign risk. As I said, in those areas that do not have a reasonably equivalent service we have decided to allow the continuation of the analog system beyond the year 2000.The member for Calare described areas of his electorate and said how important it was that these people have digital phones. I do not disagree with that for a minute, but you will find anywhere in Australia, as you did when we had only analog, that there are areas where you cannot get a signal. I have areas between Bundaberg and Gladstone in my electorate where we do not get a signal—analog or digital. The interesting thing is this—and none of the other speakers have mentioned this in the debate today: analog currently covers 93.8 per cent of the populated areas of Australia.QT4FILINGMr Filing—Static telephone numbers.KV5Neville, Paul, MPMr NEVILLE—Yes, static telephone numbers.CF4CAMPBELLMr Campbell—What about geographical areas?KV5Neville, Paul, MPMr NEVILLE—Where most of the people live—I thank them very much for readily taking the point. Where most of the people live, it is 93.8 per cent. Interestingly enough, digital is now covering 94.1 per cent, to be precise. In fact, it has overtaken analog and is going ahead of it.I am not pretending for one minute to the member for Kalgoorlie (Mr Campbell) or to you, Mr Deputy Speaker Andrews, that those two signal areas overlay completely. There will be some areas where there are gaps in the analog and there will be some areas where there are gaps in the digital. But the big point that the member for Calare is missing is this: we are now coming to yet another era of digital phone technology. Contrary to what the member for Moore said, we are on the threshold of having intermodal handsets. The technology that will be delivered is an American based digital technology called CDMA. CDMA will be the next technology offered to Australia. If we are going to have intermodal phones that can roam from one technology to the other, that opportunity will exist if companies are encouraged to come into this country in the same way that Optus and Vodafone were encouraged to come to Australia in 1992. You could not say that they have not made a fair effort to do the right thing and to honour their side of the agreement. For example, Optus has invested at least $5 billion in Australia. If you want to take their television interests into it, it is possibly as high as $10 billion. At this stage, Vodafone has invested $1.2 billion. They did that in the clear understanding that the analog technology was going to be switched off in the year 2000, and that may or may not have been a good decision.QT4FILINGMr Filing—That was a rubbish decision.KV5Neville, Paul, MPMr NEVILLE—It was a bad decision, as it turns out. However, if we do not honour that agreement, as the member for Calare himself said, the government faces the risk of quite heavy litigation. To try to interfere with its shareholding after again giving an understanding to this company and using that as a method of blackmail would destroy any guarantee of sovereign risk being honoured in this country, would be the very thing that would drive companies away like those who wish to introduce CDMA, people like Hutchison Telecoms from Hong Kong, and would deny Australians a better quality technology.If you go back over the history of broadcast and telecommunications in Australia, we have not always been the first to adopt a new technology. We generally stand back a bit, have a look at the technology and then decide what will be appropriate for Australia. When we did this with black and white television, Australia per head of population embraced the medium to a greater level than anyone else in the civilised world. Then came colour television and, again, we were the frontrunner, but we waited to get the technology right. Again, with the advent of VCRs, we were a major user around the world. We are now on the verge in broadcast communications of this same argument of digital against analog. Obviously if we introduce digital properly and control it properly, we can have the best quality television in the world, no risk.CF4CAMPBELLMr Campbell—Talk about phones.KV5Neville, Paul, MPMr NEVILLE—I am coming back to phones. We already have the best free to air broadcast system in the world with two public broadcasters and three commercial broadcasters.QT4FILINGMr Filing—It is basically four buckets of slop.KV5Neville, Paul, MPMr NEVILLE—That is hardly fair. I suppose it gives Australia's commercial broadcasters and the ABC an insight into what you think of them. I do not know if that is appropriate. I think we have very good public broadcasters in this country and, as commercial broadcasters go, quite good ones also. If we want to take that to the next plane, we have to create certainty that there will be a commercial return to those organisations at the end of the investment period, and the investment will be somewhere in the order of $700 million to $900 million, which is a huge investment.QT4FILINGMr Filing—It's a licence to print money.KV5Neville, Paul, MPMr NEVILLE—It is not a licence to print money. The point I am making here is this: if we want people to come to this country or if we want existing players in this country to invest in new broadcast and telecommunications technology, then it is critical that we provide certainty. If we want to move from analog to digital, from digital to CDMA and beyond CDMA to low orbiting satellites, which will be absolutely crucial for the member for Kalgoorlie—CF4CAMPBELLMr Campbell—You don't know what you're talking about.KV5Neville, Paul, MPMr NEVILLE—In fact, I was only briefed on this about three nights ago.CF4CAMPBELLMr Campbell—Who by—Vodafone or Optus?KV5Neville, Paul, MPMr NEVILLE—Neither. Interestingly, the first player who will be delivering services will be doing so in October this year. You are obviously not aware of that. That technology will be available to Australia this year. If we want other players like Iridium, for example, which is going to be one of the early players in low orbiting satellites, to invest, we cannot tear this up every time we find a glitch or an inconvenience or a commercial arrangement made in an inept way by the previous government and throw all those things out the door. What I am interested in for the bush is not the basic technology of analog. That was the very first technology. That, if you like, was like the old wind-up phone connected to the exchange. In terms of electronic technology, it was the first. It was the caveman stuff.QT4FILINGMr Filing—Why are the Americans sticking with it then?KV5Neville, Paul, MPMr NEVILLE—You guys remind me of a fellow who rang me up when one of the last telephone exchanges in my area was going over to automatic. He passionately wanted us to retain the old wind-up phone where you had to ask for the number. That is the sort of thing you are doing.ZK6ZAMMITMr Zammit—That's ridiculous!KV5Neville, Paul, MPMr NEVILLE—No, it is not ridiculous. What you are ultimately trying to do is to take the Australian bush for a very short-term gain. I say to the member for Calare that, for a very short-term gain, you are going to take the whole of Australia's electronic communications back to the caveman stuff. The analog spectrum is going to be surrendered for television and it is eventually going to be surrendered for telecommunications. It will be reallocated to do other things for the Australian public in both the fields of telecommuni cations and broadcast communications. We need to move on.One of the problems in Australia is this ready take-up in broadcast and telecommunications that I explained to you. We tend to take on these technologies much quicker than other countries. The fact that we got to 93.8 in analog and 94.1 in digital already is evidence of how quickly we have taken up the technologies. Because we have done that, it is not perfect. I know that in Sydney sometimes my digital phone drops out. It is overloaded. I know there are parts in my electorate where I lose my digital signal.If you ask me, on balance, whether I would rather go back to inferior technology and leave Australia in the doldrums or whether we should take on the new technologies such as CDMA and intermodal phones that can roam from one technology to another or whether I want people not just around Bathurst and Orange but the people out west who have not seen an analog or digital phone to get a high quality low orbiting satellite phone, I think it is important that we do not cave in to some shallow blackmail against Vodafone to make them leave in place technology that will not only slow down their operations, slow down Optus, but also drive away new competitors in the field.The other thing you have to think about in the bush is not just having the raw technology but having the technology at a level that people can afford. We have got very low telecommunications costs in this country because, with normal telephony, Optus and other operators have offered competitive services to Telstra. We now have people offering competitive services to analog. I appeal to the member for Calare and the member for Moore to reconsider their stand. I think it is immature. I think it will not advance the cause of the bush getting high quality telecommunications. I therefore reject the amendment.17:40:002158Campbell, Graeme, MPMr CAMPBELLCF4KalgoorlieIND00—For one of my disposition, it is very difficult to sit still and listen to somebody totally misrepresenting the facts. Let us go back to the beginning of what actually happened. In 1992, the government gave an undertaking that GSM, global systems for mobile, would be the system for Australia. The reason for this was quite easy to understand. In Europe you had 15 different systems going across Europe. The French got together and said that this was crazy and they produced a system that unified Europe, a relatively small area, and it worked well.What happened in Australia? The government was confused and bluffed by the bureaucrats and they decided to adopt this system of GSM. This is what happened. Politicians at the time were entitled to believe the information they were given by the bureaucracy, so we ended up with GSM. In the meantime, along came the Americans and developed CDMA, code division multiplier access. This is a significantly different sort of digital. It does not batch the signal, as GSM does. It is therefore compatible with analog. The member for Hinkler (Mr Neville) is quite wrong, because there is no obligation in this country to introduce CDMA. It will be opposed by Vodafone and Optus because they do not have the technology. They just simply do not have it. They will oppose that as strongly as they will oppose maintaining analog.In the United States, you have a seamless handset which will go from the CDMA to the analog. It works extremely well. When GSM was brought in we were told—and you believed it, as I believed it at the time—that the digital process would use a much narrower spectrum, therefore we would have more services. The truth is that by batching up like that you only have to hold your digital phone near your radio to hear the interference. Because of that large signal they cannot get them close together. Analog has just gone on developing because the rest of the world can see the value of it. What is happening in the cities? In the cities you can use an analog frequency here with a low level aerial and one block away you can reuse the same frequency. You cannot do that with digital. Analog ends up having many advantages that were not seen at the time.What we are talking about is a commercial decision. This is not going to end here. Don't kid yourself. This is a big battle. People are not going to be deprived of the analog sys tem, and there is going to be a conflict. There is going to be a court case. Why in heaven's name would anyone, knowing there is going to be litigation, give away goodies like this? What we are talking about is bargaining chips with Vodafone and Optus. They are simply bargaining chips because they are asking us to make allowances for them when they agreed to it in the first place. Why should we do that? That is tradeable.When the court case comes about and eventually sanity does prevail and we do maintain the analog, I expect Telstra will once more be milked to pay Vodafone off. But the bill will be a lot less if we say to them, `You agreed to those conditions. This is a commercial decision.' Let us face it: Vodafone are not going to provide service in the country, nor are Optus. The member says that he was briefed recently. I can tell you this: I have a real battle in my electorate with television. Optus decided we had to go to digital television—for very good reasons, but it was their idea. Telstra beat them to the punch and got the system up and running. So what did Optus do? Optus, loaded as it is with ex-staffers from the Labor Party, went into political mode and set about lying to everybody. When you get briefed, sir, be very careful. The only people I know who will give an accurate briefing an technical matters are in Telstra. The others lie their heads off.The truth is this: you say, `We're going to have competition in communications.' What a lot of nonsense! The Labor Party gave away a great swag of property of the people of Australia to Optus. It gave them basically free entry. What you are doing is you are not having free entry of the technology. In the United States they say, `Let the technology fall where it may.' Let us have that in Australia. Let us have free technology. If you do that, somebody will introduce CDMA. It will probably be Hutchisons. It will certainly be Telstra. They will certainly do it. They know they can marry their analog service and give you a single service.Right across the bottom of Australia you have a line of microwaves. This is technology of 30 years ago. It was a great improvement. I can remember when all the telecommunica tions between east and west were carried on six hard wires across the Nullarbor. Then they brought in microwave and opened it almost exponentially. That is now out of date. We now have glass fibres in. Those towers are there. I suggest that the cost of pulling those towers down is greater than the scrap value. It would be better to leave those towers there, attach analog to them and provide an analog service across Australia—a whole new vast area of Australia would open up. But that can only be done with analog because the towers are too far apart for digital.DK6HOCKEYMr Hockey—For 10 people.CF4Campbell, Graeme, MPMr CAMPBELL—And all the people who travel. What you have forgotten is this—DK6HOCKEYMr Hockey—They're citizens.CF4Campbell, Graeme, MPMr CAMPBELL—North Sydney is a classic case: there is not a city in this country that lives on its intrinsic worth. They all live on the sweat of the wealthy hinterland. Sydney produces nothing. It is those people out there that you despise that keep you in your comfort, and you should realise that. It will not be realised by Vodafone. It will not be realised by Optus. And I can tell you this: when the community service obligation is given to government of any shade, Liberal or Labor, it will be cut away to nothing because governments in this country—Liberal and Labor—know that if they can win in Sydney and Melbourne the rest of the country does not matter in the short term.Mr Neville interjecting—CF4Campbell, Graeme, MPMr CAMPBELL—You, sir, have been sitting there quite contentedly. You say we had an opportunity at the time. Yes, we did. We were misinformed. We now know better. It is a city thing not to change your mind when you have more information. We have the information now: we know that CDMA is a far better system than GSM. We know that if we remove the barriers, CDMA will be brought in here, certainly by Telstra, almost certainly by Hutchisons. It will give us a seamless connection.You people talk as though analog was somehow inferior. Analog has advanced by leaps and bounds since those days. Analog now carries about the same data transmission capability. It can be encrypted. It speaks of service that most people do not want. But the big thing is that in the United States the message is there: where people have the option they have opted for analog because of the longer service. The fact is that analog gives you line of sight. That is why it gets a longer service. When you see these figures put forward they are fictional figures because they talk about phone numbers, not geographical area. Remember this: if Telstra were to go around and put analog services on all the places they have installed digital, there would be an enormous increase in coverage area. It would increase rapidly again. The cost of that is infinitesimal.QT4FILINGMr Filing—It's there already.CF4Campbell, Graeme, MPMr CAMPBELL—Of course it is there already. What we are talking about really is freedom of technology. Let the technology fall where it may. But you have a government guided by Public Service and vested interests that say, `Oh no, we think GSM is the best technology.' It may have been at the time. It has been passed by. But Vodafone only has that technology. Optus only has that technology. Let the technology fall where it may.What I am saying is irrefutable. There is no doubt of that. You cannot disprove what I am saying because it is factual. On that basis, this battle is far from over. This government will turn off analog at its peril. There is going to be a court case. Let us have the court case; let us pay Vodafone out. But they will not get anything like as much as they are expecting if we leave these provisions in the act. Why would we give them this, knowing we are going to litigation? Why would we give these goodies out to them? It makes no sense at all. For this reason the member for Calare (Mr Andren) has done a service to the people of Australia. What the member for Calare is doing is, unlike the member for North Sydney (Mr Hockey), looking at the taxpayers of Australia. We are going to have this battle. There is going to be compensation paid. It will be greatly reduced if we do not give away these goodies now.There is absolutely no doubt that CDMA technology is better. You cannot keep it out forever. It is only the CDMA technology that gives you the seamless connection. The member for Hinkler (Mr Neville), I think, was talking about the satellite. The cost of the satellite is very high. The service is there now; it is true. It is very expensive. It is all right for mining companies and people in the Aboriginal industry who have their bills paid by the taxpayer. It is no good for the general public. It is a useful tool, but it will not replace the CDMA system. If you have transmission by satellite, it will almost certainly be CDMA anyway. It will be in that format because of that ability to have the seamless connection between analog and the CDMA. You cannot have it with a GSM system. It is simply technically not possible.Telstra have been working on it and one has to admire Telstra's ability. They say they are looking to double the length to which the GSM signal will go. It is actually going to halve the number of lines available. In remote areas that does not matter. Optus, on the other hand, say, `We are not bothering with that technology, we do not think it will work.' It is obviously in some doubt about it, but still it is going to be a very second best option.For heaven's sake, commonsense says that the system is working, it gives much better coverage, and the only thing it does not really provide is security. Most people do not care about that. I am one of those people. I do not really care who listens to my phone calls because I have got nothing to hide. This is a system working now; it covers a lot of Australia—the CDMA technology which the government is conspiring with the Labor Party to stop entering Australia. They are holding us back by planting the technology. It is meaningless to say we are going to have free enterprise and competition if you keep a rein on the technology, because it is simply within the one paper bag.KV5NEVILLEMr Neville—It's not going to rein in the technology.CF4Campbell, Graeme, MPMr CAMPBELL—Of course it is because CDMA will not be allowed in this country because the guarantee is that this country will have GSM. I can tell you now that Vodafone and Telstra are terrified of CDMA. They simply do not have the technology. For that reason, the agreement in Australia is that the digital service will be GSM. Why will we be taking the analog out anyway? The answer is simple: we are taking the analog out because GSM cannot compete. It is as simple as that. Don't you understand? We are taking this out because the companies say, `We sold you a pup. We sold you a French system and you bought it, but we cannot make this work against the analog; therefore, you have got to remove the analog.' That is why it is being removed. GSM cannot compete with the digital. If it can, if it is a superior technology, then let the cards fall where they may. Let both play.DK6HOCKEYMr Hockey—You know that Telstra would dominate the market.CF4Campbell, Graeme, MPMr CAMPBELL—Telstra gives a good service to remote areas, unlike your friends. It does not matter what you say to your friends. I know Vodafone in your electorate and I know that they look after you very well, but I have to think about the interests of Australia. The fact is that it is simple, it is as clear as day. If the technology is superior, it will beat the analog. It cannot beat the analog, therefore, you must remove it.The people will not cop that. This government at the end of the day will be faced with such outrage that it will back down, it will be faced with litigation, it will be faced with compensation. For heaven's sake, do not give away these trump cards now. If the member for North Sydney cannot understand the logic of that, it is just as well he comes from a legal background, because he never would have survived in business.I just want to say this: we have heard a lot from this government about the community service obligation and, if the Labor Party were in government, we would hear the same from them. The reality is this—and people in the bush understand this intuitively—if the community service obligation is an off budget payment, if it has left the government, it will diminish and diminish and diminish. They will say, like the member for North Sydney, `But there is no-one out there. There are only a handful of people.' That will be their mentality because what we have in Australia today is a political system where there is no real conflict between Liberal and Labor. You are, as the member for Moore (Mr Filing) said, Tweedledum and Tweedledumber. The real battle developing in Australia is between rural Australia, which creates the wealth, and urban Australia, which spends it. That is the battle that has to be fought in this country and this is part of that battle, because communication is vital in maintaining some sort of equity in this country.We have seen infrastructure in this country gutted in country areas. We have seen it gutted right through the country. We have seen no real enthusiasm from the present government to restore it. It was gutted by Labor and not restored by this government, and it will not be. There will be continual pressure on infrastructure in the country areas. That is why communication is absolutely vital.What we are saying is that we know we get a good service with analog. It works over a much wider area. Digital does not work. In my own town of Kalgoorlie, Telstra tells me that they have got the digital coverage. I know, because I live there, that I only have to go out of town on the north side and the coverage ceases. They said, `But we put a system in Coolgardie and now you can get coverage all the way.' They might have much more powerful receivers than I have, because I cannot get that coverage. (Time expired)17:54:002161Anthony, Larry, MPMr ANTHONYXJ6RichmondNP10—I have been very interested in some of the comments in this debate and it is good to see the member for Kalgoorlie (Mr Campbell) here. The member for Kalgoorlie was speaking very passionately this morning in the Main Committee about child support. He was referring to France's child-support arrangements, and I noticed he was just talking about the French system of mobile phones. He obviously must be spending too much time with the member for Holt (Mr Gareth Evans) if he is using the French analogy.The debate today though is about this motion that was moved by the member for Calare (Mr Andren). I think it is important to go back and look at some of the contributions, particularly those by the member for Watson (Mr Leo McLeay), the member for Calare and the member for Kalgoorlie. As previous speakers from the coalition side have stated, the whole reason we are in this predicament about analog phones is that the legislation that was put in place was put in place in 1992 by the Australian Labor Party. They put that in place. Not only did they do that, they compounded the problem when it came to pay TV. They legislated to have two cable TV carriers, and an enormous amount of public capital was put in place with Optus and Telstra.The reason for some of these changes to Vodafone is clear. When you look back at the Optus case, they were forced by legislation—again, that was poor policy by the Australian Labor Party—they did not have enough equity and they had to raise more capital through their British company. The whole indignity here of the Australian Labor Party is that, firstly, this is diminishing the communications systems to rural Australia and, secondly, it is increasing foreign ownership. Let us look at foreign ownership and let us look at foreign debt.CF4CAMPBELLMr Campbell—Let's look at telephones.XJ6Anthony, Larry, MPMr ANTHONY—We will get back to that, but that was the point introduced by the member for Watson. Let us look at the number of companies that were sold. Lifesavers and Allens went to Rowntree. Speedo and Tooheys Castlemaine were sold to New Zealand. King Gee and Stubbies went to the USA. Sidchrome went to the USA. A big chunk of Fairfax media went to Canada. The Ten Network went to Canada. A big chunk of Qantas went to the UK. Other big names to be sold were Brashs, Aeroplane Jelly, Arnotts, BTR Nylex, National Mutual—another French company—Peters ice cream, Eagles and on it goes, particularly in the rural sector and particularly in the telecommunications sector. So do not come in here and parade the virtues of Australian ownership when you have just about sold the whole farm. What we are trying to do is let people who are staying on the farm have a proper communications system to help get them through to the next century.So we come back to AMPS. The decision was made in 1992 by the Australian Labor Party to phase out AMPS by the year 2000. In a very courageous decision on 5 February this year we introduced legislation, and I will quote from the Australian Communications Authority in relation to this. The member for Kalgoorlie should listen to this, as should the member for Calare, because if a review is being done now on Mount Canobolas, the member for Calare should be putting in a submission.In February 1998 the Australian Communications Authority said that a number of packages were announced for regional Australia which currently receive mobile phone coverage. If they do not receive adequate digital coverage beyond the year 2000, then the analog system will remain and it will remain until there is a proper GSM digital coverage. What could be more appropriate policy—particularly for our rural party and members of the Liberal Party in rural Australia—than ensuring that there are adequate communication facilities, whether you are sitting out the back of Orange, whether you are in Kalgoorlie or whether you are in a suburb of Sydney, but they have pretty good communications systems there already.QT4FILINGMr Filing—What about Perth?XJ6Anthony, Larry, MPMr ANTHONY—Or in Perth, I should mention that. So some good policy initiatives have been introduced by this government to ensure that regional areas are taken into account.CF4CAMPBELLMr Campbell—Introduced by the Labor Party.XJ6Anthony, Larry, MPMr ANTHONY—No, that was not introduced by the Labor Party. That was introduced by us recently.CF4CAMPBELLMr Campbell—You were conned by the Labor Party.XJ6Anthony, Larry, MPMr ANTHONY—You were conned. You were in the Labor Party and you voted with them and you have acknowledged that.QT4FILINGMr Filing—So did you.XJ6Anthony, Larry, MPMr ANTHONY—I was not in the Labor Party. I never have been and I never will be. I obviously must have made an impression on the member for Kalgoorlie because he thinks I have been here for a long time, but I only came in at the last election.Let us take on board what was said by the member for Hinkler (Mr Neville). He talked about the actual coverage of analog. It is 93.8 per cent at the moment and digital is 94.1 per cent. I acknowledge that these are not the actual number of people and does not take into account people in remote areas, but the fact is that it is a wider coverage. What we are trying to do is enhance that coverage and make sure that the bush areas that do not have adequate coverage will continue to get coverage beyond the year 2000—whether it is through Vodafone, Optus, Telstra or new carriers that will come into the place—QT4FILINGMr Filing—Why not keep analog then?XJ6Anthony, Larry, MPMr ANTHONY—We have. We have said that—until they are covered by an adequate GSM system. We have actually said that. Are you blind to it? We have actually done that. If you are a farmer, one of the reasons for digital is that you can get other services. You can get data transfer, you can get the Internet, you can get a whole bunch of stuff—and a lot of it you cannot get on analog. That is why we want a better system. That is why, when we privatised part of Telstra, a big chunk of that—$250 million—went back into building regional telecommunications infrastructure. I suspect, when the next tranche is sold, there will be another commitment to put money back. As the member for Kalgoorlie knows, when the Labor Party was in government—when they privatised Qantas, the Commonwealth Serum Laboratory and the icon, the Commonwealth Bank—it went back into recurrent expenditure.CF4CAMPBELLMr Campbell—Just watch where your old man puts the money then.XJ6Anthony, Larry, MPMr ANTHONY—That is a good point. I am glad he is bringing up the history of the coalition. In 1983, when the Labor Party got into power, they reduced a lot of the foreign ownership requirements. Instead of having 51 per cent Australian ownership in the North West Shelf, as you well know, it was the Labor Party that reduced it. That is why we have a lot of foreign carriers here.The member for Hinkler also made some very good points about sovereignty. As the member for Kalgoorlie knows, there is a huge amount of Australian investment and a huge amount of foreign investment in the mining industry—in your industry, Graeme. Your people are working there because of foreign investment. To use Vodafone as a bargaining chip—it is populist; it has a nice ring about it—is poor policy and you cannot just blackmail Vodafone. Can you imagine blackmailing some of your mining companies like that? You cannot do that. That is the problem with it. A policy was put in place by the previous government. Now they are trying to renege on that and trying to use it as a bargaining chip. Let us follow that argument through. Even if you achieve that, if Vodafone maintain this analog system and they do not put in any digital system—CF4CAMPBELLMr Campbell—They haven't got an analog system.XJ6Anthony, Larry, MPMr ANTHONY—That is absolutely correct. Part of the problem is that we want to ensure that we do have proper ownership, proper equity, and that when people come into this country and buy certain slabs there is not an element of sovereign risk. That is precisely the reason why.Mr Campbell interjecting—XJ6Anthony, Larry, MPMr ANTHONY—It is. Part of the motion—and you should have listened—is that there could be an increase in foreign equity in Vodafone.QT4FILINGMr Filing—That is restrictive trade practice.XJ6Anthony, Larry, MPMr ANTHONY—Perhaps it is, but I would say that if it were tested it would not be successful. As the member for Hinkler said, look at some of the other carriers that are coming into place. It was talked about recently. I know that we can only take Iridium at their word, but they are bringing in a facility at the end of this year. When you look at satellite communications, yes, they are very expensive. No-one is denying that having a CDMA phone is very expensive. But, gentlemen, when you look back to when the computer first came in in 1968 or 1970, the units cost about $10 million. Today the equivalent computer technology—and even the member for Kalgoorlie would recognise this—is about $2,500. So, with the advent of new technology, prices come down. Obviously it is up to the consumer and who actually takes delivery. It is not an argument to say that this new technology, particularly with digital—because that is the main focus at the moment—will not replace some of these systems.A lot of the rationale used today, particularly by the member for Watson (Mr Leo McLeay), was fairly unintelligible. There were thoughtful comments perhaps, although I think they were misguided, from the member for Calare, and the member for Kalgoorlie represents an enormous constituency, but the fact is that this policy was put in place by the previous government.Mr Filing interjecting—XJ6Anthony, Larry, MPMr ANTHONY—It was the wrong policy for pay TV. You cannot turn the clock back. That is why I think it is terribly important that, in the next phase of the Telstra sale, we see a large chunk going back into maintaining services. The most important point is that this government has recognised it, because if there are not appropriate services covered by digital by the year 2000 analog will remain.18:04:002164Smith, Warwick, MPMr WARWICK SMITHGJ4BassLPMinister for Family Services10—It only remains for me to indicate to the House the government's position with regard to the motion moved by the member for Calare (Mr Andren). In the summing up it is not usual to thank honourable members, but I think it has been an interesting debate. If we remove some of the emotion from it, I think that there are lots of issues there and members have had a good opportunity to canvass them.The government takes the view that it will not support Mr Andren's motion. The declaration that he seeks to overturn basically is designed to remove from Vodafone the licence condition requiring it to achieve majority Australian ownership by 1 July 2003. It gives effect to the decision by the Treasurer (Mr Costello) on 14 August last year wherein the government decided to remove, with immediate effect from the date of that announcement, the foreign ownership restrictions that are specific to Optus and Vodafone and that all proposals by foreign interests to invest in Optus and Vodafone would be subject only to the general applicable provisions of foreign investment policy. Essential ly, the application of the contrary-to-the-national-interest test under the Foreign Acquisitions and Takeovers Act would apply.We considered that it was no longer necessary to constrain foreign involvement in Optus and Vodafone and that, from the point of the announcement of 14 August, foreign involvement of these two entities would be treated the same as cases involving the establishment of new entrants to the telecommunications sector. While prior approval is required, proposals would normally be approved unless judged contrary to the national interest. The government considers that it is important from the competition viewpoint that participants in the telecommunications sector not be unnecessarily constrained by foreign investment regulation. That is the basis of what we are talking about today. That is the reason why this is before the House and why we reject Mr Andren's motion.I will address some of the points in the broad. The original proposal was in the Telecommunications Act 1991. I have not had the opportunity to re-read my own speeches from that time but, to the best of my recollection, Minister Kelly was the minister who took advice and made the decision that there should be a change and a commitment to a new GSM technology and that we would move progressively to a universal application of the digitalised use of GSM technology by the year 2000. The reason for that was to provide additional competition and better utilisation of the finite resource of the spectrum. There were at the time some concerns about determining technology usage so far out, and I think those of us who voiced concerns at the time have been proved to be correct. Indeed, if the decision by the people of Australia in 1993 had been different, there may well have been an opportunity to have a look at it at that stage.The legislation in section 70 provided the opportunity for agreements to be entered into between the government and putative carriers. Minister Collins was the minister at the time—1992—who entered into a section 70 agreement. The section 70 agreement—the actual agreement, being a commercial agreement—was not available to the opposition at the time. But we now find ourselves—some years having gone along, Vodafone having been awarded a licence and there being substantial investment for the roll-out to meet the objectives of the 1991 act—in the position where there is a real legal risk that action can be taken under the compensation on just terms arrangements under the acquisitions provisions of the constitution. The extent of the pay-out for these situations is arguable, but if we look at the roll-out of the exclusive digital facility provided by Vodafone it is well over $1 billion.Mr Campbell interjecting—GJ4Smith, Warwick, MPMr WARWICK SMITH—I think it would be nice if you just let me finish, Graeme. That is the reason we are proceeding in the way that we are. The Minister for Communications, the Information Economy and the Arts (Senator Alston) made the decision last year that we would continue with the commitment to have a universal digitised approach to the mobile phone system, but we made an announcement at that stage that it would be subject to safeguards.That brings me to the next issue that was the subject of discussion by colleagues, that is, the use of the technology. I do not want to enter into a detailed overview of that.CF4CAMPBELLMr Campbell—You don't know.GJ4Smith, Warwick, MPMr WARWICK SMITH—Perhaps I do. The first point I would make is that satellite opportunities, prospectively provided by Iridium, Globalstar, ICO and Elipso will be coming on stream—September this year will see Iridium start—and that will provide an opportunity. The arrangements with regard to the proposed auction in July this year of the spectrum—that is, the 800 megahertz and the 1.8 gigahertz areas—will leave some spectrum. Half the new spectrum will become available to new service providers which will be able to utilise whatever technology they decide. It could be code division multiple access or time division multiple access which will see the capacity for the utilisation of dual handsets which are available now. I think some members have made reference to these matters. The residual amps spectrum in the regional areas will see the emergence of possible dual operation.The other major point was made by my colleague the Minister for Communications, the Information Economy and the Arts in his press release of 5 February which recognised that there is a capacity to utilise the amps spectrum in regional and remote Australia in a continuing way beyond the year 2000. It is to be subject to an immediate Australian Communications Authority review—it was described as an urgent review to be completed by 30 June this year—to examine, in each regional area, concurrent services where they currently receive amps service; to determine whether the phase-out of the amps could leave that area without an alternative mobile coverage; and to offer a quality of service and breadth of coverage reasonably equivalent. So the opportunity is to be pursued.We made known by way of this announcement that, where there cannot be agreement between the carriers for ongoing amps coverage—and remember Vodafone do not have an analog system; they only have a digital system—we will retain for ourselves the capacity to give further directions to existing carriers to mandate that there should be a service in those areas. We will also consider mandating roaming between parts of the GSM networks which are installed under those roll-out obligations if it is technically feasible and commercially appropriate as this may be a very practical way of reducing the cost to the three carriers given the expansion of GSM coverage.We recognise that there is an issue here. We are looking for a commonsense approach, a practical approach, utilising the emergence of the technologies. The member for Kalgoorlie (Mr Campbell) spoke eloquently about these matters. We are looking for some ways in which that can be accommodated within the proposals. I recommend that you look closely at the 5 February statement by the minister. There is an understanding of the issues, particularly in regional and remote Australia, surrounding the utility of the amps systems. As we stand here today we do not know, as the member for Richmond (Mr Anthony) mentioned, the extent to which we will see price movements in the low orbit satellites and the middle orbit satellites in the very near future. That may be a solution that will solve, in part, some of these problems.I assure honourable members that the minister, the department and I are fully aware of the challenges that the decision in 1991 delivers to this country. Whilst I can understand the approach taken by the member for Calare in his motion, the government could not, in reality, given its need to address the broad responsibilities it has to taxpayers, take a conscious decision which could cause it to enter into litigation which it would be sure to lose and which would have the consequence of an extremely large cost that it would need to bear. For those reasons, the government will not be supporting the motion for disallowance. Question put: That the motion (Mr Andren's ) be agreed to.18:18:00The House divided. (Mr Deputy Speaker—Hon. N.M. Dondas)45Albanese, A. Andren, P. J.Baldwin, P. J. Beddall, D. P.Bevis, A. R. Brown, R. J.Campbell, G. Crean, S. F.Crosio, J. A. Dargavel, S. J.Ellis, A. L. Evans, G. J.Evans, M. J. Ferguson, L. D. T.Ferguson, M. J. Filing, P. A.Fitzgibbon, J. A. Grace, E. L. *Griffin, A. P. *Hanson, P. L.Hatton, M. Hollis, C.Jenkins, H. A. Kerr, D. J. C.Latham, M. W. Lawrence, C. M.Lee, M. J.Macklin, J. L.McClelland, R. B. McLeay, L. B.McMullan, R. F. Melham, D.Morris, A. A. Morris, P. F.Mossfield, F. W. O'Connor, G. M.O'Keefe, N. P. Price, L. R.Quick, H. V. Sercombe, R. C. G. *Theophanous, A. C. Thomson, K. J.Willis, R. Wilton, G. S.Zammit, P. J.79Abbott, A. J. Andrew, J. N.Andrews, K. J. Anthony, L. J.Bailey, F. E. Barresi, P. A.Bartlett, K. J. Billson, B. F.Broadbent, R. E. Brough, M. T.Cadman, A. G. Cameron, E. H.Cameron, R. A. Causley, I. R.Charles, R. E. Cobb, M. R.Draper, P. Elson, K. S.Entsch, W. G. Evans, R. D. C.Forrest, J. A. Gallus, C. A.Gambaro, T. Gash, J.Georgiou, P. Grace, E. J.Hardgrave, G. D. Hawker, D. P. M.Hicks, N. J. *Hockey, J. B.Jeanes, S. B. Johnston, R.Jull, D. F. Katter, R. C.Kelly, D. M. Kelly, J. M.Kemp, D. A. Lieberman, L. S.Lindsay, P. J. Lloyd, J. E.Marek, P. McArthur, F. S. *McDougall, G. R. McGauran, P. J.McLachlan, I. M. Miles, C. G.Moore, J. C. Moylan, J. E.Mutch, S. B. Nairn, G. R.Nehl, G. B. Nelson, B. J.Neville, P. C. Nugent, P. E.Prosser, G. D. Pyne, C. M.Randall, D. J. Reid, N. B.Reith, P. K. Ronaldson, M. J. C.Ruddock, P. M. Scott, B. C.Sharp, J. R. Slipper, P. N. *Smith, A. C. Smith, W. L.Somlyay, A. M. Southcott, A. J.Sullivan, K. J. Taylor, W. L.Thomson, A. P. Truss, W. E.Tuckey, C. W. Vaile, M. A. J.Wakelin, B. H. West, A. G.Williams, D. R. Wooldridge, M. R. L.Worth, P. M.Beazley, K. C. Howard, J. W.Brereton, L. J. Fischer, T. A.Smith, S. F. Bishop, B. K.* denotes tellerQuestion so resolved in the negative.Bills2166r4182166Debate resumed.18:23:002166McMullan, Bob, MPMr McMULLAN5I4CanberraALP00—Let us remember what it is that we are dealing with, and I will then conclude my remarks on this piece of legislation, the Workplace Relations Amendment (Superannuation) Bill. What we are dealing with here is a bill which is innocuous in its appearance, but which, for those people who are affected, is very significantly detrimental.This bill says that superannuation is no longer an allowable matter in awards. In future, it may be that most people can enter into arrangements that will put their superannuation arrangements which are not covered by the superannuation guarantee legislation in certified agreements or other such arrangements. Not everybody will, and if time permits, I will come to that. Most evidently, tens of thousands of Australians will be affected. The figure might be more than 100,000, if you could get behind the figures and find all the individual cases. But it is on the record, uncontested, that tens of thousands of low paid Australians will be affected—people working part time and casually in the hospitality industry and the textile, clothing and footwear industry, earning less than $450 a month. These are not fat cats that we are talking about; these are usually second income earners, mainly women, in families, battling to make arrangements that will enable them to assist in funding their and their family's retirement.If this bill is passed, it will mean that those people will, from 1 July or from when this bill takes effect, lose their superannuation entitlement because they are not covered by the superannuation guarantee legislation, as they earn below the threshold.Imagine if what we were saying involved an Australian who owned a piece of property and we were going to pass a law and take it away. There would be an outcry. But all the people affected by this are people in weak bargaining positions, otherwise they would not be affected by it. They would be able to get their superannuation rights by virtue of their bargaining strength or under the superannuation guarantee legislation. Tens of thousands of Australians who currently have a legally enforceable entitlement and, each month, have money going into their superannuation account, will all lose.The government promised that no-one would be worse off. The government promised that no-one would lose their award entitlements. The government promised, `Your superannuation will be secure.' There are tens of thousands of Australians who, under this bill, will lose, and nobody wins.It is not one of those circumstances where you can say there is a cost benefit. Maybe the benefit to others is such that the loss to these people can be justified. But the problem is that, first and foremost, the losers are the weakest, not the strongest. This is not a case of redistribution by the government in order to try to assist people in the weaker position. This is a case of the weak losing.The government often talks about the terrible circumstances imposed in industrial relations by powerful unions and portrays themselves as the defenders against the strength of powerful unions. I can tell you that nobody in a strong union, nobody in a strong industrial relations bargaining position, is getting caught under this. It is often the people in very good, well-organised unions but which do not have industrial strength. That is why they are on such low incomes. It is why they have had the award as their underpinning. There has been substantial research done in these two industries where you do not find highly paid workers—the hospitality industries, the clothing, textile and footwear industries—and they are losing.What worries us is that this is part of the emerging pattern of Australian industrial relations. As regulation is pulled out, what inevitably happens—not just in industrial relations, but that is the matter that we are dealing with at the moment—is that those in the weakest positions lose. As the framework of regulation is withdrawn, as the potential for, in this instance, the Industrial Relations Commission to intervene in the interests of fairness on behalf of those who are not in strong bargaining positions is withdrawn, as we enter into free bargaining, those with the most bargaining power win and those in the weakest positions lose.If that is the world you are trying to achieve, you should vote for this bill. But if you think that Australians have a broader sense of fairness and there ought to be some protections in place for the weak, the powerless, those who cannot otherwise enforce their rights, you should oppose this bill. As I said, who is losing? Casual workers, part-time workers and, on all the evidence, predominantly women workers, in the main earning less than $450 a month.People are excluded from the superannuation guarantee legislation for other reasons, not just because they fall below the $450 per month threshold. Sometimes they lose because of age or the nature of their industrial classification. People can and do lose, or do not gain, under the superannuation guarantee legislation, which has been a great leveller, a great equaliser, in superannuation. It has done a lot of good, but it cannot solve all the problems. This bill is saying, `If you don't get caught under that act, too bad.'The other side is to say that superannuation is no longer an industrial relations matter which the Industrial Relations Commission is entitled to arbitrate. It cannot make an award about this. So in the circumstances where there is a dispute about superannuation, the Industrial Relations Commission will not be in the circumstance to resolve it. This is not a new matter; this is a matter we have been drawing to the government's attention since it first proposed to withdraw superannuation from allowable matters for awards in the first half of 1996.It is now nearly two years that we have been saying, why is it, given that the guarantee that was given in the pre-election policy called Better Pay for Better Work explicitly stated that existing award superannuation entitlements would be guaranteed minimum for all workplace agreements, that, under that circumstance, none of these 26,000 employees, or others in similar circumstances who entered into a workplace agreement, will be guaranteed any superannuation benefits at all? Many employees, especially those with little or no bargaining power, will suffer a manifest injustice.You cannot pass a law to say that there should not be any disputes about certain matters. Disputes arise when employers and employees cannot agree, and Australia has a traditional method of reconciling those disputes, that is, in the Industrial Relations Commission, and their findings can be and often are incorporated in awards.Where is the mischief that is caused by superannuation being an allowable award matter? Where is the crisis that is emerging? Where is the damage that is being suffered? Even if you read the arguments of the advocates, what they say is, `This ought to be done by agreement or ought to be left to the superannuation guarantee legislation.' Some people fall through the cracks in the superannuation guarantee legislation, excellent legislation that it is. I am glad the Liberal Party finally gave up its opposition to it and allowed it to continue. It is excellent legislation and a very important part of increasing savings in Australia and improving the equity of access to superannuation. It has transformed superannuation in this country.The government has other measures which are going to undermine it, make it worse, fragment it and deny access to lower income Australians, but they are not before us in this bill. The package of them will make superannuation less fair in this country. It will make low income Australians and low income Australian families less secure in their retirement. It will take away, for no benefit and for no advantage to any other Australians, the rights of these people. It is a very strange concept. It is not something that I thought anybody came into this parliament to do, that is, to say, `I have a clever idea. I'm going to pass a law to take away some of your rights.' But that is what we are doing here. We are doing it explicitly in breach of the commitment which the government made before the election in Better Pay for Better Work and in speeches by the Prime Minister (Mr Howard), then the Leader of the Opposition.If you had to sum up what Australian working people felt about superannuation, what they would say is, `Stop changing the system. There have been too many changes already. Let it remain as it is. It is complex, but we know what our entitlements are now. Stop changing the system.' But this government cannot stop fiddling. There will be other legislation to follow this legislation. I say: do not pass this legislation, which achieves no positive purpose. All it does is take away legitimate rights and aspirations from low income Australians, for no benefit, and it should accordingly be rejected.Debate (on motion by Mr Andrew) adjourned.Miscellaneous2169Motion (by Mr Andrew) agreed to:That the following bills be referred to the Main Committee for consideration:Workplace Relations Amendment (Superannuation) Bill 1997Student and Youth Assistance Amendment Bill 1998Bills2169r405Billsr424216910000DEPUTY SPEAKERMr DEPUTY SPEAKER (Hon. N.M. Dondas)—I have received a message from the Senate acquainting the House that the Senate has agreed to an extension of time for the presentation of the report of the parliamentary Joint Committee on Corporations and Securities on the provisions of the Company Law Review Bill 1997 and the Managed Investments Bill 1997 to 1 April 1998.Committees21692169216918:36:002169Thomson, Kelvin, MPMr KELVIN THOMSONUK6WillsALP00—On behalf of the parliamentary Joint Committee on Corporations and Securities, I present the following reports: Report on the Company Law Review Bill 1997 , and Report on the Managed Investment Bill 1997 .Ordered that the reports be printed.Bills2169r3532169Bill returned from the Senate with an amendment.Ordered that the amendment be taken into consideration forthwith.Senate's amendment—(1) Schedule 2, item 23, page 30 (table item 5), omit "bubble jet", substitute "ink-jet".18:37:002169Miles, Chris, MPMr MILESBI4BraddonLP10—I move:That the amendment be agreed to.I would like to make a few comments about the Taxation Laws Amendment Bill (No. 5) 1997 and the amendment made by the Senate. The amendment replaces the term `bubble jet' in proposed subsection 91C(1) with a reference to `ink-jet' in order to clarify the types of printers which will be considered as part of 7A goods. While the term `bubble jet' has become synonymous with the term `ink-jet' in describing a type of printer that operates by a stream of ink being shot onto paper, it has been brought to the government's attention that the term `bubble jet' may be associated with one particular manufacturer. The amendment merely clarifies that all types of printers which operate by a stream of ink will be part of 7A goods.18:38:002169Thomson, Kelvin, MPMr KELVIN THOMSONUK6WillsALP00—When this amendment to omit `bubble jet' and substitute `ink-jet' was circulated it did occur to me that it was 1 April but the Parliamentary Secretary (Cabinet) to the Prime Minister (Mr Miles) has delivered the case for it in all seriousness. This is nothing if not a cooperative opposition and if you want `ink-jet' you can have `ink-jet'. We will support the amendment.Question resolved in the affirmative.Bills2169r1042169Bill returned from the Senate with amendments.Ordered that the amendments be taken into consideration forthwith.Senate's amendments—(1) Clause 3, page 2 (line 5) to page 3 (line 11), omit "Chairman" (wherever occurring), substitute "Chair".(2) Clause 3, page 3 (after line 11), at the end of the clause, add:(2) For the purposes of this Act: (a) the Chair may be referred to as the Chair, Chairperson, Chairman or Chairwoman or by any other such term as the person occupying the office so chooses; and (b) the Deputy Chair may be referred to as the Deputy Chair, Deputy Chairperson, Deputy Chairman or Deputy Chairwoman or by any other such term as the person occupying the office so chooses.(3) If a person occupying either of the offices mentioned in subsection (2) does not make known his or her choice of term, the person may be referred to by whichever of the following terms that a person addressing that person considers appropriate, as the case requires: (a) Chair or Deputy Chair; (b) Chairperson or Deputy Chairperson; (c) Chairman or Deputy Chairman; (d) Chairwoman or Deputy Chairwoman.(3) Clause 6, page 4 (lines 8 to 26), omit "matters relating to industry and productivity" (wherever occurring), substitute "matters relating to industry, industry development and productivity".(4) Clause 6, page 4 (line 27) to page 5 (line 8), omit subclause (2), substitute:(2) In this section: matters relating to industry, industry development and productivity includes legislative or administrative action taken, or to be taken, by the Commonwealth, a State or a Territory that affects or might affect the productivity performance of industry, industry development, or the productivity performance of the economy as a whole.(5) Clause 8, page 5 (line 13) to page 6 (line 3), omit the clause, substitute: 8 General policy guidelines for Commission(1) In the performance of its functions, the Commission must have regard to the need: (a) to improve the overall economic performance of the economy through higher productivity in the public and private sectors in order to achieve higher living standards for all members of the Australian community; and (b) to reduce regulation of industry (including regulation by the States, Territories and local government) where this is consistent with the social and economic goals of the Commonwealth Government; and (c) to encourage the development and growth of Australian industries that are efficient in their use of resources, enterprising, innovative and internationally competitive; and (d) to facilitate adjustment to structural changes in the economy and the avoidance of social and economic hardships arising from those changes; and (e) to recognise the interests of industries, employees, consumers and the community, likely to be affected by measures proposed by the Commission; and (f) to increase employment, including in regional areas; and (g) to promote regional development; and (h) to recognise the progress made by Australia's trading partners in reducing both tariff and non-tariff barriers; and (i) to ensure that industry develops in a way that is ecologically sustainable; and (j) for Australia to meet its international obligations and commitments.(2) In the performance of its functions, the Commission must also have regard to any other matters notified to it in writing by the Minister.(6) Clause 8, page 6 (after line 3), at the end of the clause, add:(3) The Commission, in all reports on matters referred to it, must provide a variety of viewpoints and options representing alternative means of addressing the issues in the report. If the report relies on formal mathematical economic modelling, the Commission must either: (a) if practicable—utilise at least 2 different economic models, with the assumptions and results of those models made explicit in the report; or (b) if it is not practicable to utilise at least 2 different economic models, appoint, and report on the views of, an independent reference panel on the modelling.(7) Clause 10, page 6 (lines 17 to 20), omit subclause (2), substitute:(2) In the report, the Commission must report on matters relating to industry, industry development and productivity that have been referred to it, and the Commission may also report on industry and productivity performance generally.(8) Clause 10, page 6 (line 21), omit "Without limiting the generality of subsection (2), the", substitute "The". (9) Clause 11, page 8 (lines 25 to 28), omit subclause (4), substitute:(4) If the Minister refers a matter to the Commission for inquiry, the Commission may also make recommendations in the report on any matters relevant to the matter referred.(10) Clause 13, page 10 (lines 3 to 8), omit the clause, substitute:13 Notice of inquiry As soon as practicable after the Commission receives a reference to hold an inquiry, it must give reasonable notice in each State and internal Territory, by advertisement published in a newspaper circulating in the State or Territory, of its intention to hold the inquiry.(11) Clause 14, page 10 (lines 9 to 15), omit the clause, substitute:14 Notice of hearings Before the Commission begins to hold hearings for the purposes of an inquiry, it must give reasonable notice in each State and internal Territory, by advertisement published in a newspaper circulating in the State or Territory, of its intention to hold the hearings, the subject of the hearings and the time and place at which the first of the hearings is to be begun.(12) Clause 20, page 13 (lines 12 and 13), omit "matters relating to industry and productivity", substitute "matters relating to industry, industry development and productivity".(13) Part 4, Division 2, page 14 (line 2) to page 17 (line 11), omit the Division, substitute:Division 2—Competitive neutrality complaints21 Complaints to the Commission(1) A person may complain to the Commission that: (a) a particular Commonwealth Government business or business activity, or a business or business activity competing with a Commonwealth Government business or business activity, is not conducted in accordance with competitive neutrality arrangements that apply to it; or (b) a particular Commonwealth government or business activity, or a business or business activity competing with a Commonwealth government business or business activity, should be required to be conducted in accordance with competitive neutrality arrangements.(2) The complaint must be in writing.(3) The Commission is to give particular regard to ensuring the interests of users of the service are considered in relation to the complaint and may invite submissions from interested parties.(4) In addition to the obligations imposed on the functions of the Commission in section 8, the Commission must give particular consideration to the public interest requirements in clause 1 of the Competition Principles Agreement signed by the Commonwealth Government on 11 April 1995.(5) Competitive neutrality arrangements are the arrangements referred to by that name in the Commonwealth Government Competitive Neutrality Statement of June 1996 (the aim of which is to ensure that significant business activities do not enjoy net competitive advantages or disadvantages in comparison with their competitors by virtue of their public sector ownership).22 Discretion not to investigate complaints(1) The Commission may decide not to investigate a complaint, if in the opinion of the Commission: (a) the complaint is frivolous or vexatious or was not made in good faith; or (b) the complainant does not have sufficient interest in the subject matter of the complaint; or (c) an investigation is not warranted having regard to all the relevant circumstances.(2) If the Commission decides not to investigate a complaint it must inform the complainant of the decision.(14) Clause 27, page 18 (lines 4 to 12), omit "Chairman" (wherever occurring), substitute "Chair".(15) Clause 27, page 18 (line 12), at the end of subclause (2), add: ; or (c) the lack of a member who meets the requirements of subsection 30(2A), (2B) or (2C) for a period of not more than 4 months.(16) Clause 28, page 18 (line 17), at the end of the clause, add:(3) At least one Commissioner must have extensive skills and experience in applying the principles of ecologically sustainable development and environmental conservation.(4) At least one Commissioner must have extensive skills and experience in dealing with the social effects of economic adjustment and social welfare service delivery.(5) At least one Commissioner must have extensive skills and experience acquired in working in Australian industry. (17) Clause 29, page 18 (line 19), omit "Chairman", substitute "Chair".(18) Clause 30, page 18 (line 22), omit "Chairman", substitute "Chair".(19) Clause 30, page 18 (after line 24), after subclause (2), insert:(2A) At least one member must have extensive skills and experience in matters relating to the principles of ecologically sustainable development and environmental conservation.(2B) At least one member must have extensive skills and experience in matters relating to the social effects of economic adjustment and social welfare service delivery.(2C) At least one member must have extensive skills and experience acquired in working in Australian industry.(20) Clause 33, page 20 (lines 1 to 3), omit "Chairman" (wherever occurring), substitute "Chair".(21) Clause 34, page 20 (line 5), omit "Chairman", substitute "Chair".(22) Clause 35, page 20 (line 8), omit "Chairman", substitute "Minister".(23) Clause 35, page 20 (lines 7 to 20), omit "Chairman" (wherever occurring), substitute "Chair".(24) Clause 36, page 20 (line 21) to page 21 (line 25), omit "Chairman" (wherever occurring), substitute "Chair".(25) Clause 42, page 26 (lines 2 to 4), omit "Chairman" (wherever occurring), substitute "Chair".(26) Clause 43, page 26 (lines 5 to 17), omit "Chairman" (wherever occurring), substitute "Chair".(27) Clause 43, page 26 (lines 5 to 17), omit the clause, substitute:43 Meetings of Commission(1) The Chair is to convene such meetings of the Commission he or she thinks necessary for the efficient performance of the functions of the Commission.(2) Meetings are to be held at such places as the Chair determines.(3) The Chair must preside at all meetings.(4) The Chair may give directions regarding the procedure to be followed at or in connection with a meeting.(5) At a meeting: (a) the Chair and 3 other Commissioners form a quorum; and (b) questions must be decided by a majority of votes of the Commissioners present and voting; and (c) the Chair has a deliberative vote and, if necessary, also has a casting vote.(6) The Chair may permit a person to participate in, or a Commissioner to form a part of a quorum at, a meeting by means of telephone, closed circuit television or any other method of communication.(7) A power of the Chair under subsection (1), (2), (4) or (6) must be exercised, so far as practicable, only after consultation with the Commissioners.(8) This section has effect subject to sections 44 and 45.(28) Clause 44, page 26 (line 18) to page 27 (line 14), omit "Chairman" (wherever occurring), substitute "Chair".(29) Clause 46, page 28 (lines 3 to 7), omit "Chairman" (wherever occurring), substitute "Chair".(30) Clause 46, page 28 (line 5), omit "Chairman's", substitute "Chair's".(31) Clause 47, page 28 (line 8) to page 29 (line 7), omit "Chairman" (wherever occurring), substitute "Chair".(32) Clause 48, page 30 (line 7), omit "Chairman", substitute "Chair".(33) Clause 49, page 30 (lines 10 to 17), omit "Chairman" (wherever occurring), substitute "Chair".(34) Clause 49, page 30 (after line 13), after subclause (1), insert:(1AA) In selecting consultants and in its annual reporting on the engagement of consultants, the Commission must follow the Commonwealth's best practice standards.(35) Clause 49, page 30 (after line 13), after subclause (1), insert:(1A) The Chair must ensure that the Commonwealth's best practice standards are used in selecting consultants and in public reporting on their engagement.(1B) If the estimated value of a consultancy exceeds the amount prescribed by the regulations, the Chair must ensure that an open, competitive tendering process is used in selecting the consultant or consultants.(36) Clause 49, page 30 (line 16), at the beginning of subclause (3), insert "Subject to any commitments under any award or employment agreement,". (37) Clause 52, page 32 (line 19), omit "Chairman", substitute "Chair".(38) Clause 53, page 33 (lines 6 to 23), omit "Chairman" (wherever occurring), substitute "Chair".(39) Clause 54, page 33 (line 27), omit "Chairman", substitute "Chair".18:39:002173Miles, Chris, MPMr MILESBI4BraddonLP10—I move:That the amendments be agreed to.The Productivity Commission Bill 1996 was passed by the Senate on Monday, 30 March 1998 after the Senate had made a relatively large number of amendments. In particular, amendments have been made to the functions of the commission provisions, clause 6; the general policy guidelines for the commission, clause 8; the commissioner appointment provisions, clause 30; the meetings of the commission provisions, clause 43; and the engagement of the consultants provision, clause 49. While some of the amendments are significant, the government considers that overall the amendments do not affect the integrity of the bill. Hence, the government accepts the Senate's amendments.Parliamentary consideration of the bill has been both slow and difficult. The government is keen to complete the process so that the commission can settle down and focus on promoting policies at both the government and business levels to improve the competitiveness and dynamism of the Australian industry. I commend the bill to the House.18:40:002173Thomson, Kelvin, MPMr KELVIN THOMSONUK6WillsALP00—We will not be opposing the amendments which have been put forward, which strike us as neither improving nor diminishing the legislation or the operations of the Productivity Commission generally. We want to place on the record that the opposition has not seen the Productivity Commission as the most appropriate vehicle for conducting industry policy. Indeed, a resolution was carried at the Labor Party National Conference in Hobart in January of this year to the effect that a Labor government would abolish the Productivity Commission. That was certainly a resolution that I was happy to support.Applying the Productivity Commission's own yardstick to these matters, it takes the view that any industries which are not world's best practice and are not seen to be efficient, effective and productive ought to be put out to pasture. In recent times, the Productivity Commission has delivered reports on the future of the motor vehicle industry and the textiles, clothing and footwear industry. Those reports have been rejected by the government. They have been rejected by the government because the Labor opposition, employers, unions and state governments mounted a concerted campaign against those recommendations, which were out of step with the need for Australia to have a modern manufacturing industry.Those recommendations would have led to the demise of the motor vehicle industry and the textiles, clothing and footwear industries in this country, with the loss of many jobs and to some extent the loss of national sovereignty—our capacity to produce the things which sustain us and make us prosper. Those recommendations were of very little value. The Howard government—under sustained pressure, let me say—decided to reject those recommendations.If the best that the Productivity Commission can come up with is recommendations which get rejected, it does not seem to us that it has much of a future. That is Labor's view concerning the Productivity Commission. Having said those things, as I said, these amendments are not in and of themselves controversial and, therefore, we will not be opposing them.Question resolved in the affirmative.Bills2173r3062173Bill returned from the Senate with amendments.Ordered that the amendments be taken into consideration at the next sitting.Bills2174r3462174Bill returned from the Senate with amendments.Ordered that the amendments be taken into consideration forthwith.Senate's amendments—(1) Schedule 1, item 6, page 8 (line 11), omit "notify the person", substitute "by notice in writing given to the person, inform the person".(2) Schedule 1, item 6, page 8 (after line 16), after subsection (2), insert:(2A) A notice under subsection (2) must inform the person to whom it is given of the effect of failure by the person to comply with the requirement set out in the notice.(3) Schedule 1, item 6, page 11 (after line 18), after subsection (3), insert:Meaning of satisfactory progress(3A) In forming an opinion about whether a person is making satisfactory progress for the purpose of paragraph (1)(d), the Secretary is to have regard to the guidelines.(3B) The Minister, by determination in writing: (a) is to set guidelines for the exercise of the Secretary's discretion under subsection (3A); and (b) may revoke or vary those guidelines.(3C) Guidelines made for the purpose of subsection (3A) are disallowable instruments.(4) Schedule 1, item 6, page 12 (line 9), after "person" (first occurring), insert "in writing".(5) Schedule 1, item 6, page 12 (line 12), at the end of subsection (1), add ", being a period of not less than 14 days".(6) Schedule 1, item 6, page 13 (after line 27), after paragraph (g), insert:(ga) the place of work is not accessible by public transport services and the person does not have access to alternative transport facilities and could not reasonably be expected to travel to the place of work; or(7) Schedule 1, item 6, page 13 (after line 29), after paragraph (h), insert:(ha) the work requires the person to move from a home in one place to a home in another place; or (8) Schedule 1, item 6, page 15 (line 9), at the end of subsection (1), add:; or (e) the program of work requires the person to move from a home in one place to a home in another place.(9) Schedule 1, item 6, page 16 (lines 10 to 15), omit all words after "(as the case requires)", substitute "unless the Secretary is satisfied that the person has not attempted in good faith and to the best of his or her ability to comply with the requirement.".(10) Schedule 1, item 6, page 18 (line 24), after "notice", insert ", being a period of not less than 14 days".(11) Schedule 1, item 6, page 19 (lines 7 to 14), omit subsection (3), substitute:What are reasonable steps(3) For the purposes of paragraph (1)(d), a person takes reasonable steps to comply with a requirement under subsection (1) unless the Secretary is satisfied that the person has not attempted in good faith and to the best of his or her ability to comply with the requirement.(12) Schedule 1, item 6, page 26 (after line 3), after subsection (1), insert:Meaning of special circumstances(1A) In making a decision under subsection (1), the Secretary is to have regard to the guidelines.(1B) The Minister, by determination in writing: (a) is to set guidelines for the exercise of the Secretary's discretion under subsection (1A); and (b) may revoke or vary those guidelines.(1C) Guidelines made for the purpose of subsection (1A) are disallowable instruments.(13) Schedule 1, item 6, page 28 (line 27) to page 29 (line 4), omit subsection (2), substitute:What are reasonable steps(2) For the purposes of paragraph (1)(b), a person is taking reasonable steps to comply with the terms of a Youth Allowance Activity Agreement unless the Secretary is satisfied that the person has not attempted in good faith and to the best of his or her ability to comply with the requirement.(14) Schedule 1, item 6, page 29 (line 25), omit "notice of", substitute "a notice in writing of".(15) Schedule 1, item 6, page 29 (line 27), after "times", insert ", being places and times which are reasonable in all the circumstances,". (16) Schedule 1, item 6, page 29 (line 28), at the end of subsection (4), add:; and (c) the effect of failure by the person to comply with the requirement set out in the notice.(17) Schedule 1, item 6, page 32 (line 21), at the end of subsection (7), add:; or (e) the program of work requires the person to move from a home in one place to a home in another place.(18) Schedule 1, item 6, page 52 (after line 29), after subsection 550C(1), insert:(1A) A notice under subsection (1) must contain reasons why the activity test non-payment period applies to the person.(19) Schedule 1, item 6, page 60 (line 22), omit "informs the person that the person is required", substitute "gives the person a written notice stating that the person is required, within a period stated in the notice, being a period of not less than 14 days,".(20) Schedule 1, item 6, page 61 (line 22), after "notice,", insert "being a period of not less than 14 days,".(21) Schedule 1, item 6, page 62 (lines 7 to 14), omit subsection (3), substitute:What are reasonable steps(3) For the purposes of paragraph (1)(f), a person takes reasonable steps to comply with a requirement under subsection (1) unless the Secretary is satisfied that the person has not attempted in good faith and to the best of his or her ability to comply with the requirement.(22) Schedule 1, item 6, page 97 (line 20), at the end of subsection (3), add: ; and (f) must state the effect of failure by the person to comply with the requirement set out in the notice.(23) Schedule 1, item 6, page 97 (line 26), omit "7 days", substitute "14 days".(24) Schedule 1, item 6, page 99 (line 21), at the end of subsection (2), add:; and (f) must state the effect of failure by the person to comply with the requirement set out in the notice.(25) Schedule 2, item 8, page 124 (line 26), at the end of subsection (4), add "This age will be progressively reduced over time.".Motion (by Mr Miles) proposed:That the amendments be agreed to.18:46:002175Macklin, Jenny, MPMs MACKLINPG6JagajagaALP00—I am pleased to be here tonight to see the government agree to these amendments that have come from the Senate. These are very important amendments that have been made to the Social Security Legislation Amendment (Youth Allowance) Bill 1997 which will see significant improvements made to the youth allowance.I am sorry to say that the most important amendments moved by Labor in the Senate were rejected by this government. Those amendments were to maintain the age of independence for unemployed young people at 18. Young people will now be treated as dependent on their parents until they reach the age of 21. This is a very retrograde step for young people, who are trying to make the best of it out there in a very difficult employment market and finding it very hard to get a job. They are now being told by this government that, if their parents earn more than $23,500, their unemployment benefits will be reduced. This will see significant disruptions emerge in families.But, on the positive side, there are some improvements in this legislation as a result of the amendments that we are now considering. As I said, it is pleasing that the government has decided to accept them. We had a series of provisions in the bill when it was before the House and before the Senate that would have seen unemployed people and students face a whole range of different notification provisions. Anyone having had anything to do with the Department of Social Security would know how important it is to have clear requirements rather than rules saying in one instance that you could be notified in writing and in another that you could be notified orally. Some of these rules required seven days, others 14 days. Frankly, it was a mess. As a result of the amendments moved by the opposition, this has now been cleaned up. People will now have notifications sent out in writing and be given 14 days notice. That is a significant improvement.Another amendment that is also very important and which we on the Labor side are very pleased about is that young people who are unemployed and under the age of 18 will now be able to receive unemployment benefits—if they are willing and able to partici pate in case management. We did not want to see a situation where young people who, for whatever reason, would not or could not go back to school found themselves without any means of support. It is very significant that the government has decided to accept this amendment, to ensure that young people under the age of 18 who are unemployed and for whatever reason cannot go back to school will in fact be helped to get work. That is the critical issue: they want to work. They need to be helped to get work and not be left with absolutely nothing—which was, of course, the original intention of the government.The Labor opposition also moved an amendment in relation to the age of independence for students. We moved, and got a commitment from the Senate, that the independence age for students should be progressively reduced from 25 over time. The age of 25 for students is unrealistic and it is a commitment that I know students will be very pleased to see. There is also a very important change to the rules about work attachment when determining whether or not a young person is independent. The government originally said that a young person had to have worked for 18 months since leaving school, and to have earned 50 per cent of average weekly earnings in that period. That was a completely unrealistic expectation to put on young people, given the job opportunities that are out there and the wages that are paid to young people these days. What this amendment does is soften the criterion so that a person now needs to have earned the lower amount, represented by 75 per cent of the maximum Commonwealth training award. (Extension of time granted)These changes are very significant and important and, as I said, I am very pleased that the government has seen fit to make these amendments. Most unfortunately, the most significant amendment was rejected by the government. It was about the issue of the age of independence for young unemployed people. It is not the case that families with incomes between $23,500 and $42,000 are well off, as the Minister for Social Security (Senator Newman) likes to say. They are not well off and families with an income of $35,000, with young unemployed adults aged between 18 and 20 in them, will, from 1 July, be $55 a week worse off. Young unemployed people will find themselves $55 a week shorter in their unemployment benefits and having to front up to mum and dad, who do not have a high family income, to get the money out of them.Not surprisingly, parents of adults expect those young people to be out there supporting themselves—out there in the work force, trying to make the best of it and trying to earn their own living. The reason we pay unemployment benefits is that these young people cannot find a job.As we know, this government has not moved youth unemployment rates at all. They are stuck at 26 per cent, and this measure is not going to do anything whatsoever to improve youth unemployment. All it is going to do is make families worse off, make family relationships more difficult and make life for young unemployed people that much more difficult.It is a measure which the government should reconsider. We would call upon them to come back into the parliament as soon as possible to reduce the age of independence for young unemployed people to recognise that these people are independent and that they do not live in families that can afford to see their family incomes reduced by anything from $55 to over $80 a week. That is just putting the burden of unemployment on to low and middle income families. That is what this government is all about with this measure that we are debating again tonight.Question resolved in the affirmative.Business21762176Motion (by Mr Miles)—by leave—agreed to:That the following orders of the day, government business, be discharged:CSIRO—Report—Motion to take note of paper: Resumption of debate.Public Sector Superannuation Scheme—Report—Motion to take note of paper: Resumption of debate. Commonwealth Superannuation Scheme—Report—Motion to take note of paper: Resumption of debate.Genetic Manipulation Advisory Committee—Report—Motion to take note of paper: Resumption of debate.Royal Australian Mint—Report—Motion to take note of paper: Resumption of debate.Reserve Bank of Australia—Equal Employment Opportunity Report—Motion to take note of paper: Resumption of debate.Australian Institute of Family Studies—Report—Motion to take note of paper: Resumption of debate.Australian Maritime Safety Authority—Report—Motion to take note of paper: Resumption of debate.Advance to the Minister for Finance, September 1997—Papers—Motion to take note of papers: Resumption of debate.Australian Statistics Advisory Council—Report—Motion to take note of paper: Resumption of debate.Superannuation Complaints Tribunal—Report—Motion to take note of paper: Resumption of debate.Insurance and Superannuation Commission—Report—Motion to take note of paper: Resumption of debate.Special Broadcasting Service Corporation—Report—Motion to take note of paper: Resumption of debate.National Gallery of Australia—Report—Motion to take note of paper: Resumption of debate.National Museum of Australia—Report—Motion to take note of paper: Resumption of debate.National Science and Technology Centre—Report—Motion to take note of paper: Resumption of debate.Department of Communications and the Arts—Report—Motion to take note of paper: Resumption of debate.Australian Telecommunications Authority—Report—Motion to take note of paper: Resumption of debate.Agreement between Australia and the International Bureau of the World Intellectual Property Organisation on the Australian Patent Office—Motion to take note of paper: Resumption of debate.South Pacific Forum—Ministerial statement—Motion to take note of paper: Resumption of debate.Judge Advocate General—Report—Motion to take note of paper: Resumption of debate. Social Security Appeals Tribunal—Report—Motion to take note of paper: Resumption of debate.Advance to the Minister for Finance, August 1997—Papers—Motion to take note of papers: Resumption of debate.Agreement between Australia and Malaysia on trade and economic cooperation—Motion to take note of paper: Resumption of debate.Industry, Science and Technology—Standing Committee—Report on fair trading—Government response—Ministerial statement—Motion to take note of paper: Resumption of debate.Defence Reform Program—Ministerial statement and papers—Motion to take note of papers: Resumption of debate.Public Accounts—Joint Committee—Financial reporting of the Commonwealth—Report—Government response—Motion to take note of paper: resumption of debate.Airservices Australia—Corporate Plan—Motion to take note of paper: Resumption of debate.Industry Commission—Report No. 59—Motion to take note of paper: Resumption of debate.Treaties—Joint Standing Committee—Report—Restrictions on the use of blinding laser weapons and landmines—Government response—Motion to take note of paper: Resumption of debate.Final Budget outcome 1996-97—Motion to take note of paper: Resumption of debate.Poultry Industry Assistance Act—Report—Motion to take note of paper: Resumption of debate.Reform of the Australian financial system—Paper—Motion to take note of paper: Resumption of debate.Aviation safety regulation—Ministerial statement—Motion to take note of paper: Resumption of debate.Prime Minister—Visit to the United Kingdom and the United States of America—Ministerial statement—Motion to take note of paper: Resumption of debate.Industry Commission—Report No. 52—Motion to take note of paper: Resumption of debate.Industry Commission—Report No. 54—Motion to take note of paper: Resumption of debate.Industry Commission—Report No. 56—Motion to take note of paper: Resumption of debate.Communications, Transport and Microeconomic Reform—Standing Committee—Report on inquiry into Australia Post: Rural and remote letter delivery service—Government response—Motion to take note of paper: Resumption of debate. Public Sector Superannuation Scheme and Commonwealth Superannuation Scheme—Report—Motion to take note of paper: Resumption of debate.Military Superannuation and Benefits Scheme and Defence Force Retirement and Death Benefits Scheme—Report—Motion to take note of paper: Resumption of debate.Industry Commission—Report No. 58—Motion to take note of paper: Resumption of debate.Australasian Police Ministers' Council—Report—Motion to take note of paper: Resumption of debate.Financing Jervis Bay Territory—Government response and explanatory note—Motion to take note of papers: Resumption of debate.Convention on the elimination of all forms of discrimination against women—Paper—Motion to take note of paper: Resumption of debate.Science and Technology Budget Statement 1997-98—Report—Motion to take note of paper: Resumption of debate.Australian Science, Technology and Engineering Council—Report—Motion to take note of paper: Resumption of debate.Separation of Aboriginal and Torres Strait Islander children from their families—National Inquiry—Report—Motion to take note of paper: Resumption of debate.Allegations of paedophile activity within the Foreign Affairs portfolio—Papers—Motion to take note of papers: Resumption of debate.Prime Minister—Visit to Singapore and China—Ministerial statement—Motion to take note of paper: Resumption of debate.Industry Commission—Report No. 57—Motion to take note of paper: Resumption of debate.Nuclear Safety Bureau—37th Quarterly Report—Motion to take note of paper: Resumption of debate.Northern Territory Legislative Assembly—Sessional Committee on Constitutional Development—Report—Motion to take note of paper: Resumption of debate.Nursing Home Standards Review Panels—Reports—Motion to take note of paper: Resumption of debate.Small business—Ministerial statement—Motion to take note of paper: Resumption of debate.Black Hawk helicopter accident—Ministerial statement and paper—Motion to take note of papers: Resumption of debate.Advance to the Minister for Finance, November and December 1996 and January 1997—Papers— Motion to take note of papers: Resumption of debate.Oceans policy—Ministerial statement—Motion to take note of paper: Resumption of debate.Foreign Investment Review Board—Report for 1995-96—Motion to take note of paper: Resumption of debate.Federal Race Discrimination Commissioner—Report—Motion to take note of paper: Resumption of debate.Mid-Year economic and fiscal outlook 1996-97—Motion to take note of paper: Resumption of debate.Tax expenditures statement 1995-96—Motion to take note of paper: Resumption of debate.Committee on Darwin—Report—Government response and Statement—Motion to take note of papers: Resumption of debate.National Rail Corporation Ltd—Report—Motion to take note of paper: Resumption of debate.Transport, Communications, and Infrastructure—Standing Committee—Report on ship safety—Government response—Motion to take note of paper: Resumption of debate.Community Affairs—Standing Committee—Report on migrant access and equity—Government response—Motion to take note of paper: Resumption of debate.Department of Immigration and Multicultural Affairs—Access and equity report for 1996—Motion to take note of paper: Resumption of debate.APEC leaders meeting—Ministerial statement—Motion to take note of paper: Resumption of debate.Australian Parliamentary Delegation to the 96th Inter-Parliamentary Union Conference, Beijing, and bilateral visits to Vietnam, Hong Kong and the Philippines—Report—Motion to take note of paper: Resumption of debate.Australian Sports Drug Agency—Operational plan 1996-97—Motion to take note of paper: Resumption of debate.Safety Review Committee—Report for 1995-96—Motion to take note of paper: Resumption of debate.Nuclear Safety Bureau—32nd Quarterly Report—Motion to take note of paper: Resumption of debate.Nuclear Safety Bureau—33rd Quarterly Report—Motion to take note of paper: Resumption of debate.Nuclear Safety Bureau—34th Quarterly Report—Motion to take note of paper: Resumption of debate. Nuclear Safety Bureau—35th Quarterly Report—Motion to take note of paper: Resumption of debate.Industry Commission—Report for 1995-96—Motion to take note of paper: Resumption of debate.Department of Health and Family Services—Report—Motion to take note of paper: Resumption of debate.Defence Report for 1995-96—Motion to take note of paper: Resumption of debate.Great Barrier Reef Marine Park Authority—Report—Motion to take note of paper: Resumption of debate.Department of the Prime Minister and Cabinet—Report for 1995-96—Motion to take note of paper: Resumption of debate.ANL Limited—Report for 1994-95—Motion to take note of paper: Resumption of debate.Reform of the treaty making process—Ministerial statement—Motion to take note of paper: Resumption of debate.2179Motion (by Mr Miles)—by leave—agreed to:That Main Committee orders of the day Nos 6 to 10, government business, and orders of the day Nos 3 to 14, committee and delegation reports, be returned to the House.217918:55:002179Miles, Chris, MPMr MILESBI4BraddonLP10—I move:That those orders of the day returned to the House in accordance with the resolution agreed to this day be discharged.I do not propose to read the titles from the list which has been circulated to members in the chamber. Details will be recorded in the Votes and Proceedings .Question resolved in the affirmative.Bills2179r4002179Bill returned from Main Committee without having been fully considered; certified copy presented.Ordered that the bill be taken into consideration forthwith.Unresolved question—That the bill be now read a second time.18:56:002179Miles, Chris, MPMr MILESBI4BraddonLP10—in reply—I would just like to make some summing up comments on the debate which has been held on this matter. I would like to express the government's appreciation for the report tabled on 12 March by the Joint Committee of Public Accounts and Audit, report No. 356, entitled An advisory report on the Tax Law Improvement Bill (No. 2) 1997 . It is the fifth by the committee on the rewriting of the income tax law, and the fourth which specifically covers the tax law improvement project. The joint committee's ongoing involvement in the review of the work of the project has been important in ensuring the quality of the rewrite and public confidence in the rewrite process.The government is accepting all of the committee's recommendations for technical changes to the bill. The government has also made changes to the explanatory memorandum along the lines recommended by the committee. There is a table in the supplementary explanatory memorandum setting out these changes to the bill and explanatory memorandum. The government is considering other recommendations in report No. 356 that go to wider policy matters and will provide responses on those other matters later on.I would like to underline the importance the government attaches to the work of the tax law improvement project and our desire that this bill—the third instalment of the rewrite—be passed by 30 June so that it can start to apply for the 1998-99 income year. The joint committee supports this commencement date.The main feature of the bill is the rewritten capital gains tax rules. They are much clearer than the existing law and contain positive changes that taxpayers should be able to benefit from as early as possible. The bill also contains rewrites of the provisions about intellectual property, company bad debts, horticultural plants, environmental expenditure, the averaging of primary producers' tax liabilities and evening out the effects of the above average income of some professionals. These rewrites also include some minor policy changes which will help to make the law simpler, clearer and less burdensome for the taxpayers.I would like to underline the thanks of the government to the people who have been working on this Tax Law Improvement Bill. It has been going on for quite a substantial amount of time, and a lot of work is going into this. I am sure it will make it much more readable and understandable to those people who need to read it. I commend the bill to the House.Question resolved in the affirmative.Bill read a second time.2180Bill—by leave—taken as a whole.Amendments (by Mr Miles)—by leave—proposed:(1) Clause 2, page 1, lines 10 and 11, omit subclause (2), substitute: (2) Schedule 2 (except item 3 of it) commences immediately after the commencement of Schedule 1. (3) Schedule 3 commences immediately after the commencement of Schedule 2 (except item 4 of it). (4) Each of Schedules 4 to 8 commences immediately after the commencement of the immediately preceding Schedule. (5) Item 3 of Schedule 2 commences immediately after the commencement of Schedule 8.(2) Schedule 1, item 1, page 5 (examples in subsection (3)), omit "• hire purchase".(3) Schedule 1, item 1, page 5 (examples in subsection (3)), omit "• rolling-over superannuation".(4) Schedule 1, item 1, page 6 (section 100-15), omit "for the income year".(5) Schedule 1, item 1, page 7 (lines 13 and 14), omit "current year or a later income year", substitute "current or another income year".(5a) Schedule 1, item 1, page 8 (before line 20), insert "• your home;".(6) Schedule 1, item 1, page 9 (after line 24), after section 100-30, insert:100-33 Can there be a roll-over? (1) Roll-overs allow you to defer or disregard a capital gain or loss from a CGT event. They apply in specific situations. Some require a choice (for example, where an asset is compulsorily acquired: see Subdivision 124-B) and some are automatic (for example, where an asset is transferred because of marriage breakdown: see Subdivision 126-A). (2) There are 2 types of roll-over: 1. a replacement-asset roll-over allows you to defer a capital gain or loss from one CGT event until a later CGT event happens where a CGT asset is replaced with another one;2. a same-asset roll-over allows you to disregard a capital gain or loss from a CGT event where the same CGT asset is involved. Note: The replacement-asset roll-overs are listed in section 112-115, and the same-asset roll-overs are listed in section 112-150.(6a) Schedule 1, item 1, page 14 (line 9), after "capital loss.", insert "(Amounts otherwise included in your assessable income do not form part of a net capital gain.)".(7) Schedule 1, item 1, page 17 (after line 10), at the end of section 102-15, add: Note: For applying a net capital loss for the 1997-98 income year or an earlier income year: see section 102-15 of the Income Tax (Transitional Provisions) Act 1997 .(7a) Schedule 1, item 1, page 17 (after line 14), at the end of section 102-20, add: Note 2: These Divisions of Part IIIA of the Income Tax Assessment Act 1936 continue to have effect for the purposes of working out capital gains and capital losses under this Part and Part 3-3: Division 17A (about roll-over relief on certain disposals of assets of small businesses); Division 17B (about disposal of small business assets where the proceeds are used for retirement); Division 19A (about transfers of assets between companies under common ownership). See sections 160ZZPJA, 160ZZPZAA and 160ZZRAAAA of that Act.(8) Schedule 1, item 1, page 17 (after line 18), after section 102-22, insert:102-23 CGT event still happens even if gain or loss disregarded A *CGT event still happens even if: (a) it does not result in a *capital gain or *capital loss; or (b) a capital gain or capital loss from the event is disregarded. Example: Lindy sells a car. Section 118-5 says that any capital gain or loss from a CGT event happening to a car is disregarded. However, the sale is still an example of CGT event A1.(9) Schedule 1, item 1, page 17 (line 19) to page 18 (line 5), omit section 102-25, substitute:102-25 Order of application of CGT events (1) Work out if a *CGT event (except *CGT events D1 and H2) happens in your situation. If more than one event can happen, use the one that is the most specific to your situation. (2) However, there is an exception for *CGT event K5 (which depends on CGT event A1, C2 or E8 happening). In that case, CGT event K5 happens in addition to the other event. (3) If no *CGT event (except *CGT events D1 and H2) happens: (a) work out if CGT event D1 happens and use that event if it does; and (b) if it does not, work out if CGT event H2 happens and use that event if it does. Note: The full list of CGT events is in section 104-5.(10) Schedule 1, item 1, page 18 (after line 6), insert: Provisions of this Act are in normal text, The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 .[The next amendment is (12).](12) Schedule 1, item 1, page 19, at the end of the table, add:8A PDFIf it is a PDF at the end of an income year for which it has a net capital loss, it can apply the loss in a later income year only if it is a PDF throughout the last day of the later income year.section 195-259A PDFIf it becomes a PDF during an income year, it works out its net capital gain and net capital loss for the income year in a special way.section 195-3510Body that has ceased to be an STBNet capital losses made before cessation disregarded. Special rules apply in cessation year where net capital gain before cessation and net capital loss after cessation. section 24AX11A life assurance companySections 102-5 and 102-10 do not apply to the calculation of net capital gains and losses. Capital gains and losses are instead allocated to separate classes of income. section 116CD12A registered organisationSections 102-5 and 102-10 do not apply to the calculation of net capital gains and losses. Capital gains and losses are instead allocated to separate classes of income. section 116GB13A PDFSections 102-5 and 102-10 do not apply to the calculation of net capital gains and losses. Capital gains and losses are instead allocated to separate classes of income. Subdivision C of Division 10E of Part III 14A CFCIn calculating the CFC's attributable income, pre-1 July 1990 capital losses are disregarded section 409[The next amendment is (14).](14) Schedule 1, item 1, page 22 (after line 10), at the end of section 103-25, add: Note: This section is modified in calculating the attributable income of a CFC: see section 421 of the Income Tax Assessment Act 1936 .(15) Schedule 1, item 1, page 24 (table item dealing with CGT event B1), omit the item, substitute: B1 Use and enjoyment be fore title passes [See section 104-15]when use of CGT asset passescapital proceeds less asset's cost baseasset's reduced cost base less capital proceeds[The next amendment is (17).](17) Schedule 1, item 1, page 31 (line 5) to page 32 (line 2), omit subsection (2), substitute: (2) You dispose of a *CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. However, a change of ownership does not occur: (a) if you stop being the legal owner of the asset but continue to be its beneficial owner; or (b) merely because of a change of trustee.(18) Schedule 1, item 1, page 32 (line 5), omit "you stop owning the asset", substitute "the change of ownership occurs".(19) Schedule 1, item 1, page 32 (lines 24 and 25), omit paragraph (c).(20) Schedule 1, item 1, page 33 (after line 8), at the end of section 104-10, add: Note: You may be able to choose a roll-over if an asset is compulsorily acquired: see Subdivision 124-B. (7) CGT event A1 does not happen if the *disposal of the asset was done to provide or redeem a security.(21) Schedule 1, item 1, page 33 (lines 9 to 19), omit the headings and subsection (1), substitute:Subdivision 104-B—Use and enjoyment before title passes 104-15 Use and enjoyment before title passes: CGT event B1 (1) CGT event B1 happens if you enter into an agreement with another entity under which: (a) the right to the use and enjoyment of a *CGT asset you own passes to the other entity; and (b) title in the asset will or may pass to the other entity at the end of the agreement.(21a) Schedule 1, item 1, page 34 (after line 13), at the end of subsection (1), add: Note: This event can apply to part of a CGT asset: see section 108-5 (definition of CGT asset ).(22) Schedule 1, item 1, page 35 (line 2), omit "a *CGT asset you own ends by", substitute "your ownership of an intangible *CGT asset ends by the asset".(23) Schedule 1, item 1, page 36 (after line 7), at the end of section 104-25, add: Note 3: A capital gain or loss a company makes because shares in its 100% subsidiary are cancelled (an example of CGT event C2) on the liquidation of the subsidiary may be reduced if there was a roll-over for a CGT asset under Subdivision 126-B: see section 126-85.(24) Schedule 1, item 1, page 36 (after line 28), at the end of section 104-30, add: Note: This subsection is modified for the purpose of calculating the attributable income of a CFC: see section 418 of the Income Tax Assessment Act 1936 .(25) Schedule 1, item 1, page 38 (lines 2 to 6), omit subsection (5), substitute:(5) CGT event D1 does not happen if: (a) you created the right by borrowing money or obtaining credit from another entity; or (b) the right requires you to do something that is another *CGT event that happens to you; or (c) a company issues or allots *shares to you; or (d) the trustee of a unit trust issues units in the trust to you. (26) Schedule 1, item 1, page 38 (line 15), after "grant", insert ", renew or extend".(27) Schedule 1, item 1, page 38 (line 16), after "grant", insert ", renewal or extension".(28) Schedule 1, item 1, page 38 (line 17), after "grant", insert ", renew or extend".(29) Schedule 1, item 1, page 38 (line 25), after "grant", insert ", renewal or extension".(30) Schedule 1, item 1, page 39 (line 1), after "granted", insert ", renewed or extended".(31) Schedule 1, item 1, page 39 (line 17), after "*ordinary income", insert "or *statutory income".(32) Schedule 1, item 1, page 41 (lines 2 to 10), omit subsection (5), substitute:(5) CGT event E1 does not happen if: (a) you are the sole beneficiary of the trust and: (i) you are absolutely entitled to the asset as against the trustee (disregarding any legal disability); and (ii) the trust is not a unit trust; or (b) the trust is created by transferring the asset from another trust, and the beneficiaries and terms of both trusts are the same.(6) A *capital gain or *capital loss you make is disregarded if you *acquired the asset before 20 September 1985.(33) Schedule 1, item 1, page 41 (line 24) to page 42 (line 6), omit subsection (5), substitute:(5) CGT event E2 does not happen if: (a) you are the sole beneficiary of the trust and: (i) you are absolutely entitled to the asset as against the trustee (disregarding any legal disability); and (ii) the trust is not a unit trust; or (b) the trust is created by transferring the asset from another trust, and the beneficiaries and terms of both trusts are the same. Note: There is also an exception for employee share trusts: see section 130-90.(6) A *capital gain or *capital loss you make is disregarded if you *acquired the asset before 20 September 1985.(33a) Schedule 1, item 1, page 43 (lines 4 to 6), omit subsection (2), substitute:(2) In working out the non-assessable part, disregard any part of the payment that is: (a) *excluded exempt income; or (b) *exempt income subject to withholding tax; or (c) paid from an amount that has been assessed to the trustee.(34) Schedule 1, item 1, page 43 (line 10), after "*CGT event", insert "(except CGT event E4)".(35) Schedule 1, item 1, page 43 (lines 14 to 20), omit subsection (4), substitute:(4) You make a capital gain if the sum of the amounts of the non-assessable parts (adjusted by subsection (7)) of the payments made in the income year made by the trustee in respect of the unit or interest is more than its *cost base.(36) Schedule 1, item 1, page 43 (after line 27), at the end of subsection (6), add: Example: Mandy owns units in a unit trust that she bought on 1 July 1999 for $10 each. During the 1999-2000 income year the trustee makes 4 non-assessable payments of $0.50 per unit. If at the end of the income year Mandy's cost base for each unit (including indexation) would otherwise be $10.10, the payments require that it be reduced by $2, giving a new cost base of $8.10. If Mandy sells the units (CGT event A1) in the 2000-01 year for more than their cost base at that time, she will make a capital gain equal to the difference.(37) Schedule 1, item 1, page 44 (after line 13), at the end of subsection (7), add: Note 1: Deductions under Division 10C or 10D of Part III of the Income Tax Assessment Act 1936 (about capital works) are also relevant: see section 104-72 of the Income Tax (Transitional Provisions) Act 1997 . Note 2: In working out the cost base of the unit or interest, the non-assessable part does not exclude any part attributable to a deduction under Division 10C or 10D of Part III of the Income Tax Assessment Act 1936 (about capital works) if the payment was made before 18 December 1986: see section 104-70 of the Income Tax (Transitional Provisions) Act 1997 .(38) Schedule 1, item 1, page 45 (after line 5), at the end of subsection (4), add: Note: There is also an exception for employee share trusts: see section 130-90.(39) Schedule 1, item 1, page 45 (lines 24 and 25), omit "the beneficiary's right to receive *ordinary income, or part of it, from the trust", substitute "the beneficiary's right, or part of it, to receive *ordinary income or *statutory income from the trust".(40) Schedule 1, item 1, page 48 (lines 6 and 7), omit ", or you acquired it by assignment", substitute "and you did not acquire it by assignment".(41) Schedule 1, item 1, page 51 (lines 18 to 22), omit subsection (6), substitute:(6) A *capital gain you make is disregarded if you *acquired the *CGT asset that is the interest in the trust capital before 20 September 1985.(42) Schedule 1, item 1, page 53 (line 21) to page 54 (line 4), omit subsection (6), substitute:(6) A *capital loss you make is disregarded if you *acquired the *CGT asset that is the interest in the trust capital before 20 September 1985.(43) Schedule 1, item 1, page 59 (line 16), omit "the payment", substitute "some or all of the payment (the non-assessable part )".(44) Schedule 1, item 1, page 59 (line 21), omit "the payment", substitute "the non-assessable part".(45) Schedule 1, item 1, page 60 (line 1), omit "the payment", substitute "the non-assessable part".(46) Schedule 1, item 1, page 60 (line 3), omit "the payment", substitute "the non-assessable part".(47) Schedule 1, item 1, page 61 (line 20), omit "The", substitute "If you make the choice, the".(48) Schedule 1, item 1, page 63 (lines 23 to 28), omit subsection (5), substitute:Exceptions(5) CGT event H2 does not happen if: (a) the act, transaction or event is the borrowing of money or the obtaining of credit from another entity; or (b) the act, transaction or event requires you to do something that is another *CGT event that happens to you; or (c) a company issues or allots *shares to you; or (d) the trustee of a unit trust issues units in the trust to you.(49) Schedule 1, item 1, page 67 (after line 1), at the end of subsection (1), add: Note: If the roll-over was under section 160ZZO of the Income Tax Assessment Act 1936 , CGT event J1 does not happen if there would not have been a deemed disposal and re-acquisition under that Act: see section 104-175 of the Income Tax (Transitional Provisions) Act 1997 .(50) Schedule 1, item 1, page 67 (line 20), omit "*CGT asset", substitute "roll-over asset".(51) Schedule 1, item 1, page 68 (line 2), omit "*CGT asset", substitute "roll-over asset".[The next amendment is (53).](53) Schedule 1, item 1, page 71 (after line 28), at the end of subsection (1), add: Note: A net capital loss mentioned in subsection 160ZC(4A) of the Income Tax Assessment Act 1936 is also relevant: see section 104-210 of the Income Tax (Transitional Provisions) Act 1997 .(54) Schedule 1, item 1, page 74 (line 11), after "replaced", insert "under section 116-80".(55) Schedule 1, item 1, page 76 (lines 2 to 9), omit subsections (3) and (4).(56) Schedule 1, item 1, page 77 (after line 3), at the end of section 104-230, add:Exceptions(9) CGT event K6 does not happen if: (a) for a company referred to in subsection (2)—some of its *shares were listed for quotation in the official list of a stock exchange in Australia or a foreign country at the time of the other event and at all times in the period of 5 years before the time of the other event; or (b) for a trust referred to in subsection (2) that is a unit trust—some of its units were so listed, or were ordinarily available to the public for subscription or purchase, at the time of the other event and at all times in that period.(57) Schedule 1, item 1, page 82 (line 19), omit "owner of the asset", substitute "person who provided the security".(57a) Schedule 1, item 1, page 84 (after line 17), at the end of section 108-5, add: Note 2: A capital gain or loss from a CGT asset is disregarded if the asset was last acquired before 26 June 1992 and was not an asset for the purposes of Part IIIA of the Income Tax Assessment Act 1936 : see section 108-5 of the Income Tax Transitional Provisions Act 1997 .(58) Schedule 1, item 1, page 84 (line 21), omit "share of the asset", substitute "interest in the asset and as if each of them held that interest as a tenant in common".(59) Schedule 1, item 1, page 85 (line 16), omit "or" (last occurring).(60) Schedule 1, item 1, page 86 (line 13), omit "Division 118", substitute "section 118-10".(61) Schedule 1, item 1, page 86 (line 18), omit "Division 118", substitute "section 118-10".(62) Schedule 1, item 1, page 86 (line 23), omit "Division 118", substitute "section 118-10".(63) Schedule 1, item 1, page 86 (after line 29), at the end of section 108-15, add: Note 2: This section does not apply to a collectable you last acquired before 16 December 1995: see section 108-15 of the Income Tax (Transitional Provisions) Act 1997 .(64) Schedule 1, item 1, page 87 (line 25), omit "Subdivision 118-A", substitute "section 118-10".(65) Schedule 1, item 1, page 88 (line 12), omit "Division 118", substitute "section 118-10".(66) Schedule 1, item 1, page 93 (line 7), omit "This section does not apply", substitute "Subsections (2) and (3) do not apply".(67) Schedule 1, item 1, page 93 (after line 10), at the end of subsection (5), add: ; or (d) *plant to which Subdivision 124-K applies.(68) Schedule 1, item 1, page 93 (after line 22), after paragraph (c), add: ; or (d) *plant to which Subdivision 124-K applies.(69) Schedule 1, item 1, page 94 (at the end of the table), add: 4 *PlantSubdivision 124-K(70) Schedule 1, item 1, page 94 (before line 6), before the example, insert: Note: Roll-overs under sections 160ZWA, 160ZZF, 160ZZPE and 160ZWC of the Income Tax Assessment Act 1936 are also relevant: see section 108-75 of the Income Tax (Transitional Provisions) Act 1997 .(71) Schedule 1, item 1, page 99 (table item dealing with CGT event B1, 2nd column), omit "You enter into a hire purchase or similar agreement for a *CGT asset", substitute "You enter into an agreement to obtain the use and enjoyment of a *CGT asset".(72) Schedule 1, item 1, page 100 (at the end of the table), add: Note 1: For CGT events E1, E2 and E3, if the circumstances specified in the second column of the table happened to an asset before 12 January 1994, there may be no acquisition: see section 109-5 of the Income Tax Transitional Provisions Act 1997 . Note 2: The acquisition rule for CGT event E9 in the table does not apply to you as trustee if the agreement to create the trust was made before 12 noon on 12 January 1994: see section 109-5 of the Income Tax (Transitional Provisions) Act 1997 .(73) Schedule 1, item 1, page 103 (after table item 8), insert:8AThere is a same-asset roll-over for a CGT event that happens to a CGT asset (acquired on or after 20 September 1985) because the trust deed of a fund is changed and you are the fund that owns the asset after the CGT eventat the time of the CGT eventSubdivision 126-C(74) Schedule 1, item 1, page 104 (table item 13, 2nd column), omit "A lessee of land acquires", substitute "You (as a lessee of land) acquire".(75) Schedule 1, item 1, page 104 (table item 13, 3rd column), omit "the lessee", substitute "you".(76) Schedule 1, item 1, page 105 (at the end of the table), add:15You become an Australian resident and you owned a CGT asset that you acquired on or after 20 September 1985 and that did not have the necessary connection with Australiawhen you become an Australian residentsection 136-4016A trust of which you are trustee becomes a resident trust for CGT purposes and you owned a CGT asset that you acquired on or after 20 September 1985 and that did not have the necessary connection with Australiawhen the trust becomes a resident trust for CGT purposessection 136-4517There is a roll-over under Subdivision 126-B for a *CGT event and you are the company owning the roll-over asset just after the roll-over and you stop being a *100% subsidiary of another company in the *wholly-owned groupwhen you stopsection 104-175(77) Schedule 1, item 1, page 105 (lines 1 to 3), omit subsection (2).(78) Schedule 1, item 1, page 105 (after line 3), at the end of Division 109, add:109-60 Acquisition rules outside this Part and Part 3-3 This table sets out other acquisition rules outside this Part and Part 3-3. Provisions of the Income Tax Assessment Act 1936 are in bold .Other acquisition rulesItemIn these circumstancesThe asset is acquired at this time:See:1You stop holding an item as trading stockwhen you stopparagraph 70-110(b)2CGT event happens to Cocos (Keeling) Islands asset30 June 1991 section 24P 3Trust ceases to be a resident trust for CGT purposes and there is an attributable taxpayerwhen it ceases section 102AAZBA4CGT event happens to CGT asset in connection with the demutualisation of an insurance companyon the demutualisation resolution day section 121AS5CGT event happens to assets of NSW State Bankat the first taxing time section 121EN6You own shares in a company that stops being a PDFjust after it stops section 124ZR7You acquire a number of shares that results in you obtaining a 10% (threshold) interest in a SMEwhen you obtained the threshold interest section 128TI8CGT event happens to 30 June 1988 asset of complying superannuation fund, complying ADF or complying PST30 June 1988 section 3069A CGT asset of a CFC (that it owned on its commencing day)on the CFC's commencing day section 41110A CGT asset is owned by a tax exempt entity and it becomes taxableat the transition time section 57-25 of Schedule 2D(79) Schedule 1, item 1, page 108 (lines 2 to 5), omit "It also includes indexation of those elements (except the third one) if you acquired the asset at least 12 months before a *CGT event happens in relation to the asset", substitute "It can also include indexation of those elements (except the third one)".(80) Schedule 1, item 1, page 109 (lines 21 to 25), omit subsections (7) and (8), substitute: (7) Expenditure does not form part of the second or third element of the cost base to the extent that you have deducted or can deduct it. (8) Expenditure does not form part of any element of the cost base to the extent of any amount you have received as *recoupment of it, except so far as the amount is included in your assessable income.(81) Schedule 1, item 1, page 110 (lines 1 to 10), omit section 110-28, substitute:110-30 Cost base of partnership assets(1) Expenditure does not form part of the second or third element of the cost base for your interest in a *CGT asset of a partnership to the extent that you, or a partnership in which you are or were a partner, have deducted or can deduct it.(2) Expenditure does not form part of any element of the cost base for your interest in a *CGT asset of a partnership to the extent of any amount that you, or a partnership in which you are or were a partner, have received as *recoupment of it, except so far as the amount is included in your assessable income or the partnership's assessable income.(82) Schedule 1, item 1, page 110 (after line 19), at the end of subsection (2), add: Note: The requirement in subsection (2) that the professional advice be provided by a recognised tax adviser does not apply to expenditure incurred before 1 July 1989: see section 110-35 of the Income Tax (Transitional Provisions) Act 1997 . (83) Schedule 1, item 1, page 111 (lines 17 to 21), omit paragraph (b) and the note, substitute: (b) any amount that would have been so included apart from any of these (which provide relief from including a balancing charge in your assessable income): (i) section 42-285 or 42-290; or (ii) subsection 59(2A) or (2D) of the Income Tax Assessment Act 1936.(84) Schedule 1, item 1, page 112 (lines 8 to 10), omit subsection (6), substitute:(6) Expenditure does not form part of the reduced cost base to the extent of any amounts you have received as *recoupment of it. However, this rule does not apply to the extent that the amounts are included in your assessable income.(85) Schedule 1, item 1, page 112 (lines 18 to 21), omit paragraph (c), substitute: (c) you are entitled to a rebate of income tax under section 46 or 46A of the Income Tax Assessment Act 1936 (the dividend rebate ) on the part of the distribution that is a *dividend (the dividend amount ); and(86) Schedule 1, item 1, page 113 (lines 7 and 8), omit paragraph (b), substitute: (b) any amount that would have been so included apart from any of these (which provide relief from including a balancing charge in your assessable income): (i) section 42-285 or 42-290; or (ii) subsection 59(2A) or (2D) of the Income Tax Assessment Act 1936 ;(87) Schedule 1, item 1, page 114 (lines 5 to 8), omit paragraph (c), substitute: (c) the partnership is entitled to a rebate of income tax under section 46 or 46A of the Income Tax Assessment Act 1936 (the dividend rebate ) on the part of the distribution that is a *dividend (the dividend amount ); and(88) Schedule 1, item 1, page 116 (line 5), omit "event".(89) Schedule 1, item 1, page 116 (line 8), omit "event".(90) Schedule 1, item 1, page 116 (line 10), omit "rules ", substitute "modifications ".(91) Schedule 1, item 1, page 116 (after line 15), before section 112-20, insert:112-15 General rule for replacement modifications If a cost base modification replaces an element of the *cost base of a *CGT asset with an amount, this Part and Part 3-3 apply to you as if you had paid that amount. Example: An individual pays $10,000 to acquire an option. The individual dies and the option devolves to his legal person representative, who exercises the option. Section 134-1 applies to the legal personal representative as if the representative had paid $10,000 for the option.(91a) Schedule 1, item 1, page 116 (line 21), omit "some part", substitute "some or all".(92) Schedule 1, item 1, page 117 (table item 1, column 2), after "*ordinary income", insert "or *statutory income".(93) Schedule 1, item 1, page 118 (table item 5, 3rd column), after "company", add "and you did not pay or give anything for it".(94) Schedule 1, item 1, page 118 (table item 6, 3rd column), after "trust", add "and you did not pay or give anything for it".(95) Schedule 1, item 1, page 118 (before line 1), at the end of section 112-20, add: Note: Disregard subsections (2) and (3) for shares or units that you acquired before 16 August 1989: see section 112-20 of the Income Tax (Transitional Provisions) Act 1997 .(96) Schedule 1, item 1, page 119 (after line 23), after subsection (1), insert:Apportionment of expenditure in other elements (1A) If you incur expenditure and only part of it relates to another element of the *cost base or *reduced cost base of a *CGT asset, that element includes that part of the expenditure that is reasonably attributable to that element. (97) Schedule 1, item 1, page 120 (line 3), omit "*CGT event A1, B1, C1, E1, E2, E6, E7 or K3", substitute "a *CGT event".(97a) Schedule 1, item 1, page 121 (after line 6), at the end of section 112-35, add: Note: The first element of cost base is dealt with in subsection 110-30(2). The first element of reduced cost base is the same: see subsection 110-55(2).(98) Schedule 1, item 1, page 122, omit section 112-45, substitute:112-45 CGT eventsCGT eventsEvent numberIn this situation:Element affected:See section:E1A trust is created over a CGT assetFirst element of cost base and reduced cost base104-55E4A trustee makes a capital payment to you in relation to units or an interest in the trustThe total cost base and reduced cost base104-70F4A lessee receives payment for changing leaseThe total cost base104-125G1A company makes a capital payment to you in relation to your sharesThe total cost base and reduced cost base104-135G2There is a shift in share valuesThe total cost base and reduced cost base140-60 140-95G2There is a shift in share valuesFourth element of cost base and reduced cost base140-65G3A liquidator declares shares to be worthlessThe total cost base and reduced cost base104-145K1There is a partial realisation of an item of intellectual propertyThe total cost base104-205(99) Schedule 1, item 1, page 126 (before line 3), before section 112-90, insert:112-87 ResidencyResidencyItemIn this situation:Element affected:See section:1An individual or company becomes an Australian residentFirst element of cost base and reduced cost base136-402A trust becomes a resident trust for CGT purposesFirst element of cost base and reduced cost base136-45(100) Schedule 1, item 1, page 127, omit section 112-97, substitute:112-97 Modifications outside this Part and Part 3-3 This table sets out other cost base modifications outside this Part and Part 3-3. Provisions of the Income Tax Assessment Act 1936 are in bold .Modifications outside this Part and Part 3-3ItemIn this situationElement Affected:See:1You stop holding an item as trading stockFirst element of cost base and reduced cost baseParagraph 70-110(b)2CGT event happens to Cocos (Keeling) Islands assetFirst element of cost base and reduced cost base section 24P 3CGT events happens by the borrower disposing of the borrowed security to a third partyFirst element of cost base and reduced cost base paragraph 26BC(9)(a)4CGT event happens to replacement security and compensatory payment was incurred by the borrower Second element of cost base and reduced cost base subsection 26BC(9A)5CGT event happens to CGT asset in connection with the demutualisation of an insurance companyFirst element of cost base and reduced cost base section 121AS6CGT event happens to assets of NSW State BankFirst element of cost base and reduced cost base section 121EN7Trust ceases to be a resident trust for CGT purposes and there is an attributable taxpayerThe total cost base and reduced cost base section 102AAZBA8You own shares in a company that stops being a PDFFirst element of cost base and reduced cost base section 124ZR9You acquire a number of shares that results in you obtaining a 10% (threshold) interest in a SMEFirst element of cost base and reduced cost base section 128TI10CGT event happens to CGT asset used in gold miningThe total cost base section 159GZZZBC11CGT event happens to CGT asset used in gold miningThe total reduced cost base section 159GZZZBD12Shares in a holding company are cancelledThe total cost base and reduced cost base section 159GZZZH13CGT event happens to 30 June 1988 asset of complying superannuation funds, complying ADF or PSTFirst element of cost base and reduced cost base section 30814CGT event happens to CGT asset of complying superannuation fund, ADF or PSTFirst element of cost base and reduced cost base section 31115A CGT asset of a CFC is taken into account in calculating its attributable incomeFirst element of cost base and reduced cost base section 41216A CGT asset of a CFC is taken into account in calculating its attributable incomeFirst element of cost base and reduced cost base subsection 413(2) 17A CGT asset of a CFC is taken into account in calculating its attributable incomeFirst element of cost base and reduced cost base subsection 413(3) 18A CGT asset of a CFC is taken into account in calculating its attributable incomeFirst element of cost base and reduced cost base section 414 19A commercial debt is forgivenThe total cost base and reduced cost base of CGT assets of the debtor (except assets that are excluded assets under Schedule 2C) sections 245-175 to 245-190 of Schedule 2C20A tax exempt entity becomes taxableFirst element of cost base and reduced cost base section 57-25 of Schedule 2D(101) Schedule 1, item 1, page 128 (line 1), omit "roll-over events ", substitute "roll-overs ".(102) Schedule 1, item 1, page 128 (line 11), omit "roll-over event ", substitute "roll-over ".(103) Schedule 1, item 1, page 128 (line 12), omit " replacement-asset roll-over event ", substitute "replacement-asset roll-over ".(104) Schedule 1, item 1, page 128 (lines 17 and 18), omit subsection (3), substitute: (3) All replacement-asset roll-overs are set out in Divisions 122 and 124 of this Act and Division 17A of Part IIIA of the Income Tax Assessment Act 1936 .(105) Schedule 1, item 1, page 129 (line 4), omit "roll-over events", substitute "roll-overs".(106) Schedule 1, item 1, page 129 (line 9) to page 130 (before line 1), omit section 112-115, substitute:112-115 Table of replacement-asset roll-overs This table sets out all the replacement-asset roll-overs and tells you where you can find more detail about each one. Provisions of this Act are in normal text. The other provisions, in bold , are provisions of the Income Tax Assessment Act 1936 .Replacement-asset roll-oversItemFor the rules about this roll-over:See:1Disposal or creation of assets by individual to a wholly-owned companysections 122-40 to 122-652Disposal or creation of assets by partners to a wholly-owned companysections 122-150 to 122-1953CGT event happens to small business assets and you acquire replacement assets Division 17A of Part IIIA4Asset compulsorily acquired, lost or destroyedSubdivision 124-B5Renewal or extension of a statutory licenceSubdivision 124-C6Strata title conversionSubdivision 124-CD7Exchange of shares in the same company or units in the same unit trustSubdivision 124-E8Exchange of rights or options to acquire shares in a company or units in a unit trustSubdivision 124-F9Exchange of shares in one company for shares in an interposed companySubdivision 124-G10Exchange of units in a unit trust for shares in a companySubdivision 124-H11Body is converted to an incorporated companySubdivision 124-I12Crown leasesSubdivision 124-J13PlantSubdivision 124-K14Prospecting and mining entitlementsSubdivision 124-L15Disposal of a security under a securities lending arrangement section 26BC (107) Schedule 1, item 1, page 130 (line 1), omit "roll-over events ", substitute "roll-overs ".(108) Schedule 1, item 1, page 130 (line 11), omit "roll-over event ", substitute "roll-over ".(109) Schedule 1, item 1, page 130 (line 12), omit " same-asset roll-over event ", substitute "same-asset roll-over ".(110) Schedule 1, item 1, page 131 (line 1), omit "roll-over events", substitute "roll-overs".(111) Schedule 1, item 1, page 131 (line 14) to page 132, omit section 112-150, substitute:112-150 Table of same-asset roll-overs This table sets out all the same-asset roll-overs and tells you where you can find more detail about each one.Same-asset roll-oversItemFor the rules about this roll-over:See:1Transfer of a CGT asset from one spouse to the other because of a marriage breakdownSubdivision 126-A2Transfer of a CGT asset from a company or trust to a spouse because of a marriage breakdownSubdivision 126-A3Transfer of a CGT asset to a wholly-owned companysections 122-70 and 122-754Transfer of a CGT asset of a partnership to a wholly-owned companySections 122-200 and 122-2055Transfer of a CGT asset between related companiesSubdivision 126-B6CGT event happens because a trust deed of a complying approved deposit fund or complying superannuation fund is changedSubdivision 126-C(112) Schedule 1, item 1, page 134 (lines 3 to 5), omit section 114-5, substitute:114-5 When indexation relevant Indexation is only relevant if the *cost base of a *CGT asset is relevant to a *CGT event.(113) Schedule 1, item 1, page 134 (lines 10 to 13), omit subsection (1), substitute: (1) You only index expenditure in the *cost base of a *CGT asset for a *CGT event happening in relation to the asset if you, or the entity whose cost base is being worked out, had *acquired the asset at least 12 months before the time of that *CGT event.(114) Schedule 1, item 1, page 134 (line 19), omit "4", substitute "5".(115) Schedule 1, item 1, page 134 (after line 23), at the end of subsection (2), add: ; and • one for *CGT event J1: see subsection (8).(116) Schedule 1, item 1, page 135 (lines 5 to 17), omit subsections (4) and (5), substitute: Same asset roll-overs (4) The 12 month rule is satisfied for both the entity that owned a *CGT asset before a *same-asset roll-over and the entity that owned it after the roll-over if the sum of their periods of ownership of the asset (and the sum of the periods of ownership of the asset of other entities involved in an unbroken series of roll-overs) is at least 12 months.Replacement asset roll-overs (5) The 12 month rule is satisfied for an entity obtaining a *replacement-asset roll-over for a *CGT event happening in relation to a *CGT asset if the period of the entity's ownership of the original asset (and of other assets for an unbroken series of replacement-asset roll-overs) and of the replacement asset are together at least 12 months.(117) Schedule 1, item 1, page 136 (line 6), before "asset", insert "deceased's interest in the".(118) Schedule 1, item 1, page 136 (after line 9), at the end of section 114-10, add:CGT event J1 (8) If *CGT event J1 happens, the company that owns the roll-over asset ignores (for indexation purposes) the acquisition rule in subsection 104-175(8). (119) Schedule 1, item 1, page 136 (line 12), after "see", insert "sections 112-20 and 112-35 and".(120) Schedule 1, item 1, page 136 (line 15), omit "you index the element", substitute "or includes an amount in such an element, you index the element or the amount".(121) Schedule 1, item 1, page 137 (line 16), omit "roll-over event", substitute "roll-over".(122) Schedule 1, item 1, page 137 (line 17), omit "roll-over event", substitute "roll-over".(123) Schedule 1, item 1, page 138 (line 24), omit "rules for CGT event C2", substitute "rule for CGT event C2 happening to a lease".(124) Schedule 1, item 1, page 140 (after line 4), at the end of section 116-10, add: Note: Also, these provisions of the Income Tax Assessment Act 1936 modify capital proceeds: sections 159GZZZF and 159GZZZG (cancellation of shares in a holding company); sections 159GZZZQ and 159GZZZS (buy-backs of shares); . sections 401, 422, 423 and 461 (CFC's); . section 613 (foreign investment funds).(124a) Schedule 1, item 1, page 142 (line 7), omit "that may be relevant", substitute "that can apply".(124b) Schedule 1, item 1, pages 142 and 143 (table, heading to 3rd column), omit "Modifications that may be relevant", substitute "Only these modifications can apply".(125) Schedule 1, item 1, page 142 (table item dealing with CGT event B1, 2nd column), omit "Hire purchase and similar agreements", substitute "Use and enjoyment before title passes".(125a) Schedule 1, item 1, page 143 (table items dealing with CGT events F5 and F4), omit the items, substitute:F4Lessee receives payment for changing lease2, 3, 4NoneF5Lessor receives payment for changing lease2, 3, 4None(126) Schedule 1, item 1, page 143 (table item dealing with CGT event E8, 3rd column), after "4", insert ", 5".(127) Schedule 1, item 1, page 143 (table item dealing with CGT event K6, 3rd column), after "4", insert ", 5".(128) Schedule 1, item 1, page 144 (lines 9 to 19), omit subsections (2) and (3), substitute:There are capital proceeds (2) The *capital proceeds from a *CGT event are replaced with the market value of the *CGT asset that is the subject of the event if: (a) some or all of those proceeds cannot be valued; or (b) those capital proceeds are more or less than the market value of the asset and: (i) you and the entity that *acquired the asset from you did not deal with each other at arm's length in connection with the event; or (ii) the CGT event is the redemption, release, abandonment, surrender, forfeiture or cancellation of the asset.(The market value is worked out as at the time of the event.) Note: The matters set out in subparagraph (3)(b)(ii) are examples of CGT event C2.Market value for CGT event C2 (3) Subsection (1) does not apply to: (a) these examples of *CGT event C2: (i) the expiry of a *CGT asset you own; (ii) the cancellation of your statutory licence; or (b) *CGT event D1 (about creating contractual or other rights). (3A) If you need to work out the market value of a *CGT asset that is the subject of *CGT event C2, work it out as if the event had not occurred and was never proposed to occur. Example: A company cancels shares you own in it. You work out the market value of the shares by disregarding the cancellation.CGT assets the subject of certain events(129) Schedule 1, item 1, page 148 (line 5), omit "rules for CGT event C2 ", substitute "rule for CGT event C2 happening to a lease ".(130) Schedule 1, item 1, page 148 (lines 6 to 16), omit subsections (1) and (2) and the note and example.(131) Schedule 1, item 1, page 149 (line 1), omit "*personal-use asset", substitute "*personal use asset (other than a car, motor cycle or similar vehicle)".(132) Schedule 1, item 1, page 149 (table item 2, 2nd column), at the end of the item, add:except a roll-over under Subdivision 124-J (about Crown leases), 124-K (about plant) or 124-L (about prospecting and mining entitlements)(133) Schedule 1, item 1, page 150 (after line 13), at the end of section 116-85, add: Note: This section is disregarded in calculating the attributable income of a CFC: see section 410 of the Income Tax Assessment Act 1936 .(134) Schedule 1, item 1, page 150 (after line 18), after paragraph (a), insert: (aa) subsection 457(3) of the Income Tax Assessment Act 1936 does not apply to the change of residence; and(135) Schedule 1, item 1, page 151 (line 17), omit "paragraph 457(2)(a)", substitute "subparagraph 457(2)(a)(i)".(136) Schedule 1, item 1, page 152 (before line 5), insert:Increase in capital proceeds(137) Schedule 1, item 1, page 152 (line 7), omit "paragraph 457(2)(a)", substitute "subparagraph 457(2)(a)(i)".(138) Schedule 1, item 1, page 152 (after line 18), at the end of section 116-95, add: Note: This section is disregarded in calculating the attributable income of a CFC: see section 410 of the Income Tax Assessment Act 1936 .(139) Schedule 1, item 1, page 153 (before line 17), at the end of section 118-1, add: Note: There are also these exemptions in the Income Tax Assessment Act 1936 : section 23AH (about foreign branch gains and losses of companies); section 24B (about External Territories); . section 26BC (about securities lending arrangements); . section 27CB (about eligible termination payments); . section 116DK (about life insurance companies); . section 121AS (about demutualisation of insurance companies); . section 121EL (about offshore banking units); . section 159GZZZN (about buy-back and cancellation of shares); . section 315 (about superannuation and related businesses); . section 408 (about calculating the attributable income of a CFC).(140) Schedule 1, item 1, page 154 (line 19), omit ", valour decorations and cultural bequests ", substitute "and valour decorations ".(141) Schedule 1, item 1, page 154 (line 21), omit "(or an interest in one)".(142) Schedule 1, item 1, page 155 (after line 11), at the end of subsection (2), add: Note: If you last acquired the interest before 16 December 1995, a capital gain or loss is disregarded if you acquired the interest for $500 or less: see section 118-10 of the Income Tax (Transitional Provisions) Act 1997 .(143) Schedule 1, item 1, page 155 (after line 21), after section 118-12, insert: Note: This section is disregarded: in calculating the attributable income of a trust: see section 102AAZB of the Income Tax Assessment Act 1936 ; and in calculating the attributable income of a CFC: see section 410 of that Act. 118-13 Shares in a PDF A *capital gain or *capital loss you make from a *CGT event happening in relation to *shares in a *PDF is disregarded.(144) Schedule 1, item 1, page 156 (lines 22 to 24), omit "This rule does not apply to an amount included in assessable income under section 160AQT of the Income Tax Assessment Act 1936 (which relates to franked dividends)", substitute: (1A) Subsection (1) applies to an amount that, under a provision of this Act (outside of this Part), is included in: (a) your assessable income or *exempt income; or (b) if you are a partner in a partnership, the assessable income or exempt income of the partnership;in relation to a *CGT asset as if it were so included because of the *CGT event referred to in that subsection if the amount would also be taken into account in working out the amount of a *capital gain you make. Note: An example is an amount assessable under Division 16E of Part III of the Income Tax Assessment Act 1936 , which deals with accruals taxation of certain securities. (1B) The rule in subsection (1) does not apply to: (a) an amount that is taken to be a dividend under section 159GZZZP of the Income Tax Assessment Act 1936 (which relates to buy-backs of *shares); or (b) an amount included in assessable income under section 160AQT of that Act (which relates to franked dividends).(145) Schedule 1, item 1, page 157 (lines 3 and 4), omit "with a view to later selling it for a profit", substitute "as part of a profit-making scheme".(146) Schedule 1, item 1, page 157 (after line 26), after subsection (4), insert: (4A) A *capital gain the trustee of a *superannuation fund makes from a *CGT event happening in relation to a *CGT asset in an income year is reduced if the asset's market value was taken into account in working out the fund's net previous income for earlier income years under section 288A or 288B of the Income Tax Assessment Act 1936 . (4B) The gain is reduced to zero if it does not exceed the amount that would have been the *capital gain from the *CGT event if the *capital proceeds from the event were the asset's market value that was taken into account in working out that net previous income.If the gain exceeds that amount, it is reduced by that amount.(147) Schedule 1, item 1, page 158 (line 2), omit ", or the exempt income of the partnership,".(148) Schedule 1, item 1, page 160 (lines 6 to 26), omit section 118-35, substitute:118-35 Research and development (1) Disregard a *capital gain or *capital loss from a *CGT event if an amount is included in your assessable income in any income year under subsection 73B(27A) of the Income Tax Assessment Act 1936 because of that CGT event. (2) Disregard a *capital gain or *capital loss from a *CGT event if an amount is included in the assessable income of a partner (including you) in any income year under subsection 73B(27A) of that Act because of that CGT event. (3) If you are absolutely entitled to a *CGT asset as against the trustee of a trust (disregarding any legal disability), disregard a *capital gain or *capital loss the trustee makes from a *CGT event if an amount is included in your assessable income or the net income of the trust under subsection 73B(27A) of that Act because of that CGT event.(148a) Schedule 1, item 1, page 161 (line 1), after "Exempt", insert "or loss-denying".(149) Schedule 1, item 1, page 161 (lines 20 to 24), omit section 118-50.(150) Schedule 1, item 1, page 165 (map), omit "Basic exemption ", substitute "Basic case ".(151) Schedule 1, item 1, page 165 (map), omit "Deceased estates exemption ", substitute "Deceased estates case ".(152) Schedule 1, item 1, page 166 (line 2), omit "exemption ", substitute "case "(153) Schedule 1, item 1, page 166 (line 3), omit "exemption ", substitute "case " (154) Schedule 1, item 1, page 166 (line 16), omit "exemption", substitute "rule".(155) Schedule 1, item 1, page 166 (lines 19 to 22), omit paragraphs (a) and (b), substitute: (a) CGT events A1, B1, C1, C2, E1, E2, F2, I1, I2, K3, K4 and K6 (except one involving the forfeiting of a deposit); and (b) a CGT event that involves the forfeiting of a deposit as part of an uninterrupted sequence of transactions ending in one of the events specified in paragraph (a) subsequently happening.(156) Schedule 1, item 1, page 167, (line 6), after "However,", insert "except as provided in section 118-120,".(157) Schedule 1, item 1, page 167, (lines 8 to 20), omit section 118-120, substitute:118-120 Extension to adjacent land (1) This Subdivision applies to land that is adjacent to a *dwelling (if the same *CGT event happens to the land or your *ownership interest in it) to the extent that you used the land primarily for private or domestic purposes in association with the dwelling as if it were a dwelling. (2) The maximum area of land covered by the exemption (including the area of the land on which the *dwelling is built) is 2 hectares. (3) For a flat or home unit, this Subdivision also applies to a garage, storeroom or other structure that is associated with it (if the same *CGT event happens to the structure or your *ownership interest in it) as if it were a dwelling. However, it so applies only to the extent that you used the structure primarily for private or domestic purposes in association with the flat or home unit.(158) Schedule 1, item 1, page 168 (lines 23 to 27), omit section 118-135, substitute:118-135 Moving into a dwelling If a *dwelling becomes your main residence by the time it was first practicable for you to move into it after you *acquired your *ownership interest in it, the dwelling is treated as your main residence from when you acquired the interest until it actually became your main residence.(159) Schedule 1, item 1, page 169 (lines 15 to 17), omit ", and any adjacent land, garage, storeroom or other structure to which the exemption extends under section 118-120,".(160) Schedule 1, item 1, page 169 (line 24), omit "the *dwelling", substitute "the part of the *dwelling that was your main residence".(161) Schedule 1, item 1, page 176 (lines 15 to 17), omit ", or any adjacent land, garage, storeroom or other structure to which the exemption extends under section 118-120,".(162) Schedule 1, item 1, page 176 (line 20), omit "land or structure".(163) Schedule 1, item 1, page 177 (line 1), omit ", land or structure".(164) Schedule 1, item 1, page 177 (line 25), omit "Division", substitute "Subdivision".(165) Schedule 1, item 1, page 177 (line 27) to page 178 (line 1), omit ", or any adjacent land, garage, storeroom or other structure to which the exemption extends under section 118-120,".(166) Schedule 1, item 1, page 178 (line 4), omit "Division", substitute "Subdivision".(167) Schedule 1, item 1, page 178 (line 22), omit "Exemption—dwelling ", substitute "Dwelling ".(168) Schedule 1, item 1, page 179 (table item 1, column 2), omit "1985," substitute "1985 and".(169) Schedule 1, item 1, page 179 (after line 7), at the end of subsection (1), add: Note 3: There are special rules for dwellings acquired before 7.30 pm on 20 August 1996. These rules also affect the operation of section 118-192 and subsections 118-190(4) and 118-200(4): see section 118-195 of the Income Tax (Transitional Provisions) Act 1997 .(170) Schedule 1, item 1, page 180 (lines 2 to 5), omit paragraphs (a) and (b), substitute: (a) CGT events A1, B1, C1, C2, E1, E2, F2, I1, I2, K3, K4 and K6 (except one involving the forfeiting of a deposit); and (b) a CGT event that involves the forfeiting of a deposit as part of an uninterrupted sequence of transactions ending in one of the events specified in paragraph (a) subsequently happening.(171) Schedule 1, item 1, page 181 (lines 26 to 28), omit ", or any adjacent land, garage, storeroom or other structure to which the exemption extends under section 118-120,".(172) Schedule 1, item 1, page 184 (lines 7 to 9), omit paragraphs (a) and (b), substitute: (a) CGT events A1, B1, C1, C2, E1, E2, F2, I1, I2, K3, K4 and K6 (except one involving the forfeiting of a deposit); and (b) a CGT event that involves the forfeiting of a deposit as part of an uninterrupted sequence of transactions ending in one of the events specified in paragraph (a) subsequently happening.(173) Schedule 1, item 1, page 185 (line 1), omit "your", substitute "the entity's".(174) Schedule 1, item 1, page 185 (lines 15 to 22), omit paragraphs (b) and (c), substitute: (b) another trust having the same trustee where an entity that benefits or is capable of benefiting under the first trust benefits or is capable of benefiting under the other trust; or (c) any other trust having the same trustee where: (i) the other trust is one of a series of trusts that includes the first trust; and (ii) each trust in the series (also the first trust ) is linked to at least one other trust in the series in that an entity that benefits or is capable of benefiting under the first trust benefits or is capable of benefiting under the other trust.(175) Schedule 1, item 1, page 188, lines 2 to 5, omit subsection (1) (except the example), substitute: (1) A *capital gain or *capital loss is disregarded if you make it from a *CGT event happening in relation to any of the following: (a) a right to an allowance, annuity or capital amount payable out of a *superannuation fund or *approved deposit fund; (b) a right to an asset of such a fund; (c) a right to any part of such an allowance, annuity, capital amount or asset.[The next amendment is (176a).](176a) Schedule 1, item 1, page 192 (lines 8 and 9), omit "create them or have someone else create them", substitute "reconstruct them or have someone else reconstruct them".(177) Schedule 1, item 1, page 192 (lines 12 and 13), omit "by an appropriately qualified person".(178) Schedule 1, item 1, page 193 (after line 1), after paragraph (b), insert: Note: There are special record keeping rules where there has been a roll-over for a merger between superannuation funds under section 160ZZPI of the Income Tax Assessment Act 1936: see section 121-25 of the Income Tax (Transitional Provisions) Act 1997 .(179) Schedule 1, item 1, page 193 (after line 14), at the end of Division 121, add:[The next Part is Part 3-3.](180) Schedule 1, item 1, page 199 (line 2), omit "(or an interest in one)".[The next amendment is (182).](182) Schedule 1, item 1, page 229 (line 2), omit "roll-over events ", substitute "roll-overs ".(183) Schedule 1, item 1, page 230 (line 3), omit "roll-over event", substitute "roll-over".(184) Schedule 1, item 1, page 233 (line 1), omit the formula, substitute:The number of original assets you*acquired before 20 September 1985The number of new assets x The total number of original assets(185) Schedule 1, item 1, page 240 (line 18) to page 241 (line 25), omit section 124-95, substitute:124-95 You receive both money and an asset (1) If you receive both money and another *CGT asset for the event happening and choose to obtain a roll-over, the requirements and consequences are different for each part of the compensation attributable to the original asset (having regard to the amount of money and the market value of the other asset). The other asset as a part of compensation (2) The market value of the other asset (when you *acquire it) must be more than that part of the *cost base of the original asset that is attributable to the new asset. Note: This requirement is different to that in subsection 124-80(3). It requires a proportional attribution of the cost base of the original asset. (3) If you *acquired the original asset on or after 20 September 1985: (a) the first element of the other asset's *cost base is that part of the original asset's cost base at the time of the event that is attributable to the new asset; and (b) the first element of the other asset's *reduced cost base is worked out similarly. Note: These consequences are different to those in subsection 124-90(3). They require a proportional attribution of the cost base of the original asset. (4) If you *acquired the original asset before 20 September 1985, you are taken to have acquired the new asset before that day.Money as a part of compensation (5) If you make a *capital gain from the event, this table sets out in what situations that part of the gain on the original asset that is attributable to the amount of money you received is reduced, not reduced or disregarded. It also sets out in what situations the expenditure you incurred to *acquire another *CGT asset or to repair or restore the original asset is reduced.You make a capital gain from the event ItemIn this situation:There are these consequences1The money exceeds the expenditure you incurred to *acquire another CGT asset or to repair or restore the original assetIf that part of the gain that is attributable to the amount of money is more than the excess: (a)that part of the gain is reduced to the amount by which the money exceeds that expenditure; and (b)that expenditure is reduced by the amount by which that part of the gain (before it is reduced) is more than the excess2The money exceeds that expenditureIf that part of the gain that is attributable to the amount of money is less than or equal to the excess, the gain is not reduced3The money does not exceed that expenditureThat part of the gain that is attributable to the amount of money is disregarded in working out your *net capital gain or *net capital loss for the income year. That expenditure is reduced by the amount of that part of the gain Note: These consequences are different to those in subsection 124-85(2). They require a proportional attribution of capital gain on the original asset. (6) If you *acquired the original asset before 20 September 1985 and you incurred expenditure in acquiring another *CGT asset, you are taken to have acquired the other asset before that day if: (a) the expenditure you incurred in acquiring the other asset is not more than 120% of the market value of that part of the original asset that is attributable to the other asset when the event happened; or (b) a natural disaster happened so that the original asset, or part of it, is lost or destroyed and it is reasonable to treat the other asset as substantially the same as that part of the original asset that is attributable to the new asset. Note 1: The consequences in paragraph (6)(a) are different to those in paragraph 124-85(3)(a). They require a proportional attribution of the market value of the original asset. Note 2: The consequences in paragraph (6)(b) are different to those in paragraph 124-85(3)(b). They require a proportional attribution of the original asset. Example: Kris owns land, which he acquired in 1998. It is compulsorily acquired, and Kris receives $80,000 in cash and replacement land with a market value of $80,000. The cost base of the original land is $150,000. Kris buys additional land for $80,000. Subsection (2) is satisfied because the market value of the replacement land ($80,000) is more than the part of the cost base of the original land that is attributable to the replacement land: 50% x $150,000 = $75,000 Applying subsection (5), the other part of the gain is disregarded, and the first element of the cost base of the replacement land is the part of the cost base of the original land that is attributable to the replacement land: 50% x $150,000 = $75,000 Applying subsection (3), the money he received ($80,000) is the same as the expenditure he incurred to buy the additional land. Item 3 in the table applies. The part of the gain that is attributable to that money is disregarded: 50% x $10,000 = $5,000 The expenditure is reduced by $5,000.(186) Schedule 1, item 1, page 244 (line 21), omit "this requirement", substitute "one of these requirements".(187) Schedule 1, item 1, page 276 (line 2), omit "roll-over events ", substitute "roll-overs ".(188) Schedule 1, item 1, page 276 (line 9), omit "roll-over event", substitute "roll-over".(189) Schedule 1, item 1, page 277 (lines 12 to 19), omit subsection (3), substitute: (3) However, there is no roll-over if: (a) the *CGT asset involved is *trading stock of the transferor; or (b) for *CGT event B1—title in the CGT asset does not pass to the transferee when the agreement ends.(190) Schedule 1, item 1, page 283 (lines 7 to 16), omit subsection (3), substitute: (3) However, there is no roll-over for *CGT event B1 if title in the *CGT asset does not pass to the transferee when the agreement ends. Note: CGT event J1 can happen if the recipient company stops being a 100% subsidiary of a company in the relevant group: see section 104-175.(191) Schedule 1, item 1, page 283 (after line 19), at the end of subsection (1), add: Note: This requirement is taken to be satisfied in the case of the transfer of the life insurance business of a life insurance company: see section 121AS of the Income Tax Assessment Act 1936 .(192) Schedule 1, item 1, page 290 (after line 3), at the end of Division 126, add:126-85 Effect of roll-over on certain liquidations (1) A *capital gain or *capital loss a company (the holding company ) makes because *shares in its *100% subsidiary are cancelled (an example of *CGT event C2: see section 104-25) on the liquidation of the subsidiary is reduced if the conditions in subsection (2) are satisfied. The reduction is worked out under subsection (3). (2) These conditions must be satisfied: (a) there must be a roll-over under this Subdivision for at least one *CGT asset (the CGT roll-over asset ) being *disposed of by the subsidiary to the holding company in the course of the liquidation of the subsidiary; (b) the subsidiary must have acquired each CGT roll-over asset on or after 20 September 1985; (c) the disposals must either: (i) be part of the liquidator's final distribution in the course of the liquidation; or (ii) have occurred within 18 months of the dissolution of the subsidiary if they are part of an interim distribution in the course of the liquidation; (d) the holding company must have beneficially owned all of the shares in the subsidiary for the whole period from the time of the disposal, or the first disposal, of a CGT roll-over asset until the cancellation of the shares; (e) the market value of the CGT roll-over asset or assets must comprise at least part of the *capital proceeds for the cancellation of the shares in the subsidiary that are beneficially owned by the holding company;(f) one or more of the shares that were cancelled (the post-CGT shares ) must have been acquired by the holding company on or after 20 September 1985. (3) The reduction of the *capital gain or *capital loss is worked out in this way.Method statementStep 1. Work out (disregarding this section) the sum of the *capital gains and the sum of the *capital losses the holding company would make on the cancellation of its shares in the subsidiary.Step 2. Work out (disregarding this Subdivision) the sum of the *capital gains and the sum of the *capital losses the subsidiary would make on the *disposal of its CGT roll-over assets to the holding company in the course of the liquidation assuming the *capital proceeds were the assets' market values at the time of the disposal.Step 3. If, after subtracting the sum of the *capital losses from the sum of the *capital gains, there is: (a) an overall capital gain from Step 1 and an overall capital gain from Step 2; or (b) an overall capital loss from Step 1 and an overall capital loss from Step 2; then continue. Otherwise there is no adjustment.Step 4. Express the number of post-CGT shares as a fraction of the total number of shares the holding company owned in the subsidiary.Step 5. Multiply the overall *capital gain or *capital loss from Step 2 by the fraction from Step 4.Step 6. Reduce the overall *capital gain or *capital loss from Step 1 by the amount from Step 5. The result is the *capital gain or *capital loss the holding company makes from the cancellation of its shares in the subsidiary. Note: This Subdivision is modified in calculating the attributable income of a CFC: see section 419 of the Income Tax Assessment Act 1936 .Subdivision 126-C—Changes to trust deedsGuide to Subdivision 126-C 126-125 What this Subdivision is aboutThis Subdivision sets out when there is a roll-over for a CGT event that happens because of an amendment to or replacement of the trust deed of a complying approved deposit fund or complying superannuation fund.Table of sections 126-130 Changes to trust deeds 126-135 Consequences of roll-over[This is the end of the Guide.]126-130 Changes to trust deeds There is a roll-over if: (a) *CGT event E1 or E2 happens in relation to a *CGT asset because the trust deed of a *complying approved deposit fund or *complying superannuation fund is amended or replaced; and (b) the amendment or replacement is done for the purpose of: (i) complying with the Superannuation Industry (Supervision) Act 1993 ; or (ii) enabling a *complying approved deposit fund to become a *complying superannuation fund; and (c) the assets and members of the fund do not change as a consequence of the amendment or replacement. Note: The full list of CGT events is in section 104-5.126-135 Consequences of roll-over (1) A *capital gain or *capital loss made from the *CGT event is disregarded. (2) If the fund that owned the *CGT asset just before the time of the *CGT event *acquired it before 20 September 1985, the asset retains its status as a *pre-CGT asset in the hands of the fund that owned it after the time of the event. (3) If the fund that owned the *CGT asset just before the time of the *CGT event *acquired it on or after 20 September 1985: (a) the first element of the asset's *cost base (in the hands of the fund that owned the asset after the time of the event) is its cost base just before that time; and (b) the first element of the asset's *reduced cost base asset is worked out similarly; and (c) the fund that owned the asset after the time of the event is taken to have acquired the asset at that time.(193) Schedule 1, item 1, page 293 (after line 10), at the end of subsection (4), add: Note 3: The rule in item 3 in the table does not apply to a dwelling that devolved to your legal personal representative, or passed to a beneficiary in your estate, on or before 7.30 pm on 20 August 1996: see section 128-15 of the Income Tax (Transitional Provisions) Act 1997 .(194) Schedule 1, item 1, page 302 (before line 15), before subsection (3), insert: Note 3: There is a special rule for shares issued on or before 30 June 1987: see subsection 130-20(2) of the Income Tax (Transitional Provisions) Act 1997 .(195) Schedule 1, item 1, page 303 (after line 5), at the end of subsection (3), add: Note 2: There is a special rule for bonus equities issued on or before 1 pm on 10 December 1986 that affects item 2 of the table: see subsection 130-20(3) of the Income Tax (Transitional Provisions) Act 1997 .(196) Schedule 1, item 1, page 304 (after line 7), at the end of section 130-20, add: Note: Subsection 26BC(9E) of the Income Tax Assessment Act 1936 (about securities lending arrangements) modifies the operation of this section.(197) Schedule 1, item 1, page 306 (after line 5), at the end of section 130-40, add: Note 2: There are transitional rules for some rights: see section 130-40 of the Income Tax (Transitional Provisions) Act 1997 . Note 3: The effect of this Subdivision is modified in 2 cases by sections 102AAZBA (about non-resident trusts) and 414 (about CFC's) of the Income Tax Assessment Act 1936 .(198) Schedule 1, item 1, page 308 (after line 4), at the end of section 130-60, add: Note 2: There are transitional rules for some convertible notes: see section 130-60 of the Income Tax (Transitional Provisions) Act 1997 .(199) Schedule 1, item 1, page 310 (lines 14 to 18), omit subsection (1), substitute: (1) A *capital gain or a *capital loss a trustee makes when a beneficiary becomes absolutely entitled to a *share or right in a company is disregarded if these conditions are satisfied. (1A) The beneficiary must be: (a) a *PAYE earner of the company or of another company (at the time the beneficiary first became beneficially entitled to the *share or right); or (b) an *associate or affiliate company of such a PAYE earner.(200) Schedule 1, item 1, page 310 (after line 27), at the end of section 130-90, add: Note: There are transitional rules for some shares or rights acquired under employee share schemes: see Subdivision 130-D of the Income Tax (Transitional Provisions) Act 1997 .(200a) Schedule 1, item 1, page 312 (after line 22), at the end of Division 132, add: Note: CGT events F1 to F5 deal specifically with leases. See also (in particular) CGT event C2 (about cancellation, surrender and similar endings).(201) Schedule 1, item 1, page 314 (after line 9), at the end of subsection (1), add: Note 2: Item 1 in the table is modified for options granted before 20 September 1985: see section 134-1 of the Income Tax (Transitional Provisions) Act 1997 .(202) Schedule 1, item 1, page 315 (lines 20 and 21), omit subsection (3).(203) Schedule 1, item 1, page 315 (after line 25), at the end of subsection (4), add: Note 2: There is an exemption for the grantor if the option is exercised: see subsection 104-40(5).(204) Schedule 1, item 1, page 317 (before line 1), before section 136-5, insert:[This is the end of the Guide.](205) Schedule 1, item 1, page 317 (table item dealing with CGT event B1, 2nd column), omit "Hire purchase and similar agreements", substitute "Use and enjoyment before title passes".(206) Schedule 1, item 1, pages 318 and 319 (table items dealing with CGT events F5 and F4), omit the items, substitute:F4Lessee receives payment for changing leasethe CGT asset the subject of the lease1, 2F5Lessor receives payment for changing leasethe CGT asset the subject of the lease1, 2(207) Schedule 1, item 1, page 319 (table item dealing with CGT event H1, 4th column), omit "6", substitute "8".[The next amendment is (209).](209) Schedule 1, item 1, page 322 (paragraph (a) of table item 5), before "event", insert "CGT".(210) Schedule 1, item 1, page 322 (paragraph (a) of table item 6), before "event", insert "CGT".(211) Schedule 1, item 1, page 323 (lines 22 and 23), omit the note, substitute: (3) Also, Part 3-1 and this Part apply to the asset as if you had *acquired it at the time you became an Australian resident.(212) Schedule 1, item 1, page 324 (lines 10 and 11), omit the note, substitute: (3) Also, Part 3-1 and this Part apply to the asset as if the trustee had *acquired it at the time the trust became a *resident trust for CGT purposes.Exception (4) This section does not apply to a trust if, just before it became a *resident trust for CGT purposes, it was a *CFT because of paragraph 342(a) of the Income Tax Assessment Act 1936 . Note: This section is disregarded in calculating the attributable income of a trust: see section 102AAZB of the Income Tax Assessment Act 1936 .(213) Schedule 1, item 1, page 324 (after line 11), at the end of Division 136, add:136-50 CFC becomes an Australian resident (1) This section applies to a *CFC that stops at a time (the residence change time ) being a resident of a *listed country or an *unlisted country and becomes an Australian resident. (2) Section 136-40 does not apply to the *CFC. (3) The modifications of this Part and Part 3-1 in sections 411 to 414 (inclusive) of the Income Tax Assessment Act 1936 have the effect they would have, in relation to each *commencing day asset owned by the *CFC at the residence change time, if those modifications were used to work out the taxable income of the CFC rather than its *attributable income. (4) However, if a *capital gain on a *commencing day asset of the *CFC (for a period before the residence change time) was subject to tax (within the meaning of Part X of the Income Tax Assessment Act 1936 ) in a *listed country, the modifications of this Part and Part 3-1 in sections 411 to 414 (inclusive) of the Income Tax Assessment Act 1936 have the effect they would have in relation to the asset if: (a) those modifications were used to work out the taxable income of the CFC rather than its *attributable income; and (b) the *commencing day of the CFC were the residence change time. Note: This section is disregarded in calculating the attributable income of a CFC: see section 410 of the Income Tax Assessment Act 1936 .(214) Schedule 1, item 1, page 325 (line 1) to page 354 (line 21), omit Division 138.(214a) Schedule 1, item 1, page 357 (before line 24), before subsection (3), insert: Note 2: No cost base adjustments are required under this Division if the increase and decrease in market value occurred before 12 noon on 12 January 1994: see section 140-7 of the Income Tax Transitional Provisions Act 1997 . (215) Schedule 1, item 1, page 359 (line 9), after "159GZZZQ(2)", insert "of the Income Tax Assessment Act 1936 ".(215a) Schedule 1, item 1, page 359 (after line 11), at the end of subsection (8), add: Note: A share value shift is disregarded under subsection (8) only if the company buys back the shares after 7.30 pm on 9 May 1995 and the buy back is not done under an excluded transitional arrangement: see subsection 140-15(8) of the Income Tax Transitional Provisions Act 1997 .(216) Schedule 1, item 1, page 362 (line 17), omit "Subdivision 140-B", substitute "this Subdivision".(217) Schedule 1, item 1, page 363 (lines 5 to 9), omit the example.(218) Schedule 1, item 1, page 363 (after line 12), at the end of section 140-50, add: Example: Bill and Bevan are the only shareholders in a company and are associates. They own one post-CGT share each. The shares are fully paid and each has a market value of $120,000. The company issues one new share to Bill and Bevan for $100,000 each. After the new shares are issued, each share in the company has a market value of $110,000. The total decrease in the market value of the original shares equals the total discount given in relation to the new shares. Apart from this section, Bill and Bevan would make a capital gain based on the value shifted from their existing share into the new share of the other. Bill and Bevan will not make a capital gain from the share value shift, although cost base adjustments will be required under this Subdivision.(219) Schedule 1, item 1, page 367 (before line 13), before subsection (2), insert: (1A) However, the amount is included only to the extent that it is reflected in the market value of the *increased value share at the time of a later *CGT event. The amount is so included even if it is not reflected in the state or nature of the share at that time.(220) Schedule 1, item 1, page 373 (line 8), omit the formula, substitute:$2,000$4,000 x = $2,000$4,000(221) Schedule 1, item 1, page 376 (line 1), omit "the entity has not", substitute "the asset has not".(222) Schedule 1, item 1, page 376 (after line 2), at the end of section 149-10, add: Note: There are transitional rules for assets that stopped being pre-CGT assets under the Income Tax Assessment Act 1936 : see section 149-5 of the Income Tax (Transitional Provisions) Act 1997 .(223) Schedule 1, item 1, page 379 (line 11), omit "subsection 149-30(2)", substitute "subsection 149-30(1)".(224) Schedule 1, item 1, page 379 (lines 12 and 13), omit subsection (3).(225) Schedule 1, item 1, page 399 (after line 10), at the end of subsection 149-170(2), add:[The next Part is Part 3-5.](225a) Schedule 1, item 1, page 400 (lines 11 and 12), omit "entered no new transactions and conducted no additional business", substitute "entered no new kinds of transactions and conducted no new kinds of business".(226) Schedule 1, item 1, page 402 (after line 24), at the end of section 165-102, add: Note: In the case of a listed public company or its 100% subsidiary, Subdivision 166-B modifies how this Subdivision applies, unless the company chooses otherwise.[The next amendment is 228.](228) Schedule 1, item 1, page 406 (lines 16 and 17), omit "entered no new transactions and conducted no additional business", substitute "entered no new kinds of transactions and conducted no new kinds of business".(229) Schedule 1, item 1, page 417 (before line 8), before section 170-105, insert:[This is the end of the Guide.](230) Schedule 1, item 1, page 417 (line 9), after "net capital loss", insert "(except a net capital loss from collectables)". (231) Schedule 1, item 1, page 418 (lines 17 and 18), omit "160ZP(9B) of the Income Tax Assessment Act 1936 ", substitute "195-30 of the Income Tax Assessment Act 1997 ".(231a) Schedule 1, item 1, page 427 (after line 2), at the end of subsection (1), add: Note: Reductions under subsection 160ZP(13) of the Income Tax Assessment Act 1936 are also relevant: see section 170-175 of the Income Tax Transitional Provisions Act 1997 .(231b) Schedule 1, item 1, page 428 (after line 10), at the end of subsection (1), add: Note: Increases under subsections 160ZP(14) and (15) of the Income Tax Assessment Act 1936 are also relevant: see section 170-180 of the Income Tax Transitional Provisions Act 1997 .(232) Schedule 1, item 1, page 429 (after line 13), at the end of Subdivision 170-B, add: Note: This Subdivision is disregarded in calculating the attributable income of a CFC: see section 410 of the Income Tax Assessment Act 1936 .(233) Schedule 1, item 7, page 442 (after line 30), at the end of section 373-10, add: (3) You also cannot deduct an amount under this section if the item relates to a copyright in an Australian film within the meaning of Division 10B of Part III of the Income Tax Assessment Act 1936 . Note: In that case you may be able to deduct amounts under that Division.(234) Schedule 1, item 7, page 443 (lines 7 to 9), omit paragraph (c), substitute: (c) the owner, or a licensee, of a copyright;(235) Schedule 1, item 7, page 444 (after line 20), at the end of subsection (1), add: Note: If you have owned the item since before the 1998-99 income year: see instead subsection 373-10(2) of the Income Tax (Transitional Provisions) Act 1997 .(236) Schedule 1, item 7, page 449 (after line 5), insert: Note: If you have owned the item since before the 1998-99 income year: see instead subsection 373-10(3) of the Income Tax (Transitional Provisions) Act 1997 .(237) Schedule 1, item 7, page 454 (after line 18), at the end of subsection (4), add: Note: If you have owned the item since before the 1998-99 income year: see subsection 373-10(4) of the Income Tax (Transitional Provisions) Act 1997 .(238) Schedule 1, item 7, page 456 (after line 7), at the end of section 373-60, add: (4) A balancing adjustment is not required if the item relates to a copyright in an Australian film within the meaning of Division 10B of Part III of the Income Tax Assessment Act 1936 . Note: In that case, see that Division.(239) Schedule 1, item 7, page 457 (after line 9), at the end of subsection (2), add: Note 2: If you have owned the item since before the 1998-99 income year: see subsection 373-10(4) of the Income Tax (Transitional Provisions) Act 1997 . Note 3: If there has been an earlier balancing adjustment event for which roll-over relief was available under section 124PA of the Income Tax Assessment Act 1936 : see section 373-65 of the Income Tax (Transitional Provisions) Act 1997 .(240) Schedule 1, item 7, page 460 (after line 10), at the end of section 373-80, add: Note 2: If you have owned the item since before the 1998-99 income year: see subsection 373-10(4) of the Income Tax (Transitional Provisions) Act 1997 .(241) Schedule 1, item 7, page 461 (after line 13), at the end of subsection (4), add: Note: If you have owned the item since before the 1998-99 income year: see subsection 373-10(4) of the Income Tax (Transitional Provisions) Act 1997 .(242) Schedule 1, item 7, page 463 (after line 23), at the end of subsection (1), add: Note: If that entity had owned the item since before the 1998-99 income year: see section 373-100 of the Income Tax (Transitional Provisions) Act 1997 .(243) Schedule 1, item 7, page 464 (before line 11), at the end of section 373-100, add: Note: If that entity had owned the other item since before the 1998-99 income year: see section 373-100 of the Income Tax (Transitional Provisions) Act 1997 .(244) Schedule 1, item 8, page 467 (after line 4), insert:387-162 Simplified outline (1) To get a deduction: (a) you must own the horticultural plant and use it (or hold it ready for use) for commercial horticulture; and (b) the expenditure must not be otherwise deductible.It does not matter who incurred the expenditure. (2) If the plant's effective life is less than 3 years, you can deduct all the expenditure in the income year when the plant is first used (or held ready for use) for commercial horticulture. (3) If the effective life is 3 years or more: (a) you get an annual deduction for the expenditure, worked out on a prime cost basis; and (b) you can get a special deduction if the plant is destroyed before you have deducted all the expenditure. (4) If a horticultural plant changes hands, the new owner can require the old owner to provide information to help the new owner work out his or her deductions.[This is the end of the Guide.](245) Schedule 1, item 8, page 469 (line 18) to page 470 (line 30), omit section 387-175, substitute:387-175 Meaning of effective life (1) If you own a *horticultural plant at the time (the starting time ) when it is first used (or held ready for use) for *commercial horticulture, the effective life of the plant is worked out under whichever one of subsections (2) and (3) you choose. (2) If you choose this subsection, the plant's *effective life is the period for which the plant could reasonably be expected to be used for *commercial horticulture, worked out as at the starting time. (3) If you choose this subsection, the plant's *effective life is the period specified for that kind of *horticultural plant in a determination: (a) made by the Commissioner under section 387-177; and (b) operating at the starting time.You can choose this subsection only if any conditions that the determination specifies for that kind of horticultural plant are met at the starting time. (4) You make the choice for the first income year for which you can deduct under this Subdivision an amount relating to the *horticultural plant. You cannot change the choice (except under subsection 387-177 because of a retrospective determination). Note: If the plant's effective life was determined under section 124ZZK of the Income Tax Assessment Act 1936 , it has the same effective life for the purposes of this Subdivision: see subsection 387-160(3) of the Income Tax (Transitional Provisions) Act 1997 .387-177 Determination of effective life by the Commissioner (1) The Commissioner may make written determinations for the purposes of subsection 387-175(3). They may specify conditions relating to *horticultural plants. Note: This subsection also allows the Commissioner to revoke or vary determinations: see subsection 33(3) of the Acts Interpretation Act 1901 . (2) A determination relating to a kind of *horticultural plant may operate retrospectively, but only if: (a) it is the first determination relating to that kind of plant; or (b) the retrospectivity works to the advantage of entities in working out the effective life of that kind of plant. (3) If a determination operates retrospectively, you can choose to work out under subsection 387-175(3) the *effective life of a *horticultural plant to which the determination applies, even if you have previously chosen to work out the plant's effective life under subsection 387-175(2). (4) You must make the choice by the day when you lodge your first *income tax return after the retrospective determination is made. (However, the Commissioner can allow you to make it later.) You cannot change the choice.(246) Schedule 1, item 8, page 474 (lines 17 to 26) and page 475 (lines 1 to 11), omit subsections (2), (3) and (4), substitute: (2) You cannot deduct an amount under this Subdivision for any income year for expenditure to the extent that: (a) you or another entity can deduct an amount for the expenditure under a provision of this Act (outside this Subdivision) for any income year; or (b) the expenditure is taken into account in working out a deduction for depreciation; or (c) the expenditure is part of a pool of *construction expenditure. Note 1: However, a deduction for an income year before 1998-99 under Division 10F of Part III of the Income Tax Assessment Act 1936 (which deals with horticultural plants) does not prevent you from deducting an amount under this Subdivision: see section 387-195 of the Income Tax (Transitional Provisions) Act 1997 . Note 2: Deductions for depreciation are worked out under Division 42. Note 3: Construction expenditure in a pool of construction expenditure is deducted under Division 43.(247) Schedule 1, item 8, page 476 (lines 20 and 21), omit subsection (4), substitute: (4) Only one notice can be given in relation to the same acquisition of a *horticultural plant.(248) Schedule 1, item 9, page 489 (lines 16 to 18), omit paragraph (b), substitute: (b) any *net capital gain included in your assessable income under Division 102 of the Income Tax Assessment Act 1997 .(249) Schedule 1, item 9, page 498 (lines 6 to 15), omit subsection (1), substitute:Choosing to discontinue and restart averaging (1) You can choose that this Division not affect your income tax liability for an income year (the reduction year ) if you show the Commissioner that, because of retirement from your occupation or from any other cause, your *basic taxable income for the reduction year is permanently reduced during that year to less than two thirds of your *average income for that year. (1A) You must make the choice by notifying the Commissioner in writing by the day you lodge your *income tax return for the reduction year. However, the Commissioner can allow you to make it later. (1B) If you make a choice under subsection (1), this Division applies to assessments for later income years as if you had never carried on a *primary production business before the reduction year.Working out the extent of the permanent reduction(250) Schedule 2, page 525 (line 1) to page 530 (line 23), omit the Schedule, substitute:Schedule 2—CGT (new Parts 3-1, 3-3 and 3-5)Part 1—Amendment of the Income Tax (Transitional Provisions) Act 19971 Chapter 3 (link note after heading) Repeal the link note.2 Before Part 3-45 Insert:Part 3-1—Capital gains and losses: general topicsDivision 102—Application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997102-1 Application of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (about capital gains and capital losses) apply to assessments for the 1998-99 income year and later income years.102-5 Working out capital gains and capital losses General rule (1) In working out whether you have made a capital gain or a capital loss from a CGT event that happens in relation to a CGT asset in the 1998-99 income year or a later income year, you use only the provisions of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (or a provision of an Act that modifies the operation of those Parts) unless a provision of this Part or Part 3-3 of this Act also requires you to use another provision. Note 1: This means that, for example, in working out your cost base of the asset, you will apply the new law to circumstances that occurred before the 1998-99 income year (except where this Act requires you to use another provision). Note 2: In most cases, the other provision is a provision of this Act. However, in some cases, other provisions may be relevant (for example, provisions of the Income Tax Assessment Act 1936 ). Note 3: Part X of the Income Tax Assessment Act 1936 includes provisions that modify the operation of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 . Roll-overs (2) If: (a) an entity acquired a CGT asset before the start of the 1998-99 income year as part of a transaction or event or series of transactions or events in respect of which there was a same-asset roll-over or replacement-asset roll-over under the Income Tax Assessment Act 1936 ; and (b) the entity owned the asset just before the start of that income year; and (c) a CGT event happens in relation to the asset in that income year or a later one; the provisions of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 apply to the asset from the time when the roll-over happened except that the first element of the cost base and reduced cost base of the asset (when the roll-over happened) is the amount the entity is taken to have paid as consideration in respect of the acquisition of the asset under the relevant provision of the Income Tax Assessment Act 1936 .102-15 Applying net capital losses (1) In working out whether you have a net capital gain for the 1998-99 income year, the amount of any net capital loss for the 1997-98 income year or an earlier income year must be worked out under the Income Tax Assessment Act 1936 . (2) If you had a net capital loss for the 1997-98 income year, or some unapplied net capital loss for either of the 2 preceding income years, under Part IIIA of the Income Tax Assessment Act 1936 , it can be carried forward to a later income year to be applied under the Income Tax Assessment Act 1997 . Note: The way in which capital losses can be applied may be affected by other provisions: see section 102-30 of the Income Tax Assessment Act 1997 . (3) If you had a net listed personal-use asset loss for the 1997-98 income year under Part IIIA of the Income Tax Assessment Act 1936 , it is taken for the purposes of the Income Tax Assessment Act 1997 to be a net capital loss from collectables for that income year.102-20 Net capital gains, capital gains and capital losses for income years before 1998-99 For the 1997-98 income year or an earlier income year: capital gain has the meaning given by Part IIIA of the Income Tax Assessment Act 1936 . capital loss has the meaning given by Part IIIA of the Income Tax Assessment Act 1936 . net capital gain has the meaning given by Part IIIA of the Income Tax Assessment Act 1936 .Division 104—CGT eventsTable of Subdivisions 104-B Use and enjoyment before title passes 104-E Trusts 104-J Reversal of roll-overs 104-K Other CGT eventsSubdivision 104-B—Use and enjoyment before title passes 104-15 Use and enjoyment before title passes A capital gain or capital loss is disregarded if: (a) you made the capital gain or capital loss for the 1997-1998 income year or an earlier income year under Part IIIA of the Income Tax Assessment Act 1936 because of an agreement to which paragraph 160M(3)(d) of that Act applies with another entity in relation to an asset; and (b) the agreement ends in the 1998-99 income year or a later income year; and (c) title in the asset does not pass to the other entity when the agreement ends.Subdivision 104-E—Trusts104-70 Capital payment before 18 December 1986 for trust interest (1) This section applies for the purpose of working out the cost base of a unit or an interest you own in a trust if these conditions are satisfied: (a) CGT event E4 happens in relation to the unit; and (b) you were taken to have disposed of the unit or interest under section 160ZM of the Income Tax Assessment Act 1936 (the former equivalent of CGT event E4) because of a payment made by the trustee before 18 December 1986; and (c) some or all of the payment (the non-assessable part ) was not included in your assessable income; and (d) some or all of the non-assessable part (the attributable part ) was attributable to a deduction under Division 10C or 10D of Part III of the Income Tax Assessment Act 1936 (about capital works). (2) The cost base of the unit or interest is also reduced by the attributable part.104-72 Application to Divisions 10C and 10D of Part III of the Income Tax Assessment Act 1936 Paragraph 104-70(7)(a) applies to deductions under Divisions 10C and 10D of Part III of the Income Tax Assessment Act 1936 (about capital works) in the same way that it applies to deductions under Division 43 of the Income Tax Assessment Act 1997 .Subdivision 104-J—Reversal of roll-overs104-175 Company ceasing to be member of wholly-owned group after roll-over (1) This section applies if there was a roll-over under section 160ZZO of the Income Tax Assessment Act 1936 for a disposal of an asset from one company to another company (the transferee ). (2) If CGT event J1 would happen in relation to the roll-over in a situation involving something happening in relation to the transferee, that event does not happen if there would have been no deemed disposal and re-acquisition of the asset by the transferee in that situation under whichever of these provisions would have been relevant for that situation if it had happened before the start of the 1998-99 income year: (a) section 160ZZOA of that Act; or (b) paragraphs 160ZZO(1)(g) and (h) of that Act. (3) In working out whether subsection (2) affects you, take into account provisions of other Acts that amended Part IIIA of the Income Tax Assessment Act 1936 and that affect the situation referred to in that subsection.Subdivision 104-K—Other CGT events104-210 Bankrupt pays amount in relation to debt Subsection 104-210(1) of the Income Tax Assessment Act 1997 applies to a net capital loss mentioned in subsection 160ZC(4A) of the Income Tax Assessment Act 1936 in the same way as it applies to a net capital loss referred to in subsection 102-5(2) of the Income Tax Assessment Act 1997 . Note: This provision covers the case where the net capital loss was for the 1997-1998 income year or an earlier one and the payment in respect of the debt was made in the 1998-99 income year or a later one.Division 108—CGT assetsTable of Subdivisions 108-A What a CGT asset is 108-B Collectables 108-D Separate CGT assetsSubdivision 108-A—What a CGT asset is108-5 CGT assets If: (a) an entity owned a thing that is not a form of property before 26 June 1992 and at all times from that day to the start of the entity's 1998-99 income year; and (b) that thing was not, before 26 June 1992, an asset as defined in section 160A of the Income Tax Assessment Act 1936 ; any capital gain or capital loss the entity makes from the asset is disregarded.Subdivision 108-B—Collectables108-15 Sets of collectables Section 108-15 of the Income Tax Assessment Act 1997 does not apply to a collectable you own that you last acquired before 16 December 1995. Note: That section has special rules for the separate disposal of collectables that are a set.Subdivision 108-D—Separate CGT assets108-75 Capital improvements to CGT assets for which a roll-over may be available (1) Subsection 108-75(2) of the Income Tax Assessment Act 1997 applies to a roll-over under section 160ZWA of the Income Tax Assessment Act 1936 in the same way that it applies to a roll-over under Subdivision 124-J of the Income Tax Assessment Act 1997 . (2) Subsection 108-75(2) of the Income Tax Assessment Act 1997 applies to a roll-over under section 160ZZF of the Income Tax Assessment Act 1936 in the same way that it applies to a roll-over under Subdivision 124-L of the Income Tax Assessment Act 1997 . (3) Subsection 108-75(2) of the Income Tax Assessment Act 1997 applies to a roll-over under section 160ZZPE of the Income Tax Assessment Act 1936 in the same way that it applies to a roll-over under Subdivision 124-C of the Income Tax Assessment Act 1997 . (4) Subsection 108-75(2) of the Income Tax Assessment Act 1997 applies to a roll-over under section 160ZWC of the Income Tax Assessment Act 1936 in the same way that it applies to a roll-over under Subdivision 124-K of the Income Tax Assessment Act 1997 . Note: This provision covers the case where the roll-over occurred in the 1997-1998 income year or an earlier one and the relevant CGT event in the 1998-99 income year or a later one.108-85 Improvement threshold Despite section 108-85 of the Income Tax Assessment Act 1997 , the Commissioner is entitled to publish the improvement threshold for the 1998-99 income year: (a) before the beginning of that year; or (b) within a reasonable time after the beginning of that year.Division 109—Acquisition of CGT assetsTable of Subdivisions 109-A Operative rulesSubdivision 109-A—Operative rules109-5 General acquisition rules (1) If: (a) the circumstances specified in the second column of the table in subsection 109-5(2) of the Income Tax Assessment Act 1997 for CGT event E1, E2 or E3 happened in relation to an asset before 12 noon, by legal time in the Australian Capital Territory, on 12 January 1994; and (b) the trustee that owned the asset just after those circumstances happened also owned it at all times from then until the start of the trustee's 1998-99 income year; the question whether those circumstances resulted in an acquisition of an asset by the trustee is to be determined under the Income Tax Assessment Act 1936 as in force just before 12 noon, by legal time in the Australian Capital Territory, on 12 January 1994. (2) The acquisition rule for CGT event E9 (about an entity creating a trust over future property) in the table in subsection 109-5(2) of the Income Tax Assessment Act 1997 does not apply to you as trustee if the agreement to create the trust was made before 12 noon, by legal time in the Australian Capital Territory, on 12 January 1994.Division 110—Cost base and reduced cost baseTable of Subdivisions 110-A Cost baseSubdivision 110-A—Cost base 110-35 Incidental costs Despite subsection 110-35(2) of the Income Tax Assessment Act 1997 , expenditure for professional advice about taxation incurred before 1 July 1989 does not form part of the cost base of a CGT asset.Division 112—Modifications to cost base and reduced cost baseTable of Subdivisions 112-A General rulesSubdivision 112-A—General rules112-20 Market value substitution rule In working out the cost base and reduced cost base of a CGT asset: (a) that you acquired before 16 August 1989; and (b) to which paragraph 112-20(2)(b) or (c), or item 5 or 6 in the table in subsection 112-20(3), of the Income Tax Assessment Act 1997 would apply (apart from this section); disregard subsections 112-20(2) and (3) of that Act. Note: This section preserves the pre-16 August 1989 position for, among other things, shares or units issued or allotted to you by allowing the market value substitution rule to apply.Division 118—ExemptionsTable of Subdivisions 118-A General exemptions 118-B Main residence 118-C GoodwillSubdivision 118-A—General exemptions118-10 Interests in collectables (1) This section applies to a collectable you own that: (a) is an interest in: (i) artwork, jewellery, an antique or a coin or medallion; or (ii) a rare folio, manuscript or book; or (iii) a postage stamp or first day cover; and (b) you last acquired before 16 December 1995. (2) A capital gain or capital loss you make from the interest is disregarded if what you paid or gave to acquire it was $500 or less.Subdivision 118-B—Main residence118-195 Exemption—dwelling acquired from deceased estate (1) This section applies to an entity: (a) that acquired an ownership interest in a dwelling as trustee of a deceased estate on or before 7.30 pm, by legal time in the Australian Capital Territory, on 20 August 1996; or (b) to whom an ownership interest in a dwelling passed as a beneficiary in a deceased estate on or before that time. (2) Item 1 in the table in subsection 118-195(1) of the Income Tax Assessment Act 1997 applies to the entity in relation to the dwelling as if that item required the dwelling to be the deceased's main residence throughout the deceased's ownership period. (3) Section 118-192 and subsections 118-190(4) and 118-200(4) do not apply to the entity in relation to the dwelling.Subdivision 118-C—Goodwill118-260 Business exemption threshold Despite section 118-260 of the Income Tax Assessment Act 1997 , the Commissioner is entitled to publish the business exemption threshold for the 1998-99 income year: (a) before the beginning of that year; or (b) within a reasonable time after the beginning of that year.Division 121—Record keepingTable of sections 121-15 Retaining records under Division 121 121-25 Records for mergers between qualifying superannuation funds121-15 Retaining records under Division 121 If you were retaining records under section 160ZZU of the Income Tax Assessment Act 1936 for an asset, you must continue to retain them in accordance with Division 121 of the Income Tax Assessment Act 1997 .121-25 Records for mergers between qualifying superannuation funds (1) A superannuation fund to which subsection 160ZZU(6A) of the Income Tax Assessment Act 1936 applied just before the start of the 1998-99 income year must keep the records referred to in that subsection, and retain them until the end of 30 June 2002. (2) A superannuation fund to which subsection 160ZZU(6B) of the Income Tax Assessment Act 1936 applied just before the start of the 1998-99 income year in relation to a CGT asset must keep the records referred to in that subsection for the asset, and retain them until the end of 5 years after CGT event A1, B1, C1, C2, G1 or G3 happens in relation to the asset. Note: The full list of CGT events is in section 104-5 of the Income Tax Assessment Act 1997 . Maximum penalty: 30 penalty units. (3) Subsection (1) or (2) does not require a fund to retain records if the Commissioner notifies the fund that the retention of the records is not required.[The next Part is Part 3-3.]Part 3-3—Capital gains and losses: special topicsDivision 126—Same asset roll-overs126-100 Merger of qualifying superannuation funds (1) This section applies to a CGT asset of a superannuation fund (the transferee ) if: (a) the transferee acquired the asset from another superannuation fund in circumstances to which section 160ZZPI of the Income Tax Assessment Act 1936 applied; and (b) the transferee owned the asset just before the start of the 1998-99 income year; and (c) CGT event A1, B1, C1, C2, G1 or G3 happens in relation to the asset in that income year or a later one. Note: The full list of CGT events is in section 104-5 of the Income Tax Assessment Act 1997 . (2) The first element of the cost base of the asset in the hands of the transferee (at the time the transferee acquired the asset) is the asset's cost base (in the hands of the other fund) at that time. (3) The reduced cost base of the asset in the hands of the transferee is worked out similarly.Division 128—Effect of death128-15 Effect on the legal personal representative or beneficiary The rule in item 3 in the table in subsection 128-15(4) of the Income Tax Assessment Act 1997 (about a dwelling that was your main residence just before you died and was not being used for the purpose of producing assessable income) does not apply to a dwelling that devolved to your legal personal representative, or passed to a beneficiary in your estate, on or before 7.30 pm, by legal time in the Australian Capital Territory, on 20 August 1996.Division 130—InvestmentsTable of Subdivisions 130-A Bonus shares and units 130-B Rights 130-C Convertible notes 130-D Employee share schemesSubdivision 130-A—Bonus shares and units130-20 Issue of bonus shares or units (1) This section modifies some of the rules in section 130-20 of the Income Tax Assessment Act 1997 if: (a) you own shares in a company or units in a unit trust (the original equities ); and (b) on or before the day specified in subsection (2) or (3), the company issues other shares, or the trustee issues other units, (the bonus equities ) to you because it owes an amount to you in relation to the original equities. (2) If the bonus equities are shares and they were issued on or before 30 June 1987: (a) subsection 130-20(2) of the Income Tax Assessment Act 1997 does not apply to you; and (b) you work out the cost base and reduced cost base of the bonus equities under subsection 130-20(3) of that Act regardless of whether any part of the amount owed to you by the company is a dividend. (3) The rule in item 2 of the table in subsection 130-20(3) of the Income Tax Assessment Act 1997 does not apply if the bonus equities were issued on or before 1 pm, by legal time in the Australian Capital Territory, on 10 December 1986 and you were required to pay or give something for them. Instead, you are taken to have acquired the bonus equities when you acquired the original equities.Subdivision 130-B—Rights130-40 Exercise of rights (1) The modifications in section 130-40 of the Income Tax Assessment Act 1997 apply to you for rights (issued to you by a company before 16 August 1989) to acquire shares, or options to acquire shares, in that company, only if you were a shareholder of that company. (2) The modifications in section 130-40 of the Income Tax Assessment Act 1997 apply to you for rights (issued to you by a company after 15 August 1989 and before the start of the 1993-94 income year) to acquire shares, or options to acquire shares in the company because you were a shareholder of another company, only if the companies were members of the same wholly-owned group for the whole of the income year in which the issue occurred. (3) The modification in item 3 of the table in section 130-40 of the Income Tax Assessment Act 1997 applies also to your exercise of rights (that you acquired before 20 September 1985) to acquire shares, or options to acquire shares, in a company.Subdivision 130-C—Convertible notes130-60 Shares or units acquired by converting a convertible note (1) The modification in item 1 of the table in subsection 130-60(1) of the Income Tax Assessment Act 1997 does not apply to shares or units in a unit trust you acquire by converting a convertible note (that is a traditional security) that you acquired after 10 May 1989 and before 16 August 1989. Instead, the first element of the cost base and reduced cost base of the shares or units is the sum of: (a) what you paid or gave to acquire the note; and (b) any amount you paid in relation to the conversion;if that sum is more than the market value of the shares or units (at the time of conversion). (2) The modification in item 2 of the table in subsection 130-60(1) of the Income Tax Assessment Act 1997 does not apply to shares you acquire by converting a convertible note (that is not a traditional security) that you acquired before 20 September 1985 where you paid or gave something in relation to the conversion. Instead, the first element of the cost base and reduced cost base of the shares is the sum of: (a) the market value of the note at the time of the conversion; and (b) what you paid or gave in relation to the conversion. (3) Subsection 130-60(2) of the Income Tax Assessment Act 1997 does not apply to the acquisition of shares by the conversion of a convertible note that you acquired before 20 September 1985 if you did not pay or give anything in relation to the conversion. Instead, you are taken to have acquired them when you acquired the convertible note.Subdivision 130-D—Employee share schemes130-95 Application of Division (1) This Subdivision applies to shares, or rights to acquire shares, you acquired under an employee share scheme if: (a) the acquisition occurred on or before 6 pm, by legal time in the Australian Capital Territory, on 28 March 1995; or (b) the acquisition occurred before 1 July 1995 as a result of an offer or invitation made on or before the time referred to in paragraph (a) made to employees of a company to acquire shares or rights in the company or in another company of which the first company was a 100% subsidiary; or (c) for shares in a public company—the acquisition occurred before 1 July 1996 where: (i) an offer or invitation to acquire the shares or rights was made to employees of the company or of another company that was a subsidiary of that company within the meaning of the Corporations Law ; and (ii) if approval of shareholders was required for the scheme—that approval was given on or before the time referred to in paragraph (a); or (d) you elected under subitem 11(5) of Part 4 of Schedule 2 to the Taxation Laws Amendment Act (No. 2) 1995 that the amendments made by that Schedule not apply to the acquisition;and an amount was included in your assessable income under section 26AAC of the Income Tax Assessment Act 1936 because of the acquisition. (2) Despite subsection (1), this Subdivision does not apply to the shares or rights if you elected under item 12 or 13 of Part 4 of Schedule 2 to the Taxation Laws Amendment Act (No. 2) 1995 that the amendments made by that Schedule apply to their acquisition.130-100 Cost base modification The first element of the cost base and reduced cost base of the shares or rights is their market value (at the time of acquisition) reduced by any amount that is excluded from being included in your assessable income under paragraph 26AAC(4F)(c) of the Income Tax Assessment Act 1936 .130-105 Time of acquisition If subsection 26AAC(15) of the Income Tax Assessment Act 1936 applies to the acquisition, you are taken to have acquired the shares or rights at the time set out in that subsection. Note: That subsection deals with the case where there are conditions or restrictions on your disposal of the shares or rights. The time of acquisition is when the conditions or restrictions end.130-110 Disposals by trustees (1) A capital gain or a capital loss a trustee makes when a beneficiary becomes absolutely entitled to a share or right in a company is disregarded if these conditions are satisfied. (2) The beneficiary must be: (a) a PAYE earner of the company or of another company (at the time the beneficiary first became beneficially entitled to the share or right); or (b) an associate or affiliate company of such a PAYE earner. (3) The terms of the trust must have required or authorised the trustee to transfer the share or right to the PAYE earner or associate. (4) The PAYE earner or associate must not have acquired the share or right for more than the cost base of the share or right (in the hands of the trustee) at the time of the transfer. (5) There must have been an acquisition of a share or a right to acquire a share by the PAYE earner or associate under a scheme for the acquisition of shares by employees to which section 26AAC of the Income Tax Assessment Act 1936 applies.130-115 Deceased estates A capital gain or capital loss a trustee makes from transferring a right to acquire shares in a company to an individual is disregarded if: (a) the individual dies and an amount is included in the assessable income of the trustee of the deceased's estate under subsection 26AAC(9) of the Income Tax Assessment Act 1936 as a result of that trustee acquiring shares because of the exercise or operation of the right; and (b) the deceased acquired the right under a trust the trustee of which is required or authorised to transfer shares in a company to employees of the company or another company or to relatives of those employees; and (c) the deceased did not acquire the right for more than the right's cost base (in the hands of the trustee) at the time of the transfer.130-120 Amendment of assessments Section 170 of the Income Tax Assessment Act 1936 does not prevent the amendment of an assessment at any time for the purpose of giving effect to this Subdivision.Division 134—Options134-1 Exercise of options The modification in item 1 in the table in subsection 134-1(1) of the Income Tax Assessment Act 1997 does not apply to an option (that was granted before 20 September 1985 and exercised after that day) that binds the grantor to dispose of a CGT asset. Instead, the first element of the cost base and reduced cost base of the CGT asset acquired by the grantee by exercising the option includes the market value of the option when it was exercised.Division 136—Non-residentsSubdivision 136-A—Making a capital gain or loss136-25 When an asset has the necessary connection with Australia A CGT asset a company owns has the necessary connection with Australia if: (a) the company acquired the asset after 28 January 1988 and on or before 25 May 1988; and (b) it acquired the asset as a result of a disposal (for the purposes of Part IIIA of the Income Tax Assessment Act 1936 ) for which there was a roll-over under section 160ZZN or 160ZZO of that Act; and (c) that disposal was by: (i) an entity that was not a trustee, and not a resident of Australia for the purposes of that Act; or (ii) an entity that was a trustee of a trust that was not a resident trust estate, or a resident unit trust, for the purposes of that Act.Division 140—Share value shiftingSubdivision 140-A—When is there share value shifting?140-7 Pre-1994 share value shifts irrelevant You make adjustments to the cost base and reduced cost base of shares under Division 140 of the Income Tax Assessment Act 1997 only in relation to schemes where the decrease in market value and increase in market value occur after 12 noon, by legal time in the Australian Capital Territory, on 12 January 1994.140-15 Off-market buy backs (8) A share value shift is disregarded under subsection 140-15(8) of the Income Tax Assessment Act 1997 only if: (a) the company concerned buys back the shares after 7.30 pm, by legal time in the Australian Capital Territory, on 9 May 1995; and (b) the buy back is not done under an arrangement that is an excluded transitional arrangement within the meaning of subsection 12(2) of the Taxation Laws Amendment Act (No. 1) 1996 .Division 149—When an asset stops being a pre-CGT asset149-5 Assets that stopped being pre-CGT assets under old law (1) This section applies to a CGT asset that: (a) an entity last acquired before 20 September 1985; and (b) the entity owned just before the start of the 1998-99 income year; and (c) the entity was taken to have acquired on a day (the acquisition day ) on or after 20 September 1985 under Division 20 of Part IIIA of the Income Tax Assessment Act 1936 . (2) In applying Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to the entity: (a) the entity is taken to have acquired the asset on the acquisition day; and (b) the first element of the cost base and reduced cost base of the asset on the acquisition day is the amount for which the entity is taken to have acquired it under Division 20 of Part IIIA of the Income Tax Assessment Act 1936 . [The next Part is Part 3-5.]Part 3-5—Corporate taxpayers and corporate distributions [The next Division is Division 165.]Division 165—Income tax consequences of changing ownership or control of a companyTable of Subdivisions 165-CA Applying net capital losses of earlier income years 165-CB Working out the net capital gain and the net capital loss for the income year of the changeSubdivision 165-CA—Applying net capital losses of earlier income years165-95 Application of Subdivision 165-CA of the Income Tax Assessment Act 1997 Subdivision 165-CA of the Income Tax Assessment Act 1997 (about companies applying net capital losses of earlier income years) applies to assessments for the 1998-99 income year and later income years.Subdivision 165-CB—Working out the net capital gain and the net capital loss for the income year of the change165-105 Application of Subdivision 165-CB of the Income Tax Assessment Act 1997 Subdivision 165-CB of the Income Tax Assessment Act 1997 (about companies working out the net capital gain and the net capital loss for the income year of the change) applies to assessments for the 1998-99 income year and later income years. [The next Division is Division 170.]Division 170—Treatment of company groups for income tax purposesTable of Subdivisions 170-B Transfer of net capital losses within wholly-owned groups of companiesSubdivision 170-B—Transfer of net capital losses within wholly-owned groups of companies170-101 Application of Subdivision 170-B of the Income Tax Assessment Act 1997 Subdivision 170-B of the Income Tax Assessment Act 1997 (about transfer of net capital losses within wholly-owned groups of companies) applies to assessments for the 1998-99 income year and later income years.170-175 Direct and indirect interests in the loss company Any reduction in the cost base and reduced cost base of a share or debt that has been made or is required to be made under subsection 160ZP(13) of the Income Tax Assessment Act 1936 (as that subsection applied from time to time) is taken to have been made or to have been required to be made under section 170-175 of the Income Tax Assessment Act 1997 .170-180 Direct and indirect interests in the gain company Any increase in the cost base and reduced cost base of a share or debt that has been made or is authorised to be made under subsections 160ZP(14) and (15) of the Income Tax Assessment Act 1936 (as those subsections applied from time to time) is taken to have been made or to have been authorised to be made under section 170-175 of the Income Tax Assessment Act 1997 . [The next Division is Division 175.]Division 175—Use of a company's losses, deductions or bad debts to avoid income taxTable of Subdivisions 175-CA Tax benefits from unused net capital losses of earlier income years 175-CB Tax benefits from unused capital losses of the current year Subdivision 175-CA—Tax benefits from unused net capital losses of earlier income years175-40 Application of Subdivision 175-CA of the Income Tax Assessment Act 1997 Subdivision 175-CA of the Income Tax Assessment Act 1997 (about companies obtaining tax benefits from unused net capital losses of earlier income years) applies to assessments for the 1998-99 income year and later income years.Subdivision 175-CB—Tax benefits from unused capital losses of the current year175-55 Application of Subdivision 175-CB of the Income Tax Assessment Act 1997 Subdivision 175-CB of the Income Tax Assessment Act 1997 (about companies obtaining tax benefits from unused capital losses of the current income year) applies to assessments for the 1998-99 income year and later income years. [The next Part is Part 3-45.]3 At the end of the Act Add: [The next Chapter is Chapter 6.]Chapter 6—The DictionaryPart 6-1—Concepts and topics [The next Division is Division 960.]Division 960—GeneralTable of Subdivisions 960-M IndexationSubdivision 960-M—Indexation960-262 Application of Subdivision 960-M of the Income Tax Assessment Act 1997 (1) Subdivision 960-M of the Income Tax Assessment Act 1997 (about indexation) applies to assessments for the 1998-99 income year and later income years (except so far as it affects the car depreciation limit). (2) For the car depreciation limit (see section 42-80 of the Income Tax Assessment Act 1997 ), that Subdivision applies to the 1998-99 financial year and later financial years.960-275 Indexation factor (1) This section applies to a CGT asset that: (a) is a share in a company that was issued or allotted to you by the company or a unit in a unit trust that was issued to you by the trustee; and (b) you acquired before 16 August 1989; and (c) you owned just before the start of the 1998-99 income year. (2) In working out the cost base of the cost base of the asset, you ignore subsection 960-275(3) and use the indexation factor in subsection 960-275(2).Part 2—Consequential amendment of the Income Tax Assessment Act 19974 Section 10-5 (table item headed "capital gains") Omit "160ZO ", substitute "102-5".5 Section 12-5 (table item headed "capital loss") Omit "160ZO ", substitute "102-10".6 Section 12-5 (table item headed "capital loss") Omit "160ZP ", substitute "Subdivision 170-B".7 Section 12-5 (table item headed "insurance and annuity business") Omit "notional Part IIIA disposal of", substitute "notional CGT event relating to".8 Paragraphs 41-20(1)(b) and (c) Repeal the paragraphs, substitute: (b) the disposal involves a *CGT event; and (c) the conditions in an item in the table are satisfied. CGT roll-overs that qualify transferor for relief under Common rule 1ItemType of CGT roll-overConditions1Disposal of asset to wholly-owned companyThere is a roll-over under Subdivision 122-A for the *CGT event. 2Disposal of asset by partnership to wholly-owned companyThe transferor is a partnership, the property is partnership property, and there is a roll-over under Subdivision 122-B for the *disposal by the partners of the *CGT assets consisting of their interests in the property.3Marriage breakdownThere is a roll-over under Subdivision 126-A for the *CGT event. 4Disposal of asset to another member of the same wholly-owned groupThere is a roll-over under Subdivision 126-B for the *CGT event. 9 At the end of section 41-20 Add: (2) In applying an item in the table in subsection (1), disregard the following so far as they relate to a *car, motor cycle or similar vehicle, or to an interest in one: (a) the exemption in section 118-5; and (b) subsection 122-25(3) (which excludes certain assets from roll-over relief).10 Section 42-395 Repeal the section, substitute:42-395 How CGT applies to pooled plant Sections 110-55 and 110-60 (about reduced cost base) apply to a *CGT event in relation to *plant as if, for a period for which the plant was in a *pool, you had deducted amounts for depreciation of it using the pool percentage as your rate and the *diminishing value method.11 Subsection 43-50(3) Omit "that you have elected to treat as a disposal of an asset under section 160ZSA of the Income Tax Assessment Act 1936 ", substitute "to which you have chosen to apply section 104-115 (CGT event F2)".12 Subsection 43-50(3) (note 1) Repeal the Note, substitute: Note 1: Choosing to apply section 104-115 results in the lease being treated for CGT purposes more like an outright disposal.13 Subsection 43-180(3) Omit "that you are taken to have disposed of under section 160ZSA of the Income Tax Assessment Act 1936 ", substitute "in relation to which CGT event F2 has happened".14 Subsection 43-180(3) (note 1) Repeal the Note, substitute: Note 1: CGT event F2 results in a lease with a term of 50 years or more being treated for CGT purposes more like an outright disposal.15 Subsection 70-30(1) (note) Omit "Part IIIA (Capital gains and capital losses) of the Income Tax Assessment Act 1936 ", substitute "Parts 3-1 and 3-3 (about CGT)".16 Subsection 70-30(1) (note) Omit "160ZB(7) of that Act", substitute "118-25(2)".17 Subsection 70-30(4) Repeal the subsection, substitute: (4) However, if you last acquired the item for no consideration, its cost is worked out using this table:Cost of item acquired for no considerationItemIn this case:The cost is:1you acquired the item during or after the 1998-99 income year, and the acquisition involved a *CGT eventthe item's market value when you last acquired it2you acquired the item before or during the 1997-98 income year, and the acquisition involved a disposal of the item to you within the meaning of Part IIIA (Capital gains and capital losses) of the Income Tax Assessment Act 1936the item's market value when you last acquired it3your acquisition of the item involved the item: (a)devolving to you as someone's *legal personal representative; or (b)*passing to you as a beneficiary in someone's estate; and, if a *CGT event had happened in relation to the item just before you started holding it as *trading stock, a *capital gain or *capital loss could have resulted that would have been taken into account in working out your *net capital gain or *net capital loss for the income year of the event(a)if the person died during or after his or her 1998-99 income year—the dead person's *cost base for the item just before his or her death; or (b)if the person died before or during his or her 1997-98 income year—the dead person's indexed cost base (within the meaning of Part IIIA (Capital gains and capital losses) of the Income Tax Assessment Act 1936 ) for the item just before his or her death (but worked out disregarding section 160ZG (which affects the indexed cost base for a non-listed personal use asset) of that Act)4any other case where you last acquired the item for no considerationa nil amount18 Chapter 3 (link note after heading) Repeal the link note.18A Section 165-5 Omit "entered no new transactions and conducted no additional business", substitute "entered no new kinds of transactions and conducted no new kinds of business".19 Subsection 165-60(2A) Repeal the subsection, substitute: (2A) However, so much of an amount included in the company's assessable income under section 97 or 98A of the Income Tax Assessment Act 1936 as is a *capital gain that forms part of a *net capital gain is not attributed to a period.20 Subsection 165-60(6A) Repeal the subsection, substitute: (6A) A *net capital gain is not attributed to a period. Note: This is because Subdivision 165-CB provides for how the company must work out its net capital gain for the income year.21 Subsection 165-60(7) Omit "capital gain that forms part of a net capital gain", substitute "*capital gain that forms part of a *net capital gain".22 Subsection 165-65(3) Omit "net capital gain that accrued to the company in respect of", substitute "*net capital gain of the company for".23 Paragraph 165-70(3)(f) Omit "net capital gain that accrued to the company in respect of", substitute "*net capital gain of the company for".24 Subdivision 166-B (heading) Repeal the heading, substitute:Subdivision 166-B—Working out the taxable income, tax loss, net capital gain and net capital loss for the income year of the change25 Section 166-20 (heading) Omit "Subdivision 165-B applies ", substitute "Subdivisions 165-B and 165-CB apply ".26 Subsection 166-20(1) Omit "the way Subdivision 165-B applies", substitute "how Subdivisions 165-B and 165-CB apply".27 Subsection 166-20(1) (after note 1) Insert: Note 1A: Subdivision 165-CB is about when a company must calculate its net capital gain and net capital loss for the income year in a special way.28 Subsection 166-20(1) (note 2) Omit "Subdivision 165-B applies", substitute "Subdivisions 165-B and 165-CB apply".29 Section 166-25 (heading) Omit "and tax loss ", substitute ", tax loss, net capital gain and net capital loss ".30 Subsection 166-25(1) After "Subdivision 165-B,", insert "and its *net capital gain and *net capital loss under Subdivision 165-CB,".31 Section 166-30 (heading) Omit "Subdivision 165-B applies ", substitute "Subdivisions 165-B and 165-CB apply ".32 At the end of subsection 166-30(1) Add: Note 2: Subdivision 165-CB is about when a company must calculate its net capital gain and net capital loss for the income year in a special way.33 Subsection 166-30(4) Omit "Subdivision 165-B", substitute "Subdivisions 165-B and 165-CB".34 Subsection 166-35(1) Omit "Subdivision 165-B is to", substitute "Subdivisions 165-B and 165-CB are to".35 Subsection 166-240(1) Omit "the *head company or *interposed company", substitute "a company".36 Subsection 166-240(1) Omit "the *ownership test time", substitute "a particular time".37 Subsection 166-240(2) Omit "the *head company or *interposed company", substitute "a company".38 Subsection 166-240(2) Omit "the *ownership test time", substitute "a particular time".39 Subsection 166-240(3) Omit "the *head company or *interposed company", substitute "a company". 40 Subsection 166-240(3) Omit "the *ownership test time", substitute "a particular time".41 Subsection 166-270(3) After "an equal proportion of", insert "that percentage of".42 Section 175-25 (heading) Repeal the heading, substitute:175-25 Deduction injected into company because of available income or capital gain43 At the end of subsection 175-25(1) Add ", or had not made some or all of a *capital gain it made in that income year".44 Section 195-1 Omit "Division", substitute "Subdivision".45 Subsection 195-15(6) (link note) Repeal the link note.46 After section 195-15 Insert:Working out a PDF's net capital gain and net capital loss195-25 Applying a PDF's net capital losses If a company is a *PDF at the end of an income year for which it has a *net capital loss, it can apply the loss in working out its *net capital gain for a later income year only if it is a PDF throughout the last day of the later income year.195-30 PDF cannot transfer net capital loss If a company is a *PDF at the end of an income year for which it has a *net capital loss, it cannot transfer any amount of the loss under Subdivision 170-B (which is about the transfer of net capital losses within wholly-owned groups of companies).195-35 Net capital loss for year in which company becomes a PDF (1) This section applies if a company becomes a *PDF during an income year and is still a PDF at the end of it. (2) Divide the income year into periods according to subsection 195-15(2) (about working out the company's tax loss for the income year). (3) For each period, work out whether the company has a *net capital gain or a *net capital loss (or both), treating each period as if it were an income year. (4) If the company has: (a) a *net capital gain for the non-PDF period; and (b) a *net capital loss for the PDF period; that loss is a net capital loss of the company for the income year. Note: The company can only apply the loss while it is a PDF: see section 195-25. (5) If the company has a *net capital loss for the non-PDF period: (a) section 195-25 does not prevent the company from applying its *net capital loss for the income year in working out its *net capital gain for a later income year; and (b) section 195-30 does not prevent the company from transferring an amount of its net capital loss for the income year under Subdivision 170-B (which is about the transfer of net capital losses within wholly-owned groups of companies); to the extent that its net capital loss for the income year does not exceed its net capital loss for the non-PDF period. (6) These rules apply in addition to the other rules about how *net capital losses are applied or transferred. The other rules start in Division 102 (about net capital gains and losses).[The next Part is Part 3-45.]47 After paragraph 387-490(2)(a) Insert: (ba) if a *net capital gain is or will be included in your assessable income for any income year—the part of the net capital gain that is attributable to a premium on the grant or assignment of the lease; orPart 3—Consequential amendment of the Income Tax Assessment Act 193648 Subsection 6(1) Insert: 100% subsidiary has the same meaning as in the Income Tax Assessment Act 1997 .49 Subsection 6(1) (definition of capital gain ) Repeal the definition, substitute: capital gain has the same meaning as in the Income Tax Assessment Act 1997 .50 Subsection 6(1) (definition of capital loss ) Repeal the definition, substitute: capital loss has the same meaning as in the Income Tax Assessment Act 1997 .51 Subsection 6(1) Insert: capital proceeds has the same meaning as in the Income Tax Assessment Act 1997 .52 Subsection 6(1) Insert: CGT asset has the same meaning as in the Income Tax Assessment Act 1997 .53 Subsection 6(1) Insert: CGT event has the same meaning as in the Income Tax Assessment Act 1997 .54 Subsection 6(1) Insert: cost base of a CGT asset has the same meaning as in the Income Tax Assessment Act 1997 .55 Subsection 6(1) Insert: exempt entity has the same meaning as in the Income Tax Assessment Act 1997 .56 Subsection 6(1) Insert: necessary connection with Australia has the same meaning as in the Income Tax Assessment Act 1997 .57 Subsection 6(1) (definition of net capital gain ) Repeal the definition, substitute: net capital gain has the same meaning as in the Income Tax Assessment Act 1997 .58 Subsection 6(1) (definition of net capital loss ) Repeal the definition, substitute: net capital loss has the same meaning as in the Income Tax Assessment Act 1997 .59 Subsection 6(1) Insert: ordinary income has the same meaning as in the Income Tax Assessment Act 1997 .60 Subsection 6(1) Insert: reduced cost base of a CGT asset has the same meaning as in the Income Tax Assessment Act 1997 .61 Subsection 6(1) Insert: resident trust for CGT purposes has the same meaning as in the Income Tax Assessment Act 1997 .62 Subsection 23AH(4) Omit "subsection 160ZA(4)", substitute "section 118-20 of the Income Tax Assessment Act 1997 ".63 Subsection 23AH(6) Omit "the disposal of an asset by a taxpayer", substitute "a CGT event that happens in relation to a CGT asset of a taxpayer".64 Paragraph 23AH(6)(a) Omit "the asset is disposed of during", substitute "the CGT event happens during".65 Paragraph 23AH(6)(d) Repeal the paragraph, substitute: (d) the asset does not have the necessary connection with Australia;66 Paragraph 23AH(6)(e) Omit "the disposal of the asset", substitute "the CGT event".67 Subsection 23AH(7) Omit "the disposal of an asset of a taxpayer", substitute "a CGT event that happens in relation to a CGT asset of a taxpayer".68 Paragraph 23AH(7)(a) Omit "the taxpayer's asset is disposed of during", substitute "the CGT event happens during".69 Paragraph 23AH(7)(d) Repeal the paragraph, substitute: (d) the taxpayer's asset does not have the necessary connection with Australia;70 Paragraph 23AH(7)(e) Omit "the disposal of the taxpayer's asset", substitute "the CGT event".71 Subsection 23AH(8) Repeal the subsection, substitute: (8) If the original taxpayer in relation to the foreign branch capital gain is a company, any capital gain (for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 ) made by the company from the CGT asset is disregarded.72 Paragraph 23AH(8A)(a) Repeal the paragraph, substitute: (a) a CGT event happens in relation to a CGT asset of a company; and73 Paragraph 23AH(8A)(b) Omit "the disposal", substitute "the CGT event".74 Paragraph 23AH(8A)(c) Omit "the disposal", substitute "the CGT event".75 Subsection 23AH(8A) Omit "no capital loss is incurred by the taxpayer under Part IIIA in respect of the disposal of the asset", substitute "any capital loss (for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 ) made by the taxpayer from the CGT event is disregarded".76 Subparagraph 23AH(9)(c)(iii) Repeal the subparagraph, substitute: (iii) the original taxpayer had no capital loss (for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 ) for that year of income; and77 Sub-subparagraph 23AH(9)(c)(iv)(C) Repeal the sub-subparagraph, substitute: (c) none of the interposed partnerships or trusts had a capital loss (for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 );78 Paragraph 23AH(9A)(a) Repeal the paragraph, substitute: (a) a CGT event happens in relation to a CGT asset of a taxpayer (the original taxpayer ), being the trustee of a trust estate; and79 Paragraph 23AH(9A)(b) Omit "the disposal", substitute "the CGT event".80 Paragraph 23AH(9A)(c) Omit "the disposal", substitute "the CGT event".81 Paragraph 23AH(9A)(d) Repeal the paragraph, substitute: (d) the original taxpayer had made a capital loss (for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 ) from the CGT event; and82 Subparagraph 23AH(9A)(f)(iii) Repeal the subparagraph, substitute: (iii) the original taxpayer had no capital loss (for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 ) for that year of income; and83 Sub-subparagraph 23AH(9A)(f)(iv)(C) Repeal the sub-subparagraph, substitute: (c) none of the interposed partnerships or trusts had a capital loss (for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 );84 Subsection 23AH(9A) Omit "no such capital loss had been incurred by the original taxpayer", substitute "the original taxpayer had made no such capital loss (for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 )".85 Subsection 23AH(10) Repeal the subsection.86 Subsection 23AH(12) (paragraph (a) of the definition of foreign income ) Omit "Part IIIA", substitute "Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 (about CGT)".87 Subsection 24P(1) Omit "an asset", substitute "a CGT asset".88 Subsection 24P(2) Omit "Part IIIA", substitute "Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ".89 Paragraphs 24P(2)(b) and (c) Repeal the paragraphs, substitute: (b) the first element of the asset's cost base in the hands of the taxpayer (at the end of 30 June 1991) is its market value at that time.90 Subsections 24P(3) and (4) Repeal the subsections, substitute: (3) Despite Division 121 of the Income Tax Assessment Act 1997 , the taxpayer is not required to keep records of the date of acquisition of the asset, or its cost base on 30 June 1991.91 Subsection 24P(5) Omit "a taxpayer disposes of an asset", substitute "a CGT event happens in relation to the asset".92 Subsection 24P(5) After "160ZZU", insert "of this Act and Division 121 of the Income Tax Assessment Act 1997 ".93 Subsection 24P(6) Omit "disposal", substitute "CGT event".94 Paragraph 24AW(h) Omit "Part IIIA", substitute "Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ".95 Subsection 24AX(1) Omit "Part IIIA", substitute "Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ". 96 Subsection 26AAC(11A) Repeal the subsection, substitute: (11A) Subsection (11) does not apply to a disposal of a right to acquire a share in a company if that disposal would result in a capital gain or capital loss for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 .97 Subsection 26AAC(12A) Repeal the subsection, substitute: (12A) Subsection (12) does not apply to a disposal of a right to acquire a share in a company if that disposal would result in a capital gain or capital loss for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 .98 Subsection 26AAC(13A) Repeal the subsection, substitute: (13A) Subsection (13) does not apply to a disposal of a right to acquire a share in a company if that disposal would result in a capital gain or capital loss for the purposes of Part 3-1 of the Income Tax Assessment Act 1997 .99 Subsection 26AB(1A) (note) Repeal the Note, substitute: Note: The Income Tax Assessment Act 1997 does not contain a rewritten version of this section. For the 1998-99 year of income and later years of income, Parts 3-1 and 3-3 (about CGT) deal with the income tax treatment of premiums for: . granting leases; and . assigning leases granted on or after 20 September 1985. For the 1997-98 year of income, Part IIIA of this Act (about CGT) deals with the income tax treatment of such premiums.100 Subsection 26BC(1) (paragraph (e) of the definition of distribution ) Repeal the paragraph, substitute: (e) a unit issued by the trustee of a unit trust to which section 130-20 of the Income Tax Assessment Act 1997 applies (apart from subsection (4) of that section).101 Subsection 26BC(1) (paragraph (d) of the definition of public company ) Omit "subsidiary", substitute "100% subsidiary".102 Subsection 26BC(1) (definition of subsidiary ) Repeal the definition.103 Paragraph 26BC(4)(a) Omit "Part IIIA", substitute "Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 (about CGT)".104 Subsection 26BC(4A) Omit "Part IIIA", substitute "Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 ".105 Subsection 26BC(4B) Omit "Part IIIA", substitute "Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 ".106 Paragraph 26BC(5)(a) Omit "Part IIIA", substitute "Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 ".107 Subsections 26BC(6) and (7) Repeal the subsections, substitute: (6) Any capital gain or capital loss from the disposal of the borrowed security by the lender is disregarded. (6A) If the lender acquired the borrowed security before 20 September 1985, the lender is taken (for the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ) to have acquired the replacement security before that day. (6B) If the lender acquired the borrowed security on or after 20 September 1985, the first element of the cost base of the replacement security is the cost base of the borrowed security just before the acquisition of the replacement security. The reduced cost base of the replacement security is worked out similarly. (7) If: (a) the borrowed security was acquired on or after 20 September 1985; and (b) a CGT event (other than one involving a transaction covered by subsection (3)) happens in relation to the replacement security at least 12 months after the lender acquired a paired security in relation to the replacement security (otherwise than under a transaction covered by subsection (3)); section 114-10 of the Income Tax Assessment Act 1997 (about the requirement for 12 months ownership) does not apply to the CGT event.108 Paragraph 26BC(8)(a) Repeal the paragraph, substitute: (a) if CGT event A1 happens (involving a transaction covered by subsection (3)) by the lender disposing of an eligible security to the borrower, that security is a paired security in relation to the replacement security subsequently acquired or re-acquired by the lender; and109 Subsections 26BC(9) and (9A) Repeal the subsections, substitute: (9) For the purpose of applying Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to the borrower: (a) if the borrower disposes of the borrowed security to a third party: (i) the first element of the cost base and reduced cost base of the borrowed security (in the hands of the borrower) is taken to be its market value when the borrower acquired it; and (ii) when the borrower disposes of a replacement security to the lender, the capital proceeds from that CGT event are taken to be that market value; and (b) if no third party is involved—the transactions referred to in paragraph (3)(a) are ignored. (9A) For the purpose of applying Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 to the borrower, the incidental costs to the borrower of the acquisition of an eligible security covered by sub-subparagraph (3)(a)(ii)(B) include a compensatory payment incurred by the borrower (to the extent that the borrower has not deducted and cannot deduct it).110 Subsection 26BC(9B) Omit "Part IIIA", substitute "Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ".111 Subsection 26BC(9C) Omit "Part IIIA", substitute "Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ".112 Subsection 26BC(9D) Omit "Part IIIA", substitute "Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ".113 Subsection 26BC(9E) Omit "section 160ZYC" (wherever occurring), substitute "section 130-20 of the Income Tax Assessment Act 1997 ".114 Subsection 26BC(9E) Omit "Part IIIA", substitute "Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ".115 Subsection 26BC(9F) Omit "Part IIIA", substitute "Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ".116 Paragraph 26BC(9F)(c) Repeal the paragraph, substitute: (c) the lender had disposed of the right or option immediately after its issue and had received capital proceeds of an amount equal to the compensatory payment.117 Subsection 26BC(9G) Omit "Part IIIA", substitute "Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ".118 Paragraph 26BC(9G)(c) Repeal the paragraph, substitute: (c) the lender had immediately disposed of the shares, units, bonds, debentures or financial instruments that resulted from exercising the right or option and had received capital proceeds of an amount equal to the compensatory payment.119 Subsections 26BC(10) and (11) Repeal the subsections.[The next item is 122]122 Paragraph 27CB(1)(d) Omit "a capital gain accrues to the taxpayer", substitute "the taxpayer makes a capital gain".123 Subparagraph 46A(12A)(a)(i) Omit "if the relevant property was disposed of by the shareholder", substitute "if a CGT event happened in relation to the relevant property".124 Sub-subparagraph 46A(12A)(a)(i)(A) Omit "disposal", substitute "event".125 Subparagraph 46A(12A)(b)(i) Omit "if the relevant property is disposed of by the shareholder", substitute "if a CGT event happens in relation to the relevant property".126 Sub-subparagraph 46A(12A)(b)(i)(A) Omit "disposal", substitute "event".127 Before subsection 46A(12B) Insert: (12BA) If there was a roll-over under Division 122, 124 or 126 of the Income Tax Assessment Act 1997 (except under Subdivision 124-J, 124-K or 124-L of that Act) for a CGT event that resulted in a shareholder acquiring relevant property, then, for the purposes of subsection (12A), the property's cost base to the shareholder is worked out as if the shareholder had acquired the property for what would, but for the roll-over, have been its cost base for the purpose of working out the amount of a capital gain arising from the event.128 Subsection 46A(12C) Repeal the subsection.129 Subsection 46A(13CA) Omit "whether an asset was acquired on or after that date is determined under Part IIIA", substitute "when a CGT asset was acquired is determined for the purposes of the Income Tax Assessment Act 1997 ".130 Subsection 46B(5A) Omit "whether an asset was acquired on or after that date is determined under Part IIIA", substitute "when a CGT asset was acquired is determined for the purposes of the Income Tax Assessment Act 1997 ".131 Sub-subparagraph 46E(2)(a)(v)(B) Repeal the sub-subparagraph, substitute: (b) the asset-holding company acquired the asset on or after 20 September 1985, the disposal would have been a CGT event, and a capital gain or capital loss arising from the event would not have had to be disregarded (apart from a roll-over under Division 122, 124 or 126 of the Income Tax Assessment Act 1997 (except under Subdivision 124-J, 124-K or 124-L of that Act)); and132 Subsection 46E(5) Omit "whether an asset was acquired on or after that date is determined under Part IIIA", substitute "when a CGT asset was acquired is determined for the purposes of the Income Tax Assessment Act 1997 ".133 Subparagraph 46E(6)(b)(ii) Repeal the subparagraph, substitute: (ii) the company acquired the asset on or after 20 September 1985, the disposal would have been a CGT event, and a capital gain or capital loss arising from the event would not have had to be disregarded (apart from a roll-over under Division 122, 124 or 126 of the Income Tax Assessment Act 1997 (except under Subdivision 124-J, 124-K or 124-L of that Act).134 Paragraph 46E(11)(b) Repeal the paragraph, substitute: (b) the taxpayer not making a capital gain during the year of income that the taxpayer would have made (or might reasonably be expected to have made) if the arrangement had not been entered into or carried out.135 Paragraphs 47(1A)(a) and (b) Repeal the paragraphs, substitute: (a) an amount (except a net capital gain) included in the company's assessable income for a year of income; or (b) a net capital gain that would be included in the company's assessable income for a year of income if the Income Tax Assessment Act 1997 required a net capital gain to be worked out as follows: Method statement Step 1. Work out each capital gain that the company made during that year of income. Do so without indexing any amount used to work out the cost base of a CGT asset. Step 2. Total the capital gain or gains worked out under Step 1. The result is the net capital gain for that year of income.136 Paragraph 51AAA(1)(a) Omit "160ZO", substitute "102-5 of the Income Tax Assessment Act 1997 (about net capital gains) or subsection 116CD(2), 116GB(2) or 124ZZB(1) of this Act (about notional capital gains of life assurance companies, registered organisations or PDFs)".137 Subparagraph 54AA(7A)(b)(ii) Omit "because of a relevant exempting provision (within the meaning of section 160K)", substitute "because the authority is an exempt entity".138 Subsection 63D(1) (paragraph (d) of the definition of Eligible debt term ) Omit "Part IIIA", substitute "section 318".139 Paragraph 73AA(1)(a) Repeal the paragraph.140 At the end of subsection 73AA(1) Add: ; and (c) the disposal involves a CGT event; and (d) the conditions in an item in the table are satisfied.CGT roll-overs that qualify transferor for relief Item Type of CGT roll-over Conditions1Disposal of asset to wholly-owned companyThere is a roll-over under Subdivision 122-A of the Income Tax Assessment Act 1997 for the CGT event. 2Disposal of asset by partnership to wholly-owned companyThe transferor is a partnership, the building or part is partnership property, and there is a roll-over under Subdivision 122-B of the Income Tax Assessment Act 1997 for the disposal by the partners of the CGT assets consisting of their interests in the building or part. 3Marriage breakdownThere is a roll-over under Subdivision 126-A of the Income Tax Assessment Act 1997 for the CGT event. 4Disposal of asset to another member of the same wholly-owned groupThere is a roll-over under Subdivision 126-B of the Income Tax Assessment Act 1997 for the CGT event. Note: The heading to section 73AA is replaced by the heading "Section 73A roll-over relief in the case of certain CGT roll-overs ".141 Paragraph 73E(1)(a) Repeal the paragraph, substitute: (a) the disposal involves a CGT event for which there is a roll-over under Subdivision 126-B of the Income Tax Assessment Act 1997 (or would be, disregarding the exemption in section 118-5 of that Act, so far as it relates to a car, motor cycle or similar vehicle, or to an interest in one); and Note: The heading to section 73E is replaced by the heading "Section 73B roll-over relief on disposal of unit of plant to another member of same wholly-owned group ".142 Subsection 73E(12) Repeal the subsection.143 Paragraph 73F(2)(a) Repeal the paragraph, substitute: (a) the disposal involves a CGT event for which there is a roll-over under Subdivision 126-B of the Income Tax Assessment Act 1997 ; and Note: The heading to section 73F is replaced by the heading "Section 73B roll-over relief on disposal of building etc. to another member of same wholly-owned group ".144 Paragraph 73G(1)(a) Repeal the paragraph, substitute: (a) the disposal involves a CGT event for which there is a roll-over under Subdivision 126-B of the Income Tax Assessment Act 1997 ; and Note: The heading to section 73G is replaced by the heading "Section 73B roll-over relief on disposal of item of intellectual property to another member of same wholly-owned group ".145 Subsection 82V(1) (definition of associate ) Omit "Part IIIA", substitute "section 318".146 Section 102AAZB Repeal the section, substitute:102AAZB General modifications—CGT For the purposes of applying this Act in calculating the attributable income of a trust estate, Parts 3-1 and 3-1 of the Income Tax Assessment Act 1997 (about CGT) apply as if: (a) sections 118-12 (about assets used to produce exempt income) and 136-45 (about a trust becoming a resident trust) were disregarded; and (b) the trust estate were a resident trust for CGT purposes.147 Paragraph 102AAZBA(a) Omit "resident trust estate or a resident unit trust, as the case may be, within the meaning of Part IIIA", substitute "resident trust for CGT purposes". Note: The heading to section 102AAZBA is replaced by the heading "Modified application of CGT—effect of certain changes of residence ".148 Paragraphs 102AAZBA(b), (c) and (d) Repeal the paragraphs, substitute: (b) the trust estate owned a CGT asset at the residence-change time; and (c) a CGT event happens in relation to the asset during the attributable income year; and (d) subsection 160M(9) or (10) of this Act, or section 104-170 of the Income Tax Assessment Act 1997 (CGT event I2), applies to the asset in respect of the change of residence for the purposes of the application of this Act apart from this Subdivision;149 Section 102AAZBA Omit "to 417", substitute "to 414".150 Paragraph 102AAZBA(g) Omit "non-taxable Australian".151 Paragraph 102AAZBA(j) Repeal the paragraph, substitute: (j) subsections 412(2) and (3), and paragraphs 414(3)(b) and (4)(b), referred only to the market value of the asset concerned.152 Subsection 110(1) Insert: accumulated net capital loss for a year of income (the loss year ) means the amount (if any) by which the total of: (a) the total of the overall capital losses for all classes of assessable income for the loss year; and (b) any accumulated net capital loss for the last year of income before the loss year; exceeds: (c) the total of the overall non-exempt capital gains for all classes of assessable income for the loss year (before section 116CD is applied).153 Subsection 110(1) (paragraph (a) of the definition of current year deduction ) Omit "Part IIIA disposals", substitute "CGT event".154 Subsection 110(1) (definition of fund asset ) Repeal the definition, substitute: fund asset , in relation to a notional CGT event, means a CGT asset that was included in any of the insurance funds immediately before the event.155 Subsection 110(1) (definition of modified 25/25A amount ) Repeal the definition.156 Subsection 110(1) (definition of modified 51/52 amount ) Repeal the definition.157 Subsection 110(1) (definition of modified 160Z gain amount ) Repeal the definition.158 Subsection 110(1) (definition of modified 160Z loss amount ) Repeal the definition.159 Subsection 110(1) Insert: modified capital loss for a notional CGT event means any capital loss that would (apart from this Division) arise from the event if Division 10 of Part IX applied in respect of the event.160 Subsection 110(1) Insert: modified general deduction for a notional CGT event means an amount that (apart from sections 116CB and 116CC) could be deducted under: (a) section 8-1 or 25-40 of the Income Tax Assessment Act 1997 ; or (b) section 52 of this Act; in respect of the event if Division 10 of Part IX of this Act applied in respect of the event.161 Subsection 110(1) Insert: modified ordinary income amount for a notional CGT event means an amount that (apart from sections 116CB and 116CC) would be included in assessable income under: (a) section 6-5 or 15-15 of the Income Tax Assessment Act 1997 ; or (b) section 25A of this Act; in respect of the event if Division 10 of Part IX of this Act applied in respect of the event.162 Subsection 110(1) Insert: non-exempt modified capital gain for a notional CGT event means any capital gain that would (apart from this Division) arise from the event if Division 10 of Part IX applied in respect of the event, reduced as follows: (a) if, had the gain instead been ordinary income derived when the gain was made, some or all of the ordinary income would have been exempt income under section 112C: (i) reduce the gain by so much of that ordinary income as would have been so exempt; and (ii) further reduce the rest of the gain (if any) by the proportion worked out using the formula in section 112A; (b) otherwise—reduce the gain by the proportion worked out using the formula in section 112A.163 Subsection 110(1) Insert: non-exempt ordinary capital gain for a notional CGT event means any capital gain that would (apart from this Division) arise from the event, reduced as follows: (a) if, had the gain instead been ordinary income derived when the gain was made, some or all of the ordinary income would have been exempt income under section 112C: (i) reduce the gain by so much of that ordinary income as would have been so exempt; and (ii) further reduce the rest of the gain (if any) by the proportion worked out using the formula in section 112A; and (b) otherwise—reduce the gain by the proportion worked out using the formula in section 112A.164 Subsection 110(1) (definition of non-fund asset ) Repeal the definition, substitute: non-fund asset , in relation to a notional CGT event, means a CGT asset that was not included in any of the insurance funds immediately before the event.165 Subsection 110(1) (definition of notional Part IIIA disposal ) Repeal the definition.166 Subsection 110(1) (definition of notional Part IIIA disposals deduction ) Repeal the definition.167 Subsection 110(1) (definition of notional Part IIIA disposals income ) Repeal the definition.168 Subsection 110(1) Insert: notional CGT event means: (a) a CGT event that involves a CGT asset (unless a capital gain or capital loss arising from the event is to be disregarded); or (b) a CGT event: (i) that involves a CGT asset; and (ii) for which there would be a roll-over under Part 3-3 of the Income Tax Assessment Act 1997 if subsection 306(1) of this Act applied to that asset; (unless a capital gain or capital loss arising from the event would have to be disregarded even without the roll-over). 169 Subsection 110(1) Insert: notional CGT event deduction means so much of any unmodified or modified general deduction as can be deducted.170 Subsection 110(1) Insert: notional CGT event income means: (a) so much of any unmodified or modified ordinary income amount as is included in assessable income; or (b) any amount included in assessable income under section 116CD.171 Subsection 110(1) (definition of ordinary 25/25A amount ) Repeal the definition.172 Subsection 110(1) (definition of ordinary 51/52 amount ) Repeal the definition.173 Subsection 110(1) (definition of ordinary 160Z gain amount ) Repeal the definition.174 Subsection 110(1) (definition of ordinary 160Z loss amount ) Repeal the definition.175 Subsection 110(1) Insert: ordinary capital loss for a notional CGT event means any capital loss that would (apart from this Division) arise from the event.176 Subsection 110(1) (definition of overall 160Z gain ) Repeal the definition.177 Subsection 110(1) (definition of overall 160Z loss ) Repeal the definition.178 Subsection 110(1) Insert: overall capital loss means: (a) for the general fund class—the amount by which the total of the non-exempt ordinary capital gains for that class is less than the total of the ordinary capital losses for that class; or (b) for the CS/RA class—the amount by which the total non-exempt modified capital gain for that class is less than the total modified capital loss for that class; or (c) for any other class—the amount by which the total non-exempt ordinary capital gain for that class is less than the total ordinary capital loss for that class.179 Subsection 110(1) Insert: overall non-exempt capital gain means: (a) for the general fund class—the amount by which the total of the non-exempt ordinary capital gains for that class exceeds the total of the ordinary capital losses for that class; or (b) for the CS/RA class—the amount by which the total non-exempt modified capital gain for that class exceeds the total modified capital loss for that class; or (c) for any other class—the amount by which the total non-exempt ordinary capital gain for that class exceeds the total ordinary capital loss for that class; or, if an amount has been applied under subsection 116CD(3) to reduce an overall non-exempt capital gain previously worked out under this definition, that gain as so reduced.180 Subsection 110(1) (definition of prior year Part IIIA loss ) Repeal the definition. 181 Subsection 110(1) (definition of residual overall 160Z gain ) Repeal the definition.182 Subsection 110(1) Insert: residual overall non-exempt capital gain means so much of an overall non-exempt capital gain as remains after applying subsection 116CD(3).183 Subsection 110(1) (definition of total modified 160Z gain amount ) Repeal the definition.184 Subsection 110(1) (definition of total modified 160Z loss amount ) Repeal the definition.185 Subsection 110(1) Insert: total modified capital loss for the CS/RA class means the total of so much of any modified capital losses as has been allocated to that class under section 116CB.186 Subsection 110(1) Insert: total non-exempt modified capital gain for the CS/RA class means the total of so much of any non-exempt modified capital gains as has been allocated to that class under section 116CB.187 Subsection 110(1) Insert: total non-exempt ordinary capital gain for a class means the total of so much of any non-exempt ordinary capital gains as has been allocated to that class under section 116CB.188 Subsection 110(1) (definition of total ordinary 160Z gain amount ) Repeal the definition.189 Subsection 110(1) (definition of total ordinary 160Z loss amount ) Repeal the definition.190 Subsection 110(1) Insert: total ordinary capital loss for a class means the total of so much of any ordinary capital losses as has been allocated to that class under section 116CB.191 Subsection 110(1) Insert: unmodified general deduction for a notional CGT event means an amount that (apart from sections 116CB and 116CC) could be deducted in respect of the event under: (a) section 8-1 or 25-40 of the Income Tax Assessment Act 1997 ; or (b) section 52 of this Act.192 Subsection 110(1) Insert: unmodified ordinary income amount for a notional CGT event means an amount that (apart from sections 116CB and 116CC) would be included in assessable income in respect of the event under: (a) section 6-5 or 15-15 of the Income Tax Assessment Act 1997 ; or (b) section 25A of this Act.193 Subsection 116CB(1) Repeal the subsection, substitute: (1) The core amounts for a notional CGT event for a fund asset are as follows: (a) any un modified ordinary income amount; (b) any un modified general deduction; (c) any modified ordinary income amount; (d) any modified general deduction; (e) any non-exempt ordinary capital gain; (f) any ordinary capital loss; (g) any non-exempt modified capital gain; (h) any modified capital loss. Note: The heading to section 116CB is replaced by the heading "Notional CGT events for fund assets ".194 Subsection 116CB(2) Omit "Part IIIA disposal of a fund asset shall be", substitute "CGT even for a fund asset are".195 Subsection 116CB(2) (definitions of average calculated liabilities (all non-exempt resident policies) and average calculated liabilities (categories of policies) ) Omit "disposal", substitute "the CGT event".196 Subsection 116CB(3) Omit "Part IIIA disposal of", substitute "CGT event for".197 Paragraph 116CB(3)(a) Omit "ordinary 25/25A amount", substitute "un modified ordinary income amount".198 Paragraph 116CB(3)(b) Omit "ordinary 51/52 amount", substitute "un modified general deduction".199 Paragraph 116CB(3)(c) Omit "modified 25/25A amount", substitute "modified ordinary income amount".200 Paragraph 116CB(3)(d) Omit "modified 51/52 amount", substitute "modified general deduction".201 Paragraphs 116CB(3)(e) and (f) Repeal the paragraphs, substitute: (e) so much of any non-exempt ordinary capital gain or ordinary capital loss as is distributed to a class other than the CS/RA class is taken into account in determining the overall non-exempt capital gain or overall capital loss for the class concerned; (f) so much of any non-exempt modified capital gain or modified capital loss as is distributed to the CS/RA class is taken into account in determining the overall non-exempt capital gain or overall capital loss for that class.202 Subsection 116CC(1) Repeal the subsection, substitute: (1) The core amounts for a notional CGT event for a non-fund asset are as follows: (a) any un modified ordinary income amount; (b) any un modified general deduction; (c) any non-exempt ordinary capital gain; (d) any ordinary capital loss. Note: The heading to section 116CC is replaced by the heading "Notional CGT events for non-fund assets ".203 Subsection 116CC(2) Omit "Part IIIA disposal of", substitute "CGT event for".204 Paragraph 116CC(2)(a) Omit "ordinary 25/25A amount", substitute "un modified ordinary income amount".205 Paragraph 116CC(2)(b) Omit "ordinary 51/52 amount", substitute "un modified general deduction".206 Paragraph 116CC(2)(c) Repeal the paragraph, substitute: (c) the whole of any non-exempt ordinary capital gain or ordinary capital loss is taken into account in determining the overall non-exempt capital gain or the overall capital loss for the general fund class.207 Subsection 116CD(1) Omit "160ZO", substitute "102-5 of the Income Tax Assessment Act 1997 (about net capital gains)". Note: The heading to section 116CD is replaced by the heading "Treatment of capital gains and losses ".208 Subsection 116CD(2) Omit "160Z gain", substitute "non-exempt capital gain".209 Subsection 116CD(3) Omit "160Z loss", substitute "capital loss".210 Subsection 116CD(3) Omit "160Z gains", substitute "non-exempt capital gains".211 Subsection 116CD(3) Omit "160Z gain" (wherever occurring), substitute "non-exempt capital gain".212 Subsection 116CD(4) Omit "160Z losses", substitute "capital losses".213 Subsection 116CD(5) Omit "prior year Part IIIA loss", substitute "accumulated net capital loss".214 Subsection 116CD(5) Omit "160Z gains", substitute "non-exempt capital gains".215 Subsection 116CD(6) Omit "prior year Part IIIA loss", substitute "accumulated net capital loss".216 Subsection 116CD(6) Omit "160Z gains", substitute "non-exempt capital gains".217 Subsection 116CD(7) Repeal the subsection.218 Subsection 116CD(8) Repeal the subsection, substitute: (8) A life assurance company cannot make a net capital loss for a year of income, despite section 102-10 of the Income Tax Assessment Act 1997 .219 Subsection 116CE(5) Omit "Part IIIA disposals", substitute "CGT event".220 Subsection 116CF(1) Omit "Part IIIA disposals", substitute "CGT event".221 Paragraph 116DK(g) Omit "other than this Subdivision or Part IIIA", substitute "(except this Subdivision and Parts 3-1 and 3-3 (about CGT) of the Income Tax Assessment Act 1997 )".222 Paragraph 116DK(i) Repeal the paragraph, substitute: (i) whether a CGT event has happened, or whether a capital gain or capital loss from a CGT event is to be disregarded.223 Subsection 116E(1) Insert: accumulated net capital loss for a year of income (the loss year ) means the amount (if any) by which the total of: (a) the total of the overall capital losses for all classes of assessable income for the loss year; and (b) any accumulated net capital loss for the last year of income before the loss year; exceeds: (c) the total of the overall capital gains for all classes of assessable income for the loss year (before section 116GB is applied).224 Subsection 116E(1) (paragraph (a) of the definition of current year deduction ) Omit "Part IIIA disposals", substitute "CGT event".225 Subsection 116E(1) (definition of modified 25/25A amount ) Repeal the definition.226 Subsection 116E(1) (definition of modified 51/52 amount ) Repeal the definition.227 Subsection 116E(1) (definition of modified 160Z gain amount ) Repeal the definition.228 Subsection 116E(1) (definition of modified 160Z loss amount ) Repeal the definition.229 Subsection 116E(1) Insert: modified capital gain for a notional CGT event means any capital gain that would (apart from this Division) arise from the event if Division 10 of Part IX applied in respect of the event.230 Subsection 116E(1) Insert: modified capital loss for a notional CGT event means any capital loss that would (apart from this Division) arise from the event if Division 10 of Part IX applied in respect of the event.231 Subsection 116E(1) Insert: modified general deduction for a notional CGT event means an amount that (apart from section 116GA) could be deducted under: (a) section 8-1 or 25-40 of the Income Tax Assessment Act 1997 ; or (b) section 52 of this Act; in respect of the event if Division 10 of Part IX of this Act applied in respect of the event.232 Subsection 116E(1) Insert: modified ordinary income amount for a notional CGT event means an amount that (apart from section 116GA) would be included in assessable income under: (a) section 6-5 or 15-15 of the Income Tax Assessment Act 1997 ; or (b) section 25A of this Act; in respect of the event if Division 10 of Part IX of this Act applied in respect of the event.233 Subsection 116E(1) (definition of notional Part IIIA disposal ) Repeal the definition.234 Subsection 116E(1) (definition of notional Part IIIA disposals deduction ) Repeal the definition.235 Subsection 116E(1) Insert: notional CGT event means: (a) a CGT event that involves a CGT asset (unless a capital gain or capital loss arising from the event is to be disregarded); or (b) a CGT event: (i) that involves a CGT asset; and (ii) for which there would be a roll-over under Part 3-3 of the Income Tax Assessment Act 1997 if subsection 306(1) of this Act applied to that asset; (unless a capital gain or capital loss arising from the event would have to be disregarded even without the roll-over).236 Subsection 116E(1) Insert: notional CGT event deduction means so much of any unmodified or modified general deduction as can be deducted.237 Subsection 116E(1) (definition of ordinary 25/25A amount ) Repeal the definition.238 Subsection 116E(1) (definition of ordinary 51/52 amount ) Repeal the definition.239 Subsection 116E(1) (definition of ordinary 160Z gain amount ) Repeal the definition.240 Subsection 116E(1) (definition of ordinary 160Z loss amount ) Repeal the definition.241 Subsection 116E(1) Insert: ordinary capital gain for a notional CGT event means any capital gain that would (apart from this Division) arise from the event.242 Subsection 116E(1) Insert: ordinary capital loss for a notional CGT event means any capital loss that would (apart from this Division) arise from the event.243 Subsection 116E(1) (definition of overall 160Z gain ) Repeal the definition.244 Subsection 116E(1) (definition of overall 160Z loss ) Repeal the definition.245 Subsection 116E(1) Insert: overall capital gain means: (a) for the CS/RA class—the amount by which the total modified capital gain for that class exceeds the total modified capital loss for that class; or (b) for any other class—the amount by which the total ordinary capital gain for that class exceeds the total ordinary capital loss for that class; or, if an amount has been applied under subsection 116GB(3) to reduce an overall capital gain previously worked out under this definition, that gain as so reduced.246 Subsection 116E(1) Insert: overall capital loss means: (a) for the CS/RA class—the amount by which the total modified capital gain for that class is less than the total modified capital loss for that class; or (b) for any other class—the amount by which the total ordinary capital gain for that class is less than the total ordinary capital loss for that class.247 Subsection 116E(1) (definition of prior year Part IIIA loss ) Repeal the definition.248 Subsection 116E(1) (definition of residual overall 160Z gain ) Repeal the definition. 249 Subsection 116E(1) Insert: residual overall capital gain means so much of an overall capital gain as remains after applying subsection 116GB(3).250 Subsection 116E(1) (definition of total modified 160Z gain amount ) Repeal the definition.251 Subsection 116E(1) (definition of total modified 160Z loss amount ) Repeal the definition.252 Subsection 116E(1) (definition of total ordinary 160Z gain amount ) Repeal the definition.253 Subsection 116E(1) (definition of total ordinary 160Z loss amount ) Repeal the definition.254 Subsection 116E(1) Insert: total modified capital gain for the CS/RA class means the total of so much of any modified capital gains as has been allocated to that class under section 116GA.255 Subsection 116E(1) Insert: total modified capital loss for the CS/RA class means the total of so much of any modified capital losses as has been allocated to that class under section 116GA.256 Subsection 116E(1) Insert: total ordinary capital gain for a class means the total of so much of any ordinary capital gains as has been allocated to that class under section 116GA.257 Subsection 116E(1) Insert: total ordinary capital loss for a class means the total of so much of any ordinary capital losses as has been allocated to that class under section 116GA.258 Subsection 116E(1) Insert: unmodified general deduction for a notional CGT event means an amount that (apart from section 116GA) could be deducted in respect of the event under: (a) section 8-1 or 25-40 of the Income Tax Assessment Act 1997 ; or (b) section 52 of this Act.259 Subsection 116E(1) Insert: unmodified ordinary income amount for a notional CGT event means an amount that (apart from section 116GA) would be included in assessable income in respect of the event under: (a) section 6-5 or 15-15 of the Income Tax Assessment Act 1997 ; or (b) section 25A of this Act.260 Subsection 116GA(1) Repeal the subsection, substitute: (1) The core amounts for a notional CGT event for a CGT asset are as follows: (a) any un modified ordinary income amount; (b) any un modified general deduction; (c) any modified ordinary income amount; (d) any modified general deduction; (e) any ordinary capital gain; (f) any ordinary capital loss; (g) any modified capital gain; (h) any modified capital loss. Note: The heading to section 116GA is replaced by the heading "Notional CGT events ".261 Subsection 116GA(2) Omit "disposal of", substitute "CGT event for".262 Paragraph 116GA(2)(a) Omit "ordinary 25/25A amount", substitute "un modified ordinary income amount".263 Paragraph 116GA(2)(b) Omit "ordinary 51/52 amount", substitute "un modified general deduction".264 Paragraph 116GA(2)(c) Omit "modified 25/25A amount", substitute "modified ordinary income amount".265 Paragraph 116GA(2)(d) Omit "modified 51/52 amount", substitute "modified general deduction".266 Paragraphs 116GA(2)(e) and (f) Repeal the paragraphs, substitute: (e) any ordinary capital gain or ordinary capital loss is to be disregarded; (f) any modified capital gain or modified capital loss is taken into account in determining the overall capital gain or overall capital loss for the CS/RA class.267 Subsection 116GA(3) Omit "disposal of", substitute "CGT event for".268 Paragraph 116GA(3)(a) Omit "ordinary 25/25A amount", substitute "un modified ordinary income amount".269 Paragraph 116GA(3)(b) Omit "ordinary 51/52 amount", substitute "un modified general deduction".270 Paragraph 116GA(3)(c) Omit "modified 25/25A amount", substitute "modified ordinary income amount".271 Paragraph 116GA(3)(d) Omit "modified 51/52 amount", substitute "modified general deduction".272 Paragraphs 116GA(3)(e) and (f) Repeal the paragraphs, substitute: (e) any ordinary capital gain or ordinary capital loss is taken into account in determining the overall capital gain or overall capital loss for the class concerned; (f) any modified capital gain or modified capital loss is to be disregarded.273 Subsection 116GB(1) Omit "160ZO", substitute "102-5 of the Income Tax Assessment Act 1997 (about net capital gains)". Note: The heading to section 116GB is replaced by the heading "Treatment of capital gains and losses ".274 Subsection 116GB(2) Omit "160Z gain", substitute "capital gain".275 Subsection 116GB(3) Omit "160Z loss", substitute "capital loss".276 Subsection 116GB(3) Omit "160Z gains", substitute "capital gains".277 Subsection 116GB(3) Omit "160Z gain" (wherever occurring), substitute "capital gain".278 Subsection 116GB(4) Omit "160Z losses", substitute "capital losses".279 Subsection 116GB(5) Omit "prior year Part IIIA loss", substitute "accumulated net capital loss".280 Subsection 116GB(5) Omit "160Z gains", substitute "capital gains".281 Subsection 116GB(6) Repeal the subsection.282 Subsection 116GB(7) Repeal the subsection, substitute: (7) A registered organisation cannot make a net capital loss for a year of income, despite section 102-10 of the Income Tax Assessment Act 1997 .283 Subsection 116HB(1) Omit "Part IIIA disposals", substitute "CGT event".284 Section 121AS Omit "Part IIIA" (first occurring), substitute "Parts 3-1 and 3-3 (about CGT) of the Income Tax Assessment Act 1997 ".285 Section 121AS (table heading) Omit "PART IIIA", substitute "CGT RULES".286 Section 121AS (table item 1, column headed "Modification") Repeal the cell, substitute: A capital gain or capital loss arising from a CGT event constituted by the extinguishment is disregarded.287 Section 121AS (table item 2, column headed "Modification") Repeal the cell, substitute:Subdivision 126-B of the Income Tax Assessment Act 1997 (about roll-overs for transfers) applies as if the life insurance company and the other company were members of the same wholly-owned group within the meaning of that Act.288 Section 121AS (table item 3, column headed "Modification") Omit "The disposer does not incur a capital loss in respect of the disposal", substitute "A capital loss that the disposer makes from the disposal is disregarded". 289 Section 121AS (table item 3, column headed "Modification") Omit "a capital gain accrued to the disposer, or a capital loss was incurred by the disposer", substitute "the disposer made a capital gain, or made a capital loss".290 Section 121AS (table item 3, column headed "Modification") Omit "in respect of" (first occurring), substitute "from".291 Section 121AS (table item 4, column headed "Modification") Omit "The disposer does not incur a capital loss in respect of the disposal", substitute "A capital loss that the disposer makes from the disposal is disregarded".292 Section 121AS (table item 4, column headed "Modification") Omit "a capital gain accrued to the disposer, or a capital loss was incurred by the disposer", substitute "the disposer made a capital gain, or made a capital loss".293 Section 121AS (table item 4, column headed "Modification") Omit "in respect of" (first occurring), substitute "from".294 Section 121AS (table item 5, column headed "Modification", modification 1) Omit "The disposer does not incur a capital loss in respect of the disposal of the demutualisation share or interest in such a share,", substitute "A capital loss that the disposer makes from the disposal of the demutualisation share or interest in such a share is disregarded". 295 Section 121AS (table item 5, column headed "Modification", modification 2) Omit "a capital gain accrued to the disposer, or a capital loss was incurred by the disposer", substitute "the disposer made a capital gain, or made a capital loss".296 Section 121AS (table item 5, column headed "Modification", modification 2) Omit "in respect of" (first occurring), substitute "from".297 Section 121AS (table item 5, column headed "Modification", modification 3) Omit "a capital gain accrued to the disposer, or a capital loss was incurred by the disposer", substitute "the disposer made a capital gain, or made a capital loss".298 Section 121AS (table item 5, column headed "Modification", modification 3) Omit "in respect of" (first occurring), substitute "from".299 Section 121AS (table item 5, column headed "Modification", modification 3) Omit "Division 8 of Part IIIA", substitute "section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 ".300 Section 121AS (table item 5, column headed "Modification", modification 3) Omit "that Division", substitute "that section".301 Section 121AS (table item 6, column headed "Event") Omit "Division 8 of Part IIIA" (first occurring), substitute "section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 ".302 Section 121AS (table item 6, column headed "Event") Omit "that Division", substitute "that section".303 Section 121AS (table item 6, column headed "Event") Omit "Division 8 of Part IIIA" (second occurring), substitute "that section".304 Section 121AS (table item 6, column headed "Modification", modification 1) Omit "The disposer does not incur a capital loss in respect of the disposal of the demutualisation share or interest in such a share,", substitute "A capital loss that the disposer makes from the disposal of the demutualisation share or interest in such a share is disregarded".305 Section 121AS (table item 6, column headed "Modification", modification 2) Omit "a capital gain accrued to the disposer, or a capital loss was incurred by the disposer", substitute "the disposer made a capital gain, or made a capital loss".306 Section 121AS (table item 6, column headed "Modification", modification 2) Omit "in respect of" (first occurring), substitute "from".307 Section 121AS (table item 6, column headed "Modification", modification 3) Omit "a capital gain accrued to the disposer, or a capital loss was incurred by the disposer", substitute "the disposer made a capital gain, or made a capital loss".308 Section 121AS (table item 6, column headed "Modification", modification 3) Omit "in respect of" (first occurring), substitute "from".309 Section 121AS (table item 6, column headed "Modification", modification 3) Omit "Division 8 of Part IIIA", substitute "section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 ".310 Section 121AS (table item 6, column headed "Modification", modification 3) Omit "that Division", substitute "that section".311 Section 121AS (table item 7, column headed "Event") Omit "Division 8 of Part IIIA" (first and second occurring), substitute "section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 ".312 Section 121AS (table item 7, column headed "Event") Omit "that Division" (wherever occurring), substitute "that section". 313 Section 121AS (table item 7, column headed "Event") Omit "Division 8 of Part IIIA" (third occurring), substitute "that section".314 Section 121AS (table item 8, column headed "Modification") Repeal the cell, substitute:A capital gain or capital loss arising from a CGT event constituted by the change in the rights is disregarded.315 Section 121AS (table item 9, column headed "Event") Omit "Division 8 of Part IIIA" (first occurring), substitute "section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 ".316 Section 121AS (table item 9, column headed "Event") Omit "that Division", substitute "that section".317 Section 121AS (table item 9, column headed "Event") Omit "Division 8 of Part IIIA" (second occurring), substitute "that section".318 Section 121AS (table item 10, column headed "Modification") Repeal the cell, substitute:A capital gain or capital loss arising from a CGT event constituted by the distribution is disregarded.319 Section 121AS (table item 11, column headed "Event") Omit "Division 8 of Part IIIA" (first occurring), substitute "section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 ".320 Section 121AS (table item 11, column headed "Event") Omit "that Division", substitute "that section".321 Section 121AS (table item 11, column headed "Event") Omit "Division 8 of Part IIIA" (second occurring), substitute "that section".322 Section 121AS (table item 12, column headed "Modification") Omit "the person does not incur a capital loss in respect of that disposal", substitute "a capital loss that the person makes from the disposal is disregarded". 323 Section 121AS (table) (note 5) Repeal the note, substitute: 5. A roll-over provision is: any of these Subdivisions of the Income Tax Assessment Act 1997 : 122-A, 122-B, 124-B, 124-C, 124-D, 124-E, 124-F, 124-G, 124-H, 124-I, 126-A, 126-B; or section 128-10 or 128-15 of that Act.324 Section 121AT Omit "other than Part IIIA", substitute "except Parts 3-1 and 3-3 (about CGT) of the Income Tax Assessment Act 1997 ".325 Section 121AT (table heading) Omit "other than Part IIIA", substitute "except CGT rules".326 Section 121AT (table item 3, column headed "Event") Omit "Division 8 of Part IIIA" (first occurring), substitute "section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 ".327 Section 121AT (table item 3, column headed "Modification") Omit "Division 8 of Part IIIA" (first occurring), substitute "section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 ".328 Section 121AT (table item 4, column headed "Event") Omit "Division 8 of Part IIIA" (first occurring), substitute "section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 ".329 Section 121AT (table item 4, column headed "Modification") Omit "Division 8 of Part IIIA" (first occurring), substitute "section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 ".330 Section 121AT (table item 5, column headed "Event") Omit "Division 8 of Part IIIA" (first occurring), substitute "section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 ".331 Section 121AT (table item 7, column headed "Event") Omit "Division 8 of Part IIIA" (first occurring), substitute "section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 ".332 Section 121AT (table item 8, column headed "Event") Omit "Division 8 of Part IIIA" (first occurring), substitute "section 130-20 (about bonus shares) of the Income Tax Assessment Act 1997 ".333 Subsection 121EE(2) Omit "Part IIIA", substitute "Part 3-1 of the Income Tax Assessment Act 1997 ".334 Paragraph 121EL(e) Repeal the paragraph, substitute: (e) any capital gain or capital loss made by the trust estate from a CGT event happening in relation to a CGT asset of the trust estate in the course of, or in connection with, an investment activity covered by subsection 121D(6) is disregarded; and335 Paragraph 121EL(g) Repeal the paragraph, substitute: (g) if, apart from this section, the trust estate would make a capital gain or capital loss from a CGT event happening in relation to a CGT asset of the trust estate in the course of, or in connection with, an investment activity covered by subsection 121D(6A)—the trust estate makes only the average Australian asset percentage (for the portfolio investment concerned) of the gain or loss.336 Section 121EM (paragraph (d) of the definition of asset ) Repeal the paragraph, substitute: (d) a CGT asset, and a car, motor cycle or similar vehicle.337 Subsection 121F(1) (paragraph (ca) of the definition of relevant exempting provision ) Repeal the paragraph.338 Paragraph 124PA(1)(a) Repeal the paragraph.339 At the end of subsection 124PA(1) Add: ; and (d) the disposal involves a CGT event; and (e) the conditions in an item in the table are satisfied.CGT roll-overs that qualify transferor for reliefItemType of CGT roll-overConditions1Disposal of asset to wholly-owned companyThere is a roll-over under Subdivision 122-A of the Income Tax Assessment Act 1997 for the CGT event. 2Disposal of asset by partnership to wholly-owned companyThe transferor is a partnership, the unit is partnership property, and there is a roll-over under Subdivision 122-B of the Income Tax Assessment Act 1997 for the disposal by the partners of the CGT assets consisting of their interests in the unit.3Marriage breakdownThere is a roll-over under Subdivision 126-A of the Income Tax Assessment Act 1997 for the CGT event. 4Disposal of asset to another member of the same wholly-owned groupThere is a roll-over under Subdivision 126-B of the Income Tax Assessment Act 1997 for the CGT event. Note: The heading to section 124PA is replaced by the heading "Roll-over relief ".340 At the end of section 124ZN Add: Note: Any capital gain or capital loss from a disposal of shares in a PDF is disregarded: see section 118-13 of the Income Tax Assessment Act 1997 .341 Section 124ZP Repeal the section.342 Subsection 124ZR(2) Omit "other than Part IIIA", substitute "except Parts 3-1 and 3-3 (about CGT) of the Income Tax Assessment Act 1997 ".343 Subsection 124ZR(3) Repeal the subsection, substitute: (3) Parts 3-1 and 3-3 (about CGT) of the Income Tax Assessment Act 1997 apply as if the taxpayer: (a) had disposed of the CGT assets constituted by the shares, and had done so immediately before the company ceased to be a PDF; and (b) had re-acquired those assets immediately afterwards; for an amount equal to the shares' market value immediately after the company so ceased.344 Section 124ZS (definition of non-CGT assessable income ) Omit "Part IIIA", substitute "Part 3-1 or 3-3 (about CGT) of the Income Tax Assessment Act 1997 ".345 Section 124ZW Insert: accumulated net capital loss for a year of income (the loss year ) means the amount (if any) by which the total of: (a) the total of the overall capital losses for all classes of assessable income for the loss year; and (b) any accumulated net capital loss for the last year of income before the loss year; exceeds: (c) the total of the overall capital gains for all classes of assessable income for the loss year (before section 116GB is applied).346 Section 124ZW (definition of non-CGT assessable income ) Omit "Part IIIA", substitute "Part 3-1 or 3-3 (about CGT) of the Income Tax Assessment Act 1997 ".347 Section 124ZW (definition of ordinary 160Z gain amount ) Repeal the definition, substitute: ordinary capital gain for a CGT event means any capital gain that would (apart from this Subdivision) arise from the event. 348 Section 124ZW (definition of ordinary 160Z loss amount ) Repeal the definition, substitute: ordinary capital loss for a CGT event means any capital loss that would (apart from this Subdivision) arise from the event.349 Section 124ZW (definition of overall 160Z gain ) Repeal the definition, substitute: overall capital gain for a class of assessable income means: (a) the amount by which the total ordinary capital gain for that class exceeds the total ordinary capital loss for that class; or (b) if an amount has been applied under subsection 124ZZB(2) to reduce an overall capital gain previously worked out under this definition—that gain as so reduced.350 Section 124ZW (definition of overall 160Z loss ) Repeal the definition, substitute: overall capital loss for a class of assessable income means the amount by which the total ordinary capital gain for that class is less than the total ordinary capital loss for that class.351 Section 124ZW (definition of prior year Part IIIA loss ) Repeal the definition.352 Section 124ZW (definition of residual overall 160Z gain ) Repeal the definition, substitute: residual overall capital gain means so much of an overall capital gain as remains after applying subsection 124ZZB(2).353 Section 124ZW (definition of total ordinary 160Z gain amount ) Repeal the definition, substitute: total ordinary capital gain for a class means the total of so much of any ordinary capital gains as has been allocated to that class under section 124ZZA.354 Section 124ZW (definition of total ordinary 160Z loss amount ) Repeal the definition, substitute: total ordinary capital loss for a class means the total of so much of any ordinary capital losses as has been allocated to that class under section 124ZZA.355 Section 124ZZ Omit "160ZO", substitute "102-5 of the Income Tax Assessment Act 1997 (about net capital gains)". Note: The heading to section 124ZZ is replaced by the heading "Treatment of capital gains ".356 Section 124ZZA Omit "160Z" (wherever occurring), substitute "capital".357 Subsection 124ZZB(1) Omit "160Z", substitute "capital". Note 2: The heading to section 124ZZB is replaced by the heading "Assessable income etc. in relation to capital gains ". Note 2: The heading to subsection 124ZZB(1) is omitted.358 Subsection 124ZZB(2) Omit "160Z" (wherever occurring), substitute "capital". Note: The heading to subsection 124ZZB(2) is omitted.359 Subsection 124ZZB(3) Omit "prior year Part IIIA loss", substitute "accumulated net capital loss". Note: The heading to subsection 124ZZB(3) is omitted.360 Subsection 124ZZB(3) Omit "160Z", substitute "capital".361 Section 124ZZC Repeal the section.362 Section 124ZZD Repeal the section, substitute:124ZZD No net capital loss The company does not make a net capital loss for the year of income, despite section 102-10 of the Income Tax Assessment Act 1997 .363 Subsection 128TG(2) Omit "Part IIIA (Capital gains and capital losses)", substitute "Parts 3-1 and 3-3 (about CGT) of the Income Tax Assessment Act 1997 ".364 Section 128TI (note) Omit "Part IIIA of this Act", substitute "Parts 3-1 and 3-3 (about CGT) of the Income Tax Assessment Act 1997 ". [The next item is 371] 371 Paragraph 149A(1)(a) Omit "within the meaning of Part IIIA".372 Subparagraph 149A(1)(b)(i) Omit "within the meaning of Part IIIA".373 Paragraph 158H(3)(c) Omit "within the meaning of Part IIIA".374 Subsection 159GA(1) (paragraph (a) of the definition of taxable non-primary-production income ) Omit "Part IIIA", substitute "Parts 3-1 and 3-3 (about CGT) of the Income Tax Assessment Act 1997 or Part IIIA of this Act".375 Paragraph 159GZZZBB(a) Omit "owns an asset", substitute "owned a CGT asset".376 Paragraph 159GZZZBB(c) Repeal the paragraph, substitute: (c) after the changeover time, a CGT event (which event is in this Subdivision called the post-changeover disposal ) happens in relation to the asset; and377 Paragraph 159GZZZBB(e) Repeal the paragraph, substitute: (e) the taxpayer makes a capital gain or capital loss from the post-changeover disposal;378 Section 159GZZZBC Repeal the section, substitute:159GZZZBC Capital gains adjustment For the purposes of working out the amount of a capital gain that the taxpayer makes from the post-changeover disposal, if the market value of the asset at the changeover time was more than its cost base at that time, the first element of its cost base at the changeover time is that market value.379 Section 159GZZZBD Repeal the section, substitute:159GZZZBD Capital loss adjustment For the purposes of working out the amount of a capital loss that the taxpayer makes from the post-changeover disposal, if the market value of the asset at the changeover time was less than its reduced cost base at that time, the first element of its reduced cost base at the changeover time is that market value.380 Subsection 159GZZZBE(1) Omit "subsection 160ZK(1) in relation to a disposal of the asset by the taxpayer after 31 December 1991", substitute "section 110-55 of the Income Tax Assessment Act 1997 (about reduced cost base) in relation to the post-changeover disposal". 381 Subsection 159GZZZBE(2) Omit "subsection 160ZK(1) in relation to a disposal of the asset by the taxpayer after 31 December 1991", substitute "section 110-55 of the Income Tax Assessment Act 1997 (about reduced cost base) in relation to the post-changeover disposal".382 Subsection 159GZZZF(1) Omit "consideration" (wherever occurring), substitute "capital proceeds".383 Subsection 159GZZZG(1) Omit "consideration" (wherever occurring), substitute "capital proceeds".384 Subsection 159GZZZH(2) Omit "Part IIIA", substitute "Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ".385 Subsections 159GZZZH(3) and (4) Repeal the subsections, substitute: (3) For the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 , if a CGT event happens in relation to the eligible interest, the cost base and reduced cost base of the eligible interest is reduced by the eligible interest's eligible proportion of the cancellation adjustment amount.386 Subsection 159GZZZH(5) Repeal the subsection, substitute: (5) This section applies in relation to the acquisition of the eligible interest held by the eligible entity, and to a CGT event happening in relation to the eligible interest, even if the entity was not an eligible entity, and the interest was not an eligible interest, at the time of the acquisition or CGT event.387 Section 159GZZZN Repeal the section, substitute:159GZZZN Buy-back and cancellation disregarded for certain purposes If a company buys-back a share then the buy-back, and any subsequent cancellation of the share, are disregarded for the purposes of: (a) determining for the purposes of this Act: (i) whether an amount is included in the assessable income of the company under a provision of this Act (other than a provision of Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 (about CGT)); or (ii) whether an amount is allowable as a deduction to the company; or (b) determining whether the company makes a capital gain or capital loss.388 Subsection 159GZZZP(1A) Omit "paragraph 160ZA(4)(b)", substitute "section 118-20 of the Income Tax Assessment Act 1997 ".389 Subparagraph 159GZZZQ(1)(a)(i) Omit "Part IIIA", substitute "Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (about CGT)".390 Paragraph 159GZZZQ(1)(b) Repeal the paragraph, substitute: (b) whether the seller makes a capital gain or capital loss;391 Subparagraph 159GZZZQ(8)(c)(i) Omit "Part IIIA", substitute "Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (about CGT)".392 Subparagraph 159GZZZQ(8)(c)(ii) Omit "Part IIIA", substitute "Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 .393 Subparagraph 159GZZZS(a)(i) Omit "Part IIIA", substitute "Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (about CGT)".394 Paragraph 159GZZZS(b) Repeal the paragraph, substitute: (b) whether the seller makes a capital gain or capital loss; 395 Subdivision E of Division 16K of Part III Repeal the Subdivision.396 Subsection 159J(6) (paragraph (aa) of the definition of separate net income ) After "Part IIIA", insert "of this Act or Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 (about CGT)".397 Subsection 159ZR(1) (paragraph (c) of the definition of normal taxable income ) After "160ZO", insert "of this Act or section 102-5 of the Income Tax Assessment Act 1997 (about including net capital gains in assessable income)".398 Subparagraph 160AFD(9)(b)(ii) After "Part IIIA", insert "of this Act or Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 (about CGT)".399 Before subsection 160ZC(1A) Insert: (1AA) Subsections (1) and (2) do not apply for the purposes of assessments for the 1998-99 year of income or any later year of income. See instead Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 .400 Before section 160ZNB Insert:160ZNBA Application of this Division This Division does not apply for the purposes of assessments for the 1998-99 year of income or any later year of income. See instead Subdivision 165-CB of the Income Tax Assessment Act 1997 .401 Before section 160ZNT Insert:160ZNTA Application of this Division This Division does not apply for the purposes of assessments for the 1998-99 year of income or any later year of income. See instead Division 175 of the Income Tax Assessment Act 1997 .402 Before subsection 160ZO(1) Insert: (1A) This section does not apply for the purposes of assessments for the 1998-99 year of income or any later year of income. See instead Division 102 of the Income Tax Assessment Act 1997 .403 Before subsection 160ZP(1) Insert: (1A) An amount of a net capital loss cannot be transferred under this section in the 1998-99 year of income or a later year of income. Note: To work out whether a company can transfer a net capital loss to another company in the 1998-99 year of income or a later year of income: see Subdivision 170-B of the Income Tax Assessment Act 1997 .403A Before section 160ZZPK Insert:160ZZPJA Continued operation of Division This Division continues to have effect (with such modifications as are necessary) for the purposes of working out capital gains and capital losses under Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 .403B Before section 160ZZPZA Insert:160ZZPZAA Continued operation of Division This Division continues to have effect (with such modifications as are necessary) for the purposes of working out capital gains and capital losses under Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 .403C Before section 160ZZRAAA Insert:160ZZRAAAA Continued operation of Division This Division continues to have effect (with such modifications as are necessary) for the purposes of working out capital gains and capital losses under Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 .404 Section 160ZZZH Repeal the section, substitute:160ZZZH Net capital losses Subdivision 170-B of the Income Tax Assessment Act 1997 (about transfer of net capital losses within wholly-owned groups of companies) has effect as if an Australian branch of a foreign bank were a 100% subsidiary (within the meaning of that Act) of the bank and an Australian resident (within the meaning of that Act).405 Subsection 170(9D) After "Part IIIA", insert "of this Act or Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 (about CGT)".406 Subsection 170(10AA) Repeal the subsection, substitute: (10AA) Nothing in this section prevents the amendment, at any time, of an assessment for the purpose of giving effect to any of the provisions of the Income Tax Assessment Act 1997 set out in this table.Amendment of assessmentsItem ProvisionBrief description1Subdivision 20-BDisposal of a car for which lease payments have been deducted10Division 28Car expenses20Section 42-290Balancing adjustment relief for plant30Subsection 104-10(3) or (6) Subsection 104-25(2) Subsection 104-45(2) Subsection 104-90(2) Subsection 104-110(2) Subsection 104-205(2) Subsection 104-225(5) Subsection 104-230(5)The time of a CGT event is decided by there being a contract entered into40Paragraph 104-15(4)(a)CGT event B1: agreement ends without title passing50Subsection 104-40(5)Exception to CGT event D2 where option is exercised60Section 108-15Disposal of collectable that is part of a set70Section 108-25Disposal of personal use asset that is part of a set80Section 116-45Modification to capital proceeds for non-receipt90Section 116-50Modification to capital proceeds for amounts you repay 100Subsection 122-25(4)Right or option etc. exercised after roll-over to acquire trading stock110Subsection 122-135(4)Right or option etc. exercised after roll-over to acquire trading stock120Subdivision 124-BRoll-over for assets compulsorily acquired, lost or destroyed130Subsection 126-5(3)CGT event B1: agreement ends without title passing140Subsection 126-45(3)CGT event B1: agreement ends without title passing150Subsection 126-50(3)Right or option etc. exercised after roll-over to acquire trading stock160Section 126-70Capital loss disregarded despite choice for no roll-over180Section 330-175 Section 330-245An amount in an agreement to transfer deduction entitlements exceeds the maximum amount capable of being transferred190Subdivision 385-EPrimary producer elects to spread or defer tax on profit from forced disposal or death of live stock200Section 385-160Disentitling event happens in relation to your primary production business210Division 900Substantiation407 Subsection 177A(1) (definition of capital loss) Repeal the definition, substitute: capital loss means a capital loss within the meaning of Part 3-1 of the Income Tax Assessment Act 1997 .408 Subparagraph 177C(2)(a)(i) Repeal the subparagraph, substitute: (i) the non-inclusion of the amount in the assessable income of the taxpayer is attributable to the making of an agreement, choice, declaration, election or selection, the giving of a notice or the exercise of an option (expressly provided for by this Act or the Income Tax Assessment Act 1997 ) by any person, except one under Subdivision 126-B or 170-B of the Income Tax Assessment Act 1997 ; and409 Subparagraph 177C(2)(c)(i) Repeal the subparagraph, substitute: (i) the incurring of the capital loss by the taxpayer is attributable to the making of an agreement, choice, declaration, election or selection, the giving of a notice or the exercise of an option (expressly provided for by this Act or the Income Tax Assessment Act 1997 ) by any person, except one under Subdivision 126-B or 170-B of the Income Tax Assessment Act 1997410 Subparagraph 177C(2)(c)(ii) Before "declaration", insert "agreement, choice".411 Subparagraph 177C(2A)(a)(i) Omit "an agreement under section 160ZP or an election under section 160ZZO", substitute "a choice under Subdivision 126-B of the Income Tax Assessment Act 1997 or an agreement under Subdivision 170-B of that Act".412 Subparagraph 177C(2A)(b)(i) Omit "an agreement under section 160ZP or an election under section 160ZZO", substitute "a choice under Subdivision 126-B of the Income Tax Assessment Act 1997 or an agreement under Subdivision 170-B of that Act".413 Subsection 221AZI(5) (definition of net capital gain ) Repeal the definition.414 Subsection 221YA(1B) Repeal the subsection, substitute: (1B) For the purposes of this Division, disregard a taxpayer's net capital gain for a year in working out the taxpayer's taxable income for that year.415 Subparagraph 221YBA(7)(a)(iii) Repeal the subparagraph, substitute: (iii) a net capital gain; and416 Subsection 221YCAA(2) (paragraph (k) of the definition of Adjusted preceding year's tax ) Omit "within the meaning of Part IIIA".417 Paragraph 221YDA(1AA)(a) Omit "within the meaning of Part IIIA".418 Subsections 221YHAAA(5) and (6) Repeal the subsections, substitute: (5) A reference in this Subdivision to the net income of a trust estate of a year of income is, if the net income of the trust estate of that year of income included a net capital gain under Part 3-1 of the Income Tax Assessment Act 1997 , taken to be the amount that would have been that net income if the net capital gain had not been so included.419 Subsection 303(1) (definition of 30 June 1988 asset ) Omit "an asset", substitute "a CGT asset".420 Subsection 303(3) Repeal the subsection, substitute: (3) Some provisions of this Division say that a payment can include giving property. To the extent that one does, use the market value of the property in working out the amount of the payment.421 Section 304 Repeal the section, substitute:304 CGT rules are primary code for treatment of gains and losses (1) This section applies if: (a) a CGT event happens that involves a CGT asset (unless a capital gain or capital loss arising from the event is to be disregarded); or (b) a CGT event happens: (i) that involves a CGT asset; and (ii) for which there is a roll-over under Part 3-3 of the Income Tax Assessment Act 1997 ; (unless a capital gain or capital loss arising from the event would have to be disregarded even without the roll-over); and the asset was owned by a taxpayer immediately before the event. (2) An amount is not included in the taxpayer's assessable income under section 6-5 of the Income Tax Assessment Act 1997 in respect of the event unless: (a) the asset is a security; or (b) the amount is a gain attributable to currency exchange rate fluctuations. (3) None of these apply in respect of the event: (a) sections 15-15 and 25-40 of the Income Tax Assessment Act 1997 ; or (b) sections 25A and 52 of this Act. (4) The taxpayer cannot deduct an amount under section 8-1 of the Income Tax Assessment Act 1997 in respect of the event unless: (a) the asset is a security; or (b) the amount is a loss attributable to currency exchange rate fluctuations.422 Section 306 Repeal the section, substitute:306 Treatment of CGT asset owned at the end of 30 June 1988 (1) Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 apply to a 30 June 1988 asset of a taxpayer as if the taxpayer had acquired it on 30 June 1988. (2) However, this does not affect how to work out the asset's cost base to the taxpayer.423 Section 307 Repeal the section.424 Subsections 308(1) and (2) Repeal the subsections, substitute: (1) The first element of the cost base of each 30 June 1988 asset of the taxpayer is the greater of the asset's market value (at the end of 30 June 1988) and the asset's cost base (on that day). (2) The first element of the reduced cost base of each 30 June 1988 asset of the taxpayer is the lesser of the asset's market value (at the end of 30 June 1988) and the asset's cost base (on that day).425 Sections 311, 312, 313 and 314 Repeal the sections, substitute:311 Exercise of rights (1) Despite section 130-40 of the Income Tax Assessment Act 1997 , the modifications in subsections (3) and (4) of this section apply if a taxpayer exercises rights or options as mentioned in that section to acquire: (a) shares in a company, or options to acquire shares in a company; or (b) units in a unit trust, or options to acquire units in a unit trust; and those rights or options are 30 June 1988 assets of the taxpayer. (2) The first element of the cost base of the shares, units or options is the sum of: (a) the amount paid to exercise the rights or options; and (b) the greater of the market value of the rights or options (at the end of 30 June 1988) and the cost base of the rights or options (on that day). (3) The first element of the reduced cost base of the shares, units or options is the sum of: (a) the amount paid to exercise the rights or options; and (b) the lesser of the market value of the rights or options (at the end of 30 June 1988) and the cost base of the rights or options (on that day). (4) The payment referred to in subsection (3) or (4) can include giving property: see subsection 303(3). (5) For indexation purposes, the amount referred to in paragraph (3)(b) is taken to have been incurred on 30 June 1988.426 Section 315 Repeal the section, substitute:315 Options Subsection 104-30(5) applies to an option granted by a taxpayer as if the reference in that subsection to 20 September 1985 were a reference to 1 July 1988.427 Paragraph 315F(d) Omit "Part IIIA", substitute "Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 ".428 Paragraph 315F(f) Repeal the paragraph, substitute: (f) whether a CGT event has happened, or whether a capital gain or capital loss from a CGT event is to be disregarded.429 Section 317 (definition of CGT roll-over provisions ) After "Part IIIA", insert "of this Act or Divisions 122, 124 and 126, and section 118-350, of the Income Tax Assessment Act 1997 ".430 Paragraph 377(1)(c) Repeal the paragraph, substitute: (c) a profit of a capital nature derived by the company in the qualifying period: (i) in respect of the disposal of a taxable Australian asset to which Part IIIA of this Act applies, to the extent that an amount is included in the assessable income of the company under that Part in respect of the disposal; or (ii) in respect of a CGT event happening in relation to an asset having the necessary connection with Australia, to the extent that an amount is included in the assessable income of the company under Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 ; or (iii) in respect of CGT event D1 or E9 happening in circumstances where one of the items in a table in section 136-15 of the Income Tax Assessment Act 1997 is satisfied, to the extent that an amount is included in the assessable income of the company under Part 3-1 or 3-3 of that Act;431 Subsection 396(2) Repeal the subsection, substitute: (2) A reference in subsection (1) to a non-taxable Australian asset is a reference to: (a) an asset other than a taxable Australian asset (within the meaning of Part IIIA of this Act); or (b) a CGT asset other than one that has the necessary connection with Australia (within the meaning of the Income Tax Assessment Act 1997).432 At the end of subsection 396(3) Add "and in deciding whether a CGT asset has the necessary connection with Australia, disregard the residency assumption in applying category 8 of the table in section 136-25 of the Income Tax Assessment Act 1997 ".433 Paragraph 399(1)(c) Repeal the paragraph, substitute: (c) this Act is further modified by disregarding subsections 160M(13) and (14), and the Income Tax Assessment Act 1997 is further modified by disregarding section 136-45; and434 Paragraph 399(1)(d) Omit "the Act", substitute "this Act".435 At the end of paragraph 399(1)(d) Add "and, for the purposes of applying Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 in accordance with the preceding paragraphs, the trust is a resident trust for CGT purposes.436 Subsection 399A(2) (paragraph (d) of the definition of Eligible debt term ) Omit ", within the meaning of Part IIIA".437 Paragraph 401(1)(a) After "disposal of an asset,", insert "or to take into account the capital proceeds from a CGT event happening in relation to a CGT asset,". Note: The heading to section 401 is replaced by the heading "Reduction of disposal consideration or capital proceeds where attributed income not distributed ".438 Paragraph 401(1)(b) After "disposal", insert "or CGT event".439 Paragraph 401(1)(c) After "consideration", insert "or capital proceeds".440 Paragraph 401(1)(c) After "disposal", insert "or CGT event".441 Paragraph 401(3)(b) After "disposal of the asset", insert ", or the CGT event,".442 Paragraph 401(3)(c) After "disposal", insert "or the capital proceeds from the CGT event".443 Paragraph 401(3)(c) After "the consideration" (last occurring), insert "or those capital proceeds".444 Paragraph 401(3)(d) After "disposal", insert "or the capital proceeds from the CGT event".445 Subparagraph 401(3)(d)(i) After "the consideration", insert "or those capital proceeds".446 Subparagraph 401(3)(d)(ii) (at the end of the definition of Consideration ) Add "or the capital proceeds".447 Paragraph 401(5)(d) After "disposal", insert "or of the CGT event".448 Subsection 405(1) (definition of commencing day non-taxable Australian asset ) Repeal the definition, substitute: commencing day asset has the meaning given by section 406.449 Subsection 405(3) Repeal the subsection, substitute: (3) Some provisions of this Subdivision say that a payment can include giving property. To the extent that one does, use the market value of the property in working out the amount of the payment.450 Subsection 406(2) Repeal the subsection, substitute: (2) For the purposes of applying this Act in calculating the attributable income of the eligible CFC, a commencing day asset of the eligible CFC is a CGT asset (other than one having the necessary connection with Australia) owned by the eligible CFC at the end of its commencing day. (3) In deciding whether a CGT asset has the necessary connection with Australia, disregard the residency assumption in applying category 8 of the table in section 136-25 of the Income Tax Assessment Act 1997 . Note: The heading to section 406 is replaced by the heading "Meaning of commencing day and commencing day asset ".451 Section 408 Repeal the section, substitute:408 Certain capital gains and losses disregarded If a CFC makes a capital gain or capital loss from a CGT event because of Subdivision 136-A of the Income Tax Assessment Act 1997 , or would have made a capital gain from the event apart from indexation, disregard the CGT event in calculating the attributable income of the eligible CFC.452 Section 408A Repeal the section, substitute:408A Certain events before commencing day ignored For the purposes of applying this Act in calculating the attributable income of an eligible CFC, if the eligible CFC's commencing day is after 30 June 1995: (a) Part IIIA of this Act does not apply to disposals of assets of the eligible CFC; and (b) Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 do not apply to CGT events involving the eligible CFC; before the end of the commencing day.453 Section 409 Repeal the section, substitute:409 Losses before 30 June 1990 to be disregarded For the purposes of applying this Act in calculating the attributable income of the eligible CFC, capital losses incurred before the end of 30 June 1990 are disregarded.454 Section 410 Repeal the section, substitute:410 General modifications—CGT For the purposes of applying this Act in calculating the attributable income of the eligible CFC, Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 apply as if these provisions were disregarded: (a) section 116-85 (about section 47A of this Act applying to a rolled-over asset); (b) section 116-95 (about a company changing residence from an unlisted country); (c) section 118-12 (about assets used to produce exempt income); (d) section 136-40 (about an individual or company becoming an Australian resident); (e) section 136-50 (about a CFC becoming an Australian resident); (f) Subdivision 170-B (about transfer of net capital losses within company groups).455 Subsections 411(1) and (2) Repeal the subsections, substitute: (1) Subject to this section, for the purposes of applying this Act in calculating the attributable income of the eligible CFC, a commencing day asset of the eligible CFC is taken to have been acquired, for the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (about CGT), by it on its commencing day. Note: The heading to section 411 is replaced by the heading "Commencing day assets taken to have been acquired on commencingday ".456 Subsections 412(2) and (3) Repeal the subsections, substitute: (2) The first element of the cost base of each commencing day asset of the eligible CFC is the greater of the asset's market value (at the end of the eligible CFC's commencing day) and the asset's cost base (on that day). (3) The first element of the reduced cost base of each commencing day asset of the eligible CFC is the lesser of the asset's market value (at the end of the eligible CFC's commencing day) and the asset's cost base (on that day). Note: The heading to section 412 is replaced by the heading "Cost base of commencing day asset ".457 Paragraph 413(2)(a) Omit "non-taxable Australian".458 Paragraph 413(3)(a) Omit "non-taxable Australian".459 At the end of section 413 Add: (4) The payment referred to in subsection (2) or (3) can include giving property: see subsection 405(3).460 Sections 414, 415, 416 and 417 Repeal the sections, substitute:414 Exercise of rights (1) For the purposes of applying this Act in calculating the attributable income of the eligible CFC, the following provisions have effect. (2) Despite section 130-40 of the Income Tax Assessment Act 1997 , the modifications in subsections (3) and (4) of this section apply if the eligible CFC exercises rights or options as mentioned in that section to acquire: (a) shares in a company, or options to acquire shares in a company; or (b) units in a unit trust, or options to acquire units in a unit trust; and those rights or options are commencing day assets of the eligible CFC. (3) The first element of the cost base of the shares, units or options is the sum of: (a) the amount paid to exercise the rights or options; and (b) the greater of the market value of the rights or options (at the end of the eligible CFC's commencing day) and the cost base of the rights or options (on that day). (4) The first element of the reduced cost base of the shares, units or options is the sum of: (a) the amount paid to exercise the rights or options; and (b) the lesser of the market value of the rights or options (at the end of the eligible CFC's commencing day) and the cost base of the rights or options (on that day). (5) The payment referred to in subsection (3) or (4) can include giving property: see subsection 405(3). (6) For indexation purposes, the amount referred to in paragraph (3)(b) is taken to have been incurred on the eligible CFC's commencing day.461 Subsections 418(2) Repeal the subsection, substitute: (2) Subsection 104-30(5) of the Income Tax Assessment Act 1997 applies to an option granted by the eligible CFC as if the reference in that subsection to 20 September 1985 were a reference to the day after the eligible CFC's commencing day.462 Subsection 418(3) Omit "Subsection 160ZZC(9)", substitute "Section 134-1 of the Income Tax Transitional Provisions Act 1997 ".463 Paragraphs 418A(1)(b) and (c) Repeal the paragraphs, substitute: (b) the eligible CFC owned a CGT asset at the residence-change time; and (c) a CGT event happens in relation to the asset during the eligible period;464 Subsection 418A(1) Omit "to 417", substitute "to 414".465 Paragraph 418A(1)(d) Omit "non-taxable Australian".466 Paragraph 418A(1)(f) Repeal the paragraph, substitute: (f) if subsection 160M(8) of this Act, or section 104-160 of the Income Tax Assessment Act 1997 (CGT event I1), applied to the change of residence for the purposes of the application of this Act apart from this Part: (i) section 412 applies as if subsections 412(2) and (3) referred only to the market value of the asset concerned; and (ii) section 414 applies as if paragraphs 414(3)(b) and (4)(b) referred only to the market value of the asset concerned.467 Subsection 418A(2) Omit "non-taxable Australian".468 Subsection 418A(2) Omit "to 417", substitute "to 414".469 Section 419 Repeal the section, substitute: 419 Modified application of Subdivision 126-B of the Income Tax Assessment Act 1997 (1) For the purposes of applying this Act in calculating the attributable income of the eligible CFC, Subdivision 126-B of the Income Tax Assessment Act 1997 has effect as if the table in subsection 126-50(5) of that Act were omitted and the following table were substituted:Additional requirementsItemThe originating CFC's residency statusThe recipient company's residency statusThis requirement must be satisfied1A resident of a broad-exemption listed country at the time of the trigger eventEither: (a)a resident of that broad-exemption listed country at that time; or (b)an Australian resident at that timeIt does not matter what the roll-over asset is2A resident of a broad-exemption listed country at the time of the trigger eventA resident of a particular non-broad-exemption listed country at that timeThe asset must have been used (just before that time) in connection with a permanent establishment of the originating CFC in any non-broad-exemption listed country at or through which the originating CFC carried on business just before that time3A resident of a non-broad-exemption listed country at the time of the trigger eventEither: (a)a resident of a non-broad-exemption listed country at that time; or (b)an Australian resident at that timeIt does not matter what the roll-over asset is (2) The residency assumption is ignored for the purpose of applying the table in subsection (1).470 Subsection 421(1) After "Part IIIA", insert "of this Act or Parts 3-1 and 3-1 of the Income Tax Assessment Act 1997 ".471 Subsection 421(1) After "election", insert "or choice".472 Subsection 421(1A) After "election" (wherever occurring), insert "or choice".473 Subsection 421(2) After "election" (wherever occurring), insert "or choice".474 Subsection 421(3) After "election" (wherever occurring), insert "or choice".475 Subsections 422(2), (3) and (4) Repeal the subsections, substitute: (2) This section sets out what happens if: (a) the eligible CFC ceases at a time (the residency change time ), during the eligible period or an earlier statutory accounting period, to be a resident of an unlisted country and becomes a resident of a listed country; and (b) subsection 457(3) does not apply to the change of residence; and (c) because of the change in its residency status, an amount is included in the eligible taxpayer's assessable income under section 457 (including because of paragraph 58(1)(d) of the Taxation Laws Amendment (Foreign Income) Act 1990 ); and (d) a CGT event happens during the eligible period in relation to a CGT asset (the CFC asset ) that the eligible CFC owned since the residency change time. (3) If the conditions in subsection (4) are satisfied, the capital proceeds from the CGT event are reduced by the amount worked out under subsection (5). If the conditions in subsection (6) are satisfied, those capital proceeds are increased by the amount worked out under subsection (7). Reduction of capital proceeds (4) If all the eligible CFC's assets were disposed of at the residency change time for their market values in the circumstances mentioned in subparagraph 457(2)(a)(i): (a) distributable profits of the eligible CFC of a particular amount (the distributable profit amount ) would be created, or its distributable profits would be increased by an amount (also the distributable profit amount ); and (b) the eligible CFC would have made a profit (the CFC asset profit ) on the disposal of the CFC asset. (5) The capital proceeds are reduced by:CFC asset profitDistributable profit amount x Total asset profitswhere: total asset profits is the sum of the profits that the eligible CFC would have made if all its assets were disposed of at the residency change time for their market values (ignoring disposals that would not result in a profit). Increase in capital proceeds (6) If all the eligible CFC's assets were disposed of at the residency change time for their market values in the circumstances mentioned in subparagraph 457(2)(a)(i): (a) the distributable profits of the eligible CFC would be reduced by an amount (the distributable profit reduction amount ); and (b) the eligible CFC would have made a loss (the CFC asset loss ) on the disposal of the CFC asset. (7) The capital proceeds are increased by:Distributable profit CFC asset loss x reduction amount Total asset losses where: total asset losses is the sum of the losses that the eligible CFC would have made if all its assets were disposed of at the residency change time for their market values (ignoring disposals that would not result in a loss). Note: The heading to section 422 is replaced by the heading "Adjustment of capital proceeds where change of residence by eligible CFC from unlisted to listed country ".476 Subsection 423(2) Repeal the subsection, substitute: (2) The capital proceeds from a CGT event that happens in relation to a CGT asset of the eligible CFC during the eligible period are reduced if: (a) either: (i) because of Division 17 of Part IIIA of this Act, that Part did not apply to the disposal of the asset to the eligible CFC by another CFC during the eligible period or an earlier statutory accounting period; or (ii) there was a roll-over under Division 122, 124 or 126 of the Income Tax Assessment Act 1997 (except under Subdivision 124-J, 124-K or 124-L of that Act) for a CGT event (the earlier CGT event ) that happened during that period in relation to the asset and involving the eligible CFC and another CFC; and (b) the eligible taxpayer was an attributable taxpayer in relation to both CFC's at the time of the disposal or the earlier CGT event; and (c) the other CFC is taken, under section 47A of this Act, to have paid the eligible CFC a dividend in relation to the disposal or the earlier CGT event; and (d) an amount is included in the attributable taxpayer's assessable income in respect of the dividend under section 458 or 459 of this Act. (3) The reduction is the lesser of: (a) the amount of the dividend; and (b) the amount of any capital gain that: (i) apart from Division 17 of Part IIIA of this Act, would have accrued to the other CFC in respect of the disposal if the consideration in respect of the disposal had been the market value of the asset at the time of the disposal; or (ii) the other CFC would have made from the earlier CGT event apart from the roll-over if the capital proceeds from that event had been the market value of the asset at the time of that event. Note: The heading to section 423 is replaced by the heading "Adjustment of capital proceeds where section 47A applies to rolled-over assets ".477 Subsection 424(2) After "this Act", insert "or Part 3-1 or 3-3 of the Income Tax Assessment Act 1997 ".478 Subsection 438(3) Omit "has the effect that it would have if", substitute "of this Act and Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 have the effect they would have if".479 Paragraph 438(3)(b) Omit "Part IIIA", substitute "those Parts".480 Subsection 438(3A) After "Part IIIA", insert "of this Act or Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ".481 Subsection 438(3A) After "election", insert "or choice".482 Subsection 438(3B) After "election being given", insert "or the choice being made".483 Subsection 438(3B) After "election may be given", insert "or the choice may be made".484 Subsection 438(4) After "Part IIIA", insert "of this Act, or a CGT asset that does not have the necessary connection with Australia within the meaning of the Income Tax Assessment Act 1997 ".485 Paragraph 461(1)(a) After "disposal of an asset,", insert "or to take into account the capital proceeds from a CGT event happening in relation to a CGT asset,".486 Paragraph 461(1)(b) After "disposal", insert "or CGT event".487 Paragraph 461(1)(c) After "consideration", insert "or capital proceeds".488 Paragraph 461(1)(c) After "disposal", insert "or CGT event".489 Paragraph 461(1)(d) After "disposal", insert "or CGT event".490 Paragraph 461(1)(g) After "disposal", insert "or CGT event".491 Paragraph 461(3)(a) After "disposal of the asset", insert ", or the CGT event,".492 Paragraph 461(3)(b) After "disposal", insert "or the capital proceeds from the CGT event".493 Paragraph 461(3)(b) After "the consideration" (last occurring), insert "or those capital proceeds".494 Paragraph 461(3)(c) After "disposal", insert "or the capital proceeds from the CGT event".495 Subparagraph 461(3)(c)(i) After "the consideration", insert "or those capital proceeds".496 Subparagraph 461(3)(c)(ii) (at the end of the definition of Consideration ) Add "or the capital proceeds".497 Paragraph 613(1)(a) After "disposal of an asset,", insert "or to take into account the capital proceeds from a CGT event happening in relation to a CGT asset,".498 Paragraph 613(1)(c) After "consideration" (wherever occurring), insert "or capital proceeds".499 Paragraph 613(1)(c) After "disposal", insert "or CGT event".500 Paragraph 613(1)(d) After "disposal", insert "or the CGT event".501 Subsection 613(3) After "asset", insert "or the CGT event".502 Subparagraph 245-55(4)(a)(ii) of Schedule 2C Repeal the subparagraph, substitute: (ii) the forgiveness of the debt was a CGT event involving a CGT asset having the necessary connection with Australia; and503 Paragraph 245-65(2A)(b) of Schedule 2C Repeal the paragraph, substitute: (b) the forgiveness of the debt was a CGT event involving a CGT asset having the necessary connection with Australia.504 Paragraph 245-85(1)(c) of Schedule 2C Omit "for the purposes of Part IIIA", substitute "for CGT purposes".505 Subsection 245-90(2) of Schedule 2C Omit "under paragraph 160Z(1)(b)".506 Section 245-125 of Schedule 2C (definition of deductible net capital loss ) Repeal the definition, substitute: deductible net capital loss means a net capital loss that: (a) the debtor has for an income year earlier than the forgiveness year of income; and (b) apart from this Subdivision, could be applied in working out the debtor's net capital gain for the forgiveness year of income (assuming the debtor had enough capital gains).507 Subsection 245-165(1) of Schedule 2C (definition of reducible asset ) Omit "an asset", substitute "a CGT asset".508 Subsection 245-165(1) of Schedule 2C (definition of relevant cost base ) Omit "an asset", substitute "a CGT asset".509 Subsection 245-165(1) of Schedule 2C (definition of relevant cost base ) Omit ", the indexed cost base,".510 Subsection 245-165(2) of Schedule 2C Repeal the subsection.511 Section 245-170 of Schedule 2C Omit "assets", substitute "CGT assets".512 Paragraph 245-170(a) of Schedule 2C Omit "an asset", substitute "a CGT asset".513 Paragraphs 245-170(b), (c) and (d) of Schedule 2C Repeal the paragraphs, substitute: (b) a CGT asset that the debtor no longer owned at the end of the commencement day; (c) a personal use asset (within the meaning of the Income Tax Assessment Act 1997 ); (d) a dwelling (within the meaning of the Income Tax Assessment Act 1997 ) that was the debtor's main residence at any time before the forgiveness year of income;514 Paragraph 245-170(f) of Schedule 2C Repeal the paragraph, substitute: (f) a right covered by section 118-305 of the Income Tax Assessment Act 1997 (which exempts from CGT certain rights relating to a superannuation fund or approved deposit fund);515 Paragraph 245-170(g) of Schedule 2C Omit "an asset", substitute "a CGT asset".516 Paragraph 245-170(g) of Schedule 2C Omit "for the purposes of this Act".517 Paragraph 245-170(h) of Schedule 2C Omit "an asset", substitute "a CGT asset".518 Subparagraph 245-170(h)(ii) of Schedule 2C Repeal the subparagraph, substitute: (i) a CGT event in relation to which would result in an amount being included in the debtor's assessable income, or in the debtor being able to deduct an amount; and519 Subsection 245-190(1) of Schedule 2C Omit "particular asset", substitute "particular CGT asset".520 Subsection 245-190(2) of Schedule 2C Omit "particular asset", substitute "particular CGT asset".521 Subsection 245-190(3) of Schedule 2C Omit "an asset", substitute "a CGT asset".522 Subsection 245-190(3) of Schedule 2C Omit "the asset had been disposed of", substitute "a CGT event had happened to the asset". [The next item is 524]524 Section 254-255 of Schedule 2C Omit "that question would be determined under section 160ZZRN", substitute "the question whether an entity is a controller (for CGT purposes) of a company is determined under section 140-20 of the Income Tax Assessment Act 1997 ".525 Subsection 57-25(1) of Schedule 2D Repeal the subsection, substitute: (1) This section applies to: (a) the disposal of an asset by the transition taxpayer after the transition time; and (b) a CGT event that happens after the transition time in relation to an asset owned by the transition taxpayer; where the transition taxpayer owned the asset at all times from the transition time until the disposal or the CGT event. 526 After subsection 57-25(2) of Schedule 2D Insert: (2A) For the purposes of Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 (about CGT), in determining whether the transition taxpayer makes a capital gain or capital loss from a CGT event that happens after the transition time in relation to an asset referred to in subsection (1), the cost base and reduced cost base of the asset (at the transition time) is its adjusted market value at that time.527 Section 57-35 of Schedule 2D (after paragraph (d) of the definition of asset ) Insert: and (e) a CGT asset;Part 4—Consequential amendment of other Acts Australian Industry Development Corporation Act 1970528 Section 29A (at the end of paragraphs (a) and (b) of the definition of asset ) Add "and".529 Section 29A (at the end of the definition of asset ) Add: ; and (e) a CGT asset within the meaning of the Income Tax Assessment Act 1997 .530 Subsection 29ZD(1) Omit "Part IIIA of the Income Tax Assessment Act 1936 ", substitute "Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ".531 Paragraphs 29ZD(4)(a) and (b) Repeal the paragraphs, substitute: (a) working out whether the Corporation made a capital gain; or (b) working out whether the Corporation made a capital loss; or Bank Integration Act 1991532 Subsection 5(1) (at the end of the definition of asset ) Add: ; and (e) a CGT asset within the meaning of the Income Tax Assessment Act 1997 . Civil Aviation Legislation Amendment Act 1995533 Subsection 9(4) Repeal the subsection, substitute: (4) A transfer that this section makes is not a CGT event for the purposes of the Income Tax Assessment Act 1997 .534 Subsections 19(2) and (3) Repeal the subsections, substitute: (2) The surrender by AA of an equitable interest in respect of an eligible building is not a CGT event for the purposes of applying the Income Tax Assessment Act 1997 to AA. (3) The granting of a lease by the Federal Airports Corporation to AA or CASA in respect of an eligible building is not a CGT event for the purposes of applying the Income Tax Assessment Act 1997 to the Federal Airports Corporation. Commonwealth Serum Laboratories Act 1961535 Section 35 After "Income Tax Assessment Act 1936 ", insert "and the Income Tax Assessment Act 1997 ".536 Paragraph 35(d) Omit "paragraph 160ZH(1)(b), (c), (d) or (e) of the Income Tax Assessment Act 1936 ", substitute "subsection 110-25(3), (5) or (6) of the Income Tax Assessment Act 1997 ". Defence Act 1903537 Subsection 122AA(1) Omit "the Commonwealth disposes, or disposed, of an asset to a company", substitute "a CGT event (within the meaning of the Income Tax Assessment Act 1997 ) happens in relation to a CGT asset (within the meaning of that Act) of the Commonwealth".538 Before paragraph 122AA(1)(a) Insert: (aa) the event involves a company acquiring the asset;539 Paragraph 122AA(1)(b) Omit "the disposal is", substitute "the event happens".540 Paragraph 122AA(1)(c) Before "the asset", insert "for the purposes of the Income Tax Assessment Act 1997 ,".541 Paragraph 122AA(1)(e) Repeal the paragraph.542 Subsection 122AA(2) Omit "Part IIIA of the Income Tax Assessment Act 1936 ", substitute "Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 ".543 Subsection 122AA(4) Repeal the subsection. Federal Airports Corporation Act 1986544 Section 57D Repeal the section, substitute:57D Capital gains tax (1) If: (a) the Corporation owned a CGT asset at the end of 30 June 1991 (the changeover time ); and (b) the asset's market value at that time was greater than what would have been, for the purposes of Part IIIA of the Income Tax Assessment Act 1936 , the asset's indexed cost base for the Corporation if the Corporation had disposed of it at that time; then, for the purposes of working out whether the Corporation makes a capital gain from a later CGT event that happens in relation to the asset, Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 apply as if the Corporation: (c) had disposed of the asset at the changeover time for an amount equal to that indexed cost base; and (d) had immediately re-acquired it for an amount equal to its market value at the changeover time. (2) If: (a) the Corporation owned a CGT asset at the end of 30 June 1991 (the changeover time ); and (b) the asset's market value at that time was less than what would have been, for the purposes of Part IIIA of the Income Tax Assessment Act 1936 , the asset's reduced cost base for the Corporation if the Corporation had disposed of it at that time; then, for the purposes of working out whether the Corporation makes a capital loss from a later CGT event that happens in relation to the asset, Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 apply as if the Corporation: (c) had disposed of the asset at the changeover time for an amount equal to that reduced cost base; and (d) had immediately re-acquired it for an amount equal to its market value at the changeover time. (3) A capital gain or capital loss is disregarded if it arises from a CGT event that happens in relation to a CGT asset of the Corporation and: (a) the Commonwealth acquired the asset before 20 September 1985; or (b) the Commonwealth and not the Corporation is entitled to the capital proceeds from the event. (4) An expression has the same meaning in this section as in the Income Tax Assessment Act 1997 , except so far as the contrary intention appears in this Act. Financial Corporations (Transfer of Assets and Liabilities) Act 1993545 Section 3 (at the end of the definition of asset ) Add: ; and (e) a CGT asset within the meaning of the Income Tax Assessment Act 1997 .546 Subsection 15(3) Omit all the words after "acquired the asset for", substitute "an amount equal to what would have been the asset's cost base to the transferring corporation for the purposes of working out under the Income Tax Assessment Act 1997 whether the transferring corporation made a capital gain from the transfer".547 Sections 18 and 19 Repeal the sections, substitute:18 Additional roll-over relief There is a roll-over under Subdivision 126-B of the Income Tax Assessment Act 1997 (which normally applies only to transfers between companies in the same wholly-owned group) if: (a) the trigger event is a transfer to which this Act applies; and (b) the requirements of that Subdivision are met, disregarding: (i) subsection 126-50(1) of that Act (about the originating and recipient companies being members of the same wholly-owned group); and (ii) subsection 126-50(5) of that Act (about the residency status of the originating and recipient companies and the asset's connection to Australia); and (iii) section 126-55 (about the originating and recipient companies choosing to obtain the roll-over). This is in addition to that Subdivision's effect apart from this section.19 For the receiving corporation, asset has necessary connection with Australia Parts 3-1 and 3-3 of the Income Tax Assessment Act 1997 apply to an asset acquired by the receiving corporation as a result of a transfer as if the asset had, while it is an asset of the receiving corporation, the necessary connection with Australia.548 Before subsection 20(1) Insert: (1A) In addition to its effect apart from this section, the Income Tax Assessment Act 1997 also has the effect it would have if sections 170-110 to 170-145 (which are about transferring net capital losses within wholly-owned company groups) of that Act were replaced by the provisions in Schedule 2 to this Act (which are a modified version of the rules in those sections). (1B) Subsection (1) does not enable a net capital loss to be transferred in the 1998-99 year of income or a later year of income. Note: The heading to section 20 is replaced by the heading "Transfer of net capital loss ".549 At the end of the Act Add:Schedule 2—Net capital losses and the Income Tax Assessment Act 1997Effect of transferring a net capital loss170-110 When a corporation can transfer a net capital loss (1) A transferring corporation within the meaning of the Financial Corporations (Transfer of Assets and Liabilities) Act 1993 (the loss company ) can transfer an amount of its *net capital loss for an income year of the loss company (the capital loss year ) to a receiving corporation within the meaning of that Act (the gain company ) if the conditions in this Subdivision are met. (2) The amount transferred can be the whole or part of the *net capital loss. Note: A PDF cannot transfer a net capital loss, except one for a period before it became a PDF: see section 195-30 of the Income Tax Assessment Act 1997 . (3) However, the *loss company cannot transfer so much of the *net capital loss as the loss company has applied, or can apply, in working out its *net capital gain or *net capital loss for an income year before the one in which the amount is transferred.170-115 Who can apply transferred loss (1) If an amount of a *net capital loss is transferred, the gain company can apply the amount in working out its *net capital gain for the income year of the gain company for which the amount is transferred or for a later income year. The income year for which the gain company applies the amount is called the application year . Note: A company's net capital gain or net capital loss for an income year is usually worked out under section 102-5. (2) The loss company can no longer apply the transferred amount and is taken not to have made the *net capital loss to the extent of that amount.170-120 Gain company is taken to have made transferred loss (1) If an amount of a *net capital loss is transferred, the amount is taken to be a *net capital loss of the gain company for the capital loss year. (2) However, if the capital loss year is the same as the application year, the amount is taken to be a *capital loss of the gain company for the application year.170-125 Tax treatment of consideration for transferred tax loss (1) If the loss company receives consideration from the gain company for the transferred amount: (a) the consideration is neither assessable income nor exempt income of the loss company; and (b) the loss company does not make a *capital gain because of receiving the consideration. Note: However, the consideration may affect how section 170-175 modifies the cost base of direct and indirect interests in the loss company. (2) If the gain company gives consideration to the loss company for the transferred amount: (a) the gain company cannot deduct the consideration; and (b) the gain company does not make a *capital loss because of giving the consideration. Note: However, the consideration may affect how section 170-175 modifies the cost base of direct and indirect interests in the gain company.Conditions for transfer170-128 Financial Corporations (Transfer of Assets and Liabilities) Act 1993 must apply to asset transfer from loss company to gain company If it were assumed that: (a) an asset (within the meaning of the Financial Corporations (Transfer of Assets and Liabilities) Act 1993) had been transferred by the loss company to the gain company on the last day of a particular income year of the loss company (the notional transfer year ); and (b) the requirements of paragraphs 7(6)(a) and (b) of that Act were satisfied in relation to that transfer; then it must be the case that that Act would have applied to that transfer.170-132 The loss year The *loss year must be either: (a) the income year in which the Financial Corporations (Transfer of Assets and Liabilities) Act 1993 commenced; or (b) an earlier income year.170-133 The transfer year (1) The *transfer year must either: (a) end at the end of the *notional transfer year; or (b) correspond to the income year of the *loss company that next follows the *notional transfer year. (2) Also, the *transfer year must be one of the 5 income years after the income year in which the Financial Corporations (Transfer of Assets and Liabilities) Act 1993 commenced. 170-135 The loss company (1) It must be the case that the loss company was not required to calculate the *net capital loss: (a) under section 165-114 (because of a change in ownership or control); or (b) under section 175-75 (because of an injected capital gain or loss). (2) Also, it must be the case that neither Subdivision 165-CA nor Subdivision 175-CA would have prevented the loss company from applying the *net capital loss in working out its *net capital gain for the application year if it had made enough capital gains in that year. Note 1: Subdivision 165-CA deals with the consequences of changing ownership or control of a company. Subdivision 175-CA deals with using a company's net capital losses to avoid income tax. Note 2: A company's net capital gain or net capital loss for an income year is usually worked out under section 102-5.170-140 The gain company (1) If the capital loss year and the application year are not the same, the gain company must not be prevented by Subdivision 165-CA or 175-CA from applying the transferred amount in working out its *net capital gain for the application year. Note 1: Subdivision 165-CA deals with the consequences of changing ownership or control of a company. Subdivision 175-CA deals with using a company's net capital losses to avoid income tax. Note 2: A company's net capital gain or net capital loss for an income year is usually worked out under section 102-5. (2) If the capital loss year and the application year are the same, it must be the case that the gain company was not required to calculate its own *net capital gain or *net capital loss for the application year: (a) under Subdivision 165-CB (because of a change in ownership or control); or (b) under section 175-75 (because of an injected capital gain or loss). Note: In deciding whether paragraph (b) applies, remember that the transferred amount is taken to be a capital loss of the gain company for the application year (because of subsection 170-120(2)).170-145 Maximum amount that can be transferred Loss company can only transfer what it cannot use itself (1) The amount transferred cannot exceed the amount of the loss company's *net capital loss that, apart from the transfer, the loss company would carry forward to the next income year after the application year. Note: If the capital loss year and the application year are the same, the loss company would carry forward the whole of the net capital loss, because section 102-5 does not allow a net capital loss to be applied in the income year in which it was made. Example: In the application year the loss company has: . a net capital loss from an earlier income year of $25,000; and . other capital losses totalling $10,000; and . capital gains totalling $20,000; Of the $25,000 loss, the loss company can transfer to the gain company no more than: $25,000($20,000$10,000) = $15,000Transferred loss must not exceed total cost bases of equity and debt interests in the loss company held by companies in the same wholly-owned group (2) The amount transferred also cannot exceed the total of the respective *cost bases at the end of the application year (excluding indexation) of: (a) each *share in the loss company that is held at the end of the application year by a company that: (i) was a member of the same *wholly-owned group as the loss company throughout the application year (disregarding a period when either was not *in existence); and (ii) *acquired the share on or after 20 September 1985; and (b) each debt that the loss company owes at the end of the application year, for money it *borrowed, to a company that: (i) was a member of the same *wholly-owned group as the loss company throughout the application year (disregarding a period when either was not *in existence); and (ii) *acquired the debt on or after 20 September 1985. (3) No amount can be transferred if there is no such share or debt. (4) Subsections (2) and (3) do not apply if the gain company is a *100% subsidiary of the loss company throughout the application year (disregarding a period when either was not *in existence).550 Application The amendment made by item 546 applies to a transfer in the 1998-99 income year or a later income year. Income Tax Rates Act 1986551 Subsection 3(1) (paragraph (a) of the definition of capital gains amount ) Omit "section 160ZO of the Assessment Act", substitute "section 102-5 of the Income Tax Assessment Act 1997 or section 160ZO of the Income Tax Assessment Act 1936 ".552 Subsection 3(1) (paragraph (b) of the definition of capital gains amount ) Omit "section 160ZO of the Assessment Act", substitute "section 102-5 of the Income Tax Assessment Act 1997 or section 160ZO of the Income Tax Assessment Act 1936 ". Industry Research and Development Act 1986553 Subsection 39HB(4) Repeal the subsection, substitute: (4) The commercial government bodies guidelines must set out a criterion to the effect that an eligible government body will not be entered on the Register of Commercial Government Bodies with effect on a particular day if on that day the body is or will be an exempt entity within the meaning of the Income Tax Assessment Act 1997 .554 Application Section 4 of this Act does not apply to the amendment made by item 553. Transport Legislation Amendment (Search and Rescue Service) Act 1997555 Subclause 2(3) of Schedule 4 Repeal the subclause, substitute: (3) A transfer that this clause makes is not a CGT event for the purposes of the Income Tax Assessment Act 1997 .(251) Schedule 3, item 20, page 536 (line 18), omit the link note.(252) Page 536, after line 18, at the end of Schedule 3, add:Part 4—Consequential amendment of other Acts Commonwealth Bank Sale Act 199521 Subsection 18(1) Omit "section 63A of the Income Tax Assessment Act 1936 to decide whether a deduction is allowable to a Bank body", substitute "Subdivision 165-C or 166-C of the Income Tax Assessment Act 1997 to decide whether a Bank body can deduct an amount for a bad debt". Note: The heading to section 18 is altered by omitting "section 63A " and substituting "bad debt provisions ". Financial Corporations (Transfer of Assets and Liabilities) Act 199322 Subsections 22(2) and (3) Repeal the subsections, substitute: Modification of tests for receiving corporation to deduct bad debt (2) In relation to a transfer of a debt, Subdivisions 165-C, 166-C and 175-C of the Income Tax Assessment Act 1997 have effect as if the debt had been incurred at the time of the transfer. Note: Those Subdivisions are about companies deducting bad debts. Easing of restrictions on transferring corporation (3) If: (a) this Act applies to one or more transfers of assets by the transferring corporation to the receiving corporation; and (b) an entity incurs a debt to the transferring corporation in a year of income (the debt year ); and (c) the debt year is the income year in which this section (as originally enacted) commenced or an earlier income year; and (d) Subdivision 165-C or 175-C, or both, of the Income Tax Assessment Act 1997 prevent the transferring corporation from deducting an amount for the debt for an income year (the deduction year ); and (e) the transferring corporation did not, at any time in the deduction year, derive income from: (i) a business of a kind that it did not carry on; or (ii) a transaction of a kind that it had not entered into in the course of its business operations; before the transfer, or the earliest of the transfers, occurred; neither Subdivision 165-C nor 175-C of that Act prevents the transferring corporation from deducting that amount. Note: Subdivision 165-C of the Income Tax Assessment Act 1997 is about the conditions that a company needs to satisfy before it can deduct a bad debt. Subdivision 175-C of that Act is about the Commissioner preventing a company from getting certain tax benefits through its unused bad debts.23 Subsection 22(4) Repeal the subsection, substitute: Limit on deductions for partly written-off debt (4) If this Act applies to the transfer of a debt that has been partly written off, the maximum that the receiving corporation can deduct for the debt for one or more years of income under section 8-1 or 25-35 of the Income Tax Assessment Act 1997 is worked out using the formula: Amount of the debt—Unrecouped deductions where: unrecouped deductions means the total of the amounts that the transferring corporation has deducted or can deduct for any year of income under: (a) section 8-1 or 25-35 of the Income Tax Assessment Act 1997 ; or (b) section 51 or 63 of the Income Tax Assessment Act 1936 ; reduced by the total of any amounts included in its assessable income in respect of the debt under: (c) Subdivision 20-A of the Income Tax Assessment Act 1997 ; or (d) subsection 63(3) of the Income Tax Assessment Act 1936 .24 Application The amendment made by item 23 applies to assessments for the 1997-98 year of income and later years of income.(253) Page 537, before line 1, before Schedule 5, insert:Schedule 4—Intellectual property (new Division 373)Part 1—Amendment of the Income Tax (Transitional Provisions) Act 19971 Section 330-75 (link note) Repeal the link note, substitute: [The next Division is Division 373.]Division 373—Intellectual propertyTable of sections 373-1 Application of Division 373 of the Income Tax Assessment Act 1997 373-10 Application to item of intellectual property you owned before 1998-99 373-65 Effect on balancing adjustment if there has been roll-over relief under the old law only 373-100 Item you acquired in a non-arm's length transaction373-1 Application of Division 373 of the Income Tax Assessment Act 1997 Division 373 (Intellectual property) of the Income Tax Assessment Act 1997 applies to assessments for the 1998-99 income year and later income years. [The next section is section 373-10.]373-10 Application to item of intellectual property you owned before 1998-99 (1) This section affects how Division 373 (Intellectual property) of the Income Tax Assessment Act 1997 applies if you have owned an item of intellectual property since before the 1998-99 income year. Unrecouped expenditure (2) Your unrecouped expenditure on the item at the start of the 1998-99 income year equals the item's residual value in relation to you immediatelyafter the end of the 1997-98 income year, as worked out under Division 10B of Part III of the Income Tax Assessment Act 1936 . (It can later be reduced and increased as provided in Division 373 (Intellectual property) of the Income Tax Assessment Act 1997 .) See section 373-25 of the Income Tax Assessment Act 1997 . Effective life (3) The item's effective life in your hands is the same as its effective life worked out at the end of the 1997-98 income year under Division 10B of Part III of the Income Tax Assessment Act 1936 . (This is despite section 373-35 of the Income Tax Assessment Act 1997 .) Taking account of what happened before 1998-99 (4) The provisions of the Income Tax Assessment Act 1997 listed in column 2 of an item in the table apply as shown in the table.Taking account of what happened before 1998-99ItemThe following provision(s):apply to this:in the same way as they apply to this:I.373-50(4); 373-65(2); 41-40(2) (as applying because of 373-80 and 373-85) an amount you have deducted or can deduct for the item under Division 10B of Part III of the Income Tax Assessment Act 1936 for an income year before the 1998-99 income yearan amount you have deducted or can deduct for the item under Subdivision 373-B or 373-D (as appropriate) of the Income Tax Assessment Act 1997II.373-50(4); 373-65(2); 373-85(4); 41-40(2) (as applying because of 373-80 and 373-85) an amount that section 124P of the Income Tax Assessment Act 1936 included in your assessable income for the item for an income year before the 1998-99 income yearan amount included in your assessable income for the item by section 373-50 or 373-65 (as appropriate) of the Income Tax Assessment Act 1997 III.373-60(1)(a)the item's cost to you for the purposes of Division 10B of Part III of the Income Tax Assessment Act 1936your expenditure on the item[The next section is section 373-65.]373-65 Effect on balancing adjustment if there has been roll-over relief under the old law only(1) If: (a) in the 1997-98 income year or an earlier income year roll-over relief was available under section 124PA of the Income Tax Assessment Act 1936 in relation to the disposal of an item of intellectual property by a taxpayer (the transferor ) to another taxpayer (the transferee ); and (b) a balancing adjustment is required for the item for the 1998-99 income year or a later income year; and (c) there has been no earlier balancing adjustment event for the item for which roll-over relief was available under Common rule 1; the balancing adjustment is affected in 2 ways.(2) First: (a) the total amounts that the transferor deducted or could deduct for the item under Division 10B of Part III of the Income Tax Assessment Act 1936 ; or (b) if there have been 2 or more prior applications of section 124PA of that Act to the item—the total amounts that the prior transferors deducted or could deduct for the item under that Division; are taken to have been amounts that the transferee deducted or could deduct for the item under that Division.(3) Second: (a) the total amounts included in the transferor's assessable income under Division 10B of Part III of the Income Tax Assessment Act 1936 because of the item; or (b) if there have been 2 or more prior applications of section 124PA of that Act to the item—the total amounts included under that Division in the assessable income of the prior transferors because of the item; are taken to have been amounts included in the transferee's assessable income under that Division because of the item.[The next section is section 373-100.]373-100 Item you acquired in a non-arm's length transaction (1) This section affects how section 373-100 of the Income Tax Assessment Act 1997 applies to you if the entity from which you acquired the item had owned since before the 1998-99 income year: (a) the item itself; or (b) if subsection 373-100(4) of that Act applies—the other item. (2) That entity's expenditure on the item or other item (as appropriate) is taken to be the cost of the item or other item to the entity for the purposes of Division 10B of Part III of the Income Tax Assessment Act 1936 .[The next Division is Division 375.]Part 2—Consequential amendment of the Income Tax Assessment Act 19972 Section 10-5 (table item headed "industrial property") Repeal the item, substitute:industrial property consideration for disposal of unit relating to copyright in Australian film 124Psee also intellectual property and research and development3 Section 10-5 (before table item headed "interest")Insert:intellectual property amount arising from partial realisation of item of Subdivision 373-C excess of termination value over written down value for item of 373-654 Section 12-5 (table item headed "industrial property")Repeal the item, substitute:industrial property unit relating to copyright in Australian film 124K to 124Z see also intellectual property and research and development5 Section 12-5 (before table item headed "interest")Insert:intellectual property capital allowance for expenditure on item of 373-10 excess of written down value over termination value for item of 373-65 patent, design or copyright, expenditure in obtaining grant, registration or extension of 373-56 Section 20-5 (after table item 3)Insert:3AThe amount arising from a partial realisation of an item of intellectual property for which you have deducted amounts may be included in your assessable income.373-507 Section 40-30 (table item dealing with industrial property)Repeal the item, substitute: Industrial property (relating to a copyright in an Australian film)Capital expenditure on acquiring a unit of industrial property to produce assessable incomeAny entityEffective life (2 years to 25 years)Balancing adjustment required Division 10B of Part III Intellectual property Capital expenditure on acquiring an item of intellectual property to produce assessable incomeAny entityEffective life (up to 25 years, depending on the kind of item)Balancing adjustment requiredDivision 3738 Section 41-5 (after table item dealing with grapevines)Insert: Intellectual propertyApplies as modified by section 373-85Applies as modified by section 373-80Does not apply9 Section 41-10Omit "in relation to the disposal of property".10 Subsection 41-23(1) (after table item 4.1)Insert:5.1Intellectual propertythe transferor and transferee jointly elect for itSubsection 373-85(2)11 Paragraph 41-65(1)(a)Omit "a person", substitute "an entity".Part 3—Consequential amendment of the Income Tax Assessment Act 193612 Subsection 73G(1)Omit "a unit of industrial property (within the meaning of Division 10B)", substitute "an item of intellectual property (as defined by section 373-15 of the Income Tax Assessment Act 1997 )".13 Subsection 73G(2)Omit "unit", substitute "item".14 Subsection 73G(3)Omit "unit", substitute "item".15 Paragraph 73G(4)(a)Omit "unit" (wherever occurring), substitute "item".16 Subsection 73G(5)Omit "unit" (wherever occurring), substitute "item".17 Subsection 82KH(1) (before paragraph (k) of the definition of relevant expenditure )Insert: (ka) expenditure incurred by the taxpayer in respect of an item of intellectual property (as defined by section 373-15 of the Income Tax Assessment Act 1997 ) that relates to copyright subsisting in a film, but only to the extent described at the end of this definition;18 Subsection 82KH(1) (before paragraph (o) of the definition of relevant expenditure )Insert: (oa) expenditure incurred by the taxpayer in respect of acquiring an item of intellectual property (as defined by section 373-15 of the Income Tax Assessment Act 1997 ) that is a licence under a copyright subsisting in computer software, but only to the extent described at the end of this definition;19 Subsection 82KH(1) (before paragraph (w) of the definition of relevant expenditure )Insert: (wa) expenditure (unless covered by an earlier paragraph of this definition) incurred by the taxpayer in respect of an item of intellectual property (as defined by section 373-15 of the Income Tax Assessment Act 1997 ), but only to the extent described at the end of this definition;20 Subsection 82KH(1) (at the end of the definition of relevant expenditure )Add:However, paragraph (ka), (oa) or (wa) only covers expenditure to the extent that: (x) it is taken into account in working out under Division 373 of the Income Tax Assessment Act 1997 the taxpayer's unrecouped expenditure on the item in determining whether, apart from section 82KL of this Act, the taxpayer could deduct an amount under that Division for the item for a year of income; or (y) it would be so taken into account apart from the following rules (about non-arm's length transactions): (i) Common rule 2 (in Subdivision 41-B of that Act); (ii) section 373-100 of that Act.21 After paragraph 82KH(1AD)(a)Insert: (b) if paragraph (ka), (oa) or (wa) of the definition of relevant expenditure in subsection (1) covers the expenditure—the taxpayer deducting or being able to deduct, or not deducting or not being able to deduct, as appropriate, an amount under Division 373 of the Income Tax Assessment Act 1997 for the item for a year of income because the taxpayer's unrecouped expenditure on the item would be calculated under that Division by reference to the relevant expenditure; and22 Before subsection 124L(1)Insert: (1A) For the purposes of assessments for the 1998-99 year of income and later years of income, this Division applies to the owner of a unit of industrial property only if the unit relates to a copyright in an Australian film. Note: For other kinds of intellectual property, see Division 373 of the Income Tax Assessment Act 1997 .23 Subparagraph 570(1)(a)(ii)After "Part III", insert "of this Act or an item of intellectual property as defined by section 373-15 of the Income Tax Assessment Act 1997 ".24 Subsection 245-140(1) of Schedule 2C (after the table item dealing with expenditure on acquiring a unit of industrial property)Insert:Expenditure on acquiring an item of intellectual property to produce assessable incomeSubdivision 373-B of the Income Tax Assessment Act 1997 25 After paragraph 57-25(4)(k) of Schedule 2DInsert: (la) Division 373 of the Income Tax Assessment Act 1997 (about intellectual property); and26 Subsection 57-85(3) of Schedule 2D (table item 7)Repeal the item, substitute:7Industrial property (copyright in Australian film) Division 10B of Part III7AIntellectual propertySubdivision 373-B Division 10B of Part III27 Subsection 57-110(2) of Schedule 2D (table item 5)Repeal the item, substitute:5Industrial property (copyright in Australian film) Sections 124N and 124P Division 10B of Part III5AIntellectual propertySubdivisions 373-C and 373-DSubdivision 373-B and Division 10B of Part III(254) Schedule 6, item 6, page 547 (lines 1 to 5), omit the item, substitute:6 Before paragraph 42-295(3)(d)Insert:(da) Division 392 of this Act (which provides for long-term averaging of primary producers' tax liability) applies to your assessment; or(255) Schedule 6, item 8, page 548 (lines 4 to 6), omit the item.(256) Schedule 6, item 24, page 551 (lines 30 to 33), omit the item, substitute:24 Subsection 159ZR(1) (definition of rebated tax )After "156 or 160AA", insert "of this Act, and of any tax offset under subsection 392-35(2) of the Income Tax Assessment Act 1997 (which allows some primary producers tax offsets),".(257) Schedule 6, items 26 to 28, page 552 (lines 7 to 24), omit the items, substitute:26 Subsection 221YCAA(2) (before paragraph (g) of the definition of adjusted preceding year's tax )Insert:(ga) any averaging component of the taxpayer worked out under section 392-90 of the Income Tax Assessment Act 1997 for the preceding year of income had been increased by the provisional tax uplift factor for the current year of income; and27 Subsection 221YCAA(2) (paragraph (h) of the definition of adjusted preceding year's tax ) Omit "Division 16 of Part III", substitute "Division 392 (Long-term averaging of primary producers' tax liability) of the Income Tax Assessment Act 1997 or Division 16 of Part III of this Act".28 Subsection 221YCAA(2) (paragraph (j) of the definition of adjusted preceding year's tax ) Omit "other than a rebate under section 156", substitute "except a tax offset under subsection 392-35(2) of the Income Tax Assessment Act 1997 (which provides tax offsets for some primary producers), or a rebate under section 156 of this Act,". (258) Schedule 6, item 29, page 552 (lines 25 to 27), omit the item.(259) Schedule 6, item 32, page 553 (line 7), omit "26", substitute "25".(260) After Schedule 8, page 571 (after line 10), insert:Schedule 8A—Consequential amendments relating to indexationPart 1—Amendment of the Income Tax (Transitional Provisions) Act 19971 Section 42-70 Repeal the section, substitute:42-70 Adjustment: acquiring a car at a discount Paragraph 42-70(1)(c) of the Income Tax Assessment Act 1997 has effect as if, in addition to referring to the car depreciation limit, it also referred to the motor vehicle depreciation limit under section 57AF of the Income Tax Assessment Act 1936 .Part 2—Consequential amendment of the Income Tax Assessment Act 19972 Subsection 28-45(2) (note) Omit "Subdivision 42-K", substitute "Section 42-80".3 Paragraph 42-70(1)(c) Omit "calculated under section 42-345".4 At the end of section 42-80 Add: (3) The car depreciation limit for the 1997-98 financial year is $55,134. (4) The car depreciation limit is indexed annually. Note: Subdivision 960-M shows you how to index amounts. (5) The Commissioner must publish before the beginning of each *financial year the *car depreciation limit for that year.5 Subdivision 42-K Repeal the Subdivision.6 Subsection 995-1(1) (definition of car depreciation limit ) Omit "section 42-345", substitute "section 42-80".Part 3—Consequential amendment of the Income Tax Assessment Act 19367 After subsection 57AF(5) Insert: (5A) Despite subsection (5), the indexation factor for the 1997-98 financial year is 1.Part 4—Application8 Application The amendments made by this Schedule apply to assessments for the 1997-98 income year and later income years.(261) Schedule 9, page 572 (before line 6), insert:1A Subsection 960-220(1) Omit "*listed public".1B At the end of subsection 960-220(1) Add: Note: A special rule applies in working out whether an asset has stopped being a pre-CGT asset: see section 149-10.1C At the end of subsection 960-220(2) Add: Note: A special rule applies in working out whether an asset has stopped being a pre-CGT asset: see section 149-10.1D Subsection 960-225(1) Omit "*listed public".1E Section 960-230 Omit "*listed public".1F Subsection 960-235(1) Omit "*listed public".1G Section 960-240 Omit "*listed public".1H Subsection 960-245(1) Omit "*listed public".1I Subsection 960-245(2) (link note) Repeal the link note.(261a) Schedule 9, item 1, page 573 (table item 5), omit the item.(262) Schedule 9, item 1, page 574 (after line 21), insert: Note: This subsection does not apply to shares or units you acquired before 16 August 1989: see section 960-275 of the Income Tax (Transitional Provisions) Act 1997 .(263) Schedule 9, item 1, page 575 (after line 13), at the end of subsection 960-280(3), add:[The next Division is Division 975.][The next amendment is (265).](265) Schedule 9, page 577 (after line 19), after item 12, insert:12A Subsection 995-1(1) Insert: attributable income has the meaning given by Division 7 of Part X of the Income Tax Assessment Act 1936 .(266) Schedule 9, page 579 (after line 14), insert:Note 2: For income years before 1998-99, capital gain has the meaning given by section 102-20 of the Income Tax (Transitional Provisions) Act 1997 .(267) Schedule 9, page 579 (after line 19), insert:Note 2: For income years before 1998-99, capital loss has the meaning given by section 102-20 of the Income Tax (Transitional Provisions) Act 1997 .(268) Schedule 9, page 580 (after line 10), after item 27, insert:27A Subsection 995-1(1) Insert: CFT has the meaning given by section 342 of the Income Tax Assessment Act 1936 .[The next amendment is (271).](271) Schedule 9, page 580 (after line 21), after item 30, insert:30A Subsection 995-1(1) Insert: commencing day of a *CFC has the meaning given by section 406 of the Income Tax Assessment Act 1936 .(272) Schedule 9, page 580 (before line 22), before item 31, insert:30B Subsection 995-1(1) Insert: commencing day asset of a *CFC has the meaning given by section 406 of the Income Tax Assessment Act 1936 .[The next amendment is (275a).](275a) Schedule 9, item 67, page 587 (lines 7 to 10), omit the item.(276) Schedule 9, page 590 (after line 4), insert: Note: For income years before 1998-99, net capital gain has the meaning given by section 102-20 of the Income Tax (Transitional Provisions) Act 1997 .[The next amendment is (278).](278) Schedule 9, item 88, page 591 (line 2), omit "165-120", substitute "165-108".(279) Schedule 9, item 116, page 595 (lines 13 to 16), omit the item, substitute:116 Subsection 995-1(1) Insert: replacement-asset roll-over : a replacement-asset roll-over allows you to defer the making of a *capital gain or a *capital loss from one *CGT event until a later CGT event happens where your ownership of one CGT asset ends and you *acquire another one. The replacement-asset roll-overs are listed in section 112-115.[The next amendment is (281).](281) Schedule 9, item 121, page 596 (lines 16 to 19), omit the item, substitute:121 Subsection 995-1(1) Insert: same-asset roll-over : a same asset roll-over allows you to disregard a *capital gain or *capital loss you make from: (a) *disposing of a *CGT asset to another entity; or (b) entering into an agreement with another entity that constitutes CGT event B1; or (c) creating a CGT asset in another entity. The same-asset roll-overs are listed in section 112-150.[The next amendment is (283).](283) Schedule 9, item 144, page 600 (lines 11 to 14), omit the item.19:00:002275Evans, Gareth, MPMr GARETH EVANSVD4HoltALP00—Might I just take this occasion to indicate that the opposition has no difficulty at all with these amendments which are the product, among other things, of consideration by the Joint Committee of Public Accounts and Audit. The whole exercise of tax law improvement has been one that has had bipartisan support from the outset. We wish the bill a speedy passage.Amendments agreed to.Bill, as amended, agreed to.2275Bill (on motion by Mr Miles)—by leave—read a third time.Bills2275r4212275Debate resumed from 4 December 1997, on motion by Mr Miles:That the bill be now read a second time.19:02:002275Evans, Gareth, MPMr GARETH EVANSVD4HoltALP00—The Taxation Laws Amendment Bill (No. 7) 1997 contains a large number of unrelated taxation matters, including in particular relating to the introduction of the new government savings rebate scheme, on which I will have something to say, together with a major proposed change to the superannuation system, known as the `choice regime', on which I will have rather less to say, leaving the primary carriage of this to the shadow parliamentary secretary, the member for Wills (Mr Kelvin Thomson).This debate takes place against the background of the so-called tax reform debate taking place in Australia at the moment. I say `so-called' because there is no debate really taking place, and that is for the reason that the government, specifically the Prime Minister (Mr Howard) and the Treasurer (Mr Costello), refuse to participate in one. As recently as Wednesday, the Treasurer specifically refused to debate me in this House on the question of what the government was going to do about the growing use of trusts for tax avoidance purposes, leaving it to honourable members rather lower down the food chain to defend the government's honour in this respect. The Treasurer refused an invitation from the ABC—not for the first time—to debate with me again the same issue last week on the 7.30 Report.It is a fair question as to why the government will not come clean on this issue. Why has the promised discussion paper on the taxation of trusts been suppressed? Is it because so many coalition frontbenchers have trusts? Is it because so many coalition backbenchers have trusts and there would be a party room revolt if the government were to do something decent and effective about tax avoidance in this area? Is it because of some other deal that we know nothing about? We have the ludicrous situation where these two leaders, the Prime Minister and the Treasurer of the government, are constantly denigrating Australia's tax system generally through false claims or wild exaggerations of the scale of particular problems, yet they absolutely refuse to tell us what they are planning to do. What they are engaged in is a concerted effort to falsely worry Australian businessmen and families that the Australian taxation system is broken. We know, and we have certainly argued, that that is patently untrue. The truth of the matter is that the tax system is in very much better shape than it was when Labor came into power in the early 1980s. Then it was fair to say that the tax system really was broken, and it was broken because of the negligent stewardship of the then Treasurer, the current Prime Minister. It was not broken because the necessities of life—food, clothing, shelter and utility services—were exempt from tax. Rather, it was broken because paying tax was optional for those with access to specialist taxation advice. Then Treasurer Howard refused to act for years on the taxation advice provided by Tax Commissioner O'Reilly. He was, to put it at its most charitable, asleep at the wheel or, rather worse, and I suspect more accurately, he was deliberately protecting a small minority of the community. The problems we confronted after 1983 when we came into office were, as a consequence of that, quite enormous. For a start, capital gains were generally quite outside the tax net. As a result, quite literally, the rich could get richer without any contribution being made to the general community. It did fall to Labor to address that glaring anomaly, and we did so. What was the coalition's response to that issue? It was to oppose passage of the capital gains tax tooth and nail. When the present Prime Minister was campaigning in the 1987 election as the then Leader of the Opposition, he proposed to abolish capital gains tax and to substitute a paltry so-called speculative gains tax which only taxed gains made on assets bought and sold within a year. It was only when Dr Hewson became opposition leader that the conservative side of politics was brought to the grudging and reluctant acceptance that a capital gains tax is an essential part of an equitable, modern taxation system. The second area where the tax system in this country was genuinely broken when we came into office was in the area of fringe benefits. The law as it then existed attempted to include the value of non-cash benefits, but it was a joke to the tax planning industry. The provision could be avoided effortlessly, and it was consistently. This meant that executives could arrange their affairs to pay little or no income tax whereas their employees had to pay tax on all of their wages. In present value, billions of dollars of income avoided tax. It did fall to Labor again to fix that disgraceful anomaly. Again, the coalition, under the leadership of the present Prime Minister, opposed that progressive and equitable reform.Fortunately, the efforts of the coalition were unsuccessful in stopping real tax reform on those occasions, but it was not for want of trying. It should be recalled for the record that, on occasions like this when we succumb to daily bouts of hypocrisy on the subject of the present tax system, the coalition also subsequently opposed the raft of foreign source income measures which brought foreign income earned by Australians into the tax net for the first time. They also opposed the clampdown on the use of tax havens and a number of other measures which have massively increased the fairness of the current tax system. All of those reforms were achieved—it is important to emphasise— without having to resort to the punishment of ordinary families when they do their shopping or pay their bills, as will of course happen under a GST.This objective of the Prime Minister's is despite the fact that prior to the last election he promised, in language that leaves absolutely no room for wriggle, that a GST would not be the future policy of the coalition. I think it is worth reading into the record what he said in that famous or—perhaps better—notorious doorstop at Tweed Heads on 2 May 1995:JOURNALIST: So you've left the door open for a GST now, haven't you?HOWARD: No, there's no way a GST will ever be part of our policy.JOURNALIST: Never, ever?HOWARD: Never ever. It's dead. It was killed by the voters at the last election.JOURNALIST:—he was a very indefatigable journalist—Were you misquoted in today's Australian then?HOWARD: Well, any suggestion that I left the door open is absolute nonsense. I didn't. I never will. The last election killed the GST. It's not part of our policy and it won't be part of our policy at any time in the future.JOURNALIST: If the concept of the GST comes up in the polls . . . would you go back and revisit that area, or look at it again?HOWARD: No . . . No, because we are against it . . . It is absolutely out of the question.A wry smile from the honourable member for Adelaide (Ms Worth) opposite. The truth of the matter is that the Prime Minister and the Treasurer, in committing themselves to this particular `reform' of the tax system, are acting absolutely against what they said their stated policy was in an absolutely unprecedented way.A truly amazing thing about the current situation is that while the Prime Minister and the Treasurer are trying to build up a false case against the current system, arguing its decrepitude and unworkability, they do steadfastly refuse to detail what they intend to propose to the Australian people. They are running around saying, `The system is broke. It's terrible.' But they refuse to spell out even in broad terms what they are planning to do. They still refuse to admit what is supremely self-evident—that the main objective, the central objective, of their agenda is the introduction of a comprehensive GST.We have had a tax task force secretly meeting since last August. We have established that it has already spent over $1.2 million of public money, yet it keeps no record of its meetings. It meets without having formal agendas. All of the work that it produces, most importantly, is kept secret by the government. We know that the identification of the various options has already been completed. If the Treasurer is interested in a genuine, well-informed public tax debate all he has to do is release that information that has been generated by the task force, paid for with taxpayers' money, so that the community can evaluate the real options that are available.It is not necessarily a matter of putting down at this stage the government's own preferred approach to this, desirable as that would be. The most important thing is simply for the range of options that has already been generated, costed and quantified by the task force to be made public. Then the full range of those options can be known by the community. The worthiness of the government's package can be judged in its proper context, if and when it is released. Why is the government afraid of this process? Why don't we have an open, inclusive process, as we did in 1985, with the publication of a substantial draft white paper canvassing various options?The reason is, I suggest, that the government knows that its agenda simply will not stack up under detailed scrutiny. They know that the unfairness inherent in their basic objectives cannot be hidden. It certainly cannot be hidden if the facts are on the table for an extended period. So they refuse to put that information into the public arena. They want it out at the last possible moment. It is a clear strategy to avoid a real debate. It is not to engage in one. The government really does stand condemned for its cynicism.Looking at the particular provisions of this bill, which, as I say, are introduced against that background but do not tell us much what the ultimate tax package is going to be, there are a number of major proposals contained in the bill. I will quickly go through them, spending most time on the first, because it is the most substantial—the savings rebate. This was announced in the 1997-98 budget as a really, I have to say, pathetic substitute for Labor's national superannuation co-contribution regime, which was abandoned at the same time in that budget. The savings rebate is really a savings option in the context of that last budget. It certainly does not constitute a net gain to the vast majority of working Australians. Rather, it is an enormous future cost.Moreover, the abandonment of co-contribution was a deliberate repudiation of the solemn commitment that was given by this government prior to the last election that it would in fact honour the co-contribution proposed by Labor. Unless anyone is in doubt about that, let me quote from a speech by the then shadow Treasurer, Mr Costello, the member for Higgins, to the Association of Superannuation Funds of Australia on 2 November 1995. He said:We will deliver the full tax dollars earmarked by the Budget back into superannuation or like savings vehicles on the schedule set down. We reserve the right to vary the mechanism to provide the most effective and equitable delivery of these dollars. Further details will be made known during the election period. But they will be paid in full.Minor variations, possibly, yes. Basic concept, basic dollars, clearly there committed.It was a classic example of a non-core promise, as we have come to understand all too unhappily in so many other contexts—promises strongly delivered then abandoned when it is convenient to do so. Other people call them by their proper name, that is, broken promises—nothing more and nothing less than that. The crucial thing is that this particular deception of the Australian people is coming at a tremendous cost. The co-contribution was a visionary plan which would have massively increased the retirement income of future generations of Australians. It would have delivered security in retirement and would also have delivered Australia a huge increase in national savings in the future.On the first aspect of it, increasing security in retirement, the superannuation guarantee scheme, which will deliver superannuation contributions of nine per cent of people's income when it is fully implemented, is itself a tremendous base for adequate retirement income for average Australians. Even that was voted against by the coalition, just as they voted against any other decent reform in recent years. However, what needed to happen was the supplementation of that nine per cent base with another six per cent, three plus three, in order to provide completely adequate retirement income. That is exactly what the co-contribution regime was designed to do, and that is why its abandonment is such a tragedy for the Australian community.The effect of this has been estimated by the Commonwealth's retirement incomes modelling task force, or RIM task force, which estimated that a worker who was 35 years old in 1994-95 earning average weekly ordinary time earnings and who retires at age 65 would have had a superannuation benefit under our scheme of around $280,000 in real terms. However, without the benefit of the co-contribution regime, with its abandonment, that worker's final benefit will not be $280,000 but only $170,000 in the same dollars.This decision has cost that particular worker and millions of others around 40 per cent of his or her final retirement benefit and significantly reduced the standard of living capable of enjoyment by such workers in retirement. The fact that all of this has not been really widely understood in the community is absolutely no excuse for this appalling decision.The second area of lost opportunity in the government's decision here was the effect of that decision on the future level of national savings, which has just been devastating. With the Asian crisis about to beset us, indicating a very serious current account deficit problem in the future, it is even more vital that the level of national savings be maintained and that the whole burden of doing so not fall on public savings through the budget.The estimate by the RIM task force was that the co-contribution would have increased aggregate national savings by $400 billion over and above what it otherwise would have been by the year 2020. By this time it would have been increasing the level of national savings around two per cent of GDP per annum. We would have benefited both those in retirement and we would have benefited the nation by significantly increasing the pool of domestic savings, increasing the funds available of course for domestic investment and job creation.Instead of all that—and it has all been abandoned—we have now this savings tax offset known as the savings rebate. It will provide a rebate of 15 per cent of the tax that would otherwise be payable on up to $3,000 worth of non-salary and wage income earned after 1 July 1999. Non-deductible superannuation contributions do also qualify for this rebate, with a 7½ per cent rate applying for this 1998-99 year.The greatest irony, indeed tragedy, about the savings rebate is that it has little or nothing to do with improving savings. It really has nothing to do with increasing national savings nor with rewarding Australians in any very direct way for increasing their savings. It is, in fact, a subsidy to be paid to people who are deriving unearned income. If you work as an employee and receive salary or wages then you pay normal tax. But if you get considerable unearned income or business income, then you will get the benefit of this particular rebate, enabling you to pay $450 less tax a year.Ordinary employees, as a result, not only lose the higher level of retirement income that our co-contribution scheme would have delivered; they will also generally not qualify for the full $450. That is because the average interest earned by something over five million taxpayers, I understand, is less than $150 a year. If this were the only source of non-salary and wage income, as it is for most people—earnings of interest and so on of that order of magnitude—then what you are talking about is only a savings rebate of around $22.50 or less than 50c a week, and only half of that for good measure in this current year of 1998-99.To pretend that the savings rebate is a major benefit to most people is quite simply a joke in bad taste. It is a device which lowers the tax for all types of unearned income—interest, dividends, trust and partnership distributions, rent and so on—and for superannuation pensions and eligible termination payments. It rewards people who are living off their savings rather than rewarding people for engaging in saving, other than—and there is an exception—in the case of direct superannuation contributions.The critical thing to understand about all this is that it can actually reward people who are engaged in dis-saving. On the assumption that people are earning, say, six per cent on the long-term bond rate on their savings at the moment, that means that so long as you have $50,000 invested somewhere you will be generating the $3,000 of unearned income which will enable you to receive the full rebate. That means, for example, if you started a year with $75,000 invested and ran down that capital so that at the end of the year you only had $50,000—in other words, if you dis-saved to the tune of $25,000—you could still collect the full $450 rebate. This is absolutely absurd and the second reading amendment that I will be moving at the conclusion of my remarks points up that particular absurdity.We have previously established in Senate estimates that the savings rebate will not result in an increase in national savings, according to the government's own retirement incomes modelling task force. That is an issue that we will be further pursuing and fleshing out in the Senate when this legislation gets there. The cost of the savings rebate to budget is large. It is rising to over $2 billion in the year 2000-01; presumably it will grow still further in future years. One would have thought that the government would have been very proud of such an initiative. In fact the reverse was true. It will be remembered that the Prime Minister (Mr Howard) was so embarrassed that he would qualify for the full rebate that he announced in fact to this parliament on the day after the budget last year that he would not be claiming it.However, the problem for him became that the savings rebate will be calculated automatically. There is no provision for him not to claim the benefit. Indeed, advice from the bureaucracy indicated that to create a system that would allow the Prime Minister or anyone else to opt out would have cost some millions of dollars in administrative costs. Even though he knows it is unfair—knows it so well that he got up in public and said that he would not accept it—the Prime Minister will in fact benefit from this provision. That is why we consider not only this whole thing to be a nonsense but also that, if it was to be applied at all, it should certainly have been done on the basis of a decent means test. Again, my second reading amendment goes to this point.Despite the measure being considered unfair by Labor, as it was and still is—that is, only rewarding those with savings related income—the savings rebate was in fact the centrepiece of last year's budget. We take the view that opposition to it in this place, or more significantly in the Senate, is inconsistent with Labor's general position that governments are entitled to their major budget measures, however wrong-headed those measures might be. Accordingly I do indicate now that the opposition does not propose to oppose this measure. We think it is very bad policy. We think it is a disgrace, certainly, compared with the company-contribution regime that it replaced. However, it is the government's measure for better or worse and we will not oppose it.I cannot let the debate pass on this issue without pointing out just one other thing—I have already mentioned it but I will emphasise it—that is, the savings rebate does also apply to distributions from trusts. Far from cracking down on trusts, the government is proposing to actually reward the use of trusts for income splitting by providing a further maximum additional benefit of $450 per trust beneficiary. So in the case of a trust with multiple beneficiaries—a family consisting of a husband, wife and, let us say, seven children—the family could obtain an additional benefit of nine times $450, or $4,050 a year. How that could possibly be in the national interest is beyond our ken.The second measure—and I will be much briefer about all these other elements in the bill—goes to distributions from private companies. It is longstanding practice for private companies to not distribute their profits to shareholders to avoid the tax that may be payable thereby on the dividends, but rather for a loan to be made to the shareholders. That loan is very often on non-commercial terms—with no interest payable and it being repayable on demand—which means that the shareholder effectively gets the income without having to pay tax on it. The income tax law has for many years had a provision attempting to deal with this issue, but it has proven ineffective in meeting its objectives. Last year's budget contained an announcement to tighten the law to ensure that non-commercial loans by private companies to their shareholders were subject to punitive tax to stamp out that practice, and that is achieved in the bill by strengthening the existing provisions—sections 108 and 109.These proposals have been particularly controversial with the small business community, which has lobbied strongly against them. The government has relented on some aspects, specifically those concerning benefits paid to shareholders in their capacity as employees, which contained a myriad of unintended consequences sometimes involving double or even triple taxation.Incredibly, the backdown on employee benefits was announced not by the Treasurer but by the Assistant Treasurer, Senator Kemp, who was left to clean up the Treasurer's mess in this respect. The Treasurer always runs for cover when it comes to anything remotely embarrassing in the conduct of his portfolio.While supporting the proposals in principle in the soon to be amended bill, the opposition is concerned that there may be some further anomalies which do treat small businesses unnecessarily unfairly. We believe that these provisions should be properly examined by a Senate committee and that is the course that we have supported. Perhaps it is embarrassment over this issue which has caused quite outrageous behaviour, I have to say, by the government in regard to proper Senate scrutiny of this legislation. I understand the government is proposing that a Senate inquiry into this legislation should report by this Thursday—tomorrow—and it secretly scheduled hearings into the bill on Monday, before this House had even considered the government's amendments. Some of the complex raft of amendments, which have not even been dealt with in this House yet, were released last Friday evening, so people only had a few hours—no more than that—to lodge submissions to the committee. That is a bad joke in terms of the government's respect for parliamentary process, and it should come back to haunt them.The third measure goes to dividend imputation anti-avoidance. The 1997-98 budget contained a number of initiatives to counter abuse of the dividend imputation system. This bill proposes to implement two of these initiatives: namely, firstly, general anti-avoidance provisions specific to imputation and, secondly, anti-streaming rules—that is, rules to counter the practice of companies paying dividends, and giving other benefits, to shareholders in such a way as to give shareholders who benefit most from imputation credits a greater imputation benefit than those who would not benefit to the same degree.The general anti-avoidance rules will apply to schemes to obtain a tax advantage in relation to imputation credits—that is, trading in those credits or streaming. The tax commissioner has the choice of whether to limit the company's imputation credits or to deny shareholders the benefit of the credits, depending on the type of scheme and the circumstances of either party. These general anti-avoidance rules will supplement the specific provisions for anti-streaming and the announced, but not yet introduced, provisions aimed at countering trading in imputation credits.The industry is complaining that this represents a double jeopardy problem for taxpayers—namely, even if they comply with the specific requirements under the anti-streaming provisions or the upcoming anti-trading in imputation credits provisions, they may still be caught by general anti-avoidance provisions. In addition, some are concerned by the wide drafting of the anti-avoidance provisions, and the relaxation of the normal test from tax avoidance being the dominant purpose for the transaction to being other than incidental to the transaction.We are concerned that some of these criticisms may be valid, especially in the context of the potential impact on collective instruments, such as superannuation and managed investment funds, which are continually trading in shares, presumably for non-taxation reasons. We in the opposition certainly recognise the dilemma that, without general anti-avoidance provisions, wealthy taxpayers can be expected to devise ways to get around the specific provisions. God knows we fought long enough and hard enough to give real teeth and substance to part 4A in this respect. Accordingly, while strongly supporting the proposals in principle, the opposition is concerned that there may be some further anomalies which affect taxpayers unfairly, so what we want is for these provisions to be properly examined by the Senate Economics Legislation Committee.There are a number of other specific matters in respect of which the opposition takes the view that they are, on their face, reasonable and do not require any further serious investigation by a Senate committee. I am referring to provisions about employers' remittance systems and about capital gains tax and an assets register in relation to that. Then there are much smaller matters like election expenses for the Constitutional Convention, gifts to the National Nurses Memorial Trust, provisions about charitable trusts and also some minor changes to the sales tax regime. I indicate as to all of those measures that the opposition does not oppose them.The remaining part of the bill—and it is a very substantial part of the bill—goes to the question of choice of superannuation funds. I will leave detailed discussion of those matters, as I foreshadowed, to the member for Wills, whose bailiwick this is and whose knowledge of this subject is immense. What I do simply want to foreshadow, as he will spell out in more detail, is that Labor does propose a number of amendments to this part of the legislation. They will include delaying the start date for choice until 1 July 2000 for both new and existing employees; ensuring that default funds contain specific investment choice and insurance cover features to protect those employees who do not make an active choice from winding up in an inappropriate fund; outlawing commission based sales of products which receive superannuation guarantee contributions; removing clause 32V, which overrides industrial awards; redefining the definition of `industry based fund' to include the requirement that such funds operate on a not-for-profit basis; and inserting third-line forcing provisions which will prevent employers from forcing employees into a fund from which employers will receive a benefit.In addition to those amendments, and hopefully substituting for them and making them unnecessary, the member for Wills will be seeking the support of this House for a completely alternative approach to the whole question of choice of fund. We believe that there is a substantial case to be made for a quite different model, which would be a two-stage one in which, as the first stage, all super funds with more than 50 fund members would be required to offer investment choice options to all fund members and, as a second stage, after an extensive education and consumer protection campaign, there would be implemented a genuine employee choice super model whereby employees could nominate to have super contributions paid into a fund other than that set out in an industrial award with the agreement of their employers.We believe that here our model would lead to a much better choice arrangement which is driven by those whom this government should be most concerned about but whom it is manifestly not concerned about—that is, the Australian workers. If the government were concerned about workers here as elsewhere, then it would not be proceeding with this costly complicated choice of fund model that will in fact result in lower retirement incomes. I move:That all words after "That" be omitted with a view to substituting the following words:"whilst not opposing the second reading of the bill, the House notes that the Government in this legislation has: (1) broken its firm promise made before the last election to deliver the full amount of the superannuation co-contribution; and(2) instead proposed a much less valuable and much less equitable savings rebate and notes that the policy;(a) only specifically actually rewards saving in the form of superannuation contributions;(b) enables the full amount of the rebate to be received notwithstanding the taxpayer has actually engaged in dis-saving;(c) will result in the level of national savings being significantly lower than if the superannuation co-contribution arrangements were implemented;(d) is not means tested and is therefore inequitable in its impact; and(e) is so unfair that the Prime Minister announced to this House that he would not claim his entitlement".10000SPEAKERMr SPEAKER—Is the amendment seconded?UK6THOMSONMr Kelvin Thomson—I second the amendment and reserve my right to speak.Debate interrupted.Adjournment228210000SPEAKERMr SPEAKER—Order! It being approximately 7.30 p.m., I propose the question:That the House do now adjourn.228219:32:002282Morris, Peter, MPMr PETER MORRISHI4ShortlandALP00—Tonight I want to express my abhorrence at this government's divisive and confrontational actions in vilifying Australia's working men and women, their families and their unions. Australians elect governments to solve problems, give leadership, unite us and build our nation. What we have is a government that sets out to deliberately create problems and to divide Australians. It is setting Australian against Australian, pitting worker against worker and painting unionists and unions as lazy, overpaid, underworked and un-Australian, so encouraging the vilification of their families, even in their own communities. Why? Because the objective of the government is to destroy the trade union movement, to bust unions, to Americanise our workplaces and to make it easier to reduce working conditions, pay and entitlements.Mr Speaker, you and I know that we have had conservative governments in the past, but the Howard government is the most divisive, confrontationist, incompetent and dishonest in living memory. This government cultivates the politics of envy by listing the workers' gross incomes and deleting any reference to working conditions, hours worked, risks entailed or disruption to family life. They say all this whilst they ignore the incompetence of senior managements.They ignore the obscene and totally unjustified amounts paid to mining executives, and company executives generally. Business executives are being rewarded for abolishing jobs, so increasing unemployment. These executives preach parsimony to workers whilst shovelling cash, pensions and share options into their treasure chests. Let me cite Rio Tinto as an example. The most recent news on its Internet site concerning Rio Tinto's Hunter Valley No. 1 mine says that it is now one of the least productive mines in the Hunter Valley and last year made a profit of $1 per tonne. It ignores the revenue squandered by management of this global multinational in demurrage payments which cost $2 to $3 per tonne. They knowingly sell coal for delivery at a rate that cannot be achieved, resulting in late delivery penalties or demurrage payments.It refers to the average length of service of a Rio Tinto employee at Hunter Valley No. 1 mine as being 12½ years. On Rio Tinto's Internet site, they discuss `The best person for the job based on their skills and performance, not just their length of service. An end to the seniority system'. That may be a subject for discussion, but clearly this does not apply to the directors. The average length of service of the Australian directors, Messrs Clifford, Davis and O'Leary, is 37 years. Of all the directors on the board, the average length of service is 24 years. So much for seniority; so much for new thinking, currency in ideas and new ideas in personnel and management.Let us turn to salaries. The Internet site shows the average salary for an employee. For example, a truck driver at the Hunter Valley No. 1 mine earns between $73,000 to $83,000 per annum for a 42½ hour week and up to $97,000 with overtime and other benefits—like many others in society. Compare this with the exorbitant and obscene salaries of top executives and directors of Rio Tinto: Lee Clifford, mining director of Rio Tinto, was entitled to a lump sum pension at the end of 1996 of $2,759,000, an increase of $1,343,000 over 1995. He received a total salary in 1996 of $1,243,000 before tax, an increase of $284,000 from the previous year—an increase of almost 30 per cent. Leon Davis, chief executive, entitled to a lump sum pension of $6,600,000 at the end of 1996, an increase of $1,148,000 over 1995. His total salary was $1,815,000 before tax, an increase of $803,000 on the previous year. Michael O'Leary, director, was entitled to a lump sum pension of $4,025,000 at the end of 1996. His total salary in 1996 was $853,000 before tax, an increase of $293,000 from 1995.Little wonder that workers and their families rebel at the arrogant and intimidating activities of managements of companies like Rio Tinto. In all my parliamentary experience covering transport and industrial relations, I have never seen a firm that got best performance for shareholders, employees and customers by confronting, intimidating and vilifying their employees. But this is the kind of behaviour that is aided and abetted by this H.R. Nicholls Society led government supporting the actions of foreign multinationals like Rio Tinto whose only commitment is to themselves and their foreign shareholders. Any benefit to Australia is incidental. This government refuses financial assistance to workers who have been robbed of their termination entitlements. (Time expired)228319:37:002283Mutch, Stephen, MPMr MUTCHNK6CookLP10—Mr Speaker, in rising tonight I would like to congratulate you on your elevation to your present high office. That is certainly a custom of the Legislative Council whence we both came, but I am not sure that it is a custom of this place.10000SPEAKERMr SPEAKER—Many good things come from that place.NK6Mutch, Stephen, MPMr MUTCH—Certainly. The Federal Court of Australia last week made a landmark ruling in a case involving my local constituent and justice fighter Maree Whitaker. Mrs Whitaker is blind as a result of an operation some years ago that went wrong and where she developed the condition `sympathetic ophthalmia'. With this condition an operation on one eye can detrimentally affect the other good eye. The surgeon involved was found to be liable in contract and in negligence, and Mrs Whittaker was awarded a substantial amount of damages in the Supreme Court of New South Wales. The surgeon's appeal to the Court of Appeal was dismissed. A further appeal by special leave to the High Court was also dismissed.At question in the case decided by the Federal Court last week was whether Mrs Whitaker was liable to pay tax on the pre-judgment interest, that is, the amount paid to compensate her for the loss of compensation moneys between the time of the operation and the Supreme Court judgment and the post-judgment interest, the loss of the use of compensation moneys between the date of the Supreme Court judgment and the date of termination by the High Court. This was an extremely important test case for people who have received compensation moneys for personal injuries sustained through the negligence of others and upon which many incapacitated people must rely for their income for the rest of their life.The matter is long running. In 1996, I wrote to the Treasurer (Mr Costello) to ensure that legal costs for Mrs Whitaker's appeal were funded by the Australian Taxation Office. It is an indication of the importance of the case that the Australian Taxation Office agreed to pay these costs, regardless of the outcome.Before the Federal Court, solicitors Warren McKean Dixon of Miranda argued that pre-judgment interest compensates a victim for deprivation of the use of a compensation sum pending final resolution of the case, not because an investment opportunity has been forgone. This argument prevailed with respect to pre-judgment interest. However, post-judgment interest, due to the interpretation of section 95 of the Supreme Court act as compared to section 94, is taxed.It seems to me that, from the point of view of a personal injuries compensation victim, the legal distinction is semantic. The trial judge is unable to calculate into a damages award the possibility of appeal so as to ultimately compensate the victim for the exigencies of the legal process. Therefore, I ask that the Treasurer, in view of the review of the taxation system now in progress, look at the position of compensation victims and consider, in the case of such victims, treating so-called interest payments—both pre- and post-judgment—as forming part of the compensation payment. I ask that it be considered to be compensation for added pain and suffering for delay in resolution and for keeping the victim from use of the money. The money may not have been invested at all, but might have been needed immediately for the assistance and comfort of the injured party.I hope this matter will be considered by the government's tax consultative task force in the interests of those people whose lives have, in many cases, been made very difficult because of the injuries they have sustained and who have to rely upon their own devices and the compensation moneys to look after themselves so as not to be a burden upon the state.228419:41:002284McLeay, Leo, MPMr LEO McLEAY4I4WatsonALP00—Last week I was pleased to attend the Greek National Day celebrations in Sydney and the Greek embassy's function for Greek National Day on 25 March this year. The Greek National Day is celebrated very extensively in Sydney with a number of large functions, some supported by various Greek organisations and a very large celebration supported by the Greek Orthodox Church. As usual, the meeting in Sydney last Sunday fortnight was very well attended by politicians as well as by leading figures in the Greek community. This month the Greek Festival of Sydney is running, and the highlight of that will be a function at the Greek Club in Lakemba in my electorate.I think the Greek community in Sydney is what helps to make Sydney a very Mediterra nean city. In my electorate there is a particularly large Greek community. The outward looking approach of the Greek community melds exceptionally well, I think, with the Australian approach. We have there an excellent example of the way multiculturalism in this country works.As is usually the case at these gatherings, one of the focuses was the situation in Cyprus. If there is one matter that draws those who are of Greek origin and those who have a supportive nature together it is the continuing division of Cyprus. Many of us thought that the beginning of the talks about the accession of Cyprus to the European Union meant that the Turkish government would see some sense, that there would be closer ties built between the Turkish Cypriots and the Greek Cypriots and that there would be a withdrawal of the Turkish troops from Northern Cyprus. One good thing about the accession of Cyprus to the European Union would have been that we would have seen the borders between the rest of Europe and Cyprus become more transparent, which should also have made the green line that runs through the northern part of Cyprus disappear.It is unfortunate that the Turkish government seems to have taken a very strong line against Cyprus's accession to the European Union, and it was most unfortunate that the Turkish Cypriot representatives did not participate in the accession talk. It is very interesting that Robin Cook, the British Foreign Minister who has the presidency of the EU at present, noted and welcomed the offers by the Cyprus government to include Turkish Cypriot representatives in the team negotiating the terms of Cyprus's accession to the European Union. Cook said:The European Union regrets that the Turkish Cypriot community have so far responded negatively to this offer. It reiterates the importance that it attaches—that is, the union—to associating the Turkish Cypriots with the accession process, in accordance with the conclusions of the Luxembourg European Council. The Presidency and the Commission will pursue the necessary contacts. I think that that is what should happen. The Denktash regime in the north should not be trying to use this as an excuse to partition the island. The Turkish Cypriot junta in the north should join in the accession process so that Cyprus can once again become a united country and Turkish Cypriots and Greek Cypriots can live as one in an undivided homeland. As part of Europe, that would promote a lot more economic benefits for all Cypriots and will certainly allow Cypriots from both parts of the island to visit each other and get on with their lives, which is what most of the ordinary Cypriots want, unlike what many of the Turkish Cypriot politicians want. (Time expired)10000SPEAKERMr SPEAKER—Before I call on the next member, on behalf of the parliament I thank the honourable member for Watson for the job he does representing this parliament on the Committee for Cyprus of the Interparliamentary Union, which is a very important function on behalf of all Australians.228519:46:002285Kelly, Jackie, MPMiss JACKIE KELLYGK6LindsayLP10—I wish to make some comments tonight in light of the comments on child care on 30 March by the member for Prospect (Mrs Crosio). She continues to spread Labor misinformation which even the Australian Centre-Based Child Care association, which represents 1,100 child-care centres, says is completely unfounded. In a press release of 22 February, the President of the Australian Confederation of Childcare said:We want to completely refute recent comments about Child Care which appear to be politically motivated, which suggest there have been substantial fee increases. This politically motivated campaign only serves to do long term damage to the Child Care Industry as a whole. This campaign is trying to blame the current Federal Government for reductions in attendance at Child Care Centres. Nothing could be further from the truth.The current Federal Minister, Warwick Smith, has in a short space of time, shown more understanding and leadership in Child Care than any previous Minister in recent times. This Government has, for the first time, put in place a planning system for Child Care, it has removed inequitable funding practices such as operational subsidies, it has introduced a hotline for information about Child Care and it has recently announced a retention of the current system of allocation of Child Care assistance to families which will avoid complex and intrusive procedures for families. Without doubt, children and families are the big winners under The Howard Government's Child Care Policies.The Penrith City Council continues to rail against the reduction in operational subsidies. The operational subsidies effectively prevented some 51,000 families in outside school hours care from receiving any sort of child-care assistance. We have put the equity back into that. We have taken the $20 benefit from 70,000 families which was denied to 200,000 Australian families using private centres—and that $20 a week benefit basically went to fund community based centres—and we have spread that money over the entire child-care system. And it is not just long day care centres which the Penrith council is concerned about, considering that it runs 17 of them. We have spread it out over family day care centres, occasional care, outside school hours care services, vacation care services, playgroups, multifunctional children's services, multifunctional Aboriginal children's services, mobile children's services and toy libraries. we have really covered this entire area.Yes, Penrith City Council is upset. Its 17 child-care centres have lost substantial amounts of federal money, which has gone to fund other child-care places, and they have to make up that deficit. But in addition to what the Commonwealth government was funding them, something like $2 million of the ratepayers of Lindsay's money was being spent by council on child care. This is to compete for places in an area which is oversupplied with child-care places. It is to compete against private centres in Lindsay, of which there are a number which have not put up their fees and are in fact cheaper than those run by council. These centres are still available, and here we are with Penrith City Council using federal money and local government money to compete against private centres which are providing an adequate service, given that all centres must comply with the state regulations in order to qualify for the child-care assistance and the child-care rebate.These sorts of fees work together in a way that sees an equitable distribution of money between low income families, and they provide an extra 83,000 places over the next four years. By the end of next year, 83,000 more child-care places will be available in the community, including in my area, to the people of Australia than were available under the previous government. An extra $4.9 billion has been allocated over four years. So I completely refute any suggestion, any politically motivated innuendo, from the opposition that people of my electorate are in any way disadvantaged in terms of child care. Whatever it takes, this government is going to do it. We are providing more child-care places and more assistance. (Time expired)228619:51:002286Zammit, Paul, MPMr ZAMMITZK6LoweIND00—I take this opportunity in tonight's adjournment debate to pay tribute to the role played by community volunteers in my electorate—those who belong to organisations and also those who act individually. Because of the time constraints, I will refer to only one organisation and one individual.Ever since my election to the New South Wales state parliament in 1984 I have been aware of the highly dedicated and motivated Concord Hospital Service Auxiliary who are now into their 30th year, having commenced their work in 1969 when Concord Hospital was then known as the Veterans Hospital 113 A.G.H. Repatriation and was widely respected as one of the finest teaching hospitals in Australia. In June 1993 the hospital was integrated into the state system and is now known as Concord Repatriation General Hospital.The volunteers did not miss a beat. They became incorporated and now number 120 men and women who continue to go from strength to strength. To raise funds, they operate a gift shop and candy cart, and run market days and raffles. In more recent times they have expanded their operations to include functions such as Christmas and July dinners, this year being their third dinner, all of which my wife, Rita, and I have attended. They have also organised race days at Randwick and Rosehill Gardens and dinner dances. They also organise one major fete day in the hospital grounds and/or at a local park. A wine auction dinner dance was held last Friday, which my wife and I also attended. It proved to be highly enjoyable and raised a very substantial sum of money under the highly experienced hammer wielded by the guest of honour, Len Evans.Additionally, the volunteers work in many departments and wards in the hospital, tidying and refreshing flowers, as well as undertaking many other tasks, including laminating, dynomaking, stamping various envelopes, rolling bandages, repairing equipment, filing and other clerical work, and assisting patients when required. I take this opportunity to pay tribute to the livewire president of the volunteers, Ruth Ellis, who has proven to be a very great asset to the hospital and to our community in general.I will now list some of their very impressive financial donations to the hospital just in the past 2½ years. For the ophthalmology department, a Yag laser for the early detection of glaucoma, $17,000. For the radiology department, a mammography machine, $70,000. For the sports medicine department, a Bobath couch, $2,500. For the blood donors department, four lazy-boy chairs for the taking of blood, $3,500. In the chapel, the restoration of the original altar of the hospital, $500. For the burns unit, three TVs and videos for the comfort of long-stay patients, $4,000. For the medical oncology day-care unit, mattress covers to provide relief for very ill patients, $4,000 in various wards. For the ENT department, a Kay's rhino-laryngeal stroboscope, $16,500.For the new transit room, two bezique standard back armchairs, $600; two bezique high back armchairs, $660; two pastor standard back armchairs, $220; one upright refrigerator, $850; and one TV, NEC brand, $740; a total of $3,070. In addition, for the orthopaedics department, audiovisual equipment to educate patients and staff, $600. For the Anzac Health and Medical Research Foundation, $50,000. For the Kokoda Track Walkway Ltd, $4,102. Various departments require assistance with water coolers, ice making machines, curtains and tablecloths. For the cardiac department, two monitoring machines worth $7,000. I say: well done, Ruth Ellis and the Concord Hospital volunteers.While on the topic of volunteers, I also pay tribute to a most delightful and energetic 90-year-old lady who, when asked about her age, said simply that she had reached a significant age—Mrs Dorothy Pemberton from Concord West in my electorate who, together with another 13 volunteers, many from the Concord Uniting Church, has been giving assistance at Homebush Boys High School over a very long period of time. Mrs Pemberton has been helping students to improve their reading and literacy skills and, as a former teacher, she has an excellent rapport with the students, who speak highly of her patience, knowledge, teaching skills and positive attitude. She has been attending Homebush Boys High School since 1991. She is a really great lady. On my behalf, and on behalf of my constituents, I wish Dorothy Pemberton a happy retirement and continued good health.228719:56:002287Bartlett, Kerry, MPMr BARTLETT0K6MacquarieLP10—Last night I made a few comments about the needs of the Great Western Highway, until the clock rather cruelly brought my run to an end, although perhaps to the relief of some others present. I made some comments about the importance of the Great Western Highway for a number of reasons—as a link between the central west and the ports and markets of Sydney, because of the needs of a growing tourism market in the mountains, and the need for access for emergency vehicles. The same comments apply also to the Bells Line of Road, an important alternative route across the Blue Mountains.I finished by talking about safety issues relating to the Great Western Highway compared to roads throughout the rest of the state. I made the comment that, throughout the state of New South Wales, on average, three per cent of accidents lead to casualties, whereas on the Great Western Highway nine per cent of accidents lead to casualties. Across the state generally, one per cent of accidents lead to fatalities, but on the Great Western Highway three per cent of accidents lead to fatalities. So the Great Western Highway is a road of significant importance but one that needs considerable attention. It needs funding.In the last two years, the federal government has increased funding for roads to the state government of New South Wales. In 1995-96, the last year of the Labor government, $311 million was allocated for road funding to the New South Wales government. In the first year of this government, 1996-97, we increased it to $321 million, an increase of 3.1 per cent. In this year's budget, 1997-98, we increased it to $337 million, an increase of 5.2 per cent. Therefore, there really is no excuse on the part of the state government not to increase funding for the Great Western Highway.Having said that, there is still a strong case for increased federal funding for the Great Western Highway. Sadly, in 1992, the former Labor government excluded the Great Western Highway from its national highway funding program, therefore leaving it solely dependent upon the resources of the state government.It is very pleasing to note, however, that this government has restored the roads of national importance program—in addition, I might say, to the black spots program. The RONI program does give some strong hope of increased funding for the Great Western Highway. It is for this reason that I urge the federal government to seriously consider upgrading the Great Western Highway to a road of national importance. It is, on all accounts, a road of national importance, for the reasons that I said. It is a very vital link between western New South Wales, central New South Wales and the markets and ports of Sydney. It is, in essence, a road of national importance and does need to be funded appropriately.I look forward, therefore, to increased federal government attention to the Great Western Highway and the improvements that will bring. It is important that we do improve the traffic flow, that we do improve the development and employment opportunities for people in the mountains and central and western New South Wales. It is important that we assist the burgeoning tourist industry in the Blue Mountains. It is important, while doing all of this, that we consider the needs of local residents and it is important, most of all, that we improve the highway in order to reduce casualties and to save lives.10000SPEAKERMr SPEAKER—It being almost 8.00 p.m., the debate is interrupted.8V5WORTHMs Worth—Mr Speaker, I require that the debate be extended, to allow me to respond to the contribution made tonight by the member for Watson.10000SPEAKERMr SPEAKER—The debate may continue until 8.10 p.m.228820:00:002288Worth, Trish, MPMs WORTH8V5AdelaideLP10—I acknowledge the commitment of the member for Watson (Mr Leo McLeay) to a just solution to the Cyprus problem and again place on the parliamentary record my own commitment to exactly the same solution. I am, in fact, the patron of the Justice for Cyprus Coordinating Committee in South Australia. I took a special interest in this subject because of the constituents I represent in my electorate. In fact, I travelled with the member for Watson and others to Cyprus and Greece roughly 18 months ago.To speak to one's constituents and feel committed to what they are committed to is one thing, but to visit Cyprus and see the division there, to see our peacekeeping force in action, to see the green line, to see the flag pole where Solomos Solomou was shot down, to look through binoculars over Famagusta where people in my electorate lived and to know that the only way they can see the city that they lived in is through binoculars because of the division there is to bring home the lack of human rights that people there are still experiencing and, of course, to acknowledge how fortunate we are in our own country to not have those divisions.In South Australia, the Cyprus Community of South Australia Inc. has just celebrated its 50th anniversary. I was pleased to help celebrate with them at a debutante ball and assist in cutting their very splendid cake. They are very good citizens of our country, many of them coming here as refugees, many of them from one particular village which is still in that northern occupied part of Cyprus.I am sure that all of my colleagues here would welcome any progress on solving the Cyprus problem. I have noted that the European Union yesterday welcomed the Republic of Cyprus to the accession process and also expressed regret over the continued Turkish occupation of part of Cyprus. On behalf of the EU, Council President Robin Cook said:I am delighted that today we are meeting to open accession negotiations. The Union has shown it can respond decisively and effectively to the transformation of Europe's political landscape and use the opportunities this offers to end the divisions of the past. These efforts are being matched by Cyprus which has made great strides on the path to accession.The EU regrets that it has not been possible to achieve a political solution to the continuing division of Cyprus in time for the accession negotiations on which we embark today.The Union believes that Cyprus' accession to the EU should benefit all communities, including the Turkish Cypriot community, and help to bring about civil peace and reconciliation on the island. In that context, our objective remains a bi-communal, bi-zonal federation on the basis of a comprehensive political settlement in accordance with UN Security Council Resolutions. A political settlement would allow the provisions of the Accession Treaty to be implemented throughout the island.Mr Cook also noted that the EU welcomes the offer by the Cyprus government to include Turkish Cypriot representatives in the team for negotiating the terms of the Cyprus accession to the EU. He said:The European Union regrets that the Turkish Cypriot community has so far responded negatively to this offer.I would have to reiterate my own disappointment and I know that of those in my own electorate who are so interested in this just solution. In fact, in Adelaide the community have made sure that they have made contact with Turkish Cypriots who are also living in Australia. They are recognising what they share in common and how important that reconciliation, which has been spoken of in the EU yesterday, is to them.I would hope the member for Watson, and I am sure all people in this place—I know you also have a special interest in this issue, Mr Speaker—would join me in hoping for a just solution in the not too distant future.20:04:002289House adjourned at 8.04 p.m.Notices2289The following notices were given:Mr Campbell to move:That the Therapeutic Goods Regulations (Amendment), as contained in Statutory Rules 1997, Nos. 400 and 401, made under the Therapeutic Goods Act 1989, be disallowed.Mr Vaile to present a Bill for an Act to amend the Interstate Road Transport Act 1985, and for related purposes.Mr Bruce Scott to present a Bill for an Act to amend section 198 of the Veterans' Entitlements Act 1986 to allow increases in the rate of pension payable under paragraph 30(1)(a) of that Act to the widow or widower of a deceased veteran to take account of Male Total Average Weekly Earnings.Mr Williams to present a Bill for an Act for the protection of areas and objects of particular significance to Aboriginal Peoples and Torres Strait Islanders, and for related purposes.Documents2289The following papers were deemed to have been presented on 1 April 1998:Aboriginal and Torres Strait Islander Commission Act—Report of the panel convened to review ATSIC's zone, region and ward boundaries—Final boundary recommendations.Australian Bureau of Statistics Act—Australian Bureau of Statistics—Proposal 1998 No. 5.Christmas Island Act—List of Western Australian Acts for the period 13 September 1997 to 20 March 1998.Cocos (Keeling) Islands Act—List of Western Australian Acts for the period 13 September 1997 to 20 March 1998.Endangered Species Protection Act—Statement relating to delay in furnishing report within specified period—Review of the operations of the Act.Veterans' Entitlements Act—Instruments 1998 Nos. 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24.1998-04-01Mr DEPUTY SPEAKER(Mr Nehl) took the chair at 10.00 a.m.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—Order! A quorum not being present, I will resume the chair at 10.02 a.m.Sitting suspended from 10.00 a.m. to 10.02 a.m.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—The Main Committee will now consider government business.Bills2290r4002290Debate resumed from 27 November 1997, on motion by Mr Miles:That the bill be now read a second time.10:02:002290Rocher, Allan, MPMr ROCHERZI4CurtinIND00—Perhaps a good starting point in commenting on the Tax Law Improvement Bill (No. 2) 1997 is to revisit some of the principles which underpin the tax law improvement project, also known as TLIP. When the former Labor government established TLIP on 1 July 1994, it empowered it with the authority to simplify income tax law by restructuring and rewriting the 1936 Income Tax Assessment Act to make it easier to comprehend. I remind members of this mandate because, when one looks through the many hundreds of pages of submissions made to the TLIP team on this bill by those who actively have to work with the tax act on a daily basis, one could be forgiven for forgetting that the rewrite is supposed to facilitate simplification.It is hard to imagine how, in this instance, the consultation process could have been better frustrated or the drafting more poorly executed. The fact that the government produced a 79-page supplementary explanatory memorandum filled to the brim with amendments only 36 hours before the bill was first scheduled for debate is indicative of the chaotic manner in which it has been handled.The consensus in the tax industry seems to be that the structural changes that the rewrite will bring about are to be welcomed. Further, the concept of the capital tax event, so-called, has garnered a reasonable level of support amongst legal and financial advisers. However, the two leading concerns of tax professionals about this bill are very significant. They are focused both on the failure of the legislation to adequately deal with known technical errors and on the pruning back of the time available for the completion and review of the rewrite. These matters give rise to a series of related consequences, including a continuation of the lack of certainty in the tax acts and an increase in the number of interpretations which clearly favour the revenue at the expense of the taxpayer. I intend to comment on each of these in some detail.In their combined submission to the Joint Committee of Public Accounts in 1996, the Taxation Institute of Australia (TIA), the Institute of Chartered Accountants in Australia (ICAA), and the Australian Society of Certified Practising Accountants (ASCPA), who will be referred to hereon in as `the bodies', proposed more than 230 separate recommendations for the correction of technical defects in the current law.TLIP may never have intended to address big `P' policy issues in the rewrite, but its brief certainly extended to addressing the known practical problems in the original act. In isolation, these technical defects are a source of irritation to taxpayers and their advisers. When combined, they give rise to taxation on unrealised gains and dissuade business investment and development.In speaking on the second instalment of legislation to result from the tax law improvement project, I said that it was necessary that the terms of reference of TLIP should be extended to include a review of policy. My stated position then was that there should be no easing of pressure on this parliament to implement substantive changes to the policy and administration of tax legislation, and I remain committed to that position.As one submission to the rewrite project made clear, despite government comment to the contrary, there are many examples of policy changes contained within the capital gains tax rewrite. These appear to be selective and confirm that the government and the TLIP team `cannot seek to hide behind the cloak of the TLIP's limited terms of reference to pretend that it was unable to make small `p' or even large `P' policy changes to the current law'.The fact that neither the TLIP team nor the government, both of which received a copy of the bodies' submission, has bothered to give a considered response to the authors by January 1998 is an absolute disgrace. It is also lamentable that the government has failed to address in its amendments the JCPAA recommendation that the TLIP team should respond formally to any submissions from stakeholders by the time future instalments of the rewrite are tabled in parliament.That said, it is pleasing to note that the coalition has finally come to its senses in a small way by choosing to adopt all of the JCPAA's recommendations on technical correction to the capital gains tax regime in its amendments to the bill. However, it should not be forgotten that the government and the Australian Taxation Office, the ATO, had full knowledge of these deficiencies but failed to act on them until the dying hours before this debate was to take place.Before its about-face, the TLIP team, which not coincidentally is dominated by representatives from the ATO, were all too prepared to ignore their own summary of identifiable technical deficiencies. The summary comprised some 157 issues relating specifically to the CGT.As the bodies made clear in their submission to TLIP, the process of identifying and agreeing to unintended consequences is a long and tiresome one. If the outcome of this process fails to produce improved law, then it is for naught. Also, as I understand it, the government's amendments do not address the full range of concerns of the peak taxation bodies.Before issuing the supplementary explanatory memorandum, the combined government and TLIP forces had incorporated in the rewrite only 10 per cent of the recommendations by the bodies. Clearly, their amendments will improve on that figure, but they do not go far enough.To read that our leading tax experts regard this rewrite as a lost opportunity in which bad law is simply re-expressed should be of concern to all in this place and elsewhere. The government's 11th hour backdown on some of these technical amendments goes only part of the way to making the most of the opportunity presented by the rewrite. That these concerned experts perceived this bill to be the benchmark, or litmus test, against which the remainder of the rewrite will be judged must have left them feeling rather ambivalent about the worthiness of TLIP.This bill was introduced into the parliament on 22 November 1997 in an incomplete state, owing to the absence of technical corrections and to transitional and consequential provisions. It was not until some five weeks later, on 8 January 1998, that interested parties received information on these latter provisions. But that did not mark the end of the waiting game, because it was only last week—or perhaps the week before—that the government produced its own amendments to the bill, a tentative sign that it is perhaps finally taking some of the advice offered to it by the stakeholders.At best the staggered release of information makes it difficult to give a considered response to the rewritten legislation; at worst it subverts the whole consultation process. As Mr Robert Bryant, Executive Director of the Corporate Tax Association, suggested:It is grossly inadequate to have delivered to us flawed and incomplete legislation that has the potential to produce disadvantageous outcomes or not be a faithful replication of what has been there before.The big losers in all of this are the corporate and PAYE taxpayers. Clearly it is not just a lack of wanting, on the part of the TLIP team, to address the technical defects in the capital gains tax regime. The lack of time made available to it for the completion and review of the legislation helped ensure that the rewrite was riddled with written errors. Countless examples of technical errors which are present in the 1936 act and which have been faithfully replicated in the TLIP rewrite have been revealed by representatives of the tax community.In addition to these are instances where the signposting in the rewritten legislation is clearly substandard, where there are gaps in the new alphanumeric system and where misprints have been detected. As I have noted elsewhere, if these anomalies are not immediately corrected we can all expect to spend valuable parliamentary time debating a future technical amendments bill to overcome avoidable shortcomings in what is supposed to be a new and improved act.In commenting on the last instalment of the TLIP rewrite, the then Joint Committee of Public Accounts stated that the process `may be suffering in the rush to have legislation introduced into the parliament'. The chairman of that former committee, the honourable member for Fairfax (Mr Somlyay), went on to note that `the committee had not had the time to review the bill as comprehensively as it would have liked' and recommended that the government should `schedule sufficient time for . . . review of the next tranche of legislation'. This is the next tranche.That report was tabled in parliament in March 1997. In the foreword to report No. 356 of March 1998, the present chairman of the JCPAA, the honourable member for La Trobe (Mr Charles), outlined his concern that neither the committee nor the tax professionals had confidence in their ability to review the bill because:The time allowed . . . to respond to exposure drafts of the legislation has been truncated . . . A familiar story. The chairman also cautioned that there was `evidence of undue haste in preparing the bill because it was incomplete when introduced'.Here we are some 12 months and another TLIP instalment later, and there appears to have been no change in the management of either the rewrite or the review process. Worse still is the fact that the recommendation by the JCPAA which dealt specifically with this aspect of timing has not been picked up by the government in its subsequent amendments to the bill before us.Recommendation 4 of report No. 356 outlined the committee's position that all of the proposed TLIP legislation and associated consequential and transitional provisions should be introduced into the parliament together, and the committee given adequate time for a thorough review. The failure of the government to address this issue, which has been raised not only by the stakeholders but also by its own committee, is lamentable.It is with real trepidation that I note the perception of many in the tax community that the rewrite has ensured that the ATO's authority has been consolidated in the new rules at the expense of the taxpayer. Mr Duncan Baxter, partner with Deloitte Touche Tohmatsu, noted in evidence to the JCPAA on 29 January this year:The current legislation—that is, the 1936 tax act—contains a number of areas in which the law is unclear and on which the ATO has formed a particular view which is generally favourable to the revenue and on which taxpayers and our advisers have formed a different view. . . . We certainly see examples of the ATO view being legislated into the new rules.Mr William Glass, president of the Corporate Tax Association, also lent his weight to this argument when he gave evidence that:Either wittingly or unwittingly, there has been seen to be a certain Taxation Office bias in some of the decision making on certain key issues.The suggestion that the rewrite has failed to clarify those areas of current CGT law which are subject to legal challenge is also shared by the TIA, the ASCPA and the ICCA. In their joint submission, they state their belief that:The TLIP team has indicated that it will take a neutral stance to these issues. The evidence is otherwise. The TLIP team has favoured in a number of instances the ATO position.One example used by the bodies to illustrate that is the failure of the TLIP team to deal with the issue of double taxation in circumstances where damages may be recovered in relation to the injury to or loss of property.While limited change has been sought in this bill, the bodies argue that further amendments are necessary to settle, once and for all, the issue of this double tax effect. It is their stated opinion that:The rewrite does not seek to make clear by explicit provision that double tax cannot arise in relation to essentially the one event that occurs in relation to the same asset.As I noted earlier, unlike those responsible for the drafting of the new legislation, these people are responsible for offering advice on tax law on a daily basis. They are telling anyone in this place who cares to listen that this bill is not to be as effective as it could be.Apparently, as at 1 July, 1997, the ATO had identified around 900 rulings and determinations which required amendment as a direct consequence of the rewrite of the 1936 tax act. Instead of making the necessary corrections—which, admittedly, would be a formidable task—the ATO has opted to issue a new ruling, a final ruling, which has never been released in draft form and which seeks to ratify existing rulings and determinations affected by the rewrite but where there is no intended change in the law. So there is just one ruling, the wording of which is still unknown. As the bodies make very clear:The problem with this approach is that it will leave taxpayers at large, as time goes by, not knowing whether the ATO has in fact made a public statement about the relevant public or private ruling affecting them. The decision to issue this final ruling tips the scales further in favour of the ATO, because the burden that will be imposed on a taxpayer trying to ascertain whether a statement disputing a particular ruling has been made will be considerable.If a taxpayer fails to apply for a new ruling to clarify the existing ruling, the bodies say:There is the very real possibility that taxpayers' private rulings may be overtaken at some stage in the future without them being aware of the fact.In one of the most damning remarks in their entire 200-page submission, the bodies suggest that this is tantamount to:The ATO . . . encroaching on the legislative power of parliament in stating that its view creates law.I have recently commented in this place that parliament should be loath to bolster the powers of the tax commissioner, and the treatment of rulings and determinations in this instance confirms my position on that particular point. I challenge the government to try to explain how it is that the concept of this final ruling, which will lead to greater unpredictability in the tax acts, is consistent with the simplification process.Another irony of the rewrite is that it is actually increasing the complexity of the tax act, because professionals are now obliged to refer to both the 1936 act—the original act—as well as the rewritten 1997 act in order to meet the needs of their clients.On page 9 of the coalition's explanatory memorandum, it states that the accumulated impact of the many small improvements in the bill will bring about a noticeable reduction in compliance costs for those using CGT law. But the evidence suggests otherwise. In his brief to the JCPAA, Mr William Glass noted that the cost of researching TLIP affected issues and swapping between the two tax acts has steadily increased by around 30 per cent since the commencement of TLIP. He also expressed the frustration at the valuable time that has been swallowed up in the process, indicating that it was becoming increasingly difficult to provide an immediate response on an issue. Surely, even the government would concede that this establishes a good case for warehousing of this and earlier instalments, until the rewrite is complete.In closing, I remind the House that my support for the efforts being made by the TLIP team has always been qualified. I see little in either the management, or the rewrite, of this bill that persuades me to change my mind. If the rewrite is to amount to anything of substance, the government and the TLIP team must commit themselves to a more rapid, but considered, review of tax legislation.10:22:002294Smith, Tony, MPMr TONY SMITHSK6DicksonIND00—The Tax Law Improvement Bill (No. 2) 1997 highlights what is an obvious fact and that is that the tax laws in this country have long since passed their use-by date. When we have a tax law improvement bill of 600 pages and an explanatory memorandum accompanying it of substantial proportions—ZI4ROCHERMr Rocher—What about the explanatory memorandum for the amendments to it?SK6Smith, Tony, MPMr TONY SMITH—And the explanatory memorandum for the amendments, as the member for Curtin indicates, it is obvious to all of us, and should be obvious to everybody who is in a position to take notice, that the system is simply not working.I am very attracted to a proposal that has been floated by Mr John McRobert called the easytax two per cent tax. Easytax is a flat tax on every exchange of ownership of goods and/or services involving monetary considerations. It is a simple, visible and predictable charge for the use of money and facilitating trade and commerce for the exchange of goods and services. It does not apply to money deposited or withdrawn from a bank. This falls outside the definition.The two per cent tax of the gross monetary value of the exchange of ownership of goods, services and labour would replace personal and company income tax, wholesale sales tax, payroll tax, fringe benefits tax, capital gains tax, withholding tax and provisional taxes. In so doing, it would restore full employment and create a prosperous nation, paving the way for future reforms in relation to tariff and excise matters.The member for Werriwa (Mr Latham), in his as yet unreleased book, has shown some realism in relation to the tax system with his leaning towards a replacement of the income tax system by a tax on consumption, a tax that would basically move towards taxing those who consume most. Those who consume most, generally speaking, are those who are better able to pay tax, and frequently they are those who are not paying tax at the present time because of the tax arrangements they have made.There is a massive industry out there devoted to avoiding tax. There is a massive industry out there which is, reluctantly, subsidised by decent and honourable taxpayers who have to cope with the nightmare of the Income Tax Assessment Act and all of its amendments. The current taxation system is far too complex. The cost of compliance is a massive waste of Australian resources and an unnecessary burden on all taxpayers, and in particular, small businesses.No-one can fully understand the taxation laws; they are too confusing. In my electorate I constantly have members of the accounting profession contact me when a further amendment is made to the tax act. They find that the current tax act is already virtually unmanageable and they simply do not understand it. If they do not understand it, how are they going to explain it to their clients?Of course, added to that is the fact that they do have to somehow understand it; they do have to somehow struggle with it. That leads to the fact that the extra cost to their clients, and ultimately to the community as a whole, will often defeat the purpose of the tax itself. It is just one burden piled on another.In my view, complex and punitive taxation is a major obstacle for all businesses, small and large, and it does cause attention to be diverted from good, sound management. How can you tax profit when you do not have a definition of what profit is? That is the whole problem with this area. How can you insist on an income tax system continuing on as it has been since about 1915? At that time, ordinary workers would not be paying that level of tax because of their income, but they are now suffering from bracket creep.I recall that, when I was working as an apprentice at the Evans Deakin shipyard, if I worked overtime I was immediately pushed into a higher tax bracket. That was a great disincentive to work longer. That has not changed under the current system. In fact, it has got worse.A small businessman in my electorate said to me recently that his 1998 take-home pay was no different from what it was in the mid-1980s. When people in small business say that to me, there is a real problem. It is a problem that we must recognise. We can be lulled into thinking that because certain areas in the business sector are doing well other business sectors are doing well also. There are some sectors in business that are doing well and have improved considerably—and let us hope that continues—but there are other sectors that are being left behind.The small businessman who came to see me last Friday was a motor vehicle repairer. He had 14 people working for him in the mid-1980s but he now has two, including one of his sons. As I said before, his take-home pay has not changed. In fact, it has gone backwards in real terms because of the cost of living increases over that period. He is working 60 and 70 hours a week. The anguish was etched all over his face, and we cannot ignore that.These people are the real battlers out there. What he is saying to me in relation to the tax system and other matters is that those people in the middle group in society are not really being helped by the taxation system. He is saying that the system is crushing them. Therefore, we have to look for innovative ways to deal with what has become a major problem, a modern problem. We cannot keep applying the old system to a modern problem.I think we all accept that the taxation system must be looked at in a serious way, must be dealt with. This measure attempts to improve the understanding of the system but, in my view, the system itself is beyond understanding. As I said, it speaks for itself with the volume of the material that we have to consider. Australia is in a serious situation; a simpler tax system will allow our businesses to be more efficient and productive, and will provide an equal tax charge for goods and services traded over the Internet, for example, as for those traded over the counter.The flat tax of two per cent of receipts of income and sales could be phased in over a three-year period. Obviously there will be transitional problems in some areas, but those always happen when one is moving to a new system. This is a reality of life; we cannot change the tax system overnight and expect everything to just fit straight into place. Over a three-year period, using a tax pool arrangement to install new gross wages equal to take home pay plus two per cent would effectively slash the cost of employment, while increasing the purchasing power of the after tax dollar. I emphasise that slashing the cost of employment will increase the ability of employers to employ more people, and that is what we need to do.Easytax is quite different from a VAT or a GST. It is simpler. In the fully implemented system, there are no deductions, no thresholds, no demarcations, no deeming, no accruals, no pre-payments, no repayments, no exemptions and no nonsense. The net effect is to lower the taxes on employment, drop the cost of employment and increase the demand for employment. Australia has 13 million employable people with only eight million deemed to be employed. So the unemployment statistics just do not add up. After the implementation of a two per cent easytax, it is obvious that over time other taxes will be discarded as the economy improves.The two per cent tax has the advantage of being visible. This is one of the things that, I think, we struggle with in the community now—certainly, the people of Australia struggle with the fact that so many of these taxes are hidden. People say, `We don't have a GST now' when in fact we do in so many areas. This particular idea, in terms of reforming the tax system, will mean there is a visible tax which will show on the sales of goods, services and property—that is, every receipt will show a two per cent surcharge on the listed selling price. It will be a constant reminder of the cost of government, and people need to be reminded of those sorts of things. I think it is part of the accountability of government to the people. The simplification will activate a strong motivational multiplier effect in our economy and this will drive job creation.For small transactions, such as those less than $100, the tax may be added to or deducted from the sale price at the seller's option. The tax on receipts will be due for payment by the end of the month following the month in which the taxable transaction takes place. Annual financial statements will be lodged within six months after the close of the financial year, together with a statement of cash flow and reconciliation to the annual financial statements.Importers will be responsible for payment of the receipts tax on imported goods and services, those being taxed at two per cent of the purchase value. Internal sales of these imported goods and services will again be taxed at two per cent on sale. Exports will attract the two per cent tax on sale under the normal terms. There will be legal definitions and ATO rulings for different types of taxable transactions but these will be simple.Payment of interest and dividends will be taxed at two per cent for both Australians and foreign investors, with taxation at source for overseas remittances. Deposits and withdrawals from bank accounts will not be taxed, as they are not sales. A delay in the payment of the two per cent tax by the party responsible will incur a penalty tax at the rate of two per cent per month on the tax outstanding but with increasing penalty rates after six months after the end of the financial year. There may be extenuating circumstances but those sorts of details would need to be worked out over time and, frequently, on a case by case basis.The quality of life for the citizens of Australia, in my view, would be improved by this proposal. There would be a massive increase in job opportunities, better job satisfaction and an incentive to work harder. There would be a great influx of people with the entrepreneurial infusion, if you like, of wanting to work harder and get on with their dreams of achieving a reasonable standard of living and, at the same time, being rewarded for effort and not taxed out of existence. Prompted by the concept, I am advised that a unique and powerful computer model of the Australian economy has been developed by Unisearch Research Pty Ltd, at the Queensland University of Technology, to show the relevant impact of all types of taxation on all sectors of commerce and industry. The model was based on 1988 to 1991 figures and reconciled on the national accounts. It was then upgraded to cover the period 1992 to 1995 using the latest complete set of ABS statistics. Indications are that a low rate of tax on receipts has predictable stability and would be difficult to increase once entrenched.In summary, as I have indicated, this particular system of taxation would be simple, and would be much easier to enforce. Indeed, effectively, instead of the complex tax returns that we are now filling out, this would be a one-page tax return. It would be simple and efficient. It would encourage accountants to get into development planning and estimate planning instead of being bogged down on the negative side of taxation—the finding of one's way through and wading one's way through the hopelessly complex taxation legislation, the Income Tax Assessment Act and related acts.I think, in the circumstances, we have to consider a new way of viewing these things. We have to look very far-sightedly because we have been wrapped up and tied up in knots by a system which is doing everything to discourage people from investing, working hard and providing more employment. Really, we cannot have a situation where we have five million people basically twiddling their thumbs, because they could be capably and adequately employed with a system that would encourage employment.In the particular circumstances of this measure, without saying anything other than that the system we have is fracturing and has fractured, I do encourage those in a position to do something about it to look at these measures and to speak with people like the tax reform group in Queensland headed by John McRobert. Let us hear an argument about it. Let us hear someone say, `That would not work because . . . .' I am yet to hear any significant argument against but, obviously, there are areas that have to be considered. Let us look at these things because, at the end of the day, the system will eventually crack under the strain of the weighty legislation with which we are dealing.10:39:002298Thomson, Kelvin, MPMr KELVIN THOMSONUK6WillsALP00—The member for Dickson (Mr Tony Smith) referred, in his discussion of taxation issues, to the problem of the taxation treatment of overtime. I have to say, from a personal point of view, that I think it would be much better if employers, rather than encouraging workers to work overtime, in fact took on new employees. My own view is that a situation where some workers, as in the example he gave, are working 60 or 70 hours a week, while others are completely without work and unemployed, is not in fact a good piece of social policy. That would be my own view of that matter.The member for Dickson did ask for discussion and debate about his alternative tax model. I guess it will be interesting to see if the Treasurer (Mr Costello) affords him the same courtesy as he affords, for example, the member for Werriwa (Mr Latham) when he comes up with policy proposals. I guess time will tell in relation to that.The Tax Law Improvement Bill (No. 2) 1997 continues the tax law improvement project process of rewriting the income tax legislation. This TLIP process was instituted by Labor to address the constant and reasonable criticism that the income tax legislation had become too long and too complex.It is important to realise the underlying reason for the constant increase in the complexity of income tax legislation. It is quite simply a function of the increasing complexity of business and the constant practice of tax avoidance. The law has been constantly updated to attempt to ensure that all taxpayers can continue to contribute a fair share of income tax. Unfortunately, no matter how many loopholes are identified and closed, there are always new avenues being developed and new anomalies which need to be addressed.The TLIP process is one method by which this issue is being addressed. Due to the sheer scale of the task—as others have pointed out, the legislation covers many thousands of pages—it is not feasible to rewrite the 1936 legislation in its entirety in one fell swoop. Accordingly, the TLIP process has proceeded on the basis of redrafting discrete portions of the legislation. This, in itself, does raise problems. However, as it is not possible to achieve the task in one package, there is really no option but to continue on a staged basis.The bill is the third instalment of the rewrite legislation. The major areas covered in the rewrite are capital gains tax, company bad debts, intellectual property, and environmental expenditure, including environmental impact statements. These are all important areas of business taxation and, hopefully, the redrafted provisions will improve the ease with which business interprets, and complies with, these areas of the law.As well as rewriting the law, the legislation takes the opportunity to effect minor policy changes to make the law clearer and simpler. This is not an attempt to significantly change the policy governing these areas; rather, the objective is limited to replacing impractical rules with ones that are easier to comply with, simplifying the rules that are retained, deleting the unnecessary ones, removing anomalies and clarifying ambiguities as much as possible. Without commenting on any particular examples, this approach seems reasonable to the opposition, and we are not opposed to this general course of action.Consistent with the practice of the prior TLIP bills, the Joint Committee of Public Accounts and Audit has examined the bill and reported earlier this month, in Report No. 356. The report canvasses the usual range of concerns raised in the TLIP process, such as that there has been inadequate time for proper consideration by industry of the ramifications of the new wording; that the commencement date for the new provisions should be delayed beyond the 1 July proposal; and that therefore there should be a no detriment rule introduced, so that taxpayers can choose either the existing law or the new law.While there is some substance to these concerns, the problem is that, if the parliament were to agree to the no detriment rules, the whole rewriting process would be effectively rendered worthless. There would be the impossible situation of two parallel sets of income tax law operating, with taxpayers being able to choose the particular wording from either the old legislation or the new legislation—whichever suits them. Obviously that would encourage aggressive tax planning activity, especially by those with considerable means, and that would inevitably result in lower revenue collections than would otherwise be the case. Clearly, that would be an undesirable and an unfair outcome, and, accordingly, Labor will not support such a proposition.That said, we are concerned about a number of the specific issues that were brought to the attention of the Joint Committee of Public Accounts and Audit by various witnesses. There are various situations where the Joint Committee of Public Accounts and Audit is concerned about the potential for double taxation, including those provisions mentioned in recommendations 6 and 9 of the report. In addition, recommendation 8 touches on the very complex issue of the taxation of compensation payments received where an asset is destroyed.The joint committee makes the sensible point that, if a ruling on the operation of the provisions is 355 paragraphs long, then there must be a great deal of uncertainty surrounding the operation of the provisions, and this uncertainty should be addressed. There were many other technical issues highlighted by the Joint Committee of Public Accounts and Audit report, and I indicate now that the opposition will support the government amendments that will be moved later in the debate to address the issues raised in the report.Simplification of tax law is clearly no easy matter. We have thousands of pages of tax law. We endeavour to condense them to fewer thousands of pages of tax law. The problem is of course that some bright sparks—and there are certainly plenty in the taxation advice industry—will want to say that these words now mean different things from what the previous words meant. We can expect some new litigation and testing of the meaning of the words that are passed by the parliament.It is a difficult area in which to achieve simplicity. That leads some people to say that we could achieve greater simplicity of the taxation system, for example, through the introduction of a goods and services tax. If you believe that, you will believe anything. The present situation for small businesses, for example, is that some 75,000 of them are collectors for the wholesale sales tax system. If a goods and services tax were to be introduced, more like one million small businesses would become collectors of the goods and services tax. That comes to us from the government, which proposes that red tape for small business ought to be reduced by 50 per cent.We have a situation where we could be looking forward to new computer systems, new cash registers, calculations being required which previously were not required and a whole series of transactions, particularly in the services field, which were not previously subject to or part of the taxation net, becoming part of the taxation net. This would mean all kinds of services—visits to the theatre, visits to the footy, haircuts, all sorts of things—becoming part of the taxation net, and the system accordingly would become more complex. Certainly, from the opposition point of view, we reject the notion that that would provide for a simpler taxation system.As I indicated at the outset, we are supporting the government's bill and believe that this is part of an appropriate process of taxation law improvement. We look forward to its continuation.10:47:002300Charles, Bob, MPMr CHARLESOT4LaTrobeLP10—I thank the honourable member for Wills (Mr Kelvin Thomson) for most, if not all, of his comments on the Tax Law Improvement Bill (No. 2) 1997 . I had the privilege of participating in the 2½ days of public hearings in a round table format with some of Australia's top tax accountants and tax lawyers, together with the officials from the department, the TLIP group—including the three private sector consultants on the TLIP group—and the private sector consultative committee. It was for me a real learning experience.I went to the first day of those hearings expecting, quite frankly, to be bored out of my mind. In fact, I found the whole process invigorating. I enjoyed it. The debate was not acrimonious; it was harmonious, but people put their points of view strongly. By the time we had finished the 2½ days, the committee was satisfied that it had a grasp of the major issues and some specific policy changes requested by the private sector, and that it had a grasp of the overall importance of the legislation and of the processes that had been followed. Accordingly, the committee made its report.As noted by the Parliamentary Secretary (Cabinet) to the Prime Minister (Mr Miles) in his second reading speech, this bill is the third instalment in a total rewrite of the 1936 tax act as amended from time to time. I have no difficulty in remembering that year, as I joined this earth at that time. I do not know what that has to do with the bill; I just thought I would throw it in.3J4SAWFORDMr Sawford—You may have been here before.OT4Charles, Bob, MPMr CHARLES—That is absolutely true: I may have been here before, but I do not recall it.The new look tax act is in plain English and is intended to be more easily understood by those who use it regularly—taxation accountants and lawyers. The government is to be congratulated on undertaking this mammoth task of simplifying and restructuring the tax act to make it clearer for the practitioners required to use it in their daily business. I also acknowledge the excellent work done by the TLIP group, and the private sector representatives advising them, in producing this legislation. The key aim of this simpler and clearer format is to reduce compliance costs to taxpayers. That has to be a primary objective.The Tax Law Improvement Bill (No. 2) 1997 is of particular interest to small business because it contains the rewritten rules about capital gains and losses and their treatment by the tax office with regard to capital gains tax. I am delighted the government has amended the original bill as a direct result of the recommendations made by the Joint Committee of Public Accounts and Audit in its report No. 356, tabled in parliament on 12 March 1998.The government has accepted all of the committee's recommendations for technical changes. The government has also made changes to the explanatory memorandum along the lines recommended by the committee. Of some continued concern, however, is the fact that the number of issues to be discussed remains limited to about 12 a year. I am particularly pleased to note the government's adoption of recommendation 3—to delay introduction of proposed subdivision 118-F and divisions 123 and 138 pending review by the JCPAA. That was a particular part of our recommendations.The member for Wills talked about the private sector asking for either a no-detriment clause to be put into the bill for a period of some two years or both the 1936 act and the rewritten act to operate in parallel for some period of time. The committee, on balance, while it understood the private sector concerns—as the member for Wills has rightly pointed out—came down on the side of workability for tax agents and tax lawyers in the field in view of the difficulty that we would impose on them by having two parallel acts running at the same time and them having to go through both acts on a particular issue, pick the one that they thought suited them best and then try to use that as their justification for their approach with their client to the tax office. We thought, on balance, that that would lead to an impossible situation.We are pleased that the government has accepted our recommendation, that the bill will go ahead as amended and that further amendments will be made in order to pick up subdivision 118-F and divisions 123 and 138 after the JCPAA has had the opportunity to review those sections both with TLIP and with the private sector consultant.The bill describes division 138—`Dealings between companies under common ownership'—as being:. . . designed to overcome timing advantages that bring forward capital losses and defer capital gains that can arise when value is shifted between companies under common ownership.It says:Value shifts can occur when one company (the originating company):. transfers a CGT asset to another company (the recipient); or. creates a CGT asset in the recipient (for example, by creating contractual rights or granting an option);for less than its market value.This will reduce the market value of the shares in the originating company and increase the market value of shares in the recipient company.These issues are of vital importance to business and it is essential that proper consideration of the full implications of the rewrite be undertaken by JCPAA. At this stage it has not been possible to scrutinise this division at committee level.Proposed division 123 deals with rollover relief on the disposal of assets of small businesses and proposed subdivision 118-F with exemption for disposals of small business retirements assets. Both these issues were the fulfilment of election promises to the small business community. Both of these rewrites will be subject to further review by the joint committee to ensure proper scrutiny and the identification of any unintended consequences that may arise.The bill includes some enhancements in the rewritten rules to clarify previously complicated, uncertain or ambiguous convoluted terminology. For example:Division 104 lists all the events that may result in a capital gain or capital loss. It also specifies for each kind of event:. how to calculate the amount of any gain or loss;. the time of the event, which in turn determines when the gain or loss is made; and. cases in which gains are losses or disregarded for CGT purposes.The term `CGT event' is a new term that spells out in plain English when a capital gain or loss occurs. This area has been particularly complex in the past, with no clear definition about the timing of a capital gain or a capital loss. It also includes the important issue of deeming whether or not a gain or loss has occurred. If for no reason other than this, it is important for the bill to pass into legislation so that it can be enacted before 1 July 1998.The new division 108 covers the three categories of assets that may be liable to capital gains and losses. They are: capital gains tax assets, collectables and personal use assets. The bill clarifies the circumstances under which a CGT liability arises.The definitions of what comprise these categories are clear and concise and should make it easier for taxpayers to determine their CGT accessible property. A change of significant value to some home owners is the new provision that allows a person to continue to apply the main residence exemption to the disposal of vacant land where the dwelling that was on it is accidentally destroyed.The old act denied an individual a CGT exemption on the sale of vacant land if the main residence was destroyed by, say, a bushfire. For a range of reasons, the people who lose their homes through fire may not wish to rebuild on the same site. Under the new law, section 118-160, they will be able to apply the main residence exemption rules to the disposal of the vacated land as if the residence was not destroyed. This is a genuine benefit for those whose homes are devastated in a bushfire and who cannot face the prospect of rebuilding or living in the same spot again.This is good legislation. It is good because it simplifies very complex law to make it easier for practitioners on the ground to advise their clients. It is not intended that a layman be able to read every section of the new act and necessarily come to grips with it or understand it. It is, however, intended to put in plain concise English all those tax laws which will enable the professional to treat them properly.3J4SAWFORDMr Sawford—That's a bit of a contradiction, isn't it?OT4CHARLESMr CHARLES—In a way. The member for Port Adelaide interjects. Yes, that is true but capital gains tax is very complicated. I must admit that I have a personal view that, if we could simplify capital gains tax, and if we could reduce the rates of capital gains tax, I would be pleased. It would be good for business, for jobs and for the country. It is a very difficult issue. I am sure we will come to grips with it as we further address the important issue of taxation reform. I move:That further proceedings on this bill be conducted in the House.Question resolved in the affirmative.Bills2302r4372302Debate resumed from 12 March, on motion by Mr Miles:That the bill be now read a second time.10:58:002302Thomson, Kelvin, MPMr KELVIN THOMSONUK6WillsALP00—The Child Support Legislation Amendment Bill 1998 is the government's substantive response to the recommendations of the inquiry of the Joint Select Committee on Certain Family Law Issues into the child support scheme. It proposes a number of changes. It proposes, firstly, to introduce a minimum child support liability for all non-custodial parents of $260 per annum, and secondly, to include net rental property losses—that is, negative gearing types of losses and exempt foreign income—in the taxable income for child support purposes.It proposes to introduce case management to assist parents at risk of family violence, to end the collection of child support or, indeed, to recommence the collection of child support as appropriate. It proposes to increase the exempt income of the child support payers by 10 per cent. For 1997-98, the exempt amount would be $9,907 for single payers and $16,525 plus additional amounts for each child for payers with natural or adopted children in their care.It also proposes to lower what is referred to as the `payee's disregarded income' from $37,424 to $29,598 by using a figure known as the `all employees average total weekly earnings' rather than full-time adult weekly earnings. It needs to be pointed out at once that this reduction will be offset by the halving of the rate at which child support is reduced from the present dollar for dollar reduction in child support once you are over that income limit to 50c in the dollar. So that will offset the lowering of the payee's disregarded income. Payees may seek reassessment if they incur high child-care costs exceeding five per cent of their income.The bill also seeks to revise the child support scheme objectives to recognise that both parents are responsible for the support of their children. It seeks to allow parents, by agreement, to undertake private collection of child support at any time, and it talks about using the most current taxable income information available in the child support assessment. However, I would want to suggest to the committee that simply using the previous tax year, rather than the one before, does not really resolve the problems that we have where people are required to make estimates of their income, or are subjected to the indexation factors, and if it turns out that their income is less than they have estimated, but that estimate is less than 15 per cent, in fact, they cannot recover the amounts that they pay in child support.It also seeks to introduce an internal review mechanism for objection to decisions made by the Child Support Agency. It proposes to deem a stepchild to be a relevant dependent child where the court has made a relevant order under the Family Law Act. It also proposes to continue child support liability until the end of the school year when you have got a child who is undergoing full-time secondary education and that person turns 18 during that school year. The proposal is that the liability would continue to the end of the school year. It makes a series of other administrative changes which are, I think, of less significance.It has to be said that the child support legislation has been controversial and was the subject of an extensive inquiry by a committee of the parliament, the Joint Select Committee on Certain Family Law Issues. I have a copy of their report which goes to approximately 700 pages. That committee received 6,197 submissions which, I understand, is the largest number ever received by any parliamentary committee, and a hotline organised by the joint select committee generated 150,000 calls in some two days of operation. So there is a very substantial degree of community interest and community concern in relation to this issue.This is also borne out by the fact that the 1995-96 Commonwealth Ombudsman's report notes that the Child Support Agency accounted for some 16 per cent of all the complaints to the Ombudsman's office. I understand that the Child Support Agency receives in excess of 4,000 letters a day and, in terms of more recent information which I obtained from the Child Support Agency, from 1 July 1997 to 30 November 1997 it received 17,516 applications for departure from the standard formula. So there is no doubt that the Child Support Agency has generated a lot of community comment and, indeed, community concern.When the child support review was conducted by the joint select committee, it concluded that the development of the child support scheme was a qualified success. It pointed out that it had been successful in sheeting home to parents responsibility for looking after their children, and making it clear that it was not acceptable to have children and then to walk away from that responsibility to look after them until they attained the age of majority.It ought to be said that some members of the government have been highly critical of the child support scheme. Indeed, I think that it is fair to say that it was used in some places as a campaigning weapon against Labor. But, if we look at the legislation before us, the government has essentially acknowledged the success of the child support scheme by only tinkering at the margins. I have made a few calculations about the impact of the child support scheme changes being proposed by this bill and I think that you will find they indicate that the changes are very small indeed, and very much at the margin.For example, if we look at a non-custodial parent who has a child support liability or obligation for two children, if their income is presently $80,000 or more, they pay 24 per cent of that income in child support to look after those two children. Under the government's changes, allowing for rounding, they will still pay 24 per cent of their income in looking after those two children.If we move to $70,000 per year, they presently pay 24 per cent of their income in looking after two children. Under the government's model, that will move to 23 per cent, and so on down the line. If your income is presently $60,000 you have to pay 23 per cent of your income in child support. If you have two children to look after, you will still have to pay 23 per cent of your income. If your income is $50,000, the amount you have to pay will remain at 22 per cent under the government's model. If your income is $40,000, current payments of 21 per cent will move to 20 per cent, allowing for rounding in these matters. The same sorts of situations apply if you factor in looking after one child, looking after five children, and so on.The impact of increasing the exempt income amount by 10 per cent to 110 per cent of the pension rate will be very much at the margin. Indeed, if you look at the government's examples as set out in the explanatory memorandum, this point is made clear as well. On page 14 of the explanatory memorandum there are calculations for a hypothetical couple, Peter and Francine, who have three children and have separated.In this hypothetical example, Peter's taxable income is $42,000 and Francine's taxable income is $14,000. The current child support annual rate is $11,163, but under the government's proposed change it will be $10,795, a very small change indeed and even smaller if you look more closely at the calculations and see that there are different inflation factors from one year to the next.Similarly, the government's proposed changes regarding a carer's disregarded income amount will also have a negligible effect. In the government's example concerning the impact of reducing the disregarded income amount, but offsetting that with a move from dollar for dollar reduction to 50c in the dollar reduction, they give the hypothetical example of Peter with $42,000 and Francine, on this occasion, with $48,000. Under the present arrangements, Peter has to pay Francine $7,686. However, under the changed arrangements brought in by the government's legislation, Peter will have to pay Francine $7,663, which is $23 per annum less. I do not think that will cause Peter to be breaking out the champagne, quite frankly.Indeed, that is the pattern of the changes. They are differences absolutely at the margin. That is one reason why they have not attracted a great deal of public comment, either concern from custodial parents or support and applause from non-custodial parents. I guess this amounts to inherent recognition from the government of the scheme's value.We now have a situation where the government has fallen in behind the child support scheme, leaving those who have been critical of it in an interesting position. I note on the speakers list there are a number of government speakers who I recall have been quite critical in the past of the child support scheme, so I will be interested to see what their approach is in the debate in relation to this issue.The opposition has a number of amendments which we propose to move during the committee stage of this debate. I hope that the government will see its way clear to support these amendments, or at the very least provide us with an appropriate explanation as to why it would not be prepared to support those amendments. Indeed, if the government is not prepared to support those amendments then I hope that some of those government MPs who have taken an interest in child support issues will see their way clear to support them themselves.For our part, good public policy is always an unfinished business. Just because the child support scheme is a pioneering, trailblazing scheme it does not mean that it is perfect and does not mean that it will not require tinkering or adjustment in the future. On the contrary, it is all the more probable that pioneering and trailblazing legislation will require tinkering and adjustment in the future. We are happy that the government has examined this issue and happy that it has come forward with a number of changes for the parliament to consider.As I said, we have put forward a number of amendments which we believe pick up issues arising out of the report from the Joint Select Committee on Certain Family Law Issues that have not been appropriately dealt with so far. Those proposed amendments concern, firstly, direct payments in the child's interest. They follow recommendations 67 and 68 of the joint select committee and would allow the Child Support Registrar the discretion to credit certain non-agency payments as child support when in the registrar's opinion—let me emphasise that—these payments are in the interests of the child, subject to a 25 per cent limit on the amount of child support which the payer is obliged to pay before the custodial parent's consent is required.As those who have followed this debate and have seen the recommendations of the joint select committee will be aware, this is designed to give non-custodial parents a more realistic opportunity of participating in the raising of their children. I think that is an important and worthwhile objective and always to be seen as part of this scheme; we want to have non-custodial parents involved in the raising of their children. It also endeavours to address, in part, the concerns of non-custodial parents about the lack of accountability for how child support is spent. Some of the evidence that the joint select committee received from payers in this area is somewhat hysterical; some of it proposing that there ought to be accountability for every single dollar. That is not something which, as a matter of public policy, ought to be supported. It would be extremely intrusive into the life of the custodial parent and it would also be very costly and cumbersome to administer. In coming up with the recommendation, I think the joint select committee did go some way towards addressing those concerns. We are, therefore, proposing to move this as an amendment.We are also looking at trying to ensure that changes in income are properly reflected in child support liabilities. At present, the non-custodial parents who suffer a reduction in their income cannot recover any payments that they make unless that reduction exceeds 15 per cent. Recommendations 125 to 127 of the joint select committee provide for a much more up-to-date assessment of income and thereby largely address this problem. The government has made some changes, both in this legislation and previously, which are intended to help address this problem but, as far as we can tell, it still remains a serious issue for people making estimates of their income. Let us say that a person is employed as a part-time cleaner; that they have a part-time cleaning contract. If the contract comes up for renewal and they miss out on the contract, their income is therefore reduced but their child support is paid on that earlier basis and they are not entitled to recover the overpayments.This strikes us as a problem that could be better addressed. Therefore, we are proposing that recommendations 125 to 127 of the joint select committee be put forward to address this. We think there ought to be a financial penalty on anyone who deliberately or recklessly provides false or misleading information. We do not want to encourage dishonesty in this area and this is something that the joint select committee also recommended at 128 and 129.We also propose to put forward some amendments which will attack child support avoidance which continues to be a problem. Joint select committee recommendation 142 is designed to help repair the child support income base by identifying parents who receive business or investment income and the extent to which those parents minimise their child support liabilities in that way. Joint select committee recommendations 143 and 144 propose that fringe benefits should be added to the existing child support income base for both parents and we should require both parents to provide full details of all fringe benefits received from an employer.We also put forward proposals for changes to the modelling of the scheme. Joint select committee recommendation 162 proposes that we include the impact of the relative disposable income of custodial parents and non-custodial parents of the value of fringe benefits provided by all levels of governments to parents who are social security recipients. We also propose that that assessment be conducted by a body independent of the Department of Social Security.Finally, we will be putting forward an amendment concerning the issue of subsequent family repartnering following joint select committee proposal 139 that a non-custodial parent's subsequent family formula self-support component be increased so that the relativity between the single and married rate of pension is reflected in the basic and subsequent self-support component.These are things that I propose to speak to in more detail during the committee debate, but I do believe that this amendment would go some way towards addressing what is an increasing concern that the children of subsequent relationships are being treated as less valuable than the children of a first relationship.As I said before, the child support legislation is pioneering legislation and its impact is beginning to be measured and understood. I obtained recently from the Child Support Agency a very interesting paper from Allan Shephard of the Child Support Agency's Research and Policy Unit. The paper was prepared in September 1997 and compares Australia's with other child support schemes. It ought to be noted that there are very few legislatively based child support schemes around the world and this comparison focuses on Australia, the United States, New Zealand and the United Kingdom. Canada has recently introduced a child support scheme with legislative backing, but it is too recent for there to be relevant data available. It is interesting to note that if you look at the collection as compared with case load and convert it to Australian dollars as the researcher has done, you see that in the United States the average Australian dollar collection per case is $816; in New Zealand it is $1,111; in the United Kingdom it is $1,302 per annum; in Australia it is $2,368 per annum. In terms of where we are in Australia, we are a long way ahead of the world and there is no question that this is the best place in the world by far to be a custodial parent and nothing in the government's legislation in my view will change any of that, with the changes being very much at the margin.I do want to make some comments about the issue of the relationship between child support and matrimonial property which is an area of some concern which was identified by the joint select committee in its report. Indeed it devotes a whole chapter to the issue of the relationship between child support payments and matrimonial property and expresses some concern in the report that a non-custodial parent might agree to a property settlement which includes provision for the custodial parent and children to remain in the family home and then discover at a later date that the non-custodial parent is responsible for a substantial child support liability which arguably includes a component for housing. The committee received submissions to it which referred to this phenomenon as double-dipping.It is interesting to note that the Family Court's submission stated that anecdotal reports from the legal profession indicated that the child support formula and the scheme in general have had little, if any, impact on levels of property adjustment. Michael Watt, from the Law Council, stated:. . . there is undoubtedly a lag in the recognition by the judicial and legal culture of the structural change which the Child Support Assessment Act has brought into the whole process.The Chief Justice of the Family Court stated:I do not think that there is any discernible effect on the level of property settlements as a result of this legislation.This is an issue which I took up with one of the judges of the Family Court, Justice Mushin, when I was a member of the House of Representatives Standing Committee on Legal and Constitutional Affairs. In terms of property settlements, he stated that, in his view, child support is a maintenance thing, that the need to house children—those capital sorts of things—are not part of what child support is about.It is certainly my understanding—and if you talk to those responsible for the child support scheme about the formula, the 18 per cent, 27 per cent, 32 per cent and so on, it is also their understanding—that child support is intended to cover accommodation for children. So it seems to me that we do have a problem in relation to double-dipping. I suggest, however, that the way in which property settlements are conducted is most properly addressed back at the Family Court. Rather than being an appropriate topic for review in this legislation, they are something which the child support scheme itself should be able to address.Child support arouses very strong passions, and it is seen as evidence that there is a gender war taking place in our society. The member for Werriwa (Mr Latham), who has spoken on this issue before, was absolutely right when, in previous debate in this place concerning child support, he called for us to stop looking at this issue through the prism of gender.We find this exhortation very hard because at present, in over 90 per cent of cases of separation or divorce, it is the woman who ends up with the children and becomes the custodial parent, and therefore in over 90 per cent of cases it is the man who is the non-custodial parent and liable to pay child support. I personally think that, in the long run, the best way to get the heat out of this area and to lower its emotional temperature would be for us to move to a situation where fathers have custody of children in something approaching 50 per cent of cases rather than in the less than 10 per cent at present.Whether the reason why they do not have custody in 50 per cent of cases at present is that they do not seek it or that the Family Court tends to award custody to mothers is something that I do not know a great deal about. In any event, it is well beyond the scope of the legislation which we are considering to attempt to address such an issue.But if, as a society, we did move towards a situation where post separation a lot more fathers were directly responsible for the care of their children, then I think we would have a calmer public debate. We might see the calls for change to the formula subside or, if they continued, we might be in a better situation to be able to deal with them.One of the things that troubles me about the present operation of child support is that it does not make any practical distinction between cases where men are happy to father children and then move on, taking no responsibility for the welfare of those children—those whom President Clinton has rightly condemned as `deadbeat dads'—and the cases where a father is only too happy to continue raising the children, often cases where he did not initiate the marital split in the first place but is prevented from raising the children by a Family Court decision. In these cases of unsuccessful attempts to win custody, the child support scheme seems to the father concerned to add insult to injury.I hope that in the future we will be able to move forward to a situation where there is less hardship and misery all round. There is no question in my mind that the breakdown of a marriage, or of any relationship involving children, is a terrible thing. It leaves emotional scars on both parents and on the children. We try, as a parliament, to do justice in each of these situations as best we can to each of the parties and to help them through these difficult circumstances.I hope that the government's bill represents a further step in the development of a fair and just social policy. As I indicated at the outset, we will be supporting it. We will also be moving amendments on which we will have a debate in the committee stage and taking up issues there which we hope will improve it further.11:25:002308Lindsay, Peter, MPMr LINDSAYHK6HerbertLP10—This legislation has certainly been widely welcomed in Townsville and is a small step in the right direction. I am also interested to hear of the amendments that the opposition have proposed.1K6BILLSONMr Billson—It is really nice to see them.HK6Lindsay, Peter, MPMr LINDSAY—I was going to make that point, Mr Billson. It is perhaps a bit late in the day, but certainly some of them seem attractive. I am surprised, and perhaps many of the members here today would be too, that perhaps the legislative changes need to go significantly further down the track in order to address some of the root and core problems of the Child Support Agency. I think many members feel very deeply about this. Certainly in our electorate offices there is widespread contact with both sides of the equation indicating the kinds of issues that are continually there.Child support is a difficult issue. It is a dreadfully complex and terribly emotional issue and, by the very nature of family breakdown, is often quite adversarial. The fundamental problems of the Child Support Agency are felt right throughout Australian society: rich or poor, black or white, north or south. You name a section of the community and somewhere you will find family breakdown and people with problems associated with child support.We all have our own horror stories to tell about constituents who have been dragged through the Family Court and the child support system. They may be mothers living on the edge of poverty because the father has done a runner and is refusing to contribute financially to support the child. They may be fathers who have not seen their sons or daughters for months, if not years, because they have shifted towns or states.Laurie Chalker was something of a regular in my electorate office, discussing the need for fundamental family law reform and Child Support Agency reform, up until the beginning of this year. Sadly, his problems overwhelmed him, driving him, like many others, to take his own life. All of my staff in my electorate office were touched personally by his passing.We never really got to know Laurie personally. By that I mean we did not know what sort of a family man he was, where he grew up and so on. What we did get to find out was that he was passionate about reforming the system and the sorts of things we have in this legislation today, which in his eyes and in the eyes of many thousands of other people throughout Queensland and Australia seem far from fair and equitable. He was passionate about reform and what it meant specifically for non-custodial fathers. It was not difficult to understand from where his frustration developed over time.Shortly before he died, Laurie Chalker had a visiting schedule determined by the Family Court so that he could see his child. Laurie was in Townsville but his child was in Cloncurry, some 700 kilometres west of Townsville. Laurie had to arrange for and pay, without assistance from anyone, transport to and from Cloncurry, accommodation, meals and so on. When he was there, he had to arrange and pay for qualified and approved supervision on all of the visits. To his frustration, often that may not have been available on the weekend when he was able to go. Each of his visits was for a certain day of the month and, if the supervisor was not available, well then it was a case of bad luck. I am sure Laurie knew many more sole mums and dads much worse off than he was.I support this bill as it is a step in the right direction. But, in the overall scheme of things, it is only a small step and we certainly need to try harder and harder. The fundamental principle behind these reforms, as the second reading speech of this bill states, is:. . . parents are primarily responsible for the financial support of their children.I certainly support that. I have no doubt that reform of the Child Support Agency must go further. I am pleased that the government has recognised this and I look forward to participating and contributing to those necessary further changes.11:30:002309Price, Roger, MPMr PRICEQI4ChifleyALP00—In the debate on the Child Support Legislation Amendment Bill, I certainly support the view that reform needs to go further. I have already spoken in this place about the failure of the Labor government to pick up the recommendations of the report, so I do not want to traverse that again. If this is a small step, there are many people that are going to feel completely let down by these changes. They are wimpy. They do not go far enough. They certainly are not fair or equitable. The thing that I find the most difficult to comprehend is that in the committee it was not just my view—in fact, I credit the President of the Senate, Senator Reid, with saying this—that we have brought down a balanced package of recommendations and that government should not cherry-pick their way through it. But successive governments have attempted to do just that.I almost feel, 3½ years after bringing down the report, and now seeing this passage of measures going through, that we ought to consign the report to history. It will always stand a good test of time, in terms of a base document. But I really feel that we now probably need to move on and take a more different approach. I notice that the government, having set up one backbench committee on child support, has this week announced the formation of a second backbench committee on child support. However, the chairman, the honourable member for Richmond (Mr Anthony), will not be participating in this debate. It does not augur well.The first thing I want to say is regarding the modelling of changes. The committee developed a package of changes to the formula. Before we agreed on that, we asked the Department of Social Security to model these and proposed other changes. That took six months and a technical upgrade of their computer. I say to government members that, if you are so proud of the changes that you have made, where is the modelling information? We have the explanatory memorandum to the bill. There is in it absolutely no modelling of these changes. There are examples of the impact, but no modelling. Why is there none?One of our amendments picks up the recommendation that DSS should not have a monopoly on the modelling. Why, I ask government members, have you picked 10 per cent? Why not 15 per cent? Why not 7.5 per cent, for that matter? What is your argument for picking 10 per cent? There is no argument. It is like this: `We have got 10 per cent. Thou shalt have 10 per cent.' I am not saying 20 per cent is immutable. I am not saying that lowering the disregarded income level that we recommended is immutable. We picked the pension cut-off point to avoid double whammies of poverty traps.There was another argument. For example, the Family Court did not say that it should go down to the $29,598 that you are recommending. The Family Court said to us, `In the interests of fairness in terms of parents' capacity to pay, it should go down to $15,000.' We did not agree with that. We set the pension cut-off point—recognising that, in the formula of changes proposed by the committee 3½ years ago, that was seen as the minimum necessary to restore some equity and fairness. What is it about this new level that has prompted you to change it? Please tell us. I may agree with you or I may disagree with you, but there is absolutely nothing of it in the explanatory memorandum.If there are people who really do think that this is a wonderful bill, that we are at last seeing some changes—I could use an expletive but you are in the chair, Mr Deputy Speaker, and I would not. This is nothing more than a revenue raising measure. Do government members know how much money this is going to raise? Between $47.2 million and $26.2 million—straight into consolidated revenue.AK6GASHMrs Gash—Rubbish!QI4Price, Roger, MPMr PRICE—Read your own explanatory memorandum. Do the maths. It is in the first section of the explanatory memorandum.1K6BILLSONMr Billson—It is when the partners, though—QI4Price, Roger, MPMr PRICE—I am sorry, it is all accounted for. I am just making the point that if this bill goes through it is expected, depending on which figure you use—and I agree that there are two figures in the explanatory memorandum—that consolidated revenue is going to be better off by between $47.297 million and $26.2 million.My simple point to government members would be: would this not be better being applied to families or applied to children? I am not particularly fussed what you choose, but would it not be better going to the families that are affected by this legislation rather than being pocketed by the government? That is partly why I am so disappointed.I think people who have looked to this government to introduce reform are going to be surprised, even shocked, that the reform package nets the government money. I can tell honourable members how it is done. I know they are very upset about it all. It is done through a means that I fully support: by allowing the registrar to decide that good payers should not be part of the scheme. That is a principle in the report. No-one can afford to have the Child Support Agency growing and growing every year as it has since its existence.I suppose I need to put forward the usual disclaimers. I am proud of the child support scheme. It was a good scheme. I do not think we have looked hard enough at it or tried to refine and reform it sufficiently. That is my only quibble about it. But am I in favour of abolishing the child support scheme? Certainly not. But this is one of the measures to try to contain the growth and to develop the principle that the best relationships are mutually arrived at between the two parties.There is something not said in terms of shifting people out of the scheme, and I would be grateful to learn what is proposed here. I assume that the registrar is going to have to develop guidelines for traceable payments, so that, in the event that the arrangements break down, people can revert to the Child Support Agency.I am probably saying something very unpopular amongst a lot of the people that meet me, when I say that I feel very sorry for the Child Support Agency. Why do I say that? I have always said that you can never refine the administration of the scheme to such a perfect point as to think you have solved the problem, until you tackle the hard policy areas. Again the Child Support Agency has been left with the burden of administering some flawed policy areas.I do not think I have said exactly what increasing the exempted income means for the paying parent—this 10 per cent. Lest we rush away with the thought that this is going to have a fabulous impact on the living standards of these paying parents, let me say that, if a paying parent has one child, this 10 per cent is going to mean a difference of an extra 46c per day. Even the weekly amount of $3.25 per week is not going to pay for a packet of cigarettes—at best, half a packet of cigarettes.For the parent who is paying for two children, this 10 per cent increase is going to mean that, in their disposable income, they are going to have $4.80 per week or 68c per day. It is true this is better than nothing—absolutely—and I support it on that basis. But let us not run around saying that we have addressed the concerns of the paying parent. I do not think we have. I reiterate that the 20 per cent in the report was seen as a minimum necessary, not a maximum. In fact, we had modelled up to an extra 60 per cent.Mr Deputy Speaker, I told you that this nets revenue to the government. If they had gone to the 20 per cent that would have cost an extra $10 million. They could have well afforded it. It has, in additional family payments, impact on the caring parent, which I acknowledge. However, it would have cost, in additional family payments, an extra $10 million a year. It is pretty miserable to be pocketing this money and not looking to do more for those that are directly affected.This bill imposes a minimum payment, something that I certainly support and that was part of the recommendation. But, again, this was predicated against a more balanced treatment of all the other recommendations. Perhaps the government members have not thought about this, but when you are giving 46c or 68c a day—for paying parents with one or two children—this minimum payment is going to affect 31 per cent of the Child Support Agency's clientele. Those are 3½-year-old figures.What really disappoints me is the lack of explanation. It is very hard to have an argument when people do not offer you their reasoning. I regret that, in anything that I have read about these measures, no reasoning is offered for the approach. It is like: `Well, pick it out.' Is it still 31 per cent? I guess we have to leave it to the experts, but I was surprised at the $2 million that it was said it was going to cost to administer. Not that I thought that was an overstatement—I am not in a position to query it. But I was surprised that it was relatively so low, given the huge number of new assessments that we are going to be making.With great respect to government members, I would want to feel very confident that this is a very meaningful package, with such large numbers of people now no longer having a nil assessment and having a minimum assessment. Please do not accuse me of duplicity on this—I want to make it very clear that I support the recommendation; I did in the committee, I do now—but I think it is the lack of balance in other measures that is going to leave you very vulnerable. If you are looking at the package as a whole, please do not say that this package errs on the side of the paying parent. It certainly does not. In fact, I think it is the other way around.I have always been concerned about the fact that this is a scheme about ordinary citizens, ordinary PAYE citizens; that, in fact, it is not a universal scheme. Why is that so? Because it is basically based on the test of what is taxable income.We all know that professionals, small businesses and people with family trusts have a legitimate way of minimising their income. There are 1.9 million taxpayers—perhaps there are later figures; I would be very grateful for those—who can legally minimise their incomes. Under this scheme, a worker or a battler in my electorate on PAYE taxation is not going to be able to evade or minimise it. But a small businessman—if he has a family trust like most of the cabinet—or a professional can legally avoid his responsibilities. Normally, you would say, `So what!' but this highlights the fact that there is a whole raft of people, predominantly women and children, who are getting nothing out of the scheme. They know that their former partner has assets—which may have been legally transferred—and income that he is living off. But their former partner is paying minimal child support.This proposal picks up the issue of negatively geared property. I am not against that. We asked the registrar, Michael Carmody, to look at this situation and to do a study. This was one of our recommendations and I understand that the study has been done. I thank him for that. It is disappointing that there is nothing in here. Why haven't we published the study? Why haven't we had a statement about what the outcomes and the conclusions are? We are agreeing about the ramps involved in the taxation system. The government has said nothing about how it is being abused in relation to Australian children.We recommended draconian measures in the report, and I apologise for harking back to it. Some people have been critical that we did this but it was done with a sense of trying to compel voluntary compliance—that is that group of people that I was talking about. We gave the registrar sufficient powers so that he could deem income and property not to be transferred. This was pretty draconian stuff; this is still not being picked up.If you have a system like the child support scheme where some people can avoid their responsibilities legally and get away with it but others are, if you like, trapped or compelled into it, it undermines the whole credibility of the scheme.I only have a couple minutes and I want to go through more of the changes. I agree that it is the first right of the registrar to alter an assessment, to fix up mistakes. I support his ability to vary an assessment on the belief of understatement.I reiterate the point that I started with. We are now running out of steam with these recommendations for those people who have been seeking to refine and improve the child support scheme. Society moves on. I never thought it would take so long. Certainly, I do not believe that you can set things into cement with a scheme like this. After this bill goes through, we will have to forget whatever was recommended in terms of formula changes. It is a tired old argument and I think we are getting to the point where we need a fresh approach.Last, but not least, I want to make the point again that the member for Wills (Mr Kelvin Thomson) made: you cannot fix child support without looking at family law. You will make no headway with domestic violence if you do not look at child support and family law. We must try not to bite these off as separate packages, but to have them a basis for moving forward. More than anything else, avoiding courts and tribunals, and what have you, is a solution, not to cover up something, but on the basis of being able to be in there doing preventative things at the earliest possible time—(Time expired)11:50:002313Billson, Bruce, MPMr BILLSON1K6DunkleyLP10—I concur with many of the closing remarks of the member for Chifley (Mr Price). He was far more genuine and gracious in his comments near the end and I would encourage him to continue to take a fairly positive and productive outlook in this very difficult area. I have to take exception with almost all he said before he became gracious near the end of his speech. It is a bit hard to hear the opposition members arguing about the lack of reasoning and modelling, and the like, making consideration of these things very difficult. At least you have got what is before us to be considered. We would love to see what your amendments say. We have not seen those at all. Let us have a little bit of consistency in all of this.The other thing that needs to be commented upon is the effort of the member for Chifley at having a go at the government about the lack of pace with which it has implemented the recommendations of the Joint Select Committee on Certain Family Law Issues. I need not remind him that he was singularly unsuccessful in persuading his own colleagues about the virtue of many of these changes. I know that has been difficult and I would certainly—QI4PRICEMr Price—I have always acknowledged that.1K6Billson, Bruce, MPMr BILLSON—That is right, and I take the interjection that he does acknowledge that he was singularly unsuccessful in having a lot of these amendments and suggestions implemented. They are complicated, and we empathise with the difficulties that you faced—without putting too much of a fine point on it. We understand many of those.I am pleased to have been able to make a contribution to the child support subcommittee that the coalition government formed to bring forward a number of proposals. As has been said repeatedly, and particularly for the members opposite, a good number of us view these as instalments. I certainly do not think that this is the last word on the subject. There are many unresolved issues and a lot of work in progress, but this is, nonetheless, a constructive and positive step forward and we could all have a discussion about how big that step is.I certainly welcome these proposed changes to the child support arrangements, based on a very simple and central recognition that both parents are responsible for supporting their children. I have had the good fortune of becoming a father in recent times and I think that helps to sharpen one's appreciation of the simple fact that both parents have a very considerable responsibility for the child—and I will talk about those issues as I go through my contribution.There is no area in the federal government's responsibility that generates as much contact with my office. We see frustrated, angry and disenchanted people, both payers and payees. Even parents, cousins, nieces, nephews, brothers, sisters—and everybody else—come to talk to us about this particular area. People on both sides of the issues, if you could put it that way, come forward with concerns.I must say though that I do not see the satisfied people. I do not know precisely what it is that makes those people satisfied, but there seems to be a good number of them who feel that the child support system is ably assisting them to fulfil their responsibilities to the child; and, as the other parent also has responsibilities, the system seems to work for them. So there is some good in the Child Support Agency arrangements because they appear to have a number of satisfied customers who, for whatever reason, do not beat a path to my door.I think that people genuinely want to make a reasonable contribution to the raising of their children from earlier relationships as long as they feel that it is fair. I think that some of the discussion we will be having today, and certainly some of the issues contained in this package of measures, seek to make sure that people do appreciate that there is a genuine effort at fairness. That effort at fairness and an effort to have the system more responsive to the individual circumstances of the parents are things that we should encourage and welcome.The changes aim to make the child support system fairer to ensure more regular financial support for the children. They recognise that the government should not intrude where the arrangements are working and—here is another common ground I think we share with the member for Chifley—if we can avoid having a government agency involved, that is an admirable objective. These changes go some way toward supporting that.The introduction next July of a minimum assessment for child support payments of $5 per week sends a much needed and warranted signal that both parents have the primary responsibility for the care of their children. Let us think about what the options are. If the parents are not providing for the children, we all are: the taxpayer provides.I have great affection for a great number of taxpayers in my electorate of Dunkley, but in terms of their family arrangements, I cannot take any responsibility for that. So, it is entirely appropriate that we do all we can to make sure that those parents who brought these little people into the world understand clearly that they have a responsibility to those children and that it is not satisfactory to simply abdicate that responsibility and pass it on to the taxpayer.The minimum payment will be welcomed and will not cause low income parents to lose access to family payment income support. The income that is excluded from calculations of child support for paying parents to support themselves is to be increased by 10 per cent to just under $10,000 for single payers and $16,500 for payers caring for other children.The amount of income the parent receiving child support can earn before payments reduce will drop in July from about $37,500 to $29,600. To ensure fairness, the rate at which child support payments reduce at a payee's level of income above this disregard level will halve, and a reassessment will be available where child-care costs are too high.Paying parents with second families claiming family payment and child-care assistance will be allowed to deduct half of any child support payments paid from the household income figure used to assess eligibility for these benefits. This has been a major gripe for parents who enter into new relationships after separation or divorce. Allowing this concession will help take away some of the concerns of child support parents.I welcome the government's encouragement of divorced and separated parents to make private arrangements to transfer child support payments, as 40 per cent of child support agency clients already do quite successfully.The government also wants to ensure maximum privacy for Child Support Agency clients by introducing proposals such as dropping the names and dates of birth from assessment notices. There is a host of other administrative changes which I believe will simplify the arrangements, provide for much needed review mechanisms, improve privacy, and make the scheme more friendly to people's needs. As I said earlier, this is not the end of it. There is more work in progress.I would like to pick up on some of the comments the member for Chifley made. I believe very strongly that there is a need to strengthen the appreciation of the interplay between the Family Court and the Child Support Agency. That is tentatively done in this bill where the Child Support Agency registrar can suspend payment where there is a question still to be resolved before the Family Court. But that is just the start of it; we need to go a whole lot further.Section 79(4)(g) of the Family Law Act 1975 requires the courts to take account of child support payments when determining property settlements. But what we are looking for is an equally strong statement that the reverse should apply as well, where the Child Support Agency needs to take a fuller account of what the Family Court has been doing with its decisions and its judgments.Payments that clearly benefit the child's upbringing, such as mortgage payments, vehicle payments, paying off credit cards and the like, which are done by the parent without the primary care responsibility, are often viewed as choices by the Child Support Agency. That is, the agency tells these people that, notwithstanding the fact that those payments are important, that they benefit the child, because they are not prescribed in the arrangements that we are working under, they represent a choice. Therefore, they are not taken into account when determining what level of child support liability needs to be met.I would have thought that the Child Support Agency would be and should be encouraging these sorts of contributions. I will give you an example, Mr Deputy Speaker. I have a number of constituents in my electorate who through their feeling about the way their relationship dissolved and their deep love for their child have said, `Stay in the family home. I will keep paying the mortgage payments'. Why do they say this? They do that because the child can stay in a familiar environment. They can still be amongst their friends, they can go to the same schools, and they can basically have their life as uninterrupted as they possibly can, notwithstanding the difficulty that surrounds a marriage dissolution.Having made all those decisions and having made all of those, I think, worthwhile contributions to the raising of the child, the Child Support Agency said, `No, that's a choice. You've made a choice to make those payments. On top of those payments, on top of those substantial contributions to the child's wellbeing and development, we want you to pay Child Support Agency payments.' I have had one case where one of my constituents has been left with not much more than about $40 a week in their pocket. That is a very difficult assignment to deal with. I am hopeful that the measures in here that are more accommodating of formula departure claims and reviews will be helpful. This is certainly an area that needs to be looked at. That leads me to the next point dealing with the packaging of property settlement and Child Support Agency decisions at the time a relationship is dissolved.If we are going to the Family Court, and the Family Court to its credit has financial counsellors who try to work with both parties to come up with a property settlement that is responsive to their circumstances and the like, why can't we include the Child Support Agency in that discussion so that people know the full deal that they are signing up to? As it stands, these property settlements are negotiated often in isolation from the Child Support Agency formulas and responsibilities. So you get through that fairly difficult time and feel that you have come out with an arrangement that everybody can live with, only to find that there is another layer of assessment, another layer of contribution being expected of you from the Child Support Agency.I have been to the Family Court a few times, out of curiosity and concern about what had been said to me by constituents; I thought it sounded funny so I decided that I would go and spend some time in the Family Court to see how things actually go. I have asked the Family Court why the child support arrangements were not included. The Family Court officer said that they worked to fulfil their obligations under the Family Law Act. That is fair enough. But, in terms of the client, in terms of the families involved, it is not enough. It might be legally quite accurate and quite responsible but it ignores such a large percentage of the picture.I went to the Child Support Agency and said, `What can we do about this? Can we encourage the Family Court to take a more holistic view?' They said, `We've provided the software. They've got all the material they need to model these things but they just don't do it.' Surely we can get these things together. It is the same people that are involved, the same circumstances that are being considered but, above all, it is the same child or children, and it is their longer-term care and development needs that are at the heart of this whole issue.The packaging question goes further. I know of a client of the Child Support Agency who has had to pay back money because of the Child Support Agency's interpretation of an incoherent order from the Family Court. No-one could make any sense of it. Everyone thought they knew what it meant but, when it was considered by the Child Support Agency, this constituent in the electorate of Dunkley had to pay back thousands of dollars because someone in the CSA had a different view of a Family Court order that no-one could follow in the first place. Surely, working closer together is the answer. Parenting arrangements, property settlement and child support, in my view, are three legs of the same stool: all need to function together in the interests of the child.As I was saying, as a recent parent, Steven Biddulph's book is compulsory reading. Biddulph keeps saying that each parent has an important role at varying ages of the child's life and right throughout the child's development. Fine. However, if you are denied that opportunity as a parent, unreasonably, then one of the legs of the stool is compromised. I believe there is then a case to have a look at the other legs of the stool. Where there are consistent contraventions of parenting orders, without cause, perhaps we could look at the child support financial liability being discounted. Maybe the reverse should apply: if you are ignoring your financial responsibilities, perhaps the leg of the stool that says you have certain entitlements to access and contribute to your child's development and personal life should be wound back in some respects.I am not on about forfeiting rights for people needlessly but somewhere along the line, if people are not fulfilling their responsibilities, some forfeiture should take place that reminds them that they are part of a three-legged contribution in the raising of the child. I am certainly not advocating state sanctioned impoverishment but in my view the development of new tools is essential to ensure that there is improved accountability of the parents and the fulfilment of all their obligations to the child.The Australian Law Reform Commission in report No. 73 titled `For the sake of the kids' said that enforcement of orders, of contact orders in particular, is basically a criminal procedure. I raised this issue with a Family Court justice, whose name I will not mention, and the indignant reaction I got from that person was, `What do you want me to do—lock the parents up?' No. I do not. I am saying that we need to provide new tools. Just giving me an answer like that does not solve the problem. It does not go away.The proposition I am hopeful we can consider more—certainly through government channels because we have got more work to do on this—is to look at new tools to make sure that those accountabilities are fulfilled. The accountability issues go further, though. For the payees, there has been some concern raised in a very few cases about the way the funding that is provided is applied.The last thing I want to see is the Child Support Agency or the government policing parental roles, but where there is evidence of child support payments being consistently applied to purposes other than the raising of the child, whether it be gambling, alcohol or substance abuse, whatever the case may be, surely there is an argument to enable the payer to make direct payments, maybe not with the agreement of the other parent, for costs that go to the very heart of the care of the child. You could discount those payments and have that reflected in the child support liability. Surely that is a productive and constructive way of making sure that the child's interests are paramount in these arrangements.There are also the payers themselves. I concur with some of the views of the member for Chifley about how easy it is to minimise your income. We are trying to do something about that through tax reform and the like so all are paying their fair share of taxes. But where you have got an income based formula and you have got opportunities for people to artificially lower that income, the kids miss out again.Perhaps having a look at the actual means testing arrangements used for the Austudy youth allowance might be one way of determining a more realistic level of income. I am just putting that forward as a suggestion. I am encouraged again that in this package, the registrar has powers to vary assessments where they feel that the information they are getting just simply is not right.But the accountability goes further; it goes to the Child Support Agency as well. Through my inquiries and a considerable amount of time put into this subject, it is clear to me that you can forum shop in the Child Support Agency. The discretions that are available within the Child Support Agency are exercised differently at different locations throughout the country. This is unsatisfactory and I would support the introduction of statements of principles or something like that that apply across the board in the Child Support Agency so that when these new discretions—and even the old discretions—are being used at least they are consistent. At least you will know that there will be consistent treatment of those issues before the Child Support Agency. But again, in this package, the strengthening of internal review options should help in some direction in a case by case basis.Finally, Mr Deputy Speaker, I want to talk about what I call the `stuff it' option. That option is where people just say, `This is all too much. I'm off.' The kids miss out; everyone misses out. That option is too attractive to too many people in my view. I think if we looked at ways of considering the means available to both parents, then we would get a bit more of that fairness view in there that would make this `stuff it' option less attractive. If we had some way of encouraging payers to earn extra income in the interests not only of the child to a degree, but also to themselves and then make sure, if they are taking on second and third jobs, they actually get some benefit from it, then that again reduces the attractiveness of the `stuff it' option.I also think there is an argument that the proposition contained in this package which allows people to take 50 per cent of their child support payments off their income for the purposes of calculating family payment and child care assistance eligibility for a second family should be extended more widely. I have people coming into my office who are making their child support payments which if deducted from their income would make them eligible for rent assistance, would make them eligible for concession cards and would make them eligible for a whole range of things. What is happening is they are denied those arrangements which are supposed to maintain a base standard of living purely because they are paying the Child Support Agency.It is very hard to explain to somebody who hardly has money to rub together to pay their rent that their circumstances are not warranting rent assistance when someone whose disposable income is far greater can qualify for it. I am saying perhaps the child support payments should come out of that disposable income calculation for the purposes of looking at those areas.In closing, I was troubled a little bit by many of the things the member for Wills (Mr Kelvin Thomson) was saying, opening his contribution by saying we should not make these things political and then proceeding to talk for 15 minutes at a political level. It gives you an idea of where my frustration comes from.This issue about a gender war troubles me greatly. This is my little guy in this photo. At the end of the day, this is what this is about. I will not table this photo because you will all be very envious of him. But this is about the little people. There is an argument that says this is all about the gender war. It is not for me. This is a war for the kids. We are all here for the kids, in my view.Questioning proportions of residential care given to males and females and then arguing—as the member for Wills did—that that somehow points to an error in the system, ignores the fact that at certain stages in kids' lives they need each parent in a different way. Right now, I cannot provide for that child's needs as well as my wife can. When that child becomes a young man and is learning to deal with his maleness, my wife cannot provide what I can provide at that time. Kids need both of us. We need the system to support that. (Time expired)12:10:002318Campbell, Graeme, MPMr CAMPBELLCF4KalgoorlieIND00—The previous speaker, the honourable member for Dunkley (Mr Billson), is quite right: at the end of the day, this is about the little people. That is exactly the problem because this legislation was compiled by intellectual pygmies. The legislation is a disaster. If people get up in this place and say they support the legislation, it is a complete cop-out. Nobody, in my view, should be able to avoid paying for the upkeep of their children. In my experience, the great bulk of people want to contribute to the upkeep of their children. But what this Child Support Legislation Amendment Bill 1998 does is divide families and it makes the wives and children of second families second-class citizens in Australia.One of the great joys of being an independent is that the Labor Party and the Liberal Party have immediately conspired to keep me off committees, which for the most part are a waste of time; a way of keeping backbenchers occupied. However, this is one committee I would like to have been on because I think I could have made a contribution. This is a social evil in Australia. It is causing chaos particularly in my electorate and throughout Australia.You see here—and I think the member for Chifley (Mr Price) made this comment—that you cannot consider this legislation without looking at family law in total. What is the reason for family law? The Family Law Court is the fastest growing, most corrupt court in Australia and it should be swept away if we are going to do anything constructive. It should be returned to the states to start with. It should be in the district court with appeals to the Supreme Court.There is a case that the Child Support Agency could still function. I have heard people here say the Child Support Agency has its hands tied. It cannot take factors into consideration—for instance, if people put their assets in trust. That is not true. The Family Court has the power to assume an income—up to $97,000 a year, I believe it is—and they use this quite wantonly in cases.I see this day by day in my electorate. The other day I had a 53-year-old man whose crime was to work all the overtime he could because he thought it was to the benefit of his family. He came home one day to find the family gone. His wife had never said to him,`I'd rather have you home; this is no life.' He was making money because he thought that they would be able to retire to the city. Now he is reduced to riding a bicycle in Tom Price at 53 years of age. What justice is that? We see in this child support allowance—and they say it to me all the time—`My hands are bound.' It is not true. There is a lot of discretion there and they do not use it.In relation to zone allowances and people working in remote areas, often the custodial parent goes to remote areas because he can earn more money. Zone allowances are to take account of the high costs in those areas, yet we tax them. We say, `This is part of your income.' We say, `Second jobs.' A man is struggling. He has an income that was his income when he was married. He goes out and gets a second job because he is married again or living in another relationship, and we make that part of his income. Overtime is part of the income. There is simply no way forward for him.SK6SMITHMr Tony Smith—He will never get ahead.CF4Campbell, Graeme, MPMr CAMPBELL—He is locked in a downward spiral. This just devastates people. I have had people in my electorate simply take that too hard option and retire. They will go from $75,000 a year as a train driver on Hamersley Iron to the dole in Adelaide because they are better off on the dole. That is what the effect of this legislation is. It is a mess. It is a mess because, right from the start, it was introduced by people not with goodwill but a vehement hate of males.AK6GASHMrs Gash—Oh, come on!CF4Campbell, Graeme, MPMr CAMPBELL—I do not think there is any doubt about that. There is another explanation: it could be just stupidity. It could be that, and I am prepared to concede that.There is one group of women who do suffer as custodial parents: in my view and in my experience, this group is business women. I have a case that I am very involved with at the moment, where a woman brought all the money and all the assets to the marriage. She ended up with all the kids and the husband ended up with all the assets. Nine years later, she is being pursued for perjury in the Family Court, when she has nothing and he has all the assets. What a nonsense, using public money for this! In the Family Court, everybody lies. I have taken this up with the Chief Justice of the Family Court in Western Australia, Judge Michael Holden. He wrote me back a letter and told me off for my gratuitous insults: in his view, that did not happen. Where is this man living? Of course they lie! It is the adversarial nature of the cases that makes people lie in the Family Court.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Hollis)—Order! I do not want to interrupt the honourable member, but I am in a difficulty. You must be very careful when you are referring to the court, because there are standing orders about that. I am drawing that to your attention: we must be a little careful when we are referring to the Family Court or any other court.CF4Campbell, Graeme, MPMr CAMPBELL—Thank you, Mr Chairman. I have a very strong view—10000DEPUTY SPEAKERMr DEPUTY SPEAKER—I know; that is what I am worried about!CF4Campbell, Graeme, MPMr CAMPBELL—that this parliament, the court of the people, is the highest court in the land. The judges are not beyond criticism, nor should they be. For them to hide behind that standing order is, in my view, long out of date.Let us take another example of the anomaly. A custodial parent can be earning $37,424 per year without contributing 1c to the upkeep of the child. That is far more than the non-custodial parent is left with. He will be left with—as the honourable member for Dunkley (Mr Billson) said—$40 per week. We are going to reduce that in this bill—big deal!—to $29,598 to take account of child-care arrangements. It was always in there to take account of child-care arrangements. It was always within its scope to take account of that, but it never was. If the parent has got child-care responsibilities, back it goes now to $37,424.Of course, it may not be known to some of the honourable members and it may not be known to the Family Court, but there are two people who are responsible for the procreation of children. As a custodial parent, the mother has to accept some responsibility. I think it is absurd to give that very large exemption there. But is this addressed in this act? No; these amendments go simply nowhere. I can tell members that there is nothing, no other single issue, that generates as much angst and animosity in my electorate as this single one does. It constitutes a very large proportion of my office business. But are you addressing it? No, you are not addressing it. This bill goes nowhere.If we had a tribunal situation to which we could actually refer people, without going to that confounded Family Court, we could keep the lawyers out of it and we might have a better chance. It is at least worth a try. But the fact is the Family Court is growing and growing. To what purpose? It is growing to confound the community and to spread angst and hate in the community.0V5SLIPPERMr Slipper—I rise on a point of order. Mr Deputy Speaker, the honourable member has been here for a considerable period of time and he ought to know that, in standing orders, he is not able to reflect adversely on judges-10000DEPUTY SPEAKERMr DEPUTY SPEAKER—If you had been listening, you would have heard that I have already drawn the honourable member's attention—wait until I have finished—to that. The actual ruling is that you cannot refer to the judiciary itself. It does not exclude you from referring to decisions of the judiciary or decisions of the court. I did drawn the honourable member's attention to that. I have been listening to him very carefully, and he has been reflecting more on the actions of the court than on individual members of the court. While ever he does that—and do not jump up again—he is in order. The honourable member for Kalgoorlie has the call.0V5SLIPPERMr Slipper—On a further point of order, the court basically is the collective number of judges of the court. I listened carefully to what the honourable member said, and he said something to the effect that the court existed to spread hatred. Those sentiments, I believe, are well and truly beyond the standing orders, and I would ask that he stay within the standing orders, accordingly.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—You may believe that. I am in the chair. I have made my ruling. For your benefit, I suggest that you read page 479 of House of Representatives Practice , under the heading `Reflections on members of the judiciary'. You will see that, as usual when I am in the chair, I am correct and you are incorrect. The honourable member for Kalgoorlie has the call.0V5SLIPPERMr Slipper—Mr Deputy Speaker, I take personal exception to the comment that you made and I ask that you withdraw it. What you said was—10000DEPUTY SPEAKERMr DEPUTY SPEAKER—If you take exception to what I say in the chair, there are measures available to you. You should pursue those rather than asking other things. So you should resume your seat.0V5SLIPPERMr Slipper—On a point of order, Mr Deputy Speaker: you mentioned that `as usual' I am wrong when you are in the chair. That is a reflection and I would ask you not to generalise because, when I do take a point of order, as you would know I take it sincerely and upon consideration.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—You may think that, but I am in the chair. My ruling stands. The honourable member for Kalgoorlie.CF4Campbell, Graeme, MPMr CAMPBELL—I might say to my honourable friend that I spent a lot of time on this and I am on the receiving end of considerable damages, so I probably know much more about this than you, from your limited knowledge as a lawyer. I can tell you this, with the greatest respect: given your lack of intellectual rigour, I am surprised that you have never been made a judge.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—The honourable member for Kalgoorlie should direct his comments through the chair and return to what we were talking about.CF4Campbell, Graeme, MPMr CAMPBELL—I am happy to do that. It is quite clear. I am surprised the honourable member never made a judge.Having had my train of thought thoroughly dislocated, I am going to have to recapitulate some of this. Why can't we have a situation where people are encouraged in a tribunal format to discuss these things equitably between themselves? It does not happen. What happens, though, is that the court can come down very hard on the custodial parent and there is no room to move, no room to manoeuvre at all.The law is the law. It is the embodiment of everything that is excellent, as the honourable member would know. But when it comes to the custodial parent, they can ignore orders of the court with absolute impunity, and they do. They can up and move interstate, imposing an enormous additional cost on the non-custodial parent, and nothing is done about it. Judges will say, as the previous speaker said, `What do you want me to do, gaol them?' If necessary, yes. Why should only one side be subject to the law? The whole thing is just a nonsense.The other thing is this: you have the non-custodial parent paying out money week after week. A lot of them want to do it; they want to see their kids kept. But they have no say in how the money is spent, absolutely no say at all, and they are precluded by the law from having any say. In some cases, as I know from my experience of cases that come before my office, the money is often spent to keep the new boyfriend; it is spent on clothes. It is not spent on the children.It is nonsense to suggest that a three-year-old child needs the same income as a 15-year-old child. There should be a way in which this money can be postponed. It would give, in that case, the non-custodial parent the chance in life. The greater income then comes when the child needs that income. Or at least there should be a mandatory requirement to put some of it away for those later costs that are going to be incurred. What happens inevitably is that, when those costs arise, the non-custodial parent is once again hit to meet those costs—and many of those do, if they can, because they have a regard for their children. These things will not be addressed in this act, and they are certainly not addressed by the Family Court.I know that, when people go before this court, statements are made by the custodial parent. There is some view that custodial parents are somehow pure, and no attempt is made to check statements made by them. It is just not done. It is considered not right, apparently. So they lie and they get away with it, and then the good judge tells me that there is no perjury in his courts. What a nonsense.I believe that this act, basically, goes nowhere. I am sure the committee laboured mightily but they brought forward, at the very best, a very small egg, and it is a dud one at that. I believe that we have to go to a situation where we have some tribunal arrangement, something very similar to the French model. We ought to be keeping those lawyers at bay as much as we possibly can, and we ought to be taking a much broader look at this whole thing. I can tell you now that this is not a male/female issue; it is the second wives, of second marriages, and the children of second marriages that we, in this parliament, are turning into second-class citizens. There is no justice in that. Of course there is no justice.Before I was so rudely interrupted, I was going to make the point: why do we have to provide protection to judges in the Family Court? We do not provide it elsewhere. We have to provide protection to judges in the Family Court because the people know there is no justice—that is why. I believe that this act goes a very small way, a negligible distance. I suppose we should be grateful for crumbs. But what we really need is a complete revamp, a complete overhaul, and a sweeping away of the Family Court and returning it to courts where justice can be seen to be done.12:25:002322Gash, Joanna, MPMrs GASHAK6GilmoreLP10—As a member of the child support subcommittee I rise to take part in today's debate on the Child Support Legislation Amendment Bill 1998 , which will provide greater equality in the treatment of this very emotive and often difficult matter. As it is an emotional issue, there has been a lot of angst on behalf of both custodial and non-custodial parents in my electorate of Gilmore, and it has been apparent for a long time that changes had to be made. Some of these have been addressed by this government, as the previous Labor government thought it was all too hard. Bear that in mind.I can give members of the Main Committee a quick example of why the current legislation is not working. However, I am sure they all have plenty of their own cases where parents, and in particular children, are facing unnecessary extra financial and emotional burdens because of the unworkable nature of the current system. In Gilmore we have a number of non-custodial parents. It is a fact that they are mostly fathers, though this should not become an issue of gender because that serves only to cloud further a very muddy debate. But there are many non-custodial parents who are struggling to support two families under the current system.We have grown men who have been forced to return home to the support of their parents in order to be able to continue to meet child support payments. We have non-custodial parents who are better off on welfare because they cannot meet the obligations set down by the Child Support Agency. In one particular case in Gilmore there is a gentleman who has had to resort to living in a tent in order to continue paying for the upkeep of his children, who live with their mother, even though he never sees them and rarely has other contact.By the same token, the need for strong child support laws and their enforcement is undeniable. I have cases of custodial parents who cannot afford to clothe their children, while the non-custodial parent is living comfortably but refuses to pay their share in the raising of their children, which is still a joint responsibility of parents. And we have non-custodial parents who, far from being forced to apply for income support, do so in order to avoid paying their share of child support for their children.It is a system which lays as much guilt on children as it does on each parent. Having gone through it myself, I can honestly say that no party is ever free from blame in the fallout from divorce. However, there are some things which can be done to make it easier for children and for their parents to fulfil their obligations and responsibilities to each other and their former families.By introducing changes to the child support scheme this government has made steps, albeit small steps, in the right direction. For example, removing the obligation of the Child Support Agency to become involved has been a vital issue. There are cases in my electorate of Gilmore, as there would be throughout Australia, where the parents have come to a mutually agreeable arrangement on the issue of child support, yet the agency has determined a different figure and demands to be involved. This demand had the support of the original legislation and it came with an ultimatum from the Department of Social Security that unless the Child Support Agency's agreement was met, the custodial parent would lose their income support. Where is the logic in that?Removing the Child Support Agency from all agreements, unless they are required to become involved, is a major step in ensuring the best outcome for both parents and, subsequently but more importantly, for the children. However the Child Support Agency should not be made out to be the big bad ogre in all of this, for the support I and my staff have received from agency officers has been tremendous. We have come to an arrangement whereby, every month, agency staff travel from their base in Wollongong to my electorate office in Nowra to hold private interviews with parents who have concerns over child support agreements. The feedback I am getting so far has been very positive. We have managed to resolve most cases just by arranging face-to-face meetings between parties and the agency. These interviews will continue for as long as necessary, even following the positive changes introduced by this government.While the House is well aware of the changes which we introduced, I would like to quickly refer to the specific reforms which have made the most difference to the lives of many people in my Gilmore electorate. The change to the family payment income test for payers with second families will increase assistance for non-custodial parents with second families. This measure sees non-custodial parents with second families able to claim 50 per cent of any child support they pay as a deduction from the household income which is used for determining the family's entitlement to family payment and child-care assistance. This measure is fair to all parties as it ensures that custodial parents do not lose access to financial support for their children and non-custodial parents receive extra support for their second families.Another measure was to introduce a minimum child support liability measure for all players, including those on income support at $260 per year or $5 per week, which, in the past legislation, was not introduced. This will fulfil the recommendation—of the Joint Select Committee on Certain Family Law Issues which looked into child support—that there should be minimum payment and the principle that some contribution towards the cost of raising a child is an obligation of all parents, even those who do not have the day-to-day demands of the child as part of their routines and their budgets.One of the major reforms introduced by this government is one which I, as a former representative of the New South Wales Domestic Violence Advisory Council, totally support and that is to ensure consistency in the treatment of family violence cases.Before 1 January this year, there was no mechanism to assist parents at risk of family violence to commence or continue collecting child support from their violent spouse. Imagine for a moment that you are at risk from a violent partner. Imagine the pain, humiliation and fear which is part of your everyday family life. When you finally gather the courage to make the move away from this intolerable and unacceptable position, you find yourself in the further untenable, unenviable situation of having to face your partner for funding for the upkeep of your children. This is a totally humiliating experience, to say the least, and it is certainly one which many custodial parents choose not to go through and, therefore, they are left without the financial support for the upkeep of their children which is their right under the law.Now they have the support of the agency case managers to go through such demanding obstacles and they can continue with their lives with as few financial difficulties as possible. That is a move which has been a long time coming and one which I certainly applaud.However, as I stated at the outset, these changes are just three of the 18 introduced by this government and they are just the tip of the iceberg in terms of what is required for greater support and equality in the child support scheme for all parents and their children. I am constantly reminded by letters and phone calls from constituents of Gilmore that the changes have not yet gone far enough. The fact that this government has recognised the need for change and done something about it is always commended by my residents who are affected by child support or who know of someone who is, whether it be their son who they are continuing to support as he faces financial difficulties or their daughter who cannot find enough money to feed and clothe herself and her children. But—and there is always a `but' at the end of their sentences—more needs to be done. This is something that we have recognised, with further reforms being debated in the subcommittee on child support.We have presented submissions to the relevant ministers, the Minister for Social Security (Senator Newman) and the Assistant Treasurer (Senator Kemp), outlining details of what must be done, and yes, they are listening. These changes include the need to reassess the amount of child support which is paid by a non-custodial parent to their former partner. At present, the means test for such arrangements is unfair and there are a number of proposals for reforming this issue, particularly in relation to overtime pay and changes in income following the time after the marriage is dissolved.Why is it that non-custodial parents who spend their time doing overtime to better provide for their second families must be forced to pay some of that money to the first family, when it was not something that they had access to at the time of their marriage? Who pays when the child is with the non-custodial parent for a length of time? This alone often causes financial strain and when added to the cost of the visit—sometimes to another state and over which non-custodial parents have no control—the burden is and can be enormous.This is one of the major `buts' which my constituents bring to me and it is one which needs to be addressed. There is scope for addressing it in the next round of reforms which this government will introduce. The changes which came into effect on 1 January were the second stage of a three-stage process which has been evolving over the two years that we have been in government. Understandably, in such an emotive issue, there must be a balance to achieve a fair outcome for all parties. To do so requires wide consultation with community groups and representative organisations, as well as with the agency itself, to determine the most appropriate changes to make and the most effective ways of implementing them. I welcome the chance to provide input to this debate from the people of Gilmore, and I will continue to work with the child support subcommittee for a fairer outcome for all parents and, more importantly, for their children.12:35:002325Zammit, Paul, MPMr ZAMMITZK6LoweIND00—Mr Deputy Speaker, thank you for the opportunity to enter this debate on the Child Support Legislation Amendment Bill 1998 . It is a very difficult time in the lives of so many people when they and their children are unfortunate enough to experience separation or divorce. No-one would argue with the fact that the child support scheme, as it stands, desperately needs overhauling. It is an unfair and inadequate system of assessing and collecting support for children whose parents are separated and/or divorced.The children of the nation ought to be the responsibility of all citizens, but primarily they are the responsibility of both parents. When, through no fault on the part of the children, the parents' relationship breaks down, the children should not be made the pawns. In an ideal world, both parents should continue to support the children financially, emotionally and in providing role models, but in most cases separation and divorce is not an amicable arrangement.The usual arrangement, depending on the age of the child or on the ages of the children, is that one parent is given custody, with the other being given access. However, in too many instances the custodial parent uses child support as a bargaining tool. We need to establish a fair and just procedure for collecting child support that is based on the needs of the child or children and on the capacity of both parents to pay. It seems so simple, but in reality it is far from that.The matter of child support affects so many of our citizens and causes much anger, angst, heartache and suffering. Something like 40 per cent of marriages in this nation end up in divorce, many involving children. A number of constituents have come to me for help with a wide range of personal examples that point to the inadequacies of the child support scheme.There is no doubt that some custodial parents understate their income. Creative accounting for some self-employed persons can vary the income received, albeit legally, by conceding the income in several ways, not the least of which is by family trusts. On the other hand, there are many examples of a custodial parent denying access to the other parent whether or not child support is paid in that instance. Contributions should be assessed on net income, not on gross income, and overtime should not come into the equation.Another area of concern raised by a constituent recently is losses from investment properties that should be considered in the assessment of child support liability. If the non-custodial parent were to realise a capital gain from selling the same property, the agency would include profits realised in the assessment. It is grossly unfair.Other aspects which require addressing include the question of the formula, which I believe is too rigid. Individual assessments should be carried out which look at the needs of the child and the capacity of parents to pay. There needs to be a link between maintenance and support payments and access. If the custodial parent denies access for no valid reason, that parent should have to show cause as to why the child support maintenance payment should not be terminated. We owe it to the thousands who are affected by child support to provide real change which removes the biases and offers genuine and long-lasting solutions which are fair and just.I hasten to add that I am not being critical of the agency which collects child support. They are doing the best they can with a complex and emotionally charged issue. However, there is no doubt that the agency can increase its vigilance and diligence in investigating individual cases. As is the case with other underresourced government departments, there is no doubt that the agency is overworked and understaffed.The system needs overhauling in order to give equity and fairness to the parties concerned and, primarily, to safeguard the welfare of the children. The way child support operates at the moment pushes people into finding ways and means of avoiding the payment. If the system is not fair and not seen to be fair, why bother working? It is not flexible enough, in my view, to accommodate changes which are occurring in many cases within a short period of time in the working life of the parties involved.Some of the people who have come to see me on the matter of child support are almost suicidal and in some cases they are undergoing psychiatric counselling because the system is stacked against them. How does all this impact on the children? Very negatively, I would suggest.The bill before the House underscores the fundamental principle that parents are primarily responsible for the financial support of their children, and the government, through these measures, would not intrude unnecessarily into people's lives. I support some of the changes which have been proposed to the child support scheme which will address some of the concerns expressed by my constituents, such as the inclusion of net rental property losses and exempt foreign income into taxable income for child support purposes. The exempt income amount will be increased by 10 per cent, recognising the cost of employment faced by payers. Payers with second families will now be able to claim 50 per cent of any child support paid as a deduction from the household income used for determining the family's entitlement to family payment and child-care assistance.The objectives of the scheme will be revised to recognise that both parents are responsible for the support of their children. Whilst many of these recommendations come into effect on 1 July 1998, regrettably some will have to wait until 1 July 1999. We must stop tinkering at the edges and provide real solutions by implementing the recommendations made by the joint select committee.The proposals need to take into account the level of disregard of the income for custodial parents, that is, the amount the custodial parent can earn before any reductions in the non-custodial parent's child support payments. The government is encouraging parents to escape from the clutches of the Child Support Agency and deal with child support matters themselves, and that is a very important initiative. This is a very smart move, since estimates suggest that the money recovered by the agency is less than half the costs of administering the system.The review system needs overhauling, and the need for introducing a less costly system of appeals is absolutely vital. Not a great deal more can be said about this. This is only a start. It is a step in the right direction and a lot more needs to be done. I would urge the government to move with haste in bringing these changes into effect so as to lessen the pain, suffering and anguish so many people feel at a particularly vulnerable period of their lives.12:42:002327Entsch, Warren, MPMr ENTSCH7K6LeichhardtLP10—I rise today to offer my conditional—and I stress conditional—support for the Child Support Legislation Amendment Bill 1998 . I was here earlier when the member for Wills (Mr Kelvin Thomson) made a suggestion that the government was supporting the Labor Party's child support formula, et cetera, and he made this observation on the basis that we were only `tinkering with the edges'. I suggest to you that the whole system is haemorrhaging. To suggest that we are fully supportive of it, quite frankly, is a nonsense. The problem, of course, is dollars and cents. It does cost a lot of money to deal with these issues and, unfortunately, given the position that we were left in, it is going to take some time to replenish the coffers to be able to give back to this the proper balance that is required.Having said that, the measures that are contained in this bill have been designed to introduce some flexibility into the child support scheme and reduce unnecessary bureaucratic intervention. As I said earlier, the measures certainly do not go far enough. They are just the first wave of reforms by this government—reforms that are becoming increasingly urgent, I might point out, as more families are drawn into the child support scheme at a tragically rapid rate.My support for these reforms, as I have stated at all levels of debate on this issue, is given on the condition that a second wave of reform will follow very close behind, bringing fairer and more workable solutions to the enormous inequities in the child support scheme that is currently operating. A level of the problems out there could be demonstrated recently with the 60 Minutes program on problems within the child support system. It was reported at that time that it was one of the largest volumes of mail that they have received for any program. It shows that there are a lot of people out there sharing these concerns.Since my election to the seat of Leichhardt in 1996, a significantly large and increasing number of constituent grievances received in my office have been associated with the child support scheme and the Child Support Agency. Problems relate to both the legislation governing child support and its administration. Grievances are received from both child support paying and child support receiving parents.What most constituents complain about is the manner in which the system is administered and the problems subsequently caused by the shortcomings of this administration. It is a fact that many child support paying parents are living from hand to mouth. For them, life is mere existence. The enormous problems and obstacles child support parents face need to be recognised. Recent statistics provided by the Child Support Agency reveal that there are 7,587 child support payers and 4,920 child support payees in my electorate of Leichhardt. So the child support scheme invades the everyday lives of many thousands of my constituents and their families.This bill will actively encourage parents to move away from the Child Support Agency into private collection agreements. This is designed to encourage parents to take greater responsibility for their child support arrangements. It will remove the bureaucracy from the lives of the payers, many of whom have contacted me and said they were completely disgusted that after many years of faithfully meeting their child support liability, they suddenly found their wages had been garnisheed and their tax refunds seized without any prior warning.I should point out that you cannot entirely blame the bureaucracy for this. It is a very emotional issue. The first piece of advice that I give to anybody who comes into my office with a problem relating to these issues is that if they really want to get a fair and equitable solution, no matter how much they dislike their ex-partner they should sit down and talk to them. I advise that because anything that they can agree on is going to be infinitely better than anything that is going to be dictated to them by bureaucrats and by those who really do not have a real understanding of the situation. Unfortunately, there are very few who are able to do that, and as a consequence it is almost like a war zone out there.For the first time ever there will be a minimum liability, an annual liability of $260 which has been applied to reinforce the principle that parents of the child have a primary duty to maintain that child and to share the costs of supporting that child. It will also be collected from recipients of social security benefits or pensions, and that is a great initiative. Irrespective of the amount of money, it is one way at least of acknowledging that there is some responsibility there, whatever the circumstance.Under this bill the exempt income applicable to child support payers will be increased by 10 per cent to $9,907 for single payers and to $16,525 for payers caring for other children, plus additional amounts for each child for payers with natural or adopted children in their care.This bill also introduces some flexibility by taking into account the paying parent's legal duty to maintain a stepchild. Payers with second families will now be able to claim 50 per cent of the child support payments as a deduction from household income used to determine eligibility for family payment and child-care assistance. Payers with second families have long been the poor relation of the child support scheme. Their child support liability often leaves them almost destitute and forces them to leave work to go on the dole because of the unfairness of the payments demanded of them.An example brought to my office related to a constituent who had accrued a debt of $30,000. He was making payments directly to his ex-wife but the Child Support Agency had no details of these payments and his ex-wife denied receiving payments for child support. The Child Support Agency immediately garnisheed his wage and presented him with a bill for arrears of child support backdated to the date of his settlement in the Family Court. There were a number of reviews, the last one resulting in the advice that the review officer was unable to form a clear view as to what had happened in the past years. Therefore, the review officer declined to make any decision and my constituent's debt still stands.He is remarried now and he is currently taking home one-third of his wages: one-third goes to child support payments, one-third to tax and one-third is left over to cover his daily expenses. As a result, his wife works 12 to 14 hours a day to help cover expenses. To add further stress to the situation, he has not seen his children for over two years. You would agree that this situation is far from conducive to a secure and happy marriage. There is no possibility of this couple considering having a family of their own at this stage as they simply cannot afford it.This bill will enable child support assessments to be calculated using the most current taxable income available to each parent. Assessments are currently calculated according to a formula which uses taxable income from two years prior. Re-assessment based on income can only be requested where income drops by 15 per cent from that used for the initial assessment. Concern is frequently expressed about the accuracy of this assessment process. Measures contained in this bill should allow more accurate and timely assessment of the capacity of parents to pay child support. This bill will introduce significant reform in the area of objection and appeal rights.A range of decisions, which are now only reviewable by the Family Court, will be subject to an internal review mechanism. It is hoped that this will improve perceptions of fairness, equity and the accountability of the Child Support Agency. Many instances are brought to my attention by paying parents where they have waited sometimes for months to have a review completed, then they receive notice that the review decision has gone against them. To add insult to injury, they then learn a decision can only be reviewed in the Family Court. This is often a last straw with limited access to legal aid and income already stretched to the limit with child support payments. They have no possibility of affording legal representation so they just accept the decision. It is just another body blow.When I rose today I stressed that my support for the bill was conditional on further urgent reform to the child support scheme. The enormous distress and frustration suffered by parents when the system fails to work for them, and creates other difficulties as a result, does nothing for the betterment of the children involved and ultimately does a great disservice to the community in general. The child support paying parent has little relief under the current scheme. The fact is that these parents, too, need to set up a home, rebuild and stabilise their lives. The government must address ongoing reforms in the following areas.Most of my constituents agree that some other type of formula is needed to arrive at a reasonable amount payable for child support—A division having been called in the House of Representatives—10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Nehl)—In view of the time, we will adjourn the Main Committee for today.7K6Entsch, Warren, MPMr ENTSCH—I seek leave to continue my remarks later.Leave granted; debate adjourned.Main Committee adjourned at 12.54 p.m.Answers to Questions in Writing2330The following answers to questions were circulated:2330(Question No. 2289)22892330Thomson, Kelvin, MPMr Kelvin ThomsonUK6WillsALP00 asked the Treasurer, upon notice, on 29 September 1997:(1) Will there be benefits flowing to Australia and the Australian economy from decisions made at the annual meeting in September 1997 of the International Monetary Fund (IMF) and the World Bank in Hong Kong; if so, what.(2) What decisions were announced at the meeting with regard to the establishment of an Asian currency stability fund, and what involvement in the fund will the Australian Government have.(3) Is he able to provide detail on progress made by the IMF to stabilise the Thai and other currencies in the region.(4) Will the currency turmoil in Asia have any impact on Australian exports.(5) What role is being played by Australia in dealing with currency stability in Thailand and Asia.2330Costello, Peter, MPMr CostelloCT4HigginsLPTreasurer10—The answer to the honourable member's question is as follows:(1) Decisions made at or in the context of the September 1997 IMF and World Bank annual meetings included a 45 per cent increase in IMF quotas, an allocation of Special Drawing Rights (SDRs) and an approximate doubling of the authorised capital of the Multilateral Investment Guarantee Agency (MIGA)Quotas are the financial subscriptions made by member countries to the IMF. The agreement reached in September was formally adopted by the Board of Governors of the IMF in February 1998 and is currently awaiting ratification by members. The quota increase will expand the resources available to the IMF to fulfil its responsibilities including the provision of emergency assistance to members. Australia will benefit to the extent that IMF programs are able to be more effective in supporting the economic recovery of global and regional trading partners.SDRs are financial assets created by the IMF and allocated to members to supplement their international reserves. The agreement reached for an SDR allocation of SDR21.4 billion will double the volume of SDRs on issue. Australia will receive SDR213.5 million, valued at about $A426.9 million, from the IMF as a result of this decision. Our international reserves will increase accordingly.Agreement was also reached for a doubling of the capital of MIGA. MIGA provides political risk insurance and advisory services in relation to foreign investment in developing countries. Australia is in the process of finalising its membership of MIGA. Australia will benefit from the capital increase through the strengthening of MIGA's capacities to provide insurance and advisory services to Australian businesses investing in developing countries.(2) The annual meetings did not make any decisions on the establishment of an Asian currency stability fund, but a meeting of officials to discuss a proposal for the establishment of an Asian monetary fund was held in Hong Kong at the time of the annual meetings. This meeting did not reach agreement. A further meeting of officials in Manila on 18- 19 November 1997 agreed on a new framework for enhanced Asian regional cooperation. This included a mechanism for regional surveillance to complement global surveillance by the IMF, enhanced economic and technical cooperation particularly in strengthening domestic financial systems and regulatory capacities, measures to strengthen the IMF's capacity to respond to financial crises, and a cooperative financing arrangement that would supplement IMF resources. This "Manila Framework" was endorsed by APEC Economic Leaders at their meeting in Vancouver on 25 November 1997 and by the ASEAN plus Six Finance Ministers meeting in Kuala Lumpur on 2 December 1997. Australia was represented at these meetings by the Prime Minister and the Treasurer, respectively.(3) The governments of Thailand, Indonesia and the Republic of Korea have each agreed on reform programs with the IMF. Summaries of the programs are included in the latest edition of the Treasury Roundup. They include both macroeconomic and structural measures designed to restore market confidence.Thailand and the Republic of Korea have both made good progress in implementing their programs and in reducing market turbulence. In Indonesia, less progress has been made and an IMF team is currently reviewing the program.(4) The outlook for growth in many of Australia's trading partners in the East Asian region has weakened considerably in the face of financial market turbulence over the past six months and that is likely to have a negative impact on both the quantity and price of Australian exports to the region.Most likely to be affected by the downturn are exports of manufactures and services (such as tourism and various business services), demand for which tends to be influenced by changes in incomes in countries of destination. Indicators of a decline in tourism credits have already emerged, with arrivals from Asia falling by 23.5 per cent through the year to December 1997.Non-rural exports may also be affected by a downturn in world industrial production. However, the impact is more likely to be felt through lower prices than through lower export volumes. This is because export volumes of some non-rural commodities are more likely to be affected by domestic production than income levels in export markets.Asia accounts for a large proportion of our rural exports and the world price of some rural commodities have fallen as a result of the slowdown in Asia. However, as with some non-rural commodities, volumes of a number of important rural exports, such as cereals, are largely determined by the quantity produced rather than movements in the income levels of export markets. In addition, for some rural commodities, such as beef, veal and sugar, supply difficulties elsewhere in the world may work to the advantage of Australian suppliers, despite a downturn in demand from East Asia.The impact on growth in the Asian economies affected by instability will be reduced by the positive effects of depreciation of their currencies on their exports. This in turn provides export opportunities for countries such as Australia, whose exports feed into the production of Asian exports.(5) Australia has been active in regional consultations at Ministerial and official level on the crisis, and through our representatives on the Executive Boards of the IMF, World Bank and Asian Development Bank.Australia is participating in support arrangements for the IMF-supported programs for Thailand, Indonesia and Korea. Japan and Australia are the only countries in all three support arrangements. In each case, Australia's support is for up to $US1 billion.Australia's support for Thailand is being provided through currency swaps between the Reserve Bank of Australia and the Bank of Thailand. The size and timing of the swaps are in parallel with the disbursements being made to Thailand by the IMF. A first swap of $US400 million was made on 12 September 1997, a second swap of $US200 million was made on 17 December 1997 and a third of $80 million on 13 March 1998. The support arrangements for Korea and Indonesia are based on the Manila Framework and constitute a second line of defence which can be called upon in the event that unanticipated adverse external circumstances create the need for additional resources to those provided by the IMF and other international financial institutions. As at the end of February 1998, no funds have been transferred under these support arrangements.On 25 December 1997, the bilateral supporters announced a willingness to activate up to $US8 billion (around a third) of the support funds for Korea in response to continuing market pressures and in conjunction with the announcement by the Korean Government of a revised adjustment program. With the subsequent improvement in market conditions, these funds have not so far been required.2331(Question No. 2515)25152331Crosio, Janice, MPMrs Crosio7T4ProspectALP00 asked the Minister representing the Minister for Justice, upon notice, on 18 November 1997:(1) Does Operation Mandrake monitor 1300 known paedophiles and approximately 400 additions each year.(2) Is he able to say how many Australian Federal Police (AFP) officers are assigned to Operation Mandrake; if not, why not.(3) Is it a fact that there is not one single full-time officer assigned to Operation Mandrake.(4) Is it a fact that Operation Mandrake is managed by two part-time officers and one part-time staff member.(5) Are the resources allocated by the Commonwealth to the AFP for the fight against paedophilia sufficient, if so, why.2331Williams, Daryl, MPMr Williams7V5TangneyLPAttorney-General10—The Minister for Justice has provided the following answer to the honourable member's question:(1) The AFP maintains an intelligence project codenamed `Mandrake' relating to paedophilia. The AFP investigates Australians involved in paedophile activities overseas and monitors in particular the overseas travel of those persons who are the subject of alerts. State/Territory police have the primary role in the investigation of paedophilia activities within Australia and the AFP provides information and international support on request.As at 15 January 1998 the database contains 1854 names of which 330 are considered as potential offenders under the Crimes (Child Sex Tourism) Act. The rest are persons who, for a variety of reasons, have come to notice in relation to paedophilia. Some are convicted paedophiles, but the majority are suspects, to varying degrees.On creation of the database in 1994, there were approximately 122 entries. In the last three years, entries have averaged 450 per annum.It could, however, be misleading to draw inferences from these figures alone as to the scale of criminal paedophile activity. An assessment of the nature and scale of any criminal activity involves judgements drawn from a number of sources, of which statistics is only one.(2) The AFP maintains a flexible workforce with a system of operational assessment which allows resources to be allocated according to priority. The AFP currently has nine people throughout Australia engaged in investigation and intelligence collection relating to paedophilia.(3) No.(4) No. See (2) above.(5) I am satisfied that the AFP resources currently being allocated to the investigation of suspected paedophile activities meets Commonwealth responsibilities.The Commonwealth Government, through the AFP, has responsibility for enforcement of the Crimes (Child Sex Tourism) Amendment Act 1994. This Act makes it an offence for Australians and permanent residents of Australia, to engage in child sex tourism overseas. The Act has extra-territorial powers and persons may be prosecuted for acts committed outside Australia.The AFP, through its overseas liaison network and membership of Interpol, monitors overseas travel of persons suspected to be involved in paedophilia and also investigates the illegal use of the communications network (Internet) to transmit child pornography. This is carried out in close cooperation with State and Territory Police Services which carry the primary responsibility for investigating paedophile activity in Australia.The Commonwealth Government remains concerned about Australians who engage in paedophile activity overseas and is working closely with other countries to discourage such activity. This includes encouraging countries to strengthen their laws and to give priority to the protection of children.Australia has provided direct assistance to both Thailand and the Philippines in training of police officials to investigate sexual offences against children. Australia also recently entered into a Memorandum of Understanding with the Philippines to co-operate in the exchange of information relating to child sex activity. 2332(Question No. 2671)26712332Ferguson, Martin, MPMr Martin FergusonLS4BatmanALP00 asked the Minister for Immigration and Multicultural Affairs, upon notice, on 2 March 1998:Has the Commonwealth funded the Victorian Foundation for Survivors of Torture; if so, (a) under what category was the funding provided, (b) what tendering process was followed, (c) how many organisations applied for the funding, (d) did the Foundation receive additional funding for the purchase of major capital items such as vehicles; if so, under which funding round, (e) for what period has the funding been allocated under the service agreement between him and the Foundation, (f) what were the Foundation's client outcomes in 1996-97, (g) were the outcomes considered in the tendering process and (h) does the Foundation receive recurrent funding; if so, for how many positions.2332Ruddock, Philip, MPMr Ruddock0J4BerowraLPImmigration and Multicultural Affairs10—The answer to the honourable member's question is as follows:Yes.(a) The funding provided by the Department of Immigration and Multicultural Affairs to the Victorian Foundation for Survivors of Torture (VFST) is under the Community Settlement Services Scheme (worker based) category.(b) The VFST received funding through the standard grants process in accordance with the guidelines for the Community Settlement Services Scheme for worker positions and projects which fitted the priority categories of the Integrated Humanitarian Settlement Strategy as identified by the Government in its Budget Statement of May 1997.(c) Six hundred and seventy organisations applied for funding in 1997-98.(d) No.(e) Funding was allocated for 1997-98 for twelve months commencing 1 October 1997.(f) In 1996-97, the VFST provided services to 744 refugee and humanitarian entrants who have experienced some form of torture and trauma, mainly from Bosnia, Iraq and Somalia. These services included an early intervention program (assessment and counselling) for 511 clients placed in On Arrival Accommodation (OAA). One hundred clients were assessed as requiring short term counselling and 102 clients required medium to long term counselling. The VFST also works in collaboration with mainstream and specialist agencies to provide specialist health services and other generalist settlement services. (g) Yes.(h) The VFST was funded for 12 months from 1 October 1997 until 30 September 1998. Funding is sufficient for approximately ten positions.2333(Question No. 2674)26742333Ferguson, Martin, MPMr Martin FergusonLS4BatmanALP00 asked the Minister for Immigration and Multicultural Affairs, upon notice, on 2 March 1998:(1) How many (a) USA, (b) UK and (c) French citizens have applied for protection visas.(2) How many instances in each class referred to in part (1) have been categorised as (a) fraudulent, (b) delusional or (c) other categories.2333Ruddock, Philip, MPMr Ruddock0J4BerowraLPImmigration and Multicultural Affairs10—The answer to the honourable member's question is as follows:(1) During the financial year 1997-98 to date 28 February the following applied for protection visas: (a) 6 USA citizens (b) 4 UK citizens (c) nil French citizens.During the financial year 1996-97 the following applied for protection visas: (a) 18 USA citizens (b) 17 UK citizens (c) 25 French citizens.(2) The Department does not report on the categories as identified in question (2). However, the outcome of those determined in the last two financial years is detailed below:1997-98 to date 28 February:(a) USA. applied—6. rejected—7 (includes applications lodged in previous financial year). otherwise resolved—1 (withdrawn, died or granted other visas). granted—nil. on hand—1(b) UK. applied—4. rejected—7 (includes applications lodged in previous financial year). granted—nil. on hand—1(c) French. applied—nil. rejected—2 (includes applications lodged in previous financial year). granted—nil. on hand—11996-97:(a) USA. applied—18. rejected—16 (includes applications lodged in previous financial year). granted—1. on hand—3(b) UK. applied—17. rejected—15 (includes applications lodged in previous financial year). otherwise resolved—1. granted—1. on hand—4(c) French. applied—25. rejected—29 (includes applications lodged in previous financial year). granted—nil. on hand—3During the financial year 1996-97 there was one protection visa granted to a citizen of the USA and one to a citizen of the UK.The protection visas granted to citizens of the USA and the UK were to children who acquired their citizenship as a result of their birth. Their parents and siblings are nationals of other countries and protection visas were granted on the basis of family unit membership.