1999-06-083913REPS625901999-06-08Mr SPEAKER(Mr Neil Andrew) took the chair at 2.00 p.m., and read prayers.Questions Without Notice625962596259Crean, Simon, MPMr CREANDT4HothamALP00—My question is to the Deputy Prime Minister. Does the Deputy Prime Minister recall his incomprehensible statement yesterday that `there was no GST on Tony Lockett's goals yesterday, but there was a sales tax on some of the football gear'? Deputy Prime Minister, isn't it true that according to the AFL the GST will increase AFL ticket prices by six per cent and increase the price of food, drinks, clothing and other merchandise and the AFL Football Record by eight per cent? Isn't it also true that club membership, public transport to the ground and reserve seats will also cost more? Won't the GST make it more expensive for ordinary Australians to go to the footy? Unlike Plugger, isn't this another example of you being off the mark and off the money?6259Fischer, Tim, MPMr TIM FISCHERDG4FarrerNP10—Firstly, congratulations to Tony Lockett on an outstanding performance.Mr Crean interjecting—DG4Mr TIM FISCHER—Well, good, and I listened carefully to your question. Secondly, whether it is a sporting arena or whether it is rural and regional Australia, there is a huge gain from the dynamic of the tax reform package. You stand for a 43c a litre tax on every litre of diesel.DT4CREANMr Crean—Mr Speaker, I raise a point of order on the obvious point of relevance. The question was very specific: the GST and football prices. He should answer it.10000SPEAKERMr SPEAKER—The Deputy Leader of the Opposition will resume his seat. I uphold the point of order and invite the Deputy Prime Minister to come to the question.DG4Mr TIM FISCHER—A lot of people who play football in country areas use a lot of transport to get to and from football, just logically. So I am very delighted to defend every aspect of the new tax system. The sooner it is passed by the Senate, the better.DT4CREANMr Crean—What about the poll?DG4Mr TIM FISCHER—The Australian had a curious question associated with that poll this morning. If they more clearly declared what the question was utilised in the poll, I think we would get a better balance in the responses from the Australian people. Australia, sporting Australia and export Australia will be better off for the new tax system when it comes.62596259Wakelin, Barry, MPMr WAKELINHV5GreyLP10—My question is addressed to the Prime Minister. Can the Prime Minister outline to the House the national interest considerations which demand that taxation reform be undertaken without delay?6259Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—I thank the honourable member for Grey for that question and I particularly thank him for focusing on what is the most important element in this whole debate—that is, the Australian national interest. We are pursuing taxation reform because it is in Australia's long-term interest to get rid of the taxation system that we now have. We believe in a taxation system that will take $4½ billion off Australia's export costs. We believe in a taxation system that will take $10½ billion off business costs in Australia. We believe in a taxation system that will dramatically reduce the price of fuel in rural and regional Australia. We believe in a taxation system that will result in 80 per cent of Australian taxpayers paying a marginal rate of not more than 30 cents in the dollar.We believe in a taxation system that will sweep away the multi-layered complexity of the existing wholesale sales tax system and replace it with an infinitely simpler, fairer and more effective and more equitable indirect taxation system. We believe in a taxation system that will enable the Australian states to provide increased resources over the years for government schools, for hospitals, for police and for all the other services that governments are meant to provide. In other words, the Liberal and National parties—those parties that occupy this side of the parliament—are committed to a taxation policy which is in Australia's long-term national interest.At the end of the day and at the end of the political combat, parties are judged on their commitment to the national interest. We took taxation reform to the last election because we believed it was for the good of Australia. We continue to pursue tax reform because it will be for the good of Australia that we get rid of the existing taxation system. Those who vote against this system are voting against more incentive for 80 per cent of Australian taxpayers. They are voting against cheaper exports. They are voting against more money for the Australian states for government schools, for hospitals and for police. But, above all, they are voting to retain a taxation system that is clearly out of date with the needs of modern Australia and a taxation system that is manifestly unable to carry Australia into the new millennium.62606260Beazley, Kim, MPMr BEAZLEYPE4BrandALP00—Australian people do not agree with you, Prime Minister.10000SPEAKERMr SPEAKER—The Leader of the Opposition will come to his question.PE4Mr BEAZLEY—My question is to the Treasurer. Does the Treasurer stand by his claim that the price of gas will rise by just 3.3 per cent after taking into account the removal of wholesale sales tax and state based taxes? Won't the fact that most state taxes will now be retained forever increase the GST impact on gas tax prices? Wasn't ACCC member and independent pricing and access regulator Mr Graham Scott right when he predicted yesterday that gas prices will now increase by eight to nine per cent?6260Costello, Peter, MPMr COSTELLOCT4HigginsLPTreasurer10—I think the Leader of the Opposition made some kind of comment in his question that state taxes will stay forever. State taxes won't stay forever. It is Labor policy to keep state taxes forever.UNKNOWNOpposition membersOpposition members—Oh!CT4Mr COSTELLO—Yes. It is Labor policy to keep state taxes forever. Just so you know, it is Labor policy to keep stamp duty on shares. It is Labor policy to keep FID. It is Labor policy to keep BAD. It is Labor policy to keep bed taxes. This side of the parliament is in favour of abolishing state taxes. We are going to abolish bed taxes. We are going to abolish stamp duty on shares.10000SPEAKERMr SPEAKER—The Treasurer will resume his seat. I call the Leader of the Opposition.PE4BEAZLEYMr Beazley—Is it correct for Mr Scott to say that the price of gas will rise eight to nine per cent unlike your prediction of 3.3 per cent?10000SPEAKERMr SPEAKER—The Leader of the Opposition will resume his seat. I call the Treasurer.CT4Mr COSTELLO—Mr Speaker, as he said in his question that state taxes will stay forever, he was completely false. He was misrepresenting government policy and he was describing his own because we are going to abolish stamp duties on shares. We are going to abolish Labor's bed taxes. We are going to abolish financial institutions duty, and we are going to abolish bank account debits taxes. Those taxes come off. The second point that I make is as follows: we are going to abolish Labor's wholesale sales tax. Listen, Leader of the Opposition, you are engaging in a huge fight to keep wholesale sales tax. That is what you love. No wonder you love it.PE4BEAZLEYMr Beazley—Mr Speaker, I rise on a point of order on relevance. The question was simple. Is the rise in gas prices going to be eight to nine per cent or 3.3? It was a very simple question. It is either a yes or no answer.10000SPEAKERMr SPEAKER—The Leader of the Opposition will resume his seat. The Leader of the Opposition has raised a point of order on relevance. His question did pose the question about tax prices. It also asked a question about the impact on state taxes. In that context the Treasurer is relevant and I call him.CT4Mr COSTELLO—The point that I am making is that, when we abolish wholesale sales tax, all of the embedded wholesale sales taxes in gas production are abolished. No wonder the Labor Party loves wholesale sales tax. When it introduced wholesale sales tax, it introduced it at a rate of 2½ per cent and it is now at 32 per cent—Labor's secret whole sale sales tax. When you are looking at gas prices, you are taking out all of those indirect taxes, which Labor is committed to. You are taking out all the embedded wholesale sales taxes on practically everything that is required to produce gas. You have an up-front transparent tax at the end of it. Businesses—let me make this point—that are buying gas get a full rebate of GST. They don't even pay any tax on the gas. But they would not get a rebate if you embedded wholesale sales tax, they would not get a rebate of the financial institutions duty, they would not get a rebate in relation to their stamp duties—all of the hidden taxes that the Labor Party loves.62616261Causley, Ian, MPMr CAUSLEY4K6PageNP10—My question is addressed to the Deputy Prime Minister and Minister for Trade. Can the minister inform the House how the United States proposed safeguard action is threatening exports of Australian lamb?6261Fischer, Tim, MPMr TIM FISCHERDG4FarrerNP10—I thank the member for Page for his question. I thought this would be a matter which both sides of the House would be deeply interested in, as we do battle in the interests of the great Australian lamb industry and the great Australian lamb export industry. They have worked hard to carve out a $100 million market in the USA using a lot of their own dollars and resources to finetune their product and develop extra jobs here in Australia, and to grow the overall size of the lamb consumption market in the USA to the benefit of even USA producers and processors as well as to Australian and New Zealand lamb producers.Our existing access is reduced if it is capped, if they impose barriers, and this is grossly unfair as this is unsubsidised lamb product going from Australia to the largest economy in the world—the United States. The US administration ought to very carefully consider all of the ramifications arising in relation to the proposal to utilise safeguard action to impose unjust, unfair barriers when the ITC found that there was no injury thus far created by the Australian and New Zealand lamb export effort.A protectionist decision will create a huge backlash, quite properly, amongst farmers in Australia and New Zealand. It will sour the attitude in the lead-up to the meetings of APEC in Auckland and to the WTO meeting in Seattle in November of this year. It would also be the wrong decision for the US lamb producers and processors, who have gained a 50 per cent increase in the price of their US processed lamb over the last six months. I want to make it very clear that the Australian government stands as one with the Australian lamb industry in fighting all the way with regard to the consideration by Washington of a determination in respect of the ITC.I close with a short quote which is very relevant to this matter: `Protectionism is just a fancy word for giving up'. Who made that statement? None other than Governor Bill Clinton as then presidential candidate in 1992. May I respectfully remind the President of the USA of his quote on the campaign trail and that as they take steps towards protectionism, which the government is considering in the USA, if they are going to provide any sort of leadership, they ought to think carefully about this and think again.62616261Swan, Wayne, MPMr SWAN2V5LilleyALP00—My question without notice is directed to the Treasurer. Treasurer, isn't it a fact that in your GST deal with the Democrats, the Prime Minister claimed there would be compensation available for the 1.1 million Australians who are outside the social security and tax systems, despite allocating no funds for that purpose? Treasurer, how do you propose to compensate these 1.1 million people, given that no funding is allocated in the costing table the Prime Minister released? Treasurer, if at some stage you make extra money available for this purpose, won't you breach your commitment last week that you will not dip any further into the surplus to pay for the revised GST deal?6261Costello, Peter, MPMr COSTELLOCT4HigginsLPTreasurer10—Of course in relation to anybody who is outside both the tax and the social security systems, the government has announced it will have provisions for them to get one-off compensation. But this statement that there are 1.1 million such persons includes a lot of married women who are not in the tax or the social security system but are dependent on a primary income earner, it includes numbers of children who are not in the income tax system or the social security system but are dependent on income earners, and those persons are already fully and adequately compensated by the increases in family allowances. The family allowance increase for each child is $140; for the single income family, $350—and, in addition, there are income tax cuts, which of course the Labor Party opposes. So those single income families get income tax cuts and additional family allowances, both of which incidently the Labor Party opposes. That puts those families in a much stronger and a much better position.We have said, if there are people outside of that—and that is the overwhelming bulk of the so-called 1.1 million people who can be identified—there will be one-off compensation, as we have provided for self-funded retirees. The honourable member then goes on to talk about surpluses. I have never seen such born-again, newfound interest in surpluses as now comes from the Labor Party. This was the hero of the $10.5 billion deficit.10000SPEAKERMr SPEAKER—The Treasurer will resume his seat.PE4BEAZLEYMr Beazley—I take a point of order, Mr Speaker.10000SPEAKERMr SPEAKER—The Leader of the Opposition does not have the call.Mr Beazley interjecting—10000SPEAKERMr SPEAKER—I realise that was a matter of him not listening. I now call the Leader of the Opposition.PE4BEAZLEYMr Beazley—Okay, I take it was a friendly nod and not the call. I go to the issue of relevance, Mr Speaker. He was asked a specific question of the impact of this particular issue, this guarantee on the deficit. It does not allow him to canvass at boring length the absurdities they have been canvassing for the last few years.10000SPEAKERMr SPEAKER—The Leader of the Opposition will resume his seat. The Treasurer has the call.CT4Mr COSTELLO—Mr Speaker, the fact is that this government believes in running a surplus budget, and we are not going to take any lectures from the Australian Labor Party on surplus budgets. If it had not been for this government, this question would have been to the effect of `How much would we be adding to a $10.5 billion deficit?' That was your policy. When this side of politics said we were going to put the budget into surplus, you opposed us hook, line and sinker on every measure. So we are not going to sit here and hear this `$10.5 billion deficit man' on the question of surpluses.PE4BEAZLEYMr Beazley—My point goes to relevance on the fact that this $26 billion deficit party or Prime Minister—10000SPEAKERMr SPEAKER—The Leader of the Opposition will resume his seat.PE4BEAZLEYMr Beazley—is not in a position to criticise us on the subject which we raised with him, which was the impact of this latest—10000SPEAKERMr SPEAKER—The Leader of the Opposition will resume his seat. The Leader of the Opposition knows that he cannot introduce a point of order as he introduced that one. I was in consultation with the Clerk to ascertain that my memory was right and that the question did involve a reference to surpluses, and I call the Treasurer.CT4Mr COSTELLO—I have finished.62626262Cameron, Ross, MPMr ROSS CAMERON3K6ParramattaLP10—My question is to the Minister for Community Services. As minister responsible for delivery of government services through Centrelink, can the minister inform the House what action this government is taking to crack down on social security fraud?6262Truss, Warren, MPMr TRUSSGT4Wide BayNPAgriculture, Fisheries and Forestry10—I thank the honourable member for Parramatta for his question. The Treasurer alluded to some of the differences between Labor and this government. Another obvious one is that, when we came to power, there was a fundamental change in the attitude of government towards welfare cheats. This government is serious about stopping welfare cheats, and we have been taking decisive action over three years to stop the small number of people who cheat on taxpayers by attempting to claim benefits to which they are not entitled.Most people who receive social security benefits do so because they are in need of assistance, and these people are also entitled to protection from those who cheat the system. In the budget process, the government announced a number of other initiatives to help reinforce our campaign against the welfare cheats. There will be an increased number of Centrelink officers stationed and located in the Australian Taxation Office to assist with data matching processes. In particular, there will be savings in identifying those who are wrongfully claiming benefits through data matching with the Australian Taxation Office's reportable payment system and their prescribed payments arrangements. This will help to detect those social security recipients who are receiving other income without properly declaring it.In the first half of the 1998-99 financial year, Centrelink conducted about 1.3 million reviews to identify overpayments, and 116,000 of these reviews resulted in cancellations or reductions in payments. Debts were identified totalling over $137 million. This action has been followed up by prosecutions in cases where clear social security fraud has been identified, and 1,510 people were convicted of social security fraud involving over $14 million. We are serious about addressing these issues of fraud to make sure that only those who are entitled to receive benefits get them.In addition, we are currently reviewing tenders for the enhanced investigative optical surveillance arrangements to improve the capacity of Centrelink to seek out those who are involved in elaborate scams which are resulting in their receiving payments to which they are not entitled. Around 70 per cent of all social security debts are created because people fail to declare the income that they have received or incorrectly report their income. So, to prevent these sorts of debts from occurring in the first place, Centrelink has appointed 230 debt prevention officers whose task it will be to work with Centrelink customers to avoid debts occurring in the first place. We want to assist people in that regard so that there can be no allegations in those instances of defrauding the system.We want to work with men and women of goodwill, those who assist Centrelink in providing information, so that the hardworking people of Australia do not have to bear the cost of welfare cheats and welfare fraud. Those who are entitled to receive benefits should receive them and receive them in an efficient and fair way. Those who are cheating the system will not be tolerated by this government.62636263Swan, Wayne, MPMr SWAN2V5LilleyALP00—My question without notice is directed to the Prime Minister. Prime Minister, are you aware of last Friday's statement about the GST from St Vincent de Paul which said:The tax package was a `new bonanza' for the wealthy, and the concentration on exempting food . . . was a cruel hoax on millions of Australians.Prime Minister, is it not a fact that, as St Vincent de Paul stated, despite the narrow food GST exemption, according to the HES data, the majority—almost three-quarters—of a low income household weekly budget will still be hit by the GST? Prime Minister, should you not heed the warning from St Vinnies, an organisation that knows more about the poor than anybody in this House?6263Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—In answer to the honourable member for Lilley, I have considerable respect for the Society of St Vincent de Paul. I think it does tremendous welfare work in this country. I listen carefully to things that the society says, as I do statements made by the Salvation Army, the Brotherhood of St Laurence and other organisations.It is fair to say that the changes that the government has made as a result of the agreement with the Australian Democrats have received a lot of comment. Much of that comment has been supportive. A lot of the comment has been critical. I make this comment to the Society of St Vincent de Paul: I find it extraordinary that anybody properly applying themselves could regard a package which changed the original personal income tax scales so that a rate of 47 cents in the dollar applied at $60,000 and a rate of 42 cents in the dollar applied at $50,000 as being a bonanza for the rich.It is a bonanza for middle Australia because they will have a bit of incentive. I am very proud of the fact that, through this taxation package, we are going to deliver a level of incentive to middle Australia the like of which no government since Federation has ever proposed. To say to 80 per cent of Australian taxpayers that you can work and pay no more than 30 cents at the margin up to $50,000 is a remarkable improvement on the present system.Coming to the question of the less well off in the Australian community, I would remind the honourable member for Lilley that, as a result of the changes we have made with the Democrats, essentially two things have occurred: the GST has gone off basic food and, in addition, the real value of the compensation package has been increased. That is a double benefit. You have an agreement that provides a bonanza for middle Australia and a double benefit so far as compensation is concerned for low income earners in the Australian community.The astonishing thing is that the self-proclaimed supporter and sympathiser of and protagonist for the Society of St Vincent de Paul, the member for Lilley, is going to join with all his other Labor mates in voting down a two per cent real increase in the pension. You are going to vote down an increase in the pension. You are going to vote down increases for the unemployed. You are going to vote down a tax bonanza for middle Australia.The member for Lilley gets up in this place and asks questions as the social security spokesman for the Australian Labor Party. He does not understand the real benefit of this package to low income earners. He does not understand the family benefits. He does not understand the benefits for middle Australia. But he is locked in to joining all other members of the Australian Labor Party in voting against the best chance this country has had in a generation to reform its taxation system. The reason that this government remains absolutely committed to the cause of taxation reform is the reason I outlined in answer to the question from the member for Grey—that is, it is in the long-term national interest of this country.You can nitpick. You can point score. You can try to get a cheap headline. In the end, you will be judged on the way in which you matched the national interest of this country. At the present time, you are failing the national interest of Australia and you are failing it in a big way.62646264Nugent, Peter, MPMr NUGENTUT4AstonLP10—My question is addressed to the Minister for Aged Care. Can the minister inform the House of the action the government is taking to meet the challenges of an ageing Australia? What strategies do we have in place to meet those challenges and opportunities over the long term?6264Bishop, Bronwyn, MPMrs BRONWYN BISHOPSE4MackellarLPAged Care10—I thank the member for his question. He is a person who has a great deal of perception about the challenges that an ageing Australia presents us with in the next century. Unlike the Labor Party, who never had the ability to look forward any further than the next election, this government is looking forward over the next 50 years at the impact an ageing Australia will have on its work force, on its social policy and on its health policy. To put it into context, this government has a vision that will utilise the wisdom, abilities and experience of older Australians and include them in the work force.The fact is that, if you look at the statistics, by the year 2020 we will see a slowing in the rate of new entrants into the work force—from 170,000 today to 125,000 for the entire decade. That means that we cannot afford to discard the post-45s and the post-55s, as had increasingly become the case under the 13 years of Labor government—a government which sent all the wrong messages and said people could retire at 55. Anyone who is thinking of doing that had better think again. We recognise that a lower birth rate and the fact that people are living longer and healthier lives—YU5TANNERMr Tanner—Jeff Kennett didn't think so.SE4Mrs BRONWYN BISHOP—mean that sudden immigration or indeed—dare I say it—adhering to Jeff Kennett's dictum to go out and procreate a little more is not going to change the fact that this is an ageing society. We are indeed the product of our history. So, in answer to that very good question from the member for Aston, it is by pursuing policies of growth, fiscal consolidation, taxation reform and planning for the future that we will be able to ensure that all Australians have productive, fulfilling and purposeful lives. We do not discard older Australians in the way the Labor Party did, but say to them, `You are part of this contributing society with cross-generational respect for each other and a prosperous society into the 21st century.'62656265Crean, Simon, MPMr CREANDT4HothamALP00—My question is to the Treasurer. Treasurer, does your GST deal with the Democrats include removal of the high rollers casino amendment? Will you be persisting with this special deal for Australia's wealthy gamblers?6265Costello, Peter, MPMr COSTELLOCT4HigginsLPTreasurer10—I have heard some rubbish talked by the opposition, but none more so than in relation to high rollers and casinos. It may elude the Labor Party frontbench, but states currently have value added taxes on gambling. When this government said that it would be introducing a consumption tax, if it had been applied without a state set-off it would have been double taxation on the margin—on the same issue. This government said—and I think there are three countries in the world that do it—that it would apply GST to gambling; that is, to the margin on gambling.Mr Crean interjecting—10000SPEAKERMr SPEAKER—The Deputy Leader of the Opposition!CT4Mr COSTELLO—There are three in the world. And may I say: what is the Labor Party policy on applying tax to gambling? Nothing.Mr Crean interjecting—10000SPEAKERMr SPEAKER—I warn the Deputy Leader of the Opposition. He persistently interjects, even though the Speaker has drawn his attention to the fact that he is interjecting.CT4Mr COSTELLO—Not only did this government say it was going to apply it but, when it announced that it was going to apply it, the states legitimately said it would be double taxation on the same thing so the agreement with the states was that, to the extent that the GST taxed value added, the states would reduce their value added tax accordingly so that there was not any double taxation. In other words, to the extent that the Commonwealth taxes, the state reduces—but the overall tax never varies. I just add here that it is Labor policy to have no Commonwealth tax whatsoever on gambling.In relation to high rollers, this means that high rollers, like anybody else, are taxed on their margin. Like any other punter, the high rollers are taxed on their margin—and it is right that high rollers be taxed on their margin. It is right that the high rollers pay a consumption tax in Australia. And, if I may say so, on this side of the parliament we think the high rollers should pay a tax not only on their gambling consumption in Australia; we think they should pay a tax on their hire cars and on their entertainment—which of course the Labor Party opposes. The Labor Party wants the high rollers in Australia to get a tax free run. We think that people coming into Australia, whether they be tourists or high rollers, should be paying money to the Australian tax authorities, just as Australians who go across to Europe or anywhere else pay consumption and value added taxes to foreign jurisdictions. It is only the Labor Party that wants to give foreigners a free run on the Australian taxation system.DT4CREANMr Crean—Mr Speaker, I raise a point of order and it goes to relevance. The question was simple: is he keeping the high rollers amendment—yes or no?Government members interjecting—10000SPEAKERMr SPEAKER—The Deputy Leader of the Opposition will resume his seat. The Treasurer was in fact being entirely relevant and will return to the question.CT4Mr COSTELLO—When a high roller comes into Australia, we in the coalition say that the high roller should pay GST on the margin of their gambling and GST on their consumption. The Labor Party says that a high roller should get free consumption in Australia—because the Labor Party is against taxing foreigners. The Labor Party would like to have all of the taxes that Australians pay when they go to Europe or Asia or anywhere else not apply to high rollers who come into Australia. We have seen some pretty regressive arguments come out of the Australian Labor Party over its time, but this has to take the cake—the taxable cake.Mr Crean interjecting—10000SPEAKERMr SPEAKER—The Deputy Leader of the Opposition does not have the call.62666266Haase, Barry, MPMr HAASE84TKalgoorlieLP10—My question is addressed to the Minister for Immigration and Multicultural Affairs. Minister, does the government have any new evidence which demonstrates the way unlawful arrivals to Australia are abusing our judicial system in order to delay their removal from Australia? What impact does this ability to delay have upon people smugglers around the world seeking to ply their gruesome trade in human cargo?6266Ruddock, Philip, MPMr RUDDOCK0J4BerowraLPImmigration and Multicultural Affairs; Minister Assisting the Prime Minister for Reconciliation10—I thank the honourable member for Kalgoorlie for his question in relation to this matter. Yes, I do have some additional evidence to put before the House in relation to the need for reform in this area. I would have thought that there would be no doubt about the need for urgent action in these matters. My colleague and friend the shadow minister and member for Bowman said on 4QY, Cairns on 26 May:Illegal immigrants are now arriving in Australia so frequently that it should be treated as a national emergency.One would have thought that, if the Labor Party saw it as a national emergency, they would appreciate that at the moment we have 1,036 people in our four detention centres. Of those, 230 people are eligible to pursue court action relating to their status in Australia and, significantly, over 60 per cent—that is, 137—have chosen to do so.So we have a very significant number of people held unnecessarily, in my view, in detention over a long period of time pursuing matters before our courts when we have a perfectly good and independent merits review system in place—the one that the Labor Party put in place and believed was the most appropriate way to deal with any appeals in relation to these matters. It is a blatant manipulation of our system. It is one in which the courts are being used as a weapon of delay by people who want to ensure that they are able to remain here in Australia. Further, we have some indications that people who are involved in this trafficking are touting that one of the reasons that they can expand their trade here is the opportunity to exploit judicial review.Yesterday I urged the Labor Party to be supportive of one other matter, and that is in relation to the substantial increasing of penalties for those who are involved in this trafficking. I understand the opposition will agree to increase penalties and I understand that they will agree to attaching it to a bill in the Senate so that we can get it through this session, but when I ask whether or not they will agree to facilitating that through the Senate by way of a guillotine the answer is no. You are either serious about dealing with these matters or you are not.62666266McMullan, Bob, MPMr McMULLAN5I4CanberraALP00—My question is to the Minister for Defence. Is the minister aware that in April of this year the Defence Estate Organisation entered into a $175,500 contract with a company called Cape York Concrete Pty Ltd for the supply of sand, cement and mixing services to the Scherger Air Force Base? Can the minister confirm that this contract was not awarded under competitive circumstances and that the only other potential supplier was not invited to provide a quote? Finally, is the minister aware that half of the shares in Cape York Concrete Pty Ltd are owned by the Parliamentary Secretary to the Minister for Industry, Science and Resources, the member for Leichhardt, and that the member for Leichhardt is one of only two directors of this company as well as being the company secretary of this company?6266Moore, John, MPMr MOOREEI4RyanLPDefence10—I am advised that the provision of concrete was undertaken in accordance with the department's procurement policies.Mr Kelvin Thomson interjecting—10000SPEAKERMr SPEAKER—I warn the member for Wills!62676267Prosser, Geoff, MPMr PROSSERRI4ForrestLP10—My question is directed to the Minister for Foreign Affairs. Can the minister inform the House of the government's response to the conduct of the Indonesian elections which took place on 7 June? What assistance has Australia provided to these historic elections in Indonesia, our near neighbour?6267Downer, Alexander, MPMr DOWNER4G4MayoLPForeign Affairs10—I thank the member for Forrest for his question and for his interest in this historic event of the Indonesian general elections. The Indonesian general elections were a tremendous demonstration of the commitment of Indonesians to exercise their new found democratic freedom in a peaceful way. Over 90 per cent of registered voters have apparently participated. It is too early at this stage to be definitive, but indications so far from our election observers from the Australian Embassy and other sources suggest that the process has been free, fair and peaceful. The Australian Embassy and the observer team have commented on the enthusiasm of voters and the general good-natured spirit of polling across the country.I think all members of the House would agree—and I think all Australians would agree, on reflection—that this Indonesian election is a truly momentous event. For us as a country, we have lived alongside a virtual dictatorship since 1955, and I think in the Australian community that has created a sense of uncertainty, a sense of concern. From now on, we will be living alongside the world's third largest operating democracy. That will give the Australian public a much greater sense of confidence in Indonesia. It will make our relationship with Indonesia easier. It will make it a relationship which garners more public support than has been the case in the past. It is truly an historic event, first and foremost for Indonesia but also for us in this country, to see our neighbour transformed into the world's third largest operating democracy.Australia has plenty to be proud of in this process. We have of course supported the moves towards democracy in Indonesia. It is worth saying that one of the heroes of this exercise is none other than the President of Indonesia himself, President Habibie, because it is he who put this process into place and it is he who has run the risk of his party being defeated in these elections in an open, free and transparent electoral process. He is the person who, at the end of the day, is responsible for delivering democracy to his country and to that important part of our region.The Australian government has supported this process. We provided $15 million worth of both financial and technical assistance, and we are providing an election observer team that is made up of a number of officials, including members of both houses of parliament. It is led very ably by my friend and colleague—your friend and colleague, Mr Speaker, let me add—Senator Ferguson from South Australia, who has been doing an excellent job. It includes people like the opposition spokesman on defence and the member for Griffith, who it would have to be said is one member of the opposition who has a keen and reasonably objective interest in foreign affairs. It has some useful people on it.Government member interjecting—4G4Mr DOWNER—No, the member for Kingsford-Smith is not on it. This is an election observer team which makes a useful contribution to the whole of the process. I want to repeat for the benefit of the House that this election is an enormously important event, of course for Indonesia but also for Australia. We should be particularly pleased with the manner in which it has been conducted.62676267Beazley, Kim, MPMr BEAZLEYPE4BrandALP00—My question is to the Prime Minister. Did the Parliamentary Secretary to the Minister for Industry, Science and Resources declare his half share or his directorship of the company Cape York Concrete Pty Ltd in his confidential disclosure of pecuniary interest to you? Did the secretary to your department, Mr Max Moore-Wilton, provide a certification to you in writing that after examination he was satisfied that this disclosure complied with the code? Why didn't you or your delegate, Mr Moore-Wilton, raise with the parliamentary secretary his failure to disclose these pecuniary interests properly in his statement to parliament? If Mr Entsch did not disclose this conflict, even in his confidential disclosure to you, what action do you propose to take on him?6268Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—I thank the Leader of the Opposition for the question. The Minister for Defence has dealt with the question of the circumstances of the awarding of the contract and made it very plain that the procedures followed were completely in accordance with the procurement procedures of the defence department. I am advised that the situation is as follows. The company was established prior to Mr Entsch becoming a parliamentary secretary. He contributed $14,000 to help establish the company. Mr Entsch declared his shareholding on the register of parliamentary members' interests and in his separate return to me. Mr Entsch, so I am told, plays no part in the day-to-day running of the company. This is entirely in the hands of his business partner, with the company's day-to-day financial management in the hands of the accountant. This has been attested to in relation to the operations of the company.Mr Entsch has received no director's or other fees or payments from the company during the time he has been a parliamentary secretary. He made no representations on behalf of the company on this matter. Mr Entsch is a director of the business and is listed as company secretary. As indicated, the management of the company is in the hands of his partner and all day-to-day financial affairs are conducted by its accountant. A copy of the letter from his accountant is attached, demonstrating that Mr Entsch plays no part in the day-to-day affairs of the company, and its financial management is dealt with by the accountant.Under the guidelines of ministerial conduct, Mr Entsch is entitled to have this investment because there is no conflict with his duties. There was no conflict, according to my understanding of the operations of this company, with his duties as a parliamentary secretary. He should have disclosed his directorship and company secretaryship of Cape York Concrete both on his parliamentary return and in his return to me. Given that he fully disclosed the substantive matter—that is, his shareholding, his financial and his beneficial interests—both to the parliament and to me, I am satisfied that the error he made was an error of inadvertence, and in that I am emboldened by the statement of the person who asked me the question. Quoted in an interview in March last year, in answer to a question about declarations of interest, which I think is the subject of this question, the respondent to the question—his name is shown as Beazley—said:Oh, no. Look, inadvertent slips are totally reasonable and totally to be expected. It's not easy to necessarily have in place every single declaration of comprehension.The parliamentary secretary made the substantive disclosure. He disclosed to me and he disclosed to the Australian public that he had a beneficial interest in this company. He disclosed to the secretary to my department that he effectively owned half of the company. At all times he was completely forthright in responding to those questions.I believe that the failure to list the directorship and the secretaryship, given that he has listed his beneficial and his financial interests, is an inadvertence. In those circumstances, although it is regrettable, I believe it does fall into the category of an inadvertence. I am completely satisfied that, as the parliamentary secretary disclosed the financial interests and his true beneficial ownership in relation to this company, his conduct has been entirely proper.PE4BEAZLEYMr Beazley—I ask the Prime Minister to table the document from which he was quoting.ZD4Mr HOWARD—It is marked `confidential'. However, I am perfectly happy to table for the information of the House a memorandum from Lane Accounting, which deals with the management of Cape York Concrete.8K6FITZGIBBONMr Fitzgibbon—Mr Speaker, I rise on the same matter. I might stand corrected, but I understood the Prime Minister made reference to an attachment. I invite him to table that as well.10000SPEAKERMr SPEAKER—The Prime Minister has indicated that he has tabled the documents he had, other than those marked `confidential'.62696269Lieberman, Lou, MPMr LIEBERMANXU5IndiLP10—My question is to the Minister for Forestry and Conservation. Minister, when was the National Forestry Policy Statement first introduced, and who supported it? What other forestry measures were associated with that policy? Has there been any change to the policy? What developments have occurred since its introduction?6269Tuckey, Wilson, MPMr TUCKEYSJ4O'ConnorLPForestry and Conservation; Minister Assisting the Prime Minister10—This is the national forestry policy statement and this accompanying scientific document is the Janus criteria. This policy document was prepared in 1992, and it contains some quite interesting signatures of people who endorsed it at the time. It was, of course, endorsed by the then Prime Minister, Paul Keating. It was endorsed by the then Premier of Western Australia, Dr Carmen Lawrence. In fact, it was endorsed by five leaders of Labor governments and four premiers of conservative state governments. This policy was further endorsed by the coalition in the federal parliament at the time, and it was accepted as our policy. It was endorsed by the scientific community at the time, and it was endorsed because of the Janus criteria document which set down the Carr reserve system.In other words, at the time this particular policy was introduced it was Labor government policy, it had bipartisan support and it was accepted universally as a policy that was best for the forest industry taking account of the various factors involved such as the rights of workers, the rights of the economy and the rights of the environment. All of these matters were supported by everybody, and it is very interesting to note that, fundamentally, as far as forest management, forest ecology and forest economy is concerned, there is practically no change whatsoever.I was asked whether there is any change to this policy. Yes, the government in this parliament has changed in a minor way the compensation measures that are proposed by in fact saying that on the whole we will continue with compensation but redirect it to business development rather than Labor's policy of business exit. Of course, I am adding to that the fact that in some proposed amendments to the regional forest agreement legislation that I mentioned yesterday there is an amendment that talks about relocating people—in other words, kicking them out of their towns when Labor's policy of closing down the forests, which is their new policy, is introduced.At the last election our government went with the national forest policy statement to the people and, after the election, the Prime Minister charged me with implementing it. We have stuck religiously to that policy.ZD4HOWARDMr Howard—You have done it very well too.SJ4Mr TUCKEY—Thank you, Prime Minister. But the other side of that is that the Labor Party also went to the last election with that policy unchanged. They went off in Tasmania, they went off in New South Wales, they went off in Victoria, and in all the forest electorates they told people that they could trust this policy, that they would get regional forest agreements and that the Labor Party would support them.But what did they do? As soon as they got back here and sat in opposition they did a switch on these people. They went into the Senate and decided to kill off part of this policy, the regional forest agreement legislation. They did that to the detriment of everybody, and to the detriment of the forests as well, because it was the scientists who said that this was a good policy for the ecology of forests. In points 5.2 and 5.4 in this document they make the point that there has to be recognition of social factors, that it is a contributing scientific fact.But isn't it interesting that yesterday in this House when I raised these issues all that the Leader of the Opposition wanted to talk about was some five per cent of votes that he perceived he might win by backing down on this policy? Mr Speaker, this is typical of everything the opposition does. You, Sir, and I have been here a long time. We knew a time when, if either side of parliament had a policy, they were prepared to stick with it. We now have a policy vacuum in the opposition. They come to this parliament with nothing of substance. All they are doing is running around trying to pick up a few little votes, ignoring their natural constituency, and backing down on promises they made at the last election. Why didn't you tell people you were going to knock off the RFA system before the last election? That would have been reasonable.In closing, I want to come back to this whole policy issue. We have seen it all day today, we see it every day of the week—the negativity of the Labor Party. There is not one thing—be it this policy or anything else. The Leader of the Opposition is a man of some considerable dimensions in terms of his physical stature, but in the policy context he could crawl under a rug and not make a bump.62706270Beazley, Kim, MPMr BEAZLEYPE4BrandALP00—My question is to the Prime Minister. Prime Minister, you have seen the declaration form and you know there is a clear-cut point on it which requires disclosure of things such as directorships. `Anything else' is incorporated there, and I would have thought that would incorporate company secretaryships. How can you claim the member for Leichhardt inadvertently failed to declare his directorship when it is clear the member has misled this House, the Australian people and you, and are you completely satisfied that there are no other directorships on his part to disclose?6270Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—Can I say to the Leader of the Opposition that that claim would have some substance if the member had not disclosed his financial interest in the company. Quite plainly, the purpose of disclosure is to discover whether there is any potential conflict of interest. I would have thought that if you disclose your financial interest, your beneficial interest, then that is far more material than an office holding in the company. The reality is that this company was effectively owned by two people—the member for Leichhardt and another person—and my understanding is that they were essentially equal owners of the company. That was fully disclosed by the member.I would have thought that ownership of the company went more to the question of conflict of interest, because it goes to a beneficial holding rather than the office you hold in the company. Of course, he should have disclosed that he was a director and the secretary as well as being the beneficial owner of half the shares—of course he should have—but in assessing his behaviour and his bona fides I would take an entirely different view if he had neglected to disclose his beneficial interest. The fact that he disclosed his beneficial interest—that he told me and he told the Australian public that he owned half of this company—means that he is hardly pretending to me or to the Australian public that he has no interest in the company.In those circumstances, other than to apply the dictum that you were so happy to hand out when it suited you in March of last year would be completely unreasonable. If we live in a world where somebody who has quite honestly volunteered the fact that he is the half-owner of a company is to be hung because he did not contemporaneously say that he was a director and the secretary of the company, then I think you are substituting form and technicalities for substance. I am satisfied, on the information available to me, that the honourable member has behaved in a bona fide fashion. There is no evidence of a conflict of interest. There is no evidence that improper procedures were followed. There is no evidence that any pressure was exerted in order to win the contract. After all, the whole purpose of disclosure in this place is to avoid conflict of interest. That is the purpose of it. The purpose is to avoid conflict of interest. The man disclosed his beneficial holding. He told the world that he was a part-owner of the company. In those circumstances, I believe that he has behaved with honour and honesty.PE4BEAZLEYMr Beazley—Mr Speaker, I rise on a point of order as to relevance. The Prime Minister has not dealt at all with my question as to whether or not there are any other directorships he failed to disclose.10000SPEAKERMr SPEAKER—The Leader of the Opposition will resume his seat. That was an unreasonable intervention on the part of the Leader of the Opposition. The Prime Minister not only was responding to the question but had not in fact concluded his answer.ZD4Mr HOWARD—I say to the parliament that the whole purpose of these disclosures is to guard against conflict of interest. That is the whole purpose of them; they have no other point. Therefore, I would have thought that what really mattered was the substance. Yes, one can be critical of the member for Leichhardt, which I am, for not including the directorship and the secretaryship, but if the member for Leichhardt had also not included the fact that he was the half-owner of the company then he would be in trouble—and he ought to be in trouble in those circumstances. But that is not his situation. And in those circumstances, as I think the Australian people would want me to do, I will prefer substance over form; and I think the substance is on the side of the member for Leichhardt.CE4O'KEEFEMr O'Keefe—Watered down yet again! Watered down guidelines again!10000SPEAKERMr SPEAKER—I warn the member for Burke.62716271Thomson, Andrew, MPMr ANDREW THOMSONFB6WentworthLP10—My question is to the Minister for Employment Services. Does the minister have any knowledge of publicly expressed views on former labour market programs? Can the minister advise the House of the government's response to any such views? Further, what is the government doing to enhance programs like the successful Work for the Dole program?6271Abbott, Tony MPMr ABBOTTEZ5WarringahLPEmployment Services10—I thank the member for Wentworth for his question. I am aware of published criticism of the Working Nation program. In his recent book Open Australia the member for Melbourne said that labour market programs under the former government led:. . . to perverse outcomes, with some unemployed people forced to undertake inappropriate and even demoralising training. Labor MPs regularly encountered people who had done several courses and still had little chance of finding a job.This government is determined to do better, and that is why we have introduced the Work for the Dole program, to get away from the training for training's sake treadmill of Working Nation. While the Labor Party engages in mindless nitpicking and the politics of resentment, this government is getting on with the job.The Work for the Dole program is a success, but we are determined to build on that. We are determined to make a fine program even better. We want more community organisations involved. We want to give more participants a wider range of work experience. So last Friday I announced some changes to the way this program will be managed. We are moving towards a brokered model of managing the scheme. We are introducing community work coordinators to act as intermediaries between the government on the one hand and key community groups and participants on the other. In future, community groups wishing to host Work for the Dole participants will not have to tender themselves, they will simply approach a community work coordinator, and this should result in the possibility of shorter, smaller and more varied projects as well as the projects that are already operating.I am sure the House will be pleased to know that a survey of 3,000 Western Australian teenagers has shown that 80 per cent think that Work for the Dole is a good idea; only 16 per cent disagree with the idea. The survey also found that only one in 10 strongly believed the dole was a right and not a privilege. On this issue, Western Australian teenagers make a lot more sense than the Leader of the Opposition.62716271McClelland, Robert, MPMr McCLELLANDJK6BartonALP00—My question is to the Attorney-General. Does section 44(v) of the Constitution state:Any person who— . . . . . . . . . (v) Has any direct or indirect pecuniary interest in any agreement with the Public Service of the Commonwealth otherwise than as a member and in common with the other members of an incorporated company consisting of more than twenty-five persons:shall be incapable of . . . sitting as a . . . member of the House of Representatives.Attorney, have you sought advice on whether the Parliamentary Secretary to the Minister for Industry, Science and Resources is disqualified from sitting as a member by that section? If not, would you immediately seek such advice—10000SPEAKERMr SPEAKER—The member for Barton would be aware that he is in fact seeking a legal opinion—Opposition members interjecting—JK6Mr McCLELLAND—No, not at all. If I can repeat that paragraph, the question is: Attorney, have you sought advice on whether the Parliamentary Secretary to the Minister for Industry, Science and Resources is disqualified from sitting as a member by that section? If not, will you immediately seek such advice and table it in this House as a matter of the utmost urgency?10000SPEAKERMr SPEAKER—I will allow the question to stand.6272Williams, Daryl, MPMr WILLIAMS7V5TangneyLPAttorney-General10—I have not learned section 44(v) of the Constitution off by heart, but what the member for Barton read sounded pretty close to what I understand to be in it. It is not my practice to say whether I will or have sought advice, nor is it my practice—as is consistent with past attorneys-generals' practice—to provide advice unless the client who seeks the advice requests me to do it. I am not in those circumstances and I, therefore, have no further response to the question.62726272Hull, Kay, MPMrs HULL83ORiverinaNP10—My question is directed to the Minister for Sport and Tourism. Could the minister inform the House how the government's new international air services regime will provide a boost to tourism, particularly in regional Australia?6272Kelly, Jackie, MPMiss JACKIE KELLYGK6LindsayLPSport and Tourism; Minister Assisting the Prime Minister for the Sydney 2000 Games10—I thank the honourable member for her question. I know that she has a keen interest in tourism. Australia's tourism industry is one of the big winners from the government's decision to further liberalise international air services. In particular, the tourism industry will benefit from more flights, which means more seats, which means more marketing of those seats internationally, which means more competitive airfares and innovative new travel products.The new arrangements are also great news for the development of tourism in regional areas of Australia. We are looking at the number of tourists to Australia doubling in the next decade—that is, 8.4 million tourists arriving in Australia each year. It is good to see that we are taking some initiatives now to spread the benefits of that growth to our regional and rural parts of Australia. The increasing number of overseas tourists is looking to some of Australia's unique attractions, and many of these are found in regional Australia. This aviation decision builds on the government's initiatives to boost regional tourism, such as our regional tourism program extended to $16 million as well as our domestic tourism campaign, which is under way, for another $16 million.62726272Beazley, Kim, MPMr BEAZLEYPE4BrandALP00—My question is to the Prime Minister, and it goes to his code of conduct. Prime Minister, do you recollect that your code of conduct says:Ministers are required to resign directorships in public companies and may retain directorships in private companies only if any such company operates, for example, a family farm, business or portfolio of investments . . . Prime Minister, does not the company which Mr Entsch is associated with qualify under none of those circumstances? Is he, therefore, not in breach of your code of conduct? In that case, why don't you dismiss him?6272Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—He is not in breach, and I do not intend to dismiss him.62736273Barresi, Phil, MPMr BARRESIZJ6DeakinLP10—My question is to the Minister for Financial Services and Regulation. Minister, in March you ordered an urgent investigation into a certain type of fire door in response to concerns about the safety of consumers in high occupancy buildings. There are nursing homes in my electorate which might use these sorts of doors, so could the minister inform the House on the progress of this investigation?6273Hockey, Joe, MPMr HOCKEYDK6North SydneyLPFinancial Services and Regulation10—I thank the member for Deakin for his question and, in particular, for his concern about the nursing homes in his electorate. I am sure the nursing homes in the electorates of a number of members, particularly in southern Queensland and northern New South Wales, would be concerned. For only the seventh time since 1974 the Commonwealth is going to exercise its mandatory powers of recall, and it is going to exercise those under section 65F of the Trade Practices Act. Up to 4,500 fire doors are to be recalled from around Australia. The recall will have priority in nursing homes, hospitals and other buildings where the occupants need help to evacuate in the case of fire. These buildings are particularly located in southern Queensland and northern New South Wales.We have ordered the suppliers of the fire doors to identify buildings as a matter of urgency and replace or repair doors and bring them up to appropriate safety standards. The costs, which are significant in this case, are to be met by the suppliers. In this case we are determined to protect consumers. We will constantly use our Trade Practices Act powers to force recalls where in particular cases goods are provided that are a danger to the users of those goods. In this case the CSIRO seized three doors from the actual buildings where they were located and tested them. They failed to meet a one-hour standard—in fact, they were burnt through after only 15 minutes, which is an obvious concern to disabled people and elderly people, who may not be able to evacuate a building quickly. Therefore, we have ordered the recall. We expect action to take place immediately.ZD4HOWARDMr Howard—Mr Speaker, I ask that further questions be placed on the Notice Paper .Opposition members interjecting—ZD4HOWARDMr Howard—There were 20 questions.Questions to the Speaker627362736273Price, Roger, MPMr PRICEQI4ChifleyALP00—Mr Speaker, as you know, many members on both sides of the House are concerned at the plight of two Australian CARE workers, Pratt and Wallace. My question to you is: would you consider using your high office to sponsor a motion in this parliament that may be voted upon by all members, calling for the release of Pratt, Wallace and the Yugoslav national, which might be transmitted to the Yugoslav parliament?6273Mr SPEAKERMr SPEAKER10000PON/A10—I will consider the request from the member for Chifley. I should, however, point out that I have been impressed with the action taken by both the minister and his department in this instance, and I believe that is a view shared by all parliamentarians. The member for Chifley may not be aware but, in fact, I used the opportunity, when I had it, to speak directly with the Speaker of the Yugoslav parliament in order to use what influence I had at that level to get him to intervene on behalf of the aid workers. At the time we were being denied diplomatic access to them. We were subsequently granted diplomatic access, and I took the liberty of writing to the Speaker of the Yugoslav parliament expressing my appreciation for what I presumed to have been his intervention. I will further consider your request.62736273Crosio, Janice, MPMrs CROSIO7T4ProspectALP00—Mr Speaker, under standing order 150, would you please write to the Treasurer reminding him of, and requesting an answer to, question No. 465 that was placed on the Notice Paper by me on 8 March?6273Mr SPEAKERMr SPEAKER10000PON/A10—I will act on the member for Prospect's behalf.Matters of Public Importance6274627410000SPEAKERMr SPEAKER— I have received a letter from the honourable member for Lilley proposing that a definite matter of public importance be submitted to the House for discussion, namely:The failure of the Coalition-Democrat tax deal to adequately protect low and middle-income Australians from the adverse impact of the GST.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—15:18:006274Swan, Wayne, MPMr SWAN2V5LilleyALP00—It is my pleasure to propose this matter of public importance relating to the failure of the coalition-Democrat tax deal to adequately protect low and middle income Australians from the adverse impact of the GST—and I do so not just on behalf of the parliamentary Labor Party but also on behalf of the 58 per cent of Australians who reject the GST and the 30 per cent of Australians from the coalition who support the coalition but reject the GST. There is overwhelming public opposition to this tax. This is a tax we do not have to have, it is a tax that Australians do not understand and it is a tax that Australians cannot afford to pay.This is a debate that distracts us all at a vital time for this nation when there are fundamental things at stake which demand our attention. It is a debate that has gridlocked this parliament and poisoned our political climate. In the past week we have seen incursions by illegal immigrants and we have seen a dramatic erosion of our external trade account. But what has the government been doing? It has been playing with birthday cakes—the menu of John Howard's birthday cake. It need not be so.When the Prime Minister declared that this miserable, unfair, inefficient tax was off the agenda for all time, Australians believed him. We all recall him saying `never, ever'. Australians were entitled to have that trust honoured. But this man has the courage of his prejudices: he will pursue this unfair tax no matter what—irrespective of public opinion, irrespective of what all Australians say, irrespective of the third of coalition supporters who oppose the GST. This Prime Minister has forfeited all trust on tax reform. He must be reminded that he ruled this tax out for all time, and the public believed him. He has brought it back, the public oppose it and he continues.Also, the public believed the Democrats; they believed the Democrats who promised that no tax in the form of that which is presently proposed would ever, ever receive their agreement. The Democrats said that they would `keep the bastards honest'. What do we have? We have a bastard tax. That is what we have from the coalition-Democrat deal. We have a tax that nobody wants. The Democrats made 16 pledges to the Australian people and not one of those pledges has been kept—not even the pledge to completely exempt food. None of those pledges have been kept.This is a bit like the story of Little Red Riding Hood. Little Red Riding Hood wanders off to grandma's house. There we have grandma. Little Red Riding Hood comes in and says `Oh my, Grandma, what big ears you have'—and you can just see it now, `All the better to hear you with.' `Oh, what big eyes you have, Grandma.' `All the better to see you with,' says grandma. Then Little Red Riding Hood says, `What big teeth you have, Grandma.' And what does grandma, the Treasurer of this country, say? `All the better to eat you with, Little Red Riding Hood.'That is exactly what has occurred. Not one of those 16 pledges that the Democrats made to the Australian people—the pledges to `keep the bastards honest'—have been kept. When it comes to food, that is where we have seen the most dramatic departure from the Democrats' commitments to the Australian people. Over one-third of all food consumed by low and middle income Australians is still subject to the GST. If you are on a pension, if you are earning under $30,000 a year, one-third of the food that you consume will be subject to a GST; and 75 per cent of everything that you consume, if you are under $30,000 a year, will still be subject to a GST.That is the extent of the Democrats' departure from the commitments they gave to the Australian people. None of those commitments will be honoured. What we have is a coalition-Democrat deal that represents John Howard and Peter Costello's GST. None of the architects of this monstrosity—Peter Costello, Tim Fischer, Meg Lees—can ever again be trusted by the Australian people.If you want to find out the truth about this tax, you do not have to look at the Labor Party's analysis, you do not have to look at all the economic people in the universities; you can just look at what has been said by some of the reputable people who have rejected this tax. Senator Harradine said:Decisions we make now on this issue are not for the next three years; we are making decisions here that will affect generations. The question that I have to ask myself is whether I am going to be a party to imposing an impersonal, indiscriminate tax on my children, my grandchildren and their children for generations to come.He was right. And so were the tens of thousands of people around this country who wrote and faxed and emailed Senator Harradine with their opposition. No doubt the `assistant treasurer' in this government, Senator Lees, would say that that was the result of a Labor Party phone tree. What it was the result of was an overwhelming revulsion at the stench of the deal that has been done by the Liberal-National-Democrat coalition.Let us look at what all the churches have had to say, let us look at what all the charities have had to say, let us look at what all the community organisations have had to say. An ACOSS media release states:The package will . . . widen the gap between rich and poor, and the whole nation will suffer from greater division between the haves and have-nots.. . . . . . . . .Food is exempted from the GST, but the definition is too narrow.Earlier this year, when the Democrats agreed with ACOSS on tax reform, Senator Lees had this to say about a statement from ACOSS:I'm delighted to see the statement echoes the Democrats' position that raising $5 billion by taxing food and using it to fund tax cuts for the well-off is quite simply immoral. Absolutely! Meg Lees said that the deal she signed up to with John Howard and Peter Costello was completely immoral. Let us just not dwell on ACOSS, which represents all the churches, all the charities and all the community organisations in this country. Let us have a look at what the gutsiest community organisation in this country, the St Vincent De Paul, has had to say about the GST:We will enter the next millennium having lost the opportunity of providing a just and equitable Australia by enshrining a system that will provide an unegalitarian and unfair Australia thus locking millions of Australians, as has been done in other countries, into a cycle of poverty. The myth of a "fair go for Aussie battlers" will become another casualty in our search for what we are told is "good for the economy".What has the government's response been? All we have had is the K-Mart Treasurer out there laughing about birthday cakes at the Prime Minister's 25th anniversary. He was chuckling about the fact that we will have to legislate for cakes, that we will have to legislate for bread recipes. All of this is very funny. The pictures said a thousand words. Remember the stony look on the Prime Minister's face when the Treasurer was lampooning the deal that had been agreed to. That is because the Prime Minister thinks that Meg Lees is a far better ally for him in this Liberal-National-Democrat coalition than Peter Costello. The stony look from the Prime Minister at the talk about the cake said it all. What we have got is a completely nonsensical approach to this tax. Where is the simplicity? All that is left is the stupidity and the unfairness.Let us look at some of the unfairness. As I said earlier, up to a third of all the food that is consumed by people on incomes of less than $30,000 a year will still be subject to a GST. Seventy-five per cent of all the expenditure by pensioners and low income workers will still be subject to a GST. Of course, the Democrats would have us believe that that was not the case. The Democrats have said that 80 per cent of food is GST free. Unfortunately, 80 per cent is not 65 per cent. So low income Australians are really going to bear the burden of that component of food which is still taxed.We have evidence from the retailers association that, as a result of the compliance nightmare, the price of food will rise again for those items that are not subject to the GST. So the Democrats so-called big win on food is already looking very shaky. The fact is that battlers in this community—the government does not talk about battlers anymore—are going to be paying the GST on all of the essentials of life. They are going to be paying it on the electricity account, the Telstra bill and the insurance bill. That is where people are going to get slugged. That is where their standard of living is going to go down the tube. That is what we know about the nature of their deal.We also know that it is going to be particularly punishing for families. Families with children will be particularly badly hit, because families with kids spend much more on housing, energy, clothing and household services. They are the items that are really going to take that big whack out of the family budget. The ABS household expenditure survey reveals that 75 per cent of the budgets of low income earners and families will be hit by the GST. Families with three or more children spend something like $98 a week on housing costs compared with couples without children, who spend just $76 a week. Such families spend $23 a week on energy costs compared with couples, who spend just $16, and so on. Families with children are going to have their standard of living substantially eroded.So for the Prime Minister and other ministers to come in here and use pro-family rhetoric is simply obscene, because every step they take sends families backwards. It is two steps forward, five steps backwards—constantly eating away at the standard of living of families. Even with the Democrats' changes, a family with three children earning $30,000 a year gets just $16 a week in tax cuts compared with a couple earning $100,000 a year who get $60 a week. This means that children born into a family earning $30,000 are worthy of just a quarter of the tax cut of children born into a family earning $100,000. That is how obscene these new tax scales are.The so-called family package is nothing more than an attempt at compensating for an unfair GST. What do we find in that package? We find that the government calculates that the GST cost of a child is 30c a week extra. That is all that we get from this government when it comes to the importance of helping children in families. On top of that, parents will pay the extra tax on haircuts, school books, video hire and so on.When we look at this Liberal-National-Democrat deal, the deal provides only $1 of every extra $5 in additional expenditure directly in the form of additional compensation, and families get just seven per cent of that total additional compensation package. So you can never say that, with this package, families were a priority of the Democrats or the Liberals or the Nationals. Of course, the package also particularly penalises dual income families. Children in families with one child with one income earning $50,000 a year get $61.50 a week while children in dual income families earning the same amount—that is, $50,000—get only $27 a week. That is the extent of the social engineering we are getting from this government.What should be occurring is that people should be getting assistance on the basis of need, not some social judgment made by the government. Why is one group of children worth half of what the other group is worth? That is simply very bad social policy. It will also have very perverse results on a woman's decision to work. It will build a whole new raft of poverty traps which will disadvantage many two-income families where, frequently, the second income is relatively minor but is absolutely essential so that that family can survive and aspire to do better for themselves and for their children.That now brings us to charities, because the one thing you can guarantee from this package is that poverty will rise. It will build two Australias. It will deeply entrench poverty in this country which the previous Labor government had worked to get down. The latest NATSEM report indicates how much Labor did to redistribute income in this country to ensure that people got a better go at the lower end. What this package is going to do is push those people much further down, and that is the whole purpose. The thing about this package is that it is very strong in taxing the weak and very weak in taxing the strong. The end result of this package is going to be a redistribution of wealth from the bottom to the top.This is a program which has really been developed by the radical rich. It is nothing more than a transfer of the tax burden to the few at the top from middle and low income earners. What the conservative parties and their new partners, the Democrats, have really constructed here is not tax reform; it is basically tax deform. They have deformed the tax system, and they have done it with the very deliberate intent of redistributing all of the benefits from the bottom to the top.This government simply believe that the person who is in the ritziest restaurant in town washing the dishes should be paying the same amount of tax as the person who delivers the goods in the truck and the same amount of tax as the millionaire diner sitting at the swankiest table in the restaurant. At the end of the day, a GST is simply a flat tax which pays no heed to capacity to pay. Via that mechanism, they are on about redistributing wealth from the bottom to the top. As we have said on many occasions before, when you look at this government's policies in social security, in education and in labour market reform, they have one favourite minority—the wealthy. (Time expired)15:33:006277Truss, Warren, MPMr TRUSSGT4Wide BayNPAgriculture, Fisheries and Forestry10—There is nothing the Labor Party hates more than a good deal for the poor, a good deal for Australian families, a good deal for all Australians. This new tax package is not just about compensation; it is about a bonus—a social bonus for all Australians. It is a tax package that provides benefits to all sectors of the community but particularly benefits to those who are on low incomes—to the pensioners, to the welfare beneficiaries. And sitting opposite are a group of people who are about to vote against it. They are about to become the first political party in Australian history to vote against a real increase for pensioners. They are trying to vote down a four per cent pension rise from 1 July 2000. Is this a group that cares for the poor? They invoke the name of St Vincent de Paul and then try to vote down a pension rise.This is supposed to be a matter of public importance, but the member for Lilley chooses to use the time to tell fairytales. In fact, almost the whole of his address was a fairytale there was so little element of truth associated with it. He used his time to tell fairytales about what the processes might be and what the real effects of this package might be. But the sad part about this whole tax debate has been the total irrelevance of a party that claims it is the alternative government. In fact, it has so forfeited that role that a small number of people in the other place have become the effective opposition. A small number of people in the other place are engaging themselves in the tax debate while the Labor Party stands aside in the grandstand.I thought it was rather interesting that in the very first question today in question time the Labor Party asked about the effect of the GST on a seat in the grandstand. Of course, they would be very interested in the effect of the GST on a seat in the grandstand because that is where they have been through this entire tax debate. I might add that they have not even been in the front row of the grandstand. They have not even got into the front row of the grandstand. They have not got into the corporate boxes. They are right up in the terraces sitting under the umbrella sheltering from the rain with no friends. They are so irrelevant, so out of the TV picture, right up there on the terraces because they have nothing to say about the tax debate. They have no contribution to make. They are talking about the flower decorations while we build the new economy.They are talking about trivial matters. They are trying to nitpick on matters of comparatively limited significance while failing to make any kind of an attempt to capture the vision of what is going to happen when we build a new tax system for the people of Australia. Labor have lost their opportunity. I was interested to hear the member for Lilley talk about St Vincent de Paul and comment on the lost opportunity. Indeed, the lost opportunity was the lost opportunity the Labor Party had to participate in a relevant way in this important debate. In this debate that will shape the future of our national tax system, Labor prefers to sit in the grandstand in GST-free seats, because that is where they want to be—onlookers playing no real part.Even when the honourable member for Lilley got his grand opportunity to make his landmark speech—after claiming to make the only contribution to the Leader of the Opposition's new vision for Australia with the jobs bonus, something that would have contributed absolutely nothing towards getting people back into work, the member chose an out of the way stage at the Evatt Foundation—his passion, his vision for the future was to tell us that Labor's social welfare policy had failed and he was thinking of this great new idea called mutual obligation. Whenever I have heard the Minister for Employment, Workplace Relations and Small Business talk about mutual obligation, Labor have said what a shocking horror it is.Mr Swan interjecting—10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Nehl)—The member for Lilley, stop sounding off.GT4Truss, Warren, MPMr TRUSS—The Lord Mayor of Brisbane won't support mutual obligation, but the member for Lilley has deserted his Labor colleague in Brisbane and he is now talking about mutual obligation in the welfare system. Maybe he has at last found the key to some new Labor reinvention of their attitude towards social welfare. Sadly, Labor have been marginalised absolutely—up in the grandstand, taking no interest whatever in this whole debate.It is a tragedy that a party that has over the years always prided itself on trying to be the party for the battler—the party that wants to look after the poor, those who are disadvantaged—has been well and truly trumped by a caring and compassionate government that consists of the Liberal and National parties. The coalition has delivered and will deliver, with the benefit now of an agreement from one of the minor parties in the other place, to the pensioners and battlers of Australia a new tax system that will provide real benefits to all Australian taxpayers.Every Australian taxpayer will pay less tax. Over 80 per cent of Australian taxpayers will pay 30 cents in the dollar or less. That provides real incentive for people to earn that extra dollar to be able to care better for their family, to ensure that the benefits of their labours return to their own lifestyle. When St Vincent de Paul and others have been critical of benefits provided to low income earners they have not been, like the Labor Party, prepared to tear down the benefits of encouraging people who want to go out and work and to keep some of those benefits for themselves. It is a very clear statement of fact over the years that you do not benefit the poor by punishing middle income earners and the rich. By encouraging and providing incentives across the board, you provide the rewards and incentives that are necessary to build a stronger economy. Governments do not create jobs. Governments do not create wealth. That is done by the labours of Australians, by those who are prepared to invest and expand. You only encourage that kind of investment and expansion when you have a tax system that rewards effort, that rewards and encourages those people who are prepared to put in that extra effort.Our system does not just benefit the workers—those with jobs, those with incomes, those with medium or higher incomes. They certainly benefit, but it also provides an important social bonus for the poor. We should not talk about the four per cent increase to pensions as being compensation. It is more than compensation. It provides a two per cent indexed real bonus for pensioners, a real improvement in their standard of living. Is that what the member for Lilley is condemning—an improvement in the standard of living for pensioners? Is the member for Lilley also condemning the bonuses that we propose to provide to self-funded retirees, to others who are poor and who have set money aside in their working life for their own retirement? They are going to receive the benefits of this package as well. Are those the sorts of people that the Leader of the Opposition chooses to condemn?The other interesting point that the Labor Party always want us to forget in this taxation debate is that they are experts at putting up taxes. They are experts at inventing new taxes. These are the people who told us faithfully there will be no capital gains tax and then turned around within a month or two and introduced the toughest capital gains tax in the world.Honourable members interjecting—10000DEPUTY SPEAKERMr DEPUTY SPEAKER—Order! The members for Dawson, Richmond and Grayndler will not interject when they are not in their places.GT4Truss, Warren, MPMr TRUSS—These are the people who told us we would have l-a-w tax cuts and then revoked them at the first available opportunity. These are also the people who delivered at the same time the biggest increase in indirect taxes in the history of our nation through Labor's wholesale sales tax system. When they introduced all of those tax increases, what was their compensation package? What did they do for the poor? What did they do for the disadvantaged? Absolutely nothing. These are the poor people who had to pay all these tax increases and got absolutely nothing. There was no four per cent increase in benefits up-front. There were no increases in benefits for the poor under Labor. They could not care less about this group of people.They tried to scare and frighten pensioners. The member for Lilley is a champion at that, running around the bush trying to whip up a frenzy of concern instead of trying to educate people to give them the opportunity to understand the real benefits this package will provide to all. We are offering not only a four per cent increase in pensions, not only bonuses to the self-funded retirees and others who are put aside, not only massive increases in family benefits, not only the new benefits that will be provided across the whole social welfare system, but also the benefits that flow through to the nation as a whole—rich and poor—from having an economy that works more effectively, where there is more investment, where there are more jobs. The best thing you can always do for an unemployed person is to give them a job. Yes, we want to make sure their living standards are not disadvantaged, and this particular tax package will certainly ensure those incomes are protected. In addition to that, this package offers a new taxation arrangement for Australia that will reward investment, that will encourage people to seek out the jobs that are available and to take the best possible advantage from them.I would also like to mention some of the other benefits included in this package for those who are less well off. There will be increases in the income and assets test free area, which will mean something like 45,000 additional Australians will qualify, for the first time, for a part pension and the benefits that are associated with that. Labor wants to vote against giving those 45,000 people access to the age pension and other benefits—45,000 people whom Labor does not want to give benefits to. What about the others who will get the benefit of the increases in the tax rebate to pensioners and low income earners? What about the benefits under the aged person's savings bonus? That is a tax-free benefit up to $1,000 for people over 60.What I was amazed about with the opposition in their absolute frenzy and annoyance that the Democrats have trumped them in getting involved in the tax debate was their criticism that somehow or other this deal was unfair. It is a deal that actually took the GST off standard items of food—so reducing the potential rise in the cost of living as a result of the new package—but it kept the entire compensation package in place. Is that unfair? Is it unfair to give pensioners an even better deal? It seems to be for the member for Lilley. He does not like good deals for pensioners; he likes better deals even less it seems. These benefits flow through to people and will certainly be appreciated by the people of Australia from 1 July.Mr Albanese interjecting—GT4Truss, Warren, MPMr TRUSS—I was also interested when the Leader of the Opposition and, for that matter, the member for Lilley made comments about the impact of the GST and referred to the Australian Bureau of Statistics household expenditure survey. I will put aside the fact that, when they were in government, Labor considered this survey to be worthless and of no value at all. Now they are in opposition, they are happy to quote from the survey. The member for Lilley went through the survey and identified that three-quarters of the budget of pensioners would be subject to GST and only about a quarter of it would be GST free.Mr Albanese interjecting—10000DEPUTY SPEAKERMr DEPUTY SPEAKER—The member for Grayndler's deposits of goodwill of the chair are rapidly diminishing.GT4Truss, Warren, MPMr TRUSS—What the member for Lilley always chooses to ignore is that many of these items that will have GST on them currently carry the wholesale sales tax, often at rates of up to 32 per cent. In fact, there will be some items that currently have wholesale sales tax on them that will be GST free in the future. Certainly the system where items which a pensioner has to buy every week that currently attract a wholesale sales tax—Labor's favoured tax option with up to 32 per cent tax on pensioners and welfare beneficiaries—goes. Labor like to ignore that fact, unless they are going to vote to retain those taxes as well. Presumably so. They like to have these sorts of regressive taxes that affect pensioners in this way. The member for Lilley refuses to acknowledge that fact in assessing the real impact of the new tax package on pensioners and welfare beneficiaries.So this indeed is a matter of public importance for the people of Australia and for those who are poor and disadvantaged in our community. They want an improvement in their standard of living. They want the opportunity to enjoy the benefits that our society can offer. This tax package offers that opportunity, and it is time the Labor Party supported it. It is time they supported a four per cent increase in pensions. It is time they supported the benefits for self-funded retirees. It is time they supported the benefit, for low income earners. It is time they supported the benefits for our economy to deliver a much better Australia for the future. (Time expired)15:48:006280Plibersek, Tanya, MPMs PLIBERSEK83MSydneyALP00—It seems that the Prime Minister's great tax adventure has come undone. The shadow minister for family and community services was put in mind of the story of Little Red Riding Hood. I was reminded of another story, and that was J.R. Tolkien's story The Hobbit , where a motley collection of dwarves and hobbits go on an adventure to find a magical ring. We are about at the point of the story where the hobbits get lost in the murky forest of Mirkwood and the spiders are rapidly approaching.The Australian public know that this tax cannot be made fair and it cannot be made popular. For that reason, the Australian Newspoll figures today show that about 33 per cent of voters support the Democrats-government GST deal, while 58 per cent of Australians oppose it. The deal is opposed by 58 per cent of the people, and that is because they understand the details of this tax now. They understand that the Democrats' deal will not protect them from the adverse effects of the GST. They know they will not be protected, and that is why 19 per cent of Australians have shifted their support for the GST since May.What is the result amongst the people who have negotiated this deal? They are very busily blaming each other for the deal. They cannot blame each other fast enough. It was very interesting to read Glenn Milne's piece this week. He pointed out that Peter Costello was the first to distance himself from the deal. Milne reported that his decision was to:. . . distance himself publicly for 24 hours last Monday .. serving notice that this was the PM's compromise—not his.Then we see that John Howard has been telling others that, if the coalition loses the next election, it is not going to be his fault. No, it is not going to be his fault, having negotiated the deal; it is going to be Peter Costello's fault.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Nehl)—I think you mean the Treasurer's fault.83MPlibersek, Tanya, MPMs PLIBERSEK—It is going to be the Treasurer's fault because he is the person responsible for implementing the deal. The Minister for Employment, Workplace Relations and Small Business has also made it very clear that he is not associated with this deal. In fact, he has given the Prime Minister the kiss of death by publicly acknowledging the Prime Minister's very central role in negotiating this deal. Milne reported Reith as saying that the man:. . . who has provided leadership in this issue, doggedly, persistently, with determination for over 20 years is none other than the Prime Minister.They cannot blame each other fast enough. The Premier of Victoria, Jeff Kennett, has an election coming up later this year and he cannot blame the federal government fast enough either. It is certainly not going to be Jeff Kennett's GST. He is also suggesting amendments and criticising the onerous implementation measures that small businesses will face.Senators Stott Despoja and Lees are also very busy blaming each other for the breakdown in the Democrats' united front on a GST, but the Australian public know who will be to blame when this GST is implemented. They know that the government and the Democrats will share culpability for this new tax. The government are culpable because they are the ones who wanted this unfair tax to start with. The Prime Minister has pursued his obsession for over 20 years, and the government are the ones who have undertaken to deliver huge tax cuts to high income earners at the expense of ordinary Australians.The Democrats are culpable because they made 16 pledges to the Australian electorate before the last election and every single one of them has been broken. They have broken their pledge on food. They have broken their pledge on books. They have broken their pledge to protect the environment. They have broken all of those pledges. They had a strong negotiating position when they went into negotiations with the government and they have given away that strong negotiating position. Australians will blame them when this tax is implemented, and they will blame them when the environmental effects of the diesel fuel measures come into effect as well.What is particularly disappointing about the Democrats' deal is not only that they negotiated away, they gave away, their position of strength but that they are claiming victories for things that are not victories at all. They are claiming victories for things that the government was going to do anyway. It is certainly not a good example of negotiating from a position of strength.While they have been very busy feeling important in their negotiations with the government, it is good to see that they have kept their priorities right. I was pleased to read a piece by Dennis Shanahan in the Australian which said that the Democrats want to reassure Australians that they can enjoy their favourite breads, from focaccia to Turkish pide and cheese topped rolls, without paying a GST! Really, they are giving away so much and yet focusing on the details of whether Australians can eat focaccia and pide.I am sure that many people in my electorate will be pleased that their pide will not be taxed, but really it is pretty poor compensation for the fact that education will be taxed, that many health products will be taxed, that gas, electricity, books and insurance—all of those necessities of life—will be taxed. The public transport that most of my electors take to get to work will also be taxed, and that is pretty poor comfort for the fact that they will be able to eat tax-free pide. We have to really look at who the real losers will be from this tax.Opposition member interjecting—83MPlibersek, Tanya, MPMs PLIBERSEK—That is right. The shadow minister interjects that aromatherapy is also going to be GST free, and that is a great comfort as well.The compensation package negotiated by the Democrats is simply not good enough. At the Press Club a few months ago, Senator Lees said that the compensation package that Senator Harradine was speaking about was a `paltry, inadequate sum'. This `paltry, inadequate sum' is twice what the Democrats have finally settled for. A two per cent increase in social security benefits will absolutely not be enough to compensate those people who rely on social security, but it also will not compensate those many people on low incomes who do not have access to social security, including new migrants, unemployed young people between 18 and 20, mature aged unemployed people with superannuation assets, self-employed people without children, workers compensation recipients, people with disability or chronic illness and Australians in rural and remote areas, especially remote Aboriginal communities.It is worth bearing in mind not only the sorts of prices that these communities are already paying for fresh fruit and vegetables in particular but also many of the things that will be taxed under the GST, many of the types of food that will be taxed. Of course, full-time wage earners and self-employed people on very low incomes who also are not beneficiaries of social security benefits will pay this major new tax on all the necessities of life.The tax breaks are still skewed to high income earners. All taxpayers with incomes over $60,000 will still gain that tax cut of $62 a week. The Democrats are congratulating themselves while forgetting that many of the poor people who are included in the list that I have just mentioned will still pay this extra tax on all the necessities of life.The implementation of this tax is going to continue to be a nightmare. The Democrats have done nothing to make this easier—in fact they have made it even harder. Small businesses will certainly not thank the Democrats for the complication that they have added to this tax, particularly those corner shops that will be taxing some of their products and not taxing others. It is going to be an absolute nightmare for them. I do not see how the Democrats can even think of congratulating themselves for this absolute dog's breakfast of a tax that they have negotiated with the government.ACOSS, St Vincent de Paul and other organisations have pointed out that this tax will definitely not benefit low income earners. ACOSS have said that `the Senate should not pass this tax in its current form'. They have said that all taxpayers with a taxable income over $60,000 still get their $62 a week tax cut, thus widening the inequality. St Vincent de Paul have also pointed out many of the inequities in this new tax.My final word to the Democrats is: you cannot make a silk purse out of a sow's ear. It is not too late. You are able to change your minds on 21 June and walk away from this tax. There is no way that this tax can be made fair. There is no way that this tax can be made popular. The Democrats should realise the error of their ways, realise that they have been done over by the masters, realise that they have been negotiated into a corner, and they should walk away on 21 June.15:58:006282Elson, Kay, MPMrs ELSON6K6FordeLP10—This so-called matter of public importance really is the ultimate act of desperation and hypocrisy by the Labor Party. Having sat on the sidelines, they are now frantically trying to write themselves into the tax reform equation. So what do the ALP do in times of crisis? They reach into their well-worn bag of tricks and dig out the old class warfare line. No amount of compensation—adequate, generous or over the moon—would have prevented the Labor Party from raising this MPI today. It is their standard fall-back to say that some Australians will be better off at the expense of low and middle income earners even when they know it is not true. The fact is that nothing could be further from the truth.The original tax package, which the Australian people endorsed last October when they voted the Howard government back into office, provided adequate protection for low and middle income earners. That is proven by the fact that not one single bit of evidence was brought before the Senate inquiry into the GST that anyone would be worse off under our package—not a single fact, and this is the case. Sure, there was a debate about how some people may be more better off than others, but the fact is that, even with our original package, no-one was going to be worse off.I know it is a difficult concept for Labor, but the new tax package was actually about collecting less tax overall from the Australian people than is currently the case. After years of Labor continually increasing taxes when they were in office—and I know this is a difficult concept for them to get their heads around—we are actually going to collect less tax. So, under the original package, low and middle income Australians, along with all other Australians, were actually going to have more money in their pockets.The new package negotiated with the Democrats goes even further to provide protection for low and middle income earners. It provides all the same tax cuts for the low and middle income earners, as well as increases in pensions and benefits, no GST on most food items, and a whole range of other positive benefits. So, if the Senate inquiry failed to find that anyone was going to be worse off under our original package, this new package absolutely guarantees an even better deal for low and middle income earners.I could go on at length about the many ways in which the new tax package provides not only protection for low and middle income earners but real lasting benefits. But time does not permit me to list all the improvements and, in any case, I doubt if anyone on the other side would even be listening. What I want to ask is: how on earth does the member for Lilley have the gall to come into this place and play politics with such an important issue? I suppose the Labor Party are running out of stunts with chicken and soup. That is about the extent of their imagination and vision when it comes to the important issue of tax reform in the 21st century. I will bet that the discussion today in their caucus meeting went something like this: `Let's pull a few political stunts to get the journalists going. We'll trot out the old class warfare line.' It is such a predictable game plan for the ALP and it is getting quite boring.As someone who raised eight children under the 13 years that Labor were in office, I am surprised that they have the nerve to come into this place and pretend to be champions of low and middle income Australians. I can tell them that, under Labor, low and middle income earners, particularly families, pensioners and self-funded retirees, were squeezed from every direction. They talk about fairness and compensation now. How fair was it when, before the March 1993 election, they promised Australian people no new taxes and then, in their very first budget in 1993, they increased every single wholesale sales tax—UNKNOWNGovernment membersGovernment members—Shame!6K6Elson, Kay, MPMrs ELSON—It definitely was a shame. Ten per cent went to 12 per cent, 20 per cent went to 22 per cent, 30 per cent went to 32 per cent, and so on. On top of that, they increased petrol tax—and it was proportionately higher for low and middle income earners, many of whom drive old cars fuelled by leaded petrol. And on top of that, they did not deliver the l-a-w tax cuts which they promised. So, by way of bracket creep, they clawed more money from low and middle income earners. And where was the protection? Where was Labor's compensation for low and middle income earners? There was not a scrap; not one single cent.What the Australian public got from the Labor government, as well as their tax increases, was a massive blow-out in the government's debt and a horrendous ongoing interest bill. In fact, in their last five years, the ALP increased government debt from $16 billion to $96 billion. The interest every year, on that $96 billion alone, is a whopping $9 billion. And every Australian pays for Labor's debt—low and middle income earners more than most. Labor left us with a $9 billion bill, for interest alone, every year. That means $9 billion less for hospitals, roads, support payments and social programs—every year from now until forever, as far as the Labor Party were concerned.It is only the coalition government, through responsible economic management, that has begun to pay back Labor's debt. We have, remarkably, turned the Keating-Beazley $10 billion budget black hole into a surplus of over $5 billion, so we can tackle the debt and reduce the crippling interest payment every year. But the ALP even tried to stop us doing that. After our first few budgets, they decried our reducing the deficit and bringing in a surplus. They said it was not necessary. As always, they were obstructionist and irrelevant. If we had followed Labor's path of debt and deficit, where would Australia be in the wake of the Asian financial crisis? A few things are certain: we would not be the fastest growing economy in the world right now, at 4.8 per cent; Australian families would not be enjoying the enormous benefits of the lowest home loan interest rates in over 30 years; unemployment would not be at its lowest level in nearly 10 years; and we would not be able to afford the many necessary compas sionate social programs that this government continues to deliver.We are determined to continue to deliver our promises of tax cuts for low and middle income earners. Let us be clear about this: in opposing this package, Labor are opposing the largest reduction in personal income tax in Australia's history. In opposing this package, Labor are telling farmers and all Australians living in regional and rural areas that they must continue to pay enormous transport costs. And as someone who represents the regional and rural townships of Beaudesert and Boonah, I know that the single biggest concern farmers and business people in these areas have is the transport costs that they must incur, along with the income tax that they pay.It seems to me that everyone in Australia can see that Labor's taxation system is a mess. The personal tax system robs people of the incentive to work harder—and takes too much from low and middle income earners. The sales tax system was designed in the 1930s, and it is a complex, ramshackle disaster. Everyone accepts that tax reform is the next logical step towards securing Australia's future responsibility—everyone, that is, except the Labor Party. The sad thing is that, deep down, Labor know that we are doing the right thing. But they are not prepared to say it, because they think they can win a few votes by opposing us.My electorate of Forde covers many low income areas. I have lived, worked and raised my family there for the past 25 years. My constituents recognise that we need a fair tax system to take us into the 21st century. The Democrats also realise this, and I congratulate them for their actions in putting the national interest first. I can assure Meg Lees that she has gained respect from mainstream Australia.83BMAYMs May—The real opposition.6K6Elson, Kay, MPMrs ELSON—Thank you. She has gained respect particularly from the people in my electorate of Forde for her commonsense approach and her willingness to work with the government to make positive achievements. It is such a stark contrast to Labor's approach—as this ridiculous MPI today testifies.I would like to cite just one final example of why the Australian Labor Party have absolutely no credibility when it comes to pretending to champion the cause of low income people. Under Labor's economic mismanagement, home loan interest rates hit 17 per cent, which forced many low and middle income earning Australian families to either take a second mortgage or sell their homes. I know how this felt, because I was one of the many Australian residents who were forced to take out a second mortgage at that time. Like many Australians, I continue to pay for Labor's failed approach. It just astounds me that Labor fly in the face of all commonsense and continue to oppose every single sensible plan of this government. It is clear they have not learnt from their mistakes.Even before our tax package is put into place, there are reports that Labor will make political mileage out of promising to exempt many more things from the GST. Not only will this make this system more complex, but we have to ask: how much will it cost and where will the money come from? There are only two ways: by raising other taxes or running up more debt. Going on Labor's track record, it will probably be the worst possible combination of both. (Time expired)10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Jenkins)—Order! The discussion has concluded.Committees6284628462846284Nehl, Garry, MPMr NEHLAE4CowperNP10—I present the report of the Selection Committee relating to the consideration of committee and delegation reports and private members business on Monday, 21 June 1999. The report will be printed in today's Hansard and the items accorded priority for debate will be published in the Notice Paper for the next sitting.The report read as follows—Report relating to the consideration of committee and delegation reports and private Members' business on Monday, 21 June 1999Pursuant to standing order 331, the Selection Committee has determined the order of precedence and times to be allotted for consideration of committee and delegation reports and private Members' business on Monday, 21 June 1999. The order of precedence and the allotments of time determined by the Committee are shown in the list.COMMITTEE AND DELEGATION REPORTSPresentation and statements1 FOREIGN AFFAIRS, DEFENCE AND TRADE—JOINT STANDING COMMITTEE: Report on military justice procedures in the Australian Defence Force.The Committee determined that statements on the report may be made—all statements to be made within a total time of 15 minutes.Speech time limits—Each Member—5 minutes.2 ENVIRONMENT AND HERITAGE—STANDING COMMITTEE: Review of the Department of the Environment's annual report for 1997-98.The Committee determined that statements on the report may be made—all statements to be made within a total time of 20 minutes.Speech time limits—Each Member—5 minutes.PRIVATE MEMBERS' BUSINESSOrder of precedenceNotices1Mr Bevis to present a Bill for an Act to amend the Workplace Relations Act 1996 to ensure that leave for participation in activities as a member of the Australian Defence Force Reserves be one of the matters which can be taken to the Australian Industrial Relations Commission for conciliation or arbitration.2Mr Ripoll to move:That this House:(1) notes the importance of food labelling in providing consumers with accurate nutritional information;(2) recognises that food labelling regulations must contain enough information so that consumers can be confident a product is good value for money, meets their health and nutritional standards and falls within their cultural and religious requirements;(3) recognises that nutritional and dietary related illnesses are matters of public health;(4) expresses concern at the Howard Government's deregulation of food labelling controls;(5) condemns the Howard Government's failure to acknowledge and respond to the level of community anxiety over food labelling deregulation; and (6) calls upon the Howard Government to reverse its decision on food labelling deregulation, work towards greater protection and information for consumers and maintain the health department's role in regulating nutritional and dietary matters.Time allotted—remaining private Members' business time prior to 1.45 p.m.Speech time limits—Mover of motion—10 minutes.First Government Member speaking—10 minutes.Other Members—5 minutes each.The Committee determined that consideration of this matter should continue on a future day.3Mr Neville to move:That this House:(1) acknowledges the necessity of preserving the sustainability of the Australian fishing stocks;(2) recognises the economic potential of quality seafood exports;(3) commends the industry for its work on by-catch reduction devices (BRDs) and turtle exclusion devices (TEDs) and the protection of nursery grounds;(4) acknowledges the value of the vessel monitoring system (VMS) as a cost-efficient method of vessel location and crew safety and especially of regulating closures by strategic area locations rather than by time; and(5) calls for sanity and equity in balancing the protection of the marine environment and the legitimate expectations of fishermen, their families and those communities reliant on them.Time allotted—30 minutes.Speech time limits—Mover of motion—10 minutes.First Opposition Member speaking—10 minutes.Other Members—5 minutes each.The Committee determined that consideration of this matter should continue on a future day.4Ms O'Byrne to move:That the House:(1) draws to the attention of the Government the vital role that the Wheat Freight Subsidy plays in Tasmania in underpinning up to 1600 jobs in the baking, chicken, stockfeed and pork sectors; and(2) calls for the Government to extend the Wheat Freight Subsidy Scheme for a further three years on a calendar year basis to provide essential industry security. Time allotted—remaining private Members' business time.Speech time limits—Mover of motion—10 minutes.First Government Member speaking—10 minutes.Other Members—5 minutes each.The Committee determined that consideration of this matter should continue on a future day.Bills6286r811Billsr812Billsr813BillsBills6286Debate resumed from 3 June, on motion by Mr Hockey:That the bill be now read a second time.16:09:006286Baird, Bruce, MPMr BAIRDMP6CookLP10—I rise to support the A New Tax System (Closely Held Trusts) Bill 1999 and cognate bills. I note that the shadow minister has indicated that the opposition will be supporting the bill as well, and so it should. The reform of the trusts legislation is an important part of the overall reform of the taxation system. I would certainly congratulate both the Prime Minister and the Treasurer on their far-reaching reforms of the overall tax system—the most significant tax reforms we have seen since Federation and certainly the most significant we have seen in this chamber. Through this legislation, the government intends to eliminate the unfair advantages for those who use this particular type of tax approach, while at the same time respecting the role of trusts as well-used vehicles for asset protection and holdings by farmers, small business and others in the community.In the public debate, trusts have been characterised by the Labor Party as being a mechanism for the very rich. The reality is that they are widely used by small business and professionals as well as investors in listed property trusts. Likewise, there are many legitimate reasons why closely held trusts should be used and why they contain multiple trusts. It is clear, however, that there has been a significant growth in the number of trusts and that a certain number of these trusts and that multiple trusts are being used to give individuals an unfair tax advantage or to make it difficult for the Australian Taxation Office to piece together the trail of distributions.In 1996-97 there were 427,431 trusts lodged in Australia, up from 331,000 in 1993-94. The number of companies has also increased over this period but not at the same rate. The Australian Taxation Office has stated that the relative rates of growth of trusts and companies could reflect the different tax treatment of both trusts and companies. The Australian Taxation Office has commented on the use of trusts as follows:The preference for a discretionary trust over a company structure or vice versa is dependent upon a range of factors including establishment and operating costs, the taxation treatment of income from companies compared with income from discretionary trusts, the capital gains tax treatment of shares compared with interest in a discretionary trust, and the relative level of the company tax rate.Along with the measures contained in this bill, the government has also brought changes to ensure that trusts are taxed in the same way as companies in many regards. That is a fairly logical, sensible approach to this whole process of tax reform, which of course is symbolic of the whole reform of the tax system and the GST system itself.According to the Australian Taxation Office figures, discretionary trusts have grown by some 30 per cent in the last decade. The main reason behind this growth in popularity is that they are effective tax shelters. Trusts distribute all income and realised capital gains tax free. Tax is paid by the beneficiaries at normal income tax rates. Trustees have complete discretion as to how income tax and gains are distributed.The current taxation laws in respect of returns and assessments have certain deficiencies, including where the net income of a trust estate is passed through a series of trusts without any ultimate beneficiary having been named or assessed on that net income either because there is no ultimate beneficiary or because the ultimate beneficiary cannot be identified. A trust deed may, for example, describe a class of persons from which the trustee may select to distribute trust moneys. There may not, however, at a particular point in time, be any persons who fall within the described class. In this situation, there will not be any ultimate beneficiary.The government's new tax system is about fairness and ensuring people pay their fair share. The government wishes to see that wealthy individuals and businesses which are normally in a position to avoid paying their fair share of tax are less able to do so. I think all members of this House would agree with that proposal. The estimated revenue gains expected through this measure alone will amount to some $30 million in each of the 1999-2000 and 2000-01 years. This money will lessen the burden of the average taxpayer and will find its way through consolidated revenue to social programs and paying off Commonwealth debt. While the ALP clearly does not place the same importance on paying off national debt, it nevertheless recognises the abuse that exists in the trust system. Reform of the trusts legislation was a major part of the Labor pre-election tax package.Taxation Office computers have discovered a rort known as a circular trust program, thought to have died out in the 1970s. In one technique known as `substituted reporting dates', some trusts have shuffled income from one trust to another and then back again. The Taxation Office has said that there is evidence that some taxpayers are using complex chains to make it difficult for the tax office to piece together the trail of distributions from trust to trust to establish liability. Mr Gil Levy, a partner at Arthur Andersen, said that he suspected that some trusts have been swamping the system with so many returns that no-one really knew whether tax was being collected along the way or not.The three bills before us deal with these issues. They propose measures that are generally very well targeted, and it is reasonable to expect only opposition from tax avoiders and their financial advisers because of their vested interests and from the opposition. In this case, we know that the opposition will be supporting us.Taxpayers and ordinary Australians stand to make significant gains. Firstly, the aim of the A New Tax System (Closely Held Trusts) Bill 1999 is to correct deficiencies in the existing law and will require the trustee of a closely held trust to provide the Commissioner of Taxation with the tax file numbers of the ultimate beneficiaries of certain net income and tax preferred amounts distributed from trusts. This will apply where the immediate distribution is made by one trust to another trust—for example, where a chain of trusts is involved. Secondly, where there is no such disclosure, the A New Tax System (Ultimate Beneficiary Non-disclosure Tax) Bill (No. 1) 1999 imposes tax on the part of the net income at the top marginal rate plus the Medicare levy. The non-disclosure of tax preferred amounts produces offences under the Tax Administration Act 1953. Thirdly, where there is no ultimate beneficiary, the A New Tax System (Ultimate Beneficiary Non-disclosure Tax) Bill (No. 2) 1999 imposes a tax on part of the net income at the top marginal rate plus the Medicare levy plus the penalties for not doing so.The two main concerns with this bill cover the liability of trust directors and the burden of these measures on all discretionary trusts. Both are unfounded. The first question is in regard to the liability of trust directors. Not surprisingly, there have been some negative reactions to this. We found comments in the Financial Review about this. In an article appearing in the Financial Review on 26 May 1999, solicitor Robert Richards claimed that this legislation `does not protect a director who in good faith tries to do the right thing'. It is necessary to point out that, under section 102UL, which relates to ultimate liability, directors are specifically excluded from liability if, because of illness or other good reason, they did not take part in the decision to make a correct ultimate beneficiary statement; they did not take part in a decision not to make a correct ultimate beneficiary statement; they were aware of a decision not to make a correct statement but took reasonable steps to prevent the making of that decision; or they voted against the majority decision not to make a correct ultimate beneficiary statement.The let-outs given to directors are exhaustive and cover all the legitimate reasons for an individual director being held liable. Secondly, the inclusion of a discretionary trust in the definition of a closely held trust is claimed to spread the compliance burden too far. The definition of a closely held trust is also criticised by tax avoidance advisers, who stand to lose another loophole. Their complaint mainly centres on the fact that a closely held trust includes trusts where up to 20 individuals are entitled to a 75 per cent or greater share of income of capital of the trust or a discretionary trust, and discretionary trusts themselves. There is an unfounded fear that this measure will force some 60,000 trusts to engage in more paperwork. It is seen incorrectly as a penalty compliance burden imposed on many to control cheating by a few.These proposals do not go beyond the original intention, however. The only trusts that can be affected are those which are closely held and have other trusts as beneficiaries. All discretionary trusts are treated as closely held trusts for the purpose of the proposal, but most will not have any trusts as beneficiaries and therefore will never be affected. The only trustees that will find these measures burdensome are those who operate complex trust chains. It will not be known how many trusts are set up as part of complex structures until these measures are implemented. The government has specifically excluded a number of types of trusts from this measure. These include complying superannuation funds, deceased estates, and fixed and Stock Exchange listed unit trusts.We see from the proposals under these three new bills that there are some changes that will be beneficial to the tax system and will yield additional revenue of the order of $30 million in the next two financial years. It will close many of the loopholes where the ultimate beneficiary is not spelled out or the circuitous route is so complex that, from the way in which the whole trust is set up, it is not clear which person is ultimately respon sible. The purpose of these bills is to get to those particular individuals or to those trusts which are simply aimed at avoiding legitimate tax. There is no doubt that many of these trusts are used for entirely legitimate reasons. They are used by small business and they are used by farmers, but there are those who simply use them to avoid paying their fair share of tax. I am sure that all members of this House would want the government to retrieve income tax where it is legitimately due and these three bills will do much to address this in relation to trusts. I commend the bill to the House.16:20:006288Cox, David, MPMr COX83UKingstonALP00—The government has promised some action on tax avoidance and evasion, using trusts in its so-called A New Tax System package. Indeed, when it needed revenue to fund the loosening fiscal policy resulting from the totality of its new tax package, it claimed significant revenue increases from a package of revenue measures it called `consistent treatment of entities', which included taxing trusts as companies.They claimed a positive budgetary impact of $1.67 billion in 2000-01, declining to $650 million in 2002-03, yet we have not seen those bills; we have seen only these ones. It is a small measure to deal with some of the abuses of trust structures for the purpose of tax avoidance and evasion. It requires the disclosure of the ultimate beneficiaries of income from trusts. That is so the tax commissioner can check whether each beneficiary has properly disclosed that net income or their net assets include the receipt of any tax preferred amounts. Failing that disclosure, the income of the trust will be taxed at the top marginal rate plus the Medicare levy. These requirements, however, apply only to closely held trusts. These are defined in the bill as:(a) a trust where an individual has, or up to 20 individuals have between them, directly or indirectly, and for their own benefit, fixed entitlements to a 75% or greater share of the income, or a 75% or greater share of the capital, of the trustor(b) a discretionary trust.A discretionary trust is a trust that is not a fixed trust—that is, one where persons have fixed entitlements to all of the income and assets of the trust. A fixed entitlement is an indefeasible interest in a share of the income or assets of a trust.The bill specifically excludes unit trusts with units listed on the Stock Exchange; complying superannuation funds, deposit funds, pooled superannuation trusts; and deceased estates until the fifth anniversary of the death. The fact that it is only expected to raise an additional $30 million a year is a demonstration of how limited this measure is. There are many greater tax avoidance and evasion issues associated with trusts. The government's reluctance to come to grips with these avoidance and evasion issues shows how disinterested it is in real tax reform that protects the revenue and makes everyone pay their fair share. There is every sign the government wants little more than a few measures it can point to to deflect criticism about its lack of action. The lack of speed and commitment in this area has now reached the dimension of a scandal of such proportions that in the context of this bill it requires a second reading amendment. I move:That all words after "That" be omitted with a view to substituting the following words:"whilst not declining to give the bill a second reading, the House notes that:(1) In relation to tax avoidance(a) the Government has failed for three years to take adequate action to deal with major tax avoidance and evasion by high wealth individuals using complex trust structures;(b) lack of action is causing major ongoing losses of revenue;(c) at the time these aggressive tax avoidance and evasion schemes were first identified by the Australian Taxation Office in late 1995 and early 1996 an amount of $800 million was being evaded by 80 high wealth individuals;(d) some of the high wealth individuals participating in these schemes were manipulating their taxable incomes to declare as little as $20,000 a year and so claim various government benefits;(e) the legislative action required to eliminate these schemes is well understood by the Australian Taxation Office; and(f) the lack of adequate action on tax avoidance and evasion using trusts is an indicator of the Government's failure to provide proper and fair tax reforms; and.(2) In relation to so called taxation reform, of which this bill forms a part as a component of the New Tax System;(a) the government has not achieved real tax reforms in Australia, it has merely agreed to introduce an unfair GST;(b) the new Howard/Lees GST will involve a massive tax mix switch which will hurt ordinary families, which is directly contrary to the balloted policy of the Australian Democrats;(c) the Howard/Lees deal will actually increase the tax on food in Australia;(d) ordinary people will now face a GST on top of state indirect taxes on bank accounts; and(e) the amended tax package is still unfair and will also damage the environment".It is obvious to anyone with a serious interest in tax policy that there is scope for tax avoidance and evasion using trust structures. Throughout 1994 and 1995 the Treasurer's office pressed Treasury for advice on the extent of the problem and possible remedies. It was raised on an almost weekly basis in meetings with the department. Nothing was forthcoming until 9 November 1995 when the Australian Taxation Office—not the Treasury, the tax office—advised that they had uncovered a significant problem using multiple trust structures. They had been using new software which was capable of finding patterns in large amounts of seemingly unrelated information.They had found that large numbers of seemingly unrelated trusts were in fact related and a range of techniques were being used by high wealth individuals to reduce tax liabilities to low or negligible levels. Treasury and the tax office worked on the issue over the next three months, eventually advising the Treasurer that it would be appropriate to make a public announcement that the government would act to end these practices.The press release issued by Treasurer Ralph Willis on 11 February 1996 accurately set out the issues. It was titled, `High Wealth Individuals—Taxation of Trusts', and read:On November 9, 1995 I was informed by the Australian Taxation Office that as part of the Compliance Enforcement Strategy authorised by the Government, it had conducted analysis of the accumulation of wealth by certain individuals and the taxes paid by them. That analysis revealed that some high wealth individuals were employing strategies which allowed them to accumulate wealth, enjoy a lavish lifestyle, but pay little or no tax. The analysis was in its early stages but the ATO believed the revenue implications might amount to several hundred million dollars.At my request, the ATO and Treasury provided more extensive advice and analysis on December 20 1995. It revealed that in the 1993 financial year, 80 individuals each with a net worth of over $30 million had returned taxable incomes of $20,000 or less. This enabled some of them to qualify for low income rebates, Medicare exemptions, deferral of HECS payments and reduced child support payments. The tax minimisation techniques employed by these individuals mainly involved the use of trusts.By January 19, 1996, the ATO and Treasury were able to advise that on the basis of the work undertaken to date in respect to 100 wealthy individuals alone, appropriate measures to deal with a range of specific tax minimisation techniques using trusts would produce additional revenue of at least $500 million. Later at a meeting on January 23, 1996, Treasury gave me verbal advice raising that estimate to $800 million. Some amount could be forthcoming in 1996-97, but the first full year effect would be in 1997-98.The January 19, 1996 advice also included separate revenue estimates in addition to the $800 million for techniques involving thin capitalisation and abuses of the provisions for payments by trusts to foreign charities.The ATO has identified a number of complex tax planning arrangements used by some wealthy individuals to avoid tax, these include:- the characterisation of income as capital by the use of multiple trust structures to conceal a common controlling mind. If the activities of the various trusts and associated companies were viewed as a whole, the profits of the group could be treated as trading income. The ATO has found a number of cases of wealthy individuals operating over 100 trusts;- the creation of artificial losses (revenue as well as capital) to neutralise otherwise taxable profits, particularly through the use of related party transactions;- distributions to wealthy individuals and family members being disguised as loans and other benefits which are claimed to be non-taxable. In relation to companies this includes exploitation of alleged weaknesses in section 47A and 108 of the Income Tax Assessment Act 1936, of the deemed dividend provisions; - the continued use of offshore trusts to hold significant funds which seem to be applied for the benefit of wealthy individuals and their families; and- the use of Australian charitable trusts and overseas organisations to disguise benefits provided by family trading trusts to family members.Obviously, these are not techniques which are practised by the overwhelming majority of trusts operated by and for Australians. Trusts provide an appropriate structure to meet a range of legitimate needs such as for charities, education and non-profit organisations, deceased estates, a variety of family purposes, and for solicitors and other professionals. The Government will not interfere with these arrangements. The Government undertakes that the measures it will adopt will ensure that activities not involving tax avoidance are not adversely affected.No responsible government could stand back and let blatant abuse of the tax system by extremely wealthy individuals continue. The ATO is undertaking action to test the effectiveness of the existing law to deal with some of these practices. However, it is not expected that an outcome will be achieved by these means in the near future due to the long time frames involved in testing issues before the courts. The ATO has advised that it is particularly difficult to run test cases in these areas because the individuals concerned will settle at the end of the day rather than have their private affairs or practices exposed to the public.On January 29, 1996, I wrote to the Secretary of the Treasury and the Commissioner for Taxation, asking them as a matter of urgency to develop a legislative response to cover income from the 1996-97 financial year. The new tax measures which the Government will introduce to deal with these specific areas of tax avoidance will be prospective not retrospective.One of the most important things this Labor Government has given Australia since it was elected in 1983 is a tax system based on the principle of integrity and fairness. Maintaining that basic integrity and fairness requires stamping out tax avoidance wherever and whenever it emerges.The reason these measures are being announced today is because the Government is seeking a mandate to deal with this area of tax avoidance. We call on the other parties in this election to support these reforms. I am offering Mr Howard a briefing this afternoon from the Commissioner of Taxation.I think the shadow Treasurer of the day received a briefing the next day.More than three years have now passed and the two substantial things that have changed are the government and the fact that Australia no longer has a government with the will to do anything about this scandal. If the Howard government had any interest in the fairness and integrity of the Australian tax system, it would have legislated to put an end to this abuse in its first year.Two weeks before the 1998 election, when the government needed money to fund the tax cuts contained in its ANTS package and when it knew Labor would raise this issue, it came out with a plan to tax trusts as companies. Eight months later, we still have not seen the legislation. But it is not just eight months since the task was put in front of them; it is three years, three months and 25 days. Perhaps the Treasurer is shooting for the record on inaction on major tax fraud. Former Fraser government Attorney-General, Peter Durack, left the prosecution file for the bottom-of-the-harbour schemes in his bottom drawer for seven years. If the Liberal government can win the next election, the Treasurer has the chance to beat Durack's record.83VEMERSONMr Emerson—The Prime Minister supported him too.83UCox, David, MPMr COX—Thank you for that interjection, Mr Emerson. We are now being told that the government will produce its solution to this problem in the Ralph Review of Business Taxation. It is a bit more urgent than that. It has been a bit more urgent than that for more than three years. At the 1998 federal election, Labor indicated its preparedness to tax trusts as companies, so it is not a matter of political debate between the Labor and Liberal parties. The remedies on trusts were clearly set out in the ANTS package by the Treasurer. Labor wants them implemented as quickly as possible. But now the election is out of the way the issue has been put off. Why has a policy which was clear enough to be included in the government's election policies become too difficult? Why is this the case when we have been hearing regularly from the Prime Minister and the Treasurer for over a year about their determination to stamp out abuse in this area? On 30 September 1997 the Financial Review reported:The Prime Minister ruled out an attack on the abuse of trusts for taxation purposes on the spuri ous grounds that such a move would hurt small business.The Prime Minister was sufficiently incensed by this to make a personal explanation in the House the same day, saying:Can I say that I have done no such thing. What I have said, and I am happy to repeat it today, is that I have assured the members of the government parties that in any taxation changes we make we will not be acting in a manner that would seriously damage, or indeed damage at all, small business. But at no stage have I said that my government would never take action against the abuse of trusts. We will always take action against abuses within the tax system.On 24 February 1998 the Treasurer was reported in the Herald Sun announcing that family and company trusts should be taxed at the same rate as company profits as part of the government's crackdown on tax loopholes. The Australian Financial Review quoted him on the same day saying:In an ideal tax system, taxes would relate to the economic activity that is being carried on, rather than the legal vehicle which houses that activity.The Prime Minister and the Treasurer are very adept on this issue. They say one thing but they do nothing. Any move to stop tax evasion and avoidance always meets resistance, someone will try to characterise the measure as draconian or claim their activities are legitimate or essential.According to the Financial Review of 30 September 1998, the coalition's policy was being undermined by the Leader of the National Party even before election day with his letter of 22 September 1998 in political doublespeak to the Australian Cane Farmers Association:I can assure you that whilst the National Party is committed to stopping any practice of `rorts' through FBT or trusts, it will take all necessary action to ensure that genuine use of distributions of capital from family trusts to beneficiaries will not be subjected to fringe benefits tax.This contradicted the government's tax policy which said FBT would be:. . . extended to benefits in excess of $1,000 a year provided by companies to their shareholders or by trustees to trust beneficiaries, where the benefits were not taxed currently.There was a report in the Australian Financial Review on 30 March this year, following a National Party meeting, that Senator Winston Crane was focusing his attention on preserving the rights of `legitimate' business trusts. Senator Crane claimed he had received a lot of support from his coalition colleagues. The next day, AAP reported Queensland state opposition leader Rob Borbidge had announced that the Queensland National Party would oppose any attempts to tax trusts like companies and that both the Prime Minister and the Deputy Prime Minister had been told of the Queensland Nationals' position.On 25 May 1999 the Sydney Morning Herald reported that National Party concerns that the Review of Business Taxation proposals would reintroduce death duties on family farms by cracking down on discretionary family trusts had been given a sympathetic hearing among coalition parliamentarians. The report said it was understood the cabinet secretary, Senator Bill Heffernan, was investigating the matter further following a presentation from Queensland solicitors Cleary and Hoare, representing more than 200 farmers. The National Party is apparently hoping the Review of Business Taxation will not pursue proposals to tax trusts as companies.On 24 May, Glenn Milne reported in the Australian that the Deputy Prime Minister had said, `We'll kill this in Cabinet.' Parliament has sat for several weeks since then, but there has been no personal explanation like the Prime Minister's. On the Sunday program two days ago, the Deputy Prime Minister was again trying to characterise taxing trusts as companies as a death duty. His exact words were:But, at the end of the day, are we about to retrospectively reintroduce death duties by some approach to trusts? No.And:The Government's made no decisions, and we still haven't got the Ralph report, and it will be a little while yet.That was immediately contradicted, first by Mr Ralph, reported in yesterday's Australian Financial Review as saying:We can't see where there is any negative effect arising out of proposals being considered that would give effect to an inheritance tax. It was then contradicted by the Treasurer yesterday when he responded to a question from the Deputy Leader of the Opposition asking him to:. . . confirm that full implementation of the proposal to tax trusts as companies outlined in your original GST package has been factored into the budget surplus projections?The Treasurer replied:The government's policy as announced in A New Tax System, ANTS, stands. The government is proceeding to implement that. In relation to those matters that are fully costed as part of ANTS, they have of course been taken into the budget position.The noise was coming from the National Party even before the election was over, and it is still coming today. That explains the last eight months' procrastination. But the Prime Minister and the Treasurer are going to have to decide very soon whether their position is best summed up by an incisive comment made by the Minister for Sport and Tourism in her backbench days. On 2 October 1997, she was reported in the Sydney Morning Herald as saying:Carmody should stop attacking Australians for not paying tax.That sums up where the Liberal Party have been coming from for the last three years. Nor should we forget in the context of this debate that there are 20 members of the government frontbench who themselves have trusts. We saw today how this government treats conflicts of interest. We can only wait and see what the next excuse will be. Which interest groups and what misrepresentation will we see next? Meanwhile, the tax evaders and avoiders are using Australia as a tax haven and treating the rest of the community with contempt. The tax commissioner can have a good enforcement regime, but he will not be effective if the government fails to give him the tax law to do his job. Any government that lets tax avoidance and evasion of this magnitude go unchecked can never be taken seriously on tax reform.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Jenkins)—Is the amendment seconded?83VEMERSONMr Emerson—I second the amendment and reserve my right to speak at a later time.16:38:006293Wakelin, Barry, MPMr WAKELINHV5GreyLP10—It is a pleasure to rise to speak on the A New Tax System (Closely Held Trusts) Bill 1999 . Just to respond to my friend on the other side for a little while, I preface my comments by saying I am not a person who has any involvement with trusts, so I can wipe my hands clean on that one. I remind the opposition that they did have 13 years to bring in this `very effective' legislation that they are now proposing could be brought in. As for tax reform generally in the last 25 years, this government is now in a position to bring fundamental tax reform to Australia for the national good, as no other government has since Federation. This is but one small part of the tax reform process. I will keep coming back to the fact that my friends on the other side, the Labor Party, did have 13 years to deal with this issue, if they think it is the evil that they have stated in this place they believe it to be.Let us look at the growth of trusts in Australia from 1993 to 1994. In 1993-94 there were 331,338 trusts. In 1996-97—that is, the financial year following the demise of the Labor government—there were 427,431 trusts. There were just under 100,000 trusts formed in that short Keating Labor period. If we break down the growth of trusts in the Labor period, we see that the growth in companies from, say, 1992-93 was 8.2 per cent—that is, about 426,000 companies at that point grew to 559,520. They had a 5.6 per cent growth in 1996-97. If we look at trusts in that period of Labor government that I was quoting, we see that they grew in 1993-94 at a rate of 8.3 per cent—higher than companies were growing. In 1994-95 the number of trusts grew at a rate of 9.6 per cent per annum. If we go to 1995-96, we see growth in trusts at 9.6 per cent. So there were very significant rises in the number of trusts formed in that period of Labor government.Further, in general information to the House, something I had not realised—it is all available here in the Bills Digest—is that trusts prominently focus on the property industry, at 42 per cent of the total number of trusts, through to an education trust at 0.1 per cent of the number of trusts. Across the range of industry and primary production—which was mentioned here today, about farmers and the frontbench et cetera—5.2 per cent of the number of trusts in Australia are involved.In the pre-election ANTS, a new tax system, which the government put to the people in 1998 was a very clear undertaking from the government in response to the rhetorical question, `What immediate action has the government taken to address the misuse of trusts?' Here I quote from the pre-election document which was taken to the people:The government has taken immediate action to deal with an area where the Australian Tax Office has found evidence of trusts being used for tax minimisation. This is the use of complex chains of trusts which disguise the ultimate beneficiary and make it difficult to collect the tax.So the government did act, and it certainly put to the people before the election of 1998 what it intended to do. I keep coming back to that great growth in trusts during the Labor government, and I certainly shall keep coming back to the fact that they had 13 years to bring in this crackdown, as they see it.Who can forget—there seems to be a regular pattern in the way the Labor Party does it—that about six weeks out from any federal election there is about another $1 billion to be found from very rich individuals. It becomes part of the mantra of the Labor Party to try to convince people—that is, the whole population of Australia—that suddenly, in that last six weeks of an election campaign, you can find revenue that has been sitting out there for 13 years. Suddenly you can find the revenue, and you can attack those wealthy individuals. Suddenly that all fits into the context of an election campaign. Don't do much about it; don't talk much about it before that; don't talk much about it in the previous 13 years; but just when we are coming up to the election you remind us, you create the politics of envy and try to create some concept of political opportunism from this whole process.I now come to the legislation as introduced into the House on 13 May 1999 by the minister. The effect of the legislation is simply to amend the Income Tax Assessment Act 1936 and associated laws to ensure that the trustee of a `closely held trust' with a trustee beneficiary discloses to the Commissioner of Taxation the identity of the ultimate beneficiaries of certain net income and tax preferred amounts of the trust.I turn to the background. The taxation of trusts is governed by the provisions of division 6 of part III of the Income Assessment Act 1936. Trust income is taxed to either the trustee or the beneficiary. Where the beneficiary is presently entitled to a share of the income of the trust estate, and provided that they are not under a legal disability or a non-resident at the end of the income year, the beneficiary is assessable on that share of the net income—fairly straightforward, I would have thought. Conversely, where they are under such a disability or are a non-resident, it is the trustee who is assessable on behalf of the beneficiary. Trustees are also assessable where no beneficiary is presently entitled to that part of the income.As such, trustees are required to lodge a tax return each year in respect of every trust estate. In most circumstances, this return enables the tax commissioner to determine what taxable income has been earned by the trust and which beneficiaries have been entitled to the various elements of that income. In turn, the commissioner can then reconcile the relevant shares of the trust income that have been included in appropriate beneficiaries' returns and enable assessments to be issued to the trustee in respect of those components of net income for which no beneficiary has been assessed.We now come to the new measures. As I have alluded to before, in August last year the Commonwealth announced a series of far-reaching taxation reforms entitled `A New Tax System'. Perhaps while I am dealing with that, I might just remind the House of what the government did take to the people. At this time, as we come up to a vote in the Senate on the `A New Tax System', what we said and what the people voted on at the election in October last year appears to have escaped many people's memories.The key points were to introduce a GST which eliminates sales tax—I stress, eliminates sales tax—and a range of nine other indirect taxes. Of course, we know that that has changed with the subsequent agreement with the Democrats, but I think most Australians understand that change. It will change the Commonwealth-state financial relations by providing the states and territories with an independent revenue base. It will implement significant changes to individual marginal tax rates. It will implement a major rationalisation of family assistance—very, very important. It will replace the various existing taxation payment and reporting systems of company tax, provisional tax, PAYE, PPS and RPS by one quarterly tax payment system; I repeat that: by one quarterly tax payment system, pay as you go. It will introduce a new universal business number system. Through its implementation, we will move towards an entity taxation system which is directly towards the elimination of tax advantages between different business structures. Finally, it will simplify the imputation system and introduce refunds for excess franking credits.As part of these reforms, the Commonwealth announced that it would take immediate action to deal with the evidence uncovered by the Australian Taxation Office, as I have said. While there are many legitimate reasons for trust structures to contain multiple trusts—and I notice the previous speaker, the member for Kingston, acknowledged that there are legitimate purposes for trust structures, and I fully endorse that—it would appear that some taxpayers had constructed complex trust structures, including multiple trust arrangements, to deliberately mislead the Australian Taxation Office as to the true destination of distributions and the true level of tax liable.With immediate effect, a special anti-avoidance rule was applied on the afternoon of 13 August last year to require the identification by trustees of discretionary and closely held fixed trusts of the ultimate beneficiaries entitled to trust distribution and their tax file numbers, as I indicated earlier. In short, this measure provides an administrative audit trail for the ATO to examine to ensure that all taxpayers are treated fairly and equitably, regardless of the trust structure they or their agents construct.It is worth noting that, alongside this immediate action, the Commonwealth acknowledged back in August that the introduction of the proposed redesigned company tax arrangements from 2000-01 would involve structural changes that would address tax minimisation through trusts more generally. As a penalty mechanism, where a trustee of a closely held trust does not correctly identify the ultimate beneficiaries within the specified period, after the end of year, income tax at the top marginal rate, plus Medicare levy in the case of net income, will be imposed. It should be noted that, in the case of tax preferred amounts, this kind of failure produces offences under the Taxation Administration Act 1953. Where there are no ultimate beneficiaries of net income of the closely held trust, the measures specifically impose taxation of that part of the net income of the trust at the top marginal tax rate plus the Medicare levy.As well as shutting down an apparent abuse of the tax laws, this measure will raise an additional $30 million in 1999-2000 and 2000-01. In turn, compliance costs associated with this reform will be minimised, thanks to the number of trusts that have been carved out of the measure and, in certain circumstances, the identification of lower level beneficiaries in chains of trusts should prove sufficient disclosure.I think I have summed up in fairly short fashion—I do not intend to speak any longer—the purpose of the A New Tax System (Closely Held Trusts) Bill 1999 , introduced by Minister Hockey earlier in the year. I support the bill.16:50:006295Emerson, Craig, MPMr EMERSON83VRankinALP00—Labor supports the A New Tax System (Closely Held Trusts) Bill 1999, this legislation on trusts, meagre as it is. But we also strongly support the amendment that has been moved by my colleague the member for Kingston that points to the lack of action by this government on tax avoidance and evasion using trusts. We believe that such lack of action is an indicator of the government's failure to provide proper and fair tax reforms. In addition, part (2) of the amendment deals with the government's and the Democrats' GST, which I will be speaking on.This legislation imposes an obligation on the trustees of closely held trusts to disclose the identity and tax file numbers of the ultimate beneficiaries of net income and tax preferred amounts; and, if the trustee fails to do so or there is no ultimate beneficiary, the legislation provides for taxation at a penalty rate or offences under the Taxation Administration Act 1953.The number of trusts has grown dramatically in the last few years. In 1993-94 it was just over 330,000, but by 1996-97 it had grown to 427,000. The Australian Taxation Office attributes the growth of trusts in recent years to the increase in the number of taxpayers who are seeking to hold and organise their assets and businesses in private discretionary trusts. The annual growth of companies decreased from eight per cent in 1992-93 to six per cent in 1996-97, yet in the same period the growth rate for trusts increased from two per cent to almost 10 per cent in 1995-96 and tapered off just a little to seven per cent in 1996-97. The tax office has stated that the relative rate of growth of trusts and companies could reflect the differences in tax treatment of these entities.I could relate to you my own personal experience. I set up with a partner a small business in Brisbane, and in the process of setting up that business I was encouraged very strongly to set up a unit trust and then a family trust. The purpose of the family trust would be so that I could avail myself of income splitting that ordinary wage and salary earners could not avail themselves of. I did not proceed with the advice that my colleagues had given me, at a cost estimated by them to be a minimum of $5,000 in the first year when the trust would be setting up, then $10,000 per year thereafter. So for a very small business those are the sorts of opportunities that are being presented by the government's failure to do anything substantial on trusts.The Howard government has really been dragged kicking and screaming by the tax commissioner to plug a gaping hole in the income tax base from family trusts. As my colleague the member for Kingston has pointed out, this problem was identified several years ago—in fact, in late 1995. The member for Kingston has given a very good account of the saga of the coalition backsliding on trusts. An article in the Australian of 24 September 1997 headlined `Trusts safe from tax attack, PM tells troops' states:Mr Howard's comments were believed to have appeased MPs who feared the Government was planning a major crackdown on trusts.Of course they would fear that, because 20 out of 30 coalition frontbenchers do have trusts.83UCOXMr Cox—Maybe he did not expect to be reported.83VEmerson, Craig, MPMr EMERSON—Absolutely. The article goes on to say:While Mr Howard and Mr Costello are prepared to close down loopholes being exploited by the top end of town, trusts pose a dilemma for the Coalition.The reason is that most people who use trusts are core Coalition constituents—either small businessmen and women or farmers.A large number of Liberal and National Party MPs also use trusts themselves.Just recently, the Deputy Prime Minister of Australia was quoted in the Australian as saying, `We will kill this in cabinet,' such is the lack of commitment by this government to dealing with tax avoidance through trusts. Now we find that the main legislation on family trusts and on trusts in general has been put off into the business tax review. Once again, the Democrats have capitulated on this. They should have insisted on this legislation coming forward. It was in the ANTS package and it should have come forward as part of the legislation that was going to the Senate before 30 June, but the Democrats crumbled under pressure. The Leader of the Democrats walked into those negotiations, picked up the cards from the table and had four aces. The Prime Minister, at the other side of the table, picked up the cards and had two sevens. He asked the Leader of the Democrats, `What have you got?' She said, `Four aces.' He said, `Bad luck, I've got two sevens, I win.'The Democrats signed up to the GST that ACOSS described as `fundamentally unfair and unacceptable' and which should be rejected by the Senate. ACOSS also said:The package will widen the gap between rich and poor, and the whole nation will suffer from greater division between the haves and have-nots.What happened is that the Democrats got half of Senator Harradine's amendments. It was a case of: the amendment that Meg Lees rejects makes Harradine's amendment the best. But the best amendment to this legislation would be to apply the GST at the rate of zero; that is, to dump completely the goods and services tax.This is not the only issue on which the Democrats have been duped by the government. A media release issued by the Leader of the Democrats claims that the tax mix switch is only $2.75 billion. ACOSS correctly identifies a $5 billion net increase in indirect taxes under the deal struck between the Democrats and the government, but to that we must add the reduction in income tax of more than $10 billion. In other words, we have a switch in the tax mix towards regressive indirect taxes of more than $15 billion a year, not $2.75 billion as claimed by the Democrats.If the GST is such a good tax, why do the Democrats persist in misleading the Australian people about it? A document that has been obtained from the A Current Affair online chat room outlines advice that the Democrats gave to people who logged into the chat room on 1 June 1999. I would like to take the House through a few of the completely false or misleading claims that were made by the Democrats in response to queries that were raised.Firstly, the Democrats indicated in the chat room that `around 80 per cent of a low income household's food purchases—would be GST free.' Wrong! The household expenditure survey reveals that about a third of low income household food purchases would in fact attract the GST. In the next statement made in the chat room, the Democrats say, `If there's any doubt, it is GST free.' What we have here is the Leader of the Democrats becoming the tax commissioner, the Leader of the Democrats going around Australia over the next few years declaring, `If there is any doubt, it will be GST free.' Talk about fairies at the bottom of the garden path! The next thing we hear from the Democrats is that:We kept 80 per cent of food groceries GST free and taxed only those things consumed more by wealthy households.The household expenditure survey reveals that more than five per cent of the spending of the lowest 20 per cent of income earners is on bakery items whereas the top 20 per cent spend only about 4.2 per cent on such items. As a proportion of income, the gap between those two would be even greater. The next question asked was this:When I buy foods with the GST, is the GST "built-in" to the price, or the GST added at the cash register?The Democrats say:It's one-eleventh of the final price, built in, as happens in most countries.Yet we find this statement in the Canberra Times on 31 March:The Democrats said last night the Government should insist on retailers displaying before-and-after prices, for three months before and three months after the new tax comes into force on July 1 next year.That is another glaring inconsistency. I do not believe they know what they are saying. The Treasurer complains about the wholesale sales tax being a hidden tax, but he says, `Well, the GST will be embedded in the price.' How will consumers know if they have been falsely charged GST on some foods? The next example is a caller who asked:Why can't you put a GST on non-Australian foods and leave the Aussie foods tax free! Won't that help Australia get back on its feet?The Democrats say:That's effectively what we've done.That is completely untrue. They say:All fresh produce will be GST free but junk food, much of which is imported, will be taxed.I ask, rhetorically, are these things junk food: Lean Cuisine, chicken pieces, everything in the bakery outside Meg's bread recipe, freshly squeezed orange juice in a cafe and fruit salad? The Democrats are trying to be the nation's nutritionists. They have a particular view about the role of women in the home—that is, that women should not take home takeaway food or any prepared food; they should stay at home and cook it. That view happens to coincide with the view of the Prime Minister, a very long-held view it is too. The next caller says:I am a mum of a disabled daughter and I know for a fact the GST will hurt us financially.The Democrat response:Food will be GST free . . . Now all food is going to be GST free. The Democrats will say anything about this tax. The Democrats go on to say:We have picked up international best practice . . . This fiasco is seen by the Democrats as international best practice. Another caller, Steve, asks:I work in a school where purchases are currently exempt from sales tax. Will GST apply?The Democrats respond:Education is GST free, and schools will be able to claim even more sales tax exemptions than they can now. For eg: on books, electricity, plumbing services etc.The first point is that they say education is GST free. What about school uniforms? What about shoes? What about stationery? What about school cases and bus and train fares? All of those bear the GST and the Democrats deliberately misled this person on that point. The second point is that they say that schools will be able to claim even more sales tax exemptions than they can now. The Democrats are giving tax cuts to schools by imposing new taxes and saying that schools do not have to pay them. This is like Nero: we are going to build a new city by burning down Rome first. The final point relates to books, electricity, plumbing services, et cetera. This is highly misleading because there is no tax on these items at present. Mushie logged in and asked:What's happening with fuel, alcohol and tobacco?The Democrats said:The GST will be imposed and the relevant excise reduced by 10 percent.Wrong! That is wrong for tobacco. The excise will not be reduced by 10 per cent. That is why tobacco prices will go up so much. Why do the Democrats continue to mislead on this? Another question:How do you think voting for the GST will affect your party's standing in the next election?The Democrat response:I believe that the voters will be pleased that the Democrats said there will not be a GST on food, and that we delivered that.I rest my case. They are still saying to those people who log into this program, and to other people, that there is no GST on food. When will they tell the truth? Another question:Will rents paid by business be subject to a GST and if so how will they be compensated for a 10 percent rise on one of their largest expenses?The Democrat response:Rents will be input taxed, ie no GST will be charged, but no credits given on any GST paid by landlord.That is not true of rents on business premises. That is yet another deliberate misleading of the people. The Commissioner of Taxation effectively commented on the Howard-Democrat deal in a speech delivered in Hobart on 24 March 1999, just a few weeks ago. He said:In the UK and Canada exemptions have been introduced for food products that may be generally described as "basic groceries" or "essential foods".Giving effect to these concepts is difficult and requires administrative or legislative rules that are ripe for ridicule.And how right the tax commissioner was. These rules are ripe for ridicule. Just last week, on 3 June, the Premier of Victoria gave an interview with Neil Mitchell on 3AW. I will pick just two of the points he made, and he is absolutely right about them. He said:Because of the debate going on about items in, items out, the public's confidence in the package as a whole is being substantially eroded to the point that the package is losing credibility.He is right about that. The Newspoll in the Australian today reveals a 19 per cent turnaround in just a couple of weeks of those opposed to the GST. The Premier went on to say:Secondly, because the Democrats have insisted that certain foods be out, there are going to be many small retailers, milk bars, seven-eleven stores, places like family run supermarkets in country Victoria, country Australia, a whole range of stores that are simply not going to be able to comply by July the first next year.Then he questions whether they can comply at all. But we have the solution to that. The Democrats have got the answer to that. In the Australian Financial Review on 31 May 1999 the Democrats are reported in the following terms:The Government will consider a series of options from the Democrats to minimise compliance costs, such as one that allows small outlets to "opt out" of the exemption voluntarily. That is, a store which sold mainly taxable food, such as a takeaway, might be allowed to charge the GST on tax-free items to minimise compliance costs.These people truly are the pixies at the bottom of the garden. They are saying that small businesses can apply the GST to goods that they sell which do not bear the GST and this will reduce their administrative burden. They then remit the GST, illegally applied, to the Taxation Office, which is supposed to say, `Thank you very much.' Then these people say, `Isn't this great! We've minimised compliance costs.'This is astonishing stuff. We have an appalling deal between the Democrats and the government that is going to be very unfair for Australia, as pointed out by ACOSS. It is going to create a compliance nightmare for small business, and it is completely unnecessary. There is no need for this GST. The growth in revenue under the existing tax system has been very robust indeed. In fact in this year coming revenue as a proportion of GDP is projected to be the largest for around 12 years. So we are being told that the system is broke and it has to be changed, that we must have a new efficient GST. It is now a GST that is full of exemptions, riddled with holes, a ridiculous GST that is going to cause a compliance nightmare.What are we seeing in relation to the great efficiency benefits that are claimed in relation to the abolition of nine state taxes, the nine state taxes that everyone received material on in the election campaign which said, `We are going to get rid of nine state taxes'? At best, they are going to get rid of four state taxes. Five state taxes have been identified as being particularly inefficient taxes. But the Treasurer said today, `No. We are getting rid of them all.' One of those five taxes will be removed from 1 July 2005, but there is no date set for the removal of the other four at all.Moreover, there is no mechanism to remove these taxes because there is no new agreement and no premiers conference to forge a new agreement for the abolition of these taxes. All it is is a line of writing in a press release prepared by the Leader of the Democrats and the Prime Minister. It has absolutely no force. So the efficiency gains from this tax change simply are not there. We are taking the country backwards. We are taking the country backwards in terms of loss of jobs from the imposition of the GST, particularly in the labour intensive service industries. There is absolutely no benefit in terms of economic growth. Treasury has been able to demonstrate no benefit whatsoever. Independent economic modellers have been able to demonstrate no benefit whatsoever. We have an absolute disaster in the making. There is time, however, for the Leader of the Democrats and the Australian Democrats to change their position before 30 June, admit they have made a mistake and repudiate this ridiculous tax.17:10:006299Thomson, Kelvin, MPMr KELVIN THOMSONUK6WillsALP00—I am pleased to join with my colleagues the member for Kingston and the member for Rankin in discussing A New Tax System (Closely Held Trusts) Bill 1999 and associated legislation. It is, as others have remarked, an anti-avoidance measure aimed at curbing the abuse of trusts. The particular abuse arises where chains of trusts are used to disguise who the ultimate beneficiary of the trust income is. There is difficulty in ensuring that the original trust income, which is supposed to have flowed through that chain of trusts, has been accounted for by the ultimate beneficiary and that the net assets of the ultimate beneficiary actually reflect the receipt of that income.This legislation proposes that the trustee of what is called a closely held trust with a trustee as a beneficiary must disclose to the Commissioner of Taxation who the ultimate beneficiary of trust income and the capital distributions is within a specified period. It defines closely held trusts as those which are either discretionary trusts or where up to 20 individuals have fixed entitlements to a 75 per cent or greater share of the income or capital of the trust. There are certain trusts which are excluded from this regime: namely, the superannuation funds and other superannuation entities; deceased estates until five years after the date of death; fixed trusts which are wholly owned by tax exempt persons, for example, charities; and unit trusts listed on the Australian Stock Exchange. If the ultimate beneficiaries are not disclosed, then the income to be distributed through the trust beneficiary is to be taxed at the maximum marginal rate plus the Medicare levy, that is, 48½ per cent.The legislation provides an exemption for situations where the trust is a deceased estate for five years after death. It is appropriate for a reasonable period to apply to deceased estates. I suppose the question is whether five years is too long. We would be interested to hear the government's response on this point and why it believes five years is the appropriate length of time.Let me turn now to the issue of taxing trusts as companies. This legislation is expected to raise $30 million each year for 1998-99—it commenced on 13 August last year—and 1999-2000. Thereafter the so-called entity tax regime is due to commence. Page 26 of the explanatory memorandum states:After these periods, the effect of the measure is likely to be absorbed by the entities' taxation proposal announced in Tax Reform: not a new tax, a new tax system: the Howard Government's Plan for a New Tax System , if it is implemented as announced from 2000-2001.The point here is that we have an explanatory memorandum suggesting that the entity tax regime may not actually appear. Indeed it is a matter of the gravest concern to the opposition that for all the bills we have seen introducing the government's GST, all the bills that have been part of what is referred to as the ANTS package, a new tax system package, we have not seen the legislation to implement the entities' taxation proposal. Maybe the drafters of the explanatory memorandum who cast doubt on whether the government intends to deliver on its undertaking to tax trusts as companies had had the benefit of reading or at least were aware of reports recently written about the National Party's commitment to this proposal.Let me draw the attention of the House, as I think other speakers have also done, to the report by Glenn Milne in the Australian on Monday, 24 May. He said that the federal management committee of the National Party's Queensland branch had organised for Mr John Hoare to address the federal National Party room. In addition to expressing concern about the Ralph committee's proposals to scrap tax breaks for accelerated depreciation, Mr Hoare objected to the proposal to crack down on discretionary family trusts. Mr Hoare is reported by Glenn Milne as saying:For a lot of people in the room there was disbelief. They just didn't understand the impact of the Ralph committee on trusts.According to Mr Hoare, the Deputy Prime Minister declared in the National Party room, `We'll kill this in cabinet.' This is just extraordinary, because this is not a proposal which in some fashion is up for consideration; this is something which the government announced as part of their tax package, and they put a price tag on it of the order of $760 million in the first year and down to $430 million over the course of a three-year period. If the government were to abandon this idea of taxing trusts as companies and abandon the entity tax proposal, we would have a black hole of the order of $1.5 billion. This is a done deal and what we are waiting for in the opposition is for the government to introduce that part of their legislation as they have introduced so many other pieces of legislation.The Queensland National Party expressed concern about the proposal that family trusts would be taxed as companies. This means there would be a 47c tax rate on the distribution of capital to a beneficiary on the rental value of a house owned by a trust and lived in rent free by a beneficiary, and the beneficiaries of the discretionary trusts are family members. Milne reports that:Hoare pointed out to National Party MPs that trusts were a favoured financial management vehicle among farmers. But the primary purpose of such trusts is for asset protection—in other words, ensuring the family property is not broken up. Those other purposes to which trusts may be put are all well and good. As speakers on the government side have mentioned, there are legitimate uses for trusts, but that does not mean they should not be taxed in the same way that companies and other entities are—not for a moment.A further media report in the Sydney Morning Herald on 7 June said that the Ralph review was examining a government proposal to tax trusts carrying on a business as companies. That would mean that income would be taxed at the company rate and beneficiaries would then get franking credits. The Deputy Prime Minister, Mr Fischer, was again quoted as saying that he would not support any crackdown on trusts that amounted to a de facto reintroduction of death duties.The point I make again is that this is not something which is open for ongoing debate. It is something which the government announced as part of its new tax package. At the time the new tax package was announced, we learned there was something like $13 billion in tax cuts, and 52 per cent of those tax cuts—totalling some $6.6 billion—were going to the top 20 per cent of income earners in this country, leaving the rest of the tax cuts for the remaining 80 per cent of Australians. When we in the opposition pointed out the unfair nature of this tax package, one of the government's responses was to say, `No, it's all right because we're hitting the high wealth individuals by taxing trusts as companies. We're hitting them with entity taxation.'This is not something on which the government has any wriggle room whatsoever. It is something which the government is obligated to introduce. For the government to come into this parliament with a piece of legislation which it says will yield $30 million in revenue, when it has previously said it will get $760 million in revenue through the entity taxation proposal, is simply not good enough. It is a case of the dog that did not bark—that is, where is the tax legislation necessary to give effect to the government's commitments? On that basis, I strongly support the amendment which has been moved by the member for Kingston.I want to express some concern about where the non-appearance of this legislation leaves the area of tax avoidance generally. I think it does call into question this government's sincerity in opposing tax avoidance and acting to crack down on tax avoidance. The member for Kingston gave us something of the history of the issue of high wealth individuals and the advice that the previous government received back in 1995 and early 1996 about action that was needed to crack down on high wealth individuals. Indeed, when we announced as a government that we were going to take that action, the then opposition indicated it would support that and obtain that revenue as well. But in these past few years it has failed to obtain that revenue.In the meantime, we are becoming increasingly aware of the development of a crisis within the Australian Taxation Office concerning some of the tax avoidance schemes. I want to draw the attention of the House to a report in the Business Review Weekly on 4 June by Mr Michael Laurence. It states:Behind an image of calm efficiency, the Australian Taxation Office is deeply troubled. Commissioner Michael Carmody is making a desperate effort to manage a crisis of his office's own making. For years, his most senior officers have been quietly endorsing aggressive schemes that make the payment of tax optional.In particular, this article goes on to describe the resignation of a former first assistant commissioner, Mr Nick Petroulias, and conflict concerning a particular scheme known as controlling shareholder superannuation where the controlling shareholders of private companies make contributions to non-complying funds—that is, outside the control of the Superannuation Industry (Supervision) Act—and claim deductions for those contributions and also claim that they are not subject to fringe benefits tax, not subject to superannuation contributions tax and not subject to the tax surcharge on contributions.This issue has become one of major conflict within the Australian Taxation Office. What we learn from this Business Review Weekly article is the fact that the development of this scheme has made it optional for a number of clients of the advisers who have been promot ing the scheme to pay tax. Indeed, we read that:Tax advisers were expecting to claim up to $1.5 billion in deductions in the 1998-99 financial year for controller super alone. Recently, a sole investor was detected by the tax office's employee-benefit taskforce based in Moonee Ponds, Victoria, preparing to claim a $10 million deduction. In the past five years, billions of dollars have flowed through arrangements that, to use the commissioner's expression, claim a "total tax wipeout".That same article quotes Sydney tax consultant Robert Richards as saying:The Government and the tax office is negligent in not rushing through amending legislation. The tax office is not prepared to admit a mistake and still thinks the law can be applied to stop the schemes.The article also quotes the former tax ombudsman, Mr Peter Haggstrom, to the effect that:By effectively endorsing controlling shareholder superannuation schemes for years, the tax office created a dual tax system where it was optional to pay tax. It hounds small business people over relatively few dollars yet has allowed tax advisers to go for gold. The schemes make a joke of tax reform when a straightforward change in the law would have considerably helped revenue collection. To continually give favorable rulings and opinions for schemes that exploit a legal loophole is ludicrous.As the article says, all of this raises some pretty crucial questions. Is the tax office capable of fighting aggressive tax schemes when it has proved so wanting in the past? Did the commissioner know that his most senior officers had long been approving schemes that skirt around the tax system? What role did aggressive tax planners have in Mr Petroulias's departure?We learn here of a very sorry system and scheme existing within the tax office. I am certainly concerned that, as a result of this government's lack of interest in cracking down on tax avoidance, that culture is going through to the tax office as well with the result that paying tax has become optional for far too many high wealth Australians. Peter Haggstrom was further quoted as saying:I believe the tax office's cynical policy towards aggressive tax planning says something quite fundamental about its relationship with government . . . Hardened players in the tax industry well understand this dynamic, and they stretch the rubber band as far as it will go.We see here a very sorry state of affairs unfolding. Further to that, I note that the recent report of the CPSU on things occurring within the tax office points out that the overall staffing picture for the tax office is far from satisfactory. There are many new staff planned to come on stream in the event that the GST gets up. The tax office is to employ 3,800 new staff in GST positions, and 600 sales tax staff are gradually being picked up in GST and other work. For a scheme that is promoted as simplifying Australia's tax arrangements, it is very interesting to learn that all these new staff are going to be there to enforce the GST.The overall staffing arrangement is one that sees no more than 1,000 between 1998-99 and 2002-03. Although the tax office is being somewhat secretive about its plans, we in fact are going to see 2½ thousand staff cut from current functions over the next three years. The impact of that will be that some 1,000 staff will be cut from the small business area. So the picture in the future is going to be one of increased reliance on the indirect regressive taxes and the automatic tax with little attention being paid either to individual service to small business or to pursuing tax evasion.Indeed, we are already seeing the situation where taxpayers are not able to make payments in person at tax offices but are forced to make payments at post offices, and the tax office has already announced plans to severely restrict its in-house inquiry service. So there are accounts of taxpayers travelling a long distance to a tax office only to be referred to a phone in the foyer of the tax office and told to call the tax office. That is most unsatisfactory and it does call into question just how well things are going within the tax office.I also noted that the House of Representatives Standing Committee on Economics, Finance and Public Administration had expressed concern that the tax office had inefficiencies in its revenue collection system leading to estimated annual losses of almost $500 million. Those things were identified in a recently released Auditor-General's report. These things are cause for considerable concern.I am pleased to support the amendment which has been moved by the member for Kingston. He identified the fact that, in 1995, the tax office reported that multiple trust structures were being used by high wealth individuals. The extent of the loss to revenue was of the order of $800 million. We had a situation where people who had over $30 million in assets were declaring incomes of $20,000 or less. That situation is absolutely shameful. This government has taken no effective action to crack down on that avoidance by high wealth individuals. It said it was going to introduce entity taxation and to tax trusts as companies. So far it is yet to do it.This legislation will yield a fraction of the money which the government has said will be yielded through entity taxation. It is simply not good enough, and I call on members of the House to support the amendment moved by the member for Kingston and put some pressure on this government to become fair dinkum about tax avoidance.17:30:006302Slipper, Peter, MPMr SLIPPER0V5FisherLP10—At the outset, I would like to thank the honourable members for Melbourne, Cook, Rankin, Kingston, Grey and Wills for their contributions to this debate. The member for Wills, of course, will not be at all surprised to hear that the government does indeed reject the amendment moved by the member for Kingston. The government is very pleased, however, that all members of this House do in fact support these measures which are an important part of the government's tax reform package for which it obtained a mandate at the election held in October last year. This has been a wide ranging debate. The particular items included in the three cognate bills have been canvassed, but certain of the participants have also talked about other aspects of A New Tax System. As the government has made out quite clearly, it is absolutely committed to curbing abuses of trusts which are contrived or designed for the purposes of avoiding tax.The government has been criticised by some who suggest that the bills are draconian. Solicitor Richard Roberts says in the Financial Review of 26 May that `this bill treats users of discretionary trusts as tax cheats'. So the government, on the one hand, is criticised by the opposition for not going far enough; on the other hand, the government is blamed for going too far. So it is pretty clear that the government has got the balance right.As is well known, the Taxation Office has evidence that certain taxpayers are using complex chains of trusts to minimise tax. The A New Tax System (Closely Held Trusts) Bill 1999 and the two associated bills address this problem by enabling the tracing of ultimate beneficiaries through complex chains of trusts. These measures will apply regardless of the number of trusts through which the distributions may pass. In effect, these measures will provide an administrative audit trail, helping to establish tax liabilities in circumstances where complex chains of trusts are used to minimise tax. At their heart, these are anti-avoidance measures. They are anticipated to raise $30 million in each of the 1999-2000 and 2000-01 financial years. As has been pointed out by the honourable member for Grey, Mr Wakelin, the number of trusts lodging returns in Australia has grown in recent years—from 331,338 in 1993-94 to 427,431 in 1996-97. Therefore, it is appropriate that the tax treatment of these vehicles is considered carefully to ensure that equity is retained.The member for Wills suggested that in 1995 it was suggested that something needed to be done about the area of trusts. It ought to be recognised that in 1995 the Labor Party was in office and it did absolutely nothing following that information coming to light. We ought not to lose sight of the very obvious fact that for 13 years, from 1983 to 1996, the Labor Party was the government of this country. So it is all very well for Labor members to come into the chamber and to huff and puff and accuse this government of inactivity. The reality is that this government has done more than any other government about doing away with abuses of trusts and closing loopholes, and we are not, in any way, shape or form, apologising for what we have done.Honourable members would be aware that the government did reintroduce trust loss provisions, it brought in measures to combat sales tax fraud in the computer industry, and it brought in various other tax avoidance provisions and provisions which define the tax laws to make sure they apply as intended—for example, franking credit trading, dividend and capital streaming and dividend substitution. In addition, everyone in Australia knows that the change in tax mix which will follow the implementation of our new tax system as we approach the next millennium will indeed reduce opportunities for tax evasion. These are real, meaningful tax reforms. They reduce reliance on income tax and change the collection system and the way trusts are taxed.The amendment moved by the honourable member for Kingston claims that the new tax system will hurt Australian families. The Prime Minister has said, and this government has made it amply clear—and it is widely recognised in the Australian community—that, far from hurting families, it has a very strong bias towards the Australian family. It brought in the family tax initiative and many other meaningful and real reforms which benefit the Australian family. The amendments to the new tax system which were negotiated with the Australian Democrats will also benefit families. So people will reject the arguments of the Labor Party. They have no tax policy. As we approached the last election, they were rejected yet again by the Australian people, and yet they seek to come into the chamber and thwart the attempt by this government to implement its promises and the mandate given to it by the Australian people.The current measures are meant to counter practices where entitlements pass through a series of trusts. For instance, part or all of the net income of a trust may be passed through a series of trusts, with no ultimate beneficiary being assessed on that net income—either because there is no ultimate beneficiary or because the ultimate beneficiary cannot be identified. Other assets of a trust may be said to be distributed through a series of trusts, yet the assets may never be reflected in the assets of any ultimate beneficiary. Or there may be taxpayers whose assets reflect trust distributions which cannot be traced back through the succession of trusts to which they are ascribed. Broadly speaking, these bills require trustees of closely held trusts with trustee beneficiaries to disclose to the Commissioner of Taxation the identity of ultimate beneficiaries of trust net income and trust preferred amounts to which another trust is entitled.To reduce compliance costs, a number of closely held trusts, such as complying superannuation funds and deceased estates, have been excluded from the measure. The honourable member for Wills asked me why the government selected the period of five years with respect to deceased estates. I am very happy to advise the member for Wills, and indeed the chamber, that the reason five years has been selected is that this period is consistent with other provisions in the tax laws, including the trust loss provisions.Under the legislation, a trustee need trace an entitlement to net income no further than any of a range of listed persons, including exempt bodies, charitable trusts and widely held trusts, and this also reduces compliance costs. For those people who suggest that there will be excessive compliance costs, it ought to be seen that the government has very carefully drafted this legislation to minimise any concern in relation to this area. I believe that the government has the balance right in relation to this particular area.In his speech, the honourable member for Melbourne said:Labor has no problem in supporting this legislation. It improves the equity of the tax system and makes those with the capacity to pay, pay more of their share.They are the words of endorsement from the honourable member for Melbourne. The member for Melbourne ought to be commended for that very supportive statement of the laudable motives of the government, as encapsulated in the three bills which we are now debating. It is, however, an ongoing tragedy that the Labor Party refuses to approach overall tax reform in the same objective manner. Instead, it refuses to look to the national interest and continues to oppose tax reform. The honourable member for Cook, as always, made a very thought provoking contribution. He stressed the reasons why the government sees these three bills as being necessary. He also emphasised how the government has a genuine commitment to real tax reform. The honourable member for Grey mentioned the growth in trusts, and I referred to that a moment ago. He summarised the provisions of the bill and he provided an overview of the government's overall tax reform strategy. He stressed that the compliance costs—as I have just said—will indeed be minimised.The honourable member for Rankin spoke about problems which were identified in 1995 in relation to the taxation of trusts. I have just alluded to the fact that those problems were identified during the 13 years of Labor government when nothing was done. He also claimed that there were inconsistencies in the tax package as amended. The reason we would have any inconsistencies, if they were to exist, is that the Labor Party failed to support the mandate given to the government by the Australian people in October last year.We see our original tax package as being fair, and we see the amended tax plan, agreed with Senator Lees and the Australian Democrats, as being fair. We are proud of the fact that we have been able to sit down with Senator Meg Lees and the Australian Democrats and been able to compromise and bring forward real and meaningful tax reform.Mr Martin Ferguson interjecting—0V5Slipper, Peter, MPMr SLIPPER—It is very interesting to listen to those opposite who are supporting a continuation of an appalling situation where we have a hidden wholesale sales tax which is charged at six irrational and varying rates. The government's proposal for tax reform is comprehensive. We intend to abolish Labor's inefficient and outdated wholesale sales tax, and we are not going to apologise for doing so. I simply do not know why the Labor Party is so devoted to such a troglodyte attitude to tax reform. We are proud to be replacing Labor's wholesale sales tax with a much fairer, broad based and single low rate GST.Mrs Bronwyn Bishop interjecting—0V5Slipper, Peter, MPMr SLIPPER—I thank the Minister for Aged Care for her supportive interjection. States and territories will receive all GST revenue. Our tax plan delivers over $10 billion of tax cuts. This means that 80 per cent of Australian taxpayers will be on a top marginal rate of no more than 30 cents in the dollar. We have increased assistance to families, pensioners and independent retirees. There will be lower diesel fuel costs for businesses and also for rural Australia.We are very supportive of the environment. Indeed, it ought to be recognised that this is the greenest government Australia has ever seen. The Natural Heritage Trust, funded by the partial sale of Telstra, has ensured that the situation of Australia's environment, which we hand on to future generations—Mr Martin Ferguson interjecting—0V5Slipper, Peter, MPMr SLIPPER—It will be infinitely better, my friend, than what the Labor Party failed to achieve in its 13 years of office. As part of the tax package, we are spending $1,000 million on initiatives to improve the environment, such as urban air quality, greenhouse gas emissions and so on. We are building on the wonderful record that we already have.There was also some comment made in the debate in relation to the provisions on page 26 of the explanatory memorandum under `Government Revenue'. Under 1.102, it says:This measure was estimated to raise revenue of $30 million in each of 1999-2000 and 2000-2001. After these periods the effect of the measure is likely to be absorbed by the entities' taxation proposal announced in Tax Reform: not a new tax, a new tax system: The Howard Government's Plan for a New Tax System , if it is implemented as announced from 2000-2001.These bills before the chamber are only part of our tax plan. We cannot presume that all bills will get through the parliament, although we are confident—following the agreement with the Australian Democrats—that, unlike the Labor Party, we will be able to deliver on the mandate given to us by the Australian people. This government is committed to keeping its promises.We do remember that when the Labor Party were in office—and I suspect that you yourself, Madam Deputy Speaker, remember— they were prepared to do anything. Prior to elections, they were prepared to promise anything. They said they would not sell the Commonwealth Bank. I think they said they would not sell Qantas. Mrs Bronwyn Bishop interjecting—0V5Slipper, Peter, MPMr SLIPPER—And what did they do? They sold them both. So the Labor Party are prepared to do anything. They come into the chamber prepared to promise anything prior to a poll with a view to getting elected, and when they get onto the government benches they simply tear up the promises that they have made. This government is determined to keep its promises. This government was given a mandate by the Australian people, and this government is very pleased to support the new tax system which we are bringing in as we approach the next millennium.Returning to the provisions of the bill, it ought to be seen that the commissioner will need the information from trustees to check that a beneficiary includes his or her share of the net income of a trust in his or her assessable income for the year and to make sure that the right beneficiary's net assets include any other tax preferred amounts from the trust. When a trustee does not get the necessary information in relation to net income of the trust, the bills will impose a tax on the trustee in relation to that part of the net income at the top marginal tax rate plus the Medicare levy. This is so regardless of whether the trustee refuses to give the information, cannot give the information or gives incorrect information. The bills will also impose a tax on a share of the net income for which there is no ultimate beneficiary, again at the top marginal rate plus Medicare. If the trustee does not give the required information about a tax preferred amount, the trustee of a closely held trust may be guilty of an offence under the Taxation Administration Act 1953 if the trustee did not give the information that he or she knew or did not take reasonable steps to find out any information that he or she did not know.This has been a wide-ranging debate. The contributions made by government members have stressed the importance of A New Tax System. The contributions made by those opposite have, as always, been shallow. I am very pleased to commend these three bills to the chamber. The government rejects the amendment moved by the honourable member for Kingston.Question put:That the words proposed to be omitted (Mr Cox's amendment) stand part of the question.The House divided. [5.51 p.m.](Madam Deputy Speaker—Mr J.A. Crosio) Ayes . . . . . . . . . . . . . . . . 73 Noes . . . . . . . . . . . . . . . . 60 —— Majority . . . . . . . . . . . . 13 ——Question so resolved in the affirmative.Voting details are recorded in the Votes and Proceedings.Bill read a second time.6306Leave granted for third reading to be moved forthwith.Bill (on motion by Mr Slipper) read a third time.Bills6306r8126306Consideration resumed from 13 May, on motion by Mr Hockey:That the bill be now read a second time.Question resolved in the affirmative.Bill read a second time.6306Leave granted for third reading to be moved forthwith.Bill (on motion by Mr Slipper) read a third time. Bills6306r8136306Consideration resumed from 13 May, on motion by Mr Hockey:That the bill be now read a second time.Question resolved in the affirmative.Bill read a second time.6306Leave granted for third reading to be moved forthwith. Bill (on motion by Mr Slipper) read a third time.Bills6306r816Billsr820Billsr821BillsBills6306Debate resumed from 2 June, on motion by Mr Anderson:That the bill be now read a second time.18:00:006306Kernot, Cheryl, MPMs KERNOTXW4DicksonALP00—These three bills—the Aviation Fuel Revenues (Special Appropriation) Amendment Bill 1999 , the Customs Tariff Amendment (Aviation Fuel Revenues) Bill 1999 and the Excise Tariff Amendment (Aviation Fuel Revenues) Bill 1999 —form a package which gives effect to the announcement in the budget of an increase in excise and customs duty on aviation gasoline, known as avgas, and aviation kerosene, known as avtur, from 11 May 1999. There will be an additional duty of 0.467c per litre for avgas and 0.391c per litre on avtur—raising $8.6 million a year. That will be appropriated to the Civil Aviation Safety Authority to address what the government refers to as a `shortfall in the aviation industry's contribution to CASA's aviation safety programs'. A `temporary surcharge'—that is what it is called—of a further 0.5lc per litre on all aircraft fuels will raise $11.1 million a year. That will offset the Airservices (Location Specific Pricing) Subsidy. This surcharge is limited to two years and will be reviewed within that period. The government claims this surcharge is necessary following the Senate's disallowance of regulations permitting the contracting out of air traffic control services.The bill also repeals requirements for mandatory consultation with the boards of CASA and Airservices Australia in setting the `statutory rate' of duty and on determining the respective shares of revenue between CASA and Airservices Australia. The opposition is not opposing these bills, although I note that there is opposition from some sections of the aviation industry who, perhaps understandably, are angry with the coalition for backing off from its previous position that funding CASA and Airservices through fuel duties or levies was not something it supported. That is what it has said in the past. I note that the Aircraft Owners and Pilots Association, for example, claims that this move:. . . breaks all promises made by the current government to the industry about the way air services and regulation is to be paid for.It is certainly something the former minister, Mark Vaile, was loudly carrying on about last year. He claimed to be moving towards what he called `an equitable charging system'. He said he wanted a user-pays, fee-for-service approach. This is the sort of approach, as we have seen in many other areas, that can look great in theory but tends to go off the rails in practice.It comes down in the end to whether you think aviation safety and the services that ensure aviation safety should be treated in the same way as buying a car or getting a haircut—as some kind of expendable commodity—rather than as a service with a public or community value that extends beyond the purely commercial. This is a very distinct philosophical difference. This government believes that if you treat aviation safety like any other service then it is appropriate to charge on a user-pays basis, and it is happy to let those services which are not affordable or which are not used by many people or, for example, that are in remote areas fall by the wayside when they do not turn a profit. But if you consider, as Labor does, that aviation safety has wider public implications then you are more inclined to look for funding options which ensure that services are fairly distributed, that the price, quality and accessibility of the service are kept at a reasonable level in rural and regional areas, and that public safety or some other important community goal is not compromised.This is the nub of the problem facing the coalition in the area of aviation safety. On the one hand, their ideology drives them towards a user-pays, fee-for-service approach to just about everything. On the other hand, it is becoming very apparent that applying such an approach to air safety is not a very bright idea. And we can see that it is not turning out to be such a great idea, because less than one year after the government headed off down the path of their so-called `more equitable charging system' they are back here in the budget debate telling us, `Sorry, we've now got a shortfall to make up. We have to put the aviation fuel duties back up.'I should also make the point here that there were sections of the aviation industry that opposed the removal of the so-called avgas levy and that some of the observations they made at the time the levy was scrapped now look very prescient indeed. They spoke of their belief that the government had failed to properly explore the cost consequences of its decision. They warned that some level of cross-subsidisation was essential for general aviation and regional airports to survive. They expressed doubts about the capacity of the government to deliver quality safety regulation without the levy, and they argued that, if the government insisted on sticking to this course of action, it would eventually have to find funding from some other source to maintain access to services at a reasonable price. The introduction of these bills makes it quite apparent that the implications were not fully explored.Turning first to CASA, the Minister for Transport and Regional Services tells us CASA has been running a deficit since 1996-97. It is interesting that, while the minister says there has been an industry shortfall in contributions, the Director of CASA, Mr Mick Toller, told the Senate estimates hearings last week that the shortfall came from the government's reduction of the CASA contribution from fuel excise by 30 per cent. He described it as an `overcorrection'. Whatever it is, CASA expects to be around $8 million short this year.There have been mutterings within the industry that the shortfall has not been helped by very large expenditures by CASA in the past year on consultants. I know that some in the aviation industry who are otherwise happy to contribute to CASA's safety programs through fuel duties or levies are not so pleased to think they are contributing to activities that may ultimately have very little to do with improving safety. In Senate estimates last week, answering questions from Senator Kerry O'Brien, Mr Toller revealed that CASA had spent $1.98 million on consultancies this financial year to the end of April. That is a significant amount of money to be spending when you face a known funding shortfall. The industry would have every right to be annoyed if, having been told it has to pay for the restructure of CASA through this particular increase in fuel duty, this amount of money continued to be spent on external consultancies.I think we will all be entitled to feel angry if the restructure does not in fact deliver improved safety outcomes, because this is a restructure that is going to cost $18 million. Redundancies make up $12 million of that. CASA loses 10 per cent of its work force with this restructure. The opposition is a long way from being satisfied that such a loss is not just further cost cutting for its own sake. We are not convinced that it will actually lead to better safety outcomes. So this is something we will continue to monitor.When it comes to the so-called `temporary surcharge', there are also real questions over what exactly the government has achieved—or what the government hopes to achieve— through its shift to location specific pricing and its plan to privatise air traffic control towers. Very early on, after the abolition of the levy, it became apparent that Airservices Australia needed some financial assistance from the government to subsidise general aviation and regional towers. This is, of course, another exercise in the shift in language to try and convince us that air safety is a business and not a public obligation. That is why it is called a `subsidy' and not a `community service obligation', as we used to call it. It is a bit cute actually for the government to be arguing that the surcharge is necessary because of the Senate's failure to pass regulations enabling the privatisation—or, to use the government's euphemism, the `contracting out'—of air traffic control towers. It is hard to believe that the government is seriously suggesting that, even if the Senate had passed the regulations, the subsidy would not have been needed for a further period. For a start, Mr Mick Toller told the Senate estimates hearing that he did not believe CASA could develop the necessary safety regulatory frameworks for air traffic control and airport firefighting services before June 2000. That in itself suggests a considerable delay, irrespective of the Senate's actions or the Senate's vote.The fact that the government is moving in these bills to extend the current subsidy to general aviation and regional airports is not about the government's plans being thwarted by the Senate; it is really about the long-term implications of those plans and the ill thought out consequences and the problems the government is having in getting to the point where it can set up alternative air traffic control providers that can offer cheaper service while remaining a safe service. That is the crux of the problem—trying to fit the ideology, as usual, to the reality and sprinkling it with euphemisms all the way. As I have said before in this chamber, Labor holds a different view. We believe air traffic control services should remain a public operation and a responsibility of government—motivated, first and foremost, by the need to protect public safety, not the need to make a profit.There has been a lot of upheaval, a lot of anxiety and a lot of confusion caused by the government's agenda in this area. Despite that, we do not intend to oppose this legislation. We think that the Senate Rural and Regional Affairs and Transport Committee will engage in a very thorough examination of the issue of location specific pricing and the current state of aviation safety, so we do not need to take the time of other committees of the parliament to duplicate this. But we do intend to continue to oppose an agenda that is motivated more by the need to cut costs than by the need to ensure safety, and we do intend to continue to oppose the pointless and potentially dangerous exercise of privatising airport firefighting services and air traffic control towers.18:11:006309Wakelin, Barry, MPMr WAKELINHV5GreyLP10—The Aviation Fuel Revenues (Special Appropriation) Amendment Bill 1999 , the Customs Tariff Amendment (Aviation Fuel Revenues) Bill 1999 and the Excise Tariff Amendment (Aviation Fuel Revenues) Bill 1999 are fairly straightforward. They were introduced into the House on 2 June 1999. This legislation amends the Aviation Fuel Revenues (Special Appropriation) Act 1988 to effect the announcement made in the 1999-2000 federal budget of a small increase in excise and customs duty on aviation gasoline—that is, avgas—and aviation kerosene, avtur. Additional duty raised will address the shortfall in industry's contribution to aviation safety programs and will help maintain air traffic control services at regional and general aviation airports.The package of three bills will give effect to the government's decision in different ways. Customs and excise charges are implemented through the Customs Tariff Act 1995 and the Excise Tariff Act 1921. These charges will be amended through the Customs Tariff Amendment (Aviation Fuel Revenues) Bill and the Excise Tariff Amendment (Aviation Fuel Revenues) Bill. Funds raised through these levies are appropriate under the Aviation Fuel Revenues (Special Appropriation) Act 1998. This legislation will be amended to direct the additional revenue to new aviation safety and equity measures. It is worth while to note that the government has dramatically reduced the duty on aviation gasoline since 1996. In fact, that duty is now 15.768c per litre lower than in March 1996.The new measures will increase levies. Rates of duty on avgas and avtur will be raised to 2.71c per litre—that is, 0.467c per litre extra on avgas and 0.391c per litre on avtur and an additional 0.51c per litre to offset the Airservices (Location Specific Pricing) Subsidy. In response to the member for Dickson, there is a very significant subsidy there currently of around $9 million. The coming financial year, 1999-2000, will bring it to a total of $11 million, with a $7 million subsidy in 2001. These measures have been in place since midnight on 11 May 1999. Due to a technicality, the two rates of duty were uncoupled in November 1995. Under these amendments the two will be made identical again.Going to CASA's funding and organisation, this measure will increase CASA's funding by $8.6 million a year and $46 million a year total revenue from aviation fuel levies, thereby ending the deficit that CASA has been running since 1996-97. As a result, CASA will be able to carry out a major restructure which will centralise critical enforcement decisions such as suspensions, cancellations and prosecutions. The end result will be increased air safety through a better resourced and run CASA. It will help guarantee what pilots and aviation companies have wanted for years—fair treatment in a uniform and standard manner.I would add that I have had some experience of this inconsistent treatment meted out by CASA, and it is one of the more frustrating experiences. The legislation is quite draconian. It is very, very strong legislation which acts as a god to all. It has the all powerful and all enforcing ability to put someone out of business instantly. So it is important and essential that the administration be fair, centralised and consistent. After having been involved in some—how do I put it carefully—kind of negotiation with the previous structure of CASA and some of its personnel, I am encouraged that this sort of structure will give it a far better chance than it has had in the past to be fair, centralised and consistent.Turning to the issue of aviation control towers, at present the federal government provides a subsidy to Airservices Australia to ensure the maintenance of reasonable prices for tower services at regional general aviation airports. The current subsidy includes the $11 million for 1998-99 and $2 million in 1999-2000. As I have indicated, the revenue will be boosted by $9 million, and $7 million in 2000-01. The total subsidy is $29 million. The subsidy will be administered by the Department of Transport and Regional Services to ensure the achievement of the goals intended.The government will be spending up to $18 million over the next two years to help pay for air traffic control towers at 15 regional and general aviation airports where landing charges are capped at $6.75 per tonne landed. This is crucial to ensure that regional areas continue to receive the high quality, affordable and safe air transport and freight they require and deserve. Without the subsidy, the cost of a landing at just one regional airport would have been $38.22 per tonne rather than under the cap of $6.75 per tonne.Increases in landing charges would devastate airports and their local economies. Closure of towers would render vast areas of Australia unsafe for air traffic. Unfortunately, an earlier attempt to reduce the costs of airport facilities by contracting out tower operations at regional airports was disallowed in the Senate. Other suggested alternatives to the rise in gasoline levies, such as a ticket tax or yearly registration fee for aircraft, would have not only created a difficult administrative burden but also placed in danger the already vulnerable general aviation sector.I now turn to the expansion of the definition of `eligible aviation fuel'. From 12 May the definition of `eligible aviation fuel' will be expanded to include aviation kerosene as well as aviation gasoline. Avtur will now be treated in the same way as avgas. Requirements of mandatory consultation with the boards of CASA and Airservices Australia in relation to setting the `statutory rate' will end, as will those regulations concerning respective shares of revenue between CASA and Airservices. Such a matter is more properly one for the federal government, without such mandatory consultation. The minister has clearly indicated that he will continue to consult with the boards of both agencies, where such consultation is considered to be appropriate.That is a brief explanation of the legislation. I speak obviously in support of the bills and wish the legislation a speedy passage.18:19:006310St Clair, Stuart, MPMr St CLAIR84BNew EnglandNP10—While speaking in support of the Aviation Fuel Revenues (Special Appropriation) Amendment Bill 1999 , the Customs Tariff Amendment (Aviation Fuel Revenues) Bill 1999 and the Excise Tariff Amendment (Aviation Fuel Revenues) Bill 1999 and the comments of my colleague the honourable member for Grey on this particular issue, I ask that we not lose sight of the fact that the duty on aviation gasoline will still be 15.8c a litre cheaper than it was when this government took office in 1996. We must keep in mind that it will still be 15.8c a litre cheaper than it was when we came into office in 1996.The problem has been that, on 1 July 1998, Airservices Australia introduced terminal navigation charges for all its tower services, including those in regional areas, which were based on the costs it incurred at each location. The Federal Court ruled Airservices's charges unlawful other than on such a basis; and the Australian Competition and Consumer Commission, from which Airservices must obtain approval when it seeks to vary its charges, supports location-specific charges.The move to location-specific charges was accompanied by the abolition of 15.692c per litre avgas duty that was directed to Airservices. The full implementation of these charging arrangements under Airservices's current cost structure would result in increases in charges of up to 300 per cent at some regional and general aviation airports ranging from $7.07 to $38.22 per tonne landing compared to the current subsidised rate of $6.75c at these airports.An increase in charges of that kind or of the kind necessary to cover costs will destroy aviation services and training facilities in regional Australia, as my colleague the member for Grey mentioned. As some of these airports are vital to important regional centres, it was announced in the 1998-99 budget that the government and users of the major capital city airports would subsidise the charges of these particular airports. However, at the time the subsidy was agreed to, it was on the basis that it was required as an interim measure.It was anticipated that Airservices would be able to contract out or privatise tower services at many of these subsidised locations, thus reducing the costs imposed on airport users and allowing the subsidy to phase down markedly in the 1999-2000 years and, of course, disappear in the following year. The recent disallowance by the Senate of the contracting out regulations has meant that cost reductions through the use of alternative service providers are no longer an option in the short term. In order to ensure that these essential services are provided at regional and general aviation training centres at a reasonable cost to users, the government has agreed to maintain a subsidy.I turn to the solution. The Howard-Fischer government believes that all Australians should have access to safe and affordable air services. The government provides a subsidy to Airservices Australia so it can maintain tower services at regional and general aviation airports at prices lower than full cost of recovery. In addition, Airservices Australia will continue to cap general aviation charges at Cairns, Coolangatta and Canberra.It would be prohibitively expensive to use some of our major regional airports without the subsidised cap. For example, in my own electorate of New England, the cost of landing at Tamworth regional airport would be $38.22 per tonne—quite an extraordinary amount of money. Some people have suggested that we could force airport users to pay the full cost of the tower services or, alternatively, close those control towers. The increases in landing charges necessary to fully recover tower costs at some locations would have a devastating effect on the airports and their local economies, and it would be unsafe to close the towers at some of those locations.Instead the budget extends the subsidy to 2000-01. It provides an additional $9 million in the 1999-2000 year, taking the subsidy to $11 million next year, and an additional $7 million in the year 2000-01. The government is committed to reducing the cost of tower services in the longer term and has asked the Civil Aviation Safety Authority to develop safety standards for the operation of control towers by alternative service providers by 30 June 2000. The government will increase the duties on aviation turbine fuel and aviation gasoline to 2.71c per litre to pay for the extension of the regional control towers subsidy and the increase in CASA's funding. The tower subsidy component of the increase—0.51c per litre—is a temporary measure that will apply over the next two years.The budget increases funding for the Civil Aviation Safety Authority by $8.6 million a year. In total CASA will receive $88.1 million from the government in appropriations and fuel duties in 1999-2000. CASA has been running a deficit since 1996-97. The increased funding will make it possible for CASA to carry out a major restructure, which will centralise critical enforcement decisions such as suspensions, cancellations and prosecutions. This restructure is being funded separately through a resource agreement with CASA. One common complaint about CASA is that its district offices apply the aviation laws inconsistently. I am sure we have all heard them. The centralisation of critical decisions will guarantee that pilots and aviation companies are treated in the same fair way, no matter where they are in Australia.A proportion of the rise in the aviation fuel duty to 2.71c per litre or 0.467c per litre on avgas and 0.391c per litre on avtur will pay for the increase in CASA's funding. The government examined other options—as it should, and as it was duty bound to do—for increasing the organisation's funding, such as a levy on airline tickets or yearly aircraft registration fees. The ticket tax, however, would have been administratively cumbersome, and yearly aircraft registration fees would have greatly increased the tax burden on the vulnerable general aviation sector. In closing, I repeat the fact that the duty on aviation gasoline is still 15.8c a litre lower than it was when the government took office in 1996. I commend all the bills to the House.18:27:006312Truss, Warren, MPMr TRUSSGT4Wide BayNPAgriculture, Fisheries and Forestry10—On behalf of the Minister for Transport and Regional Services, Mr Anderson, I thank honourable members for their contribution to this debate. This package gives effect to the government's budget decision to increase the duties on aviation gasoline and aviation turbine fuel to 2.71c per litre. In her comments, the member for Dickson noted in passing that the Aircraft Owners and Pilots Association was opposed to an increase in the duties. I would simply remind the House that the duty on aviation gasoline is now 15.768c per litre lower than it was when we took office—a significant decrease in any terms. I thank those members who contributed so constructively to this debate. I commend the bills to the House.Question resolved in the affirmative.Bill read a second time.Message from the Governor-General recommending appropriation announced.6312Leave granted for third reading to be moved forthwith.Bill (on motion by Mr Truss) read a third time.Bills6312r8206312Consideration resumed from 2 June, on motion by Mr Anderson:That the bill be now read a second time.Question resolved in the affirmative.Bill read a second time.6312Leave granted for third reading to be moved forthwith.Bill (on motion by Mr Truss) read a third time. Bills6312r8216312Consideration resumed from 2 June, on motion by Mr Anderson:That the bill be now read a second time.Question resolved in the affirmative.Bill read a second time.6312Leave granted for third reading to be moved forthwith.Bill (on motion by Mr Truss) read a third time.Sitting suspended from 6.30 p.m. to 8.00 p.m.Bills6312r8326312Debate resumed from 2 June, on motion by Dr Wooldridge:That the bill be now read a second time.20:00:006312Macklin, Jenny, MPMs MACKLINPG6JagajagaALP00—The National Health Amendment (Lifetime Health Cover) Bill 1999 has been described by the Minister for Health and Aged Care as the last great reform for private health insurance. It is more aptly described as his fourth rescue plan in four years. We are rapidly going down the same road as we did in the Fraser years when we saw five health plans in five years. As I will explain, the opposition does not intend to oppose the introduction of lifetime community rating even though the scheme the government has dubbed `Lifetime Health Cover' falls a long way short of a great reform.The opposition has always said that it supports the private health sector working to complement Medicare. Most other OECD countries have private health insurance available to provide a service to a particular part of the community that wants and can afford such a product. Where we part company with the government is in its fixation that membership of private health insurance has to be artificially boosted at public expense. We strongly object to the $1.7 billion government rebate for private health insurance and will oppose measures that limit access to the public hospital system or anything that results in resources being taken from the public sector to subsidise the private sector.This bill enables Lifetime Health Cover to be adopted by removing restrictions in the National Health Act 1973 that require private health insurance to be community rated. In essence, people will pay a higher premium depending on the age at which they join private health insurance. The intention is to create a penalty which encourages people to join earlier and, once joined, to stay with the fund.The key elements of the scheme are that all existing fund members and anyone who joins in future under the age of 30 pays the base premium. People born before July 1934—that is, those who are 65 now—and who are currently not members of health insurance funds will be charged only a base premium if they join in the future. That does not mean the base premium now, but whatever the 30-year-old premium is in the future. Anyone else who joins after the age of 30 will pay an additional two per cent for every year they wait. This increases to a maximum of 70 per cent. So there is a 70 per cent penalty for people joining at age 65 or older.Members can suspend their membership with the agreement of the fund if they travel overseas or have other hardship claims such as losing a job. Members who drop their membership have their effective age under the scheme adjusted by a formula that gives them up to three years of being non-financial without a penalty to their premium. Longer periods of absence impose a proportional penalty.The government also intends allowing people to join health funds before 1 July next year without incurring any of these penalties. The outcome is intended to be that everyone pays a premium that reflects their age of entry to insurance adjusted for periods of absence. People who are members for fewer years pay towards the insurance pool. However, there will still be a substantial cross-subsidy in the arrangements and the grandfathering of people over the age of 65 as of now largely undoes the impact of the scheme in reducing hit and run claims in that age group.Lifetime Health Cover is a move by this government away from community rating. The objective is transparently to push people into private health insurance over the next 12 months in fear of higher premiums after that. It really is designed to cover up for what has been an abysmal failure of the government's $1.7 billion health subsidy, which has neither attracted new members nor controlled premium rises.In fact, it was reported on the day after the budget that the government has a target which it is trying to keep secret—a target that private health insurance membership levels will increase to 36 per cent of the population as a result of this move to lifetime cover. If it succeeds in this goal, it will create two significant problems. Firstly, and most importantly, it will result in $200 million being clawed back from public hospitals under the Australian health care agreements without any evidence whatsoever that the pressure on public hospitals is being reduced. Secondly, it may worsen the degree of adverse selection within the health funds.The people who are most likely to join the health funds in the next 12 months—that is, before the penalties start—are those aged between 50 and 65. Those over 65 have been given an exemption from the penalties but, if a lot of middle-aged people join, the funds may develop a very skewed age profile. If so, this will give them serious financial problems in a decade when these members start making large claims.I will talk a little later about a range of other issues which may require some amendments to be made to the legislation. It certainly is the case that the bill has been constructed with some haste. There certainly is a need for more opportunity for public debate and consideration. As a result, the opposition intends to refer the bill to a Senate committee to give the community an opportunity to comment on the design the government has adopted. I will also outline a little later the general areas in which the opposition intends moving amendments when this bill reaches the third reading stage in the Senate. The most important of these concerns the flow-on impact that lifetime cover may have on public hospital funding.We certainly now know the Prime Minister's view about private health insurance and its appeal to ordinary Australians. He went on television on 12 May just this year and expressed himself as follows:. . . you are faced with the possibility that if you want it in 10 years time—that is private health insurance—when you are not as healthy as you are now it will be more expensive—because of the government's change that we are now debating—So therefore, you might say to yourself, `gee, it's more important to go into private health insurance now than to add another country to my next overseas trip.'The Prime Minister should not be surprised that only 30 per cent of Australians can afford private health insurance at its current price. Far less than 30 per cent are planning globe trotting annual holidays. To understand why the industry is so keen on lifetime health cover we need go no further than the industry's own spokesperson Russell Schneider. He recently made the wonderfully frank admission that most young people will not buy private health insurance at any price. This came in stark contrast to his prediction of eight months ago that the 30 per cent rebate would result in a massive increase in participation to 45 per cent. In May this year, Mr Schneider addressed the ACT branch of the Australian College of Health Practitioners and used the occasion to outline the real motivation for Lifetime Health Cover. The Australian newspaper recorded that he told the gathering:We are really after the 35 to 45 or 50 age group, especially if they don't have kids. It's then, they don't make claims. We are after the yuppies with no kids, they have lowest utilisation rates.In other words, the industry openly admits that its products are not viable at the premium levels that would be required to recover costs from the existing membership. It is only by forcing more young and middle aged people to pay premiums without claiming that they hope to run at a profit.The minister has been boldly going around predicting that Lifetime Health Cover will result in a drop in health insurance premiums. The truth is that there will be no such drop. Young people are not being offered a discount to take up health insurance; they are simply being told to join at the current prices or face a penalty premium in the future. Various people who responded to the initial discussion paper that the government put out proposed that there should be discounts for younger people to give them an incentive, but this advice was ignored. Everyone starts off at the same rates and late joiners pay the penalty. It could have been different, but the government lacked the insight to design a fair and effective system that would encourage rather than penalise.Of course there is no substance to the minister's claim that premiums will actually drop. Once again, we need go no further than the always frank Russell Schneider to find out the industry's view. He told the magazine Australian Doctor on 7 May:The cost of both private health insurance and private health care was unlikely to decrease and it is time that doctors and hospitals joined me in saying that. We have to end the myth of cheap health insurance.I have to say that nobody with health insurance would think it was a myth that it was cheap. There is also no doubting where Mr Schneider and the industry stand on cost control. There is a long record of price increases running at two to three times the inflation rate to back up his conviction. Is there any wonder then that in an opinion poll in the Melbourne Herald Sun just last week in response to the question: `Do you think private health insurance offers value for money?' a mere 13 per cent said yes and a whopping 86 per cent of people said no. The industry has been unable to convince half of their members that they actually get value for money.To understand just how heavily subsidised this industry has become let us compare the $1.7 billion a year government subsidy to the assistance that is given to other sectors of the economy. Madam Deputy Speaker Kelly, you might particularly be interested in this given the electorate you represent. The Productivity Commission's trade and assistance review last year records the total level of assistance given to other sectors, showing both the tax expenditures and the budget outlays. The total budget support for the primary production sector amounted to $823 million and all the assistance to manufacturing amounts to $1.4 billion. In other words, private health insurance funds get more support from this government than that which goes to the entire primary industry sector or manufacturing industry sectors in each single year. It is scandalous the extent to which this government is prepared to subsidise private health insurance for no benefit whatsoever to the health system.The promotion of Lifetime Health Cover has depicted it as a long-awaited final solution for the ailing private health insurance industry. But the government knows well that it will not solve these problems. It is another in a long line of schemes that the government has tried and failed. The opposition is concerned that the public should be fully aware of the agenda which the government and elements of the health sector have for future changes to our health system. In the same week that Lifetime Health Cover was introduced into parliament, the news leaked out that the minister was secretly planning to sell Medibank Private. Since then, the minister has certainly not denied that such plans exist. He simply says that he has not formally raised them with his colleagues.Medibank Private has served Australia well over the last 20 years and has an enviable record. Not only does it generally have the best premiums, it was also found by Choice magazine to offer the best buy for hospital cover in every state other than Tasmania where a local fund outdid it. On top of this, Medibank Private managed the lowest average increase of any fund in the most recent round of premium increases. Medibank Private put its premiums up by only 1.9 per cent, the same as the inflation rate. It is a great pity that many other funds were nowhere near this performance. So at a time when the industry is under great pressure, what does the government want to do about its most efficient fund? It wants to sell it off. Instead of welcoming the stability that a publicly owned, large and relatively efficient fund offers as a benchmark for the rest of the industry, this minister wants to get rid of it.The next plan we have been hearing about is the means testing of Medicare. Two Liberal premiers, Mr Kennett and Mr Court from Western Australia, as well as many people in medical circles have been actively advocating that entry to public hospitals should be means tested or, as Richard Court said, limited to those on benefits. This would be yet another attempt to turn back the clock to the time when Malcolm Fraser was Prime Minister and our current Prime Minister was Treasurer and they produced a radical agenda to privatise health care. It failed dismally then and contributed greatly to the demise of that government. It also led to the birth of Medicare, because the Australian public have said so clearly so many times that they want a universal health insurance scheme. If the next great reform to health care by this minister is the means testing of Medicare, it will be strenuously opposed by the opposition.Another retrograde measure which apparently was considered by the government in the lead-up to the recent budget and which has been pushed by a number of medical groups, including the AMA, is a reduction in the threshold for payment of the Medicare surcharge to a large number of people earning below the current limits of $50,000 for an individual and $100,000 for a family. It would be another major blow if this minister thinks he might embark on another revolutionary reform to private health insurance, because it would be a significant attack on the universal nature of Medicare. If people on incomes around $35,000 were required to pay the surcharge, as some commentators have suggested, it would be tantamount to a tax on those who could least afford it. Many of these people have no need for private health insurance and, as Russell Schneider knows, most would make relatively few claims.The reform the government is yet to give any details about is the reform of the reinsur ance pool. It is a contradiction that the government has made major changes such as the 30 per cent rebate and is now introducing lifetime health cover but has left the reinsurance pool untouched. The effect of the existing reinsurance pool arrangements is to share risks between the funds and equal out variations in their membership profiles and claim patterns. This gives no incentive to pursue cost saving agreements. It rewards the inefficient funds and equalises out the effect of changes, such as the one we are debating tonight, lifetime health cover. The funds that have a larger number of younger members or do effective deals to keep premiums down lose out in the current reinsurance arrangements.The minister knows that industry experts are saying he should be changing the rules for the reinsurance pool at the same time he is abandoning the community rating principle. But he does not want to do that because he needs to have the industry united behind him in order to get this plan adopted. He knows that if he undertook the changes to the reinsurance arrangements he would lose the industry's support, particularly from the inefficient funds. The minister should be well aware that the logical consequence of moving to lifetime health cover is that the reinsurance arrangements will have to change. The latest information is that this will come next year, but we will have to wait and see because the way this minister seems to go about health insurance changes is to do them in a completely piecemeal way.The minister also seems to be edging towards the soft option on the elimination of gap payments, another major issue in health insurance. Six months ago, he bowed to pressure from Senator Harradine in the Senate and finally agreed to tackle the rapidly growing gap payments, which is the main deterrent to people taking out or keeping their private health insurance. In an article in the Australian today, we see that gap payments have continued to grow. In the last two years, gap payments for nine frequently used surgical procedures have increased by an average of $200. Last week in the Senate estimates committee, we saw that the government's plan to increase the Medicare rebate for difficult births in order to eliminate gap payments has been completely negated by obstetricians. Mothers are still facing gaps of almost the same amount. So despite the increase in the Medicare rebate from $400 to $950, the average gap payment has dropped only slightly from $300 to $218—no prizes for guessing who is holding the bill. The government did not have any agreement with the obstetricians to contain their gap payments. Those obstetricians have just said, `Thank you very much,' to the government for the extra money they have paid by way of the rebate and have made no commitment to eliminating the gap payments.The same is now happening with the AMA plan. It was initially stated that there would not be any flow on in prices under a ministerially endorsed framework to control gaps. Now we are being told that this is being turned into gap insurance without any control on fees. We have not seen any legislation being put on the table, although I note once again in the Australian Doctor that it was intended to pass before the end of June. The minister should think very carefully before he brings in legislation that permits gap insurance at the expense of rapidly escalating premiums. The spiral of medical inflation of costs would be the death knell for private health insurance, as he well knows.There are a number of areas in the Lifetime Health Cover proposal that certainly will need to be improved and I hope we will be able to do that in the Senate. To do that, we will certainly need to have access to the actuarial advice the government has so far refused to release. That advice goes to the specific scheme that we are debating tonight. The only public information we have is limited to a 1997 report that is based on quite a different design. The opposition is calling for the latest analysis to be tabled before the Senate committee, and we will also be seeking to question the consultants who designed the Lifetime Health Cover about the details of the scheme. One of the serious weaknesses in the scheme we have before us is that it makes no distinction between the very large number of products now available for private health insurance. Any type of hospital cover is sufficient to preserve the lowest possible entry date. This leaves open the opportunity for a quite blatant sort of rort. A person could purchase a low cost hospital policy with a large patient contribution, or what is called `high end deductible'.These policies have become very fashionable because of the design of the government's Medicare surcharge which the funds have exploited. Often people with this sort of policy have no intention whatsoever of using private hospitals unless they have a very serious illness. They are simply avoiding the surcharge and buying the cheapest scheme possible. Now they will also be able to insulate themselves from the penalties in Lifetime Health Cover.Why should a person who has paid less than half a full premium be able to upgrade their premium after 20 years without any penalty when they have paid a fraction of the commitment of a person who has been fully covered throughout that period? It just does not stand up by the government's own logic. The Senate inquiry should look at a more accurate formula that would allocate a premium penalty in accordance with people's past commitments to make sure that there is some internal fairness in the scheme.The government should also look closely at its grandfather provision for people aged over 65. There is no question that this is a worthwhile and, I have to say, atypically generous move by the government to avoid creating problems for those who are most vulnerable. One issue which would improve this part of the scheme would be if the government could explain why it has grandfathered people over the age of 65 but not extended the same concession to those women aged under 65 who are already in receipt of the age or widow's pension.As far as the hardship provisions are concerned, the government's proposal is complex and is likely to create numerous anomalies. The rules in relation to periods of leave, overseas absence and suspension of membership overlap and the definitions are potentially ambiguous. The way in which these rules affect people in different family situations need to be explored in depth by the Senate inquiry. I do not want to dwell on these points now but I would like the government to have a look at these provisions in the bill because it currently lacks a mechanism to resolve complaints and solve these hardship situations.The assigned date of entry is a key piece of information for each person, and it will be costly if a dispute arises. Funds are meant to accept transfers of members at the same level, but there is no compulsion and no process to sort out even a basic problem such as a lost file. The hardship provision that is in the bill has a tight sunset clause in the year 2002. It also depends on the minister investigating hardship cases to resolve them. The opposition believes it might be more effective to have a continuing mechanism whereby the private health insurance ombudsman has clear discretion and powers to resolve disputes and alleviate hardship. Again, the details of what is required should be explored in the Senate inquiry.Another concern we have is with regard to the advertising program proposed by the government—another $10 million of taxpayers' money to be spent on health insurance. Our concerns are: will this be another blatant political campaign conducted by this government? I certainly hope we are not going to have to see the ACCC being the policeman again. We will be seeking some stringent guidelines through the Senate inquiry to make sure that that does not happen. As I said at the start of my remarks, the opposition does not oppose the concept of Lifetime Health Cover, but I do have grave concerns about some of the design elements. We will not oppose the bill in the House, but we will pursue some of these problems when it gets to the Senate.As I have also said, the main concern that we have is the way in which the scheme, as it is currently designed, will impact on our public hospital system. What I will be seeking from the government and what I put to the minister tonight is that we need to make sure that this scheme does not result in further cutbacks to our public hospitals that form the core of our health system. The government has failed to demonstrate any evidence that an increase in private health insurance will result in reduced demand on our cash strapped public hospitals.It was reported the day after the budget when lifetime cover was announced that the Department of Health and Aged Care thinks this scheme might frighten enough people into private health insurance to achieve the target of 36 per cent. If private health insurance did rise to 36 per cent, that would cost the government over $300 million because of the 30 per cent rebate. But the government has made it clear that the basis for proceeding with Lifetime Health Cover is that it will not come at a cost. You might ask: how can this be possible? Because the government intends to take this money off our public hospitals.Demand for public hospital beds has continued to increase and funding provided under the Australian health care agreements is already insufficient to provide decent health care services sufficient to meet demand. The public needs to know that the government inserted a clawback clause in each of these health care agreements with the states. So funding to each state will be reduced when private health insurance coverage exceeds a particular trigger point for that state. These trigger points are generally around 34 per cent. Our public hospitals will lose around $200 million if the government achieves what is understood to be its undisclosed target of 36 per cent membership by next July as a result of the proposed $10 million television campaign.This is outrageous on two counts. Firstly, the people the funds and the government hope will take out health insurance because of Lifetime Health Cover are the young and the healthy who do not claim. As they are not sick, they will not be going to public hospitals either. In other words, increasing health insurance by this method will not take any pressure off public hospitals.Secondly, the states did not know about the introduction of Lifetime Health Cover when they signed the Australian health care agreements. They were not to know the government had in mind attempting to drive people into health insurance by this method which would take no pressure off the public hospitals. The government should act immediately to make sure that our public hospitals are protected. We all know the enormous pressures that they are already under, and this further cut in funding which the government has in mind will only make matters worse.If Lifetime Health Cover is to proceed, the clawback arrangements need to be removed and an assurance given that there will not be a reduction in public hospital funding, which is not related to actual demand for public hospital services. To proceed without this assurance would highlight the risk that this scheme is just another attack on public hospitals and the principle of universal coverage under Medicare. I certainly hope that the minister will seriously examine this proposal, and I look forward to the detailed consideration of this bill when it gets before the Senate.20:30:006318McArthur, Stewart, MPMr McARTHURVH4CorangamiteLP10—I acknowledge the long involvement of the shadow minister for health in the health industry and her tabling of the Macklin reports, and I note her total commitment to the Medicare arrangements and her rejection of private health insurance. I totally reject her very unfair attacks on Russell Schneider, who is the spokesman for the insurance industry. Nobody has a better understanding of the issues involved in the private insurance industry than he has, and I think the shadow minister was very unfair in the way in which she attacked Mr Schneider. I also totally reject the argument that the $1.7 billion allocated by the government is a scandalous subsidy in the $40 billion total health budget. Finally, I note that the shadow minister has said that the opposition will not oppose this measure, and that is a reflection of the public support that the government has received in putting forward this proposal.I support very strongly the National Health Amendment (Lifetime Health Cover) Bill 1999 because most Australians value their health. Being in good health is fundamentally important to most people. Most people, if they have to choose, would rather be healthy but not rich instead of wealthy and sick. It is a fundamental thing that most Australians and most voters understand, especially in my electorate of Corangamite, where 59 per cent of the people have taken out private health insurance.Australians really want a choice as to the kind of health care they have, and this measure will help provide this choice. They do not want, nor should they have placed in their path, a public health system where there is only one choice. We see this situation in the UK, where it is 100 per cent National Health Service, although the situation is changing in that country. On the other hand, private health gives people a choice. It gives them the ability to choose their own doctor and hospital and to receive treatment when it suits them, instead of having to get in the public hospital queue. I talked with Minister Tuckey, who is at the table, about this on a number of occasions during his time as the shadow spokesman for health.People want a choice in protecting their own health, and surveys reveal that the overwhelming majority of people want to have private health insurance to supplement their Medicare cover. Unfortunately, a few of them are stopped by what they consider to be the prohibitive cost of private health insurance, and I think both sides of the parliament acknowledge that fact. They consider the cost of private cover to be too high compared with the `free' Medicare system—and I think this is the fundamental issue before us all in this House. The problem is worsened by patients having to pay the gap between the schedule fee—which private health insurance covers—and the actual fee from the doctor. The gap occurs when GPs do not bulk-bill and patients end up paying 15 per cent of the schedule fee, and when doctors in hospital charge a patient more than the schedule fee. I think that most Australians are concerned about that issue. Gaps rarely occur with hospital fees, because they are more regulated and more understanding.Private cover does not cover everything; people can still be out of pocket, and that is the main complaint that I get. There is a need for attractive `no gap' products to be further developed, and the government is encouraging insurers to make innovative changes. On the other hand, the government is discouraging specific gap policies and is encouraging people to take out the total insurance. This legislation is one of a series of reforms designed to protect health care in Australia.I emphasise that the coalition's support of Medicare is ongoing. Medicare has wide community support—everyone in this parliament would understand that—and, under this government, Medicare stays. However, the survival of the public health system is contingent on the survival of the private health insurance system.Recent ABS figures, from 1996, tell us some very interesting facts. According to those figures, health in Australia takes up 8.5 per cent of the GDP, compared with about 15 per cent of GDP in the USA. So, relatively speaking, we have an efficient health system here in Australia which is not taking too much of our resources. Health is a $40 billion industry, and I think members on both sides should fully understand the magnitude of the amount of money involved in the health industry in Australia. Forty-five per cent of the health industry is Commonwealth funded—so this parliament funds about half of the industry; 22 per cent of the industry is state funded; and 33 per cent of the industry is funded by private expenditure. So the reality is that 65 per cent of the health sector is government funded, and nearly three-quarters is funded by the taxpayers.The fundamental problem is that taxpayers are paying already for the system—but they see it as free or as something that is to be used because it is there. They have that attitude and that makes it difficult for private insurers. The private sector is hardly on a level playing field, because they are up against another product which is perceived as being free; but obviously it is not free, because the taxpayers are funding it.The other significant benefit of private health insurance is frequently overlooked: the existence of the private sector encourages efficiencies throughout the entire health system. Without private hospitals there would be less choice, less competition and lower efficiency standards throughout the system. We know that privately insured Australians comprise about 30 per cent of the population, and that figure has been debated in this place throughout the health debate over the last few years. Fifteen years ago, 65 per cent of the population was privately insured but, under the Labor government, that dropped quite dramatically. It is estimated that every time this figure drops by one per cent, another $100 million will have to be spent on the public system by the taxpayer.Facts about private health insurance from the Industry Commission's report on private health insurance conducted in 1997 provide some very interesting data: private health insurance is a $4.5 billion industry; the six million Australians it covers tend to be richer and older than average; most individuals who have private health insurance have top level cover, costing an average of $1,230 for individuals and $2,460 for families; there are 48 health benefit organisations, and most are mutual societies. There are more than 60,000 people employed in the private system, and there are in excess of 22,000 beds.The private sector is a very important part of the total health system in Australia. There is a need to stabilise and then increase the number of privately insured Australians, especially with an ageing population where people make greater use of doctors and hospitals. The other important feature is the introduction of new medical technology, making it all the more costly to use these facilities.How is this government increasing the number of privately insured patients? Firstly, it has put a surcharge on high income earners, encouraging them to insure privately because they have more resources to do so. An individual earning more than $50,000 per annum or a couple earning $100,000 will pay a 2.7 per cent Medicare levy rather than the 1.7 per cent levy. That is an incentive for people to take out private health insurance and not lean on the public system. This is an equitable policy, and it reminds people that there is no free public system, like there is no free lunch.The 30 per cent rebate which the Howard government introduced effectively deals with the fundamental reason—which we have certainly debated in this place—that people have dropped out of private cover: it is too expensive. The Industry Commission, in its deliberations, identified that the price issue was the major factor of the vicious circle of declining membership. As the costs went up, the numbers declined and then costs went up again, and it was forever a vicious circle which reduced the number of people in the private system.The government is hoping to stabilise the numbers and improve the membership profile; that is, increase the number of young people—who are better insurance risks—with private health insurance. A very important and encouraging aspect of this particular policy is that from the age of 31 onwards you will pay an extra two per cent per annum on your premium for every year in which you do not have private health cover. So if you apply for private health insurance in 10 years time, you will pay an extra two per cent for every year you do not have cover. The fundamental decision people have to make is whether to join a private health insurance fund at an early age and keep the cover later in life or pay a penalty later on if they want to join.These reforms, as members would be aware, take effect from July next year. There will be a period of grace until then to allow people to make these decisions. If you are in a fund before that time you will pay the lowest rate and there will be no penalty. If you are 65 or older on 1 July 2000, you will be exempt from paying these premium penalties. The government is encouraging people to join, and it is providing a period of grace for people in the short term so that in the longer term the funds will be in a competitive position. The government has allowed for cover to be suspended for an aggregated period of 1,094 days for the unemployed and those travelling overseas to cover some of the anomalies that have been raised in the debate.This policy rewards long-term members and discourages hit-and-run members. There has been an ongoing debate about people who, to use the parochial term, hit and run—those who join the funds in times of potential medical need and leave at a time when they do not think they will use the funds. People in the electorate of Corangamite frequently say to me, `I've paid for my private cover for years. It's very expensive, but I'm too afraid to leave.' They have done the right thing, been in private health insurance, and they are not game to leave but are very worried about the high level of premiums. Fundamentally, loyalty to these funds should be rewarded by a lower premium structure so that we do not have this hit-and-run syndrome and people remain in the funds for most of their lifetime.The public perceives the fairness of what we are doing in this legislation. The MBF-Morgan Health Watch survey of 1,200 people across the country conducted last month indicated that 68 per cent of Australians agree with the principle of lifetime community rating. The government has also addressed the other key finding: that the public do not want to see the elderly penalised. The concepts of community rating and the need to look after the older, potentially sicker members of our community can be addressed in this legislation. We have addressed the problem of the over-65s being exempt in the early stages of the legislation.If we do have a lifetime community rating concept, it will increase the likelihood of premium reductions. Actuarial projections suggest that five years of lifetime health cover will make insurance more affordable for all members than under the current system. The projection is that premiums could be 15 per cent lower compared to the current system. This will take pressure off the public hospital waiting lists, and that is one of the key outcomes of the proposal before the parliament.When Medicare was introduced in 1984, 65 per cent of Australians had private health insurance. Under the Labor government it was reduced to 30 per cent. The government has written to everyone 65 years and over telling them that they are exempt from these current proposals. Labor, however, want to neglect private health insurance, as they claim it will destroy Medicare. As the shadow spokesperson indicated in her remarks to the House, they are supporters of Medicare. However, it is interesting to hear what some other members of the Labor Party—those who had an understanding of health matters and understood what the declining membership of private health funds would do—have had to say. Former health minister Graham Richardson has often been quoted. In the Bulletin of 21 August 1996, he had this to say on Labor's position:Labor aren't recognising the big problem. It's still a huge problem—that people are deserting health insurance at the rate they are. It isn't a problem any of you will worry about tomorrow, but in ten years time it will be.He went on to say:I steered the package through the Cabinet but resigned before I could sell it to the caucus. Practically the whole package died when I left as the Labor Party has always been biased against private health insurance. Without a sponsor, any proposal to help the industry was doomed.We can see quite clearly what that spokesman, what that minister, thought about the Labor Party's position, and no-one has really refuted the intelligent and sensible remarks of former Senator Richardson.There is also the member for Werriwa. He is a thoughtful Young Turk. On 19 March 1999, Mark Latham, writing in his regular column in the Daily Telegraph, referred to the intent of this legislation: to link premium levels to the age at which people take up fund membership. He noted:This is what the Whitlam Government wanted to do in 1973.Approvingly, he continued:. . . private health insurance needs to operate according to the rules of risk and competitive pricing.His conclusion was:The best way to support Medicare and the public hospital system is to support the phasing out of community rating.I might debate some of the points that he raised, but he fundamentally understands that you need to have the Medicare arrangements, and you need to have the private sector running alongside.There are projections that health costs will double in 25 years and that governments of all political colours will not be able to fund these galloping health costs. This government is spending an additional 17 per cent on Medicare in the coming years. The Howard government is providing the choice of Medicare, and it has made an attempt to stabilise the decline in private health numbers. It has doubled medical research funding, with an increase of $614 million over the next six years. This is a step in the right direction. The area of research has an impact on the total health bill, which impacts on patients. Community rating remains. It is fair and it gives a lifetime guarantee.Through this legislation we are responding to the Industry Commission report of 1997, which recommended lifetime cover. We have received support from the Council on the Ageing, Consumers Health Forum of Australia, the AMA, the Australian Private Hospitals Association, the Australian Catholic Health Care Association and the Australian Consumer Association. Reform needs to be ongoing. All members on the government side would agree with that, and this is a major step in the right direction. The Industry Commission recommended there be a further broad inquiry into Australia's health system. Allowing the Industry Commission to have yet another look at the health arrangements is worthy of consideration.The next real challenge to the government and to all those persons interested in the health of Australians is no-gap insurance to cover the gap between the scheduled fee and what the doctor charges. It is a very real issue out in the electorates, as most members would be aware, and the government is looking at that. I encourage the minister and the policy makers to address this fundamental issue. It is incumbent on insurers to look at innovative products to ensure that those people who wish to remain in private health insurance get value for the money they are paying out on an annual basis through their premiums.The main thrust of this legislation is to protect the choice that the private sector brings to the health industry. More importantly, the legislation encourages efficiency in the health industry. Individual Australians can receive treatment in the public hospital system or the private hospital system and have the doctor of their choice. I think it is a step in the right direction. It is a fundamental move which, hopefully, in the longer term will establish an ongoing system of private health insurance.Those sitting opposite have fought tooth and nail to refute the arguments about the importance of private health insurance in the scheme of health provision in Australia. That is a pity, because in the longer term we need the resources to look after young and older Australians. We need to make sure that over the next 20 and 30 years we have the resources to increase medical technology. Private health insurance, with more Australians in private health funds, will ensure that this comes about. I commend the bill, I commend the concepts behind it and I commend all Australians and this parliament to support this very innovative and important piece of legislation.20:49:006322Sidebottom, Peter, MPMr SIDEBOTTOM849BraddonALP00—The member for Corangamite, in his selective quotations of the member for Werriwa, forgot to point out that in the same article the member for Werriwa said he believed Graham Richardson was wrong in 1993. The second reading speech on the National Health Amendment (Lifetime Health Cover) Bill 1999 says:The government is committed to ensuring a balance between public and private health sectors. This balance will ensure Australians have a level of choice as well as universal access to excellent health care.The government then goes on to claim that it has demonstrated this commitment through recent reforms to private health insurance. In the light of the commitment I cited above, I question the government's motives in this legislation and its priorities.I would like to deal with these issues in turn. What exactly does the government claim? The government announced in its recent 1999-2000 budget that it would introduce Lifetime Health Cover from 1 July 2000. Essentially, Lifetime Health Cover is an extension of the carrot and stick philosophy, designed to allow private health insurance funds to charge different premiums depending on the age at which people take up private health insurance. It is based on age rating rather than risk factoring. Anyone in future who joins under the age of 30 will pay the base premium. Existing members are protected, no matter what their age, and will pay the base rate set for people of 30 years-of-age for the rest of their lives provided they remain insured.A carrot at the end of this health insurance stick is the sunset clause, with a commencement date of 1 July 2000. After all the incentives thrown at people over the last four years by this government, this allows a 12-month period in which people who are not currently members of private health insurance funds to join and pay the rate for a 30-year-old. Anyone else who joins after 1 July 2000 and after the age of 30 will pay an additional two per cent for every year they wait. This increases to a maximum of 70 per cent for people joining at age 65 years or older. However, people born before 1 July 1934 will be able to join a fund at any time and pay the rate for a 30-year-old.This is an interesting choice of age rating. Industry analysts suspect that 65 years as the maximum age threshold has been chosen probably for political rather than actuarial reasons. The same could be said about the special treatment of those over 65. So what is the logic of choosing 30 as opposed to, for example, 25? To date there has not been an announcement by health insurance funds on the actual new base rate premiums for health insurance policies.In order to rationally debate the legislation, it is prudent to outline some of the arguments put forward by supporters of Lifetime Health Cover. These would include some of the following, which I would add are quite contentious and fundamentally flawed in places. For instance, over time, Lifetime Health Cover should result in a broad cross-section of the community being covered by private health insurance. This is premised on the argument that younger people will be encouraged to join funds at the cheaper rate rather than waiting until they are older. Thus, as the age profile of people insured changes, it is argued that premiums should begin to stabilise and may even fall because the funds will have more good risks.The government further argues that the introduction of Lifetime Health Cover, combined with the effect of other initiatives such as the 30 per cent rebate, will make private health insurance more attractive to people who regard it as poor value. Finally, there is a belief that the existing system of community rating encourages a short-term view of private health insurance, whereby many people weigh up their risks and join health insurance funds only when they expect to use their insurance cover.It is interesting to note that this is the fourth major change to private health insurance in four years. In 1996, a means tested rebate was introduced to fix the health insurance industry's problems. Well, it did not work, so we were hit with a one per cent Medicare levy surcharge to force higher income earners to take out health insurance. It did not work.Less than a year ago, this government tried the current approach, a $1.7 billion bribe to get the middle class to take up private health insurance. It was warning us that the private health care industry faced a bleak future unless the Senate passed the new 30 per cent health insurance rebate. With the privately insured portion of the population dipping towards only 30 per cent, the tax rebate was a desperate measure by the government to stop the unravelling of the private insurance system it so passionately supported. The 30 per cent rebate was supposed to achieve 550,000 new members by the end of this year and increase the insured population from 30 per cent to 33 per cent. Six months ago, the industry itself was saying that it would lift coverage to 45 per cent, translating to 2.5 million new members.What do we have now? The industry tells us that more measures are now needed. I note that the June-July 1999 edition of Health Cover reported the March 1999 quarter increase, for an outlay of $1.76 billion per year in taxpayer subsidies, as this:. . . piddling 8.2 per cent notwithstanding extensive advertising that misled many. The insured population rose a net 57,000 from 30.1 per cent to 30.3 per cent. The obvious conclusion to draw from this scheme is that it was an expensive bandaid proposal, along with others before it, to repair the private health care industry. It has not worked. It has not resulted in significant uptakes in membership quite simply because it went largely to people who were already insured for a wide range of reasons. Additionally, the rebate scheme's objective to arrest premium increases has also failed to materialise. Premiums have gone up by an average of 4.9 per cent. This is not surprising, and analysts of the proposed legislation argue that the trend will continue.Jacquie Hayes of the Australian Financial Review of 15-16 May 1999 cites comments of Nicola Ballenden, a senior health policy officer of the Australian Consumers Association, who says that the proposal is unfair and probably will not achieve its aim of bringing more people into the system and encouraging a more rational pricing policy. Since 1999, premiums have risen each year between four and 17 per cent, which is an average of almost eight per cent. Ballenden has concluded:In effect, the health insurance premiums are rising higher than inflation and there are no guarantees those prices won't continue to rise.In what really sums up the major problem with this legislation, Ballenden says:In my view, it's more likely they will rise, because there is no mechanism in place to stop it.The Herald Sun of 2 June 1999 published a Voteline on the question of whether private health insurance is value for money. Of the 522 calls, 86.6 per cent said no and 13.4 per cent answered yes. I can assure you that the Labor Party did not arrange that ring-in.Paul Gross, in the Australian Financial Review of 19 May 1999, labelled the current proposals before the House as:. . . yet another marginal tinkering with health insurance—and it will not drive down the price of health insurance in the short term.He quotes Minister Wooldridge as saying that these proposals would have a long-term impact. His first guess was `three to five years', but it soon became five to 10 years later in the interview. Few health commentators believe that the proposed legislation will force down premiums or fundamentally attract younger people.Russell Schneider, the Chief Executive of the Australian Health Insurance Association, claimed that this legislation would not achieve its aims because the young neither wanted nor could afford private health insurance. I am sorry that the member for Corangamite is not here because Jenny Macklin did not attack Mr Schneider's credibility; she merely quoted him. I will continue to quote him:The scheme's real success is not going to be that it gets young people in, but it gets younger people in a few years before they start making claims.We're really after the 35-40 or 50 age groups, especially if they don't have kids for they don't make claims . . .We're after the yuppies with no kids. They have the lowest utilisation rates of anybody.In effect the proposed scheme is based on the aim of attracting low risk profile insurers with the lowest utilisation rates. There are two interesting consequences of this. The first is that, given the current base premiums, there is not much incentive for young people to join an insurance fund, either on health or on economic grounds.Ian McAuley, lecturer in Public Service Finance at the University of Canberra, has done extensive study on alternative options to health insurance. In the main, McAuley argues that viable alternatives exist for people who resent being forced into taking out insurance they either do not want or feel they do not need. The point he makes is that even with coercion or incentives—carrot and stick policies—those who ignore the fear factor and choose either to defer joining a fund until age 65 or to commit to a disciplined savings plan to pay for their own medical expenses are likely to be better off.For example, a 30-year-old who pays a $1,000 premium every year until the age of 80 would end up paying double that of a 65-year-old who would be hit with a full 70 per cent penalty for late membership, paying $1,700 a year for the next 15 years. This is the stage of life when most Australians really need insurance to help with the costs of failing health. Alternatively, a person who saves $800 a year to self-insure would still end up $25,000 ahead of the 30-year-old—even if they had to pay $2,000 out of their own pocket every five years for unexpected medical expenses. McAuley prophetically concludes that given this government's continued tinkering with health insurance:Can you see a 30 year-old making a plan for the rest of his or her life based on a health policy? Health care policy changes with every change of Government and there are major health policy changes every few years anyway.Don't we know it? He goes on:So you have got to ask people, are they willing to be on the next 50 years?Thus the rate at which premiums will increase under this scheme—that is, at two per cent per year—is not enough to encourage greater participation in private health insurance by younger and healthier people. McAuley's calculations have shown that younger people would be better off delaying participation in private health insurance until they are older despite the extra premium loading which they would be required to pay. Kenneth Davidson wrote in the Age on 18 May 1999:Self insurance is still the best bet for those who do not want to queue in the public sector . . . a reasonably healthy young adult could put aside the premiums for two to three years (relying on Medicare in the interim), and save more than enough to cover the cost of private elective surgery and private hospital accommodation.Perhaps we forget the financial impost younger people already experience. Generally, youth and good health is accompanied by significant financial costs. Those attending university will barely have repaid their HECS and university fees before they are required to contribute to private health insurance at age 30 in addition to paying the Medicare levy. These people are likely also to be in the early stages of mortgages and are likely to be facing the additional costs of raising a family.The Age editorial of 18 March 1999 was headed `Tinkering at the edges on health—late joining penalties will not cure health insurance problems'. Lifetime Health Cover is in fact playing at the edges of health insurance. It is not a solution to the underlying issue, which is that most of the community, especially younger people, regard private health insurance as too expensive and unnecessary.I mentioned earlier the comments of Russell Schneider of the Australian Health Insurance Association and the aim of attracting low risk, low utilisation insurees. However, the proposal is unlikely to persuade many young and healthy people—disinclined as they are to join private health funds—but it will make access to health care more difficult for less wealthy older people who simply may not have been able to afford private health cover when they were younger. Let's face it, if such people miss the 12-month sunset time, private health insurance will continue to be out of their reach.An important consequence of lifetime community rating or `the forgotten effect' raised by Professor Don Hindle of the School of Health Services Management at the University of New South Wales is that a matter of crucial importance is overlooked. He states:If the risk profile of private insurers is improved (by reduction in the average age relative to no lifetime community rating) then the risk profile of the public insurer will deteriorate.Professor Hindle's comments strike at the heart of the legislation's fundamental weakness.In its attempts to prop up the private health insurance industry, the government ploughs away—deliberately or not, consciously or unconsciously—on three courses. The first is that, if the high risk elderly people or those planning a family are discouraged from having private health insurance, they will need to be provided with care in the public sector. If one assumes that the overall level of care is unchanged, then the reduced utilisation experienced by the private insurance sector will be balanced by increased utilisation in the public sector. The private sector will be better off, at the expense of increased financial pressures on the public health care providers.As the Consumers Health Forum submission to the 1997 Industry Commission noted on page 431, reduced premiums for younger consumers and an increase in the viability of the private health insurance industry `will do little to relieve pressure on the public system as it relies on reducing the risk pool of private health insurance'. And this is the crux of the matter: what of the public system?One could argue that, if the costs to the public sector are increased because of a deterioration in its own risk profile, there should be a corresponding decline in private sector expenditure. Don Hindle thinks not. A more realistic scenario is that public hospital demands will increase but will not be matched by increased funding. Given this government's record of subsidising private health and reducing expenditure on public health, there will have to be further increases in efficiency and declining standards in public health. Private health insurance revenues will increase, and private care providers will maintain their revenues by providing services which would not have been affordable given the previous high risk profiles.It has been estimated that every unit of care costs more when delivered by the private sector. For example, the admitted patient episode costs at least 20 per cent more for a privately insured patient in a private hospital than for a public patient in a public hospital. This is not so much a consequence of inherently greater needs for care or lower levels of efficiency but, rather, of care providers' pressure to increase their revenues in a world where the only significant constraint has been a fear of loss of private health insurance membership due to unacceptable increases in membership premiums.One of the greatest disincentives to private health insurance is the cost and, of this, the gap between what insurers pay and doctors charge. Don Hindle and Ian McAuley argue that pressures on the public health care sector will increase under lifetime community rating and the majority of Australians who do not have health insurance will tend to lose. It is not only the loss of public funding, as Eva Cox put it recently:Given the limited number of medicare specialists who serve both sectors, the more not-so-sick queue jumpers we have in the private sector, the longer will be the queues in the public sphere.There lies another measure which needs urgent action—the number of specialists available to the health system in general. The government claims it wants to take pressure off the public hospital system. But what is the point, as Kenneth Davidson rightly asks, if that goal can be achieved only at the expense of creating a second-rate public health system and an inefficient US style private health system which is too expensive for the bulk of the population?My fear is that the plethora of schemes to bribe, entice and now coerce people into private health insurance, coupled with the erosion of funding to public health, is the thin end of the wedge into dismantling Medicare as a universal system by introducing means testing for access or running down the public health system to the point where, as Kenneth Davidson puts it, `only the desperate and the impoverished would use it'. No doubt many people believe means testing of public hospital services is not an achievable goal in the near future. We heard the words `never, ever' associated with the possibility of implementing a GST. (Time expired)21:09:006326May, Margaret, MPMs MAY83BMcPhersonLP10—As the federal member for McPherson, an electorate where one in every five persons is 65 years of age or over, I am well aware of the concerns of older Australians, particularly in the area of health. This is why I was very keen to speak on the government's National Health Amendment (Lifetime Health Cover) Bill 1999 and the benefits it will have for people in the McPherson electorate and, indeed, in Australia. From the volume of feedback I have received from my constituents, both in writing and on the telephone, it is clear the right messages are being conveyed to all Australians—the messages that the government is committed to getting the private health insurance industry back on its feet and that the government is determined to arrest the decline in private health insurance membership and ease the burden on public health.Lifetime Health Cover will end the unfairness of the current system and put in its place a new, workable solution. Under this scheme, registered health funds will be able to set different premiums so that people entering insurance at an early age pay a lower premium throughout their lives relative to those people who join later. It will reward those who take out hospital cover early in life and maintain this cover throughout their life. It encourages Australians under 30 to take on the responsibility of health insurance for life. It is important that younger Australians recognise that health services are expensive but that if they join a health fund early they will not be penalised in the future.Furthermore, this new approach to private health insurance will provide benefits for older Australians. The scheme is particularly geared to assisting the elderly. No-one aged 65 or over as at 1 July 1999 will pay a higher premium. Those who already have private health insurance will always have the lowest lifetime rating. In other words, they will pay the same rate as someone who joined at age 30. People in this age group will be able to take out hospital cover at any time in the future without paying a loading for joining later in life.Older constituents in my electorate who have recently dropped private health insurance have told me that this new initiative is a huge incentive. Along with the 30 per cent rebate, many have told me that they will rejoin their private health insurance funds, satisfied that the government is doing what it can to make private health insurance affordable. Those who so elect still have the choice of Medicare. The government is not abandoning Medicare nor taking money away from the public system to pay for the private system. Medicare remains a choice. In fact, the government has increased spending on the public hospital system by 17 per cent through the recently finalised health care agreements.Another advantage for Australians across the board—and one that particularly concerns thousands of young families in my electorate—is that Lifetime Health Cover will reward long-term members. People who pay health insurance over a long period will be rewarded for their membership loyalty. Currently, without Lifetime Health Cover, people who are long-term members of health funds are subsidising people who join only when they anticipate heavy hospital and medical expenses. This is grossly unfair and pushes up the price of private health insurance for all members.Under this new approach, people who join after the age of 30 will pay a two per cent premium loading for each year they delay joining. The loading will be capped at a maximum of 70 per cent above the premium payable by a person who joins at age 30. Existing members of health funds who have hospital cover, no matter what their age, will be treated as if they joined a fund by the age of 30. Since I was elected in October last year I have had an increasing number of telephone calls and letters from constituents concerned about rising health insurance costs. In the past few years many have dropped out of their private health insurance funds because of escalating costs. Since the government's announcement of Lifetime Health Cover there has been a noticeable decline in such complaints. This is a positive sign that the government is listening and responding to people's needs.Another advantage of Lifetime Health Cover is that it will discourage what is known as `hit and run' behaviour—that is when somebody signs up temporarily to a health fund for costly surgery and then leaves the fund immediately after having the operation. On a broader scale, Lifetime Health Cover will stabilise membership numbers and improve the membership profile of health funds. It will also reduce premium increases in the future; this will put more money back into people's pockets, giving people more money for the important things in life such as family commitments and leisure.The range of private health insurance reforms currently being implemented by the coalition government is designed to stabilise health insurance participation rates. We have known for some time that the private health insurance industry is under pressure. Since the introduction of Medicare in 1985 by Labor, the number of Australians with private health insurance has fallen from approximately 50 per cent to 30 per cent. This drop has created pressures on the industry and substantially increased Medicare costs for the government by increasing the number of public patients. It has also resulted in increases in premiums.If the current system were to be maintained, the number of Australians with private health insurance would be likely to continue to drop. Increasing the number of public patients would create further pressures on the public health system and substantially increase costs for the government and, ultimately, the Australian taxpayer. Under the current system, in order to survive, health funds would have to continue to increase their premiums, thereby creating a vicious cycle of increasing costs and declining membership. Projections are that, under the current system, premiums would rise faster than they would under Lifetime Health Cover; after five years, the average contribution would be 15 per cent higher under the current system than it would be under Lifetime Health Cover.The existing system of community rating was designed to ensure access to private health insurance for all members of the community, irrespective of their individual health risks—however, it has a number of major flaws. Over time, Lifetime Health Cover will make health insurance more affordable for all Australians, unlike the existing community rating system. While Lifetime Health Cover is a new scheme, it builds on the government's success in halting the health insurance membership decline which followed the introduction of the 30 per cent rebate; it is another government measure in a series of reforms to improve private health insurance. Other current measures include developing criteria for `no gap' and `known gap' policies and promotion of simplified billing.In addition to Lifetime Health Cover having the support of the elderly in my electorate, it has been endorsed by industry and consumer groups Australia-wide. The model is supported by all key national groups, including the Consumers Health Forum, the Council on the Ageing and the Australian Consumers Association. Positive comments have been made by the Australian Medical Association, the Australian Private Hospitals Association and the Australian Catholic Health Care Association.I thoroughly endorse the government's step to provide a grace period of 12 months to ensure that every Australian has the opportunity to take out hospital cover and lock in lower premiums. I would encourage other members of parliament to ensure that their constituents are aware of this grace period so that consumers do not miss out.Recently, one of my constituents expressed a concern in the case of a person who becomes unemployed and cannot afford to maintain his or her membership. I endorse the move by the government to address such situations. Under Lifetime Health Cover, members may discontinue their private health insurance membership for a period of time for reasons of hardship. This reform allows people up to a total of 24 months absence during their lifetime without a loading being applied to their premium when they return to private health insurance.In addition, the Lifetime Health Cover scheme will allow those with hospital cover to cease their cover for an aggregated period of 1,094 days without incurring any additional rise in contributions payable and to transfer from one health fund to another while retaining their Lifetime Health Cover entitlements. Lifetime Health Cover will stop hit and run membership. It will cut costs over time, reward long-term members and lead to the stabilising of private health insurance, taking direct pressure off public hospital waiting lists.Lifetime Health Cover is a long-term measure. It is a reflection of the government wanting to make private health insurance more affordable for Australians now and into the future. It is a policy which will ensure the continuing stability of both the public and private health sectors. This new approach builds on the success of the government's 30 per cent rebate and demonstrates our commitment to long-term solutions, not just quick fixes. Lifetime Health Cover will slow down the rate of premium increases. It will halt the decrease in health insurance membership numbers. Lifetime Health Cover is to be commended to this House.21:20:006328Hall, Jill, MPMs HALL83NShortlandALP00—The National Health Amendment (Lifetime Health Cover) Bill 1999 is another attempt by the Howard government to address the health care needs of Australians by propping up an ailing private health insurance industry while starving the public health system and the states and territories of health dollars. This is the fourth rescue package that this government has introduced in an attempt to induce Australians to take out private health insurance. Each of these rescue packages has transferred health dollars to the private health insurance industry away from the public health system. Each package has been an abject failure—and I think we are going to be faced with another failure here. Every rescue package this government has introduced has been accompanied by a promise that it will increase the number of Australians taking out health insurance. Once again, this has been a failed promise.Initially, John Howard's government promised that changes it was making would lead to 45 per cent of Australian people taking out health insurance—a far cry from what it is today, isn't it? So, if ever there was a failure, that was it. The proof is in the figures.In 1996 this government introduced the means tested rebate. It said it was going to increase the number of people taking out private health insurance to 40 per cent. It did not deliver and failed again. It could not even meet its 40 per cent target. In 1998 we saw the initiative to beat all initiatives: the 30 per cent rebate. It cost $1.7 billion of taxpayers' money. It was supposed to increase the number of people taking out health insurance to 33 per cent initially. We have heard that it is going to hold the line. If you look at the number of people who took out health insurance as a result of this rebate costing $1.7 billion, you see that it cost $30,000 per person—$30,000 of taxpayers' money per person was paid to insurance companies. Of the people who benefited from the rebate, 99 per cent were high income people who already had health insurance.The real measure of just what a failure this rescue package is is the fact that premiums have increased. People were given a rebate of 30 per cent, health insurance was to be made more affordable, and the next thing we know is that premiums were increased. Medibank had the lowest increase, at 1.9 per cent; HCF had an eight per cent increase. The average increase across the industry was 4.9 per cent. This rescue package, which passed through this House in 1998 and came into effect at the beginning of this year, has failed. It has put $1.7 billion that could have gone into the public system into the insurance industry. It has done nothing whatsoever to help those Australians who need access to public hospitals, who need quality health care. It has failed.What has this massive expenditure on health insurance done for Australians? Has it led to the building of more hospitals? No. Are more hospital beds available for people? No. Are there shorter waiting times available in hospitals? No. Is there a more efficient accident and emergency service? No. The answer to all these questions is no. Public hospitals are struggling with an increased demand for their services and fewer dollars, because this government is directing its dollars into insurance, not health care.Coming from New South Wales and having been lucky enough to spend some time in the New South Wales parliament, I know how we struggled there with the cuts that this government made to the health budget of that state. I know how hard it was to stretch that dollar. I know how mean-spirited this government is and how it has lacked a commitment to the people of New South Wales and Australia as a whole.Coming from the Hunter, I have a very high respect for the fine work done by the Hunter Area Health Service and the Central Coast Area Health Service. Belmont Hospital, within the electorate of Shortland, has been starved of funds over the last few years. This fine hospital has been in existence for 30 years. It is the centre of the community. The people who work in that hospital are committed to the public health care needs of the area. That hospital needs money to upgrade its obstetrics and gynaecological wards; it needs money for the accident and emergency area. The cuts that this government has forced on the states has made it harder and harder to deliver those things to the people of Shortland. Yet this government continues to make decisions to direct those health dollars to the health insurance industry rather than to public health.If half of the money that went into the 30 per cent rebate had been put into public hospitals, it would have met all the health care needs of those in the public health system. The people of Belmont would have had the services and the upgrade that they need. But, no, instead $1.7 billion went into private health insurance. That money could have been used to treat 275,000 public patients. That did not happen because this government chose to spend that money on the health insurance industry rather than on health care.This government has given greater financial commitment to propping up the health insurance industry than it has given to the primary production industry, which received only $823 million. Likewise, the manufacturing industry in this country received only $1.44 billion. It is absolutely unbelievable that a government can put money into insurance rather than into the delivery of services to the people of Australia.What this government has demonstrated today is a piecemeal approach to public health, an approach based on health insurance, not provision of health services. The Howard government promised the Australian people that it would not destroy Medicare, yet every initiative it has taken has to some extent been an attack on Medicare and our public health system—starving it of funds and subsidising private health insurance—and this will lead only to a second-rate public health system. I believe that is what those members on the other side of this House want. They want to downgrade the excellent public health system that we have here in Australia.Most Western countries have strong public health systems supplemented by private health systems—a smaller system which complements the public system. But this government has sought to change this mix. It is driven by its philosophical hatred of anything public. It hates public education just as much as it hates public health. The proof of that was in the budget that was delivered last month. Rather than having a private health system complementing a strong, healthy, well-resourced public system, this government is undermining our universal health system. What will this do? It will lead to the development of a two-tiered system and will force our public health system into poverty. It will operate as a poor second cousin.The people of Shortland do not like this government's health priorities, just as they do not like the Howard-Democrat GST deal and its tax on health products. If there are two issues that constituents living within Shortland have contacted my electorate office about, it is this government's performance in the area of health and this government's performance in relation to the GST. The people of Shortland are opposed to this government's performance in both these areas and are opposed to its initiatives. The government should be ashamed of itself. It is an absolute disgrace. It is here to represent all Australians, not just its mates.The Lifetime Health Cover legislation is yet another attempt to turn the tide to stop the exodus from the private health insurance industry. The first three rescue packages have not worked. Now we have mark 4. Once again, the government is investing in health insurance instead of health services. We on this side of the House have come to accept that that is the only way this government can think. It is impossible for it to make a commitment to people and a commitment to actually delivering health services.The legislation, as I mentioned earlier, signals a move away from the principle of community rating. The government is introducing a new concept and a new approach to health insurance—one that it has ignored to date and one that is a contrast to its subsidisation and rebates initiatives. This legislation will amend the National Health Act 1953 and allow the government to factor the age a person takes out health insurance into the insurance premium that a person pays. Let us not kid ourselves: it is an insurance premium. Just as you take out insurance on your house and your car, health insurance is insurance in that same way. It is a recognition that health insurance is just that. Age is a risk factor. Risk factors are written into health insurance policies just as they are written into the policy I take out on my motor vehicle because of the fact that I have a daughter who is aged 20.The legislation enforces a two per cent loading for every year a person is over 30 when they take out health insurance to a maximum of 70 per cent loading, once again writing in a risk factor. If a person is now age 65, the loading does not apply. But I ask: what is a woman of pension age, which is 60, to do? Are they still going to be faced with having to pay that surcharge? This government has ignored the total impact this legislation will have on them. It is not a well thought through or well constructed piece of legislation. Sure, it has the goal of redistributing funds amongst people over the years, but the problem is that it is once again a piecemeal approach.It does not look at anomalies. It is designed by the government looking at it from a government's point of view and from the point of view of its friends in the insurance industry. It does not look at it from the point of view of the individual, the consumer, the person who may be sick, the person who needs health care—your mother, your father, your uncle, your aunt, your brother, your sister, your child. It does not look at that. It does not take into account all those little problems that can arise like records being lost and special, unique circumstances. Of course this does not surprise us. We are used to this government's tunnel vision approach to issues.The other thing that is very frightening is the amount of money that will be sunk in advertising. We all saw how $7.5 million was put into advertising for the 30 per cent rebate initiative. And surprise, surprise! The ACCC found that that advertising was misleading. The government put $7.5 million into misleading advertising. This time it has allocated $10 million to sell its fourth rescue package. What worries me is that we will have a scare campaign and we will have pictures flashing on to our television sets scaring people into taking out this insurance.This government will have an advertising campaign on our television sets which reflects the government's political objectives and along with that, as I said, the scare campaign. The day after this budget was introduced my office was inundated with telephone calls from older Australians who were terrified and who thought that they had to rush off that day and take out health insurance. I think the one part of this package that is most objectionable is the fear it has created for older Australians. A lot of people do not understand that they will have this exemption for being over 65 now. Once again, I caution the government and suggest that they look very closely at the situation of women receiving pensions.We can only hope this initiative is more successful than the others. If it is successful, though, it will impact on the funding to states. If they get over 35 per cent membership in the funds, then the states will lose $200 million. Once again, it really makes you question what this government is about. I believe it is about putting money into private health insurance, moving away from its responsibility to the public system. The other issue that worries me is that they may start means testing patients who use public hospitals.In today's Australian there was an interesting article that showed that extra hospital charges for privately insured surgery have really blown out. The government has failed to address that. The Newspoll published in today's Australian also showed that Australian people have no confidence or very little confidence in the government's commitment and ability to deliver in the area of health and Medicare. It showed that the Australian people believe that the Labor Party led by Mr Beazley can deliver in this area, not the government. People have experienced what the government has served to them for the last couple of years and they know that the government is just not up to standard.Of the issues that were rated in the Newspoll survey, health rated second. When the performance of both the Labor Party and the coalition was compared, 38 per cent of Australians believe that the Labor Party was best able to handle and deliver the best health care to Australian people. Only 31 per cent thought that the coalition could. I wonder why. They have really been able to judge the government's performance and failures over the last four years. I think those people who were surveyed really believe that this government was not up to the grade. It could not deliver the goods, and it was just caught in an ideological time warp.Everyone knows that Labor performs better in the area of health. The government promised not to dismantle Medicare. Yet all its efforts in the area of health have been designed to prop up an ailing private health system at the expense of the public system which has been starved of funds. While the dedication of professional staff in the Hunter and Central Coast area health services struggle with their budgets, this government is not accountable. This government continues to throw money into private health insurance whilst there is no money for new hospitals to treat Australians when they are sick. There is plenty of money for the health insurance industry. This government looks after its mates at the expense of ordinary Australians. (Time expired)21:40:006332Macfarlane, Ian, MPMr IAN MACFARLANEWN6GroomLP10—I welcome the opportunity to speak on the National Health Amendment (Lifetime Health Cover) Bill 1999 . I am extremely proud to be associated with the Howard led coalition government, particularly with regard to private health insurance. I am completely dumbfounded at the criticism levelled at our government by the opposition in terms of our attempts to arrest the decline in health insurance. It would only make sense to me that if health insurance is in decline a government would do something about it. I cannot believe that here today in this House we are being criticised for doing just that—doing something about it, attempting to arrest the decline in private health insurance, which has the potential to push further costs into the already stressed public health system.I also cannot believe that we would be accused of deliberately trying to establish a second rate health system in Australia. It is simply not backed up by fact. It is part of the hysterical rhetoric that goes on from oppositions who do not have a policy of their own and, rather than propose anything, merely attack and try to drag down what good government is doing in Australia. We know that the previous Labor government did nothing about the declining rates of private health insurance. We know they did nothing to try to arrest the decline. Yet the Labor Party comes into this House today and has the audacity to attack a government trying to do something about it.This government has a realistic, practical and comprehensive plan to ease the burden on the public health system and entice people back into private health insurance. The member for Shortland described that as a piecemeal approach. That is absolute rot. What we see from the Howard led government is a strategic approach to ensure that people are encouraged to take out private health insurance. Far from being piecemeal, it is a carefully planned strategy which is working.The government's national health amendment bill is only part of this plan and by itself addresses one of the main issues of private health insurance. Lifetime Health Cover rewards people who join private health insurance funds from a young age by charging a low premium if someone joins before the age of 30. This new lifetime community rating system will reward long-term members while discouraging and disadvantaging hit and run members who join to have surgical procedures done and then let their membership lapse afterwards. This bill is aimed at improving the profile of the health insurance funds. That means getting more people into the funds, particularly young people. It takes into consideration the risk factor, as any commercial insurance scheme should, when people join funds late when the risks are high without having made any contribution at all in their younger years. The bill also allows for the transition period for people not yet members of the fund or for those who are already 30 years of age by allowing 12 months grace until 1 July 2000 for people to join and be treated as if they will be 30 forever.In addition, Lifetime Health Cover takes into account those people who through changes in employment prospects or travel overseas can suspend their health insurance for up to 24 months, or longer if the fund decides on their discretion, without penalty on their return to private health insurance. Furthermore, people aged over 65 at the end of the grace period of 1 July 2000 will only ever pay the price of a 30-year-old to join a private health insurance fund.I completely refute the suggestion that is made that we are simply trying to accommodate the middle class of Australia. As the Prime Minister said in this House on 23 November in an answer to a question from me, there are no fewer than 700,000 Australians earning less than $20,000 a year in private health insurance. Those 700,000 people are now benefiting from the initiative that the Howard government has already introduced in terms of the 30 per cent rebate, and we want to ensure that more people in that income bracket and in fact in all income brackets are enticed back into private health insurance.Lifetime cover, however, is not expected to work on its own. There have, as I have already mentioned, been a number of responsible and practical initiatives introduced by the Howard government related to health insurance—the most significant being the 30 per cent rebate. The federal government's 30 per cent private health insurance rebate is yet another detailed scheme which is enticing people back into private health insurance. In my electorate of Groom, at the end of last year, figures showed 45,000 people were covered by private health insurance, almost 40 per cent of the total population of 117,220. That information is from the latest 1996 census. These are people who want a choice in hospital and health care, the same people who do not want to wait to get that hospital care. They want to have the type of treatment they want when they want it.By way of example, if we look at the admissions into Toowoomba's biggest private hospital, St Vincent's, 95.4 per cent were covered by private health insurance, with more than half of those holding top cover. Not only do these people need to be kept in the health insurance system but we need to get more uninsured people into the system as well. This means the government must provide incentives to insure. That is the role of government. When the system breaks down, the government must step in to address a market failure. That is the basis for the 30 per cent rebate, and the 30 per cent rebate has been well received. It represents an incentive greater than a full tax deductibility of health insurance costs for the majority of taxpayers in Australia. It is having a real and positive effect on the number of people who have taken out health insurance since its introduction.I have spoken to a number of insurance providers over the last few months at length. One of those insurance providers on the Darling Downs was Wideland Insurance Brokers, which I know well from a previous life, and they assured me that the government's 30 per cent health rebate is the best thing they have ever seen to entice people back into private health insurance. Ninety-five per cent of the inquiries to Wideland offices in Toowoomba are about private health insurance, and these inquiries came immediately following the announcement of the 30 per cent rebate and its introduction in January. To go further afield, I refer to the report by Salmon, Smith and Barney, the leading broker of Australian health care stocks. They have stated categorically that over 57,000 new people joined health insurance funds in the March quarter in 1999. That is the largest increase this decade.Leading brokers are also predicting that the private health fund industry will improve its profitability. Profitability, for the benefit of some on the other side, equals sustainability for health funds which were obviously starting to face difficulties. I know members opposite do not support private health insurance and prefer instead to place an extra burden on the already strained public hospital system. In fact, the previous Labor Prime Minister, Paul Keating, went on the public record to that effect.Private health insurance pays billions of dollars a year from the private purse into the cost of health care and hospitalisation in Australia. MBF alone paid more than $600 million in benefits to hospitals in the year 1998. This amount of money is a very real and significant saving to the government and is money which would otherwise need to be paid by the government to the public health care system. The more we, the government, can do to encourage people to pay their own health care costs, the less the taxpayers of Australia are called on to meet these costs. Consequently, this means lower taxes—yes, lower taxes—such as we are seeing in the ANTS tax package and more money available to the federal government to spend on educational services, other community issues and public health. As the member for McPherson quite correctly stated, that is a 15 per cent increase. For members opposite to belittle and disparage the government's real and proven effort to ease the burden on the public health system illustrates only their own lack of understanding on this issue and their inaction and lack of commitment on the issue during their 13 years of government.Private health insurance and private hospitals play a vital part in Australia's health system and deserve the continuing support of this federal government, and they will get it. In my electorate, the two major hospitals are St Vincent's and St Andrew's. Over the last 12 months, these two hospitals admitted 29,000 patients and saved the public hospital system in excess of $53 million. That is $53 million in my electorate in two hospitals alone. This is not an issue about insurance versus health care; this is an issue about relieving the burden on the taxpayer of health care in Australia. Despite the gains we are making in private health insurance and the vital role of private hospitals in the nation's health care, all is not rosy in private hospitals.To be more specific, these private health insurance funds are at times dictating irrational prices to private hospitals for patient care, the effect being that at times the prices paid to hospitals by health insurance funds do not meet the actual real cost of patient care. While I realise the necessity of keeping health insurance premiums as low as possible in order to increase the uptake of private health insurance and thus decrease the burden on the public health system, private hospitals in my electorate are facing serious difficulties.In the year 2000-01, private hospitals will be in their fourth year of marginal decline. This means that right now, unless something is done to remedy the situation, Australian private hospitals face an inevitable collapse in investor confidence. Moreover, some private hospitals—in fact 25 in the last 12 months—have caved in under the burden placed on them and closed their doors. This issue of static or declining payments from health insurance funds is very much a contributing factor to this degeneration.While the bigger private hospitals in my electorate of Groom such as St Vincent's and St Andrew's are surviving, if only just, the smaller ones in towns such as Pittsworth, Clifton and Crows Nest on the edge of my electorate are facing severe financial difficulty. These smaller hospitals belong to and are part of their community. They are operated by their community and respond to their community's needs. These hospitals are part of the community's fabric and, unless action is taken, their disappearance will contribute to the disintegration of communities throughout regional Australia.I said earlier that the health funds were squeezing private hospitals. In fact, while health funds are in some cases not allowing the two larger hospitals in Toowoomba a fair return on their investment by lowering in real terms the benefit paid for the medical services at these hospitals, the situation in these three smaller hospitals is far worse. In fact, the health funds, for some unknown reason, are paying these smaller hospitals even less for the same services than they are paying the larger hospitals in Toowoomba and metropolitan areas in Australia. This is simply intolerable and, unless changed, will wipe out small private hospitals in our country towns.While I have grave concerns for the small private hospitals in my electorate, I also have concerns about our ability to ensure that doctors come to stay in these small rural communities. Clifton, a town in my electorate some 40-odd kilometres south of Toowoomba, came to national prominence last year through its difficulty in securing the services of a GP. While a doctor has been secured for Clifton, at least for the time being, the problem highlighted for this community still exists in many parts of regional Australia.It is not surprising, therefore, that the federal government has done something about it in the last 12 months. On this issue, as with many of the issues affecting rural and regional Australia, the federal government has implemented a number of initiatives to address the problem. I remind the House that, in the 1999-2000 federal budget, some of the initiatives announced by the government included a $43 million program of retention grants to assist doctors to stay longer in rural communities. We also supported a new medical school in North Queensland and established a clinical school in Wagga Wagga in New South Wales as a means of exposing medical students to rural practices and hopefully getting them used to the idea of working in the bush. We have also funded extra training, counselling and support services for rural doctors to help them deal with the isolation that sometimes comes with a rural practice.The federal government is committed to improving health care not only in rural and regional Australia but for the whole of Australia. Fundamental to this improvement is to ease the burden on the public health system by encouraging more Australians to insure with health funds. This bill is another successful long-term measure, no doubt, which demonstrates even further that this government does have the policies to address the issues relating to health and to private health insurance. It is also further graphic evidence of our commitment to a private health insurance industry in Australia.I cannot believe that Labor is yet to understand the correlation between private health insurance and the saving that it places on the public health system. I repeat: $53 million was saved to the public health system in my electorate in two hospitals alone. The Lifetime Health Cover initiative, combined with the 30 per cent insurance rebate and other initiatives, should be applauded by all members of parliament as a meaningful response to this important issue. I commend this legislation to the House and call for its unanimous support.21:57:006335Latham, Mark, MPMr LATHAMK26WerriwaALP00—There is nothing more frustrating than a government which refuses to deal in the facts. The truth in the health sector in Australia is there is no crisis in private health insurance. There is absolutely no crisis in this sector. This is a government which has based its policies on propaganda about a crisis, yet this assertion is never proven, it is just repeated. This is an attempt by the government to argue via repetition and argue via propaganda.It has never been proven for a single moment that there is a crisis in the private health sector. In fact, this has been asserted so many times and adopted so frequently by the government that it has reached the proportion of urban myth. On this side of the parliament at least there is attention to detail and some concern for the facts, so let me give the House this statistic.Mr Truss interjecting—K26Latham, Mark, MPMr LATHAM—That is a pretty good place to start on any matter, including private health insurance. So the member for Wide Bay, having got the reference right, might now like to consider the facts. Fifteen years ago, for every $10 of expenditure on health care in Australia, private health insurance contributed $1. So it paid $1 in every $10 spent on health care in this country. The figure today is about the same. There has been no change in the proportion of health funding contributed by private health insurance in this country. So there is no crisis on the available data, on the available facts. Nothing has changed in the relative funding share between the public and private sectors since the introduction of Medicare.Medicare was introduced in 1984 and private health insurance was contributing $1 for every $10 of total health expenditure in Australia. The recent figures show the number has not changed. So where is the crisis? Private health insurance is doing exactly the same job as it did 15 years ago when Medicare was introduced. It is treating the same number of patients as a proportion and contributing the same amount of finance as a proportion, yet this government says there is a crisis. That is not a crisis. That is the status quo. That is the equilibrium in the health sector.So the government is not able to prove its assertion, its piece of propaganda, that there is some crisis in private health insurance. All that has happened is that people who have not been using the health system have decided to drop their health insurance. And why wouldn't they? Who here in this parliament would keep up their insurance if they had a low risk of using it? What sort of blind consumer are you to put your hand up on that? Do you think if you are not at risk of using a service you should pay out for insurance? No wonder the economy has got record foreign debt and a record current account deficit. These are the economic numbskulls who are running the Australian economy. They have got no risk of using a service but they are willing to dole out the insurance money for that service.0K6BARTLETTMr Bartlett—Stick to the facts.K26Latham, Mark, MPMr LATHAM—The facts are pretty simple, and it is a clear argument. But on your side you are saying that anyone who has no or low risk of using a service should dole out for the insurance regardless. That is not a sensible argument, and it is certainly not an argument that has been supported by the average health consumer in Australia because those Australians who have not been using health services have decided to drop their health insurance, and this is a simple calculation on value for money. Younger, healthier people who have not been using the health system have decided they have no or little need for health insurance. It is totally wrong to say that these people have flooded out of private hospitals and into the public sector. They have not been using hospitals at all.If you look at the statistics in the health sector, you will see that 60- to 70-year-old Australians have got the same proportion of private health insurance as they have always had. So those Australians who are at risk of needing health services and see the need for health insurance, because they use the system, have kept their membership up. So where is the crisis? Private health insurance contributes the same proportion to health services in Australia; the same proportion of 60- to 70-year-olds are in the funds. There is no crisis. All there is is a market at work. Why would the coalition—the party of Menzies, the party of free enterprise, the party of market forces—think that a market that is sorting itself out is a market in crisis? Because they have no true understanding of good health policy.The health funds in this country maintain a strong core of older Australians in their membership; their reserves and their profits are okay. Who in this parliament can point to a private health fund that has run into a financial problem? There has been no problem. For all the protests and doorstops outside this building by Russell Schneider and his colleagues, none of the funds and none of the members opposite can point out a fund that has run into financial trouble. So there has been no crisis.Mr Bartlett interjecting—K26Latham, Mark, MPMr LATHAM—There is the same proportion of total health expenditure from the health insurance funds, a solid number of 60- to 70-year-old Australians are in funds, the funds' reserves are okay and their profit levels are okay. There has been no financial crisis in any of these funds; there is no crisis overall.The member for Macquarie is badgering on over there. He should stand up and quote, when he speaks after me, the statistics that point to a crisis. All that has happened is that membership in the funds has fallen; their net contribution to the health system in Australia has not altered. That, my friend, does not constitute a crisis and, most of all, it does not constitute the need for public subsidisation of this industry. Size is not all that important when it comes to the private funds. The thing that matters is their contribution to health services, and that has not altered since the introduction of Medicare in 1984.Out of this, it is totally unnecessary for this government to introduce a 30 per cent tax rebate on fund membership. It is an unnecessary subsidisation of a private sector market and this, of course, represents money that is being dragged away from the real point of need and the real point of overload in health service use: the public hospital system.This is not a market that needs public subsidisation. It is a market that needs to do nothing more than to operate like a market. Again I ask the coalition: for all its rhetoric about free enterprise and market forces, why doesn't it allow private health insurance in Australia to operate like a market and clear itself on the basis of a proper relationship between price and cost—that is, a proper health insurance market that works on the principle that someone at greater risk of need pays a higher premium and someone at lower risk pays a lower premium? That is just a simple principle of market insurance—the same principle that we use for car insurance and home insurance. Why should the health sector be any different?The government has maintained a policy of community rating, whereby all Australians pay the same premium irrespective of age and health risk. In a proper insurance market, if you have lower risk of using the services, you pay a lower premium. If you have a higher risk, you pay a higher premium. Until the Howard government adopts that fundamental principle in health policy, it will be running on the basis of urban myth rather than on the basis of facts and good health policy making. The simple truth is that younger people refuse to pay a premium beyond their health risk; and why should they? Why should someone who feels that they have low need for a service, they have low risk of health care, pay private health insurance? They are not willing to flush their money down the drain on the basis of an absurd assessment of the private health insurance market. They are making value for money decisions as health consumers. Why would anyone in this parliament think that is a bad thing? Why would you think it is a bad thing for Australian consumers to make a decision that, if the value for money is not there in private health insurance, they should not pay it. That is the decision they are making; that is the judgment they are making. We do not say in the car insurance or home insurance markets that you have to have community rating and if you have a low risk of using the service you have got to pay the same premium as those with a high risk of using the service.This legislation is a step in the right direction. It is a belated recognition by the Howard government of some of the principles I have been putting in this debate. This legislation links premium levels to the age at which people take up their fund membership. This legislation and this principle are supported by the Labor opposition, and why wouldn't it be? The truth is that community rating was never part of the thinking behind Medibank, nor was it part of the thinking behind Medicare.I think one piece of information needs to be placed on the Hansard record, and that is a quote from Dick Scotton's book, The Making of Medibank, page 274, where he sets out the relationship between public health insurance in this country and the community rating system that has persevered ever since. Scotton writes as follows:A third unresolved issue is the appropriate role, structure and regulatory framework of private insurance in the context of a universal public program. In a voluntary private insurance scheme, the necessary cross-subsidies between good and bad risks can only be effected by public subsidies, distortion of the premium structure, and regulatory controls. A large part of the original rationale for Medibank was that these interventions were not only unsuccessful in achieving equity objectives but also resulted in inefficiencies in health insurance operations and health service provision.What a wonderful piece of foresight for Dick Scotton, back in the early seventies, putting together the principles of Medibank, to say that if you have this cross-subsidy between good and bad health risks the only way you can get out of it in public policy is by huge public subsidies or you end up with a distortion of the premium structure.That, of course, is what has come to pass, and it is quite a shame that it has taken almost 30 years for this parliament to recognise the wisdom and the foresight that Dick Scotton had in the early seventies in putting together the original Medibank scheme. Scotton continues in The Making of Medibank:When a universal public program takes over the social function of effecting transfers between different risk groups, private insurance contracts to a supplementary role in which the need for subsidisation, community rating and anti-competitive regulation is greatly weakened.Hear, hear to that! That is what we are now seeing in this legislation at long last. There is less need for community rating and less need for subsidisation if a universal public program is introduced and takes up the slack, takes up the tension, in the distribution of health risks. That is the true role of public health insurance. It is the effective community `rater' in our system. It takes up the tension between different risk groups and it makes unnecessary community rating and the sort of public subsidisation that these fools opposite have been ploughing unnecessarily into the private funds. Scotton continues:In the second half of 1973, Deeble and Scotton examined criteria which should govern the operation of private health insurance in its new function of providing supplementary benefits to Medibank.One of their proposals was:. . . a modified form of community rating on basic tables under which the premium paid by an insured person—as in life insurance—would be based on age of entry and maintained at the same level (as a proportion of the premium charged to a good-risk entrant) for as long as the contributor remained insured.Doesn't that sound familiar 30 years later? That is the principle we are legislating in this parliament tonight: the idea that the premium level is based on age at entry and maintained at the same level for as long as the contributor remained insured. What a shame it has taken three decades for this parliament to come to its senses and legislate, and hopefully enact, the original principle put together by Deeble and Scotton. Scotton goes on:Contributors carried over from the voluntary insurance scheme would be enrolled in the new table at a "good-risk" rate, and special actuarial reserves to cover the transitional underpricing of high-risk contributors would be created by transfers from the existing reserves, which were far in excess of their post-implementation requirements.What seemed to be an elegant prescription for the regulatory framework of private insurance in the context of a universal Medibank program did not fit in with departmental thinking of the time.I can see departmental advisers sitting over there. I am glad their thinking has changed, because their predecessors 30 years ago were part of the obstruction that stopped the implementation of the proposition by Deeble and Scotton. Not only was there departmental obstruction, which the Whitlam government had too much to bear, but naturally enough—this is no great surprise—it was held up in the Senate. For those opposite to ever complain about the Senate, look at the way in which you butchered the program and propositions of the Whitlam government. It became apparent in mid-1974 that no further Medibank legislation would be passed in the Senate. The whole thing was forgotten until this legislation came before the House tonight.As a bit of a reconstructed `Whitlamite', holding the seat once held by the great man, I am particularly delighted to see that good public policy always pushes through and always perseveres and gets through in the end, even if in this case it has taken 25 to 30 years. So we are all learning from Deeble and Scotton—the holy writ; the good word on health policy—30 years later, even the member for Macquarie, who looks like he is coming to his senses, joined by the member for Gilmore and, of course, my good colleague and friend the member for Banks.4T4MELHAMMr Melham—Hear, hear!K26Latham, Mark, MPMr LATHAM—On the subject of learning from these things, I noted a contribution by the member for Jagajaga on 9 March. She said, `Community rating of course is at the heart of Medicare.' My proposition is this: private health insurance needs to operate like any other insurance market: according to the rules of risk and competitive pricing. It should not be weighed down by excessive government regulation or propped up by huge public subsidies. Until this happens, there will always be pressure on the federal government to compensate health funds for their inability to attract younger members. The best way to support Medicare and the public hospital system is to support the phasing out of community rating. Again, I say this is a useful first step, but it should not be the only step.The best way to subsidise the health care of the elderly is through Medicare. Australia has thousands of aged pensioners on waiting lists for important surgery in our public hospitals. It is a national disgrace that they are not being treated. The federal government needs to redirect its $1.5 billion rebate to where it is needed most: the public health needs of older Australians in public hospitals. Why go all the way round the world with this absurd argument that if you put the money into private health insurance that takes the pressure off public hospitals and all of a sudden things are better when you can just put the money directly where the problem is? If there is a problem in the public hospital system, pour the $1.5 billion in direct. Do not pass go; go straight to the problem. That would be the sensible way to approach this in public policy, but regrettably it is not the way of the Howard government. They are not following the third way.4T4MELHAMMr Melham—But they are looking after their mates.K26Latham, Mark, MPMr LATHAM—The federal government needs to put its money into public hospitals directly. Australia now has the worst of both worlds in our health system. We have an underfunded public hospital system plus a grossly inefficient private insurance market. Both problems could be fixed overnight, but political misjudgment and vested interests keep getting in the way. The member for Banks was pretty close to the mark earlier on when he spoke about this government looking after its mates—not just in concrete but also in private health insurance. It is across the board in all sectors in all parts of the country.This problem that we have in Australia with health policy is a bit like Australia's chronic unemployment problem: we live with it by choice, not because the solutions are unavailable to government. The solutions are there. A lot of them are in the words of Deeble and Scotton back in the early 1970s. It is long overdue for this parliament to pass those measures that were originally frustrated by woolly thinking in the department and mindless obstruction in the Senate. But better late than never. As I mentioned earlier on, good public policy always pushes its way through and gets there in the end, and I am glad to see a bit of it tonight.22:15:006339Bartlett, Kerry, MPMr BARTLETT0K6MacquarieLP10—This National Health Amendment (Lifetime Health Cover) Bill 1999 is another important step in strengthening the nation's health system. It helps improve the viability of both private health insurance and the public system. This approach stands in sharp contrast to the narrow ideologically driven focus of Labor. The coalition's approach offers choice to consumers and ensures the maintenance of a quality dual health system. It recognises the essential link between the private and public health systems, a point that Labor seems to want to overlook.Lifetime Health Cover is a response to an Industry Commission recommendation arising from its 1997 inquiry into private health insurance. It enhances and strengthens a nation's health system in three key ways. Firstly, it strengthens the private health sector by encouraging people to join at a younger age and by discouraging hit-and-run approaches to private health cover. If the age and health profiles of fund membership reflected that of the population generally, this measure would not be necessary.However, a reluctance of young healthy people to join, an ageing membership profile and hit-and-run membership by the relatively healthy have created financial difficulties for health insurance funds. The necessary response over the years has been to raise premiums, thus further discouraging membership by the young and healthy and thus exacerbating the problem. By providing an incentive for younger membership, the pressure on premiums is reduced and private health insurance remains more attractive. Along with the 30 per cent rebate which commenced in January this year, this measure will stem the decline in private health cover and improve its viability.This is a valuable equity measure. It rewards those who have been members for a long period of time—those who have been members throughout their lives. It penalises those who exploit health fund membership by joining only when their perceived need for health care is great, thereby shifting the burden to others. Lifetime Health Cover will operate on a threshold age of 30. Anyone joining at 30 or younger will pay the minimum base rate premium. Those joining later will pay a two per cent loading for every year they delay joining. The maximum loading will be 70 per cent above the base rate. Further measures to enhance the fairness of this initiative include a 12-month period of grace from 1 July 1999 to allow non-members to join and to receive the same benefits as existing members. It is a provision that allows anyone aged 65 at that date to pay the same premium as a 30-year-old. This is an import ant measure to protected the aged who wish to have private health cover, as many do.The bill allows all existing members of private health funds with hospital cover to be treated as though they had joined at age 30, regardless of their current age. Further, it allows a 24-month absence from private health insurance without requiring a loading upon returning to membership. This provides some protection for people forced to discontinue due to short-term financial hardship or other factors.In strengthening the private health system, the government is also indirectly strengthening the public system. Despite the comments of the member for Werriwa, let it be clear that a viable quality public health system requires a private health counterpart where those who can afford it and choose to can take care of their own health costs. This is a point that Labor seems incapable of grasping. It is crucial that the decline in private health insurance that has occurred over the last 15 years is reversed. For every one per cent decline in private health membership, $100 million a year is added to the cost of running the public hospital system.Since 1983 private health insurance has dropped from 63 per cent to 32 per cent. This is stark evidence of Labor's incompetence. The decline from 63 per cent to 32 per cent during Labor's 13 years has added $3.1 billion a year to the cost of the public health system. Labor's incompetence has added $3.1 billion a year to the cost of running the public health system. That is $3.1 billion a year extra that needs to be found by taxpayers, without even addressing the extra demands of an ageing population or of rising medical costs.If this decline had been brought about through neglect, through misinformation or through ignorance, it would have been bad enough, but that such decline was a deliberate policy of sabotage by Labor is culpable. In its early years, Labor worked deliberately to undermine the private health system. It removed tax deductibility for health insurance premiums. It withdrew the bed-day subsidy and it ceased its contribution to the re-insurance pool. These measures added to the costs facing private health insurers and the insured and thereby reduced the attractiveness to members by forcing premiums to rise. The resulting decline in membership may have heartened Labor's left-wing ideologues, but it left our health system in a state of extreme vulnerability that Labor seems to take delight in. By contrast, this government has undertaken a number of critical initiatives to address Labor's failures and to strengthen the public health system by strengthening the private health system at the same time.Lifetime Health Cover is an important part of this process. This initiative has been supported by a number of people, including the Council on the Ageing and the Consumers Health Forum of Australia. It has also been supported by a number of independent commentators. Let me quote this comment from the editorial of the Sydney Morning Herald three days after the budget:Lifetime health cover, perhaps the most radical goal announced in this week's Federal Budget, may be the key to guaranteeing the future of Australia's health system.It is the key to guaranteeing the future of Australia's health system. It continues:A radical policy measure to increase the flow of premiums to private health insurers is not for the insurers' benefit in isolation because it is for the benefit of the system as a whole to have a strong private health insurance component.It is to the benefit of the health system as a whole. The editorial continues:This Government's bold measures to broaden the case base underpinning a reliable and comprehensive medical and hospital service are commendable.The Herald Sun on 29 May said this:The Federal Health Budget also contains comprehensive, practical and far-sighted solutions to problems in health that previous governments have ignored or dismissed as "too hard".Previous governments have ignored or dismissed them as too hard. That sounds like Labor's approach to so many difficult policy issues. The President of the AMA, David Brand, said this:Overall the Government has shown a solid and commendable commitment to health. The introduction of life time health cover, combined with the 30% rebate, means that there has never been a better time for Australians to take out private health insurance. The initiative should provide better products for patients, rewarding long term membership and providing cheaper premiums for younger members.He went on to say:The Government also deserves praise for its commitment to medical research, general practice, indigenous health, hepatitis C initiative, youth health and aged care.It's also good to see funding for the AMA proposed rural scholarship scheme . . . This has the potential to form the basis of a long term solution to the problem of rural doctor shortages.Not only is the coalition government working to address the problems of declining private health membership and to strengthen indirectly the public system; it is also putting in place other very positive initiatives to address shortcomings in the health system.It is worth while in this context outlining some of the coalition's other quality initiatives in the area of health. Already over the past three years it has done many things. It has increased total health spending by $3.6 billion per year since the three years it has come in. That is, last year it spent $3.6 billion more than Labor did in its last year, including an extra $620 million for public hospitals. That is, last year, it spent $620 million more for public hospitals than Labor did in 1996.It has signed a new five-year Medicare agreement with the state governments, which increases their funding in real terms by 17.6 per cent over the next five years. It has increased public hospital spending by nine per cent alone in this current financial year. There is also the introduction of a 30 per cent rebate on private health insurance from January this year. This provided a tremendous relief for all private health insurance members, including 33,000 members in the electorate of Macquarie.The government has committed $500 million extra for mental health. It has allocated an extra $750 million for veteran health care over the next five years, including an extension of the gold card to an extra 50,000 veterans. It has introduced free flu vaccines for the over 65s and extended the seniors health card to another 220,000 senior citizens. These runs are already on the board in terms of this government's commitment to health.In the current budget for the year 1999-2020 which was brought down last month, the coalition continued its commitment to health. It has committed an extra $614 million over the next six years for health and medical research. It has allocated funding for measures worth $228 million to improve the delivery of primary health care services to Australians, focusing especially on prevention and on providing an integrated approach to health care for the aged. It has committed extra funding to improve health services in rural and regional Australia. There is an extra $79 million over four years to improve indigenous health care; an extra $221 million over four years to increase the fight against drugs; an extra $210 million to improve hearing services for the aged and children; and extra funding for hepatitis C and breast cancer care.The coalition government is also working on measures to address the gap. It is working to address this by encouraging negotiations between doctors, hospitals and health funds to develop no-gap and known-gap products. It is also working to introduce simplified billing.Over the past three years, the coalition government has undertaken many initiatives aimed at improving our health system. Lifetime Health Cover is another important contribution to this. As evidenced by this program and many other initiatives over the last three years, the coalition has shown its determination to find solutions to our health problems which will allow choice, will strengthen our health system and will work. I commend this bill to the House.Debate (on motion by Mr Melham) adjourned.Adjournment6341Motion (by Mrs Stone) proposed:That the House do now adjourn.634122:28:006341Plibersek, Tanya, MPMs PLIBERSEK83MSydneyALP00—I rise tonight to speak about same sex relationships. There are a number of instances recently where the issue of same sex relationships has arisen. First—and it is a pleasurable task—I congratulate the New South Wales government on their recognition of same sex partnerships. In legislation passed in May, the New South Wales government passed the Property Relationships Legislation Amendment Bill. What was particularly interesting about the passing of this legislation was that it received bipartisan support in the New South Wales parliament. The only people who opposed this legislation in the Legislative Council were Fred Nile, David Oldfield and John Tingle. I am pleased to note that both the Labor government and the coalition opposition supported the legislation.New South Wales is not the only state that recognises same sex relationships. There has been a recognition of same sex relationships in the ACT since 1994 when the ACT passed the Domestic Relationships Act, which provided a system for the division of property and the payment of maintenance when a same sex relationship breaks down.In 1996 the Liberal ACT government amended the Administration and Probate Act 1929 and the Family Provision Act 1969 to provide access to inheritance for de facto partners. These amendments—which had bipartisan support—put same sex and heterosexual de factos on the same footing by defining a spouse as a partner, whether or not of the same gender. In 1997 in Victoria the Kennett government passed changes to the Wills Act 1997 to allow family provision orders to be made for the proper maintenance and support of any person for whom the deceased had responsibility to make provision. The focus of this change is to ensure that the legislation operates in a way which is tied to its purpose and leaves out irrelevant factors such as the gender and marital status of the applicant. The Queensland government is also considering moves in this direction. An industrial relations bill introduced by the Queensland government last week proposes to recognise same sex relationships under state industrial relations law.This is particularly significant at this time. Just last week we had a report entitled `Superannuation Entitlements of Same Sex Couples' from the Human Rights and Equal Opportunity Commission. Human Rights Commissioner Chris Sidoti recommended:. . . that the legislation be amended to allow surviving same-sex partners to benefit in Commonwealth superannuation schemes.He says in that report:. . . in denying to surviving same-sex partners of superannuation fund members an entitlement to benefit [the relevant Acts] contravene the prohibitions on sexual preference discrimination in the International Covenant on Civil and Political Rights and the International Labour Organisation's Discrimination (Employment and Occupation) Convention (ILO 111) both of which are scheduled to the Human Rights and Equal Opportunity Commission Act 1986 .This is a very significant report because it recognises the terrible injustice and difficulties that people such as Greg Brown have experienced when attempting to access the superannuation benefits of a partner that they have lost. At a time when those people should be able to grieve undisturbed, they are having to worry not just about money but in many cases about actually fighting legal battles as well. The Body Shop and the Australian Society of Certified Practising Accountants are among the many organisations which have recognised the inequity of the superannuation legislation as it now stands.These measures will increase the pressure on this government to pass Mr Albanese's private member's bill, the Superannuation (Entitlements of Same Sex Couples) Bill 1998 . That bill does not provide for special rights for gay and lesbian couples. It provides universal rights, equal rights, for those people. I urge all members to support that legislation when it next comes before the House.634222:33:006342May, Margaret, MPMs MAY83BMcPhersonLP10—Tonight I want to talk about an educational centre in my electorate which has successfully implemented a Work for the Dole initiative committed to giving young men and women a fair go at employment. This program, which is run at Kings Christian Centre at Reedy Creek, has provided an opportunity for participants to develop their work ethic while putting something back into their community. It has given them the chance to take on new challenges and responsibilities.More than 50 young people completed the Kings community service project recently. It was my pleasure to present certificates to the participants and to meet with the unemployed youth, employers and supervisors who contributed to the success of the quality program. I found it immensely enriching to see the feelings of worth, fulfilment and achievement which resulted from this partnership between the government, Kings Christian Centre, employers and the community. It was rewarding to see young people so proud of their achievements and their contribution to community projects.Participants were involved in broad based activities in areas such as office administration, hospitality services, extensive construction and horticultural works. There have also been projects in landcare management, working for the elderly, gardening and refurbishing, rebuilding and retailing. Participants undertook certified courses in senior first aid and security loss prevention as well as fire emergency response training. The majority of the 50 participants committed to the six-month program are now in paid employment. This is an outstanding result, in part thanks to the commitment and dedication of a team of caring people at Kings Christian Centre, which also offers King's Job Network Service matching job seekers and employers and a program for job seekers who have literacy and numeracy barriers to employment.I congratulate centre director, Stirling Donaldson and project manager, Robert Mulligan, who have provided a catalyst for these young people to find employment. They have boosted the self-esteem and motivation of many unemployed youths and have provided them with the skills, knowledge and attitudes required to assist them in gaining full-time, long-term employment. After the ceremony I chatted with a number of the participants, including 24-year-old Peter, who had been unemployed for more than six months. Peter told me that the program had provided him with valuable work skills and enabled him to secure a job in the boat building industry. Additional training in security greatly increased his confidence with skills appropriate in any workplace.I would like to share with you some comments made by the centre's director, Stirling Donaldson, who said during the graduation:I wish to congratulate the coalition government in its success in substantially reducing unemployment. I believe it is through projects such as Work for the Dole, Literacy and Numeracy, and the Job Network, that we are seeing this tremendous reduction in unemployment.Nationwide, the Work for the Dole program has benefited thousands of young people. Already more than 20,000 participants have commenced work in nearly 500 projects to gain valuable work experience. In contrast to Labor's culture of welfare, the coalition government is creating a culture of work. Work for the Dole and mutual obligation are important components of the government's employment strategy.In his announcement recently of an extension of the program's initiatives, the Minister for Employment Services said that to date more than 40 per cent of participants have been in paid employment or further education and training within three months of leaving the program. Eighty-five per cent of participants say that this government initiative has strengthened their determination to find work. A recent Morgan and Banks survey showed that 83 per cent of employers believe that Work for the Dole improves young people's permanent job prospects. In a survey undertaken in my electorate, Work for the Dole rated very highly as a positive government initiative worthy of support, and I endorse these comments.I am delighted that in my electorate the federal government is working with seven Work for the Dole providers to boost work opportunities for young people—the Gold Coast Skill Centre, the Wheelchair and Disabled Association, Mission Australia, the Southern Gold Coast Chamber of Commerce, Phantast Cultural Music and Arts Association, Numinbah Valley Environmental Educational Centre and Twin Towns Employment Enterprises. I am delighted that the Work for the Dole program was extended by the government in the 1999 budget, doubling the number of places to 50,000 and extending the program to job seekers aged 25 to 34 who have been receiving unemployment payments for 12 months or more. It is clear that the Work for the Dole program is achieving results. This is good news for job seekers, good news for the taxpayer and good news for the communities in which we live.634422:37:006344O'Byrne, MichelleMs O'BYRNE84SBassALP00—I rise to speak tonight on a matter affecting many families in all areas of Tasmania. It relates to child care and the continual battle parents are facing on affordability versus quality. In the first budget this government brought down in 1996 it abolished the operational subsidy for community based centres. Whilst this is `old news', the long-term effects of this decision are really starting to hit. The operational subsidy was removed from community based centres. Tasmania's child-care industry has a higher rate of community based centres—some 60 per cent.To illustrate the effect this has had both on families and on the centres themselves I would like to quote statistics on comparisons of child-care centre utilisation rates, and so on, for 1996 through to 1999. I would like to quote these and other comparison statistics, but I cannot. You see, since 1997 the Department of Family and Community Services has chosen not to release any statistical information relating to long day care centres at all. Long day child-care centres around the country are asked annually to complete a child-care census form. This 10-page document requests specific information relating to utilisation rates, fee structure, session structure, opening hours, age of children attending, and so on.In recent discussions with centres in my electorate of Bass, centre directors advised it took approximately 15 hours to complete the census, which has just been completed for the May 1999 period. Centres are very happy to comply with this form, and in previous years such data was made available. This is interesting, as we are still waiting for the publication of the statistics for the May 1998 period. This period covers the first year of statistics since the loss of the subsidy. These are the vital statistics required to assess the impact that the loss of the subsidy has had on Australian families. These are the figures that are unavailable.The census provides an overall picture of how Australian families are using child-care centres. It also gives a clear picture of the services and facilities the child-care centres themselves are offering. The December 1998 Senate Community Affairs References Committee report on child-care funding recommended:The Department of Family and Community Services expedite the processing of results from future surveys and census collections so that up-to-date information is available for policy development and planning purposes.In requesting information to assist in addressing local issues, I have been advised that the children's services statistical report will no longer be made available. It is, instead, to be replaced by an `information brochure'. But will this `information brochure' contain the vital information required to assess child-care issues on an electorate-by-electorate basis? The best way to determine the true impact of child-care funding cuts is to ask the centres and to ask the families. However, lack of published statistical data from these sources makes it difficult to describe the effect that losing this subsidy has placed on the centres. We are then required to rely on our own anecdotal evidence.Through contact with large and small day care centres in my electorate of Bass, it does not take long to see a common theme of problems and issues emerging. One of the larger centres is at threat of closure, with an administrator being appointed to determine the long-term viability of the centre. Whilst other centres remain open, the types of difficulties expressed by them indicate widespread problems within the industry. All centres expressed their concerns at how they had gone from having waiting lists for places in 1996 to having an average of 10 to 15 spaces available in 1999.This is actually indicative of the effect of the higher cost of child care within the industry since the removal of the operational subsidy. All centres confirmed that they had been forced to increase their fees by an initial $20 per week when the subsidy was first removed and by an additional minimum of $5 per week per annum every year since. This represents between $35 and $40 per week more than parents had to pay in 1996. One parent who wrote to the Examiner newspaper summed this up beautifully by saying:We have two children in full-time care, which costs us twice what we would pay if we sent them to a private school. I cannot understand the logic of the proposed increased funding for private schools when the cost of child-care is not addressed.With a staff to child ratio for a three-year-old in a day care centre being one to five and in a kindergarten being one to approximately 20, this should not be an option parents are forced to take. Yet it was another of the common themes expressed by the centres in Bass that their three- to five-year-old room was well down on numbers due to parents having to choose the private school option. Of course, these are the private schools that this government is so quick to increase funding to whilst not supplying any additional funding to needy child-care centres.But the real effect of this difficulty is ultimately felt by the children and their parents. The strain of having to choose a `cheaper' option of child care to remain in the work force is now a reality for many families. It is time the government released the 1998 child-care census figures. It is time the government reviewed its funding decisions in relation to child care. It is time it prioritised the needs of Australian families and considered the strain it is unnecessarily placing on parents who need to use child care as a necessity. Child care, unlike the private school education option, is a necessity for Australian families and not a luxury.634522:42:006345Nelson, Dr Brendan, MPDr NELSONRW5BradfieldLP10—I just say in response to the member for Bass that you cannot have it both ways. Unfortunately, you cannot live in a country that is sustaining the levels of growth that we currently are and come into the parliament to, presumably, represent the people of Bass and deny reforms in transport, taxation, communi cations, government regulation and a whole range of things, including consolidating the finances of the country, on the one hand and then on the other say, `We do want a first-class and free education. We do want extremely high levels of child care and all kinds of social services provided.'I am rising tonight to make some comments about industrial relations policy. Whilst I consider Ms Jennie George, the President of the ACTU, to be an engaging and inherently decent person, her views and those of her dwindling union membership are inappropriate to the reality with which this nation is faced. In continuing to campaign against workplace based agreements underwritten by a safety net, freedom of association, youth wages and the repeal of unfair dismissal provisions for small businesses, the ACTU courts not only irrelevancy but also the ire of a generation that is being denied the reasonable prospect of having a job.But I think we also need to remember that we have a practical example of what the ACTU's prescription for the problem might actually be. The Hawke-Keating Labor government signed an accord with the unions. A degree of wage restraint was achieved in return for a boost to what was to become known as the `social wage'. The latter comprised Medicare, child care and a raft of social security benefits previously unavailable to middle income Australians. But the accord actually reinforced the very settings that mitigate against employment growth. In reaching such a centralised trade-off, the ACTU implicitly endorsed weak macro-economic policies, including the budget deficits that we use to build social infrastructure and, as a consequence, high interest rates, both business and mortgage.In the decade from 1984, when Australia averaged annual economic growth of 3½ per cent and 160,000 new jobs were created each year, the number of Australians without work in our country actually increased from 670,000 to 850,000. And, to complete the scenario, labour productivity was less than half of what it is today. In other words, if you sit in Canberra and make decisions in relation to the remuneration of workers or even at the level of the Australian Industrial Relations Commission, you do so in a vacuum of what is relevant to the circumstances of a particular workplace, its employer and employees. In the past three years, for example, the lowest paid workers in this country have received a real increase in their wages of 7.8 per cent—with lower inflation and interest rates being a critical part of the equation. Under the ACTU-Labor government accord, they received a real reduction of five per cent.The example of trying to abolish youth wages might appear as a fashionable crusade to young people who at times—I suppose, understandably—long for the trappings of modern life. But, if it is such a `just' Labor cause to abolish youth wages, why haven't the New South Wales, Queensland and Tasmanian governments removed them from their own jurisdictions? And, indeed, why hasn't Tony Blair?If youth wages discriminate, they do so in favour of young people. The Australian Retailers Association estimates, for example, that the abolition of youth wages would cost the jobs of 170,000 young Australians; it would add $1.6 billion to the national wages bill. Further to that, if you did what the shop assistants union put forward in its submission to the AIRC review of youth wages and abolished youth wages for those over the age of 18, you would add $360 million to the national wages bill. Where youth wages essentially have been abolished—for example, in the banking and major building sectors—very few young people are employed.The reason why Labor governments at a state level have not abolished youth wages is that, if you want to destroy jobs, overprice and overregulate the conditions of employment. If you doubt this, when next you go into a local shop—and I say this to those on the other side in particular—simply ask the person who owns the business whether they believe these things are mitigating against the employment of young people. As Tony Blair, shortly after moving into Downing Street, told British unions:The only way to ensure job security for your members is for them to work in efficient and profitable businesses . . . the days of lightning strikes are over.Rather ironically, a week later, in September 1997, Mr Beazley, the leader of the Australian Labor Party in this place, was reminding unions of the 19th century struggles on the railways in Queensland. (Time expired)634622:47:006346Gerick, Jane, MPMs GERICK83WCanningALP00—I want to praise the efforts of Kincare, a community group in my electorate of Canning. Kincare recently organised a successful forum for parents and carers of children with disabilities. Kincare was created initially by representatives of the Red Cross Society, its goal being to give parents and carers a regular forum in which to socialise together, give each other support and exchange information. Often the group invites guest speakers to better inform carers to enable them to access the assistance they need in relation to their children's care.In the last two years, helped through funding from HACC, Kincare has held camps in the south-west of Western Australian for carers. Members describe it as an opportunity to `regroup mentally and physically in order to face another year'. Kincare plans to work to develop a program for siblings of disabled children who experience a range of problems such as parents being away frequently if the disabled child is ill and in hospital, or being teased at school by other children because there is a child with disabilities in their family. It is groups such as Kincare that deserve more support and recognition from governments. They help parents and carers deal with the everyday stresses and problems they experience.I spoke earlier this year about the difficulties encountered by families with Centrelink processes when their child turns 17 and needs to transfer to an adult disability pension. Recently one of my constituents had the experience of being told that she could not fill out the forms for the adult disability pension on behalf of her son and that he himself would need to attend the interview. This occurred despite the fact that Centrelink was aware that her son suffers from Prader-Willi Syndrome, a disability that affects him both intellectually and physically. He is non-verbal and confined to a wheelchair, relying on his family for all his needs. It was obvious that he could neither fill in forms nor answer questions in an interview.This was another unreasonable stress and humiliation which the family was forced to endure in getting their son to a Centrelink office and explaining his condition yet again to the staff. The government should allocate to Centrelink the resources necessary to ensure that parents and carers are not forced to endure more forms and interviews that further complicate their busy and difficult lives.The costs involved in caring for someone with disabilities as already described can be tremendous. This particular family required renovations to their home to make it wheelchair accessible and the purchase of a modified van, as they were no longer able to get their child in and out of the family car. The total cost was nearly $40,000. Then there are the day-to-day expenses such as the purchase of incontinence pads and the extra domestic costs and work that this problem causes.The value and work of Kincare can best be described in the words of a mother who is an active member of Kincare and has a son with disabilities:Many carers experience similar circumstances. Through people like Kincare, carers gain support, friendships and knowledge that other people are in similar situations as themselves. Caring can be a very lonely and isolating life. Families often break down due to the stresses of having a disabled child, leaving one parent to continue the caring role under more stress and feeling even more isolated.Groups such as Kincare have provided a vital support for this family and many others. They are to be congratulated for the work they do. I am very pleased that there is such a resource in my area.634722:52:006347Cameron, Ross, MPMr ROSS CAMERON3K6ParramattaLP10—Before the 1996 election when Australians were asked what were their concerns, almost invariably, the No. 1 concern was employment; it was the lack of opportunities being delivered by the former government to young Australian job seekers and, indeed, to job seekers across the age spectrum. I rise tonight with the very considerable pleasure of informing the House of the results of the most recent Parramatta job vacancy survey conducted by the Western Sydney Research Institute of the University of Western Sydney. I would like to quote a couple of sections from that report.Mr Speaker, you will be interested to know that, according to the report, in the last two years the Parramatta labour market has displayed buoyant growth. In 1996 and 1997 job advertisements were steady, but in 1998 advertisements expanded spectacularly and 1999 has continued in the same pattern. Total job vacancies for May 1999 as measured by the survey from the Parramatta Advertiser involved an increase of 11 per cent over the month of February. So in just two months we have had this burgeoning growth of advertised jobs for job seekers in my electorate. Since May 1998 job vacancies have increased by almost 48 per cent and by more than 100 per cent since May 1997.I note that the Leader of the Opposition is demonstrating characteristic indifference to the aspirations and hopes of job seekers in my electorate of Parramatta. You can talk all you want about social justice, you can talk all you want about equity, but at the end of the day if there is not a job there to apply for it is nothing more than shallow and hollow rhetoric.The University of Western Sydney is talking about a job market in Parramatta which it describes as buoyant and characterising spectacular growth. There has been a 100 per cent growth in job vacancies since the Howard coalition government was elected in 1996. That is my idea of social justice. My idea is actually giving the battlers a job to go to. You will be interested to know that there was not only a rise in casual employment, which is encouraging and good, but also a very important rise in the number of permanent jobs on offer in my electorate.For May 1999 there were 703 jobs advertised on a full-time basis or 42 per cent of the total, versus May 1998 where only 38.5 per cent of all vacancies were for full-time employment. Casual employment is good for single mothers, for working mothers wanting to get back into the work force, for people who want to structure their family and work commitments with greater flexibility. But the presence of the offer of permanent employment is an expression of the confidence which is now filling the sails of the business community in Western Sydney and in my electorate of Parramatta in particular. We have this observation from the authors of the report:In general advertised conditions of work seem to have stabilised, casualisation has slowed and there is an improvement in the amount of full time work on offer.I am particularly encouraged to see a rise in the number of permanent jobs for unskilled workers—those who previous Labor governments would have alleged that they represented, those who have not had the benefits which many Australians enjoy in terms of a tertiary education and high standards of living in their families. Sectors such as manufacturing, retail, hospitality, transport and storage have shown dramatic rises in the opportunities for new employment. Smaller rises were evident across a broad range of sectors, including, for example, agriculture, where the number of employees rose in my urban electorate from only one in May 1998 to seven in May 1999. In the wholesale sector there were 41 advertisements in May 1998 and 81 in May 1999. What we have is this extraordinary result, with a booming sense of confidence, a willingness to invest, to employ, to give young people a go. The last paragraph of the survey says:Overall the results for May 1999 indicate a dramatic increase in jobs over the last twelve months, advertisements growing by 48 per cent. . . . While Retail, Hospitality and Manufacturing continue to be the big advertisers in the region, most industry sectors advertised more frequently this May than last. Manufacturing continues its spectacular expansion, doubling over 24 months.I congratulate John Howard on his guts, his leadership, his willingness to tackle the hard issues that the opposition continues to fail to deal with. (Time expired)634822:57:006348Griffin, Alan, MPMr GRIFFINVU5BruceALP00—It is always a great pleasure to follow the member for Parramatta because there is always plenty to reflect on after he has spoken. You can reflect on his sanity, on his performance on a range of issues—4I4McLEAYMr Leo McLeay—He is the Michael Photios of the federal parliament.VU5Griffin, Alan, MPMr GRIFFIN—I note the interjection of the member for Watson, but I would have to say that I really could not comment on that.0L6DRAPERMrs Draper—Mr Speaker, I raise a point of order. I wish to oppose the member's comment on the member for Parramatta and his sanity. I do not think that the member for Parramatta is insane or has a mental illness and I do not like the reflection.10000SPEAKERMr SPEAKER—The member for Bruce has the call and while the comments that he made may not have been charitable, they were not unparliamentary.VU5Griffin, Alan, MPMr GRIFFIN—I would be the first one to admit that I am not qualified to make that comment in a clinical sense, but I am sure there are others who would and could and probably have done so.10000SPEAKERMr SPEAKER—The member for Bruce will come to the matter for debate or the chair will be forced to intervene.VU5Griffin, Alan, MPMr GRIFFIN—I would like to comment on some events at this Monday's estimates hearings in the industry area relating to an organisation known as the Pharmaceutical Industry Working Group, which is a group set up by the government some 12 months ago for improving dialogue and consultation between the pharmaceutical industry and the government. I think that is a very good idea. I note the member for Bradfield nodding. I think there is a need for improved coordination between the pharmaceutical industry and the government, because it is a very important industry. However, in questions asked during estimates hearings, what came out was the following: the actual group was set up on 23 June 1998 and its next meeting will be on 30 June 1999, making it over 12 months between meetings of this group.If you have got a consultative group, a group that is designed to ensure that industry and government understand what they are trying to achieve, that they are committed to working together in what is a key industry for the future of our nation, it is a bit odd when you have got a situation where the group has not met for over 12 months. Yes, there was an election, but the election was in October. There has been plenty of time since then for a meeting to occur. In fact at the estimates hearing it was suggested that a report from the APMA on the question of the economic state of the industry and the opportunities for the industry in terms of the future of Australia was actually instigated as a result of the working group. However, when we checked the APMA records we found that, in fact, that report was commissioned in May 1998 in a situation where PIWG did not even exist until June. I think the government has some very important issues to raise here.23:00:006349House adjourned at 11.00 p.m.Notices6349The following notices were given:Mr Fitzgibbon to move:That this House, noting the disproportionate compliance cost impact the Coalition-Democrat GST deal will have on small retailers:(1) considers amending the terms of reference of the Joint Select Committee on the Retailing Sector to allow the committee to take intoaccount the way in which the GST deal puts smaller retailers at a further disadvantage vis-à-vis larger retailers; and(2) resolves that:(a) part (a) of the committee's terms of reference should read "the degree of industry concentration within the retailing sector in Australia, with particular reference to the impact of that industry concentration on the ability of small independent retailers to compete fairly in the retail sector both at present and in a post-GST environment";(b) submissions be invited from parties interested in commenting on the issues raised by the expanded terms of reference; and(c) the committee's reporting date be extended to 31 October 1999.Mr Truss to present a bill for an act to amend the Social Security Act 1991, and for related purposes.Mr Truss to present a bill for an act to implement A New Tax System by providing assistance to families, and for related purposes.Mr Truss to present a bill for an act to implement A New Tax System by amending legislation as a consequence of the A New Tax System (Family Assistance) Act 1999, and for related purposes.1999-06-08Mr DEPUTY SPEAKER(Mr Nehl) took the chair at 4.30 p.m.Bills6350r8076350Debate resumed from 7 June, on motion by Mr Costello:That the bill be now read a second time.16:30:006350Kelly, De-Anne, MPMrs DE-ANNE KELLYFK6DawsonNP10—I would now like to turn to the changes to the ANTS package—A New Tax System package. Food for human consumption is to be GST free except for prepared meals, takeaway food, restaurant meals, alcohol, soft drinks, confectionery, ice-cream and snack foods and associated products. Frankly, as a mother who battles to steer an 11½-year-old son to eat healthy food rather than chips, Big Macs and the ubiquitous fries, to say nothing of Coca-Cola, this is a welcome package. It is a responsible policy making decision to exclude prepared food and to focus instead on healthy home prepared food.As we all know, obesity amongst school children is a major concern. I notice also in the package that there is an initiative for a national child nutrition project. I think that is also very welcome. Overall I believe the changes to food are responsible ones and, for the average parent, very welcome. There is no doubt that there are definitional issues to be finalised to ensure that the package meets the design principles of the Australian Democrats, but overall the package is family friendly and common sense.Regrettably, the response of the Labor Party has disappointed many of those on this side of the House. Chicken Man stunts and waving bags of lettuce is really not the thing to do in such a serious debate. It was sad to see the light on the hill become the lettuce and the dill because this is a matter that goes to the heart of every home—what the family consumes—and is a responsible way to look at food and taxation. As I said, as a parent I am very pleased with the package in its current form.I would now like to turn to something particularly relevant to those of us who represent rural and regional Australia, and that is the treatment of fuel and taxation. Fuel tax reform remains the multibillion dollar breakthrough. Unfortunately, the Labor Party is still espousing 43c per litre as a fuel excise. The National-Liberal-Democrats proposal will see 23c per litre come off that fuel excise, bringing it down to 20c per litre. That will apply to all vehicles of 20 tonnes or more no matter where they operate and all vehicles greater than 4.5 tonnes in regional areas. That includes goods that go to or from cities or between regional areas. Certainly we would have liked to have seen the tonnage on the 4.5 lowered but, nonetheless, it is a great deal better than what we have now. In the next while I would like to show you and other members of the House the real advantages for rural and regional Australia.I would like to quote the shadow minister for transport and regional services in her speech on the budget on 1 June 1999. She said:It is a shift away from any strategy designed to reduce regional inequality—and there is a lot of inequality, both within and between regions . . . She was referring to the budget of the coalition government. It is quite breathtaking to be proposing a fuel excise of 43c per litre and criticising those who are offering a fuel excise of only 20c per litre. That to me is blatant inequality.I would like to share with you some examples from my own electorate undertaken by the National Truck Association. There is a trucking business in Dawson, a moderately sized family business, with a turnover of $2 million a year. Their diesel fuel bill is in the order of $400,000. On the Truck Association's figures they are going to save $132,500. On wholesale sales tax on parts, oil, tyres and so on they are looking at a saving of $75,260. So for that one small business, the total sum of the savings is $207,760—about $200,000. That is money that will not be coming to Canberra, but will be staying with that business to be passed on to those who transport products, to be kept in the local community. Regrettably, the Labor Party opposes this.I would now like to quote from the transcript of an interview given on 2 June, again, quoting somebody who feels aggrieved by the altered tax package. This is the national president of the Transport Workers Union, Mr Bill Noonan, who is quoted as saying, `It is a case of politics gone mad.' Mr Noonan says:Take the situation of a large group of truck drivers located, say, in Laverton in Melbourne. If you relocate them 20 kilometres to the west, does that mean that the road transport employer could operate the business with cheaper diesel and thus put their jobs in jeopardy? I mean, they're the sorts of simple questions I think need to be answered. But, of course, the ramifications to the simple questions are quite significant.He is quite right. The ramifications to the simple questions are significant. A ramification of this change could well be decentralisation.I see nothing wrong with businesses moving into rural and regional areas to give their employees the opportunity to live in a cleaner, quieter, more family friendly environment, to perhaps have lower housing costs and certainly lower transport costs. It is the first real initiative that I have seen towards decentralisation, which I know is very much, Mr Deputy Speaker, one of those things you feel strongly about. It is the first real policy I have seen towards decentralisation, encouraging people to live wherever they choose, perhaps in the city, but if they choose, perhaps in rural and regional Australia.I would like to share with you another example of savings for rural and regional Australia. This is a trucking company that operates, again, in Dawson; a very large company as it turns out. They transport chopped cane from the siding to the tram line, raw sugar to the harbour, molasses down to the VLC plant, refined sugar to the harbour. They use 2.5 million litres of diesel a year. The saving for this company, from lowering the diesel excise by 23c per litre, is $575,000. That is a lot of money. That money is going to stay in the community. I spoke to the owner of this business and he said, `Of course, we will pass it on.' And they will have to pass it on, and that is a good thing. But it will remain with farmers and small businesses in the town, and that is where it should be. That is a significant amount of money. From those two businesses, we are looking at a quarter of a million dollars, just two businesses, of money remaining in our local economy.It is a reversal of inequality. It is tilting the playing field in favour of regional and rural Australia, I think, really, for the first time in a very long time. Those who are opposed to this measure are opposed to the bush finally getting ahead. I simply say, where is the member for Dickson? She really should be applauding this. It is a very sound measure.I would like to mention very briefly some other aspects of the tax package. One aspect is the wholesale sales tax. It is often said by those in the opposition that farmers do not pay wholesale sales tax. If only that were true. But regrettably we do in the cane industry. Cane haul-out trucks attract 22 per cent wholesale sales tax. On every cane haul-out truck—and there are usually a couple working in a paddock through the crush—it is $30,000 extra per vehicle. That is a great sum of money for a cane harvesting contractor and his family to have to pay. That will go with the implementation of this package.Mr Deputy Speaker, I find this package enormously exciting. I really do. I think for the first time we are going to have an opportunity to attract businesses into rural and regional Australia. If they want to move there: move up to Dawson! We would love to have you. We are going to see money staying in the community that would have come to Canberra or to the states. It is going to stay in the local community, providing jobs for others. I think it is a tremendous initiative. It really is the first time I have seen a substantial plan to tilt the playing field in favour of rural and regional Australia.In the time left to me I would like to speak very briefly about some of the other sound initiatives in the budget. We are looking at regional impact statements which will assess the impact on regions of cabinet proposals. That is certainly an initiative well overdue, in my opinion. In so many other departments there are very sound initiatives, but they may or may not have a negative effect on a rural or regional area. I think this will properly assess the impact on our more vulnerable areas in Australia.I welcome the regional Australia strategy to restore services to rural and regional Australia and to ensure access to those services. We are looking at rural transaction centres. We are looking at rural GPs: a retention program of $43.4 million over four years for retention payments for long-serving general practitioners. In our area we have a GP who has been in a sole practice for 13½ years and who is absolutely exhausted. He has been advertising for 13½ years to get a partner. To get a locum in our area, if they are lucky enough to get a locum, a doctor has to spend at least $3,000 advertising. It really is a labour of love and devotion in the rural and regional areas. For those doctors who choose to serve in our small towns and communities, I have nothing but gratitude. But they certainly do need to be rewarded and encouraged, and I welcome this initiative.The Minister for Health and Aged Care, Dr Wooldridge, has already looked at a new deal with Western Australia for more rural doctors. Overseas doctors can enter into a contract which binds them to a specific rural location for a period of five years. When we were looking at Aboriginal communities in Western Australia, they found it enormously difficult; if our small towns find it hard to attract a doctor, they find it almost impossible. I think if it is good enough for overseas doctors, frankly, it should be good enough for some of ours. I know they refer to it as civil conscription, but the reality is that access to professional medical attention is the right of every Australian, whether they live in the heart of Sydney or Melbourne, whether they live in Proserpine or Bowen, or whether they live on a remote Aboriginal community.I would like to move now to the James Cook Medical School. I notice in the budget that there are to be 60 student places—$6.4 million. This was an initiative of the Prime Minister, and I am enormously grateful to him. We have waited a long time in the north for our own medical school. It is going to give young rural people from our area the opportunity to become doctors. There will be five places held for indigenous students. So it is a tremendous opportunity in our area to train people from the rural areas and to see them, hopefully, come back to the rural areas.There are so many sound initiatives in the budget, but there are some that I have to mention. We are looking in particular, from the Attorney-General's portfolio, at a national telecommunication advice and information line on child support matters. I think every one of us in our electorates has inquiries about child support. It is a very difficult and heart-rending issue for the residential and non-residential parent. This information line will be very welcome, certainly for electorates like mine where there is no Child Support Agency. That takes nothing away from the sound work that the Townsville Child Support Agency does. They are very professional and helpful and compassionate, but sometimes it is just not enough. Of course, we are the de facto child support agency office in Mackay. It does put a burden on rural and regional members, so this information line will be very welcome.We are looking at additional family dispute resolution services and at something else that I really do think is a sound measure: conferencing in legal aid. The Attorney-General is looking at putting additional funding to that. In our legal aid office in Mackay there are eight families a week that seek family conferencing. It is a less adversarial way of resolving family difficulties. By then, of course, the marriage has broken down irrevocably, but it is a way of getting away from the confrontational approach adopted in the court system. The families that go through this conferencing find it a good way of developing goodwill. Obviously, the most important people in this whole situation are the children. If they can encounter a situation where both parents are able to work with a degree of goodwill in a family breakdown, then I think we have progressed a great deal. So I am very grateful to the Attorney-General for the conferencing arrangements and the additional funding towards that. I will close by saying that it is a very sound budget, a very rural and regional friendly budget, and I am pleased to support it.16:45:006353Macklin, Jenny, MPMs MACKLINPG6JagajagaALP00—This afternoon I want to respond to the health part of the 1999-2000 budget. The budget does contain some useful initiatives and a much needed injection of funds for areas that have been systematically attacked by this government in recent years, particularly in the area of research. There are some important initiatives such as the additional funds for Aboriginal health. It is the case, as the minister has recognised, that Australia cannot rest while Aboriginal people are likely to die 20 years younger on average than their fellow Australians.As the previous speaker outlined, the imbalance between health services in the city and the country also continues to grow. I would have to say that the government's efforts so far have produced a net increase of only 12 doctors—that is 12 doctors—in all of rural Australia last year. The budget does include a new round of measures and it is certainly to be hoped that these work better than their predecessors.But overall, the budget in the health area puts the priority in the wrong areas and, as usual for this minister, fails to set any targets. He has been burnt by a previous health insurance target so he has gone off the idea of targets which would make it possible for anybody to measure whether the claims made for any of the new initiatives in health can, in fact, be tested.The budget is being billed as a billion dollar boost for health. However, of course, on closer examination we find that most of the new programs are small pilots or, in the case of medical research, the substantive boost to funding comes only after six years. In the first year, the year we are talking about, all the initiatives amount to an increase of $164 million—less than one per cent of the whole health budget.These initiatives, of course, are dwarfed by the $1.7 billion, the all-up cost of the private health insurance rebate. That is 10 times the allocation for all the new initiatives in this year's budget. Yes, health spending is up, but it is mostly to pay for the private health insurance rebate. If the government had not thrown away this $1.7 billion a year, we could have afforded to fix so many of the problems that exist in our public hospitals. We could have done something substantive about Aboriginal health and, of course, we could have reintroduced the Commonwealth Dental Program.But now, instead, we see nearly 10 per cent of the total health budget going out as a direct subsidy to the private health insurance funds. The rebate was meant to produce, in the minister's words, `a surge' of 550,000 new members—this was when he was interested in targets—and to hold down premiums because of the increased number of members. It has failed on both counts. Membership is up by a miserable 57,000 people all around Australia and we saw just recently that premiums have jumped by 4.9 per cent, or $100 a year for an average family.So what is it that has led this health minister to declare that Australia's health system is out of danger and in recovery? The most substantial claims he makes relate to a number of agreements that he has been negotiating for a cap on major areas of expenditure. At a postbudget breakfast briefing the minister said that, as a result of these agreements, two-thirds of the Medicare budget will be capped and predictable. The proof, of course, will be in the pudding as to whether these agreements work. The initial signs are certainly not encouraging.I want now to look briefly at three areas: radiology, pharmaceuticals and general practice. Between them these represent about $7 billion a year in Commonwealth expenditure, so they are rightly subject to close consideration. Unfortunately, the agreements that have been reached have utilised a very vague concept that the minister calls a `soft cap', which means they are not very effective at controlling costs. The relevant doctor organisations certainly do not have the same view as the minister about how these agreements are to be implemented.In the case of radiology, the agreement is now one year old. Under this agreement, the billion-dollar radiology budget was to be kept to a seven per cent increase—not a very hard target in times of 1.9 per cent inflation. We are now informed through a Senate estimates committee that, in the first year of this agreement, there has been a $35 million blow-out and the agreement is heading towards overexpenditure of $165 million. The radiologists were expected to keep spending within the prescribed soft cap by restricting use of CAT scan and ultrasound. However, expenditure is up by 13 per cent and 14 per cent respectively, and use is continuing to grow rapidly. The minister has done nothing to rein in these costs.To lose $35 million to radiologists in the first year of an agreement is hardly world's best practice. It is time for the minister to act and he must produce a solution that does not simply transfer the cost to the patient. At a recent closed session in Sydney, the radiologists discussed how they might respond to this budget blow-out. Their recipe was simple: any cutback by the government would be passed on to the patient. This would mean additional gap payments of up to $150, depending on the procedure involved.The trade-off for the radiology agreement was that the Commonwealth would allow Medicare rebates for privately owned magnetic resonance imaging units. This too was meant to save money—$80 million over four years. But the MRI agreement is heading for a huge blow-out, with costs running millions of dollars over budget. The number of scans was to be held to 403,000 over three years but they are already running at 13,000 a month, and a number of the new machines have yet to come on line. Why is this? The reason remains clouded in mystery.Somehow, it seems, the word got out that the minister was intending to extend the Medicare rebate to include MRI units which were only on order on the night of the 1998 budget. It has now emerged, as a result of persistent questioning by the opposition in the Senate estimates committee, that no fewer than 31 new units were allegedly ordered in the run-up to the 1998 budget. This represents a 50 per cent increase over the 62 units that were operating at the time. In a few short weeks the stock of machines which had been built up over a decade, and which the Australian Health Technology Advisory Committee had reported eight months earlier as sufficient for Australia's needs, had increased by 50 per cent.The Health Insurance Commission is still investigating whether any of these alleged contracts involved fraud or criminal activity. The minister has told the parliament that he `completely and categorically denies and repudiates' any suggestion that there was a leak from him or anyone in his office, yet he still refuses to table the dates of these contracts or to release any further information. As a start, I suggest, instead of leaving any answers to these questions to a later date, it would be a good idea if the minister came out now, gave us the dates of the contracts and cleared up some of the remaining mystery about this massive problem.The second agreement which the minister seeks to enter concerns pharmaceuticals. In this year's budget, cuts to pharmaceutical spending are supposed to be based on agreements with doctors `to measure and share' the benefits. Over the next four years, the government proposes to save $350 million on pharmaceutical spending. The portfolio budget statements say that half the savings will be redirected to doctors but the true situation—once again extracted via the Senate estimates committee—is that only 22 per cent, or $78 million, will be returned to doctors over the four years. A similar scheme for pathology will save the government $134 million and doctors supposedly will get a payback of $27 million.Payments for the pharmaceutical scheme are to be given to doctors who stay below the average for prescribing in the three designated groups of pharmaceuticals—cardiovascular drugs, drugs for gastric disorders and antibiotics. How this return to doctors is to be organised remains totally unclear to the opposition, the department and the doctors. The payments are apparently to be made to individual doctors, but nobody seems to know how this is to be measured out and allocated or which doctors are to get it.The Australian Medical Association has no doubts about the dangers. It has loudly condemned the pharmaceutical cuts in the budget—cuts which were arrived at without its agreement. I certainly support measures to curb overprescribing, but it is not very sensible to proceed without the agreement of the party on whom you are depending for the implementation of a more efficient system.This announcement has not been the right way to start. The reaction from the medical profession so far has certainly not led anybody to think that this budget initiative will be implemented smoothly. As I said, the government has been unable to spell out how these cuts will be made or how the doctors will get what the budget says is their share. We should not get to a point where a government scheme to save money prevents a doctor prescribing the correct drug for a particular patient for fear of losing a bonus payment.The third agreement that I want to touch on underpins this year's health budget—despite the fact that it has not been concluded and is not even mentioned in the budget papers. The Minister for Health and Aged Care has been unable to reach agreement with the AMA and other GP groups over the new general practice agreement to put a cap—once again, a soft cap—on total spending on general practice. The minister now says that he hopes for an agreement by 30 June, but many of the key planks on which the budget depends are based on the conclusion of this agreement.A number of drafts have been leaked during the process. The drafts highlight the way that the government has slowly backed down, replacing hard targets with vague words of principle. The document has been reduced from an agreement to a memorandum of understanding, and the soft cap has numerous exemptions which now permit expenditure to increase for a wide range of reasons. Although this agreement has not been signed, the government is depending on it to deliver its major savings for pathology and pharmaceuticals. Although the doctors have not signed up yet, a total of $171 million in new incentives are offered to them in the budget. These incentives are essentially tied to this agreement. We will see how this finishes up, but it is likely that the government will concede more ground and that the interests of the patients will come a poor last to those of the doctors and to the government's efforts to cut budgets.If the GPs do not reduce the growth in services—just as we have seen in radiology—and, as a result, the government reduces the amount paid to general practitioners, we all know who will be left holding the bill—the patients. The rapid growth in gap payments faced by patients was reported on in today's Australian. According to information from the health department, patient costs jumped by an average of $200 in the last two years for nine common surgical procedures.In practice, the agreements I have talked about today will push the costs from the Commonwealth onto individuals. The real thrust of the minister's negotiation seems to be to increase patient costs and push doctors away from bulk-billing—yet again, another attempt to undermine Medicare. The other major flaw in the soft cap agreements, particularly the radiology agreement, is that they are continually undermined by the states. The states are taking advantage of them to shift costs onto the Commonwealth and, once again, push up the total cost of health care. In the radiology area in particular, there is strong evidence that this cost shifting is taking place directly under the minister's nose. It is negating the effect of what he publicly claims has been achieved, and yet he continues to do nothing about it.I now want to turn to the additional money for medical research over the next six years. It has certainly been welcomed by many medical researchers. But the amount of money allocated to medical research has to cover many areas dramatically affected by previous Howard government cuts. We see in table 2 of the science and technology statement, released two days after the budget, that expenditure on research across the government will be $100 million less in constant prices than it was in Labor's last year of government. This is because of cuts to the university sector and the reduction of the tax concessions that applied to business research and development in the Howard government's horror budget of 1996.The minister's claim that only $110 million was spent on medical research in Labor's last year of government is simply wrong. The science and technology budget papers contain the real picture in table 3. Health and medical research in 1995-96 was $163 million, only slightly less than the $165 million in 1998-99, used by the government as its base for the new initiative.The latest Bureau of Statistics figures, released last Friday, show that business expenditure on R&D continues to plummet, with a further four per cent drop in 1997-98 due to the reduction in business R&D tax concessions. Again, the science and technology statement documents the decline.Under John Howard, the percentage of the nation's wealth invested in research of all kinds has shrunk from 0.75 per cent of GDP to just 0.63 per cent. The build-up of funds for medical research will also be painfully slow. In the first year there is only an additional $21 million. Researchers will have to wait six years before the promised doubling of funds actually occurs. Australia still remains a very poor investor in medical research. Figures in the Wills report certainly demonstrate how far we are behind in this regard.The government has also failed to tackle the other substantive changes that the Wills report on medical research has called for, most particularly to fix the problems where the country's capital gains tax regime discriminates against investments from overseas.Mr Ross Cameron interjecting—PG6Macklin, Jenny, MPMs MACKLIN—If you had read our platform before the last election, you would know that the Labor Party demonstrated, well before the Wills report, that we intended to introduce a new tax regime that would give incentives to overseas investors in research, as part of our 1998 election platform.The government remains, of course, obsessed with the GST and has refused to do anything to attract overseas superannuation funds to invest in Australian science. Let us have a look at who has actually put forward the detailed policy. As I said before, having failed to meet the dismal targets the government set for its 30 per cent rebate, this minister now intends setting no targets for any of his new programs. We do not have any idea how many additional doctors or nurses he wants to get into rural areas. We are getting no idea of measures for success on medical research and no way to measure whether these additional funds will simply replace public hospital funding withdrawn by the states, or the earlier cuts by this federal government to university grants and to R&D concessions.But, most importantly, this government once again has turned its back on two of the major problems that Australia's health system faces. Day after day, in each of the papers in the capital cities, we see the problems that the public hospital systems continue to face—whether it is in Western Australia, where the shadow minister for health talks about Western Australian mums being forced to endure disgraceful conditions, whether it is in South Australia with the South Australian government once again taking another $50 million out of the health system, or whether it is in Victoria—the minister's home state and mine—where we see the horror stories of things going on in our public hospitals. And public hospitals do not even get a mention in this national health budget—not even a mention. Most of the states—run by Liberal parties of course—withdraw funds, and the Commonwealth fails to keep up with the rise in medical costs and the growth in demand.The other horrific story is that of dental care, where the waiting times for people in urgent need of dental care continue to blow out and are now between one and two years. This is the direct result of this government abolishing the Commonwealth Dental Program. Once again, there is no commitment by this government to address a very painful cut to health care that they obviously have no intention whatsoever of redressing.17:05:006357Cameron, Ross, MPMr ROSS CAMERON3K6ParramattaLP10—I have listened to the remarks of the member for Jagajaga with, I confess, frank astonishment, in particular to her concluding remarks about economic management in Western Australia, South Australia and Victoria. The member for Jagajaga will be familiar with the economic performance of the Australian Labor Party in Western Australia. It took 10 years under the governments of Brian Burke and Carmen Lawrence to virtually bankrupt Western Australia; to reduce it to a position of penury and to subject it to absolute ridicule and disgrace because of their economic mismanagement. Richard Court is having to rescue the state from this incredible economic disaster precipitated by the profligacy of the Australian Labor Party over 10 years.Under Labor, a credit ranking of Western Australia by Standard and Poor's saw Western Australia's credit ranking drop for the first time. Western Australia lost its AAA rating under Labor. When Richard Court came to power, Western Australia had an accumulated debt of $8 billion—$8 billion for a single state—or 20 per cent of the gross state product. Under Richard Court, the AAA rating has been restored and the level of state debt has been reduced from 20 per cent of gross state product to eight per cent of gross state product.The member for Jagajaga referred to South Australia—and well might she slink out the door. Dean Brown and John Olsen have had to come in like the cavalry and rescue a state which likewise had become a subject of ridicule and pity by other states of the Commonwealth. With a population in South Australia of 1.5 million, the State Bank of South Australia, under Labor's economic stewardship, racked up a debt of $4 billion. The state is still struggling to pay $2 million a day of interest on Labor's debt. Labor, as a kind of core element of their philosophy, just takes the view that there is no long-term relationship between economic stewardship and social or human outcomes.If you went to Victoria, as the member for Jagajaga did, you would know that the Kennett government was called in to rescue a state which similarly had collapsed underneath the Victorian people because of lack of economic productivity. In Victoria's situation, the governments of Cain and Kirner saw the collapse of the Pyramid group and the Tricontinental Bank. Victoria, after a period of tough economic decisions, of real economic management, now has a fleet-footed leadership and is responding to the opportunities which are being presented. Victoria is winning one major event after another, which is enabling it to pay its debt. My federal colleagues in New South Wales will identify with the frustration of hearing all of Sydney business wandering around saying, `If only we had the sort of economic leadership that has been provided by the state government in Victoria.'If you elect Labor governments in Victoria, in South Australia and in Western Australia, you will see this absolutely consistent pattern of the states going from a position of strength to a position of great indebtedness, reduced productivity, higher unemployment and lower rates of investment. In the long run, the people who suffer are the punters—the mums and dads and the workers—who find that the states have to continually lift taxes in order to fund their ever increasing expenditures.As you wander around Parliament House you see the posters and slogans that members put on the windows of their offices from time to time; posters which are emblematic of their philosophy. One of the most popular posters among those who are drawn from the left of Australian politics seems to include this expression: `We live in a society, not an economy'. This expression is a glib one that rolls off the tongue with comparative ease and sets the maker of the expression up as being a person with a beating heart full of the milk of human kindness and compassion. But it holds within it the seeds of the destruction of any Labor government and the seeds of misfortune for any constituent or electorate which is governed by Labor stewardship. This is because it holds up the proposition that, in the long run, you can separate economic productivity from social and human outcomes; that you can somehow continue to borrow and borrow, spend and spend and shirk the hard task of economic reform without consequence. The expression somehow says that the chickens will never come home to roost; that we can eat, drink, spend and tax today and hope that tomorrow will never arrive.The whole contribution of the member for Jagajaga is a critique of the lack of further expenditure by this government in one sector after another, whether it is R&D, pharmaceutical benefits or public health. In every sentence she is saying, `Spend, spend, spend.' If she is going to be honest, with every one of those spending commitments she should be saying where she is going to raise the revenue from. She should also be saying `Tax, tax, tax.' Of course you do not hear that from the Australian Labor Party. You only hear this milk of human kindness. You do not hear where the money is going to come from. In the words of a recent film which resonated with many of us: `Show me the money.' I say to the member for Jagajaga, `Show me the money.'As we look at that quick survey of Victoria, South Australia and Western Australia, at the virtual bankruptcy of each of those states, the falling credit rating, the rising taxes, the rising rates of inflation and the rising rates of unemployment, we see this very consistent pattern which was completely reproduced with the Labor government when Bob Hawke was elected in the same year—1983—as Brian Burke in Western Australia and had, as it turned out, a very consistent record. We had a situation where in the last six years of the Labor government at the Commonwealth level we had a run-up of Commonwealth debt of nearly $80,000 million. That is a figure with so many zeros that my ordinary constituents in Parramatta, like me, have difficulty comprehending its magnitude. $80 billion in debt in six years. That is Labor's record of economic management.The member for Jagajaga talks about the `horror' budget of 1996. What did she want us to do? To continue in this pattern of profligacy in which future generations of Australians were getting more and more indebted for goods and services they would never see or receive? Or did she want us to take the hard decision? Did she want us to take the right decision and resolve that we would put the Commonwealth's books back into balance? That is precisely what we decided to do.When we came to power we had to raise $9 billion in taxes every year just to pay the government's interest bill on its debt—$9 billion a year from the Turkish bloke in the kebab shop in Parramatta mall who is there at the crack of dawn, working in front of that hot fire all day in the most unpleasant conditions. He and his wife are in there from dawn till dusk trying to build a better future for their kids. We are having to take $9 billion from his tax revenue in order to pay the interest on Labor's debt. We said that that was not good enough. So in year 1, 1996, we did produce a tough budget and I do not apologise for it. I do not think future generations of unborn Australians will criticise us for it. They will congratulate us because we did what the former government was not prepared to do and that was take the hard decisions.Today I want to touch on the psychological impact of this revolution in public finances which the Howard-Costello government has presided over. After seeing Australia slip further and further in virtually any international ranking you want to name—whether it is savings or standard of living—we have seen a change in the psychology in the same way that we saw this extraordinary change in the psychology of Victorians after the election of the Kennett government where, for the first time, there was a spring in the step, a returning self-confidence, a belief that Victoria had a future. We are starting to see this magnified across the nation as a whole as a consequence of the renewed prestige and status which Australia is enjoying in the international community following the extraordinary economic performance of this government.I want to take one sentence from the Treasurer's speech when he delivered this year's budget. He referred to the fact that we had to raise $9 billion in taxes just to pay the government's interest bill. He said:In those four Budgets, in net terms, we have not borrowed a dollar.I want the chamber to reflect on that fact. If you say to me that Labor racked up $80 billion in debt in its last six years: how much debt have we racked up in our last three years? We have not, in net terms, had to borrow a single dollar of taxpayer liability in order to fund these budgets. In fact, on the contrary, we have actually repaid $24 billion of Labor's debt. Now that is an extraordinary achievement by any fair-minded person's estimation.By 2002-03, we could repay all of Labor's debt and the Commonwealth could be debt free. We could begin the next century as we began this one with no Commonwealth debt, with a clean sheet and no interest bill to pay. And this is the critical sentence. We would have the chance to lower taxes and build better opportunities for our people. Surely, that is what government is about—building better opportunities for our people. This is a simple unvarnished but clear statement of purpose from this coalition government.If you go through the record of achievement, it could go on and on, but I want to turn now to the question: where do we go from here? What do we do now that we have achieved this new psychology of savings and a new psychology of surplus which is infecting the broader community? You see this extraordinary situation where the opposition in question time gets up each day and their principal thrust of attack is: are we going, that is, is this government going to have to dip into this miraculous surplus that it has created in order to fund the adjusted tax reform package put to the Australian Democrats? Their principal preoccupation is: are you going to have to dip into the surplus? As if it is some heinous accusation to dip into the surplus that we have created in order to fund our modernised, restructured, fairer, simpler tax package. We have fought tooth and nail at every moment for this surplus. The member for Jagajaga gets up in the chamber and continues to fight tooth and nail at every point in the budget process. Then the opposition has the gall to turn around and say, `Are you going to dip into the surplus to fund your brand spanking new modernised tax system?'This is an opposition which is bereft of ideas, which has lost its way, which faced a critical moment after it got so crushed in the 1996 election. They took the member for Holt, Mr Evans, and said, `Okay, Gareth, you are going to be in charge of remaking the Australian Labor Party. Your job is going to be to find that spark of policy and intellectual renewal which is going to allow the Australian Labor Party to become part of the mainstream debate, to re-win its place in the hearts of the Australian worker, to take a place as a credible alternative government.'And so Gareth went away with his colleagues and they consulted widely, chatted within their various caucuses and wrote their books. He came back at the end of the process, and to the great disappointment of many in politics, not just in the Australian Labor Party, he said, `It simply would not be credible to present ourselves as a different kind of outfit,' and that is virtually a direct quote.Ever since, Labor has been locked in this reactionary culture that lacks innovation, in fact that tries to block innovation at every turn, where we, on the conservative side of politics, have become the reformers. We have become the idealists and the progressives, dealing all the time with the reactionary and conservative Australian Labor Party. That is the challenge for the ALP. Do they want to be part of the debate? Do they want to contribute or do they want to be locked in this eddy, in this rut, in this philosophical vacuum, which does not seem to have any future at all?The Treasurer in his remarks said that the next decade could be a special one for Australia, and I agree. After having laid this foundation, he said that we could be looking at a step up in growth, jobs, community infrastructure, services for those in need, living standards, leading the region and in many respects leading the world.Some people say, `You are always concerned about these economic issues; you are always concerned about economic management; you are always talking about fiscal restraint.' I want to highlight the fact that every one of our economic goals is nothing more and nothing less than a proxy for our human and social objectives to create a more prosperous and a fairer Australia. That is our objective. In that sense, I suspect that both sides of politics have more in common than separates them, but the critical difference is how you get there. Labor believes in ministers writing large cheques and glowing press releases, talking about compassion, equity and social justice, and damn the consequences for debt, taxes, inflation, interest rates and future generations of Australians.We believe there are no short cuts. We believe it does not matter what the language of compassion is in the press release if you cannot fund it in the budget. We believe that it is not just this generation and this election that you have to be thinking about, but the next one—the next generation, the next century. We believe that it matters that Standard and Poor's decided in the last couple of weeks to lift Australia's credit rating from AA to AAA, because that means we can fund whatever expenditures we need more cheaply, and that means there is more of the cake left over at the end to look after those who really need it. That is the nature of social justice.Social justice is academic if there is nothing left over at the end of the day to share around. It is academic if you can divide up the cake in beautifully equal shares, but the cake is so small that you cannot do anything for pensioners, for those who are carers of people with severe disabilities. When the Treasurer says that we can now lift our services for those in need, that is what he is talking about.If we look at the area of disability, this is where I would love to see us do something more fundamental over the next four, five, 10 years. It is true that the Commonwealth put $1.7 billion into the Commonwealth-state disability agreement this year. That is a substantial amount of money in anybody's language. But other members on both sides of the chamber will have shared my experience of meeting a constituent who is a carer, often a parent of a child with profound disability, whether it is physical, intellectual or sometimes a combination of both. There are still over a million Australians suffering with either profound or severe disability. The carers are knocking themselves out to try to provide some sort of quality of life for those young Australians. Many of them are in very dire circumstances. They are deeply stressed.There is a great shortage of respite care. There is a shortage of shared group housing that has been tailor built and designed for people with a disability. All over the country we know that these are not people who are trying to rort the system. There is no debate about the morals; there is no debate about the worthiness of the cause. The simple problem is that there is not enough of the surplus left at the end of the day to do for these people what we should be able to do for them. That is why a former British Prime Minister said to the trade union movement of Great Britain, `If you want a German standard of living, you have to have a German standard of productivity.' That is what we have been saying to the Australian people and the Australian economy. If we want to be able to generate the kind of surpluses that would build respite care facilities for carers of those with disabilities and for people suffering disabilities, we have to have an economy which actually generates a surplus. There has to be something left at the end of the day. That is what this budget and the three that preceded it have been all about.There are lots and lots of things I would like us to be able to do. If you want to talk about infrastructure, I would love us to be able to more generously fund the Darwin to Alice Springs to South Australia or Darwin to Melbourne rail link. I would love to see that whole inland to eastern seaboard opened up to economic development. I would love to see that kind of decentralisation. I would love us to build the orbital route connecting the highways around Sydney to make it a more livable city. I would love us to be able to take the European carp out of Australian rivers.People talk to me occasionally about doing the really bold visionary things, like turning the Clarence the other way and sending it inland and doing something about the 70 per cent of this vast continent which is a desert. I am not an engineer. I do not know whether it is possible or not. What I know at the moment is that we cannot afford to even take a look at it. They look back to the Snowy Mountains scheme and say, `When are we going to have a government prepared to do something like that again?'I say that this government is now looking at a new decade, a new culture. We are looking at a new psychology: a psychology of savings, a psychology of surplus. We are looking at the opportunity to provide better services for those in need, a rise in our living standards, to lead the region and, in many respects, lead the world. That is my commitment to the Liberal Party, to this government. My view is that there is no short cut. While it is true that we live in a community, not an economy, unless the economy is productive you cannot deliver the quality of goods and services to people in need.That is what this budget is all about. There are many other individual aspects of it which are commendable. I would like to see us, however, abolish every legislated impediment to national savings. We have got to lift national savings as we look forward, but we cannot do it if we are scrimping and saving and have our backs to the wall for every dollar that we are looking for.I want to congratulate the Treasurer. It is an unbelievable achievement. When Keating was in power, Asia had an eight per cent growth factor and we had the recession we had to have. With Peter Costello as Treasurer and Asia in recession, Australia is leading the world in economic growth. It is an extraordinary achievement. I congratulate the Prime Minister and the Treasurer.17:25:006362McMullan, Bob, MPMr McMULLAN5I4CanberraALP00—Thank you, Mr Deputy Speaker. I welcome the opportunity to speak on Appropriation Bill (No. 1) 1999-2000 and associated bills. It is traditional to say that one welcomes the opportunity to speak on bills when getting up to commence an address, but on this occasion it really is a valuable opportunity for me because it gives me the opportunity to highlight once again the glaring inadequacy of the government's approach to the future requirements of Australia in the areas for which I have responsibility on behalf of the opposition, that is, the areas of industry and technology.In these areas I shadow two ministers, the Minister for Industry, Science and Resources, Senator Minchin, and the Minister for Communications, Information Technology and the Arts, Senator Alston. Their positions are slightly different and the response to each of them needs to be slightly different accordingly. I think an accurate description of Senator Alston is to say that he is all talk and no action. That would not be an accurate description of Senator Minchin. He is no talk and no action.The sad thing about Senator Minchin is this, really: everybody in Australia knows he never wanted to be industry minister in the first place, and it is patently obvious he is not the slightest bit interested in the job. We all saw the publicity after the election when Senator Minchin and Mr Howard were trying to force Mr Fahey out of the Finance portfolio and put Senator Minchin in there. Probably that is where his heart really lies—in the Finance portfolio. It is obvious that it is not in the industry portfolio.I continue to get representatives of industry and industry associations saying to me in surprise after they have been to see the minister, `He did not seem to be the slightest bit interested in the things we had to say.' It is quite common around this place, of course, that when people have been to see the minister they go and see the shadow minister. It is quite a common occurrence. They come in some amazement and say, `If you want to go and see the minister and talk about the monarchy against the republic, or the internal politics of the Liberal Party in South Australia, you will have his rapt attention, but once you start to talk to him about industry and technology, his eyes glaze over. He is not interested.' This is reflected in this budget.When you search for the initiatives in the industry area, when you search for any action at all, you find nothing. The only thing you could bring within the ambit of industry is the extra funding for medical science research and biotechnology. My colleague the shadow minister for health dealt with the objective reality of those circumstances, but for the purpose of this conversation let me say that nobody can say it is a bad thing to spend more money on health and medical research—and I do not—but that is an initiative essentially driven by the Minister for Health and Aged Care within the health portfolio. In the industry area, there is nothing. On the issues of concern about industry beyond and outside the budget, we hear nothing—or, in recent times, worse than nothing—as it relates to the crucial issue of research and development.Senator Alston, on the other hand, does tend to talk about the issues that the industry is concerned with. On 21 May he spoke to the Queensland branch of the Australian Information Industry Association about issues to do with information technology and challenges and opportunities for the new millennium. He outlined a series of challenges facing Australia's IT industry and I think he got a lot of them right. He spoke about our high communication equipment trade deficit; about the need to concentrate on growing in an export oriented Australian IT industry; about the capital gains tax; about the fact we are not extracting maximum long-term commercial benefits from Australian investment in research and development. He referred to the importance of education as a key element in a successful, high technology society, and he referred to the crisis facing the IT industry in the area of skills and recruitment.There might be other issues you could add, but those issues are serious concerns for the IT industry and I am sure people were pleased to hear the minister outline them as his concerns. But, sadly, when you read the rest of the speech, after the outline of the analysis of the problems, and when you look at the budget, you find nothing—a lot of talk but no action.There is a role in society for people who analyse the problems that are facing an industry. Academics do that very well and journalists often do it. The responsibility of those of us who are in public life is to go one step further, to answer the `and therefore' question. Having done the analysis, what is our response? How do we answer the `and therefore' question?Let us look at this budget. It contains no extra funding for IT science and research to match that in the area of medical science—nothing at all. There is no action to assist with the trade deficit or the export orientation of the sector—nothing at all. We have no action on the capital gains tax, despite the offer of bipartisan support to make changes; no action to improve on extracting commercial benefits from our R&D—in fact, we subsequently find we are going backwards—and no action about our education and training problems in the sector. They still suffer the burden of the ridiculous decision of the government to introduce a differential and higher rate of HECS on students in science and engineering.It is as if the government does not believe that the market system works in education. It does not believe that, if you put up the price of something, you may deter people from buying it. Or the government does not believe education in science and engineering is important. They are the only two explanations, because the government clearly made a conscious decision to make choosing an education in science and engineering more expensive. The inevitable consequence is that we have this serious shortfall in science and engineering education.Just last week the Australian Bureau of Statistics confirmed that, while I am concerned that in a lot of areas nothing is happening, in some areas it is worse than nothing. The Bureau of Statistics released data showing the continuing decline in business investment in research and development. The government says—and I agree—that the drivers of modern economic growth are innovation and investment. For that very reason, around the world, governments are seeking ways to increase business investment in research and development. Alone in the developed world, the Australian government is withdrawing support, reducing assistance.Why is anybody surprised that there is a continuing decline in business investment in research and development? It was the inevitable consequence of the crazy decision by the government in 1996 to cut the R&D tax concession from 150 per cent to 125 per cent. Once again it is as if the government does not believe in market signals, or it does not believe investment in research and development is important. You reduce the incentive; you make something comparatively more expensive; you get surprised when less of it is supplied. It was the inevitable consequence of the decision, and the ramifications of the government's short-sighted attitude are flowing through.My message to this minister is that, if the government did not set out to achieve that outcome, it was stupid to make the decision in the first place, because it was the inevitable consequence. If the government did set out to reduce business investment in research and development, that is wantonly irresponsible and reckless, showing a lack of serious concern for the future of the Australian economy and the Australian industry.No sensible picture of the Australian economy and Australian society in the year 2010 can be optimistic about the future without continuing improvement in business investment in research and development. We have the stunning attitude expressed on Saturday morning's AM program by the Minister for Industry, Science and Resources—so complacent—when asked, `Do you think the government needs to do anything in this?' He said, `No, we don't need to do anything.'After 15 years of consistent improvement, thanks to initiatives taken by John Button, Australia's business investment in research and development had nearly got up to the OECD average—with steady improvement, from the bottom of the ruck we nearly got up to the middle. That is not exactly cause for celebration, but it is progress.Having nearly got there, what did the government do? It cut back support so that business expenditure in research and development started to fall again. Australia's place in the ranking order of business investment in this vital area is falling. What did the government promise before it was elected? It promised to lift our place in the ranking because it was not high enough. Yet it cut the support, expenditure is falling and our place in the international pecking order is falling.In spite of the fanfare about the improvement in expenditure on health and medical research, there is a continuing decline in Commonwealth support for research and development overall. With the cuts—cuts to the tax concession, cuts to universities, cuts in other areas of support, and the continuing attack on the Australian Geological Survey Organisation—the net Commonwealth contribution to research and development continues to fall, while the government's policies mean that the business contribution also continues to fall.We are at the bottom level of the OECD's scale and falling. What is the government's response? We heard it in the little diatribe of the member for Parramatta. It is an obsession with the GST. This tax is such an obsession with the government that it fails to address other vital issues for the future of our economy—issues which are much more important than whether or not we have a GST. If you believed this government's agenda, you would think that the most important issue facing Australia is how we tax each other. Yet the evidence from around the world does not show that enhanced economic growth is a consequence of such changes to the tax system.Surely, how we employ each other is more important than how we tax each other. Surely, how we generate ideas, innovation and investment to create a successful, healthy and wealthy society in 2010 is more important than fulfilling the Prime Minister's nostalgic urge to achieve the tax goal that Malcolm Fraser stopped him from achieving in 1982. Yet, to achieve this goal, the government is frittering away the surplus which would otherwise be available for investing in our future—in science, research and development, innovation, venture capital, enhancing design standards, improving education, training and infrastructure—so that we could create a more efficient, effective economy for the 21st century.As if that is not enough, the government has failed to address the serious transition issues facing industry as a result of the introduction of this new tax system—for example, the serious transition issues facing the automobile industry, the housing industry and the IT industry. There are serious concerns in the IT industry about a freeze in computer hardware sales in the months preceding the introduction of the GST. Software and IT services face the opposite problem. They are currently sales tax free, so the cost of software and services will go up by close to 10 per cent because there is not much offset. There will be a sales peak in the lead-up to the GST and a drop in purchases after 30 June. What reaction do we get from the government to that? Nothing.There are serious concerns in the automobile industry about the disruption which will be caused by these transitional arrangements. There has been no satisfactory response. There has been only a facile and inadequate response to the problems of the housing industry. Caught up in this is the question of the way that business taxation has been inadequately addressed. I refer to an article which I read recently in Company Director, the journal of the Institute of Company Directors—and that institute is not renowned as a bunch of Labor Party supporters—which echoed the concerns that the shadow treasurer, the member for Hotham, and I have been expressing about the government's approach to the investment and tax trade-off. I refer to volume 15, No. 4 of May 1999 of the journal. At pages 30 and 31, it says:We want to have a look at the costings involved. We need to be internationally competitive and get investment into this country.That is talking about the concern we expressed that there has been no modelling and no indication of how this accelerated depreciation tax rate trade-off is going to affect Australia overall, industry by industry, or region by region. It went on to say:The bottom line is that we want more costings to be convinced that in the interests of all our members, it is right to go 30, 33 or 36 percent corporate tax rate . . . We don't know without the costings . . . That is absolutely correct. It is an important argument. It is a very serious thing that the government is proceeding in this way without the data. We have heard nothing from the government about modelling or about analysis of the relative benefits of the business tax models which are being put forward.Secondly, the journal of the Institute of Company Directors put sensible weight on the need for investment in traditional areas, as well as new areas. They said at page 30:It happens that Australia has great competitive advantage in those areas—of agriculture and mining—Therefore why devise a tax system that is going to disadvantage those areas?I must say it is a very interesting argument for the National Party to be pursuing—purporting to represent regional Australia and yet being caught up in a debate about a tax policy that is likely to disadvantage the great resource based industries of regional Australia. But the key element of the AICD's critique on the matter is as follows:The reality is that we need to attract investment to all sectors of the economy; it is a matter of striking the right balance.Then they turn, in what I consider a very intelligent and broad analysis, to say that we must recognise that the national interest is more than the sum of all the individual company interests:Even if the majority of companies would be better off with 30 percent, that does not necessarily equate to the national interest—particularly the balance of payments—being better served . . . They went on:Whether or not particular projects proceed in Australia may not affect individual companies but it will have a major impact on the balance of payments and, via the multiplier effect, on employment; all primary and capital intensive industry is critically important especially to the balance of payments, whereas there is little concrete evidence so far to suggest that a reduction in the corporate tax rate will cause additional investment to proceed in the services sector . . . I come back to the point that the government itself says growth is driven by innovation and investment. We are lagging behind on the innovation front, and there are serious concerns about where this business tax reform might take us in the issue of investment, where we are going to get investment and how it is going to be effectively distributed. The AICD went on to say:One of our other concerns with any tax reduction is the relationship to revenue neutrality. There are a number of other measures that we strongly endorse and these cannot always be revenue neutral.As the Leader of the Opposition has been saying over and over again, the tax bribes and expenditure bribes associated with trying to sugarcoat the bitter pill of the GST have forced the business tax review into a straightjacket of revenue neutrality, creating a potentially adverse outcome for the long-term future of the nation.In conclusion, I would like to refer to a very important series of comments made in a recent seminar conducted by the Centre for Australian Studies at the Institute of Commonwealth Studies at the University of London, where an Australian who was there on secondment conducted a seminar and published a book called Raising Economic Growth—Industry Development Strategies. The publication raises a number of important issues, but in the time available I just want to refer to two of them. The OECD Secretary-General, Mr Don Johnson, in opening the proceedings, said:The key issue is the adjustment processes. Countries cannot avoid the pressures for change—they need to embrace them and seek the benefits . . . Of course, that is true, but, importantly, he went on to say:. . . for change to be embraced, people need to be convinced the benefits are being shared.It is crystal clear that, the way the competition policy is being managed, the way the tax debate is being managed, the way the discussion is going on about business tax changes and the way in which expenditure cuts have been made, Australians do not believe that the benefits are being shared equally and fairly, and this is being exacerbated by changes in the industrial relations area. The government should give this issue some attention, instead of continuing to focus on tax changes for the top end of town, industrial relations changes which make workers feel more insecure, and cuts to services in regional and rural Australia and in those areas of the cities in greatest need.Mr Johnson's theme was reinforced by the secretary to the department of industry from the country of the so-called European miracle, Ireland, who said that the overwhelming factor that underpinned the transformation—that is, the transformation in Ireland—was a consensus across a broad spectrum of the population about the extent of the problem and the actions required to solve them. Then he went on:. . . the critical element was a 3 year social partnership agreement amongst the government employers and unions . . .He further said:. . . and the government had targeted its expenditure to transport, infrastructure, education and training and research and development.All I can say is: there are lessons in this for Australia and for the government. There are lessons about consensus, about bringing people along with the important process of reform and change, about social partnership, about transport infrastructure, about education and training, and about a focus on research and development. Sadly, this budget shows they are not listening and they are not learning.17:45:006367Schultz, Alby, MPMr SCHULTZ83QHumeLP10—Mr Deputy Speaker, I take pleasure in standing before you to make a contribution, as have many of my colleagues, on Appropriation Bill (No. 1) 1999-2000 and associated bills. I refer to the success that is the 1999-2000 federal budget—a budget for everyone. The budget will benefit the family, the poor, the rich, the sick, the healthy, the urban dwellers and, closest to my heart, the people of rural Australia, and, more specifically, the Hume electorate.This budget is proof the federal coalition government is committed to continuing to reverse the savage mauling of our economy which the former Labor government created in 13 years of incompetent management. In saying the `savage mauling of our economy', I refer to the horrendous debt that the coalition has been slowly eradicating through patient commitment to responsibly managing the best interests of the country and, more importantly, removing the burden of debt from future generations of Australians. This government will halve by 2000-01 the net debt to GDP ratio, and in 1999 will repay $20.5 billion which it inherited from the incompetent poor excuse for an opposition—the Australian Labor Party.I clearly remember the release of the 1995-96 budget and the revelation by the newly elected coalition that Labor's mismanagement of Australia's economy had left behind a deficit of $4.9 billion. In March of that year, the then Minister for Finance, the current Leader of the Opposition, Kim Beazley, refused to announce updated budget figures in an attempt to hide this massive deficit blow-out. I can also recall the coalition's drastic response to this blow-out: our Prime Minister announcing that the government would have to make budget cuts to the level of $8 billion over the following two years to try to salvage what had been lost through an uncaring and economically dumb government.Look at us now. The world has seen a huge economic shake-up with the Asian economic crisis. While figures and trends in a majority of countries have been affected by this downfall, Australia is holding its own. Here is a budget which has swung from a $4.9 billion deficit in 1996 to a $5.4 billion surplus in the budget year 1999-2000. Nobody can deny that this government is an economic success. This budget will benefit the constituents of the electorate of Hume in a number of ways, and for that I am thankful.A division having been called in the House of Representatives—Sitting suspended from 5.48 p.m. to 5.58 p.m.83QSchultz, Alby, MPMr SCHULTZ—However, I am not in the business of exaggerating the triumphs of this government. Indeed, we have a long way to go. I am still concerned about regional health. I am still troubled about the percentage of people who abuse drugs and the harm minimisation thrust of groups who are assisting in the expansion of the illicit drug trade in the community. I have been concerned about those drugs for about 11 years now. Over that period of time I have made some considerable criticism about the needle exchange program.I was interested to read an article in the News Weekly on 13 February of this year. The article, written by Dr Lucy Sullivan, and headed `Needle exchange programs: why they fail', gives me great heart that I am not the only person concerned about this needle exchange program. The article says:The picture of a pre-teenage boy injecting heroin in Sydney allegedly near a needle dispensary has shocked authorities into a reconsideration of drugs policy in NSW. Providing free needles to users is one program that has come under scrutiny—and not before time says Dr Lucy Sullivan .The data, she says, prove that as far as preventing infections is concerned, the program has been ineffectual.Free distribution of needles for injection of illicit drugs was introduced in Australia in the late 1980s on the hypothesis that it would play an important role in the prevention of HIV transmission. Statistics in the United States appeared to indicate a significant link between injecting drug use and rates of HIV, and as HIV is transmitted via body fluids there was considerable face validity in favour of this hypothesis.Only later was the extent of confounding of injecting drug use with homosexual activity identified. At the time, Australian statistics indicated injecting drug use as a very minor mode of HIV transmission, sexual contact between men being by far the major mode, but this did not preclude sharing of equipment by intravenous drug (IVD) users becoming a major mode of transmission if the disease became prevalent among them. Needle distribution, then, was introduced as a prophylactic measure, and its advocates have acclaimed its success, in that HIV has not become prevalent among IVD users.Free needle distribution and exchange began officially in Sydney, where both HIV infection and IV drug use are concentrated, with a trial programme in 1987, which progressed to an improved programme in 1988, with similar programmes implemented in other States over the next few years. In New South Wales the number of public sector outlets grew from 40 in mid-1989 to 250 in 1994, in which year there were also 500 pharmacies offering a similar service.There had been, however, ample time for the IV route of transmission to develop in Australia, as it had in the US, by the time of the development of the free needle programme, if it was to occur, and something more than continued low rates is needed to demonstrate the relevance of the strategy. Given the double standard in relation to the use of illegal drugs which needle distribution presents to the public, a serious assessment of its effectiveness is long overdue in order to substantiate its continuation.The Annual Surveillance Report of the National Centre in HIV Epidemiology and Clinical Research, HIV/AIDS and Related Diseases in Australia 1997 , provides no evidence to support the importance of the free needle (or needle exchange) programme, and much to indicate its irrelevance to HIV infection in Australia.Firstly, overall trends show no sign of a beneficial impact of the introduction of the free needle distribution. Annual HIV diagnoses fell rapidly from 2,600 in 1985 to 1,700 in 1988, in the era before free needles, but thereafter more slowly to 1,400 in 1991, 950 in 1994 and 850 in 1996.If there is any sign of any impact of the introduction of needle distribution in 1988, it is of an interruption of a rapid decline.The number of infections are attributed to IV use, both alone and in conjunction with homosexual activity, is too small to have had a detrimental impact of this size, so that if the effect was to decelerate the decline in infection rates, then this was only part of the contribution.The deceleration is possibly a statistics gathering effect, resulting from delay in diagnosing infections acquired earlier in the epidemic. But equally there is no evidence in the rate of decline from 1988 to 1994 and thereafter to suggest any benefit from needle distribution."Most cases of HIV infection in Australia continue to be transmitted by sexual contact between men. There has been relatively little transmission through other sources of exposure" . . . 95% of HIV is in men, and over 85% of HIV transmission has been through homosexual contact. 8% of all HIV cases have occurred in injecting drug users, but half of these have also engaged in homo- or bisexual activity.The article goes on to say, in part:The numbers for documented newly acquired HIV infections via infected drug use in the years 1991 to 1996 were: 4, 10, 6, 6, 6, 4—with again no obvious salutary effect of the free needle programme.Furthermore, the article continues:If needle distribution was successful in preventing the exchange of body fluids and thereby the transmission of infection, as was hypothesised as the grounds for its introduction, then one would expect to find it effective in preventing the transmission of other infections besides HIV. The rapid and exceptional spread of hepatitis C (like HIV, a blood-borne disease) among IVD users indicates that it has been ineffective in this regard. Indeed, the contemporaneous appearance of hepatitis C with the growth of needle distribution must appear an odd coincidence.The article goes on to talk about how we have been conned by the needle exchange program, and I thought that was worth putting on the record tonight.Let me return to the issue of Appropriation Bill (No. 1) 1999-2000 . I am still sceptical about the success of attempts to control the current account deficit. Indeed, only last week it was announced that the current account deficit was at a four-year long high of $8.9 billion. Although not the fault of the federal government, it is still something that we need to watch. I am convinced that, as exports pick up next year, our current account deficit will drop. To counteract this disappointing announcement, during the March quarter of 1999 the Australian economy grew by 1.1 per cent and, through the year, by 4.8 per cent.More importantly, this government is addressing those unwelcome impediments. The government is improving the living standards of Australians. It is improving relations with other countries and it is decreasing our debt. As we all know, the government announced this budget with a $5.4 billion surplus—the third surplus in a row. We also know that, in net terms, we have stopped borrowing, which is a vital prerequisite for the sound and responsible management of our economy.The government has injected funding into rural Australia which will address health, transport, employment, telecommunications and educational issues. Whilst the benefits which will flow to rural people from this funding boost are significant, they need to be ongoing and backed up by ensuring that the remaining government infrastructure is enhanced and protected so that rural communities can offer services essential to future business investment. We cannot continue the economic rationalisation of government infrastructure in rural Australia. By doing so, we push our young people out to the seaboards of our country and create massive problems within rural towns affected by the mindless social and economic acts of governments of all political persuasions.I applaud the government for its commitment to providing funding of $250 million for its regional telecommunications infrastructure, Networking the Nation. Of particular interest to the electorate of Hume is that Boorowa Shire Council has been granted $100,000 to install a base station at Mount Canemumbola, which will give mobile coverage for the town and its immediate surroundings. More importantly, it will fill a black hole of communication critical to the basic lifestyle of isolated communities. Although I am appreciative of this grant, it seems peculiar that in an age of technology in telecommunications a rural community situated just 100 kilometres from the nation's capital is only now receiving mobile phone coverage.This is only the beginning of my concerns about telecommunications in Australia. The conversion to digital receivers for mobile phones, while a necessary evil, poses many problems for my constituents. For some people, converting to digital means no reception at present. I refer to one particular case where a doctor in a rural area could not receive calls after converting to the digital system. You can imagine the consequences of that situation.I am impressed that the government has had the initiative to allocate $630,000 for a program to explain the staged closure of analog mobile phones. At least this will not only attempt to make the transition to digital phones a little more bearable but, more importantly, it will allow time to plan for and to adjust to the new system. These types of measures show that our government is a thinking and concerned government—not so much concerned about what is happening far away but about what is happening in the engine room of our great country. This government has been listening and is obviously thinking about the impacts these changes will have on isolated communities. The government is also willing to monitor its own behaviour. This comes in the form of $304,000 for the Australian Communications Authority to conduct a review of the long-term cost effectiveness of telecommunications interception.One of the most worrying institutions in New South Wales is health, and health in rural Australia has certainly been addressed by the Howard government. Retention payments for long-serving GPs in rural and remote areas have been allocated, with a commitment of $43.1 million to reverse the alarming decline in rural doctor numbers. The government is aware that there is a severe shortage of doctors in many parts of rural Australia and it has been working very hard to address this problem. There has already been significant progress.The number of Medicare providers in 1998 increased by 11.5 per cent in remote areas and by 2.9 per cent in rural areas on the previous year. For capital city and other major urban areas, the increase was 0.8 per cent. These trends are confirmed when you look at changes in the number of full-time equivalent doctors, with an increase of 5.1 per cent in remote areas and 0.8 per cent in rural areas occurring over the same period. These figures reflect the large increase in the provision of locum support, as well as an increase in doctors living and working in the country.Whilst these trends are positive, there is still a lot of work to be done. The government now has to put in place a comprehensive strategy to improve access to medical services in rural and remote areas, including a number of important recent initiatives announced by the federal government. An important element in the government's ongoing strategy has been the establishment of state based rural work force agencies to flexibly administer incentives for doctors, taking into account the needs of individual communities. In the 1998 budget the government committed an additional $13 million to these agencies, taking the total funding available for them to $65 million over four years.The number of telephone calls and letters received by my office outlining horrific tales of hospitals and communities with no doctors, or hours-long travelling to obtain medical attention, are appalling. This budget will help to alleviate some of the problems faced by my constituents and residents of rural Australia. The construction and maintenance of regional health service centres will be made possible with a $40.8 million allocation in this year's budget. On a personal level, I have been working with the government to have one of these centres constructed in Batlow, just one of a number of smaller rural communities neglected by the Carr Labor government. I trust that the New South Wales state government will reverse its contempt of rural New South Wales and join with the federal government in making this regional health service centre at Batlow a reality.Rural women's health issues have been of huge concern to the coalition, and certainly of concern to me and my wife, who has worked tirelessly on breast cancer in women for over a decade now. This government has physical evidence that the boys club mentality no longer exists. This government has honoured yet another election promise by allocating $4.1 million over four years to support women who have been diagnosed with breast cancer. As you know, the government has also provided financial assistance to encourage people to take out private health cover.One of the most promising aspects of this appropriation bill is the government's commitment to upgrading roads in the Hume electorate in the interests of more efficient road transport and road safety. This funding will help to duplicate the Sheehan Bridge at Gundagai and to fund the construction of four lanes of the Hume Highway as far as the Sturt Highway junction near Tarcutta. The undertakings by the government to the Bookham bypass, at a cost of $65 million, and a $45.2 million injection into the $100 million upgrade of the Federal Highway south of Goulburn clearly demonstrate its commitment to reducing the road toll on our major highways.Better roads mean fewer accidents, quicker trips between towns and cities and more efficient transportation of goods and services. I have a good relationship with local councils in my electorate and I can say with confidence that local government have been winners in this budget. The sum of $388.3 million in untied grants has been allocated to local governments to improve the quality of roads in their area. I know that local governments in Hume will have no trouble using this funding. As someone who spends a lot of time travelling, I can say that the road system in rural New South Wales is in need of continual upgrading. The inability of councils to maintain these roads follows the Carr Labor government's reduction of the 3X3 state levy allocation percentage to rural New South Wales from 60 per cent to 40 per cent since it was elected in 1995. Local government in New South Wales is to receive over $408 million in Commonwealth financial assistance as a result of this 1999-2000 budget.The most talked about impending change in economic history has escaped comment from me up until this point, and there are reasons for this. Firstly, the government's proposed tax reform, while an important step to alleviate many of the burdens to the taxpayer, and which has already taken effect in this year's budget, is only part of what is truly an astounding budget. Secondly, no matter how we, as coalition members of the House of Representatives, try to explain to other parties the merits of the GST, the Australian Labor Party will continue to play an obstructive, negative and selfish role, rather than taking a sensible bipartisan approach to making our country the envy of the rest of the world. Thirdly, I have to add that the Labor Party's attempt at a scare campaign by suggesting that the diesel fuel credits will be open to rorting and that there are uncertainties in relation to the proposal was nothing short of a spineless and futile attempt to discredit the government's commitment to assist rural industries in becoming more realistically competitive, both domestically and internationally.Mr Deputy Speaker, I thank you for your indulgence. I am proud to have entered federal politics in a term which can boast economic credentials including a reduction in debt, a $5.4 billion surplus and a boost to rural health, roads and education for this great country of ours.18:15:006372Price, Roger, MPMr PRICEQI4ChifleyALP00—Mr Deputy Speaker Quick, I apologise for mentioning one of my local clubs in this debate on Appropriation Bill (No. 1) 1999-2000 . You may think it is inappropriate, but I have been wanting to make this contribution for some time. I am referring to the St Mary's District Band Club and, in particular, to a competition that they have been running for some 25 years now—the Ern Keller Memorial Trophy for soloists.This year the competition was held on Sunday, 21 February. I must say that I was very pleased to again be there. In the history of this trophy, two competitors have won it three times: New Zealand's Errol Mason in 1976, 1978 and 1981, and Victoria's Christina Bowden in 1987, 1988 and 1994. I congratulate the club because I think it is a tremendous effort to promote music in the western suburbs of Sydney. They have done a fantastic job. Ten years ago there was a band competition as well.I am very proud to stand here as a federal member from the western suburbs of Sydney. If you do not come from Sydney's west you perhaps do not understand why I would say that to you with such a feeling of pride. The western suburbs of Sydney has 11 federal electorates. With the redistribution, it is likely to have 12 federal electorates; there is likely to be a new seat created in Sydney's west. The population figures are, I think, very interesting. I shall quote the figures. In 1999 in the greater west we have a population of 1.7 million people. In the rest of Sydney—I have to say `the rest of Sydney' because statistically that includes Gosford and Wyong which is, I think, inappropriate—excluding Gosford and Wyong there are 2,039,000 people. By the year 2017, western Sydney will be bigger than the rest of Sydney. It is projected that the population will be 2,541,000 and that the population of the rest of Sydney will be 2,438,000. As each year goes on this difference will become more pronounced.You could say, `So what?' If you were to shift western Sydney west, you would have a great case for making it a state because of its huge population. The GDP of western Sydney is today $34 billion. In 2011, it will be $46 billion. Indeed, I am one of those great optimists in western Sydney who believe we can do a lot better than what we are doing and that we can better those projections, but we could certainly be a state.I am not allowed to be seditious. I would be quite happy to lead a secessionist movement. I feel that, like a number of causes I embrace, it might not be too successful. But I need to remind the House that, really, in a whole variety of ways, western Sydney is a huge area and a unique area. Whilst I am very proud that, at the state level, the Australian Labor Party has wall-to-wall cabinet ministers who hail from Sydney's west, Sydney's west is in dire need of winning federal Labor seats, yet we have only one shadow minister, which is, I think, a disappointment. That is not to reflect on Laurie Ferguson, who is a good friend of mine and does a sterling job. But if we are serious in saying that western Sydney is our heartland, our homeland, then I think that needs to be reflected a little bit better.I did not want to have to digress to some of the contributions by Mr Ross Cameron, the member for Parramatta. For example, I think the Australian people are really sick and tired of when government members say, `Oh, yes, you left us with a deficit of $10.8 billion,' and then we retort, `Yes, but in 1983 that was $9.6 billion, worth $25 billion today.' I do not believe that the public thinks that this adds constructively to the debate. I guess there is one figure I thought I should quote to the honourable member for Parramatta. There are a few economic indicators I think we can be proud of. There is no doubt that breaking that cycle of inflation has happened and that it has been continued by the government. I think they certainly deserve a lot of credit for that, and I hope it will continue as a bipartisan policy.But there are areas of real concern. The national debt—that is, what we owe overseas people—is a huge problem. It has absolutely jumped in three years. It is $241 billion. I do not think it is necessarily a fair way of portraying it, but I must say that, when in opposition, Mr Howard always used to say, `This means, under Labor, every man, woman and child owes. . . ' Well, let me give you the figure. It is $13,056.40. Every man, woman and child owes that amount. If you want to extrapolate that into an electorate like Chifley—not one of the densest, that is, most highly populated, areas or electorates; I think I have about an average enrolment and that the non-enrolled people are not significantly different—let me tell you what it is. It is $1,809,708,434.80. That is a lot of dough. In one electorate, that is what it means. I invite honourable coalition members to extrapolate the population figures of Australia, the national debt—get the figure that ABS are using—and do the sums. As I said, this was something that the now Prime Minister, then leader of the opposition, did. I do not think it is a particular helpful thing to do, but it does highlight that we have a major problem.I know the honourable member for Port Adelaide is in the House. He will recall that when we were in office—and figures do bounce around—we certainly racked up some current account deficits. But the pleasing thing that we were able to do was to really work at what is now called international trade or merchandised trade, and that is that we used to either have a balance of trade there or rack up surpluses. What happens is that when you add dividends going overseas, interest and a whole variety of other things, you run into a current account deficit. But in terms of merchandised trade, in terms of international trade, the term that is now used, that was basically either in balance or in surplus. It is massively now into deficit, alarmingly into deficit. It is one quarter's figures. I said alarming but I should say disturbing—that is a more accurate description.For Labor, the heart and soul of economic policy is really savings and investment for us. Ironically, the coalition put national savings on the agenda when they were in opposition. I think one of the proudest things that we did was to introduce superannuation, a significant way of adding to private savings and helping national savings.When we are talking about the tax package and what we are going to give back to Mr and Mrs Australia, you need to remember a couple of things. Not one dollar has been returned in three years of bracket creep, not one dollar. For me that is disappointing. I think that a national superannuation policy is so important and I wish it were one area where we could put aside our political differences and work towards policy development which neither side would seek to overturn. No matter who was in government, we would be working together because it is so important.But the promised $3.2 billion—I think it was—going into national superannuation for every working class Australian from the federal government was not delivered. It is true it was a forward commitment of the Labor government. It is also true to say that Mr Costello, before the 1996 election, said that he would honour it. But he did not and that has made a huge dent in superannuation.The question I am asking is this: in three years what happened to bracket creep? The government kept all the dough. The government had a commitment to give $3.2 billion back to Australian taxpayers into their individual superannuation funds and accounts, making them—and I concede this—compulsorily save for their future. What happened to that? It was clawed back: not given; not honoured. A great disappointment.National savings is so important because it fuels and funds investment and it is from investment that we get jobs. I suppose another area is in research and development. If you are spending money on research and spending money on commercialising products of that research, you are really talking about what you are generating into the future, and that is jobs. It is like a long-term investment plan, if you like. You have to do it today to reap the benefits tomorrow and, of course, that was cut back. But it is investment that fuels private enterprise. It is investment that will deliver us the jobs.The record to date has been disappointing. In fact, if we are looking at, say—and it is a difficult barometer, I admit that—the long-term unemployed, there are now more long-term unemployed people, not fewer, after three years of a coalition government. Of course, everyone involved in dealing with and trying to meet the needs and aspirations of long-term unemployed will tell you that the longer you are out of the work force, the harder it is to get back. That is why, in a sense, you need to spend so much money upfront, investing, if you will, in the long-term unemployed to get them back into the work force. That is a very alarming figure.There were a few other things that I was hoping to raise. I found it amusing that the honourable member for Parramatta, whom I have a regard for, was concerned about a phrase that is being used currently, that is, that we live in a society and not just in an economy. He was affronted by that. We on the Labor side do not diminish the arguments about the need to stimulate and run a sound economy but, at the end of the day, it has to serve the people and it has to serve all of the people, not just some. Perhaps that is where we have a real philosophical difference. On the coalition side, I suppose they see it in terms of winners and losers and if you ain't a winner, tough. We say that to have a meaningful and stable society, to have individuals participating with a sense of self-worth and decency, then everyone has to be a winner and actively involved. We cannot cut out any one person from our concerns as far as the economy is concerned.I would have thought it could be shown in a very real way that by and large, over those 13 years, in a period of some turbulence, Labor did not do too bad a job in managing the economy. There are some things we could have done a lot better—no argument about that—but we were an innovative and an adaptive government in those 13 years.I do not apologise for saying that I am one who very much wants to embrace the notion that we live in a society. Yes, the economy is very important, but at the end of the day it needs, like everything else, to serve the people—just as this parliament needs to serve the people. It is not an end in itself. We want the very best things to happen in this parliament, but that is not an end in itself. It gains relevance only to the extent to which all people benefit from it. I say to the honourable member for Parramatta that perhaps I can understand his difficulty with it but there would be many of my constituents who would feel very strongly the other way and would rejoice in the notion that we live in a society and just not in an economy.The honourable member for Parramatta was saying that he just loved infrastructure projects and he thought the Snowy Mountains was a wonderful project. I think it was, indeed—and I apologise for scoring a fairly cheap debating point, as I have tried to suggest others should not do—but the Snowy Mountains scheme was bitterly opposed by the then conservative opposition. The great irony is that the Chifley Labor government—which I hope honourable members would understand is close to my heart—having instituted the program, it was the Menzies government that executed the scheme over so many years by means of the work of so many people 50 years ago. I offer my sincere congratulations to them.I need to say a few things about the GST. In the promotion of the GST package there is talk about a fiscally neutral proposal. That is, notwithstanding all the money that is going to be raised by the GST, what is going to be given back is going to cost the forward estimates an additional $17 billion. Now, with the Democrats supporting a changed taxation package, there is an additional cost of $3 billion. I have pulled out figures for what is being collected in personal income tax, capital gains tax, fringe benefits tax and customs and excise—in this budget leading to a surplus of $5 billion. It is pretty hard to argue that this is a basket-case taxation system and that it is not functioning, not working, and has economic hardening of the arteries. I do not think that that is the case.I regret particularly the way that this package is progressing, in that the real area of reform—business taxation, where a number of things need to be addressed—looks like being compromised or, alternatively, being strictly revenue neutral: `Give something up and we can replace it with something else.' People might say that that is fair enough, but at the end of the day we on this side of the House feel very strongly that savings and investment are important but it is actually the business community that we need to ensure is driving through to the future and creating jobs.If we can make constructive changes in order to reform business taxation, that will lead to greater investment, greater efficiency and more jobs. I am 100 per cent for that, and Australia may be the poorer for our not being able to do it.(Time expired)Sitting suspended from 6.35 p.m. to 8.00 p.m.20:00:006376Lawler, Tony, MPMr LAWLER834ParkesNP10—Madam Deputy Speaker, thank you for the opportunity to speak on Appropriation Bill (No. 1) 1999-2000 . I would like to address a few other subjects, with your concurrence, while I am on my feet this day.In the budget recently announced a couple of weeks ago there were many good news stories for regional and rural Australia. There were especially good stories for people who live in the seat of Parkes. One of the more pleasurable things I had to read was the number of dollars provided to the Royal Flying Doctor Service to fund their base in Dubbo. This funding was to the tune of $4.5 million, with $2 million as a capital grant to start off the program, followed by $500,000 per year for four years after that.This service is enormously welcomed by the people in my electorate and in neighbouring electorates, especially in the towns of Bourke, Cobar, Wanaaring, Weilmoringle and Brewarrina. The benefit to these communities is absolutely enormous. The services already provided by the Royal Flying Doctor Service in the far west of New South Wales, Western Australia, Queensland, Northern Territory, South Australia and Victoria are already widely known for their professionalism and efficiency. There are many towns in my electorate—for example, Tibooburra and White Cliffs—where the medical service provided by the Royal Flying Doctor Service is held in greater esteem and viewed as far more satisfactory than the medical services provided to towns much closer to the larger regions nearer Dubbo. Some of these towns also do not have a resident doctor, but they do not have the facility of a fly-in medical service.Having the Royal Flying Doctor Service operate out of Dubbo will provide enormous benefits in the retrieval of sick patients. The hour after an accident is the most critical time. In many cases for a severely injured person that hour means the difference between life and death. We will be able to get people to hospital more quickly than by calling an air ambulance from Sydney, or by having the flying doctor fly from Broken Hill to Bourke, for example, to pick up a patient and then fly on to Dubbo. That is the most important time for the likely survival of the patient.As far as the ongoing running costs of the Royal Flying Doctor Service go, having a base in Dubbo makes true economic sense. It will save an enormous amount of down time where the plane is in the air on its way to an accident or its way back to base from retrieving a patient. By having the base situated in Dubbo, the plane is able to fly from Dubbo out to Bourke, Walgett or Brewarrina and back and then, if necessary, to Sydney. This will be a lot more favourable to the flying doctors' budget than having a plane fly empty from Broken Hill to Bourke, pick up a patient, deliver them to Dubbo or Sydney and then fly empty all the way back to Broken Hill. Having the base in Dubbo is great not only for the patients but also for the ongoing benefit of the Royal Flying Doctor Service itself. The money that the service will save by not having so much wasted time in the air will mean that it can deliver more effective services to people.But, aside from the actual service of retrieval provided by the flying doctors, a big plus from having a base in Dubbo will be the outreach services that can be provided to remote towns such as Bourke, Cobar and Brewarrina, especially if those towns are not serviced by a GP at the moment. If these towns do have a GP, the Royal Flying Doctor Service will be able to provide relief to the doctor working there. I know a lot of GPs are under constant pressure from working seven days a week, on call 365 days a year. They feel they do not have the ability to leave their town because of the gap that will be left. Having the flying doctor presence in Dubbo will provide a backup so those doctors will be free to travel away and have a much needed break. The opportunity to do this, in turn, will make the town a far more attractive place for doctors and their families to live in the west of New South Wales.Another service that is provided by the Royal Flying Doctor Service—a service that was announced in the budget—is the fly-in fly-out female GP service. This service is enormously welcomed by women in my electorate—those who live in outlying areas. Some of them do have a GP in their town, but many of them do not. Those women who do have a GP would prefer a female GP to a male GP for many of those ladies type problems: breast screening, cancer screening, et cetera. So, in these regional areas, it is a luxury to have the fly-in fly-out female GP service. It is a luxury that many of the women in my electorate appreciate. The other big thing about having the Royal Flying Doctor Service operating out of Dubbo is that I believe it is the beginning of Dubbo becoming a medical hub.A further great aspect of the budget that I warmly welcome, although it does not apply to my electorate, is the announcement of a clinical school to be established in Wagga Wagga. This clinical school will go a long way towards providing medical services to people in rural and regional Australia by exposing university medical students to the positive experience of living, working, attending lectures and working in the hospital there. I am sure that this will result in a lot of potential doctors staying in the country who might otherwise not have had that experience and therefore would have returned to the city or stayed in the city when they had finished their training.I believe Dubbo also has a future as a medical hub in a different way from Wagga. I encourage the ministers and deans of the various universities to look more closely at establishing some form of clinical school, perhaps not in the same vein as that in Wagga Wagga but perhaps starting on a smaller scale. Dubbo already does medically service many of the towns in the surrounding areas—for example, Cobar, Bourke, Brewarrina, Goodooga, Walgett, Gilgandra and Coonabarabran. All of those places focus their medical attention on Dubbo. The trouble is that we are in great danger of losing many of the specialist services that are already provided in Dubbo. We do not have the right number of obstetricians and gynaecologists, and we are losing anaesthetists. If we lose anaesthetists they will quickly be followed by surgeons. Our physicians in Dubbo are also reaching the stage where, in a few years time, they may think about retiring as well. Having a focus on a regional town as a provider of medical services will encourage a culture that will be attractive to specialist services. That in turn will attract GPs to the area, because they will feel that they have the backup that they need.Having an Outreach post or a department of rural health from one of the universities will go a long way towards improving the standing of Dubbo as the professional centre by attracting senior people who will be able to lecture students and maintain a healthy and enjoyable professional practice. Success in attracting doctors will breed success. Dubbo's success will breed success in providing medical services to many outlying areas.May I also congratulate the Minister for Employment, Workplace Relations and Small Business on the program he has announced for Aboriginal employment. My electorate has a great number of Aboriginal people, and $100 million over four years, specifically targeted, sensibly, at Aboriginal unemployment, is most welcome by all the communities in my electorate. The encouragement for them to invest in small business, the $4,000 paid to employ disadvantaged Aboriginal people, the encouragement for Aboriginal people to get off CDEP programs and into other real jobs, instead of just maintaining or being trapped in the CDEP program, is enormously welcome.May I also congratulate the government in another area—that is, the $31.8 million funding for the capping of bores. The Great Artesian Basin—which I understand holds 22,000 times the amount of water contained in Sydney Harbour—covers a big area in the north-west of my electorate. It is vital for the areas that rely on that water for irrigation purposes and watering of stock. Some of the natural springs have stopped flowing in the past, and bore water is wasted as it flows from uncapped and unpiped bore drains and meanders slowly across the plain, causing an artificial environment which feeds feral pigs and kangaroos and causes them to flourish in an area in which they do not naturally flourish. This has been a sad thing for me to see while driving around the electorate. By capping and piping the bores, this government has, along with the funding that it provides through West 2000, made it a very real option for farmers to preserve and maintain their water. This will cause a rejuvenation of natural springs and restore an ecologically natural environment.Another area I would like to comment on is the kangaroo meat industry. I call on the government at this point to assist the kangaroo meat industry because they have, I believe, been unfairly penalised. The situation at present is that if providers of kangaroo meat for human consumption want to get their industry off the ground by providing the meat for export—at a rate in the order of $12 per kilogram—this will provide enormous export dollars for Australia. However, there has been a concerted war waged against these people by the animal welfare lobbyists. These lobbyists produce, manufacture and create false newsletters and videos that give a very adverse impression of what happens in the real kangaroo meat industry. The irony of it is that, in the kangaroo meat industry, licences are only issued to shooters who are accredited. These shooters can only shoot a kangaroo with a head shot and every kangaroo is monitored, tagged and accounted for.These are the people that the lobbyists are trying to close down. They do not pay any attention to the culling of kangaroos by farmers—who, I admit, also have to get special permission and tag their kangaroos. But because farmers are not experts, they might put three, four, five or six bullets into a kangaroo, which might hop off into the bush and die a slow and painful death. The bodies of these kangaroos cannot be used; they are just left to rot. However, the animal welfare groups specifically target those who are trying to get the kangaroo meat industry off the ground and treat the kangaroos in the most humane manner.I would ask the ministers responsible for these areas to help defend these industries when they are under threat because they will provide jobs and huge export dollars for Australia, given a fair go. But at the moment they are very loath to invest any sort of money when there is a strong likelihood that a concerted public relations campaign will be waged by welfare lobbyists. These people have far more money to spend than do the business people who are having a go at getting the industry off the ground, providing jobs for Australians and creating export dollars for us. This is a vital industry for western New South Wales, especially in the Wilcannia district in my electorate, because there are many roo shooters, abattoir workers, exporters, packers, et cetera who will benefit if the human consumption kangaroo meat industry gets off the ground.Finally, I would like to think that I can speak fairly quickly now because I do not want to appear hypocritical in what I am about to say. One thing I have found since I have been in this place is that there are many members on both sides of this parliament who have been here for so long that I believe that they have totally lost touch with what the real people in the real world think of politicians. We are all very quick to defend ourselves when people decry our behaviour or decry the way the parliament is run, yet when I sit back in question time and look at the behaviour of members, on both sides, I can see we do nothing whatsoever to convince the general public that their perception of us is not correct. I would like to see the standard of behaviour in this parliament—and obviously at question time—raised to a level that might at least be appropriate for a well-behaved year 6 class. I have nothing against robust debate or even against clever interjection, but the constant noise and constant slamming of people on both sides of the House is, I think, beneath the dignity that this place deserves.The other housekeeping matter I would like to quickly touch on is the length of time that people speak. There has been some comment, most recently in the media—and, as a coincidence, I was thinking of speaking along these lines—about the way the debates are conducted, or not conducted, in this House. I believe that if you cannot say what you want to say in a debate in 10 minutes—and I am very cognisant of the fact that I have already spoken for more than 10 minutes—then perhaps it is not worth saying. The personal contribution of many speakers is minimal. Regurgitating the figures, phrases and arguments of ministers is something that anyone can do, and this serves to take up time to the magical 20 minutes.I will admit that it is only an observation from someone who has spent very little time in the parliament and perhaps my perceptions are wrong, but I think not. Perhaps we could address these problems by making it compulsory for anyone who wishes to speak on a bill to sit in the House throughout the whole debate. This would make sure that both sides of the argument are heard. At the moment, most members will listen with one ear to their television while other speakers are speaking in the House. This way, if a speaker was making a worthwhile contribution, he could seek leave from his colleagues who are sitting in the place to continue for a while longer.I should say now that there are occasions when an amendment proposed by one side is accepted by the other, and that there is many a committee where recommendations made by the committee are accepted and welcomed by both sides of parliament. I do not know why this is not translated into the normal debate. I can hear it now: cries of `naive', `doesn't understand the way of government'. Well, maybe the people do not understand the way of government. Or is it that the government does not understand the way of the people?20:16:006379Jenkins, Harry, MPMr JENKINSHH4ScullinALP00—Before turning to the points that I want to make, I would like to make a few remarks about the comments in the latter part of the honourable member for Parkes's speech. I hope that he would not think it too patronising when I say that I understand that he has made those remarks with great sincerity. I do not believe that he is naive. I have some disagreement about his conclusions. But I believe that many of us who have been here longer than he are very acutely aware of the way in which we are perceived outside. I believe that sometimes that is coloured by people's perceptions and observations of question time, and it disappoints me that perhaps that is the only impression that people have of this parliament. I, in turn, am not so naive as to say I understand why that is so. But I would think that, in a way, the debate in this place, whether it be down in the main chamber or in this committee, would be heightened if, in fact, people paid more attention to it—that is, people other than members.I believe that he is correct, that there should be a greater interchange—that is, true debate between the contributions that are made. It disappoints me that, from time to time, people make set speeches that do not relate to what is going on and to the spirit and the environment in which the debate is going on. One of his National Party colleagues makes interesting observations about the tensions and heat of question time when he describes it as `the parliament's safety valve', that a modicum of the release that is question time enables us to get on with the type of robust parliamentary democracy we have without fisticuffs or bloodshed.Having said that, I know that there is a fine line. Madam Deputy Speaker, because of the time you do in the chair, you would appreciate that, for those of us who have to listen to the debates, they are a mixed bag. Often the contributions are well worth while; often they are very forgettable. But the point is that this is a parliamentary democracy which has served Australia for nearly a century now. With the differences that are bound in the political scene, we are a parliament that acts in the national interest. Having got to the national interest, I will probably turn to my partisan contribution, but I think the honourable member for Parkes should not give up hope. He should proceed; indeed, I would not want to dissuade him from having some idealistic views about the way in which we should carry out our duties in the parliamentary sense as well as outside, with the many facets that there are to our representation.I come to the subject that has dominated public and parliamentary debate over the last week or two, and that is tax policy and the GST. It was only on Thursday, 13 August last year that the coalition launched their package entitled `Tax reform: not a new tax, a new tax system'. Two weeks later, the Labor Party launched its package entitled `A fairer tax system with no GST'. Some three days after the Labor launch, on Sunday, 30 August, the Prime Minister announced the election date.Of course, the election was held on Saturday, 3 October 1998 and the Howard government was returned with a substantially reduced majority and, I make the observation, without even securing half of the two-party preferred vote. I do not dwell too long on that but just state it as I understand that, of course, the government won the election; the opposition lost. But I think that, in the events that have occurred since that date, that is something that perhaps the Prime Minister should have kept in mind.My concern is that the Prime Minister believes that this period between 13 August, when he launched his tax policy, and 3 October was a period in which the public at large, in coming to a conclusion on election day, was able to dissect and properly understand the GST package. I do not believe that that is the case. I believe that, since the election and the events that have been carried out, there is a better understanding of what was proposed. There is a better understanding of the things that are important that we should be looking at if we wish to improve our tax regime.Between December 1998 and April 1999 a number of Senate committees inquired into a new tax system. The evidence that was collected by these committees was quite interesting and a valuable contribution to the ongoing debate. At the conclusion of the committee inquiries, the Prime Minister still held the view that in the period between mid-August and the election there had been sufficient debate and he tended to ignore the evidence and the discussion that was created by the Senate committee inquiries.On Friday, 14 May 1999 Senator Harradine announced in the Senate chamber that he could not support the GST-inspired new tax system. After that there were about 10 days of frantic negotiation and discussions between the coalition government, which at that stage comprised only the Liberal Party and the National Party, and the leadership of the Australian Democrats. On Friday, 28 May, the Prime Minister and Senator Lees announced that they had reached an agreement on a new tax system, mark 2.In the subsequent days, of course, there have been a number of questions and discussions of what is contained in that package. Of course, we do not know the fine detail and that will be produced, it appears, next week to be discussed in the parliament over the next few weeks. I suppose in that detail we will really see what is the mark 2 new tax system to be presented to the parliament.In trying to look at the goods and services tax, which basically is the main plank of what is being proposed by the government, I am yet to believe that I have been incorrect in seeing it as being an unfair tax. I do not think that the mark 2 version agreed to by the Howard government and the Democrats is any better. I think that the exclusion of some food items and the inclusion of other food items, and the different way in which the as yet to be finalised diesel concessions work, increases in mark 2 what was already a compliance nightmare for Australian businesses in the mark 1 of the tax package.There are other things that we do not really know until we have a fuller discussion of what might be the overall impact. The planned removal of the state taxes has been largely abandoned. Only a couple of the bed taxes in two of the states are being abandoned in the first instance, and then there is a staging of the abandonment of other taxes, with a whole swag not to be abandoned but continued.More importantly, my concern not only with the tax package but with the budget—which seems so long ago and not really the central part of our discussion—is that nothing is being done for jobs. In the revised GST package of the new Howard-Democrats coalition, no mention is made of jobs. The great concern is that, over the past few months, more and more evidence has been found that the GST is a job destroyer. At the present time the European Union is looking at the extent of the negative effect of its VATs, value added taxes, on jobs and employment growth.The Democrats, earlier in the discussions about this package, set certain hurdles that they thought needed to be crossed in order to meet their requirements for employment. They indicated a cut in payroll tax, zero rated food, replacement of the first home buyers scheme with a GST rebate, zero rated inbound tourism and a reduction in the taper on unemployment benefits, amongst others. This new package, produced by the Howard-Democrats coalition, fails to deliver on these parts of the Democrats' original package. One must come to the conclusion that, according to the Democrats' own yardstick, the package they have signed off on fails to deliver jobs.Let us look at the extent of compensation in the new package. It has to be remembered that the compensation that is offered in this new agreement between the Democrats and the coalition government is less than half what was offered to and rejected by Senator Harradine.We have measures, much vaunted by the Democrats, to do with the environment. Yet, as the days go by, there is an increasing understanding that the environment package would have been put in place—nearly in its entirety—without this agreement between the government and the Democrats.The Democrats committed themselves in a very spectacular way to having books GST free, to avoiding greater taxation of education, to addressing a whole swag of tax loopholes and to preventing erosion of the surplus through the GST package, yet many of these have not been delivered in this package.The tax package should not be all that is considered. There are many things that we need to address that are not addressed either in the tax package or in the budget which these appropriation bills are about. That is the concern. I am worried that the government has stalled and has now clouded its judgment because it has a plan for a new tax only. This might appear to be simply a piece of rhetoric from our opponents, but to judge by the actions of the government it is where we are at at the moment.We need to look at a whole swag of other things that are important. Coming from a region where about 15,000 people are unemployed—and nearly 4,000 of those are long-term unemployed—I am disappointed that we are confronted with a budget in which the government seems to admit that it has given up on the reduction of unemployment. Stating that unemployment will remain at 7½ per cent throughout the next financial year does not give great hope to those who are unemployed—even worse, those who are long-term unemployed, many of whom are now part of a growing phenomenon within the Australian labour market: second or third generation unemployed people.I have always been an unashamed supporter of government intervention—not overall, capital `i' government intervention, but acknowledgment of an obligation to many sectors of the community not to rely just on the market forces. Whilst I might not think that the market forces really result in much benefit, large portions of the community miss out on anything that can be seen as of benefit from the way in which a market operates. That is why I have been one who has been disappointed that the government seems to have stalled in support for unemployed people, and a pseudo labour market program under the title of Work for the Dole will not offer anything else.I am on the record as saying that I cannot support Work for the Dole in its present fashion. It is not due to the fact that people are asked in return, as a form of mutual obligation, to do certain things; it is the nature and quality of the experience that they are offered. It is not simply that I do not believe that people should not be given the opportunity for a work experience. I believe that many of the people that should—and could—benefit from a program of the ilk of Work for the Dole will have a better experience if there are added things, and if there are proper skills training and proper welfare support, because those are the things that we really need to see.I know that people like the honourable member for Deakin, who is following me in this debate, are great supporters of Work for the Dole. I know that large numbers of people have participated in that Work for the Dole scheme in his area. I know that he will have testimonies from a number of participants who have had a worthwhile experience. But in the nature of the labour market in the area that I represent, there are not as many people in a state of readiness to have the same and equal positive experience from a program that merely gives the opportunity to turn up and participate in a job. It needs a lot more.When we have the minister responsible decrying a local government unit like the Brisbane City Council for not participating in the scheme, he has to understand that others make judgments that it perhaps does not go far enough. If we are looking at mutual obligation, it should not be in just simplistic terms. It can be a lot more complex. In variations, the notion of mutual obligation is not just the creation of the Howard government. It is a creation that had some genesis in the previous Keating government but there the type of obligation seen was very much a two-way obligation. I note that the Treasurer, in a change of rhetoric about Work for the Dole, briefly mentioned in his speech that it was a two-way thing. But the Labor government under Keating as Prime Minister saw that the obligation not only went for the income security that the unemployment benefit gives, but also should go to the government giving an undertaking that they try to ensure a definite outcome by way of positive training as well as just the outcome through the work experience.The other feature about Work for the Dole schemes that I do not understand is this: if they are worth funding under Work for the Dole, why are not the outcomes achieved by the people who work in these schemes worth funding through programs? No matter what they are doing, why do we not as government bite the bullet and understand that, if we do not as small `i' intervention provide the resources to ensure that these types of job opportunities exist, unemployment will remain at 7.5 per cent?We will be putting hundreds of thousands of Australian people in the difficult position of long-term unemployment, not just a transitory period on the way to a full-time or more successful form of paid employment. We will have more and more people stuck in a cycle of unemployment, with their families stuck in that cycle, whether they be in the suburbs of Melbourne, such as in the electorate of Scullin, or in some of the rural areas, such as in the electorate of the member for Parkes. We potentially have generational unemployment of a grand scale. I think that we need to be looking at ways in which we can ensure that we look above the type of scheme that Work for the Dole is and look for things that will have a longer-term benefit not only for individual unemployed people but for their families and the communities in which they live.I have, in the past, quoted from John Kenneth Galbraith's book The Good Society. He says:In the market economy the natural focus of power is the employer, most often the business firm. The rights of workers to join together and assert countervailing authority must be central and accepted.One of the things that I would implore the government to understand is that there needs to be a mutual effort between large sections of the community, whether they be government, employers or, legitimately, trade unions acting on behalf of the workers, to ensure that we continue to see opportunities given to people for long-term employment, whether that is part time, casual or full time. If we see that form of cooperation and generosity of spirit, we will have the future in our grasp.20:36:006383Barresi, Phil, MPMr BARRESIZJ6DeakinLP10—Given the hours we spend in this building, there would not be too many members in here who have not borrowed a couple of dollars from a colleague to purchase that emergency cup of coffee. I did just that in budget week and was reminded that I had just borrowed more than the Australian government had borrowed in three years. This is perhaps one of the greatest unsung achievements of this or any government. Certainly, no Australian government in the past 80 or so years has been able to rely entirely on its own resources. For most, it has been a case of borrowing more and repaying interest, a routine that is very familiar to those opposite.That all came to a crashing halt in 1996: Labor lost, electoral sanity was restored and economic sanity returned. Four times now, on behalf of the Australian government, Treasurer Peter Costello has delivered a budget that has given Australians a financial blueprint for greater prosperity. This is a departure from the economic fumbling in the dark that defined the Labor years, years that were defined by high interest rates that forced the closure of so many businesses and the default of so many home mortgages.No longer does Labor make any contribution to the political debate. They moan, they point fingers, they feign concern, but in here, where they have the chance, they contribute very little. As was aptly put by the Treasurer, they are `stunt driven, not substance driven', and the people of Deakin know it. In defiance of the public will and the public interest, they have ceded the mantle of opposition to the minor party in the other place.After a look at the fourth coalition budget, Labor was probably wise to have walked away. Once again, we see that, for the fourth year running, Australians will be paying back some of Labor's debt—in fact, $20.5 billion in the next financial year, representing the biggest single reduction in our history. This is quite an achievement, though I must say that it is just short of the $23 billion that the member for Brand produced in budget deficits in his two years as finance minister. That we have the resources further to rein in debt with targeted spending cuts and not increase taxes is a tribute to the modest and steady approach displayed by the coalition since we came to office in 1996.Since last year's budget, we have seen the continuing economic crisis in Asia. Australia has not only held firm, but has continued to grow, thereby enhancing our reputation in the financial world. More importantly, it stands us in good stead to take advantage of a stronger Asia in the years ahead. Australia is growing, and the rest of the world is sitting up to take notice.The strong economic performance is making a difference at the grass roots. Ordinary, hardworking men and women in Deakin are beginning to benefit from the coalition's policies. With unemployment levels in the area pushed down to around five per cent, with rock-bottom interest rates assisting 12,000 home buying families and 19,000 home owning families in Deakin, and with inflation in check, there is now more opportunity than there has been in decades.Families who struggled to keep their heads above water because of Labor's crippling interest rates and inflation are doing a lot better, and they know the reasons why. One can only wonder what economic morass we would be in now had the Australian public not exercised their good sense and backed the coalition in 1996 and again last year.There are several features of this budget package I would like to touch on because they will be of great benefit to the people in my electorate of Deakin—as they will be to the people in the electorates around the country. This budget is as much about the young as it is about economic stability.Our young people are among our greatest resources, and this budget assists them on a number of different levels. One of these levels is education. The new arrangements for the funding of non-government schools will provide more choice, promote more competition and make private education a possibility for a greater number of children. These changes are supported by schools and peak bodies alike as being fair and an all-round better deal for those institutions which are reaching out to offer educational choice to those who are less well off. I have already been in touch with the 11 non-government schools in my electorate to discuss the improved arrangements with school principals. One of those principals has already written back, and I quote from his letter:Your government is to be commended for its commitment to principle and for delivering outcomes that enhance the choice of working class families. Not the well off, but the working-class families. This is not a Scotch College or a Wesley College; this is a suburban based independent school in my area that is coping with many working-class families. Despite what we are bound to hear from that most self-centred of bodies, the teachers union, we have not turned our backs on the government system. I am a product of the state system and my two school-age children attend Laburnum Primary School where teachers, parents and the principal, Victor Byrdy, are committed to the delivery of quality education.The Commonwealth continues to provide significant resources to schools run by state and territory governments, and over the next four years funding to this sector will increase by nearly $1 billion. This is hardly walking away from government schools, as the member for Prospect recently claimed. Nor is it part of a GST-fuelled plot to hand over government schools entirely to the states. State governments, after all, provide most of the funding now and naturally exercise control in that area. Rather, put simply in black and white, it is a funding increase for government schools. With an extra $131 million available for literacy and numeracy, $90 million extra for Asian languages and $78 million for teacher development, there is a demonstrable commitment from the coalition to better educate our younger Australians and prepare them better for life's challenges.Another feature of this budget is extension of Work for the Dole. The principle of mutual obligation is understood and applauded by the vast majority of Australians. The only group to criticise the program and the much lauded employment outcomes has been the ALP, which would rather see the safety net become a hammock than the trampoline it needs to be. As the member for Scullin mentioned, I do have Work for the Dole projects in my electorate—and, may I say, very successful ones. Recently, I visited a Work for the Dole project at Clifford Park Scout Centre. There the scouting camp has been transformed and renewed by a team that includes quite a number in mutual obligation schemes. These young people have the opportunity to utilise their own skills, to learn other skills and to meet potential employers. The community groups sponsoring projects—in this case, the scouts—receive the lasting benefit of work that could not have been done at regular commercial rates. I appeal to non-profit organisations in my electorate to continue to back the scheme to give our younger Australians a better chance of being job ready.Another aspect of the budget which delivers to the young as well as the general public in my electorate is public and private health care. After many years of attempting to find a better balance between the two sectors, this budget delivers an initiative that will lead us down that path. Younger people are being encouraged to join private health funds with the coalition's latest plan for lifetime health cover. Encouraging young Australians to join private funds and to stay in private funds will ease the pressure on public hospitals and, ultimately, the public purse. A program such as lifetime health cover is in line with the wishes of many of my constituents who have been in schemes all their working lives and found it increasingly difficult to remain members due to soaring premiums caused by falling membership numbers. Once again, this is a move that has met with approval in all corners, except that of the Labor Party, who of course promote the idea that government should be a cradle to grave guardian for us all.One area where there is most definitely a place for government is in the area of youth homelessness. This budget allocates another $60 million towards a problem that has been growing each year. As family breakdown has become more prevalent, increasing numbers of our young have chosen to flee the family home. Many of these have had nowhere to go and end up on the streets in the cities and inner suburbs. The eastern end of my electorate has been identified by this government as being an area of need, which underlines the importance of organisations such as Ringwood Extended Family Services to this program. Under the energetic and professional leadership of Bruce Argyle, REFS offer counselling and advice to family members, and help in the restoration of strained relationships and in many other valuable services. Their model of early intervention was successfully trialled as part of the Prime Minister's youth homelessness pilot projects. I am delighted that REFS will continue to play a vital role in the next round.The real victims in family breakdown are inevitably the young. I am happy to see that the 1999 budget makes greater provision to help those in danger of finding themselves without a roof over their heads. The new $39 million suicide prevention strategy will impact too on our young people, who are the group most prone to taking their own lives.The special assistance required to see a greater work force participation for people with a disability is recognised with the introduction of the new trial funding arrangements. Ten million dollars will go to this in 1999-2000. Disability employment assistance is a special area of interest to me. During the last parliament I headed a task force inquiring into the possibility of implementing a program similar to the Javits-Wagner-O'Day scheme that has operated successfully in the United States of America. I was aided on that committee by Frank Harris, a tireless worker for those with a disability. Frank is the manager of NADRASCA, based in Nunawading, which assists nearly 350 clients and employs 120 workers. I have not given up on recommendations of that report being incorporated into a future policy announcement to assist the unmet needs in the disability employment sector.Another major area of this budget that will benefit our younger people is the provision of an additional $221 million for early intervention and diversion initiatives to fight drugs. There is no longer a typical drug user or addict. Drugs are in every suburb and across every socioeconomic group. They are causing pain, suffering and death to families all across Australia, at an enormous social and economic cost to all of us. In the past five years we have seen a new diversity in approaches to fight this menace, yet there is little evidence to suggest that we are winning this fight. Given the unseemly profits available to the dealers, and the bargain-basement prices at which they can sell their poisons, there is no likelihood that they will close down their operations voluntarily. We must attempt to close them down.The most vulnerable to the approaches of these pushers are younger, perhaps school-age, children. We must pull out all stops to ensure that temptation is minimised. For those who are sucked into the vortex of drug despair, we must provide the means to help those who want to get clean. The war against drugs is as much about challenging our own traditional values and beliefs as it is about fighting narcotics and those who push them. Things that we might have seen as unacceptable a few years ago are today seen as necessary, though, in most cases, just as regrettable.Recently I had the opportunity to visit Switzerland and talk with both proponents and opponents of the heroin trials. There are many arguments for and against these trials. There is even a variation in the versions of the official independent report on a trial by the World Health Organisation handed out by each side. My initial feelings tell me that heroin trials ensure that the dosage is cleaner and somewhat safer, though it appears to me that this experiment contributes little to getting people off the drug.However, what impressed me about the Swiss model was its fourfold approach to drugs: law enforcement, prevention, therapy and harm reduction—similar in theory to our approach but vastly different in its application. Our preference, of course, is that people do not begin to use drugs at all. Recently I sponsored a drug forum in connection with a non-profit group called Focus on the Family. On a cold Monday night nearly 200 people, mainly parents, came out to hear from a series of speakers on the range of drug services available in the area, from education and prevention through to treatment.Focus on the Family itself runs a program rather ambitiously titled `How to drug proof your kids' which encourages greater communication and openness between parents and children. I congratulate all involved for their continuing fight against drugs in the community of Deakin. I look forward very shortly to announcing the make-up of the Deakin Drug Advisory Council which will help me be apprised of the state of play regarding enforcement, treatment and education.This coalition government has achieved a great deal through its development and promotion of community partnerships. I am very pleased to see the new arrangements for the taxation treatment of property donations to charitable institutions which is part of the effort to encourage a high level of corporate philanthropy. This is a good thing. Governments cannot be expected to do the job on their own. The mutual obligation principle extends to the business community and they must provide assistance to the churches, the welfare organisations and the thousands of Australians who volunteer their time to help those in need.The realities are that we cannot truly help the poorer in society without economic growth. Growth will be a spur for business and provide jobs and opportunity for all who are seeking work. There are many Australians who are not currently sharing in the nation's prosperity, and this government, with its principled reforms, is attempting to right that imbalance.The Hawke government put power ahead of principle, according to ALP stalwart Clyde Cameron. We have not fallen into that trap, and just as well. Political populism does not translate into good government. I am sure the leader of the party known as the opposition knows this, but he is a desperate man, brandishing cans of soup, tossed salads and chicken wings—again, stunts rather than substance. As we all know by now he lacks the ticker.Certainly he lacks the courage of Senator Lees, who has risked her leadership on tax reform because it was the right thing to do. In response to Senator Lees's desire to achieve something positive for Australia's future, what did we see from Labor? The best they could offer was an attempt to create division amongst the Democrats. Senator Stott Despoja, who never saw a camera she did not like or a media opportunity she did not take, apparently will now vote with Labor. That says very little for her commitment to a cleaner environment, which this tax package delivers as a result of some healthy negotiations between the coalition and the Democrats. So much for her commitment to Australia's young, who will be saddled with an increased tax burden if these reform attempts fail.If there is a danger to her political career it will not come from any imagined jealousy within the Democrats' party room. Rather, it will come from the people of her state who realise that they do not share her view that politics and government are merely infotainment. Despite her grandstanding and that of the Labor Party, which has been steadfast in saying no to every major piece of legislation we have introduced, the coalition has managed to stop the rot and has begun to make substantial progress. We could make a lot more headway if only the Labor Party began acting in the national interest. To do so will be in their own self-interest as well.I note with some interest the comments last week of Whitehorse mayor, Peter Allan, who believes that change in the tax system will benefit the council to the tune of $230,000 per year. I welcome Peter's endorsement, particularly as he was a Labor candidate for Menzies at the 1998 federal election. It is too bad some of his ALP mates are not as forthcoming with the truth. Given the campaign waged against taxation reform by the Labor Party, it is not surprising that people are sceptical—even scared. No-one, bar the Labor Party, likes taxes, but some are sadly necessary. The benefits of the tax reform package will be realised soon after the changes take effect, when all Australians will have more money in their pockets from income tax cuts and increased benefits.Given the particular needs in my electorate, in the rapidly growing areas to Melbourne's east, there is a pressing need for greater funding for highways. Topping the wish list is the Scoresby transport corridor, a vital link between Melbourne's east, Ringwood and the Mornington Peninsula. While I realise that there are ever-increasing transport needs around Australia, I reiterate the importance of this link. I hope that the stable economic conditions will allow appropriations for the building of the Scoresby corridor before too much longer.That said, this is a budget which indicates once again that Australia is in safe hands. Together with the new tax package, it allows a greater number of Australians than ever before to share the dividends of a stronger economy and to look forward with confidence to the challenging and exciting years ahead.20:56:006388Griffin, Alan, MPMr GRIFFINVU5BruceALP00—I could not let the contribution of my friend and colleague the member for Deakin go without a couple of brief reflections. Really, Clyde Cameron! Clyde Cameron is a great Labor figure from another generation and many years gone by. I would have to say that quoting Clyde is very much like quoting Billy Wentworth or, for that matter, Billy Hughes—for either side. Beyond that, however, I do not know that it is really a valid contribution in terms of the political circumstances we face as a country today or of this budget.I would like to make a number of comments with respect to the appropriation bills, relating particularly to the health area and some aspects that have come to light since the budget. I will start off with the Pharmaceutical Industry Working Group, which was set up some 12 months ago by the government, with the agreement of industry, with the intention of improving dialogue and coordination between industry and government around the question of the pharmaceutical industry. It was a good idea—no doubt about it—and I certainly do not have a problem with the concept.The first meeting of the group was on 23 June 1998. A press release issued jointly by the then industry minister, John Moore, and the then and current health minister, Dr Wooldridge, states:"The Pharmaceutical Industry Working Group was established to consult on key issues facing Australias pharmaceutical industry," Mr Moore said. "The Government wants to work with the Industry to encourage more investment and growth in Australia."Our aim is to develop the right environment for companies to confidently invest in the discovery, development and manufacture of safe and cost-effective medicines, which in turn will improve the quality of life for all Australians."The Pharmaceutical Industry Working Group will help the Government deliver high-quality health care within budget, while maintaining a vigorous and innovative pharmaceutical industry. It will assist in developing a clear, positive policy framework to take the Australian pharmaceutical industry into the new millennium." It is a good idea and something that we should all encourage and applaud. It comes after the current government gutted the Factor F scheme and replaced it with PIIP, which provides significantly less money and significantly—QK6SERCOMBEMr Sercombe—What, PIIP?VU5Griffin, Alan, MPMr GRIFFIN—Yes, PIIP. Don't ask! It provides essentially less money overall, which has certainly given industry the pip. That may well be a reason for the establishment of the Pharmaceutical Industry Working Group—which is sometimes known as PIWG or `PIG', I might say. When we look at the Pharmaceutical Industry Working Group, we find an interesting issue. Its first meeting was on 23 June 1998 and, guess what, its second meeting is due on 30 June 1999. Happy anniversary.Here we have a consultative group, a body designed to improve coordination and dialogue between industry and government in a key industry, an industry that both ministers in their press release have applauded for its major role in the development of Australian industry into the new millennium, yet it has only just managed to meet once more, probably, before the new millennium. This was raised in the consideration of estimates on Monday, when Senator Conroy asked what was actually happening with the Pharmaceutical Industry Working Group.In response to those questions, a number of points were made regarding the lack of meetings. There had been difficulties around the question of the election only eight or nine months ago now. They are very busy people in the pharmaceutical industry. There is no doubt about that. They are major companies and very large corporations. But it has been a long time. It was asserted in the context of those hearings of the estimates that through PIG, the Pharmaceutical Industry Working Group, there had been a report commissioned by the Australian Pharmaceutical Manufacturers Association, the APMA, with respect to the economic state and opportunities of the industry.That is very interesting. I will just refer you to APMA's annual report last year, which said that they commissioned this report in May of 1998. As I hope honourable members will remember from my earlier contribution, the Pharmaceutical Industry Working Group was not established until 23 June 1998. So we had a situation where there was considerable confusion from both the minister and the relevant public servant over the question of what this group had done. In fact, upon discussion and reflection, it was discovered that not much had actually been done.The minister suggested that this was not the role of the group. It was not a decision making body; it was a dialogue body. It was a body designed to improve an understanding. I am not quite sure how you develop and improve an understanding through silence, because that certainly appears to have been the government's role with respect to this industry in the context of this working group.I think the Pharmaceutical Industry Working Group is a good idea. It is something that government ought to embrace, and I am sure the industry does embrace it, but I think that it takes more than embracing. It takes a situation of some communication. The fact that there is a meeting coming up on 30 June is a good thing and I applaud that. It is about six months too late. I think in the circumstances that is something that hopefully we will not see into the future, and we will see a situation where this group, which is supposed to meet twice a year, does meet twice a year, does consider some of these issues that are of importance to the industry and will consider these issues into the future, in order to ensure that the pharmaceutic al industry, which is a crucial industry for the nation, does get a fair go in government policy into the future.I will turn to another issue which relates to the budget papers and the health budget in particular. It relates to the major proposed cut out of the budget in the health area, which is a component headlined `Quality initiatives for prescribing pharmaceuticals'. It is in Budget Paper No. 2. It relates to cuts over the next four years of prospective expenditure expected on the pharmaceutical benefits scheme in terms of medicines being prescribed. It tallies over each figure: for example, for 1999-2000, there is minus $28.3 million on the forward estimates; for 2000-2001, minus $38.9 million; for next year, minus $55.5 million and following on to minus $64.7 million.If you add those figures up, you work out that you are talking about a cut over four years of about $187 million. That is very significant. There is no doubt that this is a difficult area for government in the context of the continually rising costs of pharmaceuticals. But $187 million is still a pretty significant cut in the estimates. I would refer people to the minister's media kit fax sheet 8, page 3, which talks about the fact that these savings are net of the incentive payments to doctors which will commence in 2000 and 2001. This is a program where it is proposed that incentives be given to doctors in order to improve prescribing practice and, in that way, decrease the cost to the budget of and the need for prescribing of pharmaceuticals. On the face of it, that is not a bad idea, but there are several issues here that need to be considered.One is the fact that it suggests $187 million, but that is because, in the figures for those years, something like $78 million of proposed payments to doctors are not shown there. When you look at the actual figures, which were received from the department several days later upon questioning, there is a cut of about $259 million from the forward estimates in terms of PBS costs and some $78 million over that period back to doctors, with that increasing into the following year, and a situation where the figures that are in the budget are misleading.As I understand it, it has been said elsewhere through estimates again that these sorts of figures were provided but were not included in the budget papers at the end of the day. That is a disappointing thing. Accrual budgeting is something that I support as a concept and as a practice to go forward into the future—as did my colleague the honourable member for Fairfax when we were together, and we are now again, on the Joint Committee of Public Accounts and Audit. We are both very supportive of the concept of accrual budgeting, as first commenced under the government that I was proud to be a member of and continued under this government. But, when we look at what was provided in some of the budget papers in the concept of forward estimates, there are some concerns that need to be looked at for the future. There ought to be a line item of some $78 million in the forward estimates around the question of payments going to GPs. When there is not, there ought to be a proper figure around the question of the expected cut to PBS costs of some nearly $260 million. It is not there, and that is not a good thing in terms of clarity and certainty around what the budget actually contains.On from that—and why I say that this is an issue which needs to be looked at very carefully—the whole issue of the question of prescribing processes and behaviour of GPs is a difficult one. We would all agree that, where we can, we should be trying to ensure that people are given the medicine they require and the medicine that will do the best for them in the context of their particular illness, but it ought to be medically related in terms of the choice.The concern here—and I am not saying that this is what will happen—as to what could happen is that, if you have an incentive scheme which is designed to ensure that doctors both improve medical prescribing and at the same time save the budget money by prescribing less, there is a danger around what that will mean with regard to prescribing behaviour. Will it become budget related because there are incentives there? This is certainly a concern that the AMA have about how this scheme may work, and they have put that out in press releases. They are concerned that an incentive program, as proposed, of which we have no detail as yet, could in fact lead us to a situation which is really quite dangerous in terms of prescribing practices in this country.The detail—rather, the devil in the detail—is still unknown. Upon questioning, the situation with respect to the department is that we cannot really ascertain too much detail. It is a projected figure that has been worked out through a range of formulas in the context of the budget process, which provides them with a base on which to suggest this is what they suspect the saving could be in a scheme they would implement. However, they really cannot give us any details at all about that scheme. In fact, they did agree two days after the budget to provide to the opposition details of formulas, and have since reneged on that proposal on the basis of budget confidentiality.The fact is that, until those details are available, there will be a lot of questions raised about the nature of how such an incentive system would work and what it means in terms of GP practice. For example, how are these incentives going to be paid? Are they going to be paid to individual GPs? Will there be some overall organisational approach, or regional approach? Is it going to be in a situation of looking at the previous practice of prescribing and whether there are cuts in the levels of prescribing from particular doctors or particular groups of doctors? How are they are going to safeguard a situation where it is not seen as being a cash incentive scheme where a GP can look at it and say, `I will not prescribe because I can get the money back from the government in the context of this.' That is certainly not what I would expect from GPs; I have a lot of respect for GPs. But the fact is that, once you have an incentive scheme which is economically based, you have real dangers around the question of what would be the clinical outcomes. Hopefully, the government have that concern, but I am concerned that at the moment we are expected to just trust them and wait and see when it comes to detail.We have asked a range of questions through estimates to try and get some of those answers and find out what is really being proposed in this cut. But certainly there are issues there. There is the question of its presentation within the budget papers and what that shows about this sort of issue and this sort of change in the process of the operation of the PBS. There are also the questions of what it means for GPs, and what the clinical outcomes will be for their patients.I would like to briefly talk about the situation with the goods and services tax, the deal that has been done between the Democrats and the coalition on pharmaceuticals and the current state of play. The current state of play is, to an extent, characterised by confusion. There is a good deal of confusion in this area as to the end result. A number of different peak organisations have raised with me the question of the treatment of their particular products in this agreement. They say that their attempts to get clarification from government, from the Democrats and from the relevant ministers in this area have been very difficult and, in fact, most frustrating. To give you an example of the sorts of concerns in this area I will quote from an article that was in the Herald Sun recently and which said:Up to 2500 chemists will have to spend $25,000 on computerised point-of-sale systems to help administer the GST.Most of these are small businesses in rural areas or owned by the elderly.The Pharmacy Guild of Australia said the Democrats had "stuffed up" a chance for tax reform.The guild's Victorian rural liaison officer, Bruce Robertson, said supermarket owners had to deal with food on two levels—with a GST or without.But pharmacists had a three-tiered problem.He said products, such as prescribed medicines, would be delivered to chemists GST-free and be sold over the counter GST-free. In other cases, the wholesaler would apply a GST on products, including cold tablets, then the chemists would sell them without a GST.Thirdly, products such as perfumes would have a GST on them before arriving and when leaving the pharmacy."It's going to cause a lot of trouble and cost a lot of money," Mr Robertson, a Wangaratta chemist owner, said.The fact is there is a great deal of concern. There is an argument developing around this issue, and included in the argument are the questions of the actual clinical value of a medical good, the therapeutic value of particular goods and their treatment with respect to a goods and services tax.The proposal from large components of the complementary health care industry related to the treatment of all products that are registered under the ARTG—the Australian Register of Therapeutic Goods. It recommended that they be treated as GST free because there was a recognition through that listing that there was some therapeutic value in what they do. However, I might add that that was also the position that was embraced by the Democrats as being a proposal that they saw as being of merit. They moved amendments to that effect within the Senate in the earlier consideration of the new tax system bills. However, the circumstances of the deal that has been done between the Democrats and the government are that they have chucked that out of the window. They have made an extension in relation to schedule 2 goods but they have not considered a range of other goods. They have created a situation where there is even greater confusion about what is covered and what is not.There are examples, and they have been raised in the parliament and outside the parliament—things such as Strepsils. Most Strepsils are subject to a GST, but Strepsils Plus are not. Mr Deputy Speaker Adams probably needs Strepsils in this weather we are having in Canberra at the moment, and certainly I had one just yesterday. But I advise the Deputy Speaker that he should attempt to get Strepsils Plus if he wants to ensure that the product that he purchases and uses is not GSTed. There are other products such as Mylanta, that absolutely does have a therapeutic value, which will be GSTed. There are a range of products that have very similar activities; one happens to be schedule 2, others are not. In fact, some are GSTed and some are not. It does not make a lot of sense in terms of therapeutic value or health value. Basically, it is more a question of the arrangements being made to get a deal. We have a situation where the Democrats have backtracked on what they saw as being a major consideration in their earlier amendments. But I guess it is a bit like books: only a couple of days ago there were Democrats who said they read books; now they do not seem to read that much. They do not see the need for a situation where those things are covered.What I would say is that, when we look at the question of the GST with respect to health care and a range of other areas, there are inconsistencies and there is confusion from within the government about what is affected and what is not. There are also concerns about consistency in terms of policy in this area. There is still a lot of detail that needs to come out. But the concern I have, and I know others have, is that that detail is not there now and that it does not seem that either party really understands the nature of the issues they are dealing with in this area.We could go to the question of recipes for bread, or salads, or soups, or a whole range of other goods. But the fact is that this whole process has been messy and is starting to unravel to a degree which should be of great concern to the government. I note the members for Wannon and Eden-Monaro are here. Although I am sure the member for Wannon will return at the next election, the member for Eden-Monaro ought to have real concerns about this issue in terms of how it plays out at the next election. Although that is some time to come, there are issues there for the government to have real concerns about. (Time expired)21:16:006393Nairn, Gary, MPMr NAIRNOK6Eden-MonaroLP10—I am certainly pleased to speak on Appropriation Bill (No. 1) 1999-2000 , which is a result of the 1999-2000 budget. It is an excellent budget, and excellent for rural and regional Australia, which I represent. The seat of Eden-Monaro, being very much a rural and regional seat, has done very well out of this budget.It is interesting that with federal budgets rather large figures get bandied around, and I think sometimes they go over the top of people's heads. We talk about surpluses of $5 billion. We talked about deficits when we came into government of over $10 billion. When you start to talk in billions, people tend to turn off and they really do not appreciate the extent of those sorts of figures.Something I have done over the last few years, since I have been in parliament and part of the government, is to try and relate national figures back to something that the ordinary person can understand, and to make some comparison with something that they might be dealing with in order to get some sort of measure of the actual extent of the figures. For instance, a good comparison is if you can drag down an aspect and relate it, first of all, to a small business. My electorate is made up of small businesses. From a business point of view, we do not have large corporations throughout the electorate. It is predominantly small business that employs people, so doing some sort of relative comparison of the national budget with a small business area helps people understand the sort of problem that we had when we came into government and the sort of situation we are in now. The other comparison is to relate it to a family income.I did this with some figures a couple of years ago. I have duplicated it with this budget to see how we are going when you relate similar sorts of figures to a small business and a family. In 1995-96, we all know, we had a deficit of over $10 billion that we took over when we came into government. We were told the budget was in surplus and when the figures came out for it we were actually in deficit by over $10 billion. I have related that back to, first of all, a small business and then to a family. To make it easy I have called the small business budget $1 million. That is not an enormous small business. Depending on whether it is a retail or a service one, it might employ anything from 10 people up to maybe 30 or 40 people.So let us say a small business had a turnover of $1 million. That budget that we inherited when we came into government would be the equivalent of that small business losing over $80,000. There are not too many small businesses of that size that could cope with an operating loss of $80,000. If they continued at that, the bank would be stepping in pretty smartly. Also, if that business was carrying a debt equivalent to that of the federal budget, it would have had a debt of nearly $800,000 to service. A business that turns over $1 million with a debt of $800,000 to service is in big difficulties. That is the equivalent of what we inherited in 1995-96.From a family point of view, that is like saying that if a family with an income of $35,000—which, in fact, would probably be a high family income for a lot of parts of my electorate of Eden-Monaro—operated in the way in which the federal budget that we inherited in 1995-96 operated, it would have spent $3,000 more than the $35,000 that it earned plus have a bankcard bill of just under $28,000. Somebody earning $35,000, overspending by $3,000 in the year—that means they have to go out and get another personal loan, but they also have to service a $28,000 bankcard bill—is in great difficulty. That is the sort of equivalent that we inherited back in 1995-96.I will jump two years up to 1997-98. That million-dollar business now has a turnover of $1.12 million—so they have increased their sales. They have now turned that $80,000 loss into a $9,000 profit. So in two years what we have done with the federal budget would be the equivalent of a small business that had been turning over a million dollars and losing $80,000 becoming one that turned over $1.12 million but actually made a $9,000 profit. And they had reduced that $800,000 debt to just under $700,000, so they are actually making inroads into it.The equivalent for a family—jumping those two years forward—is that they have now worked very hard and have got a promotion; their family income is now a bit over $39,000 and they are square. They have actually got $300 left over from the year. So instead of spending $3,000 more than they were getting in income, they had, in fact, $300 over and they had reduced their $28,000 bankcard bill down to $24,000—so they were starting to make headway. That is the equivalent of what we have done in a federal budget equated to a small business and a family.We now come to this year's budget—jump another two years forward. I have got the figures for the in between years, but time moves on quickly, so we will jump up to the current budget. That $1 million business that we bought in 1995-96 is now turning over $1.28 million, so it has increased its sales quite well and is making $43,000 a year profit. The equivalent of the federal budget is that we have increased the revenue; we have looked after our expenses and we are, in fact, into surplus. That million-dollar business is now turning over $1.28 million with a $43,000 profit, and they have reduced the debt down to a bit over $400,000—so from the original $800,000 down to $400,000. That is the sort of equivalent reduction in debt that we have produced in the federal budget.Take the family. This year the family has been working very well and has been well regarded by the employer. Their family income is now almost $45,000. They have really done well as far as income is concerned and they have $1,500 left over out of that almost $45,000 a year income. They have reduced the bankcard debt to a bit under $15,000, so that is not a bad move. If we continue with the sort of budgeting that we have shown over the last couple of years, that family in a couple more years will have even paid off that bankcard bill. So that brings us a bit better comparison as to what is happening with that federal budget when you compare it to an ordinary small business or a family situation.Let me say a few words about the purpose of the budget. Often all sorts of politics get played with the federal budget and I am concerned that people look at a federal budget only to ask how many dollars are going to their town or area. The federal budget really is all about making sure the overall economic situation is right, that the climate is right for business to invest. If business is investing, the economy is growing; if the economy is growing, people are being employed; if people are being employed, we have a better standard of living. And that is really the responsibility of the federal government.A variety of allocations are made to ensure that those sorts of things occur, rather than saying that this or that area can have so many tens of thousands. Some specific budget allocations have to be made which end up in a particular region of Australia, but it is not necessary that every single area gets allocated certain dollars from the budget. In the past, too much politics has been played in an attempt to appease various areas.The budget contained a series of excellent moves to benefit regional Australia. In the health area we have provided quite some additional funding: over $40 million to establish 30 new regional health centres; $4 million for regional Australia specifically for women being diagnosed with breast cancer and related issues; $19 million to put in additional Medicare Easyclaim facilities; $43 million to keep rural GPs in the bush—and I could go on. All rural and regional areas will benefit in some way from such budget allocations, even though there is no specific statement, initially, of where every dollar is going. Certainly my area has benefited from a number of those things already. Quite a variety of additional Medicare Easyclaim outlets have gone into small towns in my electorate. That is a great plus. We have had them go into Bungendore, Moruya and Eden, and I am opening one in Cobargo in a week or so, also Tathra—a lot of the very small towns.Some of the local people have been working very hard to improve the health services. Often it is a case of attracting doctors, and although we have a variety of incentives there, I think the local people in a lot of the towns can play a big part in convincing doctors that it is good to be a GP in the bush. In that sense, I should congratulate the people of Narooma, who have been working very hard to get an additional doctor. Before I continue, I should acknowledge the former member for Eden-Monaro, who has been in the gallery for a while but is now leaving.Narooma is a beautiful place to live, and the people who own one of the shopping centres there, Hans Baer and Bill Anderson, have for a couple of years been trying without success to attract a doctor into their shopping centre area. Then the town as a whole, through the chamber of commerce, made a really big push to get that to occur. They were lucky enough, not long ago, to get a major article published in either the Sunday Telegraph or the Sun-Herald about Narooma and the need for an additional doctor, and they now have an additional doctor in that town. That was something that the town itself has brought about, outside of government providing all sorts of incentives to move to the bush area. Government incentives are there as well, but the actual community contains the best people to sell the attractions of the community.Additional money was provided also for the rural assistance program, with $40.8 million for a regional assistance program. This is administered by two area consultative committees in Eden-Monaro: the South-East New South Wales Area Consultative Committee covers all the coastal area and the mountains, and the Southern Tablelands-ACT Area Consultative Committee covers part of Canberra, the Queanbeyan and Braidwood area of my electorate, and also up into the southern tablelands. Both those committees do a great job in identifying potential new projects and enterprise for the regions, and now the Regional Assistance Program will be in place.Recently I launched a couple of projects funded out of that Regional Assistance Program down on the coast. One was a planning exercise for sending directions for the aquaculture industry in the south-east. That has enormous potential. There was one also for development of a value-adding timber industry in the south-east. We have to use our timber in a lot smarter way than we have in the past. There is now less of it available and we have to make sure that we get the maximum dollar for the timber before it leaves our region.One of the other projects I also launched was a report on the social and economic effects of developing Moruya airport. There is the potential there for a great development near Moruya airport, for conference facilities and those sorts of things. A proper study is being done as far as that is concerned.Rural transaction centres were also funded in the budget at $70 million over five years. This is bringing those services such as phone, fax and banking facilities and Medicare Easyclaim back into small areas where they do not exist. That will be an added boost of services in many of the smaller towns throughout my electorate.Telecommunications as well got a big boost in the budget. In recent days, through the Regional Telecommunications Infrastructure Fund—the RTIF—we have got a number of excellent projects happening in my region, particularly on the coast, to set up a broadband infrastructure for telecommunications. With the advent of e-commerce and other matters, there is enormous scope for improving those infrastructures, which will encourage many more businesses to set up in those regions.In the time I have left, I just want to touch on a couple of other things particularly related to unemployment. We have outperformed just about every other part of the world, despite many people who have kept claiming that Asia would knock us off over and over, and we have continually outperformed even our own estimates. But although the economy overall is going superbly well, there are still some inequities within Australia. Rural and regional Australia is not doing anywhere near as well as many of the major cities.It is very sobering when you really look at some of the figures. Unemployment figures are a good guide as to which areas are doing well and which are not. If you look around my electorate, things have certainly improved, but they have a long way to go. In the Bega Valley, the unemployment rate over the last year has gone from 14½ per cent down to 12 per cent; in Bombala, it has gone from 10.1 to 9.2; in Cooma, from 5.2 down to 4.7; in Eurobodalla, from 19.3 down to 15—so the unemployment level is still very high—and in Queanbeyan, from 8.8 down to 7.2.When you take all of the shires together, there has been a fall of 15 per cent in unemployment in my electorate. The total unemployment in March 1998 was 6,688. In December 1998 it was 5,677, so it is coming down, but we have a long way to go. When you put it all together, you are talking about an unemployment rate of about 8.5 per cent throughout the electorate of Eden-Monaro. The national figure is 7.4 per cent. In New South Wales it is 6.9 per cent and in Sydney it is 5.5. There, in stark contrast, is that difference between the city and the bush. There is a 5.5 per cent unemployment rate in Sydney and an 8.5 one throughout my electorate, although it goes between 2.8 up to 15. It is a sobering point which shows that there is still much to do in that respect. Certainly, the overall budget is directed very much towards helping rural and regional Australia.Before I did not talk necessarily about how specific things are budgeted for in a particular area. Two things in the budget were of particular interest—and specifically when we talk about unemployment. The first was $3½ million for work on the proposed armaments complex in Eden, a multipurpose wharf which will open up all sorts of new possibilities for that region. I was pleased that the $3.58 million was in the budget, so the environmental work can get moving and some decisions can be made on that, hopefully by the end of this year. The second was $1.65 million through the RTIF for a call centre in Cooma. Cooma has undergone some major changes and problems because of the five years of drought and changing commodity prices. Cooma is looking to that call centre to provide something very new in a technology sense that will give it scope to develop all sorts of technology based industries.We need to look at that in a number of areas where traditional agriculture has really changed dramatically. With the sort of telecommunications type infrastructure that we have, there is no reason why many of these new technology based industries cannot be sited in rural and regional Australia to replace many of those jobs that are lost. I will be looking forward to both those major projects being progressed over the next year, as it will help the coastal area of my electorate and the mountain part of it as well.Tax reform is clearly the other major encouragement needed by rural and regional Australia to improve its export competitiveness. My electorate is very much export orientated, and that will be a major boost for it as well.21:37:006397Snowdon, Warren, MPMr SNOWDONIJ4Northern TerritoryALP00—I am told that four weeks ago today the Treasurer, with great rhetorical flourish—some might say great rhetorical flourish; I would not describe it as such, I do not think—delivered the budget—3J4SAWFORDMr Sawford—A Clayton's budget.IJ4Snowdon, Warren, MPMr SNOWDON—As my learned friend said, a Clayton's budget, because here we are, a mere four weeks later, discussing in detail in this parliament how the fundamental premises underlying that budget will be altered as a result of changes to the tax package which it proposed.That is no surprise to us, because those of us who have been involved in public life in this country for some time have known all along that much of what was being said about the GST—both prior to the last federal election and subsequent to it—by the government just did not ring true. I want to make it very clear that, in discussing the government's tax proposals, the GST, I am doing so from the perspective of someone who lives in a regional part of Australia, someone who lives in a remote area, someone whose electorate has a very dispersed population. As you would know, my electorate is 1.3-plus million square kilometres, so it is a pretty big joint.The issues canvassed during the course of the election campaign in relation to the government's tax proposals, which were a foundation of this Clayton's budget brought down four weeks ago today, were issues where the Prime Minister and the Deputy Prime Minister asserted that fuel prices—petrol prices—would go down in regional Australia. I will come to that again shortly. They made other quite extravagant claims about what the impact of their tax proposals would be.What we have learned, of course, is that, once exposed to scrutiny, the claims they were making were false. That does not seem to have stopped them continuing to make those false claims and telling lies about what it is that can be achieved under their tax package. We had them in the Northern Territory talking about the questions of housing costs, transport costs and the tourism industry. I raise the tourism industry and the housing industry because they are two of the largest employers in the Northern Territory. I vividly recall that, in the lead-up to the election, the membership of the Housing Industry Association said that there would be a negative impact on the housing industry as a result of a GST—that prices would go up.It will not come as any surprise to you, Mr Deputy Speaker Adams, to know that the person who is opposing me as candidate of the Northern Territory—and the relevant government ministers, including the Prime Minister, the Deputy Prime Minister and anyone else who could get near a microphone—claimed that there would be no negative impacts on the tourism industry or the construction industry as a result of a GST.I do not claim to be the world's greatest economist, but I do read material and I do take the advice of industry specialists when they discuss the impacts and the potential impacts of these sorts of arrangements on their industries. During the course of the election campaign I, as you would expect, ran the contrary view and said that the impact of a GST as proposed by the government—and still proposed, despite the deal which has been done with the Democrats—would be catastrophic for employment in the construction industry and in the tourism industry in the Northern Territory. I am not pleased to say to you, Mr Deputy Speaker, that industry experts now acknowledge and reaffirm the view that that prognosis is correct, despite the protestations which are made by the government that there will be no negative impacts as a result of this GST.It has got to the point where, in the context of the tourism industry, a report was released in February by the tourism industry task force which claimed that 2,000 tourism industry jobs would be lost in the Northern Territory as a result of a GST. Even if you said that is an extravagant claim, even if you were to assert that the calculation was out by 25 per cent, you are still talking 1,500 jobs. But the government is trying to lay claim to the fact that somehow or another the GST proposed in the budget would be a job generator. In my electorate the GST will cost many jobs.If you take out the Commonwealth government outlays to the Northern Territory budget—80 per cent of the Northern Territory budget revenue emanates from the Commonwealth government—on top of that there is additional expenditure as a result of decisions made by successive governments, particularly in relation to the build-up of defence infrastructure. What is important is that, if you take out the public sector, and you ask where are the small business private sector employers in the Northern Territory, the answer will be that they are primarily in the tourism and construction industries. The other important industries in the Northern Territory are not large employers. The large employers in the Northern Territory are the retail sector and the service sector, generally; not the pastoral industry, not the mining industry. They make significant financial contributions to the Northern Territory gross product, but they are not large employers. The large employers, the engine room of private enterprise in the Northern Territory, are in the tourism and construction industries and the retail sector.Which three industries do the experts tell us will be most adversely affected by the impact of a GST? The tourism industry, the retail sector and the housing industry. I do not know how advocates of the government's position can consciously walk into a community like Darwin or Alice Springs or Katherine and sit down and claim, as they have done, that jobs will not be lost. They are being fundamentally and basically dishonest. They are lying to the community. They make no bones about it, but if you criticise them it is like water off a duck's back—they take no notice at all. They continue to drive these absurd notions and make these outrageous claims which they know are dishonest. They continue to make them—even to this day. Today in the parliament the Prime Minister had the gall to say, during the course of question time:We believe in a taxation system that will take $10½ billion off business costs in Australia. We believe in a taxation system that will dramatically reduce the price of fuel in rural and regional Australia.Well, ho ho hum! What we know, despite the ignoramuses who sit opposite, is that the current price of fuel in Alice Springs is 89c a litre. You do not have to be Einstein, but, if you understand how your GST works, you will know that the bottom line is that if you take the calculation based on 7c reduction in the price of fuel and add on a 10 per cent GST, the price of fuel will go up.It is $1.25 a litre at Rabbit Flat. It is 90-plus cents a litre on the Barkly Highway. And these clowns come into my electorate, go into north-west Queensland, go into Western Australia, go into South Australia, where they know the price of fuel is 89c, 90c, $1 a litre for petrol, and they know that the impact is going to be an increase in fuel prices, yet we have got the Prime Minister standing up in this parliament today and claiming that there will be a lowering of fuel prices in the bush. He is being dishonest. We had the Deputy Prime Minister coming into my electorate at the same time, during the course of the election campaign, and subsequently, and making the same claims. No-one believes them. They do not believe themselves.Then we have this issue about diesel. Let us just talk about diesel. May I not use my words, Mr Deputy Speaker, not even use the Prime Minister's words, not even use the Deputy Prime Minister's words, but use the words of that paragon of Liberalism, the Premier of Western Australia.3J4SAWFORDMr Sawford—Richard, baby.IJ4Snowdon, Warren, MPMr SNOWDON—Richard. What does Richard say about the little deal on diesel which has been procured for him by this great negotiator—I do not know if it was Mr Anderson, or if it was the Deputy Prime Minister, or the Prime Minister—who negotiated this great outcome for rural and regional Australia on the question of diesel rebates? Let me just say to you what the Premier of Western Australia says about that little deal. I will tell you what he says. This quote is from the Hansard of the Western Australian parliament of 2 June 1999:I take exception to a Federal Government bringing about changes which will trigger greenhouse emission controls when they have nothing to do with this tax debate. Similarly, the changes which will affect power generation in remote areas are unbelievably politically stupid.I will then quote, if I may, Mr Deputy Speaker, his coalition partner, Mr Cowan. Now, Mr Cowan is even more forthright and honest about the implications of a GST on regional and remote Australia, because what does he say? I quote from the same Hansard :Some other issues have been identified by the Leader of the Opposition, which are a downside. One is the additional cost of compliance. It will create enormous difficulties for small business, especially those selling processed or fresh food. That aspect must be worked through and I can assure members that it will be difficult, but many people have underestimated the degree of difficulty associated with the compliance requirements for wholesale sales tax in this country at the moment. I disagree, and I will explain why in a moment. He goes on:I am disappointed that the diesel fuel credit has been reduced by 2c a litre, and it will be selectively applied. I find it difficult to accept that those people who have no other recourse but to use diesel for power generation, must now pay the full level of taxation on diesel, whereas—and he goes on to say that other industry sectors do not.Let us stop the rubbish around here. Let us start to understand and be honest about the implications of this GST for regional and remote Australia. I want to use some examples of what it will mean for families in my electorate who live in the bush. These Einsteins opposite reckon they know about the bush. I can tell you, you know nothing about the bush. I know that the Deputy Prime Minister knows even less about the bush. If he did he would acknowledge a survey which was done by the Northern Territory Department of Health based on 45 community stores in the Northern Territory last year. What this tells us is the exorbitant price of food for people who live in rural communities, primarily Aboriginal people as it happens—but that would not matter to the government, of course.Let me just give you an example of the cost of this basket of goods. These are not my figures; they are the Northern Territory Department of Health figures. The cost of a basket of goods across the average of all capital cities in Australia is $301. The average across all of the Northern Territory districts of these 45 stores was $484—$301 as opposed to $484. That is a 61 per cent increase in the price of food that you and others buy at major capital cities around Australia. What income level do these people have?84CTHOMPSONMr Cameron Thompson—It comes on a truck, doesn't it?10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Hon. D.H. Adams)—The member for Blair is being quite disruptive and I ask him to desist.IJ4Snowdon, Warren, MPMr SNOWDON—He is just a clown; I wouldn't take much notice of him. What income levels are we talking about here? We are talking about large sections of the community that are either on the Newstart allowance or on CDEP, that is, the equivalent of Work for the Dole. What sort of money are the people in these bush communities earning? When you pay $301 for a basket of goods, in one area of the Northern Territory they have to pay $525. That is, they have to pay 74 per cent more for the same basket of goods than you have to pay in Sydney, Melbourne, Brisbane, Canberra, Perth or any of the other capital cities.What do they earn? What is the magnificent Newstart allowance that they live on? If they are single, 21 years and older with no children, it is $325.70 per fortnight. Give me a break! You do not have to be too smart to understand that these people are going to be penalised by this GST. We hear about the issue of freight and I am glad that it has been raised. In the context of the election campaign, the issue of freight and freight costs was made much of by the government. Of course, those people who are advocates for the trucking industry did not agree with them, because they said in the Northern Territory that they did not expect there would be any decrease in freight costs as a result of the GST. But, more to the point, whatever you might say about a GST, what we do know is that freight will suffer from a GST, that every item of food bought in a remote area store in the Northern Territory will have a freight component in its cost which will be GST applicable. The GST will apply.84CTHOMPSONMr Cameron Thompson—What rubbish. What absolute rubbish!IJ4Snowdon, Warren, MPMr SNOWDON—These guys do not understand, nor are they aware of, the conditions which exist in remote and rural Australia. What this government is doing in proposing this GST in the way in which it has been done is penalising people who live in rural and remote communities. It is going to cause job losses in the Northern Territory—of that there is no doubt—and it is going to penalise the most impoverished section of our community: people that this government says that it cares for. I do not think it cares for them and I do not think it has done anything that demonstrates that it does. I have already explained that we can anticipate—if you use the tourism industry's own figures—the loss of up to 2,000 jobs.I do not know what these people opposite think about people losing their jobs. I do not know what they think about the fact that there are many people who live in these remote communities who already, because of the higher costs of food, will have to suffer as a result of a GST—and they often do go without food. I do not know what they think about that but I think it is a very serious issue. These people laugh it off. They come in and they are fundamentally dishonest. They make dishonest claims about the impact of a GST on rural and remote Australia and then they expect people to support them. We have seen what level of support they have as a result of the latest Newspoll survey. You would be worried about it, brother, and you are worried about it because you know what it means in your community. Despite the way you sit here and boast that somehow or other this is some enlightened tax journey we are having, you know that it is not supported in your community.I know it is not supported in my community, and for a very fundamental reason: people know it is not good for them. People know that this will mean a loss of jobs. People know that it will undermine their standard of living. People know that if you live in the bush—not in some Western District of Victoria but in the bush—you understand the implications of this GST proposal. I am surprised at our friends in the National Party, particularly those who represent remote Australia—not Mr Entsch; I am not sure what he believes in but he will not be here much longer. I am surprised that the member for Kennedy, for example, has not come out and railed against this GST proposal and supported the views which have been represented by the coalition's friends in Western Australia, Mr Cowan and Mr Court. Let there be no doubt about it: this GST, if it passes, will be a disaster for Australia. We are committed to opposing it. We will oppose it and I hope we defeat it. If we do not, all of Australia will be penalised.21:56:006401Thompson, Cameron, MPMr CAMERON THOMPSON84CBlairLP10—I am sure the Northern Territory will benefit a great deal through the diesel rebates that are going to be provided as part of the tax package. This is the first year that the federal budget has been brought down under the system known as accrual accounting. The change is long overdue. This is a system that acknowledges the full allocation of funding to a particular budgetary item. The old cash system recorded expenditure only when a transaction occurred. Accrual accounting means that, in accounting terms, there is emphasis on outcomes, not on processes. It is the system of accounting used in the private sector. Under this system the budget answers the question of what will be produced, not of how we are going to produce it. At last we are doing away with systems that value the process rather than the outcome. It took the Howard government to do it.I doubt that accrual accounting would ever have been introduced under Labor. I know that the public service and commentators have talked about the need to introduce accrual accounting from time to time. Unfortunately, the value of accrual accounting is that it is so much more transparent than the old cash system. Labor, in power, proved it did not care for the public having too great an understanding of the state of the nation's finances. Certainly, when in power the Leader of the Opposition ran up a $10 billion deficit, while all the time maintaining that the budget was balanced. The fibs he was telling would have been all too apparent if, at the same time, he had been required to live up to the principles of accrual accounting—the same principles that apply to small businesses all over Australia.Another point worth considering is the way in which a tax system based on a GST appears when presented in accrual terms. In the context of the wider tax debate, it is worth considering how GST revenue and expenditure would appear on paper under this transparent system, compared with the way in which the current wholesale sales tax system would present. The fact is that, without a GST or some other effective source of growth funding, the budgets of various states, and certainly the Commonwealth budget under Keating or Beazley, would be revealed as being full of holes. Without a strong source of growth money, accrual accounting would reveal that, in many cases, budgets have been delivered with revenue insufficient to fund basic needs like hospitals and schools, certainly in the outyears.For many years, under the cash system, the Queensland government—with which I am most familiar—has funded just the first year of its commitments. It puts off the question of funding in the outyears until the crunch comes, often in the Expenditure Review Committee. This razor gang has the task of finding sources—sometimes one-off—of revenue to meet the annual shortfall. Accrual accounting would reveal this little charade. Across Australia a multitude of sins would be revealed. We would see hospitals and schools on the drawing board but with no existing way of paying for them.If governments, particularly Labor governments like the one headed by Peter Beattie in Queensland, were to be denied the GST as a source of growth funding, accrual accounting beyond one or two years would be an embarrassing nightmare. Accrual accounting would quickly reveal the fact that, each year, residents face the unheralded increases in taxes and charges, asset sales and other unpopular imposts just to keep the wheels of government turning. No wonder Labor premiers—Peter Beattie, Bob Carr and Jim Bacon—were at the head of the queue waiting to sign up for the GST. Speed cameras, toll roads and user-pays charges are other examples of unpopular, unheralded changes that have been dumped on state taxpayers to fill budgetary holes carefully hidden under the old cash accounting system.By comparison, accrual accounting measures would reveal many of the natural advantages of a tax system based on the GST. Primarily there would be a source of growth revenue so important capital projects could be funded in their entirety. There would be no need for annual tax hikes or other one-off impositions. Other more regressive taxes—for example, payroll tax—could be wiped out in time. This way we will create jobs and turbocharge the Australian economy. Accrual accounting is accurate. It is rigorous. There is no opportunity to hide something as basic as a $10 billion deficit in a budget presented in this way.That prompts me to ask the rhetorical question: what do these transparent accounting principles reveal about the Howard government's 1999-2000 federal budget? The statistics read something like this: total final demand is three per cent, down from 4.25 per cent; GDP is three per cent, down from 4.25 per cent; business investment—no doubt finally influenced by the Asian downturn—is zero per cent, down from two per cent; the CPI is two per cent, up from 1.25 per cent; unemployment is to be 7.25 per cent, down from 7.5 per cent; and we see the current account deficit will be 5.25 per cent of GDP, down from 5.5 per cent of GDP. Revenue of this year will be $162.8 billion and the surplus will be $5.4 billion. All in all, given the times and the fate of many nations less well prepared than our own, to quote somebody, these are a great set of numbers.The commentators have said it all. The budget has won accolades from one end of the planet to the other. Again, in the context of the wider tax debate, it is interesting to note that in this budget the forward estimates accommodate the impact of the GST. Believe the Labor Party and the member for the Northern Territory, and you would suspect that these figures would reveal a massive new tax slug, courtesy of the GST. Believe the Labor Party and you would expect something like 10 per cent on top. But what does it show? In fact, it shows just the opposite.In this budget it is revealed that, as the GST is introduced, total revenue—that is, all money raised by the government from taxpayers—will actually fall as a percentage of GDP. It will fall from 26.3 per cent in 1999-2000 to 22.9 per cent in 2001-02. This is significant. Once again, this transparent system reveals the value of the GST. Thanks to the GST, we will see a 3.4 per cent drop in the proportion of gross domestic product required to fund government activity. The Bills Digest makes the point that these figures will change as a result of the amended package accepted by the Democrats, but the change in the percentage will still be downwards. It would be just the opposite if we followed the do nothing prescription of the Labor Party and stayed with the existing ramshackle tax system.Tonight we are discussing appropriation under three separate pieces of legislation. Under Appropriation Bill (No. 1) 1999-2000 , $36 billion will be pumped into the Australian economy. That is 25 per cent of the expenditure of Commonwealth agencies. The rest of their budgets come from special appropriations and income receipts. Appropriation Bill (No. 2) 1999-2000 provides $5.7 billion for capital expenditure, grants to states and territories, and administrative expenses that are new.Finally, the Appropriation (Parliamentary Departments) Bill 1999-2000 provides $159.2 million. This includes $27.8 million to run the House of Representatives, which is up from $25.1 million; $31.4 million to run the Senate, which is up from $27.9 million; $41 million for the Joint House Department, down from $42.7 million; $42.2 million for Parliamentary Reporting Staff, up from $36.4 million; and $16.6 million for the Parliamentary Library, up from $14.9 million. I am sure members of this House would agree, when reviewing these figures, that it seems ridiculous to spend more reviewing legislation than we do developing it. Nevertheless, that is the current state of play. The Senate does cost more to run than the House of Representatives and surely only Sir Humphrey could tell us why.The Parliamentary Library is always the first source of information for members researching bills such as this. On this occasion, it has produced several good articles analysing the impact of the budget. I have read what the authors from the library have said, after synthesising media and expert commentary on the budget. I also heard what the Deputy Leader of the Opposition had to say the other night about his views on the budget. Not surprisingly, you would think they were discussing two different budgets altogether. However, in this case, one comment comes from the Deputy Leader of the Labor Party and the other from the independent, well-respected commentators retained by the Parliamentary Library. I know who has the greater credibility on this issue.The Parliamentary Library's commentator, John Kain, summed up the main thrust of the budget very well. He wrote:The `99-2000 budget maintains the Howard Government's long standing strategic objective of striving for maximum possible economic growth and the maximum possible rise in measured living standards taking account of key economic parameters bearing on growth, in particular, the rate of inflation and the size of the current account deficit. The achievement of such economic growth is seen as the key to further substantial reduction in the rate of unemployment.Mr Deputy Speaker, he is correct: unemployment is the number one issue in the electorate of Blair and around Australia.The coalition government has a credible policy to reduce unemployment; Labor does not. It has a number—I think it came up with something like five per cent last. The extent of its planning is that Labor believes that five per cent is a good number for unemployment. Dur! That is what I would say to that. What a policy! The collective minds of the Labor Party have figured out that five is a smaller number than 7.5. That is a stunning development, a real thriller. They understand their preschool number facts, but that is the extent of it. In parliament they are doing everything they can to physically oppose policies that will actually reduce unemployment.Let us take a couple of these policies as examples: unfair dismissal legislation, Work for the Dole and now tax reform. All of these offer greater opportunity for new jobs. For example, the unfair dismissal legislation supported by Labor would be the biggest disincentive to employment currently in existence. The coalition has actively pursued amendments to make the dismissal of staff a more balanced process and to encourage more employers to take up the challenge of employing people.These laws are anti jobs. Any TAFE small business course warns small business men and women of the deadly difficulty that these laws can pose to an unsuspecting employer. Participants in these courses work on business plans and discuss issues from marketing to accountancy. But the biggest warnings are reserved for the unwary in relation to unfair dismissals. The legal danger of a dismissal being deemed unfair makes it just not worth the trouble of hiring someone in the first place.Work for the Dole is a successful measure that is improving the self-esteem of the unemployed, improving their skills and preparing them for the workplace. It is no more or less than recognition of the principles of reciprocal obligation. Mr Deputy Speaker, Aboriginal people in remote communities have been working for the dole under Labor and the coalition through a range of CDEP schemes for many years now. A few minutes ago you would have heard the member for the Northern Territory say that CDEP is the equivalent of Work for the Dole. He said it: CDEP is the equivalent of Work for the Dole.3J4SAWFORDMr Sawford—Voluntary.84CThompson, Cameron, MPMr CAMERON THOMPSON—Sure, it is well nigh impossible to get a job in a remote community, but why should Aboriginal people work for the dole when other unemployed people do not?The member for the Northern Territory referred to it as an equivalent scheme. I cannot imagine the Labor Party recanting its position in support of the CDEP, so I fail to understand why it so vehemently opposes Work for the Dole. Across Australia, it has Labor Party controlled councils and governments standing in the way of ordinary Australians wanting to work for the dole while actively encouraging Aborigines to do the opposite. How can the principle of mutual obligation, providing physical labour in return for money received from the taxpayers, be good for black people but unacceptable when applied to everyone else?3J4SAWFORDMr Sawford—Talk to us about skills.84CThompson, Cameron, MPMr CAMERON THOMPSON—That brings me back to tax reform.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Nehl)—I would prefer that the member for Port Adelaide did not talk at all.84CThompson, Cameron, MPMr CAMERON THOMPSON—Once again, the opposition is talking about creating jobs while doing just the opposite.3J4SAWFORDMr Sawford—I'm helping him.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—He does not need your help. Carry on, member.84CThompson, Cameron, MPMr CAMERON THOMPSON—They are destroying jobs. By opposing the government's tax reforms and taking cheap shots for short-term political gain, they are betraying the interests of small business and those who rely on the small business sector for work. Tax reform is about helping small business to create more jobs. This budget is about helping small business and creating more jobs.In closing, I have a challenge for the member opposite. In the past fortnight I have heard all members opposite complain that more should be done for pensioners. Well, they know how they can fix that. They have complained about tax complexity, and they can fix that too. They want more done for the bush, and that is another item that rests in their hands. They want more for the environment; same again. They can do all those things if they will only participate in the tax debate. But, of course, they continue to do nothing. Mr Deputy Speaker, I commend this budget which lights the way ahead for Australia and I condemn the opposition because they will not let go of the past.Debate (on motion by Mr Sawford) adjourned.Main Committee adjourned at 10.11 p.m.Answers to Questions in Writing6406The following answers to questions were circulated:6406(Question No. 443)4436406Albanese, Anthony, MPMr AlbaneseR36GrayndlerALP00 asked the Minister for Employment, Workplace Relations and Small Business, upon notice, on 17 February 1999:(1) Will he provide details of polling being conducted on behalf of the Office of the Employment Advocate including (a) who is conducting the polling, (b) the questions being asked, (c) the methodology used and (d) the financial cost.(2) Have funds been allocated for future polling; if so, what is the budget.(3) Does the polling referred to in the preceding parts constitute push polling.6406Reith, Peter, MPMr ReithWI4FlindersLPWorkplace Relations and Small Business10—The answer to the honourable member's question is as follows:(1) (a) The Office of the Employment Advocate has contracted the Wallis Consulting Group Pty Ltd to conduct surveys on behalf of the Commonwealth of Australia.(b) The questions being asked relate to freedom of association.(c) The surveys will consist of two elements:- a survey of 1000 employers conducted by telephone and mail questionnaire; and- a survey of 1000 union members conducted by telephone.The employer survey will be in the form of a self completed mail survey returned by mail or fax. Prior to the surveys being mailed out to 1000 employers, telephone interviewers will call a sample of business establishments (1500 employers) selected at random from the Yellow pages and Dun and Bradstreet's commercial listing to establish the most appropriate person in the company to undertake the survey. Establishments will be chosen to fit industry and size criteria (Australian and New Zealand Standard Industrial Classification 1993, industry codes excluding agriculture, forestry and fishing; 400 small establishments, 300 medium establishments and 300 large establishments). Companies employing one or two people only at a site will be excluded from the study.The union member survey will be conducted by telephone with such employees at their homes and will be run at the same time as the employer survey. The telephone survey method was selected in this instance because postal questionnaires raise issues in regards to literacy and understanding of questions which may present difficulties for some employees (eg, less educated or those for whom English is not their first language).(d) $99,270.00(2) No.(3) No.