1999-11-243914REPS1246301999-11-24Mr SPEAKER(Mr Neil Andrew) took the chair at 9.30 a.m., and read prayers.Bills12463r94212463Bill presented by Mr Truss, and read a first time.1246309:31:0012463Truss, Warren, MPMr TRUSSGT4Wide BayNPAgriculture, Fisheries and Forestry10—I move:That the bill be now read a second time.The proposed amendments to the Farm Household Support Act 1992 repeal the current 30 November 1999 closing date for applications for Farm Family Restart Scheme (FFRS) re-establishment grants.The government intends to extend the current deadline by seven months to 30 June 2000. The new deadline will be contained in the instrument which establishes the Restart Re-establishment Grant Scheme under section 52A of the Farm Household Support Act 1992.The FFRS is the government's key program for delivering improved welfare support to the farm sector. The FFRS is available to low income farm families who cannot borrow further against their assets and wish to consider their future in the farm sector. Assistance through the FFRS is flexible and can be tailored to meet the needs of each farm family. FFRS provides income support for up to one year and professional advice to meet individual needs, such as financial, legal or career advice. The FFRS re-establishment grant of up to $45,000 is also available to assist those farmers who take the decision to leave agriculture.Over 2,900 farm families have received income support under the FFRS since the scheme commenced in December 1997 and over 240 re-establishment grants have been paid. Extending the FFRS re-establishment grants will assist farmers in severe financial difficulties to assess their future in agriculture and, if necessary, leave the industry with dignity.I commend the bill to the House and present the explanatory memorandum.Debate (on motion by Mr Horne) adjourned.Bills12463r95712463Bill presented by Mr Williams, and read a first time.1246309:34:0012463Williams, Daryl, MPMr WILLIAMS7V5TangneyLPAttorney-General10—I move:That the bill be now read a second time.In 1825, British clergyman and writer, Charles Caleb Cottons observed:There are some frauds so well conducted that it would be stupidity not to be deceived by them.I am sure many would consider this to be as true today as it ever was. Fraudsters, thieves, blackmailers and corrupt officials are rapidly developing the means to deprive the Commonwealth government and its public officials of vast sums of money.This bill introduces a wide range of modern offences to protect the Commonwealth government and public officials from criminals who would cause them financial harm or seek to obstruct, threaten or harm them.The bill achieves many longstanding goals of this government:. it replaces existing Crimes Act 1914 offences with a modern and transparent scheme for preventing and punishing theft, fraud, bribery, forgery and related offences;. it provides a modern and transparent scheme for the geographical jurisdiction of the Commonwealth criminal law by replacing the existing situation where the scope of offences is often uncertain;. it provides additional protection for Commonwealth public officials from violence and harassment; and. it simplifies and reduces the size of the Commonwealth statute book by repealing over 250 offences which cover conduct dealt with by the new offences.It has been 10 years since the Review of Commonwealth Criminal Law was conducted by Sir Harry Gibbs, GCMG, AC, KBE, the Hon. Justice Ray Watson and the late Mr Andrew Menzies, AM, OBE.That review recommended a complete overhaul of the theft, fraud and corruption offences in the Crimes Act 1914.Significantly, that review found that a number of offences in the legislation, including regular and usually straightforward offences such as `stealing' and `defrauding' were overly complex and reliant on obscure common law terminology.For instance, the key fraud offence, section 29D, currently relies heavily on the meaning of the word `defraud', which can only be ascertained through reading a series of English and Australian cases on the related offence of conspiracy to defraud. As a result, the offence is uncertain and subject to unpredictable interpretation by judges in a variety of jurisdictions.This bill updates these offences, reduces their complexity and introduces more certainty.The bill also gives Australia a system of offences ready to meet the criminal activities of the new millennium. Significantly, it introduces a number of key amendments to cope with all the changes that technology has brought to criminal activity. The language of the legislation will be brought into line with that of the new Electronic Transactions Bill 1999 . This is particularly important in relation to the fraud and forgery offences. The government considers these new offences will go hand in hand with its commitment to conduct business electronically.The bill also brings about uniformity in penalties for key offences, which have long differed between state and federal jurisdictions, and between different acts. For instance, under the Crimes Act the offence of stealing carries a maximum penalty of seven years, when state theft offences and the fraud offence have a maximum penalty of 10 years.There is no reason why stealing Commonwealth property should receive a lighter punishment than stealing from a business, a state government or an individual.The existing corruption offences raise even more concerns. The current bribery and secret commissions offences have maximum penalties of only two years imprisonment. You will recall that in June this parliament passed legislation prohibiting the bribery of foreign public officials. The maximum penalty was set at 10 years imprisonment—the same as that which applies to theft and fraud.It follows that the domestic bribery offence should have the same maximum penalty.The bill also addresses the use of violence and threatened violence in dealings with the government. It covers robbery and burglary and deals with threats and attacks against those who work for the Commonwealth. These offences include an additional penalty where the threat or attack is against a law enforcement officer. At the moment the Crimes Act and other legislation only have obstruction offences with a maximum penalty of two years imprisonment. Under the bill the maximum penalty will be 13 years imprisonment where the person assaulted is a law enforcement officer.The bill will also repeal many unnecessary and outdated offences. Schedule 2 to the bill indicates our concerted effort to prune down some of the unacceptable duplication which exists in the Commonwealth statute book. This will contribute to delivery on the government's commitment when it was elected to conduct a `statute stocktake' with the aim of reducing the number of offences and making Commonwealth law less complex.The opportunity has also been taken to provide clarity on the fundamental issue of who is included within the definition of `Commonwealth public official'. It may surprise you, but the Crimes Act 1914 definition of `Commonwealth official' does not indicate clearly whether ministers are covered by the definition. The new definition ensures all federal members of parliament, ministers, judges, employees and consultants are covered by the proposed offences. This is particularly important in relation to the corruption offences.Another important overdue change is the proposed regime which will govern the application of Commonwealth laws overseas. New part 2.7 deals with geographical jurisdiction, that is when jurisdiction will be exercised over offences against Commonwealth law occurring overseas. Until recently, the general rule in common law countries, such as Australia. has been that criminal laws apply to conduct in the territory of that country. However, in recent years, that rule has been subject to variation for a number of reasons. International treaties now recognise that many kinds of personal or business transactions take place across national boundaries. They call for member countries to exercise jurisdiction even though the conduct in question has occurred beyond their boundaries. This enables these countries to effectively deal with serious transnational crime.A problem can arise when particular conduct for the purpose of committing an offence in jurisdiction X takes place or is set in train in jurisdiction Y, where the organising or inciting of the offence, or a conspiracy to commit the offence, takes place. This raises issues about appropriate rules to govern the application of the general criminal law, which have been sought to be addressed by legislation in various jurisdictions, including some of the Australian states. The matter of drafting general principles that can be readily applied by the courts is under consideration by the Model Criminal Code Officers Committee at the direction of the Standing Committee of Attorneys-General.Turning to Commonwealth legislation we find a rather different requirement. Commonwealth legislation does not deal with the general criminal law, except where it needs to be applied for specific Commonwealth situations, but with particular interests and concerns that, being of a national character, fall within the Commonwealth sphere. The practice has been for the application of Commonwealth offence provisions to be addressed case by case depending on the purpose of the legislation.Sometimes a formulation has been used to the effect that a Commonwealth statute `applies outside Australia'. From such a formulation it might be assumed, and sometimes is, that offence provisions in the act apply to any conduct by any person anywhere in the world. When such a provision was introduced in the Crimes Act 1914 in 1960 it was certainly intended to assert jurisdiction over some conduct beyond Australia. In the parliamentary debate, although it was suggested that some limitations applied, these were only indicated rather vaguely by some illustrations.Another example might be found in the Proceeds of Crime Act 1987, which `applies outside Australia', and thus, some might think, to the laundering of the proceeds of a foreign offence entirely outside Australia. Such lack of precision is undesirable, and can cause confusion when the question arises in the courts, as shown by the case of McDonald v Bojkovic [1987] VR 387.For all those reasons, there is a need for part 2.7. The code's aims of achieving clarity and consistency of principle will not be met without workable provisions on geographical jurisdiction. The part sets out five different kinds of geographical jurisdiction that might apply to Commonwealth offences. One of these is called `standard geographical jurisdiction' and will apply by way of default unless one of the other specified kinds of jurisdiction, or perhaps yet another kind of jurisdiction, is designated by statute.Naturally, it is intended that extended forms of jurisdiction will only be applied where there is justification for this, having regard to considerations of international law, comity and practice. Moreover where an offence is alleged to have been committed wholly in a foreign country by a person who is not an Australian citizen, consent to a prosecution by the Attorney-General will be required.The proposed bill is not only needed—it is essential for the proper administration of the government of the Commonwealth.I am also pleased to note that by enacting this bill the government will implement a significant segment of the Model Criminal Code which has been developed by state, territory and Commonwealth officials over the past decade.The proposed offences will eventually dovetail with equivalent offences at the state and territory level when other jurisdictions implement the model.In conclusion, I wish to give credit to His Honour Judge Rod Howie QC of the New South Wales District Court, who has chaired the Model Criminal Code Officers Committee for most of its existence, Dr David Neal, who was the main author of the Theft, Fraud and Bribery Chapter of the Model Criminal Code, and the late Mr Andrew Menzies AM OBE, who was also a member of the Gibbs Committee. They and other representatives on the committee who have been participants in what has been a most exciting and ambitious criminal law reform project which is now recognised for its work throughout the common law world.This bill is proof that the federal system can work well when expert resources across the country, and not just those of the Commonwealth, can be applied to work for the improvement of laws that are important to all Australians.I commend the bill to the House. I present the explanatory memorandum to the bill.Debate (on motion by Mr Horne) adjourned.Bills12466r95612466Bill presented by Mr Williams, and read a first time.1246609:45:0012466Williams, Daryl, MPMr WILLIAMS7V5TangneyLPAttorney-General10—I move:That the bill be now read a second time.One of the more exciting and ambitious projects within my responsibility has been the development of the model criminal code.Following extensive nationwide cooperation we have developed model offences concerning a wide range of topics, including conspiracy to defraud, assault, stalking, abduction, sexual offences, homicide, perjury, threatening witnesses, drug trafficking, the contamination of goods, slavery and sexual servitude. As a result of the states and territories adopting various components of the model criminal code, Australians have been given greater certainty, protection and confidence under the criminal law.The model criminal code discussion papers and reports contain a comprehensive review of the law on each topic in Australia and overseas. This body of work has come to the notice of the High Court and is now recognised throughout Australia and overseas as one of the more worthwhile contemporary law reform projects.While there has been this tremendous progress, some effort is still required in order to harmonise Commonwealth offences with the criminal code. The overall task of developing and implementing the criminal code has proven to be more extensive than was first anticipated in 1995. It is therefore reasonable to amend the Criminal Code Act to defer application of some parts of the act.This bill extends the date of application of chapter 2 of the act. Chapter 2 contains the criminal code's general principles of criminal responsibility, which ultimately are intended to apply generally to all Commonwealth criminal offences.Subsection 2.2(2) of the bill provides for the deferral of the application of chapter 2 until 15 December 2001. This replaces the present provision which states that chapter 2 will apply on the day five years after the day on which the Criminal Code Act received royal assent. Royal assent was given on 15 March 1995 and therefore, unless the Criminal Code Act is amended, chapter 2 will apply on 16 March 2000.In 1995 the parliament set the five-year period described in subsection 2.2(2) with the view that this would allow sufficient time for all offences under Commonwealth law to be reviewed and, if necessary, amended in order to comply with the general principles of criminal responsibility contained within the criminal code. Whilst that process of review continues and significant progress has been made, it has become apparent that the original five-year period was somewhat too optimistic. A deferral until December 2001 in applying chapter 2 is necessary to allow the review and adjustment process to be properly concluded across all Commonwealth legislation. After that time, the principles of the criminal code will generally apply to all offences under Commonwealth law.I believe that this bill will assist in the implementation of the criminal code by permitting adequate time to review offences under Commonwealth law for the application of the code. If many offences are not adjusted they will become more difficult for the prosecution to prove.The criminal code is a significant step in the evolution of our system of justice, and it is important that it be implemented in a way that is considered and pays careful regard to the way Commonwealth offence provisions are to work in practice.I commend the bill to the House, and I present the explanatory memorandum to the bill.Debate (on motion by Mr Horne) adjourned.Bills12467r96212467Bill presented by Mr Williams, and read a first time.1246709:49:0012467Williams, Daryl, MPMr WILLIAMS7V5TangneyLPAttorney-General10—I move:That the bill be now read a second time.This bill amends the National Crime Authority Act 1984. That act creates the National Crime Authority as a national body exercising both Commonwealth and state functions.The authority was established in 1984 as the only law enforcement agency in Australia whose investigations would not be limited by jurisdictional boundaries and its existence reflects the seriousness with which the Commonwealth and states view organised crime.The authority is not confined to only investigating breaches of Commonwealth law. It is truly a national body with powers to investigate organised crime offences against Commonwealth and state laws.The states confer powers, duties and functions on the National Crime Authority in relation to a variety of state investigative laws including laws for the use of assumed identities, controlled operations and electronic surveillance. These laws are the essential intelligence gathering tools used by law enforcement agencies in the states and by the authority.This amendment makes clear that the states can confer such powers, duties and functions without the need for the National Crime Authority Act to specifically contain similar provisions.I commend the bill to the House. I present the explanatory memorandum to the bill.Debate (on motion by Mr Horne) adjourned.Bills12467r95812467Bill presented by Mr Williams, and read a first time.1246709:50:0012467Williams, Daryl, MPMr WILLIAMS7V5TangneyLPAttorney-General10—I move:That the bill be now read a second time.Shielding the community from injury and protecting children from exploitation are two essential responsibilities of a just society. While each member of society should uphold public safety and prevent children from harm, governments and parliaments have a unique role in establishing laws which can ensure the protection of the community and deter crime and antisocial behaviour.Last year the Minister for Justice and Customs, Senator Vanstone, launched a landmark report that explored several causes of crime in young lives, and suggested some pathways to prevention. The government is continuing to support this important research, which emphasises the need to provide stable and safe environments to nurture the young people who will contribute so much to Australia's future.Prevention of harm is crucial. Deterrents for those who would cause damage to our community are equally vital.This bill will provide for increased penalties for a range of import and export offences under the Customs Act 1901.The bill lifts the maximum civil penalty for non-narcotic offences from $50,000 to $100,000 and, at the same time, creates new criminal non-narcotic offences with custodial sentences.There is a wide range of goods under the Customs (Prohibited Imports) and (Prohibited Exports) Regulations. They extend from pit bull terriers to goods depicting the Anzac symbol, from human tissues to nuclear weapons. There is a myriad of products and substances that have built up in the regulations over many years—some of the rationale for their inclusion appears lost in the mists of time. Dangerous goods are not welcome in Australia at any time, particularly in the lead-up to the Olympics, and we need to send that clear signal now.It has become clear that the penalty and offence provisions are no longer appropriate—neither for the diverse range of goods, nor in terms of current sentencing standards. For example, penalty rates set in 1982 can no longer reflect community expectations in all areas. The Australian Law Reform Commission drew similar conclusions in its 1992 report to government on these offences.The government has decided to take action to address this anomaly by strengthening the civil penalties and introducing criminal penalties for import/export offences for the first time.The new civil penalty maximum of $100,000 will apply to all prohibited import and prohibited export offences. It is clear, however, that some offences by their nature, or the circumstances that led to the offence, require more serious deterrents. Serious offences involving, for example, prescribed quantities of precursor chemicals used in the manufacture of narcotic and psychotropic drugs will carry a maximum penalty of $100,000 and will also allow courts to impose a sentence of up to five years imprisonment. The same penalty will be applied to offences involving prescribed levels of substances that illicitly enhance performance in sport.More serious offences, such as those involving weapons or child pornography, will attract a penalty of $250,000 and/or 10 years imprisonment. The Commonwealth's prosecution policy, implemented by the Director of Public Prosecutions, will form the basis of all decisions for the new criminal offences.The details of goods to which the new offences will apply will be specified in schedules to the regulations, where prohibited goods are currently listed.By any standard, these are serious penalties to address serious offences.The bill also removes the statutory limitations imposed on lower-level courts when they determine appropriate penalties for prohibited import and export offences.While the maximum penalty level is $50,000, cases tried in magistrates courts are currently limited to a $5,000 penalty. District and county court cases prosecuted by the Commonwealth are limited to a penalty of $20,000—amounts above that level are `written off'.This bill provides that the new offences will not have any Commonwealth imposed court limits—minimum or maximum—and be subject to the normal ceilings in each jurisdiction.This will effectively provide courts with capacity to impose higher penalties—a second string to the bow in terms of the Commonwealth strengthening penalties.These amendments demonstrate the government's continuing commitment to the approaches it has adopted under the National Firearms Agreement, the Tough on Drugs and Tough on Drugs in Sport strategies. They do not represent a complete answer to drugs and weapons problems, but do fulfil an important element of community protection policies—the need to signal our abhorrence for offences that damage people and property or have the potential to cause severe harm.The government is concerned that the new monetary penalties for non-narcotic offences not detract from deterrents that recognise the very serious damage that can be wrought on our community by narcotic drugs. As a result, the bill proposes that existing penalties in relation to narcotic drugs be increased:. from $4,000 to $250,000 for cannabis trafficking,. from $100,000 to $500,000 for narcotics other than cannabis; and. by introducing a new monetary penalty in the Customs Act for commercial trafficking of narcotics—$750,000.Other measures provided for under the bill include:. extension of the use of technology in external personal searches;. clarification of Customs' power to open international mail articles;. the same arrest powers for the new offences as currently exist;. extension of the time limit for Customs to retain evidential material and/or seized goods, from 60 to 180 days;. improved arrangements for the disposal of abandoned goods.This bill introduces two new elements in the area of external search—use of technology and videotaping of those searches. External search involves the removal of articles of clothing.The government recognises that personal searches are the subject of some concern within the community. Customs currently has strict operating procedures that are designed to reflect a reasonable balance between preserving a person's dignity and liberty and the protection of the community as a whole.We need to be vigilant in finding new ways of dealing with this sensitive area.In view of the community's concerns, the government has been exploring the use of emerging technologies that could be used in personal search procedures—for example, body scan x-ray, particle detectors, thermal imaging and swabbing kits. Following an expert examination of the technology, the government hag decided to include a provision in this bill to allow new technology to be used as an alternative to removing articles of clothing.The use of body scan x-ray in external searches meets the National Health and Medical Research Council's safety standard for cabinet x-ray equipment.People whom Customs selects for external search may be offered an option to be examined with technology. If they opt to be examined this way, they will be advised of the risks, if any. Customs will not direct any person to undertake an examination using technology.Even if technology is used, if prohibited goods are found the person may still be asked to remove clothing to locate the items. The amendments will provide that a Customs officer or police officer may take a photo of the prohibited goods on the person.Under the proposed amendment, Customs will also need to advise the person that an external search may be videotaped. The person will be entitled to a copy of the videotape. There are prescribed arrangements for limited retention, and destruction of photos and videotapes.I now turn to the proposed amendment in relation to the opening of international mail. When cargo is imported into Australia—including consignments by courier—Customs has the power to open packages and examine goods for drugs or other prohibited items.The Australian Postal Corporation Act 1989 requires that an Australia Post employee open an article of mail for examination by Customs. This limitation restricts Customs's ability to examine mail articles covertly, which is an important element in the success of a controlled delivery of illicit drugs imported into Australia. The amendments will enable Customs to open and examine a mail article reasonably believed to carry illicit drugs and to deal with any prohibited goods found. The bill contains additional technical amendments relating to arrest powers, disposal of abandoned goods, and extension of time for Customs to retain evidential material or seized goods.The bill also allows for the appointment or reappointment of the Chief Executive Officer of Customs for periods up to five years. The current provision in the act specifies an appointment of five years, and the bill allows some flexibility to match the needs of individual appointments.Laws that enhance the integrity of our borders must be supported by suitable powers for enforcement agencies to make them fully effective, and adequate deterrents to reduce the incidence of offences. The measures I have outlined in the bill today go some way towards those objectives. They complement the role of each member within our community to build a safer and more harmonious country and to let visitors know that we value a peaceful world that protects generations to come.I commend the bill to the House and present the explanatory memorandum to the bill.Debate (on motion by Mr Horne) adjourned.Bills12470r95912470Bill presented by Mr Entsch, and read a first time.1247010:01:0012470Entsch, Warren, MPMr ENTSCH7K6LeichhardtLP10—I move:That the bill be now read a second time.This bill repeals the Gladstone Power Station Agreement Act 1970. The act established the basis for the repayment of an $183 million 1970 Commonwealth loan to the Queensland government to help finance the construction of Gladstone power station. The act provided for biannual repayments until the loan was repaid in 2009.In March 1994 a one-off payment to extinguish the loan was made under conditions which were agreed by the Prime Minister, the Commonwealth Treasurer and Queensland Premier of the time. The payment in the sum of $59,102,831.85 represented the difference between the outstanding balance and the net present value of the loan.Technically, however, the payment by the Queensland government did not formally extinguish its obligations. The Commonwealth therefore treated this payment as an advance payment made on account of instalments of principal and interest due until 15 July 1998. After this date, it was agreed the Minister for Finance and Administration would be requested to waive, under the Audit Act 1901, Queensland's formal obligations under the loan agreement as they fell due.Subsequently, the Audit Act has been replaced by the Financial Management and Accountability Act 1997. Section 34 allows for the prospective waiver of debts. On 13 July 1998, the Minister for Finance and Administration approved the waiver of the $75 million outstanding as at 15 July 1998.Accordingly, all legal obligations under the act have now been extinguished and this act is being repealed in line with the government's commitment to remove inactive legislation.I commend this bill and present the explanatory memorandum.Debate (on motion by Mr Horne) adjourned.Bills12470r95512470Bill presented by Mr Anthony, for Mr Anderson, and read a first time.1247010:04:0012470Anthony, Larry, MPMr ANTHONYXJ6RichmondNPCommunity Services10—I move:That the bill be now read a second time.The Albury-Wodonga Development Act 1973 established the Albury-Wodonga Development Corporation—AWDC—to acquire and develop land and other real estate in and around the Albury-Wodonga area. An agreement was also signed at that time between the Common wealth and the states of New South Wales and Victoria which provided for a new integrated urban complex to be developed in the Albury-Wodonga region.Those states each established a state corporation to operate in conjunction with the Commonwealth corporation. The Albury-Wodonga Ministerial Council, comprising the Commonwealth, New South Wales and Victorian ministers with regional development responsibilities, was established to provide general oversight and direction to the three corporations and the development scheme in general.The Commonwealth and the states of New South Wales and Victoria now consider that this approach to regional development in Albury-Wodonga is no longer appropriate. The Albury-Wodonga Ministerial Council decided at its 1995 and 1997 meetings to wind up the Albury-Wodonga Development Corporation and to dispose of all its land and assets, in an orderly manner and without distorting the market. The Albury-Wodonga Development Amendment Bill 1999, which I am introducing into the House today, puts into effect those decisions.The bill will simplify the structure and streamline the functions of the AWDC in preparation for its abolition by a future act. The bill will also facilitate the winding up of the 1973 agreement and the withdrawal from the project by the states of New South Wales and Victoria, in line with the ministerial council decisions.The bill is to be integrated with state legislation in New South Wales and Victoria, which will abolish the two state corporations, and will confer their assets, rights and liabilities on the Commonwealth corporation. The complementary legislation of the states will facilitate the transitional arrangements, and may confer additional functions on the Commonwealth corporation. The acceptance of the rights, assets and liabilities of the state corporations by the Commonwealth corporation must be approved by the Commonwealth minister, to ensure there is appropriate scrutiny of the transfer arrangements.The Commonwealth corporation will become solely responsible for the disposal of the assets of the state and Commonwealth corporations, and it will continue to have the capacity to adopt active asset management strategies. The Commonwealth corporation may also act as an agent of the Commonwealth in the disposal of surplus Commonwealth land in the Albury-Wodonga region.Simplified AWDC board membership provisions will be introduced. The chairperson and two members are to be appointed by the Commonwealth minister. A requirement for members to have a knowledge and understanding of the Albury-Wodonga region will assist in maintaining a regional focus during the wind-up period.The bill also provides for an Albury-Wodonga area development winding-up agreement to be negotiated between the Commonwealth, New South Wales and Victoria. This will replace the current Albury-Wodonga area development agreement and will deal with a range of transitional arrangements, including the details of the state corporations' functions which may be transferred to the Commonwealth corporation. It is proposed that an indicative winding-up date of 2005 be included in the winding-up agreement in line with the ministerial council decisions.The bill provides for staged commencement arrangements to ensure that those parts of the legislation which require complementary state legislation and an agreement between the Commonwealth and the relevant states do not commence until the last of these actions is completed.The Albury-Wodonga Development (Financial Assistance) Act 1973, which provided a mechanism for funding land acquisition in relevant states, is no longer required as the state corporations are to be abolished. This bill provides for the repeal of that act.The financial impacts of the bill are as follows:. investments in the scheme by the states and the Commonwealth are to be recouped from the sale of assets by the AWDC.. there will be a one-off payment to Victoria of $3.8 million by the AWDC after the Commonwealth and states' legislation is passed. No payments are due to New South Wales. A payment of $10.2 million already has been made to the Commonwealth in 1999-2000.. It is anticipated that the return to the Commonwealth will be $15 million in 2000-01. The return in future years will depend on the AWDC's success in the disposal of its assets and may fluctuate depending on market circumstances.The first decisions to wind up the Albury-Wodonga development project were taken by the previous federal government during its last term in office. The introduction of this bill will provide a mechanism for those decisions to come into effect. I present the explanatory memorandum to this bill.Debate (on motion by Mr Horne) adjourned.Tariff Proposals1247210:09:0012472Anthony, Larry, MPMr ANTHONYXJ6RichmondNPCommunity Services10—I move:Excise Tariff Proposal No. 3 (1999)Customs Tariff Proposal No. 8 (1999)The tariff proposals which I have just tabled contain alterations to the Excise Tariff Act 1921 and the Customs Tariff Act 1995.Excise Tariff Proposal No. 3 (1999) and Customs Tariff Proposal No. 8 (1999) formally place before parliament proposed changes to the excise and customs duty on petroleum products. These changes have previously been gazetted to commence on 15 November 1999 and are now being tabled in the House in accordance with section 160B of the Excise Act 1901 and section 273EA of the Customs Act 1901.These changes are being made to address petroleum excise evasion activities that are currently occurring because some parties are exploiting weaknesses in the current tariff structure that allow certain fuel substitution activities to occur. Fuel substitution activities occur when people replace petrol or diesel used as a transport fuel with product which is subject to a lower rate of excise. These activities constitute excise evasion and lead to unfair competition and destabilisation of the marketplace. The changes do not impose an additional excise liability. The main change to the tariffs is to remove the particular tariff items being abused. Other arrangements are in place to ensure that those with a legitimate need to access certain products at a free rate of duty can do so.The changes complement the marker system the government introduced in January 1998 that required excise-free petroleum products to carry a chemical marker. The marker system also makes it illegal to sell these products in circumstances that attract the highest rate of excise, such as for use in an internal combustion engine and for on-road use. The marker system was initially quite effective. However, exploitation of the current tariff structure has meant that fuel substitution activities are increasing again. These changes to the tariff show that the government will not tolerate such activities. The changes also more clearly deliver the government's decision to make certain recycled products subject to excise.A summary of the alterations contained in these proposals has been prepared and is being circulated. I commend the proposals.Debate (on motion by Mr Horne) adjourned.Bills12472r945Billsr943Billsr946Billsr944BillsBillsBills12472Debate resumed from 21 October, on motion by Mr Costello:That the bill be now read a second time.10:13:0012472Crean, Simon, MPMr CREANDT4HothamALP00—These four tax bills comprise the first tranche of legislation for the government's business tax proposals, which are the continuing subject of debate and negotiation. Indeed, I am to meet with the Treasurer around lunchtime to have further discussions. I thought it would help indicate our position to put on the record a letter I have written to the Treasurer indicating where we stand on this. I have written in these terms:I am writing to set out some of Labor's concerns in relation to the business tax package and more specifically to inform you of an amendment that I intend to move during the debate on the New Business Tax System (Integrity and Other Measures) Bill 1999 .As I indicated in the course of our last two discussions, Labor is willing to pass the business tax package if it pays for itself. Labor will hold the Government to its promise on revenue neutrality. We cannot accept a reduction in business taxation at the expense of individuals and families who will be bearing the brunt of a GST, nor the use of the Budget surplus to fund business tax reforms.This key criterion is now even more imperative given the announcements yesterday concerning the surcharge on some taxpayers to pay for the increased cost of the GST deal with the Australian Democrats.Labor believes revenue neutrality can be achieved if the government fully implements the measures announced under Stage 2, as well as those measures in Stage 1 not yet before the Parliament, and if a stronger anti-avoidance measure is put in place to accompany the widening gap between income and capital taxation.The first element is essentially the fulfilment of the government's commitment on the revenue measures that fund the tax cuts. As you know, many of these measures, particularly those politically sensitive to the government, are not yet before the Parliament.In this context we welcome your announcement of 11 November in relation to the Stage 2 measures as an important step forward. However your release also acknowledges that further work and consultation is still under way on a number of measures. In essence, you are asking Labor to sign-off on what you acknowledge to be `work-in-progress'.For example, I note that your release states, in the context of dealing with alienation of personal services income, the detailed criteria is still to be developed concerning what is a personal services business. Clearly this detail, and the detail of some other areas in this alienation context, will be critical to the revenue effect of the measures. An assessment of how much of a contribution this measure will make to revenue neutrality cannot be made without the fine detail being settled and the final impact known.There is also considerable uncertainty surrounding the final detail of many of the other measures you announced on November 11. These include:. the proposed reduction in the 45 day rule concerning denial of franking credits—there is no firm proposal to replace this rule;. the proposed new uniform capital allowance system—currently the subject of consultations; and. the final design of the entity regime, especially the transitional arrangements.Similarly, Labor is favourably disposed to the claimed objective of strengthening the General Anti-Avoidance Rules (GAAR). However, it is not possible to evaluate the proposed new system on the basis of the announcement so far.In this context I make special reference to the government's recent record on the [general anti-avoidance rules] in the GST legislation. Following representations from business groups the initially tough draft provisions were significantly weakened. This would not be an acceptable outcome for Labor in respect of the proposed tightening of the [general anti-avoidance rules] that you have announced for income tax purposes.There also remains significant and understandable scepticism that the government will deliver on its 1998 promise on taxation of trusts as companies—a further reason we want the detail referred to above made available before we sign-off on the package.Addressing revenue leakage through appropriate anti-avoidance measures is obviously part of achieving revenue neutrality, particularly given the greater incentive to tax avoidance with the proposed widening of the gap between [capital gains tax] and the new marginal tax rates.The amendment that I plan to move to the New Business Tax System legislation—and I attach a copy—seeks to include a specific new clause in the existing [general anti-avoidance rules], Part IVA of the Income Tax Assessment Act 1936. Such a provision would also be necessary in any rewriting of [those rules].You will recall that I raised this matter in the course of our last discussions on business tax reform. While you stated a belief that the announced arrangements were sufficient, you asked me to put forward a proposal to address the matters highlighted.Any drafting suggestions you might have would of course be welcome. This new provision is designed specifically to address the increased incentive for tax planning which would arise were your proposed new nominal system of taxing capital gains to be adopted.The need for these rules has been amply demonstrated in the evidence provided to the Senate inquiry, which briefly examined some of your business tax proposals. I am sure you are aware of the testimony provided by some of Australia's leading tax academics, confirming the risks of revenue leakage contained in your current proposals.I disagree with the sentiments expressed at page 243 of Ralph Committee report which states, in the context of the proposed capital gains tax rate changes:"The Review endorses the existing practice of not employing the GAAR where certain taxpayer or market behaviour is an acceptable outcome of the tax law's structure." This seems to recommend not employing the [general anti-avoidance rules] to schemes that would exploit tax arbitrage possibilities. Labor does not support such a recommendation.I was also very disturbed to hear the evidence before the Committee—that is, the Senate committee—from senior Taxation Office officials that it is `unclear' if the proposed new [general anti-avoidance rules] would apply to such arrangements. Again, this is totally unacceptable to the Opposition.Similarly, I am also concerned about the views of some witnesses before the Senate inquiry concerning the possible abuse of the scrip for scrip rollover proposals.The anti-avoidance measure I have proposed will not on its own fill the revenue hole that has been highlighted in the Senate's report on the current round of legislation. However, it is a necessary tool to ensure that revenue is not put at serious risk due to your CGT proposals.As you will understand from the preceding discussion Labor is essentially seeking to ensure that the government sticks to all of its commitments on business tax reform.To summarise, we are seeking:. Detail on the measures not yet before the Parliament, particularly the revenue raising measures, at a level that allows us to reasonably conclude that their stated intention will be achieved. This would ideally be in the form of draft legislation.. An absolute and public guarantee that these measures, when the details are known, will be implemented in full. . Support for Labor's proposed integrity measure or some mutually agreed version which achieves the same objective.If we get agreement on these points, we can pass the package.I would be happy to discuss these matters with you in order to progress business tax reform in Australia.And I attached a copy of the amendment that I will move later.Labor has consistently supported business tax reform and we have consistently argued for a bipartisan approach to achieve it. We said that we would have had a review process had we won the election, and in that spirit we supported the Ralph process that the government set in motion. We think the process that was conducted by Mr Ralph and his fellow commissioners, with the administrative backup that it got, was a good process. It was reasonably transparent and it involved genuine consultation with the stakeholders. The final report was issued at the end of July, and then the government took the process over. That is when we saw business shut out—and certainly no approaches to Labor, despite the fact that we had consistently offered to seek and reach agreement with the government on this important area.Then we had the extraordinary process of the government announcing its response, but we did not get a full response. We got the stage 1 announcements on 21 September, and those announcements left a $3.8 billion funding hole. They did not pay for themselves. They failed the revenue neutrality test. Then, on 11 November, we got the second stage announcements in a press release from the Treasurer which can be regarded only as in-principle announcements at this stage. Just take page 3 of the Treasurer's press release where he says:The Government will undertake consultation with interested parties to finalise the detail of the Government's decisions outlined above.So all that has been done is to outline, to take a predisposition to something of a stronger disposition, but still not give the detail—and in essence that is what we are seeking. In relation to the proposals announced in stage 2, we believe that, if they are fully implemented, they can meet the revenue neutrality test. But until we have the detail we cannot be sure.As far as this package is concerned, let me indicate what Labor does support. We support the small business measures in the package that is before us today. They will ensure that small business is not adversely impacted on by the capital allowance changes. Labor also supports the integrity measures in the legislation. They are necessary to secure the future revenue base. We also support a lower company tax rate as long as it can be fully funded. We support capital gains tax reform and, in this context, are particularly disappointed that the venture capital measures are not in the bills before us today. So there is much that reflects Labor's policy in the business tax proposals—but the funding has to add up.All parties to this debate agree that the package has to be revenue neutral. We talk in terms of revenue neutrality. What does it mean for the punters? It is simple: it has to pay for itself. It means that any dollars forgone through a lower company tax rate or through cuts to capital gains tax have to be made up through increases in collections from other areas, by increasing the base—for example, through clamping down on tax avoidance and through removing other legitimate concessions such as capital allowances. The reason the package has to pay for itself is simple: it is the GST. Labor said that if we did not have the GST we could embark on a package of business tax reform that did not have to be revenue neutral but that if they as a government were going ahead with their GST—as they did, and we fought them all the way on that—if they were going to implement a GST, then it had to be revenue neutral. That is not just our test; it is also the government's test and a test that the Democrats are insisting on.Since the GST is now a reality, the package has to meet the test. It is something, as I said, that all parties agree on. Labor will not be compromising on this issue, nor can the government. The Timor commitment further reinforces the necessity for the package to pay for itself. On the issue of Timor, the Medicare levy has become the first test of the government's fiscal strategy and the great new tax system for the 21st century. It has failed that test. We all remember the Treasurer's Blue Room press conference. `With this great new tax system in place,' he said, `we won't need to make any more changes for another 50 years.' And now, two months later, and seven months before the GST even comes in, it has changed: we have got a new tax—a new tax to plug a hole in the great new tax system. This system of such significance that we would not have to alter it for 50 years has been found wanting in two months.0K6BARTLETTMr Bartlett—You would have planned ahead!DT4Crean, Simon, MPMr CREAN—Of course, we support our commitment to Timor and whatever measures are necessary to fund them. I notice by way of interjection it was said, `You would have planned ahead!' I tell you what would happen: any sensible householder knows and anyone running an economic budget knows they have to prepare for the unforeseen. Because unforeseens do and can happen. They would build ballast into the system. But, of course, the government blew the ballast with the dirty deal done dirt cheap with the Democrats. It is very interesting that the Prime Minister says that they need a new tax system to cover a $1.1 billion threat to next year's surplus. That is what the Prime Minister said when introducing this legislation. Understand the point: `We need to introduce this new tax, this new addition to the Medicare levy, to plug a $1.1 billion threat to next year's surplus.' But the dirty deal done with the Democrats cost the same surplus $1.8 billion, and at the time they said that no change was needed to the tax rates. What shallow inconsistency by this government—a government whose fiscal stance has been found wanting at the first unexpected incursion into it.I come back to the question of the package that is before us—the business tax package. It is not the business tax package as a whole, it is only part of it, because the package at this stage is incomplete. It involves legislation which covers some of the stage 1 announcements, with the balance of announcements still not before the parliament; various proposals from the ANTS package—the new GST package—which the government has stated it will modify significantly both in scope and in timing, which also is still not before the House; and a variety of announcements from stage 2, that is, press release No. 74 of 1999, none of which is before the House and many of which are still subject to consultation to settle the detail.Understand this: the government is asking the parliament to come to a view about the whole package satisfying the revenue neutrality requirements without providing to it the whole package and the details of the whole package. That is what we are essentially confronted with. But we are also confronted with the need to give certainty to the business community about their investment intentions. It is from that certainty that investment decisions are made, that the economy grows, that we correct the current account and that we create jobs. It is for that reason Labor has always said it will support a bipartisan approach to business tax reform if it is about achieving those objectives.It is interesting also to note that business has been urging the government to negotiate with Labor on this package. We know the Treasurer does not like negotiating with anyone. We saw that through the GST debate when he was forced to negotiate with the Democrats and then pulled off the negotiating team because he had this annoying habit of infuriating them—strange about that; sounds like the Treasurer to me. The Prime Minister had to take over; he had to negotiate. The Treasurer has not got a disposition to negotiate, but he is being urged in the interests of certainty to negotiate with us. He can play his games as to whom he wants to negotiate with. I just state here in this parliament that our offer is genuine. The reason our preparedness to negotiate is genuine is quite simple: if business is going to make those long-term investment decisions, it needs to know it is doing so with a background of policies that are supported not only by the government of the day but also by the only party that can become the government of the day. It is not a question of just getting the numbers through the Senate; it is a question of ensuring the integrity of the package and that it is support ed by both sides of the parliament. That is why we need certainty.The electoral cycle—our political process of three years—is too short. I know voters might think, from time to time, that elections are not often enough, but the truth of the matter is that, if we want planning, electoral cycles are too short. We should be approaching in a bipartisan way agreement to change that.0K6BARTLETTMr Bartlett—Hear, hear!DT4Crean, Simon, MPMr CREAN—I am pleased to hear that there is acknowledgment of that point from the other side. But short of doing that, the next best thing is to try to get bipartisanship around the issues that the parties can agree on. That is what we are offering. But I tell you what: anyone who has been involved in negotiations—and I have been involved in a few in my time—knows that it takes two to tango. What you do not need is people playing games, people sneering, people smirking and people talking about who is more relevant than someone else. They are cheap political points—he might think they are effective, but they seem to be wearing very thin with his own side at the moment. They are certainly not cutting with the business community, I tell you that. We hope that, in the discussions we have at midday or later today, we can progress the negotiations. The negotiations we have had to date have been constructive and amicable, but I do not know why this person cannot bring himself in public fora to demonstrate a little bit of self-control.The Treasurer still has not satisfied the test that he set for his tax package to get bipartisan support; he still has not filled the hole that he created in stage 1. To fill it we have from the Treasurer only that press release. Everyone who follows tax law knows that the devil is always in the detail. If you get the detail wrong, loopholes emerge and smart tax planners drive trucks through them. Accordingly, we asked for nothing more than the detail upon which we can make our assessment and upon which we can cut the deal. But we are not going to cut it on a wing and a prayer, and we are certainly not going to cut it on the basis of the Treasurer simply saying it is his intention to do it. If anyone has any doubt about the significance of that intention, look at his position on trusts—a position that was announced almost 18 months ago, just before the election in August last year. It was a commitment to change the law relating to trusts. We still have not seen the legislation or the detail and we know—because there are daily reports—people are seeking to get the Treasurer to water down that commitment.Today on the AM radio program he was asked a straight question on this—`Will you pass it as you announced?'—and he would not answer it. He simply said that discussions are going on. That is 18 months, and we are being presented with essentially this climate: pass all the goodies now, pass the cuts to company tax rates and pass the cuts to capital gains tax, which the government says are fully funded but `We're not going to really show you the detail by which they're fully funded'. Whenever have we been able to make sound tax and fiscal decisions in this place without the details being spelt out in documented evidence—not on the basis of press releases but on the basis of documented evidence backed by the Treasury with the detail fully known?This is one decision which is crucial to the whole integrity of the package. It is crucial that it meets the revenue neutrality test. But clearly there is a lot of detail that still has to occur. For example, the alienation of personal services income is going to be critical to the revenue effect of the measures in the future. John Ralph has said that unless something is done in this area the revenue that will leach means we will lose up to $3 billion per year. That is a lot of schools and hospitals, and this is the government's tax expert advising it about the potential problem.The Treasurer has indicated he wants to do something about this, but he has not given the detail. For example, he said `detailed criteria' are still to be developed. That is one decision that is crucial to our coming to grips with the revenue neutrality. Even Senator Murray acknowledges this reality, because in his minority Senate inquiry report he states:. . . because the final legislation has not been drafted, and further concessions and exemptions may be granted between the announcement and passage of the final law, it is difficult to comment on the fiscal effects.That is absolutely right: without the detail it is impossible to be sure of the revenue effects. The Senate inquiry has found significant shortcomings in this tax package. The Democrats have estimated them at $1.5 billion. Primarily, that hole that has to be filled comes about because of the unrealistic assumptions about behaviour associated with the capital gains tax, the unlocking effect, and the enormous threat of revenue leakage arising from the CGT proposals.I want to go to the revenue leakage aspects, because they go to the notion of the amendment that I want to move. We want to plug the hole that potentially opens up because you halve the capital gains tax rate and you have it significantly below the marginal tax rate. Plenty of tax practitioners have highlighted the problem associated with this. I have not got time here today to go through it, but this is a problem that everyone acknowledges. Tax avoidance opportunities have to be countered by anti-avoidance provisions. That is the only way we can protect and ensure the integrity of the revenue base. I am proposing an amendment, which I have circulated in my name, that essentially goes to this point. It is an amendment to the general anti-avoidance rules, part IVA, to make sure that conversion schemes, whereby people convert their income to capital gains, are caught. This amendment seeks to ensure a scheme which results in a tax benefit from converting income to capital gains is caught.This amendment was drafted with the assistance of the former Commissioner of Taxation, Trevor Boucher. He was the tax commissioner who, under Labor, cleaned up the rampant tax avoidance that proliferated under John Howard's treasurership—the bottom of the harbour schemes—and he was attacked and pilloried for his efforts by some in the coalition, most notably the then Senator Bronwyn Bishop. Mr Boucher knows about successfully dealing with tax avoidance and he knows the potential drain on public resources if it is not effectively dealt with. An amendment dealing with this conversion problem is not sufficient to plug the revenue hole in the package, but it is essential to ensure that the hole from the bogus realisations figuring does not explode due to tax avoidance. It is about securing the integrity of the base into the future.There is another area that we are concerned about and I will briefly mention it. Accelerated depreciation is being traded off for the lower company tax rate, and we are told that companies who have long-term projects can apply on a case by case basis. There is no funding for the case by case and we would be interested to know how that is to be paid for. So, if the Treasurer can bring himself to deal with Labor and can put outcomes ahead of politics, even in the business context, we can have a deal. Understand the simplicity of the position. He has been offered two choices: a choice where the Democrats are saying, `We'll pass your package only if you change it,' and a choice where Labor is saying, `We'll pass your package if you implement it in full.' Those are the choices, and it would be a pretty dumb person not to go for the latter. But if he is to go for the latter he has to give us the detail. He has to indicate the circumstances upon which we can make the assessment that that which he says he will do he will do. If he does that, we will pass it. (Time expired)10:43:0012478Bartlett, Kerry, MPMr BARTLETT0K6MacquarieLP10—Mr Deputy Speaker, I am somewhat encouraged by Labor's discovery of revenue neutrality and its commitment to fiscal responsibility, but you would forgive me for being somewhat sceptical. Certainly over the last few years of the former government we did not see any great commitment to revenue neutrality or to fiscal responsibility. It certainly did not seem to be a high priority on its list—a government which left us with a $10.3 billion deficit, which in its last five years caused Commonwealth government debt to rise exponentially from $20 billion to $97 billion, which showed no commitment at all to revenue neutrality, which showed no commitment at all to fiscal responsibility and which showed no commitment to keeping the budget in surplus or to be able to even start to pay its way on its grossly profligate expenditure. Yet now we have this sudden conversion and this supposed sudden commitment to fiscal responsibility and, in the case of this package, to wanting to see revenue neutrality. Well, I would be encouraged if the sincerity was there, Mr Deputy Speaker, but you can understand my scepticism.The legislation before the House is another step in achieving fundamental and far-reaching reform of our taxation system. This package of legislation is the result of widespread community and business consultation which has taken in all of the affected partners—small business, medium business, large-scale business, farmers and other interested community organisations.The aims of the government's response to the Ralph review of business taxation are several. It is our commitment to vastly improve the system of business taxation in this country in order to achieve a couple of most desirable outcomes. Firstly, it will make us more competitive internationally by significantly reducing company tax rates and by significantly reducing compliance costs for business. We cannot compete in a global economy when our corporate tax rates are not competitive. We cannot compete in a global economy when our businesses—small, large and medium—are burdened by unnecessary compliance costs. The other outcome from these changes to business tax will be an increased level of saving and an increased level of business investment. As a result of increased business investment, we will see sustained economic growth that will lead to improved living standards and improved employment opportunities.The changes included in this legislation build on the significant improvements already legislated under the new tax system passed through both houses of parliament earlier this year. The changes include significant reductions to personal income tax of $11 billion. Reduction in personal income tax was opposed by Labor. Labor was opposed to giving cuts in personal income tax to a large number of Australian income earners. The changes will reduce the complexity and compliance costs associated with an unworkable, anomalous and outdated wholesale sales tax system and will give assistance to businesses by cutting around $8 billion a year from the cost of doing business in this country. The changes improve our international competitiveness by cutting some $4 billion a year from export costs. In all, the changes that we have already legislated will create a fairer, simpler, more equitable, more efficient and more modern taxation system.The changes incorporated in the legislation before the House today will further improve our taxation system. In many ways they parallel some of the improvements that will arise out of the new tax package. The changes in business tax will reduce complexity, and they will reduce compliance costs. They will lead to further reductions in income tax rates—this time, in corporate income tax rates. They will lead to increased equity and fairness in our taxation system. They will reduce the possibilities for tax avoidance and tax evasion, and they will increase and improve the integrity and workability of our taxation system.The bill before the House today is a further indication of this government's determination and ability to move Australia forward and to undertake the necessary and overdue reforms which will benefit business, workers, and exporters. This will increase our competitiveness and the levels of productive investment in this country and it will lead to further economic growth and job opportunities.There are several individual pieces of legislation incorporated in the bill before the House today. The first is the New Business Tax System (Income Tax Rates) Bill (No. 1) 1999 . This piece of legislation lowers company tax rates not only for large businesses and medium businesses but for the hundreds of thousands of small businesses in this country. From July next year to July 2001 the company tax rate will be reduced from 36 per cent to 34 per cent. From July 2001 the company tax rate will be reduced to 30 per cent for all businesses. It is a significant cut in income tax rates, parallelling the $11 billion of income tax rates to be delivered under the ANTS package that will see 80 per cent of Australians on income tax rates of 30 per cent or less. This legislation will have businesses and farmers throughout the country benefiting by a reduction in their company tax rates from July 2001 to 30 per cent.These changes will make Australia more internationally competitive. They will give us a tax rate that is more competitive than others. We will have a company tax rate equal to Germany, Indonesia and the UK but, more importantly, it will be lower than that of many of our competitors, including New Zealand, USA, Japan, Canada and South Korea.Our company tax rate will be amongst the lowest in our region. This will encourage and increase investment in Australia. It will encourage direct foreign investment, which will increase our productive capacity in Australia. It will also encourage Australian domestic investment, so that our domestic investors, instead of looking offshore, will now be encouraged to put their money into Australian industry and Australian business, thereby stimulating growth in the economy and providing increased employment opportunities.The second piece of legislation before the House today is the New Business Tax System (Capital Allowances) Bill 1999 . This piece of legislation does two things. Firstly, it introduces a simplified taxation system for small business—for those with an annual turnover of less than $1 million. This will be of benefit to 95 per cent of businesses and 99 per cent of farmers in Australia. The vast bulk of farmers and small businesses in this country will benefit significantly from the simplified taxation system regime under which they will be able to operate from July 2001.It includes a number of benefits. It retains for those small businesses the benefits of the accelerated depreciation allowances on plant and equipment and the balancing offset adjustment. More importantly, perhaps, for those many small businesses, there are new measures under this simplified taxation system to reduce compliance costs, to reduce the burden of paperwork, to reduce red tape and to make it easier for them to get on with their business—to get on with making a living.One of the new measures under the STS will be the option of a cash accounting system to replace the current accrual account ing system. Income and expenses for small businesses will now be able to be recorded on a cash basis, not an accrual basis. That accrual basis had created extra paperwork and extra headaches. This allows not only simplification for small businesses but also the operation of an accounting system which better reflects their day-to-day recording system in their businesses and better reflects the basis on which they make business decisions. For many small businesses, the cash flow is the crucial thing—not the accrual of expenses and incomes into other years. Allowing 95 per cent of small businesses to account on a cash basis rather than an accrual basis is a significant improvement in reducing compliance costs and giving them a more workable taxation system which is more relevant to their decision-making processes.Another significant improvement is the much simplified treatment of trading stock. Some 75 per cent of small businesses will be able to do away with the burdensome need of having to do an annual stocktake thus saving them time, saving them headaches and saving them considerable money in compliance costs.Under the simplified tax system, the improvements for small business will include a simplified and more sympathetic depreciation system. No longer will there be the need for complicated, detailed asset registers, accounting for every different item and accounting for different rates of depreciation for different categories of business assets. This simplified depreciation system will allow small businesses to immediately claim as an expense the purchase of assets under $1,000. There will also be a simplified recording system for other assets with a life less than 25 years to allow a pooling of their assets and a depreciation of 30 per cent on the diminishing base of the pooled assets. This will lead to a significant saving in compliance and paperwork costs, thus saving time, saving energy and saving money for small business. The simpler tax system for small business as part of this package will begin in July 2001.There are over 5,000 small businesses in the electorate of Macquarie and I am sure that they will greatly benefit from the changes included in the simpler tax system. They will benefit from being able to save time by not having to do so much paperwork. They will benefit from not having to spend money on some of the complicated paperwork that is now being removed from those small businesses. It is yet another indication of the commitment of the coalition government to supporting small business, to encouraging small business and to making life easier for small business in our country.The second part of this bill is the package of measures for larger businesses. This includes the removal of accelerated depreciation for plant acquired after 21 September 1999. Larger businesses will no longer have the benefit of the accelerated depreciation allowance. This is a revenue measure to balance the cuts in the corporate tax rate to ensure that very revenue neutrality which we heard the member for Hotham waxing lyrical about earlier. It is a revenue integrity measure to ensure that the company tax rates are funded. The other benefit of this is that it will not only protect the revenue base but also improve the quality of investment decision making by removing a distortion that encouraged business decisions based on accelerated depreciation rates rather than on real productive outcomes. This is an improvement that should be praised.There will be other changes for larger businesses, such as the removal of balancing offset adjustments for most cases of plant disposal, thereby removing a significant advantage that some taxpayers had by deferring accessible balancing adjustments. Again, that is working to protect the revenue base. I might add that small businesses are exempt from this provision as are forced asset sales. Also, a further measure will allow taxpayers to make fresh calculations of the effective life of assets where either market forces or technology reduces their effective life, thereby allowing them to have an accounting system for the depreciation of their assets which more accurately reflects the life of those assets.The third aspect of this legislation before the House is the New Business Tax System (Integrity and Other Measures) Bill 1999 . This bill introduces a number of integrity measures which improve the fairness of the business tax system, which reduce avoidance and which will work to protect the revenue base. The main change consists of changes to the capital gains tax regime for individuals and for complying superannuation funds. There is also a simplification of the capital gains tax system by freezing indexation from 30 September this year and replacing indexation with a halving of the effective rate on nominal gains rather than allowing a full deduction on real capital gains—that is after allowing for inflation.The highest rate for individuals on nominal gains will now be 24.25 per cent and for some 80 per cent of taxpayers it will be only 15.75 per cent. Again, that reinforces the benefits that we have already ensured for 80 per cent of Australian taxpayers with a reduction in their capital gains tax rates. The system will be fairer and it will mean less distortion, thereby encouraging more sound investment decisions and making us more internationally competitive—again, attracting and encouraging real capital investment.There will be greater incentives to invest in new assets by removing the disincentive to realise capital gains—a system where individuals are discouraged from making new investment decisions simply because of concerns about high capital gains tax rates. That distortion will be removed and there will now be an encouragement to realise capital gains and to move on to further new productive areas of investment, thereby again encouraging investment and encouraging growth so vital for our economy.There are extra benefits for small business. Mr Deputy Speaker, you will remember that, under the ANTS package, we already made significant improvements for small business, which included for small business an exemption on capital gains tax for the first $500,000 of capital gains for active assets being sold for retirement or rolled over into an approved superannuation fund. Under these changes, this will be simplified and extended. In small businesses with assets of less than $5 million, people over 55 or people incapacitated will be given a total capital gains tax exemption for active assets held for 15 years or more and active for at least half of that time. So, instead of accruing to the tax department, the full gains of all of those hard years of toil and work in small business will be there for the retirement of that small business holder.The legislation contains a number of other integrity measures aimed at tightening up on tax avoidance and protecting the revenue base. We heard the member opposite talking about protecting the revenue base. It was this government that put the budget back in the black. It was this government that took measures to restore fiscal responsibility that we had not seen for 13 years. It was this government that took measures to ensure the protection of our revenue base. There are further measures in here and further measures to come in phase 2 of the business tax reform to protect the revenue base. In this legislation before the House, there are integrity measures relating to the disposal of leases and leased plant. There are measures preventing a claim both of deductions and capital losses arising from a single economic loss where business entities were able to double the claim that they made on those losses. There are measures relating to the transfer of losses within linked groups, value shifting through debt forgiveness, applying the same business test to unrealised losses, remedying defects in the continuity of ownerships tests and removing excess deductions for mining and quarrying.Already in this legislation there are significant integrity measures to protect the revenue base. In phase 2, to which the government is committed, there are further, stronger, tougher measures to continue to protect the revenue base. This government is not about to let slip the hard won gains on the fiscal front made by hard but responsible and fair decisions to restore this country's books to balance. We are not about to fritter those gains away. There are many measures in this package and many more measures in phase 2 that will protect and enhance the integrity of the business tax changes.In all, the business tax changes before the House and those to come will create considerable improvements for the Australian economy, for Australian business and for Australian workers and consumers—improvements which will parallel and build on those im provements that we already saw in the ANTS package. This legislation before the House will increase the integrity of the tax system. It will increase its fairness. It will reduce compliance costs for small business. It will reduce income tax rates for companies. It will encourage investment and thereby stimulate growth to the benefit of all in this country.The challenge here is for Labor. The challenge for Labor is to stop obfuscating, delaying, procrastinating and trying to score political points and to get back into the game. It proved itself irrelevant with the new tax package. It has a chance here to support these reforms which will be good for small business in this country, good for the economy, good for jobs growth and good for all within our community.11:03:0012482Tanner, Lindsay, MPMr TANNERYU5MelbourneALP00—There are a number of points that I would like to make in general about the business tax reform proposals, part of which are before the House today, and then move on to dealing with some of the specifics. First, it is important to acknowledge that whichever side of the House you come from it is very important for the economic health of this nation that there is some degree of certainty about business tax arrangements and that Australian businesses can make investments and decisions fairly secure in the knowledge that the broad structure of the business tax arrangements will continue to be the same. This does not necessarily apply to the question of actual rates but, certainly in the case of the structures of business tax, the need for certainty is extremely important.Second, it is important to recognise that the need for reform is not a constant—that some of the things that have become necessary to change now were not necessarily appropriate to change five or 10 years ago, and no doubt in five years time there could well be reasons for other changes. That is because the economy is changing. The nature of economic activity and production is changing, the nature of business activity is changing and there are a whole range of taxation arrangements emerging which always need to be considered. Third, it is important to acknowledge that, in overall terms, I think the Ralph report is a good report. There are specific weaknesses and particular points that I disagree with but, in overall terms, it is a pretty good effort at coming to grips with some of the major issues that face us on the business tax front. I will get to some of the issues of detail in a minute.The Labor Party, contrary to the typical rhetoric from the previous speaker, is seriously considering these issues on their merits and will ultimately make a decision on what the government puts forward in its totality. There are two key issues in our position on the Ralph package. First is the question of revenue neutrality—a bar that the government set for itself. This is not a test that we set for the government; this is a test that the government set for itself, and quite rightly. Given that the surplus is in the process of disappearing as a result of the extraordinary generosity of the government in bribing sections of the community to cop a GST, it is critical that the surplus is not further eroded by business tax reform. The government has set revenue neutrality as a key test to the reforms, and we intend to keep the government to that commitment.The second issue that is of critical importance to us is the question of tax avoidance. We will want to be satisfied that the package will not open up new opportunities for spivs to market tax avoidance schemes and erode the revenue and create new unfairness in the tax system and new biases that hurt ordinary taxpayers because they assume a disproportionate burden of the tax system. Another point that I think is worth emphasising is the question of equity. Clearly there are some equity concerns associated with the business tax reforms that are proposed by the government. However, it is important to understand that, in relative terms, these concerns pale into insignificance compared to the grossly inequitable nature of the ANTS package and the GST. What is occurring in the tax package is a massive shift in the tax burden in Australia away from higher income earners onto lower income earners, and there is simply no way around it.When the former Deputy Prime Minister, Tim Fischer, was asked about this in the election campaign, his only response was to say: `We are not communists.' In other words, people who propose to ensure that people on higher incomes bear a higher proportion of the tax burden and that people on lower incomes bear a lower proportion are communists, according to the government.I want to deal with some of the detail associated with the package, particularly, as this legislation reflects it, so-called phase one. We have seen part of the Ralph reforms being put forward by the government fairly quickly and several other key reforms being left on the backburner. Phase one involves a reduction over two financial years in company tax from the current rate of 36 per cent to 30 per cent. This will be attached to the abolition of accelerated depreciation. There is in overall terms a positive change emerging from this set of changes. It will have a positive impact, for example, on transfer pricing, which is a very common practice and extremely hard for governments to prevent or to minimise. So the change will be beneficial there. It will also be beneficial, in a headline, psychological sense with respect to inward investment in Australia, by having a reasonably competitive company tax rate. We should not overstate the importance of that issue. Nonetheless, we have to acknowledge that it is significant. This will be a useful test of how important that issue is relative to other considerations in determining investment behaviour.There are some concerns about the abolition of accelerated depreciation. It is important that we acknowledge them here today. In particular, there are concerns about the government's proposed approach to dealing with the acknowledged disadvantage that is suffered by people proposing to invest in long-term major projects where returns may be quite some time emerging. The government's approach would appear to be a case-by-case approach of providing some sort of assistance or relief for people proposing to invest in those major projects, which does not fill those of us in the opposition who have a concern about these issues with any great degree of confidence that there will be a rigorous or objective consideration of the issues that are involved in providing some sort of tax relief or grant relief for people investing in those projects.Nonetheless, it is important to have a tax system that by and large is activity neutral. We should not be trying to select particular kinds of economic activity and saying that this kind of activity is more appropriate or more important or more beneficial than that kind of economic activity. Therefore, it is an important principle that to the maximum extent we can—we will never get it purely right—we should have a tax system that is activity neutral.There are certain differences between particular kinds of activity, as I have referred to, with respect to major projects—for example, where there will need to be differences in the tax system. That is acknowledged. Nonetheless, getting rid of accelerated depreciation and having a lower company tax rate in a broad sense is a positive step. But some significant issues still need to be dealt with in regard to those major projects and particular kinds of activity will be disadvantaged, which I do not think the package deals with adequately.There are a number of other changes, including exempting the income earned from pooled development funds by superannuation funds from capital gains tax and exempting foreign pension funds from CGT. These are good changes which should encourage venture capital. The cash refund for people on lower tax scales who have unused dividend imputation credits is clearly a positive change and getting rid of the inter-corporate dividend rate on unfranked dividends and allowing consolidation of 100 per cent owned companies for accounting purposes for tax are basically good initiatives.I turn to the capital gains tax, which has been the main focus of controversy about the package: the reduction in the headline rate of capital gains tax to 24¼ per cent and the abolition of indexing and averaging. There are a number of other specific changes, as mentioned by the previous speaker, including the capacity for small business holders with assets held over 15 years who are aged over 55 to pay no CGT and rollover relief for scrip for scrip takeovers and the like. Those are positive proposals.It is important to note with respect to the reduction in the capital gains tax headline rate that close to 70 per cent of the notional reduction in revenue that that will produce is clawed back by the abolition of indexation and averaging. There has been a lot of confusion in the media about the nature of these changes and some uninformed comment. What it means in practice is that, for a person holding an asset to realise that asset under the new regime and get a lower actual rate of tax than they would have got under the old regime, they have to achieve a return or an appreciation in value that is double the rate of inflation for the relevant period.That might not sound like a particularly tall order in situations where you have 1½ per cent or two per cent inflation, but when inflation returns to five per cent plus, as it will next year with the GST, and when after that time it is still at least three to four per cent, and may even stay at five per cent, then it will be a very different story. Then people will need a 10 per cent increase in the total value of their asset in order to pay a lower rate of capital gains tax than they otherwise would have paid. Theoretically this change should push people into investing in assets which have a high revenue generating capacity, a higher likelihood of appreciating in value and the like. Whether that will happen in practice is anybody's guess. Taxing nominal gains, as this proposal intends to do, clearly has some difficulties.There are some problems with the capital gains tax approach the government is proposing. It is important to acknowledge that capital gains are different from week to week income, the most obvious of them being that they can only be used on realisation. If you want an illustration of the difference, consider the pattern of behaviour that emerged in Argentina only a little more than a decade ago. Hyperinflation was so bad that workers, when paid, would rush off to spend their pay packets in total as quickly as they could because prices were rising so quickly that, by the time they got to the end of the week for which they were being paid, prices were 20 to 50 per cent higher than they were when they got paid. That illustrates that timing in receipt of income relative to when it is earned or when it is accrued is a critical component. Therefore, there is a considerable difference between being paid on a regular basis and realising an asset over an extended period. The realisation rate that is purportedly going to increase substantially as a result of the reduction in the headline rate of capital gains tax I think involves an incredible leap of faith on the part of the government. Figures in the vicinity of $500 million additional revenue are factored into the package on the basis that, particularly in the early three or four years of the change being implemented, you will see a much higher rate of asset realisation. This is based on some rather dubious research in the United States which was repudiated by capital gains tax experts from the United States in the recent Senate committee hearings. So I think we have to treat that figure with a great deal of scepticism.However, it is important to acknowledge that there is likely to be an increase over time in the rate of realisation. Why? Because people hold assets with potentially two objectives in mind: one is the earning of revenue on a continuing basis from the asset, and that is not all assets of course, but most, and the other is realisation and capital gain at the end of the period for which you are holding the asset. If you change the balance in the taxation regimes between those two sources of potential return from the asset, clearly you are likely to change behaviour as a result of changing that balance. If, in effect, you do have what is ultimately a relatively marginal reduction in real terms of the capital gains tax liability, that is likely to make holding an asset for purposes of realisation slightly more attractive and likely to make earlier realisation slightly more attractive. I expect that you will see a marginal increase in realisation rates as a result of this change that maybe will produce additional revenue of $100 million a year, not $500 million a year.Then we turn to the avoidance question, which is a serious concern. It is estimated that up to $180 million in the worst of the various years that the figures are provided for would be lost as a result of increasing incentive for people to convert income into capital and therefore pay a lower rate of tax. The answer from John Ralph to the concerns that the Labor Party and others have raised about the prospect of a return to the bad old days of the late 1970s and early 1980s, when we had no capital gains tax and when we had most of the big end of town converting artificially income into capital in order to avoid paying any tax at all, is to say, `Yes, but the new method of calculating company tax will prevent that from occurring because it includes valuation of assets at the beginning and end of the financial year.' I think that is an interesting proposition, and I am quite interested in the new company tax calculation method. I think it is probably a pretty positive step forward. However, none of us can be sure what that is actually going to lead to in practice, and it is important to ask the question, if John Ralph is right: why is the government factoring in up to $180 million worth of lost revenue as a result of avoidance that will occur with the new capital gains tax regime?On this particular point, I think it is important to acknowledge that there is some inequity, some regressive shift involved with the capital gains tax changes, particularly for self-funded retirees who will lose the benefit of averaging. They will realise that maybe the one major asset that they hold will suddenly shoot them up into the top marginal tax bracket so that they will not get the benefit of being able to average that over a particular period of time and so will have to pay all of that additional tax within the one financial year.I will turn now to the phase 2 proposals that are still a bit light on detail and I think are critical to the whole package. I think that taxing trusts as companies is a good proposal. It is most amusing to see that finally the government has woken up to the fact that collective investment vehicles like cash management trusts should not be included in this proposal. I can tell you that there was a considerable amount of head shaking and head scratching in various investment banks and other sections of the financial community at the fact that the government did not seem to acknowledge the existence of these collective investment vehicles. Fortunately it has woken up belatedly and it has managed to avoid including them in its proposal. It is significant given that we have seen that trusts are a major tax avoidance vehicle: 19 frontbenchers in the government have family trusts and, in amongst all the posturing and the waffle that you get, there is no question as to why those family trusts exist—it is simply to minimise tax. It is an opportunity that most ordinary Australians do not have. So, clearly, taxing trusts as companies and eliminating that particular vehicle for avoidance, for rorting tax obligations, is very important.As I mentioned, the new method of calculating company tax which is based on cash flow over the financial year and valuation of assets at the beginning and end of the financial year is designed to substantially reduce the multiplicity of concessions that are built into the voluminous tax legislation as we currently have it so that we will get major companies paying a rate of company tax that is closer to the nominal headline rate than is currently the case. As I said, whether that is what eventuates in practice is still to be seen but, nonetheless, on the face of it, this appears to be a very worthwhile, major step forward in both simplifying and improving the equity of the existing company tax arrangements.Next, there is the change to dependent contractors to ensure that the rapid proliferation of people who are in reality employees, de facto employees working under dubious arrangements that are artificial independent contractor arrangements, will be wiped out or substantially reduced. It is an important step forward. It is something that Labor started the process of doing in the latter part of its period in office. We put legislation forward which did not ultimately proceed because we lost office. It is very important to protect the integrity of the revenue as well as ordinary taxpayers who are paying PAYE tax but do not have the opportunity to engage in artificial tax avoidance arrangements through creating artificial contracts where they are given the flavour of an independent contractor when in reality they are not. It is very important that we get horizontal fairness across the system and that people in roughly the same circumstances are paying the same tax. That principle is massively offended at the moment, particularly in the construction industry, but it is starting to spread to many other forms of economic activity.Finally, there are some very important anti-avoidance measures associated with limiting the deductions that people can claim on obviously non-commercial activities like certain kinds of hobby farms and the like; prepayment of interest prior to the financial year in which particular activities are going to be taken so that you get a greater benefit from deductions; a strengthening of part 4A of the tax act, which is the main anti-avoidance provision; and various other specific things. All of these things are good. I think that there is a case for strengthening the general anti-avoidance provisions to particularly protect the revenue from misuse of the capital gains tax provision, but that is something that we will be pursuing in both the House and subsequently the Senate.The Labor position on these issues is to emphasise two points: firstly, revenue neutrality, which is fundamental to ensuring that we do not see a further massive inequity emerge in the tax base as a result of this package—we have already seen a gross inequity inserted into the tax base as a result of a Liberal government behaving like a Liberal government, shifting the tax burden away from higher income earners and imposing it more on lower income earners—and, secondly, avoidance.Be warned: if we return to government, as I expect we will at the next election, and these changes have gone through and have produced an outburst of avoidance, Labor will act to fix those problems. We do not yet have detail on these phase 2 proposals and it is still very unclear as to whether anybody can have any confidence in the revenue neutrality of the packages put forward. As I mentioned, we need to pursue the anti-avoidance measure.There are some very dodgy figures in this package. There is a growth dividend estimate of $500 million of revenue, based on the assumption that there will be higher GDP as a result of these changes. I regard that as an heroic assumption based ultimately on nothing better than guesswork. For all the posturing of the Treasurer and the previous speaker, the member for Macquarie, Labor will be considering these issues on their merits because we believe it is important to get stability and certainty into business taxation to ensure fairness, to ensure that the revenue is protected and to ensure that the system reflects the realities of economic activity in our society today and for the future.The Democrats, of course, are engaged in their usual posturing about various things, but the odds are pretty high that, as they did with the GST, they will simply cave in at the last minute to whatever the government wants, but produce a dog's breakfast on the way through, as they did with the GST package, and the equivalent of chooks with thermometers as an unfortunate addition to Australian businesses as the price for their acquiescence. I would urge the Treasurer to take great caution in dealing with the Democrats because you could end up with some very peculiar outcomes as a result.I commend John Ralph and his committee, and all people who worked on the report. Although, as I said, I think it has some deficiencies and some points of detail with which I disagree, in overall terms it is a very worthwhile attempt at grappling with some very important issues associated with business taxation in Australia. Labor will be addressing these issues on their merits. We urge the government to do likewise. (Time expired)11:23:0012486McArthur, Stewart, MPMr McARTHURVH4CorangamiteLP10—I am delighted that the member for Melbourne is agreeing with the broad thrust of the Ralph report and that, as I hear from him and from the member for Hotham, the opposition will generally be supporting the measures before the House today. I note his comments on revenue neutrality. It is surprising coming from the member for Melbourne and from members opposite when the Keating government were able to bring up $96 billion in government debt—there was no revenue neutrality in that particular set of accounts over the last five years of the Keating government.I accept the view that the inflationary impact on capital gains tax is some concern, to which I will allude later. Concerning the shadow Treasurer's comments on avoidance, all governments have difficulty in drafting tax legislation to ensure no avoidance takes place. Members of the opposition can be assured that this set of proposals is drafted in a way to make sure that avoidance is not the key issue. These proposals are drafted in such a way that they are straightforward and there is less capacity for individuals, companies and other taxpayers to bring about schemes and arrangements to provide evasion of their taxation liabilities.I would like to refer to the Ralph report and the genesis of this very important revolution on business taxation. This government has been courageous in the way in which it has encouraged the Ralph report to be brought into being, for having the recommendations of that report brought forward and then the consequent legislative program that will implement those recommendations.John Ralph and his committee, in my view, have basically attacked the fundamental difficulties facing business taxation. In a seminar at the library here, his basic message to members and senators was that the taxation system, fundamentally, in a business sense, should reflect the accounting system and that all the anomalies, add-ons, additions and amendments that have occurred in the tax act over the years, because of interest groups and political pressures, should be eliminated and a newer modern tax system should be introduced. I note that the member for Melbourne supports that thrust.On that foundation, a whole new approach has been generated to the area of business taxation, so that those people who generate the wealth in Australia will know exactly where they stand, how much tax they have to pay and that they are world competitive.In his remarks in the Ralph report, the chairman says that tax legislation should be durable, that is, not open to all these amendments from time to time as interest groups gain a particular short-term advantage. The policy drafted in the Ralph report and in other reports previously will be implemented into a system of taxation that is understandable and able to be executed by the Taxation Office. There is a more neutral system between similar activities, that is, investors, entities such as trusts, about which there has been a lot of debate, and companies, so that they are taxed in a similar manner and the measures are considered to be fair across the community. It is important to those members in this House representing individual taxpayers and to other persons who represent the business sector that everyone feels they are getting a fair go.The chairman also remarks that the tax system should be easy to understand. Under the Hawke and Keating governments, the taxation system became incomprehensible, especially with the addition of the capital gains tax legislation. He continues that it is a simpler system for small business. We have 800,000 small businesses in Australia and many of them really do not understand the compliance regulations that they need to handle in the business taxation system. This is an attempt to make it easier for them, especially in the areas of capital expenditure, depreciation schedules and the like. Concerning the capital gains argument, he says that the regime should become internationally competitive, to encourage people to invest and to invest in Australia.Fundamentally, Ralph and his committee had a very sound approach to how this whole problem should be addressed. It is worth noting that they have been the first group to address the problem. Previous governments, on both sides of politics, have never fundamentally addressed the difficulty of business taxation and rewriting the tax act. This is a very serious attempt to undertake that project.It is worth noting the elements of the Howard government's tax reform—the indirect tax system and ANTS, A New Tax System—that have been put before the House so far and on which there has been a lot of debate. The Australian people agreed that there should be a new, better tax system—that is, a 10 per cent goods and services tax. We should note that, whilst there was a lot of public debate about the implementation of this system, Australia became a modern nation with a modern taxation system, which those opposite will utilise when they get into government in the distant future.A key measure is the abolition of the wholesale sales tax, a tax which is incomprehensible to those who use it. There are reductions in fuel excises for petrol and diesel. There is also the abolition of the financial institutions duty. It is very important for Australia to be internationally competitive in stock market transactions. There are changes to business entities, which we will discuss when debating this legislation. There is also the taxing of trusts as companies, the introduction of deferred company tax arrangements, the introduction of refundable imputation credits and other matters affecting the life insurance industry. It is important to note the desire of the government to tax all groups and entities in the same way, including companies and trusts. I put on the record my support of that proposal. The Ralph committee's report moved to a more consistent tax treatment of businesses, with the prospect of a 30 per cent company tax and reductions in capital gains tax.I turn to the reductions in the business and company tax rates. This has been a matter of considerable debate both by members on this side of the House and by the previous government. To be fair to the previous government, it reduced the level of business tax and company tax rates. This government has moved to further reduce that unfair burden on productive enterprises in Australia and make them internationally competitive. The proposal before the parliament is to reduce the rate to 34 per cent in the first tranche—2000-01—and down to 30 per cent in 2001-02 for the long term. The key argument is that the 30 per cent company rate will then become internationally competitive. It will ensure that Australian businesses are getting a rate that they can cope with rather than 42 per cent and higher. The Treasurer is on record as saying:A 30 per cent tax rate of company tax will be internationally competitive and bring Australia's rate more into line with the rates of other countries in the Asia Pacific region. This will increase Australia's attractiveness as an investment location, strengthening Australia's prospects for investment and economic and jobs growth.That is the Treasurer's and the government's position. It is fairly straightforward. Those opposite would fundamentally agree with that proposition. The 30 per cent tax rate has structural advantages. It will align the company tax rate with the 30 per cent marginal tax rate applicable to most individual taxpayers. Again, I support and emphasise that point. We have company tax rates relating to individual tax rates. Under the new reformed system, 80 per cent of Australian taxpayers will be paying 30 cents in the dollar. We have a fundamental reform taking place here. We have a situation where foreign investors can invest in Australians' portfolio stocks and do that knowing the tax rate will be compatible and that thereafter tax return from Australian investments will be as good as in other countries. Australia's commercial base, the stock market, again will be enhanced, particularly with our time line and the integrity of our stock market system. This measure will ensure that investors from the Asia-Pacific basin will move to invest in Australia. If they do not invest in Australian companies, at least they will invest in the Australian Stock Exchange knowing that it is competitive. I seek leave to incorporate in Hansard a table showing an internationally competitive company tax rate. I have spoken to the minister at the table.Leave granted.The table read as follows—Mr McARTHUR —I thank the House. I refer to the table which sets out very clearly the relative company tax rates. The new proposed rate has Australia at the bottom of the table, probably at the most competitive end. When we look at those countries which have high company tax rates, we find that Canada is at 44 cents in the dollar; Japan is at 42; France is at 40; the United States is at 35; New Zealand is at 33 and Korea is at 31. There are a raft of countries that will now be competing with Australia, including Thailand, Indonesia, Germany, which are all at 30 cents. It is worth noting that the dynamic economies of Singapore and Hong Kong have low company tax rates, with Singapore at 26 cents and Hong Kong at 16 cents. We see that those countries that are making progress have taken the tax burden off companies and have ensured that those enterprises that are developing jobs and creating wealth for their countries do not have an undue burden of company tax placed upon their operations. It is worth noting the impact on the budget of these measures. In the year 2003-04, nearly $4 billion will be reduced from the Treasury's income. It gives a clear indication that these measures will have an impact and that approximately $4 billion will be returned to Australian companies by way of these lower tax rates.I return briefly to the point of accelerated depreciation, the abolition of which assists in the revenue neutrality of the proposals before the parliament. The abolition of accelerated depreciation is really bringing forward a future tax collection. There has been a great debate amongst the miners, the oil explorers and the farmers about accelerated depreciation. I am pleased that that debate has taken a more sensible view, that accelerated depreciation was a way in which governments tried to encourage big investments for big projects but in the longer run those accelerated depreciations did not reflect the true depreciation and led to, in many cases, unfair and skewed investments. I am pleased that the mining and farming sectors have come to appreciate that accelerated depreciation was not all it was cracked up to be and that the trade-off for lower company tax rates and lower capital gains was the removal of these sometimes extraordinary accelerated depreciation rates. In the case of primary producers, it meant that they often invested unwisely in assets to seek the tax advantage and yet were not utilising those particular assets in the best possible way.I turn to the matter of capital gains tax, which has been a matter of considerable debate in this parliament. I note that the recommendations of the Ralph review have been largely implemented in the legislation before the parliament. Fifty per cent of capital gains tax will be taxed at an effective rate of 24.5 per cent. That is a dramatic reduction in the actual rate of capital gains tax. Two-thirds of the capital gains on superannuation funds are being taxed at a concessional rate of 10 per cent, which will be a big advantage to hardworking Australians who have their funds in superannuation funds. Capital losses are to be offset against nominal gains. Entity taxation is to be introduced and trusts will receive the same treatment as companies.Averaging is to be abolished. That is a fairly key issue with the new provisions of nominal taxation without indexation. The average being abolished means that taxpayers who make a capital gain will be forced to pay the capital gain at a lower rate at the time it takes place. There will be concessions for small business. Fifty per cent of goodwill will be exempt from capital gains tax if the assets are actively engaged in the business. Again, I support those rollover provisions and was very pleased when the government introduced them earlier in its term.Small business will get a full exemption for disposing of business assets held continuously for 15 years where the taxpayer is 55 years old or more and intends to retire. Again, this is valuable. It reflects a philosophy of ensuring that capital gains tax is a tax on long-term capital. If people care to move away from their business, they will be protected in retirement. Rollover relief for scrip for scrip takeovers between companies and trusts is a desirable outcome for people investing in the share market. The period of ownership will recommence for those with assets held for 15 years or more that have been subject to a rollover, other than due to compulsory acqui sition, loss or destruction or ownership affected by marriage breakdown. That provision is helpful in an unusual set of circumstances.I want to make some general comments on the capital gains argument. Australians are moving more and more into share ownership. We are now one of the highest share ownership nations in the world, following the sales of Telstra, and the Commonwealth Bank under the previous Labor government. Madam Deputy Speaker, you would recall that the Commonwealth Bank sale was against the policy of the government at the time. Individual Australians now have a share portfolio either in their superannuation scheme or in their own name. Middle Australia is now liable for capital gains tax when they realise their assets for one reason or another. That contradicts former Prime Minister Hawke, who once promised that there would never be a capital gains tax. The very next time he was elected, he introduced a capital gains tax.I note for the record that both sides of the parliament have not been prepared to put a capital gains tax on domestic dwellings. Any intelligent commentator would accept that that is politically difficult. It provides a point of discussion. Some of the largest assets of individual Australians are totally exempt from capital gains tax.It is interesting to note that 80 per cent of taxpayers earning less than $50,000 paid capital gains tax. It is interesting that they have contributed. But the bulk of revenue from the capital gains tax comes from wealthy individuals. Even so, a great number of individual Australians paid some capital gains tax as a result of completing their tax form.The Hawke government, in introducing the capital gains tax, provided the indexation measure. It was a point of political argument which protected individuals—thank the Lord it was there—from being taxed on inflationary gains. Under the new set of arrangements, capital gains tax will be calculated on nominal gains but at only 24.5 per cent. People can argue about that. I have a concern, as the member for Melbourne does, that in times of high inflation individual Australians will be taxed on inflationary gains.Finally, I will quote from those groups that are supporting the lowering of the capital gains tax rate. The Australian Chamber of Commerce and Industry had this to say:The lowering of the Capital Gains Tax rate—other proposed changes to the capital gains tax are referred to—. . .are amongst the measures which will improve both the level of investment and the flexibility with which capital can be shifted into more productive forms.The Australian Biotechnology Association said:The CGT reform will offer the necessary internationally competitive, tax-based incentives for accelerated investment in Australian innovation.The National Farmers Federation has had a long history of debate in relation to the capital gains tax and probate duties. It had this to say:On first reading, the removal of Capital Gains Tax on assets held for more than 15 years by individual retiring farmers is the highlight of the package.I strongly endorse that sentiment. It went on to say:We estimate that nearly 70 per cent of farmers have owned their farms for 15 years, and this single initiative will provoke sighs of relief from the majority of farming families across the country.Particularly welcome changes include the exemption of 50 per cent of all gains from CGT, with a further exemption for active small business assets, and enhanced rollover relief into superannuation funds and acquisition of new business assets.Finally, it says:However, the removal of indexation of capital gains may still mean that some farmers could be disadvantaged under the changes, if their assets increase in value at a rate less than the inflation rate. Under the existing system, these farmers would pay no CGT.There you have it. The National Farmers Federation is agreeing broadly with the sentiments of me and the member for Melbourne on the inflation indexation argument. Hopefully, there are no unintended consequences of the proposed legislation before the House. It is obviously fairly complex. Previous governments have had difficulty legislating and getting it all correct.I commend the legislation and the Ralph report. I commend the courage of the Treasur er and Prime Minister in bringing about the best business reform that this parliament has ever seen. (Time expired)11:43:0012491Fitzgibbon, Joel, MPMr FITZGIBBON8K6HunterALP00—I am now overwhelmed with confidence with regard to these business tax system bills, having heard the member for Corangamite say he hopes that there will not be any unintended consequences flowing from this package. That overwhelms me with joy and confidence. I am sure that those members of my small business constituency are similarly overwhelmed with confidence as a result of those comments. The group of bills we are considering in this cognate debate today seek to implement the government's so-called new business tax system. In his second reading speech on the New Business Tax System (Income Tax Rates) Bill (No. 1) 1999 , the Treasurer claimed that, as a result of the implementation of the Ralph reforms, Australia will have a world-class business tax system.As the shadow Treasurer has indicated, the Australian Labor Party supports tax reform. We support any attempts to make Australia's business tax system more internationally competitive in the new global economy. Every tax system must be continually modified to meet the changing domestic and external circumstances. It must be adjusted to ensure that its operation does not distort investment decisions to the detriment of the economic and social wellbeing of the nation state's citizens. It must be modified to maintain equity in terms of its wealth and distribution effects. It must be continually strengthened to avoid abuse by those in a position to exploit tax loopholes.In government, Labor did that all continuously and consistently for 13 years. It reduced marginal income tax rates. It reduced the company tax rate. It broadened the income tax base by introducing the capital gains tax and, of course, the fringe benefits tax. It made our tax system more relevant and efficient by introducing dividend imputation. It fixed up the now Prime Minister's legacy—the bottom of the harbour schemes, which were products of either his incompetence or his unwillingness to take on those who were perpetrating them. Bill Hayden lost an election when from opposition he very bravely talked about dealing with some of these issues by introducing a capital gains tax. It is very brave indeed to talk about introducing a tax, even if the principle underpinning it is very sound. That principle is that, no matter how your earn your income, whether it be by the sweat of your brow or by buying low and selling high, you should pay your fair share of tax. It was only the findings of the Costigan royal commission that developed or facilitated the sort of community support that made it possible for the Hawke government to finally bite the bullet and put that principle into effect.Today there exists a very great fear that these proposals before the House might be the beginning of the winding back of that important principle. The list of those who hold those concerns includes organisations such as ACOSS, Anglicare and the Brotherhood of St Laurence. Indeed, many in this House on this side at least—and I am sure on the government side—including me, share those fears.0V5SLIPPERMr Slipper—You're on the government side.8K6Fitzgibbon, Joel, MPMr FITZGIBBON—Just give it a little bit more time. In the 1996-97 financial year almost 80 per cent of capital gains tax was paid by those in this country who earned more than $50,000. That should start the alarm bells ringing in the minds of every person in this place and, of course, every Australian.A lot was said about the iniquitous nature of the GST both at the 1993 general election and at the 1998 general election. But it could be—if the government's own assumptions about the flow-on effects of these changes, particularly the supposed growth dividend, are wrong—that this package could prove to be the most iniquitous of all. Those estimates on the dividend flowing from the turnover of assets are certainly rubbery.Let us look at how the government arrived at the conclusions on this additional revenue which it predicts will come from those additional realisations. Firstly, the Treasurer appointed John Ralph, the man who told a recent parliamentary seminar that, on the question of the effects of the removal of indexation at times of high inflation, we will probably have to reduce the capital gains tax rate further. John Ralph then commissioned the Australian Stock Exchange to deliver a report to him on the likely impact on realisations of a reduction of the rate of capital gains tax. The Australian Stock Exchange, in turn, commissioned US based advocates of lower capital gains tax rates to provide that information. It is of no surprise to anyone that those great advocates of lower CGT rates came back with the results the Australian Stock Exchange—which, I am cautious to say, does have a vested interest in all of this—was looking for.That takes me to the opposition's major concern, which is the government's failure to meet its own test—that very important test of revenue neutrality. That is why the opposition are saying today that we support these changes in principle but we want to see the rest before we absolutely commit ourselves. That is eminently reasonable. We cannot be certain at this stage whether this package can be made fair until we have seen all of it.The government is asking us to trust it, but of course we know it cannot be trusted. We all remember very well the never, ever GST—the non-core promises as opposed to the core promises. This is a government that is not to be trusted. It is eminently reasonable for us to ask to see the devil in the detail before we absolutely commit ourselves to this package, before finding all the evidence that this package does meet the revenue neutrality test and all the evidence we require to ensure that the government is serious about cracking down on tax avoidance. That is eminently reasonable.I want to turn to my strongest area of interest in respect of this package, and that is how the changes in this package of bills will affect the small business sector, including those small firms operating in the tourism sector. The government has hailed this package as a great thing for small firms. I am happy to acknowledge some of those strong points but in a somewhat different way to that of the member for Macquarie, who was in here waxing lyrical and telling us what a wonderful thing all of this is. It always amazes me how you can have an independent press taking such a divided line on some of these issues, day by day bringing up anomalies and problems for small business, business and the taxpayer, and yet you get the member for Macquarie coming in here saying, `The world is a bed of roses. This is the perfect package.'8H4HAWKERMr Hawker—You wouldn't do that, would you?8K6Fitzgibbon, Joel, MPMr FITZGIBBON—No, I would not do that, the member for Wannon knows. I said that I am happy to acknowledge the package's measures: the lowering of the company tax rate, the retention of accelerated depreciation, the new simplified tax system, the 50 per cent CGT concession, the additional concession for over-55s with active assets held for more than 15 years and the immediate write-off of expenditure for new capital equipment. They are the core points and I am happy to acknowledge them. But are they enough? Are they enough to compensate small firms for the adverse impact of the GST—a GST which makes the more than one million small firms in Australia unpaid tax collectors for the government? Are the Ralph concessions enough?Before trying to compare them, let us go very quickly back over those points that I have already acknowledged. The first was the lowering of the company tax rate. As the member for Wannon will recognise I am sure, fewer than half of Australia's small firms are incorporated. So there is no benefit to the small sector in that—at least for those who are not incorporated. Of course, for many of those who are incorporated, for many reasons—including workers compensation, for example—the company is simply a vehicle from which they draw a wage at the marginal tax rate. So there is very little gain there for those people.We are now hearing about profits-first principles. We are now hearing about 80 per cent rules for dependent contractors, which will further erode any advantage that those who have not incorporated might derive from a lower company tax rate. The retention of accelerated depreciation is a good thing, but it is something that the small firm sector already has. This is something that the government puts up there on a pedestal, but it is something that it already has.8H4HAWKERMr Hawker—And simplified.8K6Fitzgibbon, Joel, MPMr FITZGIBBON—The simplified tax system is a good thing—I acknowledge the member for Wannon. The Labor Party supports it, but it has a $1 million threshold, I say to the member for Wannon. One million dollars sounds a lot to the person on the street, but when you start to talk about some small firms with high turnovers and small margins it is not a great deal of money. He knows there has been a great deal of pressure to have the threshold increased coming from those who represent the small business sector, but the silence is deafening on the part of the government.I give a tick to the measures of the 50 per cent reduction in CGT and the additional concession to over-55s. I have no argument with that. They are a good thing for small firms. I suppose you could think the immediate write-off of expenditure for new capital equipment is a good thing for cash flow in year 1, but it is bringing forward a benefit that already exists. The government says that there will be $130 million or $170 million in the first year because the savings are brought forward, but what about in the long term? Even if it is $170 million, that in itself, in the context of the government budget, gives you an idea of the value of that concession to small firms. Let us not hear that bringing forward a benefit that already exists is some great boon and a panacea for all the ills of the small firms sector.All of this is in the context of the GST, a GST which the Treasurer, since the dirty deal with the Democrats, has described as a `nightmare on main street'. We have seen Charlie Bell's report—or I hope most in this place have—and we know from that, and from many other reports, how much time small firms are required to commit to filling out paperwork and remitting PAYE and all those other things—PPS, you name it—back to government. We know that from experience and from all those reports. And now we have people like John Cohen, a tax partner at Deloitte Touche Tomatsu, who tells us that, for small firms dealing with GST, compliance will be like doing their annual returns monthly or quarterly, depending on the turnover of the firm in question. He says that for those very well organised firms—and, without being critical of the sector, that is certainly far from always the case—that might be so. For those with the ready capital available to invest in the systems they need to be organised, that might be an hour or two each time round. But for those more typical firms I think I could respectfully say that is more likely to be a day or two which, for small business operators around this country, is a weekend each month out the window. This comes from a government which, prior to the last election, committed itself—and I bet it is regretting it now—to reducing by 50 per cent red tape for small firms. What a great job it is doing with respect to that commitment!But I do not want to dwell on the GST for too long today, other than to put it in context with the Ralph reforms. Suffice to say that by Christmas next year small firm operators will have come to their own conclusions about the impact of the GST, any compensation that might have arrived through Ralph and the combined effect of those changes on their business.I know what small business are thinking now, and the government is very conscious of it. They think it is going to be a nightmare on main street. They do not see too much in the Ralph reforms. They will get through the government's rhetoric on those issues I have already outlined. Come Christmas next year, they will still be losing those weekends to additional paperwork and they will still be paying off the loans they have raised to purchase the equipment they require to put in place those systems to deal with those compliance issues.What is the government's response to all that? It has created a $500 million compensation package for our more than $1 million firms. As the opposition said many months ago, if you divvy that up between them, that is $500 for each business. But it is not $500 any longer, because the government has already spent about $135 million of that money on peak organisations, such as the CPAs, the Tourism Council of Australia, the NFF, et cetera. The NFF did very well—$15 million. It seems to me that the main criteria for grabbing money from the bucket is to have been a longstanding supporter of the GST. That seems to be the main criteria if you have a look at those organisations that have been able to secure those funds.So $135 million is gone. We have more than $300 million left. What does this government propose to do with that? It is going to send everyone a voucher. But, of course, the voucher is not now worth $500; it is worth somewhere between $200 and $300—more likely, on my calculations, to be around $200. Why is this so? Everyone knows, including Minister Reith's own departmental head, Dr Shergold—and we have him on record in Senate estimates—that that is a dumb way to spend that money. It is insufficient money to start with, but being so insufficient what we needed to do was spend it wisely and efficiently. That is certainly no way to do it. Why is the government doing it that way? Because the government knows it is in big trouble with the small business constituency. It knows that from its own private polling, the Yellow Pages Small Business Index and all those other surveys. Its own backbenchers are telling it that, and I bet the member for Wannon has had a word or two to his Prime Minister. Their stocks there have never been so low.What is the natural political response? You put a cheque in the mail. Unfortunately for the government, the cheque is worth around $200. Estimates of the average cost of compliance range from $3,500 to $9,000, if you listen to the Victorian Chamber of Commerce—and they get $200. And, despite the Treasurer's response yesterday during question time, there still remains some doubt as to whether that in itself will be taxable. What a great boost—$200. There is no doubt that the small firms sector will welcome that cheque in the mail initially, but it will turn very sour indeed once it realises how inadequate that amount of money is to compensate it for the impact of the GST.This is a real problem for the Minister for Employment, Workplace Relations and Small Business, because we know that this is not his view of the world, but we also know that the Treasurer has now taken the reins. The minister for small business first establishes the Small Business Consultative Committee, chaired by Curt Rendall, a very competent and highly regarded person. That committee had a close look at how the $500 million should be spent. That committee has now cost the taxpayer $5 million. A trip to New Zealand to have a look around, sitting fees and other costs now amount to $5 million. But have we seen the report? No. Why have we not seen the report of the Small Business Consultative Committee? Because there is information contained in there that would embarrass the government and that the Treasurer in particular does not agree with, and that is why he has taken the reins.Very briefly, I have said the opposition supports this package of bills in principle, but it reserves its right to hold back until it is assured that the government meets its own revenue neutrality test and until the government demonstrates that it is absolutely committed to getting serious about tax evasion. (Time expired)12:03:0012495Hawker, David, MPMr HAWKER8H4WannonLP10—I do welcome the support the member for Hunter gives to the New Business Tax System (Income Tax Rates) Bill (No. 1) 1999 and the related bills, although it is slightly qualified. But he is a pessimist, trying to read the worst into everything—suspicions about the government. Perhaps he is judging everybody by Labor standards. Who could forget the 1993 budget following the 1993 election? All the promises about the l-a-w law tax cuts—remember them? And what happened? Not only did we not get any decrease in taxes but up went sales tax, up went fuel excise—again. The l-a-w law tax cuts just evaporated.There is one other thing I must add which the member for Hunter should have included in his speech. His speech is seriously incomplete; there is a very serious omission. If you want to talk about tax reform, you must also include one of the very great benefits that will help small business as well as all individual taxpayers and that is the income tax cuts—$12 billion of income tax cuts. They are very significant. Nowhere did we hear anything from the member for Hunter about that. For that reason I chide him for that very serious omission when talking about the benefits of tax reform. If we are going to talk about the benefits of tax reform, we should include it all, because that is a very important aspect which will affect small business as well as individuals.We should also have a look at the New Zealand experience on the question of indirect tax, tax reform and the GST, because clearly businesses in New Zealand are very happy about it. There has never been any suggestion from either side of politics in New Zealand that they would revert to the indirect sales tax system that we have had until now. He also tried to labour the costs of meeting the GST system. As has been pointed out many times by my colleague the member for O'Connor, the Minister for Forestry and Conservation, Wilson Tuckey, small business can do a GST return on the back of an envelope. It is not a difficult thing to do, and for small business it will not take up huge amounts of time. As we know, for most small businesses most of the time, it will mean a positive cash flow and that will be a form of compensation for preparing the GST returns.I would also like to give credit to John Ralph. He has done a fantastic job in putting forward this whole new business tax system. He is a truly great Australian, one who deserves the accolades that have been going his way, because not only has he been very successful and a very great contributor to the mining industry but he has also been prepared, since he has wound back his other interests, to continue to contribute to public life in Australia in so many ways. He has done so in a way that is not political. He does it because he seriously believes in the future of Australia and is prepared to give the benefit of his experiences and his knowledge, and for that we should certainly congratulate him.The bills that are being introduced here today are part of the reforms under the New Business Tax System announced by the Treasurer on 21 September and, as a result of these, we will see Australia moving to have an internationally competitive tax system. We will have arrangements that will create the environment for achieving higher economic growth, more jobs and improved saving. These are all admirable aims and it is encouraging to hear the qualified support from the opposition. I hope that will in fact lead to these reforms being put through the parliament before Christmas so that they can be brought in on time. It is very important for Australia that we continue to push forward so that we can be internationally competitive in the business tax world, as indeed we are becoming in so many other areas. It is important that these reforms go through the parliament in the way that has been proposed because the benefits from the work that has been done have been clearly outlined.One of the key business tax reforms in the package is the company tax rate reducing from 36 per cent to 34 per cent for the next financial year and to 30 per cent following that. This will make Australia very competitive compared with other parts of the world and will clearly assist in attracting capital to develop new opportunities and, with those, new jobs. Also in the reforms are the cuts to capital gains tax, which effectively mean that individuals will need to pay tax on only half of any capital gains. Also, as we have been discussing, there is the simplification and extension of existing small business capital gains tax rollover relief and retirement exemptions.There will also be a capital gains tax exemption for small business active assets on disposal, providing they have been held continuously for 15 years and that the taxpayer is at least 55 years of age and intends to retire or has become incapacitated. Those are very important developments. There will also be measures to promote investment in venture capital, and we have seen clearly the benefits that investment in venture capital can lead to. The staggering growth of the United States is due in part to the enormous investment in venture capital and also to the jobs that has created.We will also see a simplified tax system for small business. As well as that—and again this is something which does not seem to be always brought up by the opposition—there will be a number of anti-avoidance measures to improve the fairness of the tax system. The fact that the member for Hunter found reason to criticise one of these aspects shows that maybe those anti-avoidance measures are already beginning to show some benefits. We always have to remember in this that the average Australian does not mind paying his or her fair share but that they get very upset when they find there are others who are not paying their fair share and are using all sorts of contrivances to try to avoid them. A very important aspect of this tax reform is that it must have credibility, and that is part of it.As the Treasurer has stated, the reforms offer major benefits to over 95 per cent of Australian businesses and, significantly, to nearly 99 per cent of primary producers. Through these bills there will be a reduction in compliance costs, lower company and income tax rates and enhanced incentives for investment. There will be assistance in the funding of retirement—very significant and very important, as we all know, with the population ageing and people living longer as well—and a substantial impetus to growth and innovation in the small business sector. I think that everyone would acknowledge that the small business sector is where future jobs are going to be created. We can see ample evidence that big business generally is not a big net job increase employer. It is very much in the small business area that we see the real benefits.Just to come back to more detail on some of these points, I have mentioned the value of the lower company tax rate. The advantage is that we will be internationally competitive. It will bring the Australian rate into line with the rates of other countries in the Asia-Pacific region which, of course, is all part of making Australia competitive in the region and globally. It will obviously assist to make Australia a centre of excellence and an international financial centre in this region, something that the Prime Minister has been very keen to promote and the Minister for Financial Services and Regulation has also been very active in this area.This is the sort of tool that will assist in making sure that we can achieve something very important for this nation. It will obviously also mean that the company tax rate will be aligned with the 30 per cent marginal rate which will be applied for most taxpayers, something that the Prime Minister has very proudly reminded us of on many occasions. For 80 per cent of taxpayers their top marginal rate will be 30 cents in the dollar, and I think this is very important. So we are building on the achievements that are already there under the new tax system, and we will also have the company tax rate lining up with that.It will also mean that the headline rate of corporate tax will be internationally competitive in terms of the Asia-Pacific region and compared with the corporate tax rate operating in capital exporting countries. It will mean that non-portfolio foreign investors in Australian companies can benefit: they will be better placed to utilise foreign tax credits in their home jurisdictions, thereby reducing the possibility of foreign tax credits being lost because the Australian tax rate is higher than their home country rates. This may not affect the majority of Australian directly, but indirectly it does have benefits. I think that is a very important point to note.The company tax rate will send a strong signal to foreign investors, particularly if accompanied by a clear and user-friendly tax system. Some people will ask, `What do we need foreign investors for?' If we want to continue to develop this country, we need to have capital coming in to assist us to create jobs. It will also encourage Australian companies and Australian investors who have been investing offshore to see greater value in investing locally as well as in other countries.Whatever way you look at it, the bottom line is that if we can maintain economic growth we will create jobs, which is something that the government is very strongly committed to. All Australians should welcome this, because our unemployment rate, although it has fallen from the double-digit figures of a few years ago, is still too high and we obviously need to continue to create more jobs to get it down to a more respectable level. By reducing the company tax rate, Australian companies will be able to maintain dividend flows to shareholders while increasing the levels of retained income and investment. By retaining those additional amounts of profits they can reinvest, with the benefit of creating further jobs. The shadow Treasurer said in September:[Labor] would support anything that makes our tax system more competitive and therefore has the capacity to create more jobs.We welcome that endorsement.When it comes to the small business sector—after listening to the member for Hunter, I was a bit confused as to whom he takes his advice from—I will give an example of the sort of support that has come in. The Director of the Australian Society of Certified Practising Accountants, Angela Ryan, said:The small business sector are clearly the winners and have finally gained a voice in the tax system. The government appears to have heeded calls from small business who are drowning in red tape.I would not have thought that you could get a much stronger endorsement of the system for the small business sector than that. It is very encouraging to hear that sort of support. This is the sort of tax system that people expected the government to move to, and we are rather proud to have been able to do so.I will now turn to the benefits of the new system for the farming community. I come from a farming background and I represent an electorate that has a proud farming history. The benefits for the farming community are to be welcomed. They will certainly give the farming community some assistance. Many sectors have been very hard-pressed in recent times. While there are a couple of exceptions, many have faced very difficult times over a number of years. The new tax system will bring benefits such as reductions in the fuel excise on diesel for transport. This will have a major impact on transport costs, and the benefits that come from the business tax system will equally have very positive effects on the farming community.Apart from the benefits of the corporate tax rate reductions and the income tax cuts, the benefits of the reduced tax rates will be added to the reforms of indirect tax. Ninety-nine per cent of primary producers will retain access to accelerated depreciation. This will be in a simplified form, thereby significantly reducing the amount of book work and accountants' fees for keeping depreciation schedules and so on. It is worth reminding everyone that the income distributed from trusts that are taxed like companies will continue to attract primary producer averaging provisions and farm management deposit arrangements. There will be benefits from the cash accounting and the simplified regime which will begin from 1 July 2001, which will be worth significant amounts in reduced costs for running the business.It is also important to note that capital purchases of less than $1,000 will be written off in the first year. This benefit is quite significant because there are many aspects of farming for which capital purchases are less than $1,000. This is much better than the current system where a 100 per cent write-off applies only to purchases of under $300. Other benefits include retaining the access for almost all farmers to the accelerated depreciation. There are changes to the capital gains tax for farmers who are aged 55 years and over and have held their assets for more than 15 years. That is a very significant point. It is also interesting to note that the National Farmers Federation President, Ian Donges, stated back in September:We estimate that nearly 70 per cent of farmers have owned their farms for over 15 years, and this single initiative will provoke sighs of relief from the majority of farming families across the country. The NFF will propose to the government that this measure should be extended to apply to companies in trusts which own farms.There is very strong support for that from the NFF. I will address some of the issues the NFF has raised in relation to the business tax reforms because I think there have been some misunderstandings. I hope that, after discussions with the Treasurer, the NFF is now much happier. I will quickly run through some of the points the Treasurer has clarified.One question related to restricting the simplified tax system to businesses with turnovers of $1 million or less. One of the misunderstandings was that when an asset, such as a tractor or header, was upgraded, the proceeds of sale of the older piece of machinery would be included in the $1 million. The answer to that is: no it will not be. Any plant that is sold to upgrade to newer technology will not be included in the turnover. That will hopefully relieve that concern.The Treasurer is still discussing the question of the accelerated depreciation of assets with a life of more than 25 years, which seems to apply mainly to haysheds. The NFF also mentioned the storage of grain. I do not know that there would be many silos, unless they are concrete silos, that would have a life expectancy of more than 25 years.The question of entity taxation—that is, taxing trusts like companies—is something that the government made a commitment to before the 1998 election. It is not new. It does not mean that more tax will be collected. What it does mean is that there might be some changes. There are a number of other issues where the Treasurer has worked hard to allay fears.I welcome these changes. I believe that the government is putting forward something that will really take our business tax system into the 21st century and will benefit all Australians. Most importantly, it will mean that businesses will benefit and they will be able to employ more people.12:23:0012498Rudd, Kevin, MPMr RUDD83TGriffithALP00—When we look at business tax reform it is important to ask some basic questions about what our overall objectives might be for that reform. Broadly, they are twofold. First, to maximise the nation's international economic competitiveness so that, in a global economy which is characterised by a high degree of capital mobility, the Australian economy will be seen as an attractive destination for that capital, in part because we have a competitive national taxation regime. A second and equally important objective for national business tax reform should be the preservation of the nation's revenue base so that governments in the future will continue to have the resources necessary to continue to deliver the public goods necessary for the nation's future—goods which markets cannot otherwise deliver. Of course, neither of these two sets of objectives is absolute; neither is a zero sum game. In fact, one should be seen as a continuing corrective on the other. Our national economic policy settings, including tax policy, must ensure that we remain internationally competitive so that we do have a growing economy and, as a consequence of a growing economy, a growing revenue base, so that we have the resources to deliver the nation's critical social objectives.However, a competitive tax policy is not of itself co-definitional with a competitive national economy. It is but one part of a much broader and more complex policy equation. National competitiveness is equally the product of efficient capital markets, efficient labour markets, a well educated, highly skilled and highly adaptive labour force, world-class research, development and technological innovation, a world-class entrepreneurial culture, effective competition policy, an effective legal system and a stable political system.The competitiveness of a nation is about the composite of these factors. It is not just about some international race to the bottom; a race to end up with the lowest personal or company tax regime in the world—as if that, of itself, is somehow going to magically fix the problem, because it will not. It is not some global race to the bottom in order to engineer in this nation the lowest wage rates or the worst or the weakest labour standards in the world because that, of itself, will not fix the problem either, despite Mr Reith's aspirations to do just that. Nor should we be engaged in some global race to the bottom to end up with the world's worst environmental standards because that will not work either.Our nation's economic competitiveness is much more complex than narrow ideological revolutions planned by Mr Costello on tax, Mr Reith on the labour market or Senator Hill on the environment. In terms of public policy it is not all about some mindless race to the global bottom because, quite apart from laying waste to the nation's important social objectives, within the narrow cast of the nation's economic objectives, it does not work either. The race to the bottom cannot be equated with world's best practice despite the assumptions of many of those opposite that these two concepts are the same.Tax policy is clearly a critical element in an overall debate about national economic competitiveness. That is why Labor has signalled its willingness from the outset to be a full and constructive participant in this debate on national business tax reform. That is why we have said from the outset that we believe in the importance of a competitive business tax regime.We have also said from the outset that this regime must be achieved on the basis of revenue neutrality. That is not some innovation on the part of the Labor Party. It has also been the position of the government from the outset in the instructions and the brief which it gave to Mr Ralph. It takes money and resources for governments to continue to deliver public goods such as education and defence. These things do not simply materialise from nothing.There is another reason we need to be concerned about the revenue neutrality of this package of proposed business tax reforms. That is because of the consumption tax package—one that was negotiated between the government and the Democrats and one which was not by any stretch of the imagination revenue neutral. This was no neat tax mix switch. What it in fact was was an overall cross-subsidisation of the introduction of the consumption tax at a cost of some $17 billion over three years. In equity terms, it was a redistribution tax which favoured the rich and undermined the financial position of those less well off. It was also a tax reform which resulted in an enormous drain on the overall revenues of the Commonwealth.No wonder in this country today we have a crisis in higher education. No wonder in this country today we have a crisis in Centrelink and the delivery of services through it. No wonder we now have special revenue measures to cover this nation's defence contingencies. An erosion of the nation's tax base has occurred as a consequence of the raft of taxation changes which have been brought in as part of the GST package. Had that package not been introduced, had we not had an annual $6 billion cost arising from it, we would not have faced as difficult and as dramatic a set of circumstances today whereby both sides of politics must insist that the business tax reforms are introduced on a revenue neutral basis. Had we more slack to cut on this question—as opposed to no slack at all as a result of the GST changes—then we would not be facing the sorts of difficulties we now face.That is why it has been important for the Senate, through Senator George Campbell's committee, to analyse this issue in the short time which has been available to it. The government, through the Treasurer, has said in a number of statements—the Treasurer's press statement of 21 September on the first stage of the Ralph reforms, his statement on 21 October about the overall fiscal impact of his changes and his statement on the second stage on 11 November—that this entire package is, according to the Treasurer, revenue neutral. But as some commentators have noted—and I tend to agree with them in part—this seems to represent more of a triumph of aspiration over analysis.There are in fact many doubts about the revenue neutrality of this package, and they go to three critical areas. The first goes to the extra realisations projected as a consequence of the changes to the capital gains tax regime. The second is the leakage from income to capital gains that is likely to occur as a consequence of the introduction of a lower CGT rate. The third is the overall integrity and effectiveness of the various anti-avoidance measures which are contemplated as part of the legislative package.It is for these reasons that Labor, while not opposing the package, is moving amendments which seek to entrench formally, firstly, a recognition by both government and opposition that this package be revenue neutral; secondly, that this neutrality can only be effectively guaranteed by the government producing the full detail of its entire package rather than leaving some up its sleeve for later on, including, most particularly, future government actions on the question of trusts and their taxation treatment; and the third element of the amendments which Labor has moved is to provide a new provision to be added to the GAAR—that is, the general anti-avoidance rules—in part IVA of the Income Tax Act. That will assist in eliminating schemes to abuse the new CGT regime by converting ordinary income into capital gains—arbitraging, as the literature describes it. There is no earthly reason why the government should not support Labor's amendments because they are entirely consistent with the government's stated policy in each of these three areas.When we look at the capital gains tax we are looking at a sizeable slice of government revenue—in 1997-98 some $3.7 billion. This is not chicken feed. It is a lot of money. It is capable of funding a lot of public goods through the budget of the Commonwealth. The changes proposed by the government are the first substantial changes to the CGT to be introduced since 1985. As the Senate inquiry report notes, Australia has no experience of changes in behavioural response to the CGT rate as such because no changes have in fact been introduced since 1985. As a consequence, in projecting its revenue impact we must look therefore at international experience. This makes the whole business of revenue projection arising from behavioural change arising in turn from policy change within the CGT a hazardous exercise indeed.What are these proposed changes? Simply, they are these: for individuals—a halving of the rate to a maximum of 24.25 per cent, but this rate to be imposed on nominal gains through the abolition of indexation as of 30 September and also through the abolition of averaging as of 21 September; for complying superannuation funds, similar provisions but the CGT will be imposed on two-thirds of the nominal capital gain; for small businesses with net assets in excess of $5 million, a 50 per cent of asset exemption will occur and there will be an ability to roll the remaining gain into replacement assets or CGT retirement exemption; a CGT rollover relief to remove impediments for scrip for scrip takeovers; and, finally, for venture capital investment, an exemption for non-resident tax exempt pension funds on the disposal of investments in new equity or eligible venture capital investments.Overall, these measures are all potentially significant in terms of the revenue of the Commonwealth. The critical question is whether the decline in revenue which will occur as a consequence of the reduction in the rate on the one hand and the increase in arbitrage from normal income to capital gains on the other can be offset by the abolition of indexation and averaging as well as the purported increase in realisations—that is, in activity—arising from this new capital gains tax regime. That is the key of the analytical equation.In order of magnitude, the government's projected extra revenue from extra realisations is the major factor in this whole equation. In fact, almost the total offsetting factor arises from this if we look at the numbers produced in Ralph. If we look at the published tables in Ralph, we are looking at either just under or just over $½ billion per annum for the 2000-05 period.It is instructive on this issue to spend some time analysing chapter 4 of the Senate report on this question because it goes to the ultimate legitimacy of the government's calculations as reflected in Ralph's analysis. The key analytical question is the so-called degree of elasticity in capital gains realisations relative to the different CGT rates. Ralph concludes that there is, in fact, a high degree of elasticity. The ratio that he purports is one of negative 1.7 in the short term and negative 0.9 in the long term—in other words, a strong response as a consequence of the immediate announcement effect of the new CGT rate followed by some tapering off later on. The Australian Stock Exchange report suggests that, in the first two years, there will be a 50 per cent increase in the volume of realisations that will occur under this new regime.However, the view reflected in Ralph is not the universal view of experts who specialise in the high science or, as some describe it, the dark arts of this form of economic modelling which constructs specific revenue models for different policy scenarios. I refer honourable members to the Senate report, particularly page 28, and the findings of Dr Jane Gravelle, a senior economic specialist in the Congressional Research Service in Washington. Dr Gravelle found that the assumptions which have been used in Ralph have been grossly overstated. Dr Gravelle, of course, is not alone. If you look elsewhere in the Senate report, you see that Professor Auerbach shares some of her concerns. Also, Professor Krever, who provided evidence to the Senate inquiry, is quoted on page 29 as saying:. . . the potential revenue leakage would be hundreds and hundreds of millions of dollars . . . Those studies—that is those relied on by the government—did not take into account the likelihood of massive increases in negative gearing . . . This appears to be, therefore, a highly unstable basis on which the government has constructed its view that somehow its changes to CGT are going to produce a revenue neutral outcome at least as articulated by the Treasurer. So much for the debate about realisations, or the level of new activity which arises from the introduction of a new rate.What about the second major factor impacting on overall revenue? Here we talk about the capacity for so-called arbitrage activity, or the conversion of normal income into highly concessionary capital gains. There is some recognition of this problem by Ralph himself. The report says that over five years there will be something like a half billion dollar loss to revenues as a consequence of this activity. These numbers, even on the government's admission, are fairly significant. But if we look at other analyses, again as contained in the Senate inquiry report, we find that the numbers become more significant. Professor Evans, in evidence to the committee on page 32 of the report, says that in his view the estimate that the arbitrage effect could be limited to $500 million over five years is a considerable understatement. Paraphrasing his advice, at least as contained in the Senate inquiry report, it is likely to be considerably in excess of that. Professor Evans is not alone. If we look at the advice and the evidence provided by Professor Krever to the Senate inquiry, we find that, particularly when you add the impact of negative gearing, the overall impact of converting income into capital gains is likely to be more rather than less.If you take all these factors together, you will find, as Professor Evans notes, I think on pages 30 and 31 of the Senate inquiry report, that the combined impact of all these measures could range from a positive revenue impact of $350 million up to a very significant revenue leakage of $5.5 billion—that is when you aggregate the combined impact of the overall effect on realisations on the one hand and arbitrage, that is, conversion from normal income to capital gains, on the other.These are the reasons why Labor has moved the amendments: we have fundamental doubts about the overall revenue neutrality of the package. We need to entrench this principle in the legislation. We need to force this Treasurer to fess up the details of the remaining tax measures which he has not made public yet. We also need to plug the gap that will occur as a consequence of this increase in arbitrage activity through the strengthening of the general anti-avoidance rules in part IVA of the tax act.These are the actions of a responsible opposition seeking to participate constructively in a debate to improve public policy. It does not meet the Treasurer's political strategy, which prefers us to be oppositionists for opposition's sake. It is not part of his normal preference for wedge politics. We are seeking to be constructive. We wish the government to consider this amendment, to vote for this amendment on its merits, because by taking these amendments into account we believe the package can be substantially improved.12:40:0012502Thomson, Kelvin, MPMr KELVIN THOMSONUK6WillsALP00—We live in a time when the capacity of sovereign nations and elected governments to protect labour rights and to maintain social welfare has been very much eroded. Interestingly, the well-known hedge fund operator George Soros has drawn attention to this in his writings:The capacity of the state to look after the welfare of its citizens has been severely impaired by the globalisation of the capitalist system, which allows capital to escape taxation much more easily than labour. The writer Guy Standing makes the same point, noting that governments are being pressured to reduce taxes on capital and erode labour security at the same time as they are being forced to offer increasing subsidies to capital.What does this mean for the new business tax legislation before us, the first stage of the government's business tax changes? We should be supportive of changes which simplify business taxation and taxation generally. I absolutely accept that business taxation is far too complex; I absolutely accept that taxation generally is far too complex—not helped one iota by the government's GST and its 1,000 subsequent amendments to its GST legislation. While we should be supportive of measures to remove the incentives to tax driven behaviour, so that business makes decisions based on their economic merits and not for tax reasons—I think the government has to some extent been endeavouring to achieve this—nevertheless we must jealously stand as gatekeepers guarding the door against any further attempts by the government to widen the gap between rich and poor by insisting on the principle of revenue neutrality, that is, that this tax package pays for itself.We cannot afford to see further cuts in essential community services in order that business pay less tax, in order that it can give even larger and more generous salaries to chief executive officers. A recent survey showed that the CEOs of the top 100 companies in Australia managed to score an additional 22 per cent in income during the past 12 months, leaving them with a $1.5 million average yearly salary even without taking into account share and stock options.Labor has no intention of contributing to an increase in the gap between rich and poor. We are well aware and mindful of the concerns which have been expressed regarding the revenue neutrality, and therefore the equity, of the package. If it fails them now we cannot be expected to support it. If it fails them in the future then the government's changes will clearly have to be revisited. Let me outline to the House some of these concerns so that no-one here is in any doubt that Labor is mindful of them. Tim Colebatch said in the Age recently:If the critics are right, the tax changes could weaken Australia's economic growth by discouraging the developments that maximise growth. And if Treasury's revenue estimates prove optimistic, ordinary Australians will feel the pain through cuts to government services and/or higher taxes.Mr Colebatch expressed the view that Labor and the Democrats, rather than competing for the coalition's favours as negotiating partners, should see their common interest in working together to ensure that the tax package will pay for itself. I cannot speak for the Democrats, but Labor certainly has been working to ensure that this package will pay for itself. That has been the heart and soul of our position.Mr Colebatch further says that the public interest in this debate is to ensure that tax cuts do not corrode the revenue base we need to finance community services. Once again we agree: that has been exactly what we have been doing and will continue to do. Mr Colebatch points out that the Treasury has noted that the favourable treatment of capital gains and retained earnings will create incentives for tax dodging at a revenue cost that may mount steadily. He claims that, while the government's package contains measures to ensure that only losses arising from commercial business activities can be deducted from other income, it also includes, according to him, some nine loopholes which between them allow virtually all such losses to walk through the net. So they are serious concerns.Indeed, so too are the concerns expressed by a number of economists—Fred Argy, Bernie Fraser, Professor John Freebairn, Dr Michael Keating and Professor John Neville—in a letter to the Australian Financial Review earlier in November. They expressed concern that the changes to capital gains tax could worsen the existing distortion in favour of income from capital gains relative to other income. They pointed out that:If Australia suffers from a shortage of "seed capital", there are other devices available to governments which are better targeted and which do not create new distortions in the process. They also expressed the concern that, if we had a widening of the scope for tax avoidance and minimisation, this would:further erode the long-term revenue base. This will affect the nation's capacity in the years ahead to provide education, health, welfare and public services—which are essential both to ensure a fair society and to sustain future economic growth.They did say, too:Some of the proposed changes to CGT have merit. They may make the system simpler for small business, help unlock assets . . .They also said that:But such improvements can be made without undermining the integrity of the whole tax system.We are also aware of an attack by the academic John Quiggin on revenue neutrality. He says that the claim for revenue neutrality rests on two main points. First, it is argued, based on US experience, that a reduction in the rate of capital gains tax will lead more people to realise capital gains and, therefore, to increasing revenues and, secondly, that revenue savings from a variety of anti-avoidance measures have been included in the package. In addressing those, Professor Quiggin says that an increase in realisations affects only the timing of tax payments—that is to say, a cut in the tax rate may bring forward tax revenue that would otherwise have been received in the future, but it does not generate any additional revenue in the long term. Secondly, in relation to these anti-avoidance measures, he says that this is a dubious accounting procedure because new tax avoidance devices are being invented all the time so a substantial amount of anti-avoidance legislation is necessary simply to prevent erosion of the tax base. He says that there is no evidence to suggest that the anti-avoidance legislation in this package goes beyond the level of routine maintenance and that, indeed, the proposed changes will themselves open up massive opportunities for tax avoidance.We also saw the Age commentator Kenneth Davidson saying that capital gains tax changes would, like GST changes, work powerfully in the direction of creating an unequal society. He points out that net capital gains totalled some $3 billion in 1996-97, that those gains were distributed between seven per cent of taxpayers, that three-quarters of the gains were distributed to taxpayers on above average incomes and that, overwhelmingly, capital gains were derived from property, some 31 per cent, or partnerships and trusts, some 50 per cent.We also heard Trevor Boucher, the tax commissioner who implemented the 1985 introduction of capital gains tax, saying that halving the capital gains tax rate would entice tax avoiders `like bees to a honey pot', and that these changes would favour the top end of town.We bore those concerns in mind when this issue was being considered recently in the course of a Senate inquiry. That Senate inquiry had a very short time frame—it was made very short at the insistence of Senator Murray—but it discovered that there is a large hole in the government's figures for stage 1. That hole of some $1.5 billion arises primarily because of unrealistic assumptions about behaviour associated with the capital gains tax, the so-called unlocking effect, and also because of the enormous threat of revenue leakage arising from the capital gains tax proposals because the government has not taken the step of bringing in anti-avoidance provisions to deal with the threat of schemes that seek to convert income into capital gains. That is an issue that we will be pursuing, both in the House of Representatives and subsequently in the Senate.It is worth pointing out by way of background to this legislation that the Ralph committee, in its report back in February entitled A platform for consultation, costed a 20 per cent reduction in the capital gains tax against the abolition of averaging and indexation. It came out with a slightly positive revenue figure from that trade-off. Yet a few months later the Ralph committee came up with a proposal to cut the capital gains tax not by 20 per cent but by 50 per cent for individuals and by one-third for the superannuation funds, but was able to say that this much larger change also paid for itself.They did this by making certain assumptions, the first being that there would be a huge unlocking effect, assuming that over $500 million a year would be paid in extra tax in the first few years after the change because of increased incentive to realise capital gains. We do not dispute that there will be some unlocking effect; there is no doubt about that. But these claims do seem to us to be unrealistic. They rely on United States experience. Yet the Senate inquiry heard evidence from capital gains tax specialists who suggested these claims were nonsense. All the non-government members of the Senate inquiry found that the government's revenue figures in this area were very optimistic.I think it is also worth noting that capital gains tax has been a very effective source of revenue for the Commonwealth. The Australian Financial Review reported in October that some $16.7 billion in net capital gains was realised in 1997-98 and that collections had jumped $1.4 billion in the past year, so we saw something like a 60 per cent increase on the $2.3 billion paid in 1996-97. Individuals realised an extra $1.5 billion in taxable capital gains generating an additional $500 million in capital gains tax. The report attributed strong gains in shares to substantial growth in collections of capital gains tax.You really have to ask in this respect precisely where the government thinks the problem is, just what extra activity the government feels needs to be unlocked or just what activity the present regime is stifling when you see such substantial revenue figures being generated through the capital gains tax regime.We are concerned about the issue of avoidance, and the measures that we will be putting forward in the course of this parliamentary debate reflect that concern. We are concerned to keep the government honest in relation to its proposal that this package would be revenue neutral—a guarantee that it has provided. It has guaranteed this package would pay for itself. We are concerned to ensure that that is indeed the case and that is the way we would be approaching this debate both here and in the Senate.Our position is that the package must be revenue neutral and that the parties ought to acknowledge that the detail so far announced has failed the revenue neutrality test and that we can assess this only when the full detail of the entire package has been settled. If the government thinks that it is going to slide this through without indicating to the parliament and indeed to the Australian community the full detail of its business tax propositions, it is in for a nasty surprise.This is a very complex piece of legislation. I do not really have time to cover it all but, essentially, the other aspects of the legislation involve reduction in the company tax rate from 36 per cent to 34 per cent for the year 2000-01 and to 30 per cent for the year 2000-02; reform to the depreciation system, including replacing accelerated depreciation with effective life depreciation; the introduction of a nominal system of capital gains tax to replace the previous system, which was an inflation adjusted system; and a number of measures which are designed to and which we hope will reduce tax avoidance opportunities.We have indicated we will not be opposing this legislation. We will however be seeking to keep the government honest in terms of its commitment to revenue neutrality, a most important element in ensuring that this package is indeed equitable and does not impact adversely on services and quality of life for ordinary Australians.12:55:0012505Murphy, John, MPMr MURPHY83DLoweALP00—While preparing for the debate on the business taxation legislation which is before the House this afternoon and thinking about the Ralph report, I read an article by Thomas Carlyle, the 19th century British social critic, called `Economics, the Dismal Science'. Although Carlyle was speaking in a different context, his phrasing has had a deep effect upon my thinking. If being a scientist requires agreement on fundamental propositions among practitioners, economics is certainly a dismal science. When 27 standard propositions in economic theory were put to almost 1,000 economists in five OECD countries, they did not agree on even one. Consider this example:Reducing the role of regulation authorities—for instance, in air traffic—would improve the efficiency of the economy. About 33 per cent of economists generally dis agreed, 30 per cent generally agreed and 34 per cent agreed with provisions.When economists cannot agree on basic propositions in economic theory, we as politicians should be wary of expressing opinions that may or may not match the views of our citizens.In my electorate of Lowe in Sydney's inner west, the citizens clearly voted no to a GST and the Ralph Review of Business Taxation related to it. However, the Howard government, with the support of the Australian Democrats, has made the GST law and soon the recommendations from the review of business taxation will be law as well. Moreover, the equality of taxation in Australia will more or less depend on the philosophy of the Australian Democrats. In this context, I am reminded of the words of the great Franklin Delano Roosevelt in his inspirational address to the Congress of the United States of America in which he outlined his vision: freedom of speech, freedom of worship, freedom from fear and freedom from want.In referring to freedom from want, I use this term in the context of promoting a true equality of opportunity for Australian citizens. A fair taxation system will provide for the basic needs of society: for example, education, health, aged care, public transport and safe roads. The essential issue here is the government's role in redistributing income—the wealthy sharing more with those in need.Charity—voluntarily giving to those in need—is under dire threat from the GST. This has a strong basis in Australia's religious traditions. Using the power of the state to support all citizens in a humane fashion has been historically frowned upon by the ruling Liberal-National Party elites who have always benefited from a huge surplus of labour. The Australian Labor Party grew from an absolute need for fair representation of the downtrodden masses. We have always fought fiercely and long to make equality of living standards a priority outcome of government and to give the power of resilience to every Australian citizen, not just to a select few.The Howard government, when campaigning for the GST, attempted to legitimise their case by arguing strongly for a greater tax base which would appear to take from the rich to help the needy. They attempted to convince Australians that, by voting for the GST, they would benefit from an expansion of equality and opportunity. For example, they suggested that millionaires in Australia would pay more taxes when they ate daily in restaurants. With the support of the Australian Democrats, millionaires will be paying the GST daily in restaurants, but so will the many thousands of Australia's low income families when they buy their McDonald's hamburgers and Kentucky Fried Chicken on pay night.Do the Liberals truly believe that the average Australian will continue to allow them to whitewash the workers? Never while we are a strong, united Labor Party in Australia, and never while we are led by Kim Beazley, a man who is truly in touch with the problems of every Australian citizen. Will the Australian Democrats make business taxation revenue neutral? Will the Australian Democrats make the anti-avoidance measures work well? Will the Australian Democrats allow for full, transparent equity?The Review of Business Taxation, A Tax System Redesigned, which the Ralph committee claims will make it more certain, equitable and durable, truly makes the book Exodus look like a short magazine, not something you can scan on the way to Canberra. I acknowledge the intense work done by the committee persons. We hope that they were not under direction to hide one Christmas pine tree in a forest of Australian eucalyptus. In particular, Mr Ralph is recorded as being the chairman of a liquor producing company, Mr Allert is a chartered accountant and Mr Joss was the managing director of an Australian bank, and the records show that he is not even an Australian citizen.I could not find any mention of the Reserve Bank of Australia in this report. Don't you feel that it is fortuitous that private banks are trusted more to deliver effective outcomes for the average Australian citizen? However, the modest business people in my electorate of Lowe, in suburbs like Five Dock, Drummoyne, Haberfield, Burwood, Concord, Strathfield and Homebush, do not trust this government. They have expressed constant anxiety over the GST. At the time of the last federal election, the Howard-Fischer coalition partners promoted themselves as sincere and caring for all Australians. Only because of the nature of our representation system, Australians in good faith returned the Howard Liberal-National coalition to government. The latest opinion polls show that the citizens of Lowe are disgusted with the Prime Minister. With a 50 per cent majority, they supported the republic. They do not trust this government's competency to provide equitable taxation outcomes. Voter confidence has deteriorated with every federal health cut. Voter confidence has deteriorated with every aged welfare and community cut. Voter confidence has deteriorated with every public education and employment cut. Australian citizens are slowly but surely bleeding to death with all of these cuts.We suspect that the latest move to get the business tax changes through parliament before Christmas is only another of the Howard government's sneaky ways. Before the last federal election, the Howard government spent millions of dollars advertising the virtues of the GST. They invested millions of hard-earned taxpayer dollars in manufacturing the consent of the Australian people. Using Australian taxes, they promoted the GST as a great benefit for all. The Howard Liberal-National coalition government, in conjunction with the Australian Democrats, gave birth to the GST law, then used it as a servant for their own means. I believe the Howard government's GST campaign can be compared with the cash for comments inquiry currently being undertaken by the Australian Broadcasting Authority. It seems the Democrats have also adopted a kind of cash for access mode, as reported in the Australian Financial Review on 11 November 1999. Let me remind the House of this article. It reads:In recent months, the Democrats say, they have established a dialogue with the Australian Bankers' Association (particularly the four major banks), major insurance companies and super funds, the Investment and Financial Services Association, the Property Council, the tourism industry, major accounting firm Ernst & Young and the Pharmacy Guild. But the adoption of the `cash for access' techniques of the major parties has caused some disquiet in the party. The new direction, which is being pursued by Lees and Murray (who particularly eschews lunching and dining), has revived the tensions that surfaced during the deal on the goods and services tax.Australians voted for the Australian Democrats at the last election in the expectation that the GST would be voted down. The Democrats have betrayed Australian voters and, with the revelations outlined in the Australian Financial Review , it appears they have won Lotto, unlike the rest of us, who are required to just keep on paying and paying and paying. All Labor people should continue to remind electors just how the Democrats conspired to win a prominent place at the table of the big end of town while a growing number of hardworking Australians are forced to do the best they can on the other side of the tracks.Many voters who supported the GST are now contemplating their decision in view of secret information dripping out of inquiries. We know the Treasurer is contemplating his position, as is his leader and as are the Democrats. Are some rats leaving the sinking ship? Australians are daily discovering the lack of integrity and equity of these tax proposals. Taxes paid by the ordinary worker, empowered only by the sale of his or her labour, are continually compared with taxes paid by the owners of capital, who employ others to increase their own wealth. Of all the changes that capitalism has affected, none was more striking than the manner in which it marshalled and allocated labour. Today nothing has changed. In fact, the Howard government continues to cooperate with the owners of capital at the expense of workers. The Howard government, through its tax policies, is slowly reducing the average income of most Australians. It is allowing more mergers that will leave an ever growing pool of poorly paid people, poorly educated and living in unhealthy communities. This will be in contrast to an elite group whose financial status will allow them access to high technology and educational advantage. They will take their profits in ways that reduce their taxation responsibility, with the support of their peers.Behind the veil of this government's tax and labour plan is a desire to reduce the living standards of most Australians and their modest businesses. The big end of town will be the winner. It will allow the capital originally developed by labour, for which labour was never properly rewarded, to be exploited on international ventures that will leave future generations of Australians in fear of abject poverty. The proposals set out in the Review of Business Taxation raise an interesting question. Are the tax changes based on the present economic difficulties a product of policy or are they in some way inherent in the economic system? I prefer to think of the Australian system of capitalism as a regime which, however adaptive, is nonetheless always focused on one central necessity, namely, to generate more capital—if you will, more wealth. That is a process which for periods seems to run effortlessly, as we are witnessing. Then the chosen institutions that permit and generate this capital accumulation—in Australia the established oligarchies—seem to lose their effectiveness and the system chokes up and thrashes around for new ways of expanding. Crisis occurs when oligarchies lose their stimulative and guiding capacity. Then there has to be some major restructuring.The 20th century is littered with examples of different forms of restructuring. For instance, the great crisis over which Keynesian economics initially presided was that of finding an institutional answer to underemployment and underinvestment. When the Great Depression broke out, there was no conception, and certainly no institutional possibility, of using the government as a growth mechanism. The situation of our time is not that crisis; it is rather one of restabilising forward momentum in a period when capital is fleeting. With monetary policy as a tool, capping inflationary tendencies requires a deftness of mind. The minds in the Reserve Bank of Australia seem to be doing an exclusive job, but it seems the minds in the Howard government have provided that special place for the big four. The owners of these oligarchies are certainly enjoying their power. It seems to me that as Australian capital has to seek new institutions, such as the construction of big business out of small business, superior planning of government institutions is required to complement what I would describe as direction-giving that is statist, advocating the sovereignty of the state, or labourist, advocating labour before capital. In which direction is this Howard government taking us? Is it supporting capital before labour?Further, as capitalism throughout the world reinvents itself, establishing power in various highly developed regions, where we find a strategic nuclei of the commodities that are produced, the distribution of GST taxes collected by government and paid to the states will lead to interesting political outcomes. The truth about the GST cannot be hidden. It is a very regressive tax and it will damage the Liberal and National parties, particularly in country towns. Philosophers like Adam Smith had great insight into the system of capitalism. I quote from Adam Smith's book The Wealth of Nations, article 4, under `Taxes', which it is intended should fall indifferently upon every different species of revenue. He says:The state, not knowing how to tax, directly and proportionately, the revenue of its subjects, endeavours to tax indirectly by taxing their expense, which, it is supposed, will in most cases be nearly in proportion to their revenue. Their expense is taxed by taxing the consumable commodities on which it is laid out.The consumable commodities are either necessaries or luxuries. Taxes upon luxuries have no tendency to raise the price of any other commodities except that of the commodities taxed. Taxes upon necessaries, by raising the wages of labour, necessarily tend to raise the price of all manufactures, and consequently to diminish the extent of their sale and consumption.Taxes upon luxuries are finally paid by the consumers of the commodities taxed without any retribution. They fall indifferently upon every species of revenue, the wages of labour, the profits of stock, and the rent of land.Taxes upon necessaries, so far as they affect the labouring poor are finally paid, partly by landlords in the diminished rent of their lands, and partly by rich consumers, whether landlords or others, in the advanced price of manufactured goods, and always with considerable overcharge.The advanced price of such manufactures as are real necessaries of life, and are destined for the consumption of the poor, of coarse woollens, for example, must be compensated to the poor by a further advancement of their wages. The middling and superior ranks of people, if they understand their own interest, ought always to oppose all taxes upon the necessaries of life, as well as all direct taxes upon the wages of labour. The final payment of both the one and the other falls altogether upon themselves, and always with considerable overcharge.I cannot imagine why the Reserve Bank's participation in this debate is so difficult to find. The tinkering by the Prime Minister and his Treasurer with Australia's taxation system will cause Australians much pain. Finally, Alan Ramsay described Prime Minister Howard's ability to deal with humanitarian issues in last Saturday's Sydney Morning Herald , 20 November 1999, as `a sorry tale of minute vision'. I think that most Australians will agree with his sentiments when they are applied to taxation as well. I certainly do.13:10:0012508McMullan, Bob, MPMr McMULLAN5I4CanberraALP00—What we have before us are the new business tax system bills, which are in effect the first elements of the business tax package, which the government trumpeted very loudly in response to the Ralph Review of Business Taxation. The business tax package has been to a great extent the focus of political attention in recent days, far beyond the breadth and depth of its economic significance. So let me talk about its political focus briefly, then put its economic significance in some perspective and then talk about the issues within the package which are of priority at the moment. My understanding from the comments made by my colleague the shadow Treasurer in his earlier speech to the House is that probably at this moment he and the Treasurer are in discussion about an attempt to get agreement about this tax package. I have great confidence in the shadow Treasurer; he is a very experienced negotiator. No-one in current Australian politics has been involved in more major negotiations than the member for Hotham. But at this stage, from a political perspective, in my view, it is highly doubtful that he will be able to negotiate a successful agreement with the Treasurer. Why do I say that? Because it is my political judgment that the government has never wanted to come to an agreement with the opposition. It sees its political interests better suited by coming to an agreement with the Democrats.In my view, that is not in the national interest. It is not clear to me whose political interests would be served by the government and the opposition coming to an agreement; that is actually a difficult issue to assess. But the government has made its judgment. It might be a correct political judgment, I do not know—I doubt it. But what is clear is that the national interest would be served by the government and the alternative government agreeing on the essential structure of business tax so that investors and potential investors have certainty that the business tax regime will continue in essentially the same manner beyond the limited three-year terms with which Australian politics is bedevilled. We will otherwise be forced and have reinforced the short-term focus of Australian public policy and the Australian investment profiles. That would be disadvantageous to the national interest. So I hope that the government is prepared to enter into serious negotiations with the opposition and that we might get agreement. I am extremely doubtful. I do not believe the government sees it as being in its political interest to come to an agreement with the opposition, because it wants to be able to make those whimsical remarks about relevance. We are very relaxed about those remarks. We are very relaxed about the government having ownership of the indirect tax system, which was so adequately described and analysed by the member for Lowe. But this package is less significant economically and has less profound adverse social consequences, even if it were pursued in its worst form, than the GST package, and it would be in the national interest if we could get an agreement. The opposition is genuinely prepared to enter into such an agreement, but I am not convinced that the government is seriously interested.While the economic significance of this package is important, let us get it in perspective. It is very small beer compared with the GST package. If you are talking about its fiscal impact, the dollars are much less significant in this package. If you are talking about its economic impact, its capacity to change behaviour and patterns of investment—particularly patterns of consumption and their consequences—is much less significant. Most obviously in social concerns, it is much less significant. Its redistributive capacity is much less, and of the depth with which it drills down into the daily lives of Australians it is much less significant.The majority of Australians are affected only indirectly by this package—some of them very remotely, some of them more directly because of its implications for their jobs—but for the majority of Australians this package will not touch them directly. However, it does still matter; it is still important. Particularly in my capacity as shadow minister for industry, it raises issues which I regard as important. I wanted to make those remarks in opening by way of context.It matters for a number of reasons and, in the time available, I will seek to refer to some of them: firstly, the significance of the trade-off between accelerated depreciation and the 30c rate; secondly, the proposed changes to the capital gains tax as they relate to overseas pension funds and Australian pooled development funds; thirdly, the trade-off between the CGT rate and averaging and indexation; fourthly, some of the anti-avoidance measures; fifthly, the so-called option 2; sixthly, the issue of revenue neutrality; and, seventhly, if time permits, the big issue that is not in this package—the R&D tax concession. That is the most important business tax issue in Australia—about which this is silent. By its silence, it makes the cut in the R&D tax concession's effective value greater.I turn first to accelerated depreciation. The opposition cannot and does not pretend to be opposed in principle to the idea of a trade-off between accelerated depreciation and the lower rate. It was something which we did in government when the economy was growing very strongly. We subsequently reversed it, I think with pretty widespread support, when an incentive for greater investment, particularly infrastructure investment, was required. It is not a problem of principle. When it was first raised, I wanted to look at it from three points of view: its significance for manufacturing, its significance for mining and its significance for infrastructure.Concern was raised in regard to the significance of this change for manufacturing because it was feared that it would be a disincentive to modernising investment—to the sort of investment that manufacturing needs if it is going to be viable and successful; for example, the introduction of new technology. Through consultation with manufacturers and their associations we know that they overwhelmingly support the trade-off. They say that net benefit to manufacturing is a positive and, therefore, from a manufacturing point of view, they regard it as a plus. They have some other concerns about the package, particularly with regard to the failure to adjust the R&D tax concession, but they do not oppose this.With regard to mining, the principal advocacy on that matter has been taken up by my colleague the shadow minister for resources, but let me comment on it and lump it in with my concern about investment in infrastructure. It has the potential to have a serious impact in a number of ways, but it is impossible to assess it properly because the government has made a generalised statement that it will put alternative arrangements in place.I have some serious concerns about the replacement measures for the impact of accelerated depreciation on major projects. I have them for the following reasons. First, it has a budget impact and we cannot tell what the budget impact is because we do not know what the replacement measures are. Let me give you a sense of the possible scale of it. Three big infrastructure investments are potentially adversely affected by the loss of accelerated depreciation: the AGL pipeline from Papua New Guinea to Brisbane, the North West Shelf and the Very Fast Train project. They are only three examples, but they are three big examples.It is not possible to know exactly what the impact will be because that would be confidential to the projects, but my assessment is that for AGL alone the loss of accelerated depreciation over the first seven years would be about $1 billion. Averaging it out—and it would not be smooth but let us do it for simplicity's sake—it would be about $150 million a year. That is how much replacement value we have to look for in the budget for replacement measures for the AGL pipeline alone—and the provision for it is zero. The North West Shelf project is bigger than the AGL pipeline by a factor of two or three. The implications for the VFT would also be substantial. We are talking about a potential budgetary impact of hundreds of millions of dollars with no detail and no budgetary provision.That brings me to my second concern, which is about transparency. If there is to be such a replacement scheme there should be publicly available guidelines against which decisions could be judged. We do not want to go back to the Kennett days in Victoria of backroom deals with potential investors. My third concern is that it is very difficult for project planning and project development because the people developing the project do not know the rules. You have to get the project to a certain point before you can start to talk to the government and perhaps negotiate some set of arrangements about what the replacement might be. Accelerated depreciation is known and predictable.I am concerned about the impact on medium size projects—$50 million, $100 million and $200 million—particularly in the mining sector, that are not big enough to attract special measures which are not likely to get any special arrangements. I have those concerns. They do not lead me to say that we should keep accelerated depreciation. I think the net benefit to the economy is in the trade-off, but the government has to come clean with the details of how those special arrangements are going to operate and what their budgetary implications are.With regard to capital gains tax arrangements for overseas pension funds and pooled development funds, this is a policy that the Labor Party has been advocating since before the last election. We took it to the last election and, of course, the government criticised it. It said it was a terrible policy and yet now it is doing it. That does not cause me any chagrin. I am just pleased that they have finally seen a bit of good policy. Therefore, we support the move in principle and we welcome the government's adoption of the general thrust of our policy. The government has not proceeded in exactly the way we would have preferred but, on the face of it, the proposal looks acceptable.AVCAL, the Australian Venture Capital Association, has raised a number of concerns about the detail of this. I do not have time to deal with them in this debate, but I want to mention some of them: the implications for exempt endowment funds and charitable trusts; the situation with regard to US limited liability partnerships, which are often a mix of exempt companies and individuals; the circumstance of venture capital trusts and whether they are going to be regarded as collective investment vehicles; and the collective investment vehicle status for local investors. Those are probably the four major ones, but what qualifies as eligible venture capital projects is also not yet clear.Those are concerns of detail which need to be resolved. They are just another example of the details in this package that are unavailable which people are expected to rush out and vote for—without the detail. Nevertheless, it seems to be a move in the right direction. It is essentially a move we advocated at the last election. It would not be logical to expect that we would do other than support it.There is more controversy about the capital gains tax rate trade-off. The government's decision to tax only half of the capital gain realised by any individual taxpayer in a transaction, offset by the abolition of indexation and averaging, creates much more of an illusion of a reduction in capital gains tax than a reality. We have a reduction in the rate but not a reduction in how much capital gains tax people will pay. With the abolition of indexation, roughly, you can say that if you are not getting a return of twice the rate of inflation you may be actually paying more capital gains tax, not less. Many people with weekenders, worried about capital gains tax, who have been saying, `Isn't it wonderful, the capital gains tax rate will be halved,' will find they are paying more. Everybody whose asset is increasing only at the rate of inflation and who pays zero capital gains tax now will be paying 24 cents in the dollar on that gain from now on. So there is a great illusion in it of the benefit.I have some concerns about the social consequences of the abolition of averaging, particularly for self-funded retirees, but I think that is an issue better dealt with not in this package. I mention it. It is an issue I think we might wish to come back to, but I do not think it is a matter that can be resolved in this package.All the evidence available to me is that this does have the capacity to attract investment into industries in which we need investment attracted, but it absolutely needs stronger anti-avoidance measures than we have at the moment. It is very hard to vote for this package when it does not have the strength of anti-avoidance measures that this sort of change requires. This brings me to the anti-avoidance measures, about which I will be brief. We need to strengthen them generally, particularly with regard to the transfer of income into capital. We need a clear indication from the government on the detail of its intention about taxation of trusts, and action rather than words on its intention to stop the alienation of personal services income. Those are the keys to revenue neutrality.The one other issue that is referred to in this package, and the government says it is going to act on—although, once again, we do not know how, nobody knows, how; even the government does not know how—is so-called option 2, which is bringing taxable income closer to the accounting standard measure of income. That is a correct principle. I have advocated it for a long time, so I am not going to oppose it now just because the government is supporting it—and I am supposed to be in the opposition. It is a correct principle, but it is very difficult. It will not be easy, and it has potential implications for particular industries and companies. It needs to be introduced with great care. At this stage we have not seen the detail, but it seems to be a move in the right direction. We certainly could not give it a tick-off without seeing how it is going to be done.That brings me in conclusion to the question of what is not in the package, and in particular I want to refer to the R&D tax concession. There is a very close contest for what is the worst decision this government has made. A lot of people would have their candidates, but there is no doubt that in 2010 when Australians look back and say, `What are the decisions that governments made that have affected the nature of our economy and our society?' one of the worst will be the decision to cut the R&D tax concession from 150 per cent to 125 per cent. And this package makes it worse. All the representations from industry associations, scientists and the scientific community, and all the independent economic assessment, said this is an area where government intervention is justified because of externalities. That means that the full benefit of R&D does not flow to the investor, so you tend to get underinvestment unless the government steps in to give concessions.If you do not believe the theory, look at the outcomes. They are crystal clear. From the introduction of the 150 per cent R&D tax concession to its abolition, there was a steady increase in business expenditure on R&D from a very low base—Australia was one of the lowest in the developed world—to the point where we almost got to the OECD average. These were no grounds for complacency or cutback. We had almost got to the average after 13 years of increase. Since the cut from 150 per cent to 125 per cent, the business investment in R&D has started to fall again. We are the only country in the Western world where business investment in R&D is falling. Everybody, including the government, says that the key to economic success in the first decade of the 21st century is going to be innovation, knowledge, investment in research and development, and turning that research and development into new businesses and new jobs. This government cuts it, and when it makes a major review of business tax it not only does not do anything about it but does not even make a modest modification to compensate for the impact of the proposed reduced new company tax on the effective value of the R&D tax concession. So it exacerbates the biggest problem.The 21st century is going to be the century in which the economies which succeed are those which invest in education, science, research and development. Since this government was elected, we have had a very sorry record. Before that it was not perfect, but our support for business expenditure on R&D was substantially right, had broad comprehensive support and was working. The greatest failure of this package is its failure to act on the R&D tax concession, and that is something that, if the government does not act on it between now and the next election, will be judged harshly by Australians who care about where we should be in the 21st century. It is a great weakness in the package and, while I support the bills before the chair and while I support the amendment to be moved by the Deputy Leader of the Opposition, I greatly regret the lack of detail overall and the failure of the government with regard to business expenditure on research and development.13:30:0012512Latham, Mark, MPMr LATHAMK26WerriwaALP00—More than any government in the history of this parliament, the Howard government has introduced regressive and disgustingly unfair provisions into tax law. In taxing consumption, it applies a 10 per cent rate to the rich just as it applies a 10 per cent rate to the poor. This is a flat, regressive goods and services tax. In taxing capital, the rich are even more favourably treated, with a halving of the capital gains tax. For those who hate the GST for all its inequities—and I am a hater of flat taxes—this provision is worse. If you hate the GST, this one is worse.I am grateful to the office of the Leader of the Opposition for providing this statistic: the proposed changes to the capital gains tax will provide an average gain of $149 a year to people with taxable incomes below $20,700 and a gain of $6,500 a year to people earning between $100,000 and $500,000. These proposals before the parliament entrench the guiding light and symbol of taxation policy of the Howard government: the more you earn the bigger the tax cut.But they go even beyond the definition of a regressive tax because, under this government, the more you earn the bigger proportion of your earnings you receive in a tax cut. They have established a new category of tax inequity. This goes beyond a regressive tax. These capital gains tax proposals are unique: they establish a new category of gross tax inequity. This is a multibillion dollar free kick for the rich. It is an open invitation for the tax minimisers, the tax avoiders and the capital speculators to do their worst in the Australian economy.This government has obviously forgotten the reason the capital gains tax was introduced in 1985. It was introduced following the tax avoidance and tax scandals of the early 1980s. This was not just a matter of bringing capital gains into the tax net. It was a matter of taxing capital and income at the same rate to stop the distortion of investment, to stop the distortion of economic activity and to stop high income earners converting taxable income into capital gains through artificial company structures and other avoidance devices. Of course, it was spurred on by the bottom of the harbour schemes. How we forget at the end of the nineties the nature of those bottom of the harbour schemes at the beginning of the eighties. They were based on their participants receiving untaxed capital gains.The first law of good tax policy is: do no harm; treat all parts of the economy, all types of investment and all types of revenue the same; don't distort investment decisions; don't open up avoidance techniques; don't tax capital at a lower rate than income; don't give the land speculator on the Gold Coast a lower tax rate than the small IT company trying to trade in products and income; don't give doctors buying in and out of private hospitals a lower rate of tax than the local service franchise trying to build up its business activity; don't give the smarties who milk the market for short-term gain a lower rate of tax than those who use their intelligence and know-how to actually develop products and markets and build up an income base; don't reward the great Australian disease of property trading and punish the knowledge economy; don't reward the deep-sea feeders in the Australian economy, the spivs and the speculators while, at the same time, punishing the fair dinkum trading enterprises and their income earnings; don't repeat the worst mistakes and the worst abuses of the early 1980s.It is too readily forgotten in these debates how significantly the Labor Party in government changed the culture of this place and of the Australian economy. There was a lot of reform and a lot of changes. But the one guiding principle they had at their heart was this: Labor wanted to create an economy in which you could turn a dollar by being creative, not by being a speculator. That was the one principle of all those Labor reforms. If you wanted to create something good in the Australian economy—create some income, create some jobs—you would get a fair chance to do it under our economic policies. We wanted that to ensure that the private sector got into creation instead of speculation.Unfortunately, these tax changes—the policies of the Howard government—are going back to the future. They are going back to the old culture, the old ways and all the distortion and corruption that came with it. Labor wanted an economy where wealth did not have to come out of the ground; it could come out of our heads, it could come out of our creative skills as a nation. The Liberal Party wants to go back to the old culture.You need to ask the question: who was there at the scene of the crime in the early eighties? Who was the one politician in this place who was there at the scene of the crime in the early eighties? John Winston Howard. He is the great Bourbon of Australian tax policy. He has forgotten nothing and he has learned nothing on tax in the past decade. He is a backward looking Prime Minister who takes Menzies as his leadership model, the monarchy as his social model and the early 1980s as his tax model—a tax model that was so badly scarred by so much corruption and the bottom of the harbour schemes, all underpinned by the one principle that is reintroduced under this government of taxing capital at a lower rate than taxing income, the one principle that had the bottom of the harbour merchants rubbing their hands with glee. The Parliamentary Secretary to the Minister for the Environment and Heritage can shake her head: she should go to the tax history books.Not only that, let us talk about someone else who was there at the time not allowing these schemes to take place but trying to clean them up—the then Commissioner of Taxation, Trevor Boucher. He was there when the Labor government introduced the capital gains tax in 1985. What does he have to say about these changes? Take the words of the independent taxation commissioner from the eighties. He said:Halving the capital gains tax is fiscal vandalism that will entice tax avoiders like bees to a honey pot.This government is spreading the honey around the tax act for the avoiders to come in and do their worst, just as they did in the early 1980s. It is not the way to build the skills, the knowledge, the new ideas and the enterprise culture that Australia needs to compete in the global economy. This is a tax policy with shiny white shoes, and Trevor Boucher can attest to this flaw.Some say the inequities in the package will be offset by the abolition of indexation. They must have come down in the last shower, because the only reason indexation is being abolished is that inflation is so low and there is barely anything left to index with. While some might say the GST is going to lift inflation—and most certainly it will—we all know it is an undesirable but yet one-off impact. I wish the capital gains tax halving was just a one-off, but once this thing is in the statute books it will be pretty hard to get out. If you let the white shoes put their foot in the door, we all know how hard it is to get them out. This will be anything but a one-off effect on the Australian economy.The government is promoting this as a measure to encourage share trading. Well, I too want more share trading. I believe in the virtues of Australia as a share owners' democracy. I want to disperse economic power. But the problem with this measure is that it concentrates economic power and wealth at the top end of town. We know that Australia has approximately 50 per cent of its households in share ownership. Surely the great challenge for this parliament in dispersing economic power is to get the other 50 per cent in with their fair share. This should be a matter of bringing the other 50 per cent of Australian households into share ownership. I endorse a first share owners scheme. This parliament should be enacting a first share owners scheme to bring all Australians into the virtues of a share owner democracy—not just one half of Australian households.The best way to disperse economic power, to build a fairer society and a knowledge economy is to do two things: to apply the equal taxation treatment of income and capital, and to use tax credits for families taking up share ownership for the first time. So, if we are interested in extending share ownership in this country, I think there are better targeted, more effective and more equitable measures that could be introduced by the parliament.It is not just the content of this legislation that concerns me; there is also a concern about process. It is not often in this parliament that we see instances of corruption, but the capital gains cuts certainly represent a corruption of process. John Ralph, himself a multimillionaire with extensive capital holdings, had a chance to recommend a halving of the capital gains tax. Where does he get his costing for this initiative? Where does it stand up in the Treasurer's test for revenue neutrality? He did not get his costing from the Treasury; he did not get it from the finance department; he did not get it from the traditional sources of professional public service advice in this country; he did not get it from an Australian university; he did not get it from an Australian econometric model. He got his advice on this from the Australian Stock Exchange which has a big financial interest in the measure. It is a bit like putting Hannibal Lecter in charge of the mortuary. That is the corrupted process by which this government is running tax policy. But there is more and it gets worse. Where does the Stock Exchange get its advice from? Not the Treasury, not the finance department, not the independent sources, not an Australian university but a bloke that no Australian would ever have heard of: Alan Reynolds. I can inform the parliament that Alan Reynolds—the source of this advice to the Ralph review—is a director of the Hudson Institute in the United States.When I heard that Alan Reynolds had come up with a proposition that the government could cut tax but raise more revenue—and not only that, but the more they cut the tax the more revenue they would raise—I went back in my memory bank and thought `That sounds familiar. I once heard an American President talking about the proposition that you can cut taxes but raise more government revenue.' It was Ronald Reagan in the 1980s. It was known as Reaganomics, and it even had an economic theory that went with it—the Laffer curve. I think you will find around the universities of Australia the chapter on the Laffer curve ripped out and thrown down the toilet, because it is the most discredited and disreputable economic theory that you would find in international economic circles.I thought it interesting to hear that Alan Reynolds was involved in this. I asked my staff to drag out his CV. Where was Alan Reynolds at the scene of the crime for Reaganomics? You look up his career details and he has done many things. He is an institutional investor himself—surprise, surprise that he is looking for an initiative that would be in his own financial interest. Where was he in 1981? He was on the transition team for David Stockman's budget management; he was at the heart of Reaganomics. This bloke was part of the gold card Reaganomics club in the early eighties. So here we are relying not on our professional advice in Treasury or Finance or any other part of the Australian public service but on a bloke who was part of one of the most discredited and unsuccessful economic experiments in the history of the Western world. It is a shame that this parliament is using a corrupted process to make policy. Corrupted process should have no part of our policy making here.But it is an all too familiar cycle in Australian politics. The government opens up a new tax inequity—a loophole, an imbalance—the smarties pour into it for tax avoidance reasons, there will be public outrage and then an inquiry. At the inevitable tax avoidance inquiry and all the court cases that come with it, one name should be held responsible, one name should be remembered in this debate: Peter Costello. He has the responsibility for our finances; he has responsibility for the integrity of the tax system; he has the responsibility for due process and proper procedures in the policy making of the federal parliament and this particular bill; but he has accepted a corrupted process to bring us to this point. I hope this debate well and truly records his reprehensible role in this particular provision.In the time remaining to me, I want to raise a matter of detail. I have received representations from cooperative enterprises around the country—I am surprised that the National Party has not taken this matter up—concerned that cooperatives are no longer recognised as a separate legal entity in these particular provisions. This, of course, continues the slow decline of cooperatives and their appropriate taxation treatment. I raise that matter here, hoping the Labor senators in another place might take it up in detail. I think there is an argument to recognise the very important and special economic and social roles of cooperatives. They should maintain a separate legal entity and status in our taxation laws. As I say, that is a matter of detail.On the substance, I share with other Labor speakers the concern about an absence of revenue neutrality in these measures; I share a concern about due process; I share a concern about the equity features of these particular provisions; but, most of all, I share a concern about the taxation philosophy of the Howard government. I just cannot understand how a government that is putting a 10 per cent flat regressive tax on all working Australian families can come in here and promote, as their version of tax fairness, a measure that gives absolutely enormous benefits to the top end of town, to the richest Australians. Not only that but it is a government that pours billions of dollars of speculative capital back into the Australian economy.This is all at a time when our Reserve Bank is worried about the economy overheating. We have already had an increase in interest rates. There is a worry about the GST having inflationary pressures and driving interest rates up further. This is the last thing the Australian economy needs. As Australian households and mortgage holders watch their interest rates rise, they should remember that name, Peter Costello, as the person responsible for the interest rate rises and responsible for the disgusting and corrupted process which has brought these provisions before the federal parliament.13:47:0012516Cox, David, MPMr COX83UKingstonALP00—Today in my contribution to the debate on the package of new business tax system bills, I want to talk about how and whether these business tax measures are going to be funded. Once again the Howard government is asking the Labor Party to pass a major set of tax reforms without putting all the promised components into the package. The essential components that are missing with business tax reform are those that are designed to deal with tax evasion and avoidance. The community should be concerned about this. Several generations of Liberal politicians have shown little propensity to deal with tax avoidance and evasion. In the 1970s, the Fraser government, with the same John Winston Howard as Treasurer who is today the Prime Minister, dragged its feet for years before acting on the infamous bottom-of-the-harbour schemes. They were not avoidance. They were a clear case of evasion that ultimately ended in prosecutions, yet the Liberal Party was reluctant to do anything about them.At the time Labor took office in 1983, almost the only industry that was booming was tax avoidance. There were enough schemes and angles that any Australian who was fortunate enough to be outside the PAYE system and able to arrange their own tax affairs could make optional the payment of all or a major part of their tax. When in 1985 the Labor government held a tax summit and produced a white paper introducing comprehensive tax reform to put integrity back into the tax system, the Liberal Party opposed it tooth and nail. The same John Winston Howard, who is today Prime Minister, was the prominent leader of that opposition. The Liberals, under both Howard and other leaders, opposed almost every modification to the tax system for the next decade.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 previ ous Labor government pressed Treasury for advice on the extent of the problem and possible remedies. Nothing was forthcoming until 9 November 1995 when the Australian Taxation Office advised that they had uncovered a significant problem using multiple trust structures. They had found that large numbers of seemingly unrelated trusts were, in fact, related, and a range of techniques were being employed by high wealth individuals to reduce tax liabilities to low or negligible levels. They found that at least $800 million a year was at stake from as few as 80 high wealth individuals.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. That announcement was made on 11 February 1996. On 29 January 1996, the Secretary to the Treasury and the Commissioner of Taxation had been instructed as a matter of urgency to develop a legislative response to cover income from the 1996-97 financial year. The reason Labor announced the measures during an election campaign was that it was seeking a mandate to deal with this area of tax avoidance and evasion.Despite a briefing from the tax commissioner, the Liberal response was sceptical. They really did not believe that there was that sort of level of evasion going on. They did, for the benefit of the media, suggest that if there was any evasion going on, they would if they got into government take some action to deal with it. If the Howard government had any interest in the fairness and integrity of the Australian taxation system, it would have legislated to put an end to this abuse in its first year of office.Two weeks before the 1998 election, when it needed 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. It claimed significant revenue increases from a package of measures it called `consistent treatment of entities'. The positive budgetary impact was $1.67 billion in 2000-01—the measures now put off until 2001-02—declining to $650 million in 2002-03.Yet we did not see those bills when the government introduced the necessary legislation for the GST. We were then told that the government would produce its solution to this problem in the Ralph Review of Business Taxation. Now we have the business tax legislation before us but no legislation on trusts. That has been put off until stage 2 of the business tax reforms.The remedies on trusts were clearly set out in the ANTS package by the Treasurer. Labor wanted them implemented as quickly as possible. It was not a matter of any significant conflict between the parties, at least not as far as Labor was concerned. The policy which was clear enough to be included in the government's election policy became too difficult for it.Why was this the case? It was because it was causing very great conflict within the coalition. Successive National Party leaders—Fischer and Anderson—have waged a war of resistance against it within the government. More ominously, so too has the Prime Minister's cabinet secretary, Senator Heffernan. Even the Prime Minister has himself undermined confidence that he will ever act against the abuse of trusts. On 30 September 1997, the Financial Review reported that:The Prime Minister ruled out an attack on the abuse of trusts for taxation purposes—on the spurious grounds that such a move would hurt small business.The Prime Minister made a personal explanation in the House the same day saying: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.But when, Prime Minister? When? 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 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 has been 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 they will act, but to date they have done 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 Australian Financial Review on 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. It said: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 subject to fringe benefits tax.This contradicted the government's 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'.On 25 May 1999 the Sydney Morning Herald reported the National Party concerns that the review of business taxation proposals would reintroduce death duties on family farms by cracking down on discretionary family trusts and that it would be given a sympathetic hearing amongst coalition parliamentarians. The report said that it was understood that 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 was apparently hoping that the review of business taxation would not pursue proposals to tax trusts as companies. On 24 May Glen Milne reported in the Australian that the then Deputy Prime Minister, Tim Fischer, had said, `We'll kill this in cabinet.' In one notable Sunday program performance, Deputy Prime Minister Fischer even tried 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.He was trying to get it killed off in the Ralph review. Ralph killed off his argument, I think, rather than him managing to have taxation of trusts killed off in the Ralph review. Despite him failing at that, at least for round 1, his successor, John Anderson, is still fighting on. It is now deferred to round 2, so we have not seen the legislation. On past experience, I am somewhat sceptical that we ever will.David Stockman, the Director of the Office of Management and Budget in the Reagan Administration, set out to be the master of the fiscal universe in a manner not dissimilar to the way in which our present federal Treasurer tries to characterise himself. In Stockman's case, he was thwarted by two things: an agreement he made during the presidential transition period with defence secretary Casper Weinberger on increases in military spending; and becoming a prisoner of unrealistic economic growth and, therefore, revenue forecasts.Stockman invented the magic asterisk which covered the difference between the budget he had, the one in deficit, and the budget he wanted, the one in balance. The legislation to deal with taxation avoidance and evasion using trusts has become Treasurer Costello's magic asterisk. First, when in opposition he said there was no need for legislation to deal with tax avoidance using trusts because he was sceptical that that was happening. Then in government, when he needed revenue to pay for the ANTS tax cuts, cracking down on trusts became a politically palatable way of paying for them. But then the internal heat became too great, and he put it off until the business tax review.Now we are dealing with stage 1 of the business tax review, and he has not done it. It has been put off until the second stage. It is now not paying for the ANTS tax cuts, which the Prime Minister announced yesterday had weakened next year's bottom line by an additional $1.8 billion. Now stopping avoidance and evasion using trusts is a major element of stage 2 of the business tax reforms and an essential element of paying for them. It is Costello's magic asterisk. I suppose Peter Costello shares some other views with David Stockman, most concerning amongst these is the belief that if you cut tax rates you increase tax revenues.Yesterday's announcement by the Prime Minister of changes in his government's underlying fiscal position are a good indication that the tax changes have not strengthened the country's financial position. The question is whether the business tax changes which are before the House today will be paid for as the Treasurer claims by cracking down on tax avoidance and evasion using trusts or whether they will be paid for by further cuts to education, health and aged care.What does Labor want from the business tax changes? An internationally competitive business taxation regime will result in higher levels of new investment in productive employment generating economic activity. What we want to know is that the measures that the government says will pay for that will do so. The Treasurer's problem is that he has been buying the tax reforms he wants by loosening fiscal policy: first, in bringing in the GST and providing large income tax cuts to the affluent; and, second, unless the additional measures in stage 2 are implemented, with the business tax changes.10000Cox, David, MPMr SPEAKER—Order! It being 2.00 p.m., the debate is interrupted in accordance with standing order 101A. The honourable member will have leave to continue his remarks when the debate is resumed.Condolences125181251812518Mr SPEAKERMr SPEAKER10000PON/A10—I inform the House of the death, on Saturday, 20 November 1999, of Mr Henry Arthur Hewson, OAM, a member of this House for the division of McMillan from 1972 to 1975. As a mark of respect to the memory of Mr Hewson, I invite honourable members to rise in their places.Honourable members having stood in their places—Questions Without Notice125191251912519Brereton, Laurie, MPMr BRERETON5T4Kingsford-SmithALP00—My question is to the Minister for Foreign Affairs and concerns his statements on 25 February, 7 March and 31 March concerning the arming of militias in East Timor. Minister, why did you publicly and repeatedly accept Ali Alatas's February assurance that nothing was happening, other than legitimate arming of security auxiliaries? Is it not a fact that the DIO advised the government as early as 6 January that the Indonesian military were arming civilians in a deliberate strategy to subcontract out violence against pro-independence supporters? Minister, why did you mislead the Australian people?12519Downer, Alexander, MPMr DOWNER4G4MayoLPForeign Affairs10—I thank the honourable member for his question. The government did not—and nor did I, as part of the government—deliberately mislead the Australian people. Right from the outset of this East Timor exercise, the government has made very clear its concerns about the behaviour of the Indonesian military in East Timor. When I met with Ali Alatas around 23 February this year—it might have been a day or two different from that, but it was approximately that date—I made the point to Mr Alatas that we were very concerned about what we had heard of the relationship between the military and the militias. That was the first time at my level that we made that representation to the Indonesian foreign minister, because from recollection it was the first time I met the Indonesian foreign minister following the change in Indonesian policy towards East Timor. Subsequently we made around 120 different representations to the Indonesian government about violence in East Timor and we made it perfectly clear, publicly and privately, to the Indonesians that the violence in East Timor was the responsibility of the Indonesian authorities and the Indonesian military. We made 120 representations and we organised a summit in Bali for the Prime Minister to meet with President Habibie when General Wiranto was there. Ali Alatas was there and the Minister for Defence and I were there. These issues were discussed at great length and at that summit the Prime Minister pressed President Habibie for an international peacekeeping force in East Timor. The point is this: we were always concerned about these issues and we took action.I saw the honourable member making his point in a doorstop earlier today and it follows on from the absurd, selective and intellectually very dishonest article by his friend Mr Lyons. The simple fact is that in that article and in your doorstop there is not a single reference to the fact that we made 120 representations about these issues, that we organised a prime ministerial presidential summit and that we prepared the Australian Defence Force from early this year in order to be able to move to East Timor as circumstances permitted. When finally it was possible to do it, we did it. This government is a government which will always proudly have on its record the fact that it changed Australian policy on East Timor, that it helped give the people of East Timor a chance to decide their own future and that it brought peace and security to East Timor when it happened. It does not matter what the Leader of the Opposition, the member for Kingsford-Smith, John Lyons or any of those people ever say: they will never take that away from Australia and they will never take that away from this government. We stand proudly by our record, and it is much appreciated by the people of East Timor.1251912519Somlyay, Alex, MPMr SOMLYAY ZT4FairfaxLP10—My question is directed to the Treasurer. Would the Treasurer advise the House of recent private sector surveys on activity in the Australian economy? When will the government release its own economic and budget update?12519Costello, Peter, MPMr COSTELLOCT4HigginsLPTreasurer10—I thank the honourable member for Fairfax for his question. He probably has in mind the survey of small business which was released today by the Australian Chamber of Commerce and Industry. What it showed was that general business conditions have improved in the most recent quarter and the expectation is for further improvement in the next quarter.8K6FITZGIBBONMr Fitzgibbon—What does the Yellow Pages business survey show?CT4Mr COSTELLO—I am pleased to see that the Labor Party takes such great interest in conditions improving for small business. I am sure that the Labor Party welcomes good economic news as much as the government does. The sales revenue for small business improved in the most recent quarter. The findings were that profits in the small business sector recovered during the last quarter. There are indications of employment growth continuing in the small business sector. That is good for jobs, with unemployment now at 7.1 per cent. If we continue economic growth at a decent level, it could fall further. All members of the House welcome the fact that it is down from 11.2 per cent unemployment rates under the then minister for employment, the current Leader of the Opposition, who has the modern Australian record for unemployment of 11.2 per cent.The mid-year economic and fiscal outlook will be released tomorrow, I hope, if it is back from the printers in time. As the Prime Minister indicated yesterday, what that will show is that, whilst there have been some enormous costs to the budget from East Timor, the budget will be able to fund those costs in the current financial year. The East Timor levy is for the next financial year, 2000-01. There have been additional costs in relation to that year arising partly from the Senate's demands to change the government's tax package, costing approximately $1.8 billion. There is about $0.5 billion in respect of interest on public debt, which is an additional expense because of those other expenses. There is also the putting back of the second Telstra instalment. The government has made it clear that it intends to keep the budget in surplus. We believe that just as putting the budget into surplus when we were elected in 1996 from the $10 billion deficit that the Labor Party was running at that time insulated us against the Asian economic and financial crisis, it is important to keep budget surpluses and to keep the reduction of debt going in the Commonwealth.They are the important fiscal parameters with which the government has been dealing in the mid-year review. Again it is a first, under this government. The Charter of Budget Honesty legislation requires mid-year reporting. It will detail our first forecasts for 2000-01 when it is released, which I hope will be tomorrow.1252012520Beazley, Kim, MPMr BEAZLEYPE4BrandALP00—My question is addressed to the Minister representing the Minister for Industry, Science and Resources. Is the minister aware of comments last week by the Young Australian of the Year, Dr Bryan Gaensler, that the government is on the verge of hanging a `going out of business' sign for science at Australian universities as a result of its massive cuts to university recurrent grants? Why has the government undermined our national scientific effort by devastating business expenditure on R&D by reducing the 150 per cent tax concession and cutting overall real government research spending in the last budget by five per cent to R&D in universities and 5.5 per cent for the CRC program?12520Moore, John, MPMr MOOREEI4RyanLPDefence10—The opposition do not have a very good record on R&D. They are the ones who operated the syndicated rorts that this government had to come in and fix up. What is happening in terms of R&D in this nation is that the government is running a particularly good science and research program. It is one in which the public sector is spending more than in the average OECD country by a long chalk. In fact, the amount of money we are spending in the public sector is a very great credit to the government. What is falling down is private investment in research and development.DT4CREANMr Crean—Perhaps that's got something to do with the tax concession, you dope.EI4Mr MOORE—The deputy leader should not talk about tax concessions and R&D. You are the old rort merchant. Remember that. There were the deals in the back of the Rolls Royce. The record of the government in this area is outstanding.1252012520Nugent, Peter, MPMr NUGENTUT4AstonLP10—My question is addressed to the Minister for Foreign Affairs. I draw the minister's attention to the serious issue of increased people smuggling into Aus tralia. Would the minister inform the House of the government's diplomatic efforts at the international level to stop this flow of illegal immigrants to our shores?12521Downer, Alexander, MPMr DOWNER4G4MayoLPForeign Affairs10—I thank the honourable member for his question and recognise the interest and concern he has about this issue, as indeed do many members of the House. The government, through our overseas posts, has launched a wide-ranging international campaign against people smuggling. We have been particularly engaged with authorities and with the police in both Indonesia and China. The Australian ambassador to Indonesia, John McCarthy, has discussed the issue with the new Indonesian ministers for legal and constitutional affairs and defence. Both of them acknowledge the problem, and they have been receptive to further cooperation. Indeed, the Jakarta police have told us that they recently broke into a passport forgery ring and seized 180 passports, 55 visa stamps, hundreds of blank visa labels and false identifications from a document forger.The House will be familiar with the fact that the Minister for Immigration and Multicultural Affairs recently visited China. He received reaffirmations of Chinese support and cooperation in cracking down on people smuggling rackets. Other relevant posts, including Amman, Athens, Bangkok, Islamabad and Tehran, are raising with their host governments Australia's serious concerns and are asking for cooperation in stamping out the trade. They have also been disseminating information kits outlining Australia's position and the dangers and new penalties involved.When I was in Nakhon Si Thammarat last week in Thailand I discussed increased cooperation in this field with the Thai government. The Thai authorities have, for some time, been very cooperative and in two major raids in September seized over 1,000 counterfeit passports as well as document producing equipment. So the government is very active in this area and we will continue that activism to ensure that our efforts are successful.1252112521McMullan, Bob, MPMr McMULLAN5I4CanberraALP00—Mr Speaker, my question is to the Minister representing the Minister for Industry, Science and Resources. Minister, are you aware that overseas research grants for Australian researchers will be hit by the 10 per cent GST without the grant funding body being able to recoup that impost by registering in Australia for a GST credit? Won't this mean an effective 10 per cent cut to overseas research grants such as those won by outstanding Australian scientists from, for example, the US National Institute of Health and the Wellcome Trust in the UK?12521Moore, John, MPMr MOOREEI4RyanLPDefence10—I am confident that the government's policies in research and development will be successful under the new regime, as they have been under the old, not only in terms of the gross amount but in relation to the various innovations that we have brought to research and development in Australia, particularly the Innovation Investment Fund, which I regard as one of the great successes in the R&D field. On top of that there are the new changes that we made to pooled development. Under the pooled development scheme we have been able to encourage small companies—5I4McMULLANMr McMullan—Mr Speaker, I raise a point of order. It appears the minister has opened the book at the wrong page. The question was about the impact of the GST on research grants. It was nothing to do with innovation investment funds or pooled development funds. Worthy initiatives as they may be, they are entirely unrelated to the impact of a GST on research grants and the impact on Australian scientists as a consequence.10000Mr SPEAKER—I was listening to the minister's reply. I was, I admit, in conversation with the clerk during the last 15 seconds of the minister's reply. Prior to that he had been entirely relevant and I invite him to continue his reply, relevant to the answer.EI4Mr MOORE—Mr Speaker, I was pointing out to the opposition the many benefits of research and development that the government has brought about by way of use of the Innovation Investment Fund, the Pooled Development Fund and the Technology Diffusion Program.PE4BEAZLEYMr Beazley—Mr Speaker, I raise a point of order. The question was very specific. It relates to foreign grants to Australian research institutions. There is not the capacity for them to recoup the 10 per cent. We want to know what he is going to do about it.10000Mr SPEAKER—I had no reason to interrupt the minister's reply when he had barely uttered one sentence. I call him to continue his reply.EI4Mr MOORE—Mr Speaker, I was speaking before about the Innovation Investment Fund, the Pooled Development Fund and the Technology Diffusion Program. All of these have given research and development a great leg-up in Australia. In relation to the GST application to the research and development funds, I will take that on notice and report back to you.1252212522Haase, Barry, MPMr HAASE84TKalgoorlieLP10—Mr Speaker, my question is addressed to the Minister for Immigration and Multicultural Affairs. Minister, would you inform the House what steps the government is taking to ensure it can identify people who arrive unlawfully on our shores and who may have made applications in other countries? Will these measures help address the problem of people who make multiple attempts to enter Australia unlawfully?12522Ruddock, Philip, MPMr RUDDOCK0J4BerowraLPImmigration and Multicultural Affairs; Minister Assisting the Prime Minister for Reconciliation10—I thank the honourable member for Kalgoorlie for his question and for his continuing interest in this question of people smuggling and people entering Australia unlawfully, in particular those who may have had opportunities to make claims or applications in other countries. The fact is that Australia has not been alone in facing significant numbers of arrivals. People have attempted to use the refugee process as a means of obtaining residence, often in a country of choice, without taking reasonable steps to avail themselves of protection elsewhere and sometimes already having it available to them, abandoning it and seeking to make those claims again in Australia. Some people have also made other repeated attempts to gain unauthorised entry to Australia. On occasions they have even claimed a different identity or a different nationality. It was recently reported to me that one of the ACM—that is, the Australian correctional services personnel who had previously been in Villawood—recognised a person detained in Curtin in Western Australia who had been removed from Australia as an unsuccessful asylum claimant from Iran and who was now claiming to be from Iraq.It is quite clear that there are many people who arrive undocumented. Many have destroyed travel documents en route and have deliberately endeavoured to frustrate our attempts to establish their true identities. I am sure honourable members will recall recently that, when one of our defence vessels was approaching a boat in the seas north of Australia, people were seen to be throwing documents overboard as the Navy came by. It was, unfortunately, too late to try and retrieve them. It was a situation where clearly people were trying to frustrate our ability to identify them clearly.Our identification powers are clearly out of date. We need to access the latest technologies, and I am sure honourable members will be pleased to know that the government is moving to redress this gap. The legislation is now in the process of being drafted to strengthen our identification powers under the Migration Act and to allow biometric testing of unauthorised arrivals and asylum seekers. This will enable us to identify people trying to exploit the protection arrangements by assuming false identities. It is proposed that the legislation will include mandatory fingerprinting and the latest technologies such as DNA testing, face, palm and retinal recognition, as well as voice testing. The proposed new identification powers will bring us in line with the provisions made in many European countries, Britain and the United States in relation to these identification techniques.By comparing biometric data collected from other countries, we should be in a position to quickly confirm the identity of people who already have another protection available to them. It will also enable us to identify people who have sought to enter Australia unlawfully under another identity, and it will enable us to have information here to identify clearly people who may be doubling back. This legislation will be important. We are drafting it as quickly as possible, and I would hope that the parliament would afford it quick passage when I have it ready.1252312523Lee, Michael, MPMr LEEMG4DobellALP00—My question without notice is addressed to the Prime Minister. Is the Prime Minister aware of a report by the Liberal government of South Australia which shows that South Australian government schools will face a bill of $10 million to set up for the GST and an annual bill of more than $3 million every year after that? Is the Prime Minister also aware that the report implies that the total costs for schools across all states will be more than $150 million to set up for the GST and more than $50 million a year after that? Prime Minister, are you going to give every Australian school a $200 gift voucher to pay for their $15,000 bill to set up for the GST and their $5,000 annual GST bill?12523Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—I am not aware of that report, but I am profoundly indebted to the member for Dobell for asking me that question because it enables me to point out a few salient features about the GST. To start with, the states get it all. The states get all of the GST. Every last dollar of the GST goes to the states, and that, my good friend, is why they signed up with alacrity. One after the other, they queued up. Bob Carr said, `This is outrageous. Where do I sign, John?' Peter Beattie said, `This is terrible. I will fight it to the last vote. Where do I sign?' They went on and on.This is the greatest deal that the states of Australia have had since World War II in relation to revenue sharing. This reverses the trend that began with the imposition of uniform taxation as a wartime measure in 1942. This will provide the only basis for an expansion of revenue so that the states can provide the services. The greatest beneficiaries of the GST are the state governments of Australia, because what the states will have is something that they have pleaded for for years, and that is access to a growth tax. Year after year, they came: Bolte, Bjelke-Petersen and both generations of the Courts. On they came, saying, `Will you please give us access to a growth tax?' And it was the coalition government that finally did that. This is a great investment in the federal future of Australia. There will be more money available for government schools. There will be more money available for public hospitals. Prudent state governments have grabbed hold of this, and they will help themselves to the bounty of the GST.1252312523Hull, Kay, MPMrs HULL83ORiverinaNP10—My question is addressed to the Minister for Veterans' Affairs. What does the government's announcement yesterday about additional full-time personnel strength for the Army and Air Force mean for young Australians and for key units in my electorate of Riverina?12523Scott, Bruce, MPMr BRUCE SCOTTYT4MaranoaNPVeterans' Affairs; Minister Assisting the Minister for Defence10—I thank the member for Riverina for her question. I know she has a very strong interest in this subject because of two very important defence facilities based in Wagga Wagga—Forest Hill and Kapooka. The Prime Minister's announcement yesterday that we are going to increase the planned full-time strength of the Army from 23,000 to 26,000 and the Air Force's planned strength to 13,555, with an additional 555 added to the Air Force, means more career opportunities for young Australians. I think we all agree that the Australian Defence Force provides excellent, and also accredited, training and education for many young Australians. Our ongoing recruiting, together with the numbers that we require to add to our additional infantry battalions and to combat support and airfield defence in the Air Force, means that there are some 5,000 full-time, and a similar number of part-time, recruits required this financial year. We will be transferring existing personnel from other roles in the ADF, and reservists will also be transferring to the regular force.There are clearly substantial opportunities for young Australians to start their careers in defence. Our key recruiting age is between 17 and 24. The number of Australians in this age group is falling, and these young people are also in great demand from the private sector, which presents very significant challenges to us. That is why we are planning to use Employment National and Manpower, two large private recruiting firms, to help us meet this target. That will let us reach out to people who may not have thought of defence as a career option, rather than waiting for them to walk into a Defence Recruiting office.In Wagga Wagga, in the member for Riverina's electorate, Kapooka, the `Home of the Soldier', will see many more fine young Australians arriving to receive their basic entry level training, which is designed to build their skills and their confidence. I also know that the member for Riverina and the people of Riverina and Wagga Wagga will be very pleased to hear that, because they are very supportive of the Defence community and have given them great support throughout the years.It is also important to make this point to the House: not only will these young Australians be provided with excellent training and challenging career opportunities, but a 19-year-old private will receive a gross income package equivalent to around $41,000, not including any field or deployment allowances. This taxable income of over $32,000 puts them in the top 50 per cent of income earners in this country—that is a 19-year-old private in the Army. The other thing is that it puts them in the top five per cent of income earners in their age group. We not only give them excellent skills and training, but also extremely good remuneration.The motto of Defence Recruiting, to do something for yourself and something for your country, is very relevant, because we see those skills in our Defence Force every day both here in Australia and overseas. I would hope that those on the other side of the House would support the recruiting drive to achieve the target that this government has set for our Defence Force to increase our capabilities.Distinguished Visitors1252412524Mr SPEAKERMr SPEAKER10000PON/A10—I am pleased to inform the House that among our guests in the gallery today is His Excellency Khun Anand Panyarachun, a former Prime Minister of Thailand. On behalf of the House I welcome him.I also acknowledge and welcome to the gallery today a delegation of senators from the Czech Republic. With them is His Excellency the Czech Ambassador to Australia, and the senators are led by Senator Karel Burda. On behalf of the House I extend to the delegation of Czech senators our welcome.UNKNOWNHonourable membersHonourable members—Hear, hear!Questions Without Notice125241252412524Lee, Michael, MPMr LEEMG4DobellALP00—My question is to the Prime Minister. Has the Prime Minister seen reports that small businesses will have to upgrade to a computerised accounting system or spend Saturday or the entire weekend doing their GST returns?Government members interjecting—MG4Mr LEE—You don't like that one, do you? Isn't it the case, Prime Minister, that school P&Cs run by volunteers will face the same choice? Prime Minister, what is your response to the peak national parent body for non-government schools, the Australian Parents Council, which has said that the GST proposals will act as a major disincentive to volunteer parent effort in respect of the financial and social support that parent groups provide to non-government schools?12524Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—I thank the member for Dobell for his question. I have seen a lot of reports about the reaction in the community to the GST and the new taxation system. There are critics of the system; there are also many in the business community and generally who, although they recognise that there will be transitional challenges—and the government has never pretended otherwise—understand the long-term benefits to the Australian economy and the Australian community of taxation reform are very significant.The honourable gentleman talks about independent schools. As it happens, I have not seen that comment by the Australian Parents Council, but let me say this in relation to non-government schools: I do not think any government in the history of this country has a better record than the one I lead in providing choice for people to go to non-government schools. There is a level of choice available to Australian parents now at all income levels. The really big change is that we have made it easier for people on lower incomes to choose an independent school. That is what we have done. We have not just reinforced the capacity of people at high levels of income to send their children to independent schools. By abolishing your discriminatory New Schools Policy we have made it possible for the independent schools to burgeon in the lower income area. I would have thought a Labor government would have been interested in that, but a Labor government was not.PE4BEAZLEYMr Beazley—Mr Speaker, I raise a point of order. The Prime Minister was asked a very clear question. It was not about school funding; it was about the situation of the P&Fs, who now have to organise themselves around his GST, which is being imposed on their services. We are wondering what he actually intends to do about that.10000SPEAKERMr SPEAKER—The Leader of the Opposition has made his point and will resume his seat. The Prime Minister was responding to the question about school funding, and as such I had allowed him to continue speaking. I did not think it took a lot of imagination to see where he was going with the P&F exercise as well. I invite him to return to respond to the question.ZD4Mr HOWARD—Mr Speaker, I was asked a question about the attitude of the Australian Parents Council. The Australian Parents Council is the peak body for parents who send their children to independent schools. I was therefore talking about the attitude of those parents towards the funding support they receive from this government, and their attitude is one of great gratitude.1252512525May, Margaret, MPMs MAY83BMcPhersonLP10—My question is addressed to the Minister for Education, Training and Youth Affairs. Minister, would you inform the House of the current state of progress made by the states and territories in the testing of literacy against national benchmarks?12525Kemp, Dr David, MPDr KEMPBT4GoldsteinLPEducation, Training and Youth Affairs; Minister Assisting the Prime Minister for the Public Service10—I thank the member for McPherson for her question. As members of the House will know, this government has given top priority to making sure that every child leaves primary school able to read and write properly. When we came to office, some 30 per cent of Australian schoolchildren were unable to read and write at a level that would allow them to continue successfully with their education. This was a problem which snowballed during Labor's years in office. In fact it was during the period when the Leader of the Opposition was education minister that this problem was drawn to the attention of the government in the Youth in Transition surveys and the Leader of the Opposition connived in the suppression of this information. He was not willing to make available to Australian parents information about the lack of literacy skills in Australian schools.Mr Beazley interjecting—BT4Dr KEMP—Didn't you know about the report?10000SPEAKERMr SPEAKER—The minister—Mr Crean interjecting—10000SPEAKERMr SPEAKER—The Deputy Leader of the Opposition! Minister! The minister has an obligation in fact to address his remarks through the chair. References such as `you' of course involve the chair in a way the chair does not wish to be involved in the debate. I ask him to avoid those references.BT4Dr KEMP—Thank you, Mr Speaker. The Leader of the Opposition was as useless in this area as he was as Minister for Finance and, as a result, a generation of young people suffered as he sat on information which would have alerted Australians to the problem which we discovered when we came into office. His education policy was a farce, as we know, and the member for Werriwa walked right away from that policy.Mr Beazley interjecting—10000SPEAKERMr SPEAKER—The Leader of the Opposition, the minister has the call.BT4Dr KEMP—He has no credibility whatever in this area.Mr Griffin interjecting—10000SPEAKERMr SPEAKER—The member for Bruce!BT4Dr KEMP—It has fallen to this government to address the appalling problem of literacy and numeracy left to Australia by the former Labor government.Mr Griffin interjecting—10000SPEAKERMr SPEAKER—I warn the member for Bruce.BT4Dr KEMP—This year students in all states and territories have been assessed against the national literacy standards established by this government under the National Literacy Plan. The first of these assessments is now coming through and today the government of Western Australia has released results for that state. The results show that overall some 14 per cent of year 3 and 16 per cent of year 5 students were below the national standards in literacy. For indigenous students, between 45 and 49 per cent were below the national literacy standards.These may not be pleasing facts to parents in the community but I congratulate the Western Australian government for having the courage to put on the record the facts which the Labor Party in power has never been prepared to tell parents in the community. There is a real sense in these figures that they are actually an improvement on last year's figures because of the enormous effort which is now going in across Australia to making sure that young people get decent literacy and numeracy skills.The Leader of the Opposition is totally out of touch in this area. He did nothing when he was education minister and he released an education policy in the last election campaign which had four lines on literacy and numeracy. He is not serious in relation to education and it is no wonder the member for Werriwa walked right away from his policies. It is time for him to stop waiting for the Australian Education Union to post him the Labor Party's education policy and to make a commitment to supporting the National Literacy Plan.Distinguished Visitors1252612526Mr SPEAKERMr SPEAKER10000PON/A10—During the answers to the last two questions we have also been joined by friends from our neighbouring country of Papua New Guinea. I welcome to the gallery those MPs from the Papua New Guinea parliament representing the Constitutional Development Commission. I welcome them to the parliament and I particularly welcome their leader. I look forward to meeting with them later this afternoon.UNKNOWNHonourable membersHonourable members—Hear, hear!Questions Without Notice125261252612526McMullan, Bob, MPMr McMULLAN5I4CanberraALP00—My question is to the Treasurer. Treasurer, are you aware that the Master Builders Association is predicting that the price of new houses will rise by 7.5-9 per cent in the short run and by 6.1 per cent in the long run following the introduction of a GST? Are you also aware that the Housing Industry Association has predicted that new house prices will rise by 7.8 per cent in the short run and by at least five per cent in the long run? Treasurer, which of these calculations is correct as to the impact of a GST on the price of new houses—that by the Master Builders Association or that by the Housing Industry Association?12526Costello, Peter, MPMr COSTELLOCT4HigginsLPTreasurer10—The correct assessment of the price impact of GST is that which was published through the government's model as part of its A New Tax System.Mr McMullan interjecting—CT4Mr COSTELLO—I have never seen people so disappointed, because the government is introducing a first home owners scheme, which will give young couples the opportunity to get a grant to equalise out that cost. The grant to young couples who have not bought a house before, who get a benefit from the first home owners scheme, will be enough for young home buyers to put a deposit down and to buy a house. Won't that be a great thing as part of the government's taxation reform? It is a new first home owners scheme—young couples will get assistance to put down a deposit and buy a home, and the news gets better. No wonder he interjects!PE4BEAZLEYMr Beazley—Mr Speaker, I raise the usually futile point of order on relevance, to try to get from this bloke which of those two estimates—between six and nine per cent—is the rise in the cost of housing to ordinary Australians.10000SPEAKERMr SPEAKER—The Leader of the Opposition will resume his seat. The Treasurer has the call. The Treasurer is relevant.CT4Mr COSTELLO—The good news that the Leader of the Opposition just tried to stop was that not only will the first home owners scheme give young couples a deposit and they will be able to buy their house with that deposit but home loan interest rates now at 6.8 per cent—down from 10½ per cent under the Labor Party—mean that they can afford to keep their home. Isn't that a great thing for the young couples of Australia? We know that the Labor Party likes wholesale sales tax and we know that the Labor Party has been having wholesale sales tax on building materials without compensation, and I was really taken by what I saw the Leader of the Opposition say this morning—although he does not want to be reminded, Mr Speaker.PE4BEAZLEYMr Beazley—Mr Speaker, I rise on a point of order. What I would like is some vague relevance to a very simple question of fact that was asked of him.10000SPEAKERMr SPEAKER—The Leader of the Opposition will resume his seat. The Treasurer, in responding to the question, was referring, as I heard him say, to the wholesale sales tax on building materials. As such, I deemed it to be relevant. I call the Treasurer.CT4Mr COSTELLO—With the introduction of GST, wholesale sales tax on building materials will be abolished. You have to deduct that. It was the Labor Party that had wholesale sales tax on building products. He does entertain our days, Mr Speaker. He went out and did a doorstop this morning. He said, `The old wholesale sales tax was a dream compared with what we now have.' Nought per cent, 12 per cent, 22 per cent, 32 per cent, 41 per cent, 46 per cent. He had it on toothpaste but not on toothbrushes. That was an absolute dream! Can't you see these guys, down there in Paris at the Socialist International, looking at the French socialists and saying, `You ought to oppose value added tax. You need a modern wholesale sales tax.'PE4BEAZLEYMr Beazley—Mr Speaker, I rise on a point of order. There are 1½ million taxation collection points on your GST, and 70,000 on the wholesale sales tax.10000SPEAKERMr SPEAKER—The Leader of the Opposition will resume his seat! I issue a general warning to all members of the House, including the Leader of the Opposition. That sort of behaviour is not tolerable!CT4Mr COSTELLO—Mr Speaker, I was just making the point that if you do not have a goods and services tax you have a wholesale sales tax. I do not think that there is a developed country in the world that has wholesale sales tax. If you went to the Socialist International, as the shadow Treasurer did last week, and you stood up and you said to the Blair Labour government, `You don't need value added tax; you need a modern 1932 wholesale sales tax'—7T4CROSIOMrs Crosio—Why don't you answer the question for once in your life!Honourable members interjecting—5I4McMULLANMr McMullan—I rise on a point of order, Mr Speaker. I would like to make the point under standing orders that the member for Prospect has made so well outside them.10000SPEAKERMr SPEAKER—The Manager of Opposition Business will resume his seat!5I4McMULLANMr McMullan—Why can't I raise a point of order, Mr Speaker?10000SPEAKERMr SPEAKER—The Manager of Opposition Business will resume his seat and I will rule.5I4McMULLANMr McMullan—What are you ruling on, Mr Speaker?10000SPEAKERMr SPEAKER—I am ruling on the point of order of relevance, as raised by you.5I4McMULLANMr McMullan—I have not spoken to it yet.10000SPEAKERMr SPEAKER—The Manager of Opposition Business is now defying the chair. I ask him to resume his seat.5I4McMULLANMr McMullan—But you have not let me make my point of order. The standing orders give me the right to make my point of order.10000SPEAKERMr SPEAKER—The Manager of Opposition Business is now defying the chair. I have asked him to resume his seat while I rule on the point of order.5I4McMULLANMr McMullan—But I haven't made my point of order. The standing orders protect my right to make my point of order, Mr Speaker, and you have not heard it.10000SPEAKERMr SPEAKER—I will not be defied by the Manager of Opposition Business.5I4McMULLANMr McMullan—But I have been denied my right to make my point of order, Mr Speaker.10000SPEAKERMr SPEAKER—I will not be defied by the Manager of Opposition Business, and I invite him to resume his seat.5I4McMULLANMr McMullan—Will you then allow me to make my point of order?10000SPEAKERMr SPEAKER—The question is not what I will then do; the question is whether the Manager of Opposition Business will do as he is asked and resume his seat.5I4McMULLANMr McMullan—I will resume my seat. Now Mr Speaker, I want to make a point of order.10000SPEAKERMr SPEAKER—The Manager of Opposition Business may make a point of order. Is the point of order relevance?5I4McMULLANMr McMullan—It is indeed.10000SPEAKERMr SPEAKER—Then the Manager of Opposition Business, having made his point of order, will resume his seat.5I4McMULLANMr McMullan—No, I have not. Are you ruling that I cannot make a point of order at this time?10000SPEAKERMr SPEAKER—I am indicating to the Manager of Opposition Business that I am about to rule on his point of order.5I4McMULLANMr McMullan—But you haven't heard it.10000SPEAKERMr SPEAKER—The Manager of Opposition Business leaves me no choice . . . I thank him for the courtesy of resuming his seat. Clearly the Treasurer was not being relevant to the question asked. I was about to rise and ask him to be just that when the Manager of Opposition Business rose. It was self-evident that on a matter of relevance I needed no more evidence than that that had already been presented to me, and I wish so to rule. The Treasurer will be relevant to the question.R36ALBANESEMr Albanese—So we just don't get an answer?10000SPEAKERMr SPEAKER—I warn the member for Grayndler!Ms Hoare interjecting—10000SPEAKERMr SPEAKER—The member for Charlton will excuse herself from the chamber under the provisions of standing order 304A. I had already issued a general warning. The honourable member for Charlton thereupon withdrew from the chamber.1252812528Thompson, Cameron, MPMr CAMERON THOMPSON84CBlairLP10—My question is to the Minister for Financial Services and Regulation. What is the government doing to ensure that consumers get the full benefits from the introduction of Australia's new tax system?12528Hockey, Joe, MPMr HOCKEYDK6North SydneyLPFinancial Services and Regulation10—I thank the member for Blair for his question. I remind the House that on 29 July this year wholesale sales tax on TVs, cameras, videos and a range of other goods was reduced from 32 per cent to 22 per cent. So even then we were simplifying the wholesale sales tax for the Labor Party. Since the introduction of the ANTS package in July, the ACCC has monitored 34,000 prices of wholesale sales tax decreases in 548 outlets in 112 towns right across Australia. On the first wave of analysis, there was a 90 per cent compliance rate. On the second wave, it was a 99 per cent compliance rate and, on the third wave, it will be a 100 per cent compliance rate. This extensive price monitoring during the introduction of the new taxation system by the ACCC is sending a message to all businesses that the ACCC is actively working with the community to ensure that the full benefits of the new taxation system are passed through to consumers. Of course, they have the power to fine—up to $10 million for companies and $500,000 for individuals. As I mentioned in the House yesterday, in the case of Michael Phillip Ivanoff, there was a jailing for three months for contempt of court. Many businesses have been caught by the ACCC for running a campaign titled `Beat the GST price increase'. The ACCC has formed the opinion that this is misleading and deceptive conduct, especially in the case of Werribee Mitsubishi and Daihatsu in relation to motor vehicles and Ray White Real Estate and Tropical Homes—ironically, in relation to home prices. The ACCC has acted swiftly in response to this. I am pleased to advise the House of a significant extension in the price monitoring program in the lead-up to 1 July next year.In the lead up to 1 July next year, the ACCC will be extending its price monitoring from 34,000 prices to over one million prices across Australia. It will analyse from 548 outlets to 8,000 outlets around Australia. This reminds the House—and, in fact, reminds all Australians—that the best price monitors are Australian consumers, and I urge Australian consumers to contact the ACCC on 1300 302502 if they think that any conduct is either misleading or deceptive or if people are lying to them about the prices associated with the introduction of the new tax system.1252912529Beazley, Kim, MPMr BEAZLEYPE4BrandALP00—My question is to the Minister for Community Services. Are you aware that the member for Herbert told Townsville City Council last month that he was not aware that the GST would be charged on all 100 council grants to community organisations? Did you provide him with this incorrect advice? Given that you now know the GST does apply to community grants, won't the practical effect of this be 10 per cent less funds each year to community services—10 per cent less funds to the Family Emergency Accommodation Townsville and 10 per cent less funds to the Townsville Tennis Association? How is this any different from your government just making an across-the-board cut to the budgets of community organisations?12529Anthony, Larry, MPMr ANTHONYXJ6RichmondNPCommunity Services10—I thank the Leader of the Opposition for giving me a question rather than the shadow minister. The facts are as I said yesterday in this parliament—that if charities were receiving a grant then there would be a GST reimbursement added onto that to compensate those charitable organisations and they would not be worse off. Indeed, we have made specific provisions within the new tax package to accommodate charities. If charities are receiving under $100,000 they will not be subject to it. In addition, their non-commercial activities will not be subject to it. As far as the comments of the member for Herbert are concerned, I will have to speak to him afterwards.1252912529Secker, Patrick, MPMr SECKER848BarkerLP10—My question is addressed to the Minister for Trade. Would the minister inform the House of Australia's hopes for trade reform that we will be fighting for at the World Trade Organisation meeting in Seattle next week?12529Vaile, Mark, MPMr VAILESU5LyneNPTrade10—I thank the honourable member for Barker for his question. Obviously, being in a rural electorate, on behalf of his constituents he is very concerned about the current circumstances that confront our exporters of not only agricultural commodities out of Australia but also manufactured goods and particularly services. All these areas of trade, as far as Australia is concerned, need better market access, need cleaner, fairer market access, into the marketplaces across the world into which our industries are exporting. The meeting of the WTO beginning this weekend in Seattle marks the beginning of what should be a historic occasion as far as world trade is concerned to set up a much better trade agenda over the next 10 years. Our ambitions for this round are obviously to try and make this round the market access round because better market access, cleaner market access, is going to provide the greatest benefits to all Australian exporters, whether they be primary producers or exporters of goods or services. Our intention is to make this a market access focused round; a round that should be concluded after three years and, at the end of those three years, have those decisions bound up in a single undertaking.It is interesting that we have seen in recent times the WTO significantly strengthened with the agreement by the US and China in principle on their bilateral relationship to see China enter the WTO next year. At the meeting beginning next week there will be 134 countries represented in Seattle to negotiate the launch of a new round of trade negotiations. If we can see some significant reform out of those trade negotiations over the coming years, we will see some significant benefits accrue to Australia and across the world. It has been estimated that if we saw a 50 per cent reduction in the level of protection globally then we would see the world economy boosted by $US400 billion—or $A625 billion—per year. We would see a $7.8 billion per year boost to the Australian economy.We are undertaking this task in the knowledge that it is going to be a difficult challenge; it is going to be a difficult task. There are a lot of very extreme views across the world in regard to the general concept of liberalisation. Australia thus far has played a significant role in these negotiations as we lead up to Seattle. As the chair of the Cairns Group, we have been conducting negotiations with the US, the EU and Asian countries in terms of getting the right balance in the ministerial declaration. Obviously, we will arrive in Seattle and that will progress from there on a minister to minister basis.It is vital that we recognise that it is very important for Australia that we make progress out of this round, and we will certainly be focused on doing that. We are taking with us quite a diverse range of representatives from exporting industries and interested parties in the official government delegation and the NGO group. We are going to include all those representatives from Australia in a `team Australia' exercise so that we will be projecting with one voice the views that Australia has as far as trade liberalisation is concerned and the importance of that to the Australian economy and the broader global economy.The Prime Minister highlighted at CHOGM recently that trade liberalisation is also very important to developing countries and the least developed countries in the world. That has been recognised by their support of the trade liberalisation agenda. Those benefits will accrue to those economies, and we will continue to remind some of our colleagues across the world who are probably not so enthusiastic about the agenda that we want to push that it is important for not only the richer countries in the world but also the developing economies in the world that we progress down this path. The progress we make will be to the benefit of Australia's exporting industries, and we certainly look forward to the support of the broader community in Australia and of course the opposition in this parliament in our pursuits on behalf of the Australian people.1253012530Swan, Wayne, MPMr SWAN2V5LilleyALP00—My question without notice is directed to the Minister for Community Services. Minister, are you aware that charities will have to find between $500 million and $1 billion to comply with the GST, according to Hall Chadwick Chartered Accountants? That is thousands of dollars every year for each of the 11,000 charities in Australia. Minister, when this new cost is combined with the one per cent efficiency dividend you are taking from many of these organisations, will they not lose millions of dollars each year to government coffers? Minister, if this is not a cut to social services, then what is?12530Anthony, Larry, MPMr ANTHONYXJ6RichmondNPCommunity Services10—Mr Speaker, you can never believe the words coming out of the member for Lilley. One of the greatest things that we are doing with this new tax system is giving all Australians a better chance of a higher quality of life. The greatest thing we can do for many people who have a reliance on charities is to give them the opportunity of employment. We need to give carers a better opportunity and to give those at most disadvantage a hand up so they do not have to rely increasingly on charities. They are the things that this coalition will do when the new tax system comes into place. There have been a number of concessions put in place to ensure that charities are accommodated in the new tax system. I am happy to reiterate some of those concessions. All charities with income over $100,000 must register for a GST. All charities underneath $100,000 may not have to register for it.Opposition members interjecting—10000SPEAKERMr SPEAKER—I remind members that a general warning has been issued. If I were to be consistent with the discipline handed out to the member for Charlton, a number of others should have been treated similarly.XJ6Mr ANTHONY—As I mentioned, Mr Speaker, charities that have a turnover under $100,000 may choose to register or not to register. Indeed, there are a number of concessions. If it is a non-commercial operation, they will not have to charge a GST. A commercial operation which is over 50 per cent of the market value of the product or service will be subject to it. The government has put in place provisions, particularly in the form of education—which, I might add, was never done by the Australian Labor Party when they increased a lot of their wholesale sales taxes from, as the Treasurer mentioned, 10 to 12 per cent or from 20 or 22 per cent.I would like to congratulate the Institute of Chartered Accountants and the Australian Society of Certified Practising Accounts, who are providing advice to charitable organisations in the management of the new tax system. I can assure the members of this House that the government is very cognisant of the fine work that charities do, and we are certainly making provisions in the new tax system to look after them.1253112531Hawker, David, MPMr HAWKER8H4WannonLP10—My question is addressed to the Minister for Sport and Tourism and the Minister Assisting the Prime Minister for the Sydney 2000 Games. The question relates to the outcome of the International Drugs in Sport Summit held in Sydney last week. Minister, how will the outcome of this summit contribute to making next year's Olympic Games the most drug free games we have seen?12531Kelly, Jackie, MPMiss JACKIE KELLYGK6LindsayLPSport and Tourism; Minister Assisting the Prime Minister for the Sydney 2000 Games10—I thank the member for Wannon for his question and his interest. I know that Shane Kelly lives in his electorate. He is an athlete who would know more than most of all the hurdles that must be overcome in the four-year trek to an Olympic gold medal—to have overcome finance and travel and to have actually got on the track with your equipment in one piece and be doing world beating times only to have your foot slip on a pedal. An athlete at that level does not also need cheats on the track. That was what last week's summit was all about.I am pleased to report to the House that we have taken our Tough on Drugs in Sport strategy right around the world. We have received many commendations for our initiative from the numerous nations present at that summit. It came at a very timely point. Often when you organise governments to come together for these world summits, you expect some agreement on these motherhood statements of general intent and to argue for hours about semantics in a communique. At this summit we did so much more. We ended up with an intergovernment consultative committee which is going to carry forward the initiatives of the summit. We outlined the issues that the governments of the world want to see addressed in a world anti-doping agency. We want to see a world anti-doping agency that is independent of any organisation, that is accountable to governments, that is transparent in its operations and that is representative of all the regions of the world, not just Europe but throughout South-East Asia, our region in Oceania, South America, North America and Africa. We received enormous congratulations from all of those regions and representatives right around the world on our summit.The key outcomes from the summit included: endorsement of international standards for drug testing—Australia played a key role in developing that initiative; a commitment to protecting the rights of athletes with anti-doping programs; and agreements by governments to review legislation for controlling the supply of prohibited drugs and to examine the option of collaboration between border law and enforcement agencies, sporting agencies and relevant regulatory authorities as well as collaborating on research. To this end, Australia has put in a very promising tender for further EPO research. I am quietly confident that we will have a test for EPO before the Sydney 2000 Games. I thank the member for Wannon for his interest in the question. It is tremendously important for the athletes in all of our electorates who are aspiring to the Olympic Games. It is a difficult enough task as it is without having cheats out there on the field and on the track.1253212532Swan, Wayne, MPMr SWAN2V5LilleyALP00—My question is directed to the Minister for Community Services. Is it a fact that the federal government can make unilateral changes to the base on which the government GST applies between now and 1 July 2001? Is this the reason that the Prime Minister was able to apply the GST to Olympic tickets without even consulting the states and territories? Minister, given that it is within the government's power to change the base on which the GST is applied, when will you exercise some compassionate conservatism and ask the Prime Minister to remove the churches and charities from the GST base?12532Howard, John, MPMr HOWARDZD4BennelongLPPrime Minister10—Mr Speaker—Opposition members interjectingZD4Mr HOWARD—I am answering it—Mr Sercombe interjecting—Mr HOWARD —I answer this question—10000Mr SPEAKER—I will recognise the Prime Minister in just a moment. I remind the member for Maribyrnong that he has already had a good deal more leniency extended to him than was extended to some of his other colleagues.ZD4Mr HOWARD—I take this question because the whole basis of it is wrong. The GST is applying to the tickets. We are giving a rebate to SOCOG. All I said was that that rebate would not extend to the premium price tickets. So you ought to get your facts right.PE4BEAZLEYMr Beazley—Mr Speaker—10000SPEAKERMr SPEAKER—The Prime Minister has concluded his answer.PE4BEAZLEYMr Beazley—I raise a point of order, Mr Speaker.Government members interjecting—10000SPEAKERMr SPEAKER—I invite members on my right to resume their seats. The Leader of the Opposition has every right to raise a point of order.PE4BEAZLEYMr Beazley—The Prime Minister took a question to another person, another minister. The nub of the question was: when is the government going to make an adjustment to the GST base, exercise some compassionate conservatism and remove it from churches and charities?10000SPEAKERMr SPEAKER—The Leader of the Opposition will resume his seat. I was prepared to hear his point of order. The Prime Minister had concluded his answer and part of the question asked was about the SOCOG ticketing.1253212532Fischer, Tim, MPMr TIM FISCHERDG4FarrerNP10—My question is directed to the Minister for Foreign Affairs and relates to building stability in East Timor. Firstly, did you detail further humanitarian assistance for East Timor this week? Will the government consider in due course broadening this out to help rebuild the sustainable agricultural sector as soon as possible, such as in organic coffee and tea? Secondly, did you confirm ongoing support this morning for the Crawford Fund and its capability of providing some assistance in that regard? Finally, will you confirm the onward operation of the Australian consulate in Dili and take the opportunity to salute the dedicated staff who have maintained that consulate through thick and thin in recent weeks?12532Downer, Alexander, MPMr DOWNER4G4MayoLPForeign Affairs10—I thank the honourable member for Farrer for his question. I am delighted to have been asked a question by my friend the honourable member.DT4CREANMr Crean—Oh!4G4Mr DOWNER—Oh, dear; the Labor Party are still there, are they? First of all, in relation to the Crawford Fund—8I4MARTINMr Martin—We're coming to get you!4G4Mr DOWNER—Yeah, scary!10000SPEAKERMr SPEAKER—The minister will come to the question.4G4Mr DOWNER—It is the interjections. You have given them a general warning.10000SPEAKERMr SPEAKER—The member for Cunningham knows as well as I do and better than most people in the House the point that the minister might bear in mind, and that is that a general warning means just that.4G4Mr DOWNER—Exactly.10000SPEAKERMr SPEAKER—The minister will come to his question.4G4Mr DOWNER—Good point, Mr Speaker. I acknowledge the honourable member's involvement with the Crawford Fund as its new chair. It was a pleasure to have the opportunity to address a seminar organised by the Crawford Fund this morning. The government will be continuing to provide financial support to the Crawford Fund during the course of the next financial year and, as I said in my speech this morning, we will certainly be doing so beyond that. As far as the consulate in Dili is concerned, since transition from Indonesian sovereignty to what one might describe as United Nations sovereignty the consulate has become the Australian mission in East Timor. Obviously it is a matter of great convenience that we do have a mission there. It is a mission staffed by people with very great ability, led by Mr James Batley, who has been the consul and who is now head of the mission. He served with great ability in a number of posts before that. They have worked in very difficult circumstances. They had to be evacuated in early September. They have returned, and they have shown real courage in a difficult environment.Finally, on the question of emergency assistance for East Timor, I announced a couple of days ago that we will provide an extra $60 million this financial year through our aid program for East Timor's humanitarian, but also for long-term reconstruction, needs. Over and above what happens this year will be a matter that we will look at in the context of future budgets. East Timor will need not just humanitarian assistance but assistance with the development of a sustainable economy. That sustainable economy will have to be built on the back of what they are able to get out of the Timor Gap. That will be a useful contribution to East Timor's economy and also its agricultural foundation.The honourable member in particular in his question mentioned coffee. The coffee industry is very important to East Timor. I am glad to say that the coffee crop this year was not destroyed at the time of the violence, so money will be earned from that. But I think with our skills in agricultural research and our historic involvement with agricultural development we will be able to provide a lot of assistance to East Timor in the areas that the honourable member asked specifically about.ZD4HOWARDMr Howard—Mr Speaker, I ask that further questions be placed on the Notice Paper .Questions to the Speaker125331253312533Danby, Michael, MPMr DANBYWF6Melbourne PortsALP00—Mr Speaker, I ask that you write to the Minister for Workplace Relations and Small Business drawing his attention to questions 910 and 911 on the Notice Paper of 20 September which remain unanswered for more than the 60 days outlined under section 150 of the standing orders.12533Mr SPEAKERMr SPEAKER10000PON/A10—I note the request of the member for Melbourne Ports and I will act accordingly.Questions Without Notice125331253315:16:0012533Moore, John, MPMr MOOREEI4RyanLPDefence10—In response to a question earlier this afternoon, I indicated that I would seek advice in relation to a GST matter. I am now advised that export services are GST free under section 38-190 of the GST act. This means that, where an overseas institution provides funding for research at an Australian university, the research provided to the overseas institution will be GST free.Documents1253312533Reith, Peter, MPMr REITHWI4FlindersLPWorkplace Relations and Small Business10—Papers are tabled as listed in the schedule circulated to honourable members. Details of the papers will be recorded in the Votes and Proceedings .Matters of Public Importance125341253410000SPEAKERMr SPEAKER—I have received a letter from the honourable member for Dobell proposing that a definite matter of public importance be submitted to the House for discussion, namely:The damage being done to Australia's future as a Knowledge Nation by government cuts and damaging taxes on education, science and research.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—15:18:0012534Lee, Michael, MPMr LEEMG4DobellALP00—Last night, the Prime Minister said that he could not afford to make any further cuts in education, welfare and health without cutting into essential areas. That was the Prime Minister's justification on radio and television last night as to why he had to raise taxes. The Prime Minister said it would not be fair to make further cuts in education, welfare and health because that would cut into essential areas. I do not have to make it clear to my colleagues that the cuts this government has already made have cut into the essential areas of welfare, health and education, and we will outline today the incredible damage that this government's cuts have made to Australia's education systems, the incredible damage this government's cuts have made to Australia's research and development effort, and the further damage that will be done by this government's GST.The first point to make is that, despite the claims of the Prime Minister last night in trying to justify his increased taxes come 1 July next year, this government has already done enormous damage to Australia's education infrastructure, enormous damage to the investment that our country should be making in the future of our universities, our schools and, importantly, the work that goes on in teaching and research in our higher education institutions.Mr Deputy Speaker Nehl, I think you might have been in the Great Hall here last week when we had 148 older Australians from around the country who were recognised for the contribution they have made to Australia. The guest speaker that the Minister for Aged Care, Bronwyn Bishop, brought along to the Great Hall last Friday was the Young Australian of the Year—a great fellow—Bryan Gaensler. Bryan Gaensler was chosen, presumably, by the Minister for Aged Care because he is a person who has a vision about what contribution young people can make, especially people who are interested in a career in science, who are prepared to put in the years of studying at school, working hard at university and going on to look for a research position. Bryan Gaensler is one young Australian who has done a great deal.The day before the Minister for Aged Care, Bronwyn Bishop, brought Bryan Gaensler, the Young Australian of the Year, along to this parliament, he had a very important message for the Australian parliament which he delivered at the National Press Club. Let me just read to you the way it was reported in the Sydney Morning Herald:I'd be insane to work in the `clever' country.The Young Australian of the Year, Dr Bryan Gaensler, said yesterday he would be "absolutely insane to come back to Australia" and work.Dr Gaensler, 25, an astronomer who is now on a scholarship in the United States, launched a scathing attack on the Howard Government's record on science—The article went on to say:He pointed to the squeeze on university research and the slashing of research and development tax incentives for business as the reasons for Australian science's deep-seated problems.He went on to say:"Universities are the absolute foundation upon which all scientific output is based, but it is almost as if the Government has announced a `going out of business sale', and the results have left our higher institutions in crisis."So the Young Australian of the Year, the one person whom the Minister for Aged Care brings to the Australian parliament to hold up as an example before all of those Australians who have come from electorates right across the country, says that it is almost as if this government has put out the `This business is for sale' sign at Australia's scientific research institutions around the country.And who is the minister for education who is responsible? We know he is not much of an education minister, but you can just imagine him, the sign writer, working away to put up the sign—`This business is for sale'—and hammering it in outside every science faculty in the country. This minister has set out with a deliberate intention, a deliberate policy, to destroy Australia's higher education institutions. It is like Dr Frankenstein back in the lab—the moist walls, the moss growing in the corners—trying to put energy back into the Frankenstein body he has there on the slab, the Frankenstein monster of deregulated fees for university courses, the voucher system and real interest rates on student loans.I will not name the person involved in education whom I met during the week, but he made a passing reference to the fact that the minister's global reforms in higher education are on hold, not that they have been slashed. He still has the Frankenstein creature on the slab. He is still there. He has got him on hold, hoping that there will be a day when he can put the electricity into it and bring it to life.We are pleased that this minister has failed in his attempts to destroy Australia's higher education system and we are proud of the role we played in stopping this minister bringing in the $100,000 fee for an Australian kid to go to university.It is not just the Young Australian of the Year who has criticised this government's policy on universities and scientific research. One of Australia's great Nobel Prize winners, Peter Doherty, referred to the minister's green paper on research in the following terms:. . . the current green paper stands to damage science pretty seriously in universities. It is idiotic.So not only the Young Australian of the Year but also one of our great Nobel Prize winners has dismissed this government's attempts to do a great deal of damage to higher education.They are not the only people we should be relying on. We know that in private the minister says the opposite of what he says in public. In public, he says that the government's policies are a great success. In private, in the secret cabinet submission that we released, the minister admits that the government's policies have undermined the quality of teaching and research in Australia's universities. In private, in the cabinet submission, he says:Higher staff-student ratios, less frequent lecture and tutorial contact, the persistence of outdated technology and gaps in key areas of professional preparation, including practical skills development, are fuelling a perception of declining quality.In private, the minister admits that the government's policy has done enormous damage to Australia's higher education institutions. In private, the minister admits that the $800 million that this government has taken out of universities has undermined the quality of teaching and research. That is the reason why this area is in a state of crisis today. It is a direct result of this government's policy and a direct result of the policy of this Minister for Education, Training and Youth Affairs, who will be held responsible for the damage that is being done to Australia's research effort by deliberate government policy.Australia's future will depend on how much we invest in research and development in coming years. Australia is going to have to spend a lot of money using the intellectual property that the people and citizens of other countries develop. If we want to use the medical breakthroughs that are developed in Britain or America, if we want to use the software developed by Microsoft in Seattle, if we want to make sure that Australia has access to the latest industrial processes that can improve the efficiency of our manufacturing plants, we will have to pay other countries to use their inventions and innovations, to bring out the latest technology advances for our manufacturing industries, computer users and software designers.The point is that we will face a massive deficit in the payments for intellectual property if we do not invest and generate our own inventions, if we do not have clever Australians working away in research laboratories, coming up with Australian medical inventions that will be used around the world and generate royalty payments and licence fees for our country. We need to encourage more businesses with an innovative culture that will devel op those inventions here at home and generate more payments to our country that will help us meet that intellectual property deficit that we are facing. They are reasons why we are going to fight hard on this.When you meet those medical researchers, the industrial chemists and the computer software designers you cannot help but be impressed with their passion and enthusiasm for research and development, for a commitment to studying maths and science in schools and making sure that our universities actually have expanding science faculties rather than contracting science faculties as we have under this government. They are the people we will be speaking up for. They are the people who we believe deserve a better deal than they are getting today.This has hit hardest in the regions. The government has cut university funding by $800 million across the country but it is the regions that are hit hardest. Sure, they all might be hit with the same percentage cut, but it is in the regions that they feel the cut the hardest. It is in the regions where often the university is the lifeblood of the local community. It is the universities that can be the real development promoters for a region.Go to Gippsland and you will see the enormous, positive development opportunities there that have flowed from having university studies available in university research. Go to Townsville or Cairns and speak to the people who work at James Cook University. Look at the tremendous benefits that have flowed to the people of Townsville, Cairns and Far North Queensland because of the great work that has taken place at that university. When it is hit with a six per cent cut in its operating grants, those communities are hit harder than is the case with the same percentage cuts that have been made to the metropolitan universities.One of our concerns is that the minister for education and the minister responsible for regional development are in a state of denial—they deny that these cuts have been made. We even had the Deputy Prime Minister claiming that the government has started to put more resources into regional universities. Not only is he denying the truth; he is actual ly fabricating investment in universities that is not taking place. When he announced the new $15 million regional fund at the summit we had a few weeks ago, he did not even understand that in offering $15 million for regional Australia this minister for education had taken out 10 times that much money—$150 million from regional universities—just through the cuts that have been made to date.Another example of the state of denial of this government is when the minister for education claimed a few weeks ago that his green paper on research was a great success. He said that he had nothing but favourable comment on his green paper. He said that it has `had an excellent response in the higher education community. I find it hard to think of any significant element of that community which has not endorsed all the principles and directions of the green paper.'The evidence that he is in a state of denial is this: Peter Doherty, a Nobel Prize winner, says that the green paper is idiotic. Deakin University's Pro Vice-Chancellor (Research) says that the paper contains `hastily developed proposals for implementation that are destructive rather than constructive'. La Trobe University's Deputy Vice-Chancellor (Research) said:This approach will degrade the standing of university research in Australia.How can the minister keep a straight face when he gets up and says that the response to his green paper has been nothing but overwhelmingly positive? I have many more quotes I can read out if I had an extension of time. I am sure members on this side of the House understand that we do not have to prove in this House that this minister misleads time and again. He has proven with his own words that he has misled this House. Time and time again, he has been caught out, so I will not provide any further quotes this afternoon.The real crisis that we are facing is that not only has the minister done damage to the research effort in our public institutions but also the minister and his colleagues in the Howard government have undermined the private sector research and development effort. For the first time since statistics have been recorded, the ABS is showing that private sector R&D has gone backwards in the last two years. Private sector research and development is actually shrinking. We must be the only OECD country where the private sector R&D effort is going backwards.When the Minister for Defence gets up here representing the minister for science and claims that the government's policies are a great success, presumably he means that the government is claiming success for the fact that private research and development is shrinking. How can we try to provide more high-value, high-wage jobs for the future if our country's private sector is investing less each year in R&D? How can we go about making sure that young Australians have the best possible skills, the skills that give them the key to those high-value, high-wage jobs, if our universities are in crisis? It is for these reasons that we believe the government needs to change course.The point we make is that not only is the situation bad now but it is going to get worse. The GST means that universities, schools and P&Cs will have to deal with all the GST paperwork. When the universities, schools and P&Cs realise that this government has dudded them in the way that the GST has been introduced, the crisis will get worse. Our point is that we have a crisis in science in Australia, and it is because we have three problems: a backward looking Prime Minister; an industry minister who is more interested in running a no campaign on the republic than campaigning for more money for science; and an education minister who has been discredited, who is ineffective and who has been proven to have misled the House time after time. We need a change of government to change Australia's science direction. (Time expired)15:33:0012537Kemp, Dr David, MPDr KEMPBT4GoldsteinLPEducation, Training and Youth Affairs; Minister Assisting the Prime Minister for the Public Service10—We have just seen why nobody places any credence in the Labor Party's policies on education. We have heard a speech which is founded on total inaccuracies. Indeed, one would perhaps be tempted to say that it was dishonest. It was a distor tion of the facts. I am very pleased to have this opportunity to put some facts on the record.Australia's future undoubtedly lies in the knowledge and skills of its people. This government is very committed to making sure that the best and brightest of Australians have a chance to achieve what they can in science and technology. The government is strongly promoting education and educational standards in a way that the Labor Party in office never did.We have just heard the empty sounds from the shadow minister, who stands for a party which has no acceptable education policy whatever. He talks about spending more money on science and research. Where is that money? What is the commitment of the Labor Party? Let us hear a figure on that. We know that in the policy they put out, when they were actually challenged to say how much they were going to spend, they could not even find enough dollars to sustain the forward estimates for the Australian Research Council. There have been no commitments since. There is absolutely no credence whatever to the claim by the shadow minister that the Labor Party has a policy of spending more money on science and research. There has been no process within the Labor Party through the Expenditure Review Committee. There has been no published policy on this. This is the ideal shadow spokesman for a policy vacuum in an area which is of fundamental importance to this country.Under this government, expenditure on education has increased. It has increased for universities; it has increased for schools. We are seeing growing numbers. I announced in the House the other day a total of 160,000 extra places in TAFE because this government has been prepared to maintain expenditure in real terms. Participation in education and training in Australia has increased at every level. We are seeing the fall in retention rates at schools reversed. We are seeing growing numbers of Australians in new apprenticeships. We are seeing growing numbers of places in TAFE. We are seeing growing numbers of students in universities. Standards are rising with a new focus on educational outcomes.That is a term that you never hear from the Labor Party. When the Labor Party were in office, the one thing they could never point to was that educational standards and outcomes were being improved. The Australian Education Union simply did not like them producing any information about this. It took this government's coming into office to discover the horrendous state of literacy and numeracy in Australia as a result of the policies of the Labor Party in office and their deliberate suppression of information.The research policies of this government are positioning Australia at the forefront of the revolution in biotechnology. The government has recently announced major increases in expenditure on science and technology. I am aware of the comments of Dr Bryan Gaensler in a letter. I am writing to Dr Gaensler to draw his attention to certain inaccuracies, perhaps misled by the Labor Party, in his comments in the press. Contrary to the claim made by Dr Gaensler that there has been a cut of 20 per cent in government funding for universities, the facts are these: real operating grants to universities this year are essentially the same but slightly higher than the operating grants when the government came into office. There have been no cuts to university operating grants under this government as a result.When we came into office and were confronted by the $10 billion black hole that the Labor Party and the Leader of the Opposition, as the Minister for Finance, had left, we imposed on the universities some efficiency dividends. Those efficiency dividends and the figure of $800 million, which is constantly mentioned by the Labor Party, are a cut against the Labor Party's promises. It is not money that the Labor Party ever delivered to universities. It is against promises the Labor Party said it would deliver provided someone else was going to pay for the $10 billion black hole. That would never have been delivered by the Labor Party had it been in office.The fact is that operating grants to the universities have been maintained in real terms. They were $4.9 billion in 1996. They are $4.959 billion now in real terms. They are constant dollars.MG4LEEMr Lee—How can we believe that?BT4Kemp, Dr David, MPDr KEMP—We can believe that because they are official statistics from the department of education. You do not want to believe them because you do not want to believe the facts. You prefer to go around lying to people. You prefer to go around telling people that that is not the truth.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr G.B. Nehl)—Order! The minister will withdraw that comment.BT4Kemp, Dr David, MPDr KEMP—I withdraw that.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—The member for Dobell will be silent. The minister should totally ignore his interjections.BT4Kemp, Dr David, MPDr KEMP—I shall do my best.10000DEPUTY SPEAKERMr DEPUTY SPEAKER—I am sure that you will.BT4Kemp, Dr David, MPDr KEMP—I shall seek to comply with your direction. On top of this, targeted research for university funding from my portfolio has gone up from $399 million in 1996 to over $447 million this year. Unlike the promises of the Labor Party in the last election, this government has increased targeted funding for university research. As a consequence, total funding for universities has gone up.We hear talk about a crisis in scientific research and spending in Australia. Let me make this further point and put this on the record. Australian expenditure on science in government laboratories and universities is the third highest level of expenditure in the OECD. Australia is right at the top of advanced nations in expenditure on university research and on government laboratories. As I mentioned earlier, health and medical research funding is being doubled over the next five years.The changes to taxation, particularly the capital gains tax, which the Commonwealth has announced, are expected to greatly encourage the availability of venture capital in Australia for innovation. That is an enormous improvement over the situation which has existed under the capital gains tax that the Labor Party imposed when it was in office. This government's reforms are going to make resources available for research and development in Australia through venture capital in a way that the Labor Party, with its punitive capital gains tax, was never prepared to do.The crisis in science that the shadow minister refers to is without facts. It is totally empty rhetoric. Let me give some facts on what is happening in the universities to higher degree research. Take physical science PhDs. These are the people who are going to be our researchers in the future. The numbers between 1996 and 1999 have increased by 7.9 per cent. That is an eight per cent increase in PhDs in the physical sciences under this government. PhDs in general science are up 14.4 per cent over the period from 1996 to 1999. Research degrees in computer science and information systems have gone up from 878 in 1996 to 1,899 in 1999. That is a 116 per cent increase in these research degrees.This is the cutting edge of science. These are future Australian scientists. They are being assisted by this government with higher targeted research funding than was ever provided by the Labor Party. The number of people in these fundamental areas of science is greater now than it has been before and was when we came into office. This government is building up Australian science; let there be no mistake about that.Let us get away from this total disinformation campaign coming from the Labor Party and from the member for Dobell, who is utterly careless of the truth. It does not matter how often the facts are put on the table because this empty shadow minister will continually reiterate the false statements that he has made in the debate today. He is totally unreliable and lacking in credibility in this area.In relation to the green paper, of course there is debate about any policy statement that is put out. I quote the comments of Professor Vicki Sara, the Chairman of the Australian Research Council. She is a highly respected member of the Australian scientific community in a position of great importance to Australian science. She said:Taken together, the proposals in the discussion paper allow us to build a world's best practice research funding system.I have also quoted before the comment of the Vice-Chancellor of Southern Cross University, a regional university and one of the universities supposedly disadvantaged by the government's proposals. Professor Barry Cunningham said:. . . your statement that the paper offers a particular opportunity for regional universities seems very true.Let us be quite clear. This government, in the discussion paper on research funding, is asking for performance. We have got to have a research funding system which brings the best and the brightest of young Australians back to this country. We have got to be excellent in all of those areas where we are conducting research. The funding mechanisms outlined in the government's discussion paper are designed to do that. They are designed to create that critical mass of excellence where Australia can excel and where our postgraduate students can gain outstanding research training.There are problems in research training which we inherited from the Labor Party. As we review the lack of completions in research students that the Labor Party left us, it has been up to us to determine that this problem will be addressed. We cannot have completion rates of 20 and 30 per cent amongst Australia's senior research students. It indicates that there is something wrong with the research training environment when students are not completing.That is the research training environment that this government inherited. It inherited it despite the fact that the Labor Party plunged this country into enormous deficit. It spent money it did not have and it still could not correct the problems in Australia's research area. It imposed a capital gains tax which virtually made it impossible to get venture capital to come into this country. It is this government which has put in place the policy framework that is going to lead to the revival and strengthening of Australian science. Those are the facts.What I have said has been supported by the facts. The shadow minister has not quoted in his address a single fact to refute what I have said, because the Labor Party has no credibility. It has no education policy. As we know, the current policy it offers is one which the member for Werriwa walked away from because, he said, it was so poor that he could not become the spokesman for it. The member for Dobell was less choosey. He was keen to be the spokesman for anything—even if it was a policy vacuum. One would have to say that, as the spokesman for the policy vacuum, he has succeeded magnificently because he says nothing and he repeats nothing at great length. There are no facts in what he has to say. I have put on the record the achievements of this government. It is this government which is going to build up the quality of Australian university education and Australian science. (Time expired)15:48:0012540Sawford, Rod, MPMr SAWFORD3J4Port AdelaideALP00—Let us start off with a hunky-dory fact about science, about university students and about the number of students commencing university from 1989 to 1998. When Labor was in, the average growth rate was 4.2 per cent a year—that is, an additional 845 students every year. What is it now? Between 1996 and 1998 it has fallen by 711. In other words, under us it was increasing by 845 each year; under you it has fallen by 355—and you deny a crisis.BT4KEMPDr Kemp—That is a lie.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Nehl)—No. The minister will withdraw that.3J4Sawford, Rod, MPMr SAWFORD—The member for Goldstein, the Minister for Education, Training and Youth Affairs, must be known in this parliament as the bit player of the government.10000Sawford, Rod, MPMr DEPUTY SPEAKER—Order! The honourable member for Port Adelaide will resume his seat. Minister, I would be grateful if you would withdraw that comment.BT4KEMPDr Kemp—I withdraw that. That was a highly inaccurate statement and the true facts are that the number of students has increased greatly. 10000Sawford, Rod, MPMr DEPUTY SPEAKER—I thank the minister. The honourable member for Port Adelaide has the call.3J4Sawford, Rod, MPMr SAWFORD—I am known for telling the truth. Bit players in the acting profession are sometimes nicknamed Dracula. I would not be so unkind to the minister, Mr Deputy Speaker. When it comes to education, research and science, this government and this minister are bit players with bits of ideas, bits of processes and bits of outcomes. Sadly, this minister and the government fail to understand the enormous damage they are creating.I say he is a bit player because style of brevity and smallness of substance dominate this minister's contributions in this place. I refer members to the minister's second reading speeches in all aspects of education this year. These speeches set the priorities and the agenda for the minister and the government. There is not much there. The education cupboard is very bare. In 20 minutes he did the whole lot. The minister presented what was considered important by the government in every aspect of education. Sadly, it amounted to very little. There was a bit of rhetoric of course, such as:The measures in this bill continue the government's objectives of fostering a quality higher education sector that is open, accessible and responsive to Australia's future needs.They are fine words, but they are only words. The words, however, are always preceded or followed by damage as the minister bites off a piece and then another piece of education.In the same speech in which he said that, the minister announced that the merit based equity scheme would be phased out by the year 2000. Merit and equity—he chokes on those words. In the same speech he failed to reconcile his rhetoric with the phasing out of the innovation program, and he ignores the government's failure to provide more research funding. Innovation and research are another two words and concepts they choke on.When it comes to the schools sector, the minister is again a bit player—and a very damaging bit player at that. He blatantly favours the non-government school sector. He ignores government schools. He creates winners and losers. He ignores falling reten tion rates. He creates exclusivity. He cannot get around inclusivity. He creates division, bitterness and angst between systems. There is no need; all systems can be supported. He claims credit for issues he does not understand. He distorts the truth in this chamber all the time. He packages misinformation on a grand scale. These are not idle claims; there is plenty of evidence to support these statements.For example, take the issue of literacy and numeracy, which this minister so proudly parades time and time again. His exposition on literacy levels is selective, it is dishonest and it is downright wrong in its assumptions. It has been pointed out to this minister by numerous people that the actual average literacy levels have not changed a great deal over the last 20 years. What has changed is that the top 20 per cent of students have streaked away from the rest while the bottom 20 or 30 per cent have been virtually abandoned. The reason they have been abandoned is the diminishing resource base provided by state governments and the absent damaging leadership of this minister and this government.This minister is very good at stonewalling resource implications and promoting misinformation—in the literacy debate he promoted the diversionary issue of testing. He blames the teacher and then exacerbates the whole literacy and numeracy debate.Australia ranks below the OECD average in terms of the proportion of the adult population having obtained upper secondary education. We rank below the average. That is shameful. Yet I am totally unaware of this minister or this government responding to this most damaging indictment of Australia's education system. What do you say, Minister? That was in the August OECD report on Australia for this year, 1999. No comment.Whenever the minister is in control of the microphone in this chamber, as he was a while ago, he goes into denial mode—as suggested by the shadow minister—whenever facts and figures are raised that question the authenticity of his government's actions. That has changed a bit. In the last session of parliament, his secret plans, ruled out by the Prime Minister—loan schemes, vouchers, fees, deregulation, contestable public funding, access for the dumb rich—were exposed by the shadow minister. But forget the denials, forget the ruling out by the Prime Minister, ignore the silences— this is the agenda for this government and this minister. The debate on education, science and research in this nation can often be so convoluted and full of claim and counterclaim that it can drive both participants and observers to frustrated cerebral exhaustion. But there are some facts that cannot be ignored, and these are the facts that tell the real story of this government's record on education, research and science.In a newsletter to parents of children in government schools, the government claimed that direct federal funding of government schools between 1996 and 2000 rose by $382 million. They did not explain to those same parents the real truth of that figure. For when it is analysed in terms of the students enrolled—of course, that was not taken into account—the direct funding did not rise at all between 1996 and 2000; it falls, from $606 per student in 1996 to $598 four years later. This claim of a rise is nonsense; it is propaganda.The only assessment that really counts in the government's investment in education, research or science is to measure it the way it should be measured: like the OECD do, against the nation's GDP. As can be clearly seen by any real observer of education, research or science, the Commonwealth's investment in education, science and research has fallen. If you take education, it has fallen from 2.06 per cent of GDP in 1996 to a predicted 1.6 per cent in 2001-02. That is the 20 per cent cut, Minister. That is it. You might fool other people, but you do not fool everybody in here. That is dumb. That is called the dumbing down of Australia. That is what happens when a bit player in a bit government with bits of ideas and bits of processes and bits of outcomes is in charge of education.If you take a more comprehensive view of government investment in education and research and you add training and research to it, you will be even more horrified because it falls from three per cent of GDP, when this government took office, to just 2.4 per cent in 2001-02. There is the 20 per cent cut again in education, research and training. That is not just dumb, that is real dumb.That confirms the direction of this government in the only way you can measure it. In fact, the August OECD report on Australia states, `Australia's growth in knowledge investment as a percentage of GDP'—they know how to measure real investment, Minister—`is below the OECD level.' That is shameful; it is negligent; it is damaging the nation; it is damaging to existing and future wisdom. On the government's own information, it will get even worse over the next two years.I trust that the science community, who are here in this parliament today in welcome force, note that the only real measure is the percentage of GDP spent on science, not the isolated quantum figure thrown at you time and time again which is nothing but a pea and thimble trick.But it is even worse than that. The government's new tax system—the ole GST—is not far away. The government claims that the GST will deliver to the states significant increases which will allow more funds to be directed to government schools. That needs a reality check. If that is true, why is it that official government statistics are that the GST revenue will not even match the current level of financial assistance grants for at least three years? If the GST claims of this government are true, why is it that the government had to give a written assurance to the states and territories that it will provide additional funds as necessary—potentially indefinitely?There is that lovely word `indefinitely', where governments intend to do absolutely zilch. What a fearful ring that must have for the science community. Not only have education and research suffered a 20 per cent cut; they will be subject to the impacts of the GST indefinitely. I wonder if, in the future, when a child looks up `dumbing down' in the dictionary, he or she will find a cross-reference that includes `see David Kemp' and, when they look up David Kemp, it will include `see dumbing down'. (Time expired)15:58:0012542Forrest, John, MPMr FORRESTNV5MalleeNP10—I am really pleased to have an opportunity to talk about something that happens in Australia that I am immensely proud of rather than have it talked down, as I have heard from members of the opposition today. Our history as a nation has been one where we have been very clever through all of our history in the use of technology—from the very early days of the pedal wireless to today where we have the highest uptake of mobile telephony of any of our OECD competitors. I am just staggered to hear the contributions from the member for Dobell and the member for Port Adelaide. To address the issue of university placements, let us place on the record the official figures rather than whatever it was the member for Port Adelaide quoted, for which he gave no source.In 1999, the total of undergraduate student places was 398,500—up since 1996 by 26,158. That is seven per cent. Overenrolments in 1999 were 27,073—up 9,355 since 1996. That is 52.8 per cent. There are 364,400 fully funded undergraduate places—up by 12,665 since 1996. That is 3.5 per cent, These are just a few statistics for the period since the coalition has been in the responsible position of governing our country.I would like to commend the Minister for Education, Training and Youth Affairs for all his initiatives in addressing the real challenge that confronts us as a nation, that is, to stimulate even more the innovation we have historically displayed by making proper connections between industry, the education sector and the workplace. The minister has done tremendous things in secondary education. He has connected that sector with the workplace so that when people leave school there are transitions and pathways for them, and when they arrive at their employment they have learnt the things that their employers want them to be aware of. The university sector is the same. As a nation of 19 million—with 12 million adults of whom two-thirds pay income tax—the challenge for us is to meet the demands for tertiary education.Opposition members interjecting—NV5Forrest, John, MPMr FORREST—It seems that members of the opposition are not willing to address this. They are more prepared to play cheap politics rather than work hand in hand to address the huge demand of needs so as to continue to be a clever nation. There is a growing recognition in the OECD countries—and we are up with the best of them—that technology will play a very important part in our economic development. The challenge we are confronted with is to connect the advances gained in the pursuit of knowledge in a partnership with the economy.I would like to mention, with respect to the member for Dobell's contribution, that it would have been a lot more credible if it had not been prefaced by the appalling record of the 13 years that preceded it. The member for Dobell mentioned the Nobel prize in his contribution. Perhaps we ought to introduce a prize called the `Dobell prize for exaggeration' or perhaps we could call it the `Dobell prize for obfuscation'. Let us look at the appalling record of the Australian Labor Party inherited by the current minister with respect to this matter. Business expenditure on research and development as a share of GDP was 25 per cent lower then than the OECD average.3J4SAWFORDMr Sawford—Is that how you describe the truth?NV5Forrest, John, MPMr FORREST—It is fine for the member for Port Adelaide to point this appalling fact out, but it is not fine for him to blame the Minister for Education, Training and Youth Affairs. The responsibility for that lies clearly with the former government. The members of the opposition from the former government would be a lot more credible in their contribution to debate in this place if they were a little more even-handed about the millstone which the current government inherited. Their Bankcard approach to meeting all of the demands is something this government has shown an enormous amount of courage in not embracing. We are determined to create a mind-set in which the economy pays its way as it goes and does not leave huge amounts of debt for the people coming through this education system to pay when they join the work force. It takes an enormous amount of courage to lead that debate through the community. It is cheap politics by the Australian Labor Party.In that awful period, Australia slipped from 18th to 24th position for business expenditure on R&D amongst our OECD competitors. I say for the benefit of those listening to this debate that the contributions from both the member for Dobell and the member for Port Adelaide should be dismissed as cheap obfuscation. I would rather listeners to this debate focused on the achievements of the coalition and the Minister for Education, Training and Youth Affairs in just the last few years in establishing lectureships in science, engineering and technology. I was very pleased to see that we have smartened up our approach to engineering—a career path that I am enormously proud of—with $25 million over three years to enable universities to respond quickly and effectively to the changing demand in this innovative area. The minister pointed out that this is targeted funding in areas where there needs to be rapidity in the movement, whether it be curriculum or resources, to keep up with the ever changing demand.Following the budget cuts by the former Labor government, the 1999 budget allocated almost $600 million annually to the CSIRO, which reflects this government's focus. It is very pleasing to see the partnership record the CSIRO has with university placements. I think the minister is to be commended for the innovative way in which he has been trying to connect that scientific organisation with the tertiary sector. The next challenge is to make sure that the private sector have every encouragement to continue to make the investment. They demand of the system that their graduates are relevant and that when they arrive in industry their research, knowledge and approach are flexible enough to meet their demands as employers.Let us continue to look at the minister's and the coalition government's record on increased funding for the strategic partnerships with respect to industry research and training. This scheme provides $58.1 million over the next three years to encourage research collaboration between universities and industry by matching industry awards and scholarships dollar for dollar. This is going to be the challenge for us. It is unrealistic for the opposition to expect taxpayers to fund the ever increasing demand that is going to be placed on our tertiary sector. An additional initiative from this government is the development of a world-class science and technology park at the Docklands in Melbourne—a commitment of $22.5 million. Another initiative is the Australian partnership for advanced computing. The contribution from the Commonwealth is $19.5 million, which is targeted funding to entice the universities to be specific about the style of training.Another initiative is the funding of a marine research and technology centre—Mr Deputy Speaker Nehl, who was previously in the chair, would have been pleased for me to mention this—at Coffs Harbour to the tune of $12 million. Coffs Harbour is part of a rural electorate similar to the one I represent. In the last few years, I have seen a much greater presence of universities in my electorate in the north-west of Victoria. I am very pleased to see that rural students in 1998 totalled 108,850 right across Australia—7,039 more than in 1996 or 6.9 per cent. In other words, more and more students who originate from constituencies like mine are participating in tertiary education, and not all of them are required to travel to the metropolis or to the provincial centre to have access to it. Thank you very much, Minister, for the initiatives you put in place to encourage universities to deliver right out there in remote places like my electorate. I have a full-time university presence in Horsham, Swan Hill and Mildura. Thank you very much, Minister. That is the kind of contribution I want to encourage you to continue to make.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Jenkins)—Order! The discussion has concluded.Bills12544r92212544Bill returned from Main Committee without amendment; certified copy presented.Ordered that the bill be taken into consideration forthwith.Bill agreed to.12544Bill (on motion by Mr Hockey)—by leave—read a third time.Committees12544125441254410000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Jenkins)—Order! The Speaker has received advice from the Chief Opposition Whip that he has nominated Mr McLeay to be a member of the Committee of Privileges in place of Mr Kerr.Motion (by Mr Hockey)—by leave—agreed to:That Mr Kerr be discharged from attendance on the Committee of Privileges and that, in his place, Mr McLeay be appointed a member of the Committee.125441254416:10:0012544Somlyay, Alex, MPMr SOMLYAYZT4FairfaxLP10—I present the report of the Committee of Privileges concerning the proposed release of the in camera evidence to the Bankstown Observer inquiry, together with the minutes of proceedings.Ordered that the report be printed.ZT4Somlyay, Alex, MPMr SOMLYAY—by leave—In 1955 the Committee of Privileges conducted the most controversial inquiry in its history into articles published in the Bankstown Observer which reflected on the then member for Reid, Mr C.A. Morgan. As a result of the inquiry, the committee found that the proprietor of the Bankstown Observer , Mr Raymond Fitzpatrick, and the journalist who wrote the articles, Mr Frank Browne, were guilty of a serious breach of privilege. Following this finding, the committee recommended that the House should take appropriate action. The House agreed with the committee's findings, resolved to hear Browne and Fitzpatrick at the bar of the House and, after having done so, sentenced each to three months imprisonment. Following unsuccessful cases before the High Court and the Privy Council, Browne and Fitzpatrick were jailed for a period.In relation to the inquiry, the Committee of Privileges took oral evidence from Messrs Morgan, Fitzpatrick and Browne. As was the custom at the time, the committee took its evidence in camera and the committee printed extracts from the evidence in substantiation of its findings. The complete evidence was not presented to the House, nor has it since been made public. Requests have been received over the years either for the evidence to be made public or for particular individuals to have access to the evidence for their own private purposes. Most recently, representations were made by the National Archives of Australia Advisory Council that there would be considerable public interest in the in camera evidence being released. As a result of these representations, the Speaker agreed to having the deputy chair of the committee and me examine the evidence with a view to recommending whether public release of the evidence was appropriate. The Speaker also asked that advice be sought on the legal implications of any public release.The deputy chair of the committee and I have examined the papers and consider that there would be considerable public interest in the papers and that there do not appear to be other compelling reasons not to release the material. This view is supported by the committee. Advice was sought from the Australian Government Solicitor on the legal issues associated with a possible public release. The AGS noted that the transcript contained defamatory statements that, were it not for parliamentary privilege, would probably be actionable if the persons defamed were still alive. The probable defamations were contained in the evidence by Mr Morgan and related to one of the other parties to the inquiry, Mr Fitzpatrick, and another person, former Justice Taylor of the New South Wales Industrial Commission, who was not a party to the inquiry and would probably not have been aware of the evidence given by Mr Morgan.A significant concern about public release of the evidence has been the probable defamatory statements contained in the evidence, particularly in relation to Justice Taylor, who was not a party to the inquiry. While there is sensitivity about the release of these untested allegations, Justice Taylor is now deceased, and there could be no action for defamation. The witnesses to the inquiry are also deceased. The committee appreciates the concerns about the sensitivity of the evidence to the relatives of the witnesses and to those referred to adversely in the evidence. Nevertheless, the committee recommends that the papers be publicly released. In recommending that the House agree to the release of the evidence to the inquiry through National Archives, the committee proposes that National Archives have one month to contact relatives of those referred to in the evidence and to make them aware of its contents. The public release of these papers will be an historical occasion for the House and is in the public interest. I commend the report to the House.Bills12545r85412545Bill returned from the Senate with amendments.Ordered that the amendments be taken into consideration at the next sitting.Bills12545r85312545Bill returned from the Senate with amendments.Ordered that the amendments be taken into consideration at the next sitting.Bills12546r945Billsr943Billsr946BillsBillsBills12546r94412546Debate resumed.16:17:0012546Cox, David, MPMr COX83UKingstonALP00—Before question time I was making the point that the Treasurer has been using the measure he describes as the `common treatment of entities', which is a series of measures that we have not yet seen which are designed in substantial part to deal with tax evasion and avoidance using trusts, as something of a David Stockman style magic asterisk. First, these measures were presented in the original ANTS package before the election as a properly costed and documented set of measures that were going to raise a substantial amount of revenue. Then, when it came time to present the ANTS bills, they were in fact absent. They had been used to fund some of the tax cuts that were contained in the ANTS bills, but they were not present when the ANTS bills were dealt with. We were then told that they were going to be considered and dealt with in the context of the business tax review. Today we are debating business tax and it is no surprise to me that the common treatment of entities legislation is still not in the House and has been referred to in a schedule of a press release put out by the Treasurer on the second stage of the business tax reforms.The opposition are somewhat apprehensive about this because we are aware of continual comment, particularly from the National Party, about their opposition to these measures. We are aware of newspaper reports of comments made in private meetings of the coalition by more eminent members of the coalition, such as the Parliamentary Secretary to Cabinet, Senator Heffernan, suggesting that some of the arguments that have been put by coalition members against these measures have value and deserve to be looked at. The opposition feels somewhat uncomfortable by being left in the lurch by being asked to pass the set of business tax measures that are here today without seeing that legislation. For that reason, 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 is of the opinion that the following points need to be noted in relation to the Government's claim that measures in the legislation currently before the House pay for themselves:(1) there is serious doubt about the revenue estimates for the capital gains tax changes;(2) there is a need for strong anti-avoidance legislation, and extra Taxation Office resources, to address potential tax avoidance resulting from the Government's capital gains tax proposals;(3) in addition to the measures currently before the House there are billions of dollars of business tax revenue already counted in the forward estimates from the A New Tax System (ANTS) package, such as the taxing of trusts, which have still not been legislated; and(4) the Government's announcement on stage 2 goes some way to meeting the revenue gap. However, there is insufficient detail to enable a conclusion that revenue neutrality has been met.The Deputy Leader of the Opposition has advised me since question time that his discussions with the Treasurer have been continuing and that he has made some significant progress, although I understand that a conclusion has not been yet reached. I personally look forward to such a conclusion being reached and the Treasurer managing to come to a workable accommodation with the deputy leader on these bills.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Jenkins)—Is the amendment seconded?83VEMERSONMr Emerson—I second the amendment.16:21:0012546Costello, Peter, MPMr COSTELLOCT4HigginsLPTreasurer10—We will reject the second reading amendment. During his contribution to the debate, the Deputy Leader of the Opposition said in relation to these matters:The electoral cycle—our political process of three years—is too short. I know voters might think, from time to time, that elections are not often enough, but the truth of the matter is that, if we want planning, electoral cycles are too short. We should be approaching in a bipartisan way agreement to change that.He went on to talk about the importance of getting bipartisan agreement on major tax changes. I am not going to make any political points in my response, although I would be entitled to because the Deputy Leader of the Opposition read out in his speech a letter which he delivered to me this morning. I have delivered to him a letter in reply. I want to read in a moment the letter in which I have replied to him because—as will be seen from his letter to me, which he read into Hansard—he put three conditions on the opposition supporting the government's business tax package. I announce to the House the government has met all three and that should mean that the opposition supports in its entirety the government's business tax reform agenda.The reason I do not go into detail on any political points here is that I do nothing to compromise an agreement which needs but one sentence from the opposition to be consummated. The one sentence we look for in writing is that the opposition, in response to our letter, will support the business tax changes in their entirety. And if that letter comes back this afternoon, not only will these bills pass in the House of Representatives but they will pass in the Senate and the bipartisan agreement which the opposition says that it wants will have been achieved and business tax will be accomplished. I begin by referring to the letter that the Deputy Leader of the Opposition sent to me, which he read into Hansard. It concluded:To summarise, we are seeking:. Detail on the measures not yet before the Parliament, particularly the revenue raising measures, at a level that allows us to reasonably conclude that their stated intention will be achieved. This would ideally be in the form of draft legislation.. An absolute and public guarantee that these measures, when the details are known, will be implemented in full.. Support for Labor's proposed integrity measure or some mutually agreed version which achieves the same objective.If we get agreement on these points, we can pass the package.I had a meeting with the Deputy Leader of the Opposition at 12 o'clock today and I informed him that we would meet those conditions. I have delivered to him a letter this afternoon which reads as follows:Thank you for your letter of 24 November 1999 in which you state that if we can get agreement on three points the Opposition will pass the Government's business tax reform package.We agree to the three points.1. Detail on the measures not yet before the Parliament are set out in the attachments—and there are attachments on measures in relation to alienation of personal services income, treatment of non-commercial losses and the unified entity taxation regime. I go on to say in my letter:I expect legislation containing measures dealing with alienation of personal services income, and non-commercial losses, will be available early next year.That is, the legislation, as I interpose here, has not been drafted, but I am told it will be ready in February-March next year. The letter goes on:The Government proposes to pass it prior to the 30 June 2000. As I have indicated to you I expect legislation on trusts to be prepared by 30 June next year and legislated in time to apply from 1 July 2001.That is the first point. It continues:2. The Government will introduce all the business tax changes announced in full.3. I have received advice from the Australian Taxation Office that your proposed integrity measure would not add to the Government's proposed strengthening of Part IVA. Having said that, if it were re-drafted in a workable form it would not detract from it either. If the Labor Party indicates its agreement to pass the Government legislation in the Senate the Government would include this clause if you want it. It is your election.I go on to say:I also enclosing copies of the two Bills which will be introduced into the Parliament tomorrow. These Bills provide incentives for investment in venture capital by non-resident tax-exempt super funds, streamline and extend small business CGT rollover relief provisions, provide scrip for scrip rollover relief and remove CGT averaging for individuals.I conclude the letter by saying:Since the Government has agreed to your three conditions, I look forward to your written confirmation that the Opposition will vote for the package in full.Please confirm this as a matter of urgency. If we receive written confirmation that, having met the three conditions as requested, the opposition will, as it promised, vote for the package in full, then business tax will pass unamended. There is no reason why this bill cannot pass with the support of the opposition here and there is no reason why this bill cannot pass in the Senate, either tomorrow or next week, with the support of the opposition. The ball is squarely in the opposition's court: we were asked to agree to three conditions, we have met them and there is no reason why the opposition should not now, in writing, confirm it will meet its offer.I will now amplify on the matters that I have put in my letter. As I explained to the Deputy Leader of the Opposition in our meeting earlier today, the government announced its position in relation to the so-called integrity measures of alienation of personal service income and non-commercial losses on 11 November 1999. They were measures recommended by the Ralph committee, they have essentially been adopted by the government and we have put more detail on them. I have given the Deputy Leader of the Opposition fact sheets which explain in quite considerable detail how they work. It is on the basis of these fact sheets that the parliamentary draftsman would go to work and produce legislation which, I am told, will be ready after Christmas in February or March next year.In addition, I have given him a fact sheet in relation to the unified entity regime. I make this point in relation to the unified entity regime: it was put in the government's tax policy—the ANTS policy—when the Ralph committee was set up, because it obviously required considerable transitional work. We asked the Ralph committee to look at it and, subject to the changes recommended by the Ralph committee, we have accepted the Ralph committee report. I am told that that is a more complicated question of drafting. The legislation should be ready in the first half of the year—by 30 June—and, since the measure is not to apply until 1 July 2000, as long as it is ready by 30 June, it can be legislated and it can be implemented to apply from 1 July 2001. I make this point not in any controversial way, but I noticed that the member for Kingston was speaking earlier. I recall that he was an adviser to my predecessor as Treasurer, Mr Willis. I make this point that, in 13 years of Labor government, the Labor Party never introduced a unified taxation regime. I will not make the member for Kingston recall all of the highlights of his career as an adviser to the then Treasurer Mr Willis, but he will recall very well that on the eve of the 1996 election—after 13 years in government—the then Treasurer discovered the so-called high wealth individuals. After 13 years of government, they discovered high wealth individuals—during the election campaign. It was partly as a result of the work I did in relation to that and other matters that this government came up with a unified entity regime. I make the point that it will take some considerable drafting. It has never been done before in Australia. It is a very big change to the taxation regime. It will take some considerable drafting, and I am advised by the Office of Parliamentary Counsel that they can do it by 30 June next year.The second point I make is this: business taxation reform is all about modernising and simplifying our business regime. Why do I say `simplify'? Because if we are able to simplify a multitude of depreciation regimes into one effective life regime, we get a simplification and we are able to reduce company tax rates. You would not do one without the other—you do simplification and you get the benefits in relation to reduction of the company tax rate.If we are able to simplify our capital gains tax regime, we can reduce our rates. I have always made the point that this is not a one-way street on capital gains. We are removing indexation, which means we will be taxing nominal gains. At the moment you are taxed only on real gains. We are removing averaging. They are beneficial to taxpayers. If all you did was to remove those two items and left the rates where they were, the effective rate of capital gains taxation would increase, and it could increase quite considerably. So if you are removing those things and you want your effective rates to be the same or lower, you have to reduce the rate because you are taxing nominals. The trade-off that the government decided on was that, in return for indexation and averaging, we would have a 50 per cent exclusion for individuals. The reduction for companies is that they will get the reduced company tax rate. But the whole thing coheres—you cannot take one part and not the other; otherwise you will get imbalances. It is a considerable simplification to take out indexation and averaging. Indexation requires you to adjust your cost base. It is something that small taxpayers find very difficult to manage in their tax returns. I do not know where a small taxpayer would get the relevant deflator and index their cost base. You cannot do it yourself. I do not know how small taxpayers cope with averaging. I suspect most of them do not even know about it, let alone have the capacity to utilise it. If you take those items out, you get considerable simplification. In return, you have to have lower rates. The government has always argued that simple lower rates will make Australia much more internationally competitive.The third point is that the Deputy Leader of the Opposition attached as his third condition a proposed amendment to be added at the end of section 177C. He himself said quite rightly that it had not been drawn up by the Parliamentary Counsel and it could be improved. I referred it to the Taxation Office and they said that they could improve it. It does not quite work properly as it stands, but the essence of the amendment—which could be done—is that, if you try to take advantage of the discount on capital gains by alleging you have turned income into capital, you should still be taxed on that as if it were income. That is the essence. Part IVA, as amended, will have that effect, as long as you make it entirely clear that such a provision does not derogate in any way from part IVA—it does not add, and it does not detract. I would not want the Labor Party to say, `Oh, you didn't meet our third condition.' For the sake of meeting the Labor Party, you can even have that.83TRUDDMr Rudd—We might just add a bit.CT4Costello, Peter, MPMr COSTELLO—You can even have it. If you want to agree, you can have it. We make an open offer. You can have that clause as redrafted by the Parliamentary Counsel. It is not a big redrafting. You can have it if that leads to agreement. I do not want it to be said that in any respect we have not met your offer. We have met it in full, so if there is some reason why the Labor Party does not deliver it is nothing to do with the government, and that ought to be entirely clear.We will not accept that amendment today because it is not redrafted, and it cannot be passed in that form. But, as redrafted by the tax office, if I get a letter in reply saying that having met the three conditions the Labor Party will support our legislation here and in the Senate, I will have it redrafted in an acceptable form and it can be added in the Senate when you vote through the package in the Senate. All that will then be required is for it to come back here and for the House to formally assent to it. I could go through other things that were raised in this debate, I could answer some of the points that were made against the government, but when he began his speech this morning the Deputy Leader of the Opposition made an offer, and we accepted it. If it was a genuine offer, that will be the end of the matter: the business tax reform will pass with the consent of the Labor Party in this House and in the Senate. I await anxiously the written confirmation of the Deputy Leader of the Opposition. If he wants to state it here in the House that is fine, I will accept it, but I would like it in writing as well. So that everybody is entirely clear what the government's position will be, it is this: we will oppose the second reading amendment which, if we are in agreement, is redundant anyway. We will oppose the amendment not because we do not accept it going in but because it is not currently in the proper form. If the Labor Party wants to have that amendment it can. We will do it in the Senate and then we will vote for the bills.Let me summarise by saying this: this is good tax reform. This is important tax reform. This has not been done in Australia for a very long period of time. This is a chance to modernise the business taxation system. It is not all one way, it involves trade-offs, but it will make Australia internationally competitive. This will be a great step forward for Australia. We need to get these bills through before Christmas because by announcement we have abolished indexation and we need the law to match the announcement to resolve the position for all those people who are buying and selling assets and filing tax returns at the moment on a press release when it should be by legislation. That is where things stand. If this country can get good, strong business taxation reform, it will be a great day for Australia.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Jenkins)—I understand that the Deputy Leader of the Opposition is seeking the chair's indulgence, and indulgence is briefly allowed.16:40:0012550Crean, Simon, MPMr CREANDT4HothamALP00—Thank you, Mr Deputy Speaker. I know it is out of order because the debate has essentially been closed, but I appreciate the response that the Treasurer has given. I only received it as he was talking, and therefore it does require me to look at not so much the detail of the letter—that is easy enough to follow—but the associated detail in the attachments, which are, as I understood him to say, the drafting instructions.CT4COSTELLOMr Costello—They are what will be going to the Parliamentary Counsel.DT4Crean, Simon, MPMr CREAN—I understand that they will be, in essence, the drafting instructions to the Parliamentary Counsel. So it is against that background that I want the opportunity to consider them. As to the second point, I think that is a significant commitment by the government to introduce all the business tax changes announced in full. I will reserve my remarks on the third point to the consideration in detail stage because they can be properly dealt with there. To meet the Treasurer's point, when he asked whether the letter sent to him earlier today by me was a genuine offer: I only make genuine offers, and that was another one of them. Therefore, we want to consider the detail of this. I will respond to the Treasurer as quickly as I can, although immediately after this bill we have another 250 amendments to his GST bill—the millennium man now has more than 1,000 amendments to his GST even before the millennium has come. I undertake to get back to the Treasurer as soon as I can. Question put: That the words proposed to be omitted (Mr Cox's amendment) stand part of the question.16:47:00The House divided. (Mr Deputy Speaker—Mr H.A. Jenkins)76Mr AbbottMr AndersonMr K. J. AndrewsMr AnthonyFran BaileyMr BairdMr BarresiMr BartlettMr BillsonMrs B. K. BishopMs J. I. BishopMr BroughMr CadmanMr CameronMr CausleyMr CharlesMr CostelloMr DownerMrs DraperMrs ElsonMr EntschMr FaheyMr FischerMr Forrest*Mrs GallusMs GambaroMrs GashMr GeorgiouMr HaaseMr HardgraveMr HawkerMr HockeyMrs HullMr JullMr KatterMrs D. M. KellyDr KempMr LawlerMr LiebermanMr LindsayMr LloydMr McArthur*Mr I. E. MacfarlaneMr McGauranMrs MayMr MooreMrs MoylanMr NairnMr NehlDr NelsonMr NevilleMr NugentMr PyneMr ReithMr RonaldsonMr RuddockMr St ClairMr SchultzMr ScottMr SeckerMr SlipperMr SomlyayDr SouthcottDr StoneMrs SullivanMr C. P. ThompsonMr A. P. ThomsonMr TrussMr TuckeyMr M. A. J. VaileMrs D. S. ValeMr WakelinDr WasherMr WilliamsDr WooldridgeMs Worth62Mr AdamsMr AlbaneseMr AndrenMr BevisMs BurkeMr ByrneMr CoxMr CreanMrs CrosioMr DanbyMr EdwardsDr EmersonMr L. D. T. FergusonMr M. J. FergusonMr FitzgibbonMs GerickMr GibbonsMs GillardMr GriffinMs HallMr HattonMs HoareMr HollisMr HorneMrs IrwinMr KerrMr LathamDr LawrenceMr LeeMs LivermoreMr McClellandMs J. S. McFarlaneMs MacklinMr McLeayMr McMullanMr MartinMr MelhamMr MorrisMr MossfieldMr MurphyMs O'ByrneMr O'ConnorMr O'KeefeMs PlibersekMr PriceMr QuickMr RipollMs RoxonMr RuddMr Sawford*Mr SciaccaMr Sercombe*Mr SidebottomMr SmithMr SnowdonMr SwanMr TannerDr TheophanousMr K. J. ThomsonMr WilkieMr WiltonMr ZahraMr HowardMr BeazleyMr ProsserMs Kernot* denotes tellerQuestion so resolved in the affirmative.Original question resolved in the affirmative.Bill read a second time.12551Leave granted for third reading to be moved forthwith.Bill (on motion by Mr Hockey) read a third time.Bills12551r94312551Consideration resumed from 21 October, on motion by Mr Costello:That the bill be now read a second time.Question resolved in the affirmative.Bill read a second time.12551Bill—by leave—taken as a whole.16:53:0012551Hockey, Joe, MPMr HOCKEYDK6North SydneyLPFinancial Services and Regulation10—by leave—I move:(1) Schedule 1, page 3 (after line 16), after item 2, insert: 2A Section 42-1After "unit of plant.", insert "It also provides for balancing adjustments on disposal of plant, even if you have not deducted an amount for depreciation.".(2) Schedule 1, page 4 (after line 5), after item 4, insert:4A Subsection 42-30(2)After "Balancing adjustments", insert "made because of subsection (1)".4B After subsection 42-30(2)Insert:(2A) You must also make a balancing adjustment calculation for *plant if a *balancing adjustment event occurs, but subsection (1) does not apply. Note 1: However, no balancing adjustment calculation is required if Common rule 1 applies to the balancing adjustment event or if any of the exceptions in section 42-198 applies. Note 2: A balancing adjustment calculation may include an amount in your assessable income or allow you to deduct an amount. If you are required to include an amount in your assessable income, balancing adjustment relief may be available: see sections 42-285, 42-290, 42-293 and 42-295.(2B) Balancing adjustments made because of subsection (2A) are calculated under Subdivision 42-GA.(2C) Subsection (2A) and Subdivision 42-GA apply to a unit of *plant that has not yet been fully completed or constructed, in the same way as they apply to a unit of plant that has, and the other provisions of this Act have effect accordingly.(3) Schedule 1, item 8, page 7 (line 4), omit "or 42-197", substitute ", 42-197, 42-223 or 42-224".(4) Schedule 1, item 8, page 7 (table item 2), before "118-10", insert "108-20 or".(5) Schedule 1, item 8, page 7 (line 12), omit "or 42-197", substitute ", 42-197, 42-223 or 42-224". (6) Schedule 1, item 8, page 7 (line 16), after "42-192", insert "or 42-223".(7) Schedule 1, page 7 (after line 19), after item 8, insert:8A Before Subdivision 42-GInsert:Subdivision 42-GA—Calculation of balancing adjustments where there have been no deductions for depreciationGuide to Subdivision 42-GA42-221 What this Subdivision is aboutThis Subdivision explains how to calculate your balancing adjustment in some cases where a balancing adjustment event occurs for plant:. for which you have deducted no depreciation; or. that has not yet been fully completed or constructed.Table of sectionsOperative provisions42-222 When do you make a balancing adjustment calculation?42-223 Including an amount in your assessable income42-224 Deducting an amountOperative provisions42-222 When do you make a balancing adjustment calculation?You must make a balancing adjustment calculation for the income year in which a *balancing adjustment event occurs.42-223 Including an amount in your assessable income(1) If the *plant's *termination value exceeds its *cost, your assessable income includes that excess. For exceptions, see section 42-198. For balancing adjustment relief, see sections 42-285, 42-290, 42-293 and 42-295.(2) However, the amount that subsection (1) includes in your assessable income is reduced if: (a) you acquired the *plant, or began to construct it, at or before 11.45 am, by legal time in the Australian Capital Territory, on 21 September 1999; and (b) the plant's *cost base at the time of the *balancing adjustment event exceeds the plant's *cost.The amount is reduced (but not below nil) by the excess of that cost base over that cost. Note: The main reasons why the cost base would exceed cost are: . indexation of elements of the cost base (up to 30 September 1999); . amounts being included in the cost base that are not part of the cost.42-224 Deducting an amountIf the *plant's *termination value is less than its *reduced cost base, you can deduct the difference. For exceptions, see section 42-198.(8) Schedule 4, item 11, page 25 (line 15), after "this Part", insert "and Parts 3-1 and 3-3".(9) Schedule 4, item 11, page 25 (line 24), after "this Part", insert "and Parts 3-1 and 3-3".(10) Schedule 4, item 11, page 26 (lines 16 to 20), omit subsection (1), substitute:(1) This section and section 44-25 apply to you if you own an *IRU (the original plant ) and you dispose of part of it.(11) Schedule 4, item 11, page 27 (line 4), after "owning.", insert "The *cost, and the first element of the *cost base, of that part are worked out similarly.".(12) Schedule 4, item 12, page 28 (lines 22 and 23), omit "IRUs acquired under contracts entered into", substitute "expenditure on IRUs incurred".I am moving amendments to schedules 1 and 4 of the New Business Tax System (Capital Allowances) Bill 1999 on behalf of the government. These amendments are necessary to reflect the government's original policy intention. Further details are contained in the supplementary explanatory memorandum and correction. I present the supplementary explanatory memorandum and correction to the House.Amendments agreed to.Bill, as amended, agreed to.12552Bill (on motion by Mr Hockey)—by leave—read a third time.Bills12552r94612552Consideration resumed from 21 October, on motion by Mr Costello:That the bill be now read a second time.Question resolved in the affirmative.Bill read a second time.12553Bill—by leave—taken as a whole.16:55:0012553Crean, Simon, MPMr CREANDT4HothamALP00—I move:(1) Schedule 9, Part 2, page 105 (after line 3), after item 20 insert:20A At the end of section 177C Add:(4) Without limiting by implication the generality of the provisions of this Part, where under a scheme an amount or amounts of income that would have been included, or might reasonably be expected to have been included, in a taxpayer's assessable income for any year of income is not included, but instead a net capital gain, being a discount capital gain to which subsection 100—50 (3) of the Income Tax assessment Act 1997 applies, is derived in that year of income, so much of the net capital gain as is accordingly not included in the assessable income of the year of income shall be taken to be a tax benefit for the purposes of this Part.This is in essence an attempt by us to strengthen the part IVA current provisions of the tax act to ensure that schemes entered into which have as their purpose a tax benefit for conversion from income to capital gains should be caught. We think this measure is necessary because what the House has just passed is a widening of the gap between the capital gains tax and the marginal tax rates. When there is a widening there is added incentive to avoid. We think that if we are going to take that step then there needs to be as its concomitant a stronger anti-avoidance measure.The need for this measure has been demonstrated in the evidence before the Senate inquiry into the government's tax package. The government, in our view—and it has been the finding of that Senate inquiry—have seriously underestimated what is referred to as the `conversion effect' from introducing this measure. They say that it will only cost $20 million in year 1, rising to $180 million in year 5. One estimate before the Senate inquiry by Associate Professor Michael Evans of the University of New South Wales is that the conversion effect could result, in a worst-case scenario, in a revenue loss of over $4 billion over a five year period. The purpose of our amendment is to plug that hole.Again, we cannot know what the actual amount of the leakage will be, but even the government admits there will be some. Tax experts who came before the inquiry, Professor Rick Krever, Professor Evans and Dr John Edwards—Professor Krever worked on the Ralph review as an expert consultant—consider those estimates by the government to be ludicrously low. The tax practitioners themselves are very critical of the potential for avoidance that comes from such a measure. Peter Poulos from KPMG says that if you are going to have a lower rate of capital gains tax as distinct from ordinary income then you are inviting people to look at trying to structure their affairs so that they can take their profit in a capital form rather than an income form. Paul McNab from Price Waterhouse said:So the government's faced with the possibility that reducing the rate on capital gains might lead to what could be described as domestic avoidance behaviour.Professor Robert Deutsch from the University of New South Wales said:It will push the taxpaying community back to trying to turn income into capital where possible.The Treasurer indicated in the House before and in his letter to me, which I just received earlier, that they are prepared to accept an amendment along these lines even though his advice is that the proposal we have before the House is `not drafted correctly'—I think those are his words. We are prepared to have further discussions and to take advice on that. We await with interest the Treasurer's alternative proposal. It is interesting to note that in his letter to me today the Treasurer says, `I have received advice from the Australian Taxation Office that your proposed integrity measure would not add to the government's proposed strengthening of part 4A.' Like a lot of the detail that we have been seeking, we have not seen the detail of what they are proposing to strengthen part 4A with.Indeed, on the earlier occasion when I met with the Treasurer he was of the view that part 4A in its current form was sufficient to deal with the problem that we are trying to address. We disagreed and, in our view, the tax office said it was unclear at the Senate inquiry. If it does not add to what the government are proposing to do by way of a strengthening of part 4A, then I am heartened that they are genuine in their efforts to strengthen part 4A. I accept the fact that they are genuinely trying to get an effective mechanism to stop the contrived schemes whereby people would convert their income into capital gains, thus, for the purposes of the exercise, attracting a lower rate. (Extension of time granted) I will not take much longer because a colleague wants to speak in this debate.I make the point that we reinforce the fact that it is essential to do something in regard to it. It is totally unacceptable that, if what we are going to do is to widen the gap and thereby invite people who see the opportunity through arbitrage arrangements to avoid their tax, there should be effective measures in place to stop them doing it for that purpose. If the government agree with us on that, as they say they do—and I accept their word on it—then it is incumbent upon us to try and get the right form of words. But, in that context, we will be very interested to see what is proposed by way of the overall strengthening of part 4A that they have talked about and that they referred to in the Treasurer's press release of 11 November. We expect that the outcome can be arrived at whereby we can have an effective anti-avoidance mechanism against this proposal.We want—and I repeat this point for the purposes of the simplicity of the language—to ensure that a scheme which results in a tax benefit from converting ordinary income to capital gains is caught. If the government are committed to achieving that with us, we are happy to talk with them about the form of words that is necessary. I indicate to the House that the draft we have put forward has been done with the assistance of the former tax commissioner, Trevor Boucher—a man of very distinguished public service who undoubtedly has knowledge in the tax field. We will have some further discussions with him as well.An amendment dealing with this conversion problem, whilst it is necessary to deal with the conversion, will not of itself plug the revenue holes which have been identified by both Labor and the Democrats. Those revenue holes can only be met by the government doing what it says it will do—implementing all the measures that are contained in part 2. Part 2 was detailed to some extent on 11 November. Today, in his letter to me, the Treasurer says that the government will introduce all of the business tax changes announced in full. That is an important concession because it is one that we sought. I think the only outstanding matter at this stage is the extent to which we can be satisfied that the detail of the measures not yet before the parliament will go to fixing up the problems.In an across-the-table exchange, the Treasurer confirmed essentially that the attachments that he has put and which are contained in the letter to me are similar to, if not technically so, the drafting instructions. They are what the Parliamentary Counsel will be instructed to draw around. It is against that background that we will have to consider our position and respond to the Treasurer as soon as we are able. We know that the government will oppose this measure even though it has indicated that it is not opposed to the principle. Because this issue has not been finally resolved, we think it is important to still present this amendment to the House. We look forward to the ongoing discussions by which we can get it right, because it is an essential part of the anti-avoidance armoury to get it right.17:05:0012554Emerson, Craig, MPMr EMERSON83VRankinALP00—History is repeating itself. The reason history is repeating itself is that, in the lead-up to the implementation of the goods and services tax, the government did no modelling of the economic impact of the GST package. In relation to the business tax package, a very small amount of modelling was done and, in the short time that was available for the Senate inquiry to consider the government's proposals, it asked Professor Peter Dixon of Monash University to have a look at the proposals and provide some estimates of the economic impacts.In the short time available to him, Professor Dixon arrived at tentative conclusions that the reduction in the rate of company tax, combined with the removal of accelerated depreciation, in net terms, would do nothing positive for the economy and, in fact, could increase the overall taxation burden in that respect. His conclusion, therefore, was that this tax package was not good for the economy and he pleaded that there be more time available to look in greater detail at that proposition by doing extra modelling. That time has not been provided, which is most regrettable. If this tax package is passed, we can look at the economic impacts down the track.One of our concerns, and a very important one, is related to capital gains tax. It is true—and I agree with what the Treasurer has had to say—that removing indexation, of its own account, will increase the effective rate of capital gains tax, that removing averaging, of its own account, will increase the effective rate of capital gains tax and, as a response to removing those two measures, the government is proposing to halve the rate of capital gains tax.By halving the rate of capital gains tax, the government is definitely increasing the incentive for people to engage in contrived arrangements and therefore to avoid tax. What we need to ask ourselves, though, is whether it actually increases the opportunity to do so. That is a moot point. It is the very reason why we asked Trevor Boucher, the former Commissioner of Taxation, to assist us in the drafting of a general anti-avoidance provision that related specifically to the schemes that may come into place to artificially convert income into capital gains tax and therefore to enjoy a halving of the effective rate of tax. Mr Boucher did assist us in that endeavour and has produced with us the amendment that the shadow Treasurer has moved in relation to avoidance.On the other hand, the Treasurer said, `We'll do some redrafting of it. We accept it in principle. It won't do any good but it won't do any harm.' I am concerned about his suggestions that it will not do any good. I do not believe that he knows, having had a quick look at it, that a measure like this will do no good. I think it will in fact do quite a bit of good in reducing and hopefully removing the opportunity for people artificially, in contrived ways, to convert income into capital gains. I am heartened by the Treasurer's commitment in his letter in response to the Deputy Leader of the Opposition that all of the measures that the government has announced will be implemented in full. This is vital because the revenue hole associated with the original business tax package must be filled.The business tax package must pay for itself because the Treasurer has declared he is an income tax cut man. Obviously, he is keen to provide net reductions in tax for business, and what are we going to lose as a result of that? The education of our children and the health of Australians. So it is vital that he sticks to that commitment. We are heartened by that commitment, but we will be holding him to it—the commitment that this package must be revenue neutral and that they will be implementing all of the measures announced in full to make sure that any revenue hole is filled.17:10:0012555Andren, Peter, MPMr ANDRENKL6CalareIND00—I have not prepared enough on the New Business Tax System (Integrity and Other Measures) Bill 1999 to speak in any detail about it, but I must say that I am amazed at the way in which the Labor Party particularly has rolled over on a matter of basic equity with regard to the capital gains tax provisions of this bill. In the short time I have available, I can only quote from Ross Gittins in a recent article where he said:In reality, the conventional economic arguments are all against special treatment of capital gains. There is nothing special about them. They are just another form of income alongside income from wages, profits, interest and rent. They should be taxed in the same way, at the individual's marginal rate. When capital gains are taxed more lightly than other sources of income, the allocation of resources is distorted, in particular, investment in appreciating assets is favoured at the expense of investment in depreciating assets such as plant and equipment.If the government's argument is that this reduction in capital gains tax is in effect to encourage investment, I would suggest very strongly that we are going to see a repeat of the 1980s where there will be a preference—certainly for capital investment—for capital over income tax, and the results are obvious. It is going to mean more and more speculation in our economy—I believe in non-productive areas of the economy—and it will further widen not only the perception but the reality of the gap between the haves and have-nots.In the last day or so, we have seen the Prime Minister clawing back some of those quite unrealistic tax breaks that have been given as a trade-off for the GST to higher income earners, clawing them back and putting them into the East Timor defence fund. Nobody has any real argument with that because those tax breaks should not have been offered to that degree in the first place. I presume the government has agreed to this process because the Labor Party has determined that it is going to concentrate on the GST in the lead-up to the next election and leave the government to sink or swim on the basis of this legislation. I issue a warning to the opposition that they are sending entirely the wrong message to their constituency on this. The Prime Minister has realised, I believe, that he has made a blunder in equity terms in the cuts that he gave to higher income earners, and he is clawing part of that back.If we are really talking about the gap between those who are falling further and further behind and those who have an advantage to explore the opportunities of tax avoidance, you need go no further than look at the provisions that are provided for in this particular piece of legislation. You do not have to go any further than the ACOSS submission to the Senate Finance and Public Administration References Committee where they urged that an inquiry be established but say that they are `deeply concerned about the serious threat this proposal presents to the integrity of the progressive personal income tax system and thereby to future federal budget revenues and expenditures on health, education and social security'.The only fair tax is a progressive tax on income, where every extra dollar of income is taxed and there are not provisions made for those with the means at their disposal to exploit what I believe is an obvious come-on to speculative investment. The Democrats and Labor have argued mainly about the revenue neutrality of this whole package, although I note that the Democrats have now said they wanted to cut this reduction. They are now left in the wilderness with this agreement between the opposition and the government to virtually pass the capital gains tax part of it, and any Democrat amendments in the other place will amount to nothing. They will lose that opportunity to make what the public believes are necessary amendments to cut back the generosity of these capital gains tax changes. That gap that we all know is there, and which both sides of politics have made so much mileage of, is going to widen. Come the ballot box next time around, there will be people looking around, I suggest, for other than the major parties to support.17:15:0012556Hockey, Joe, MPMr HOCKEYDK6North SydneyLPFinancial Services and Regulation10—In summary, as the Deputy Leader of the Opposition enunciated a little earlier in this debate on the New Business Tax System (Integrity and Other Measures) Bill 1999 , the government has indicated that it will accept this amendment if the opposition is prepared to accept the entire package. We have also heard discussion about the details of the wording in the amendment. That can be resolved. The government stands ready to resolve those when this bill goes to the other place. I reflect briefly on the fact, and remind the House, that there does not seem to be a great policy difference between the opposition and the government on this amendment. From that perspective, it is hunky-dory. It is a question of whether the opposition wants to have the particular wording that it has put forward or whether we can improve on the wording. It may well be best left to the house of review.I refer briefly to a couple of points made by the member for Calare, which were not really about this amendment but more about the generality of the package. It is disappointing that the member for Calare has chosen the course he has in relation to the capital gains tax. If there is one fundamental point about lowering capital gains tax, it is this: investors are prepared to take greater and more calculated risks if they see that the return to them is greater for that risk. If you lower capital gains tax, individual investors are prepared to have a go at small, high-risk investments. Those small, high-risk investments are often small businesses with great ideas that need some capital to get going. They are the Microsofts, if you like, of the future—the people who need a bit of up-front capital to invest in their technology and their intellectual property so that they can manufacture and build wealth, not just for their shareholders but, importantly, for all Australia.In a sense, the member for Calare is betraying, in particular, the interests of small businesses in his own electorate. It is an electorate that covers places and towns like Lithgow, which have suffered dearly for the industrial revolution that has taken place in the last 30 years. The second industrial revolution of the last 100 years has been the computer revolution. Lithgow has been one of the towns in regional Australia that have suffered as a result of the change in the nature of business at the end of the 20th century.The best way to get jobs into a place like Lithgow is to get new investment in smart technology. The best way to get new investment in smart technology is to give investors an incentive to have a go, to put their money behind a stranger's idea and have a go at that investment. The best way to do that is to significantly reduce capital gains tax so that there is greater reward for increased risk. It is far easier for people to buy shares in the 10 largest companies in Australia and maybe get their five per cent return and maybe get their 12, 13 or 14 per cent annual growth and just leave it as an investment that is relatively safe and secure. It is far riskier for them to meet a stranger with a good idea and to put a significant part of their savings into the company, knowing that they might not get a dividend return in a short time but in the hope that they will get significant capital gains into the future.Low capital gains taxes had a profound effect on the growth of new technology industries in the United States. That in turn has helped to drive the United States to become, obviously, the most significant global economy, now accounting for over 50 per cent of the world economy. It is something that has been desperately sought after in Europe and it is obviously a part of the culture in Asia, where people are investing in other ideas in the hope that they will get significant capital gain. (Extension of time granted) When the member for Calare comes into this House and derides the intentions of capital gains tax reform, he ought to be aware that the only people who will suffer as a result of the words that he is saying in this place are the people of Calare, Lithgow and Bathurst—the home of Ben Chifley. He is only selling them out; he is not selling anyone else out. He is only letting them down, particularly the small businesses. I might say that the farmers of the inner western plains are particularly being let down by this. On that basis, and in summary, we will not be accepting this amendment. We understand the policy intentions. We look forward to the opportunity to have some better wording and we look forward to the opportunity to enjoy the bipartisan support of the opposition in relation to this entire package.Amendment negatived.Bill agreed to.12557Bill (on motion by Mr Hockey)—by leave—read a third time.Bills12557r94412557Consideration resumed from 21 October, on motion by Mr Costello:That the bill be now read a second time.Question resolved in the affirmative.Bill read a second time.12557Leave granted for third reading to be moved forthwith. Bill (on motion by Mr Hockey) read a third time.Bills12558r95012558Debate resumed from 23 November, on motion by Mr Fahey:That the bill be now read a second time.17:25:0012558Baird, Bruce, MPMr BAIRDMP6CookLP10—It is my pleasure to speak on A New Tax System (Indirect Tax and Consequential Amendments) Bill (No. 2) 1999 this afternoon, the resumption of the debate from yesterday. Obviously, I support the bill. It is important to remember that when we left this debate, the member for Wills, in speaking for the opposition, spoke very briefly on the inclusions in this bill. They were wide-ranging in terms of some of the amendments that have been made. Consequently, in the discussions that have been taking place around the country, the input to members, the Treasurer and his office and the Assistant Treasurer have meant that these recommendations have come forward regarding appropriate changes to be made.The member for Wills made a number of sweeping statements about what the impact of the GST would be. He cited the impact on the car industry. He talked about petrol prices and insurance but very little about the actual inclusions in this bill. It is important to recognise that this is part of the overall GST reform. It is about the most significant reform to Australia's taxation system since federation. It is about ensuring that we have tax incentives for the great number of Australians who will benefit from these proposals.The fact that 80 per cent of the Australian taxpayers will have to pay no more than 30 cents in the dollar is a very significant change. It is about exporters, who will have the wholesale sales tax removed. It is about a more competitive environment in which Australian business will be able to operate. It is about widening the tax base to include services, which have so far been exempt.As to the changes in the Australian economy, there has been a significant increase in the services sector within Australia. This sector is being brought into the net instead of the manufacturing and mining sectors and other existing sectors being increasingly and further burdened. In increasing the rate of wholesale sales tax, the GST will reform in a very significant way and bring us into line with taxation systems around the world. Instead of having the taxation system of Botswana and Zambia, we will have a system that is part of the new tax environment applying not only in countries of the developed world, such as in Europe and North America, but also in many of the emerging nations around the world.These changes are a recognition that there needs to be some refinement. When you bring in a bill that is as far-reaching as these on the new tax system, obviously you need to develop a listening approach. I am sure that all honourable members have had brought to them concerns regarding individual aspects of the bills. I know that some items have been brought to me in the electorate of Cook. I have taken them up directly with the Treasurer's office. Some of them are being taken on board and considered. Obviously, there are always people who want to have their own specific advantage. However, it is about fairness and equity to the great bulk of Australians.This particular bill before us today provides several aspects. Amongst the most significant are, firstly, the deductibility of GST related plant and software upgrades; secondly, the supply of farmland; thirdly, goods taken from stock for private or domestic use; and, fourthly, the treatment of vouchers. There are other aspects to it as well in the bill, but these are amongst the most significant parts to it.On the first one that I mentioned—the deductibility of GST related plant and software upgrades—obviously a lot of small businesses operating around Australia will need to change the software in their cash registers and in their accounting processing machinery. It seems appropriate to the government that assistance be given to small businesses so that they can adapt to these changes. This is in addition to assistance being provided by the federal government of the order of $500 million to small businesses to assist them with the transition to the GST. This tax deduction will apply to expenses incurred by small to medium size businesses for GST related plant and software upgrades. Plant upgrades can include a cash register and, for example, software upgrades likely for accounting packages.In order to be eligible a business must have a turnover of less than $10,000—so we are dealing with the small end of the market but obviously a pretty important one—and be registered for GST purposes with a business tax number as of 1 July 2000. They must also acquire the upgrade between 1 July 1999 and 30 June 2000. It is a one-off offer to the small business sector to allow them to upgrade their machinery and equipment before that date. It is quite a generous offer. In addition to assisting with meeting obligations under the new GST system, the software upgrade tax deduction can apply to bundled software which would help the business concerned comply with other tax obligations. This measure is in addition to the $500 million the government has allocated to assist these businesses with complying with the GST.If the amendment were not in place, businesses would gradually depreciate items such as computers or cash registers acquired for the new tax system. In the case of a computer, there would be a depreciation period of 3.7 years. Under the software depreciation rules, this would take 2.5 years. This amendment will allow the expense to be dealt with in one income year period. Obviously it is an incentive for small businesses to make the necessary changes.In order to be eligible for support, the business must be the owner of the plant for which the upgraded software was purchased, and the plant must be used to produce assessable income. This is of particular assistance to companies that are currently using a manual system. With that sort of system, a great deal of work will be added for quarterly tax notifications under the Pay As You Go system, so this deduction will greatly assist in reducing workloads for small business people. It will also bring many business operators into the computer age. I am sure that all of us would want to assist in bringing small business into the electronic age, with all of the benefits that accrue therefrom.The second aspect of this bill is the question of the supply of farmland. I had some discussions yesterday with Mr Bob Douglas, the National Farmers Federation Chief Economist. The National Farmers Federation have had ongoing and extensive discussions with the Treasurer on the implementation of the GST. While the general thrust of the GST proposal has been agreed to by the NFF, there are nevertheless some parts of this bill that need addressing—and this is one of them. It relates to how the GST is to apply to the sale or long-term lease of land. This is dependent on the land being used as part of that arrangement for at least five years.The NFF has brought to the government's attention that common farming practice is that the entity carrying on the farming business is not the owner. While the changes have been made to the five-year requirement for a trust, and trusts have been involved in operating the farms, it is evident that a great number of farms are owned separately from the trust. If you trace ownership you find that they are often in a joint ownership arrangement rather than a trust per se. Consequently the GST provisions that apply to the trust are not relevant in terms of the ownership. The amendment ensures that the sale of farmland is GST free, even if the entity supplying the land is different from the entity carrying on the farming business on the land. In other words, the supply of land is GST free, provided that farming business has been carried out on the land concerned for at least five years.This bill also ensures that the supply of land is GST free if it is the sale of land or the supply of land by way of long-term lease. This corrects the anomaly. I am sure you, Mr Deputy Speaker Causley, in terms of the farmlands in your own area, would recognise the problems of the ownership being separate from the trust in many cases. You would recognise the benefit of bringing in the provisions for GST exemption to apply to both categories, with the provision that the arrangement has to have been in place for at least five years. It is a change that I am sure the NFF, the farming community and regional centres in New South Wales, Victoria and right across the country would welcome.The third aspect, which is particularly important, is the question of goods taken from stock for private or domestic use. One of the issues that applies to a lot of small businesses is where the GST is paid and then the item is subsequently used by the business person for their own requirements. The GST will be payable—and obviously it should be—where an item of stock is used by the individual proprietor for their private or domestic use. Input tax credits cannot be claimed in respect of purchases that are for private or domestic use—and rightly so. However, there will be occasions where input tax credits are claimed for stock which is later taken for private or domestic use. This applies if at the time of claiming for the input credits it was not understood that it was going to be used for private purposes.If the person knows at the time of purchase that the item will be used for private purposes for which he or she should not claim an input credit, the person should not apply for an input credit. A supermarket owner may purchase an item intending to on-sell it but may later consume or use the item at home, and this amendment will allow an adjustment to be made. It is a simple processing technicality of the bill which will make it a lot easier for the small business proprietors who use some of the stock for their own purposes. This amendment will ensure that in these circumstances an appropriate adjustment is made to the input tax credit previously claimed.The final aspect that I wish to touch on this afternoon is the question of the treatment of vouchers. This amendment will ensure that certain vouchers, such as gift vouchers, are subject to GST at the time of redemption. I am sure that all of us are aware that the use of vouchers that are redeemable at some point in time are an increasing way to provide gifts to people, and they can be redeemed in various forms. The amendment that is included in this provision will apply to vouchers that have a specified monetary value. Bus tickets, postage stamps and vouchers for specified goods or services will continue to be taxed at the time that the ticket or voucher is supplied. So that is not an issue.Under current legislation, all vouchers will be subject to GST at the time they are supplied, and no GST is payable when the voucher is redeemed. This can cause problems if the voucher is redeemed for GST-free goods. Of course, that will apply in some cases. Where it is recognised that that is the situation, then that should be clearly rectified. This amendment was requested by the Australian Retailers Association—a fine organisation that I had quite a lot to do with during the recent retail inquiry. The head of the ARA, Mr Phil Naler, has consistently disagreed with the Australian Taxation Office position that the GST should apply to vouchers at the time of purchase. Of course, until the voucher is actually used, it is nothing more than a piece of paper.These are some of the provisions which are included in these amendments. There are a number of other minor amendments that are included in this bill, but overall it is about improving the application of the GST. We all know the significant benefits that will be found in the economy with the introduction of the GST. It shows several things. One is that the business community is responding strongly and positively to the new tax system. It is getting involved in the tax forums and seminars which are being held by various associations, industry groups and the Australian Taxation Office. In the course of these seminars, it is raising issues about implementation, and most of them are relatively minor. Of course, there are some ongoing disputes that are part of such a major and significant change to our tax system, but I believe that the changes we have seen to date show that the government, the Australian Taxation Office and the Treasurer's office are listening to proposed changes. It is about making a better system. (Time expired)17:40:0012560Emerson, Craig, MPMr EMERSON83VRankinALP00—The Australian people know that they have an appointment with the dentist on 1 July next year. As someone who has been to the dentist on quite a few occasions, I know that you do not really like to be reminded that you have an appointment with the dentist; you like to put it out of your mind. But it is increasingly difficult for Australians to put out of their minds the fact that they have an appointment with the dentist, in the form of the GST, from 1 July next year when everywhere—in newspapers, television and advertisements—we see and hear daily how the GST is going to affect people. There is great apprehension rising within the Australian community about that. If the Australian people needed any further reminder that they have an appointment with the dentist from 1 July next year, then it is provided in the A New Tax System (Indirect Tax and Consequential Amendments) Bill (No. 2) 1999 that is before the House today.This legislation passes a milestone. It passes the 1,000th amendment to the GST. The millennial amendment is contained in this legislation today. Three hundred and two amendments to the GST were passed by the deal between the government and the Democrats. One of the most infamous of those amendments was the high-roller amendment that the government and the Democrats are so proud of. At our last sitting, another 454 amendments passed the House of Representatives, taking the total to 756 amendments. Until yesterday, the legislation that is contained in the documents today included another 181 amendments. But today the legislation has a further 119 amendments, taking the grand total to date to 1,056 amendments to the GST legislation—and we are still more than six months away from that legislation coming into force. I can easily foresee a huge new raft of amendments coming to this parliament in the new year to fix up the mess that has been created by the Treasurer, by the government and by the grubby deal between the government and the Democrats.I thought I might take the opportunity to have a look at the millennial amendment, thinking perhaps it might be an amendment to remove the GST from food, baby food, clothes, public transport or something like that. But it is in fact as follows:(93) Schedule 2, page 29 (after line 5), before item 1, insert:1AA Paragraph 11(1A)(a) Repeal the paragraph.It relates to leases—a very boring amendment, as it turns out. But what can you expect when the government puts into the House a current total of 1,056 amendments? The millennial man, the Treasurer, boasts that he is presiding over a new streamlined tax system for a new century. My colleague here has agreed to help me put in front of the parliament today this streamlined new tax system for the new century.He is handing me the documentation. He has a slight back problem, Mr Deputy Speaker, which can only be compounded by this exercise, and for that I apologise. This is the streamlined new tax system for a new century. Just before coming into the parliament to speak on this, I conducted an official weigh-in of this legislation. It now weighs 5.1 kilograms, and we have more amendments to follow. I am able now to conduct an official measurement with the use of this tape measure. This legislation now measures in height 16 centimetres. With the help of the member for Lowe, who is bringing forward a number of other documents, we can see that this is slightly higher than three telephone books. Mr Deputy Speaker, I present to you the streamlined new tax for a new century.I want to bring forward another document. The member for Cook has been copying the Treasurer, who has mentioned on no fewer than 24 occasions over the last few months that his streamlined new tax for a new century is going to replace the 1930s ramshackle Botswana style wholesale sales tax. I have now obtained a copy of the Botswana Sales Tax Act 1993. It measures a quarter of an inch at best and weighs a few grams. I ask members to observe which seems to be the most streamlined. This big pile here is the legislation that the Prime Minister and the Treasurer say is replacing the ramshackle Botswana style wholesale sales tax. This is the Botswana Sales Tax Act of 1993, and it does not take a genius to work out which is more streamlined—one weighs 5.1 kilograms and measures 16 centimetres and another weighs a few grams. I am not necessarily recommending that Australia adopt the Botswana Sales Tax Act 1993; the point I am making is that this can hardly be described as a streamlined new tax for a new century.I highlight that point further by referring to just two of the amendments that are contained in this legislation. One amendment ensures that payment of compensation and damages is subject to GST if the payment relates to an initial supply that is taxable. What this is all about is yet another botched job on the GST. In situations of compulsory third party insurance or workers compensation insurance, unsuspecting owners of shops and businesses who, until this legislation goes through, claim the GST on insurance costs as an input tax credit are liable to pay GST on any payout. If someone injures themselves and is eligible for workers compensation, or if someone is driving a vehicle for a business and hits a pedestrian, and there is a payout of $1 million, the person who took out the insurance would be subject to a GST of 10 per cent on the $1 million payout, or $100,000, if they claim the GST on insurance cost as an input tax credit.This legislation purports to deal with that problem, but I ask this question: does it deal with the situation of personal injury insurance? For example, someone goes into a shop and slips over on a wet floor or trips over on a mop or an A-frame. The shop owner goes to the insurer with the insurance policy and there is a payout to the injured person, again, say, of $1 million. Will the shop owner know that he or she could be liable for a GST of $100,000 on that payout? I do not think so.The next amendment I briefly describe as the `Christmas amendment'. It provides that GST is payable on a voucher, based on its face value, at the time it is redeemed for goods or services rather than at the time the voucher is purchased. This is to head off the horror Christmas story where someone goes into a shop to buy a Christmas voucher for dad for some CDs, a pair of shoes or a new tie. The voucher may well be subject to GST at present—it is not clear. Obviously, the government does not want to have these horror Christmas stories, so it is now saying that when dad goes in to cash that voucher and get the pair of shoes or the tie or the CDs he has to fork out 10 per cent of the value. That is what this amendment now does.They are just two examples of the sorts of amendments that have to be dealt with in this legislation—amendments that now total 1,056. This is a compliance nightmare. The government has said that this is the streamlined new tax for a new century—replacing the Botswana style wholesale sales tax. As I have shown, the GST legislation and the explanatory memoranda right here with me are now thousands of pages long. They are thicker than three telephone books, they weigh 5.1 kilograms and they contain more than 1,000 amendments. And this does not include the regulations, many of which have not yet been written. Arthur Andersen, the international accounting giant, said in its submission to the Senate GST inquiry:The draft legislation as proposed is very complex and at times uses vague and imprecise language. There are 67 pages of basic rules which require a 28 page dictionary to apply, but these are impacted by 30 pages of exemptions and 144 pages of special rules which are made even more difficult by extensive cross-referencing to other acts. Indeed the draft legislation is far more complex than we were led to expect.They said that on the basis of the original legislation; they must be having kittens now that they and all the accounting firms and tax advisers around Australia have to deal with a further 1,056 amendments.The compliance costs have been estimated and reported by the Victorian Employers Chamber of Commerce and Industry. The head of the chamber, Nicole Feely, who was a senior staffer in the Prime Minister's office until comparatively recently, has reported on the findings. The compliance costs will be $3.5 billion for businesses in Australia and 75 million hours. The government says it is the friend of small business, but small business bears the overwhelming burden of those compliance costs because, of the $3.5 billion estimated by the chamber to be borne by business as a whole, a full $3.1 billion is to be borne by small business. So $3.1 billion—or 88 per cent—of all the compliance costs are to be borne by small business. It is estimated that each small business will face a compliance cost of $3,500 and a time cost of 80 hours to implement this new tax for a new century, this dog's breakfast of a tax, this nightmare on main street. How fair on small business is that?The government say, `Oh, but we're replacing the Botswana style wholesale sales tax with this new streamlined, beaut new tax for a new century.' They fail to point out that at present there are 75,000 businesses in Australia paying the wholesale sales tax, but Treasury has estimated that there will be 1,600,000 businesses paying GST—it is truly the nightmare on main street. The latest figures are suggesting registrations for GST of 1,800,000 organisations. That implies another 200,000 charitable and non-profit organisations registering for GST and going through the compliance nightmare so that they might be able to claim back some GST on the inputs that they use. This is a nightmare for small business, it is a nightmare for charities and it is a nightmare for non-profit organisations.I point out some of the other facts about the GST. In terms of its complexity, section 165-55 of the GST legislation states:For the purposes of making a declaration under this Subdivision, the Commissioner may:(a) treat a particular event that actually happened as not having happened; and(b) treat a particular event that did not actually happen as having happened and, if appropriate, treat that event as:(i) having happened at a particular time; and(ii) having involved particular action by a particular entity;(c) treat a particular event that actually happened as:(i) having happened at a time different from the time it actually happened; or(ii) having involved particular action by a particular entity (whether or not the event actually involved any action by that entity).Is that clear? That is the streamlined new tax for a new century! This is a nightmare on main street. In fact, the Commissioner of Taxation warned about this nightmare on main street and his warning went unheeded. Before the grubby deal between the Howard government and the Democrats, the tax commissioner said in a speech in Hobart on 24 March:Non-compliance is inevitable. In the UK fish and chip shops selling both fresh and cooked fish typically report that 30 per cent of their sales are cooked fish—taxable—and 70 per cent are fresh—tax free. Anecdotal reports indicate the reverse is closer to the truth: 70 per cent cooked—and taxable—and 30 per cent fresh—and tax free.He went on to say:At one level you can get a laugh out of the overseas examples but the costs to business and the community in the form of our additional administration costs are not quite so funny. However, there is perhaps a more subtle but potentially more dangerous cost to all this. Ask yourself this question: what do you think will be the impact on attitudes to compliance with GST and perhaps other taxes of introducing rules that inevitably will be subject to ridicule and that almost encourage people to become comfortable with entering into arrangements to exploit them?So the tax commissioner's nightmare was the deal that was ultimately done between the government and the Democrats. The tax commissioner warned not to do that deal but the government did the deal anyway and is inflicting this appointment with the dentist, this nightmare on main street, on the Australian people.During question time today and on innumerable occasions the Treasurer has said, `We are getting rid of the wholesale sales tax which has all these rates—zero, 12, 22, 32 and 42 per cent.' By my count, that is five rates of wholesale sales tax. He says, `Oh, we're getting rid of those and inserting in their place a streamlined new tax system for a new century, a 10 per cent GST.' Not true! What the Treasurer is inserting in place of the wholesale sales tax, which has five rates, is a GST which has, at the very minimum, seven rates.He would like people to believe that there is a simple GST across the board. That is not the case. The rates are as follows. There is a zero rate for a range of goods and some services. There is input taxing for members of the financial sector; that is, they must pay GST on their inputs and they get no GST refund on their outputs. There is a tax rate of five per cent for caravan parks and sites, Then there is a 10 per cent GST. There is a special GST rate for cigarettes, a special GST rate for wine and a special GST rate for luxury cars. In total, at a very minimum, there are seven rates of GST.The Australian people do have an appointment with the dentist from 1 July next year. They need no reminding of it, but every day on television, in the newspapers and in this parliament they are being reminded that from 1 July next year they will feel a lot of pain and business will experience the reality of the nightmare on main street.17:58:0012564Cadman, Alan, MPMr CADMANSD4MitchellLP10—It is very interesting watching the Australian Labor Party, without policies or ideas, simply being negative right through this tax process. The member for Werriwa is the only person that seems to have ideas about where the Labor Party may take the Australian people, if it ever gets a chance to govern, and it is sad that he is being ignored by everybody. So we have this episode in the House today unrelated completely to the A New Tax System (Indirect Tax and Consequential Amendments) Bill (No. 2) 1999 before it and, in my view, that ought to change. We ought to deal with the legislation that is before the House instead of some stunt or circus.The honourable member is leaving the chamber—running out—but I will take you through Labor's tax record on wholesale sales tax, and the number of taxes the Labor Party put on the Australian people over the period from 1983 to 1996. In 1983 the Australian Labor Party decided that it would tax matches at 12 per cent and agricultural machinery, implements, apparatus and refrigerating agents at 22 per cent. Piping, tubing, channelling and guttering for use other than for irrigation, water supply, drainage and sewerage purposes were also taxed at 22 per cent. One can imagine the definitional problems with these sorts of taxes.A member came into the House and said that A New Tax System is a tax system that needs to be thought through. We are dispensing with years and years of deciding whether or not piping, tubing, channelling and guttering is used for irrigation, whether or not it is used for water supply, or whether or not it is used for drainage or sewerage purposes. That was the complexity of the system that we have replaced. Piles of paper were engendered by the system. In the British system, half a page of description was necessary to decide whether a gingerbread man was confectionery or food.The change is extensive and significant. Paul Keating said that there were three main advantages in the change. Keating said that it would allow a more rational indirect tax system than the current anomaly-ridden wholesale sales tax, which has multiple rates, numerous exemptions and fails to tax the service sector. Secondly, Keating said that it would enable us to generate tax revenues to provide for a major reduction in marginal rates of income tax. No other tax has the same potential for this purpose. Thirdly, it generates tax from those who continue to evade or avoid income tax that provides a useful net dividend for distribution to the rest of the community. That was not a bad summary—it was a fairly neat summary by the former Prime Minister, put long ago when he was Treasurer and shortly after the Labor Party was elected to government in 1983.To a large extent the current government have adopted those goals. We felt that the changes were needed because the personal income tax rate in Australia was far too high. Secondly, there must be not only a removal of the multiple rates of taxation of wholesale sales tax but also an opportunity to get rid of nine other taxes, which are part of a complicated process. I do not think there would be a person in the Labor Party who has had to deal with the prescribed payments tax. The Labor Party invented it, but they would never have to have dealt with it, nor would they have had to deal with the reportable payments system.Go to the City Markets, Madam Deputy Speaker. I know that many of your constituents go down there from time to time to sell or to buy. One only has to watch the reportable payments system at work at 4 a.m. or 5 a.m. in the City Markets, where hardworking migrant farmers have to keep a record of every transaction, with wet hands in cold weather, working with a system that is impossible to maintain and impossible to regulate. It is impossible to say that the system has any integrity about it. The prescribed payments tax is one of the taxes that will go. In the building industry, every brickie and his mate have to keep accounts that go back for years. I assure you, Madam Deputy Speaker, that they are accounts that the tax office never checks.This paperchase piles up. It was a process that hoped to keep people honest and their transactions accountable. It hoped to keep a money trail back through the transactions. Those taxes that we are getting rid of are taxes that, for the average person, are impossible taxes. They are taxes that have rankled with them for many years.The consumption tax will change the way in which we do things in Australia. It will bring about a simpler system, despite the fear that the Australian Labor Party are trying to engender that it will be more complicated. My prediction is that within two or three weeks of it being brought into effect on 1 July next year people will be comfortable with it and they will not understand what all the fuss was about before it was put into place.I will conclude the comparison between the system that we are introducing and the system that we are getting rid of by referring to some of the taxes the Australian Labor Party introduced in 1985. They brought in taxes on biscuits, ice-cream and similar products. They brought in taxes on domestic stoves, ranges, fire grates, fireplaces and domestic water heating and storage equipment. The Australian Labor Party in 1985 brought in taxes of 12½ per cent on water-softening, filtering, desalinating and sterilising equipment. They brought in taxes of 22 per cent on ships, vessels and Australian produced food for birds kept as domestic pets. It goes on and on. It brought in taxes of 12 per cent on pianola rolls, packet flavoured milk, non-alcoholic wine and cider and similar beverages and Australian fruit juice products.In 1986 they taxed non-alcoholic and low alcoholic beverages at 12 per cent. Beer with an alcohol content of more than 1.5 per cent by volume was taxed at 22 per cent. It goes on year after year, product after product, with all the definitional problems. Is this in or out? Is it wholesale sales taxable or not? When the current government came to power, it realised that there were areas that needed definition and careful analysis. The bill before the House today addresses some of the issues. Sure, there have been a number of amendments, and there will need to be a number of amendments to the original concept, but we do not need to start up on 1 July 2000 without this thing having been thought through and the modifications and changes that are necessary to make it work smoothly having not been attended to. It shows a flexibility and a willingness to get the system right. It appears from the arguments being expressed by some members opposite that they do not want any of the anomalies fixed up, that they do not want to have a smooth start-up, that the amendments are futile and that they do not want to go on making amendments to the goods and services tax or to the new tax system. Well, they are going to have to keep making them, because the fact of the matter is that this government is determined to make sure the new tax system works, and works easily and smoothly. It is designed to make taxation simpler. It is designed to reduce compliance costs. It is designed to get rid of anomalies in taxation and make it better for small business and for the average family.The current legislation we are dealing with is entitled A New Tax System (Indirect Tax and Consequential Amendments) Bill (No. 2). This legislation deals with policy changes since the release of the consultation document. What a sensible thing to do: put out a consultation document, a draft policy, let those who are affected comment on it and then move onto legislation. That is what we have today: the government will be introducing legislation following the passage of these bills, and those regulations will affect the financial services industry. As anybody who has followed this issue will know, the financial services industry is one of those industries that nobody in the world has been able to put a goods and services tax on. People have thought about it, but they have found that it is a complicated, confusing and difficult process. So, most nations have decided that, instead of putting a goods and services tax on financial transactions, they are going to tax the inputs—that is, put a GST on everything that business buys but not allow business to tack on the goods and services tax to the products they sell, which is basically money or a service related to money. So, after consultation with the industry, the government has come forward with this legislation. The consultation document was entitled The application of a goods and services tax to financial services, and that was released in September this year. There have been a few minor changes made to the policy specified in the consultation document, and the most important changes are those contained in this legislation. There were changes to the proposals for life insurance, because the definition of life insurance has been broadened to include all policies written under the act. That means that some risk policies written by life insurers, such as disability insurance, will be input taxed. So life insurance changes in character, and it should. Disability insurance should be included with life insurance. That is a sensible approach, and it is something that is strongly supported by the life insurers, something that the industry thinks is sensible and something that the people who are paying premiums think is sensible, too. So that is a very significant and worthwhile change—there is a boundary put around what life insurance may be for a goods and services tax. Turning to credit unions, I think members of this House have a favourable attitude to credit unions. In many areas, they appear to be a lot more thoughtful and willing to deal with customers than banks, if I may say so. As to the financial services supplied by credit unions, it has been decided that all services provided to credit unions by an entity that is wholly owned by two or more credit unions is now eligible for a reduced input tax credit. That means that services provided by the Credit Union Services Corporation, the central body that looks after the affairs of credit unions, and the data-processing centres that are owned by the credit unions will be eligible for that reduced input tax credit. It would have been obvious to anybody who was studying this that credit unions were at a disadvantage as compared with banks. So the government has moved to rectify that problem. What could be more sensible? What could be more practical? What could be designed to make sure that, as we move into the new tax system on 1 July next year, things will go smoothly? Credit unions, insurance companies and their clients will be satisfied. In relation to transaction banking delivery channels, a reduced input tax credit has been extended to Internet banking and call centre operations. We are all moving to that. Why should there be a full GST on the inputs for those areas because they are operating on quite a different basis from the current banks. As we move to a smarter, snappier and more customer oriented banking system, financial transactions are being considered by this government as part of the change to the taxation system. The change that has been made to Internet banking and call centre operations maintains neutrality between different banking channels so that there is not a government sponsored difference for different types of banking. The market and the customer will decide that. The customers will show which they prefer, whether they prefer Bpay or Internet banking or if they still want a savings passbook—whatever they want, it will be a matter for the customer.There have been changes to insurance. Changes to the interaction between insurance and stamp duty have been made to remove tax on tax. Despite the efforts of the Australian Labor Party to paint us as doing so this week, the government is not going to go ahead and put a GST on stamp duties. That is not the government's intention. From day one it has not been the government's intention to put a tax on tax. Changes to the claiming of input tax credits by business for compulsory third-party insurance have been made to simplify administration. The states and the territories requested this change. How crass and how stupid it would have been to resist those requests, and yet it appears from many of the arguments presented by those opposite that we should have done so.There have also been changes in relation to imported telecommunications services. There is an amendment that will ensure that the goods and services tax is applied to imported telecommunications services. It will ensure that the domestic telecommunications industry is not disadvantaged. That is sensible. Who would want to fail to tax the American or European based telecommunications services but tax the Australian—the home grown—product? Surely the Australian Labor Party is not going to come forward with a proposition that we should let off the foreigners from this tax but tax our own. That is inconsistent and stupid, and seems to run against everything that the Labor Party claims it stands for. But, in many of the arguments presented, that appears to be the case. This amendment relating to imported telecommunications services was requested by Telstra, and it will be welcomed by everybody operating in this country. So come on board, foreigners, and be taxed at the same rate whether you are outside or inside Australia. What could be fairer? It will make sure that Australian based businesses are not disadvantaged.There are amendments in this legislation relating to Australia's international obligations in respect of diplomatic, consular and related privileges and immunities. This meets our international obligations in relation to diplomatic missions, consulates, posts, overseas missions, international organisations and their officials following the introduction of the goods and services tax. An exemption from the goods and services tax will be granted when goods covered by the concessions are imported by these bodies. That is traditional. That is general practice. People may not like it, but we get the same sort of courtesy extended to our diplomats wherever they are in the world.There is an amendment in relation to the branching and grouping of government entities. This amendment is consistent with the original intention expressed by the government. It will align the definition of `government entity' in the goods and services tax. The Australian business number legislation will provide flexibility so that each government can decide which subentities it will treat as separate branches for the purposes of a goods and services tax. One can look at a structure and say, `It ought to be taxed as one and the goods and services tax applied to the whole entity,' or one could say, `It is a widely dispersed organisation at every level; it should be taxed. What suits us best?' The government made a decision this week that the Girl Guides and scouting organisations can make that same decision. They can decide whether to tax the head office as a national organisation or tax it at the branch level out in our electorates at their scout halls. That is sensible stuff. The little scouting group or Guide group will not be eligible for a business registration number but head office may be and may want to apply for registration and, as a large entity, they will be able to claim the input tax credits. What simple and effective decision making!I will conclude by saying that we are going through a commonsense process. You cannot build this into a political debate unless you want to deal with the detail. We can argue the principles elsewhere, but it seems to me that if you are going to look at principles the stupidity of all of the taxes introduced on item after item, year after year by the Australian Labor Party speaks for itself. The simplicity of thinking through a new tax system appears to be beyond those who sit opposite.18:18:0012567O'Connor, Gavan, MPMr O'CONNORWU5CorioALP00—The A New Tax System (Indirect Tax and Consequential Amendments) Bill (No. 2) 1999 continues the saga of the government's ANTS package and, more specifically, the GST that it wants to foist on the Australian community. We are now up to amendment 901. I guess it might not be too long before we breach the tonne—go over the 1,000—with amendments to this pernicious piece of legislation which the Treasurer and the Prime Minister are hell-bent on foisting on Australian households, especially farm households.This tax is Costello's curse on the Australian people. The defensiveness and sensitivity of government members to the criticism that we have made of this particular tax and these propositions merely indicate the depth of despair that now exists on the coalition back benches—certainly not on the front bench yet—about the effects of this tax on their electoral prospects. This will be the one issue that will sink the Costello government. I do not think anybody on this side of the House—and, increasingly, many people on the other side of the chamber—really think that the Prime Minister is going to survive until the next election, so I have used term `the Costello coalition government'. I am sure that, in coming months, the Prime Minister is going to feel the heat from his own backbench on this particular tax that is being foisted on Australian businesses, Australian farmers and Australian households. The government is going to pay a heavy price for its folly in foisting this tax on the Australian people.In the main, this particular piece of legislation covers matters relating to the supply of financial services and matters dealing with the insurance industry. Both of these areas are very important to the farming constituency of this nation. Indeed, this whole taxation package is of real relevance and importance to farmers and their families. I have always maintained in the public utterances I have made out in rural and regional Australia on this ANTS package that the devil was always in the detail and—if I can borrow the phrase—the chickens are going to come home to roost as far as the adverse effects of this package on the rural sector go.5V5SMITHMr Stephen Smith—Cooked or otherwise.WU5O'Connor, Gavan, MPMr O'CONNOR—I thank the honourable member for Perth for that interjection. I think it symbolises the extent to which this tax proposal has descended into the pit of utter confusion. Now, of course, we have another raft of amendments to this legislation trying to, I guess, fix up that mess that is now the ANTS package.Out in rural and regional Australia I have made the point to farmers that at the end of the day there were two sides to this coin—there was not only the GST; there was the business tax package—and that is where the real slug would come for many innovative and progressive farmers. Indeed, that is so. But let me concentrate for a moment on the GST and on matters in this bill pertaining to rural and regional Australia. I was interested in the admission that was made by the Treasurer the other day that this taxation proposal, the government's GST package, was going to ramp up inflation in Australia. One thing really impacts on farm profitability, and that is inflation and its effect on farm costs and the inputs of the rural sector.It took Labor 13 years—13 long, hard years—to excise out of the Australian economic system the rate of inflation that was left to us by the Prime Minister. I know this is something that members opposite do not want to admit or consider in any depth, but the Prime Minister left Labor in 1983, when he was the Treasurer, with an inflation rate in double digits. It took us a long time—it was a long, hard road—to excise inflation out of the Australian economic system. That reaped enormous benefits for Australian farmers. There were enormous additions to their income and their profitability simply because we had lowered the inflation rate from in excess of 10 and 11 per cent under the Prime Minister's tutelage to the bracket of one to two per cent when we left office.What is the great legacy of the Howard-Costello government in this regard? What is the great offering to Australian farmers by the government? It will be a ramping up of the inflation rate, inflation that we had beaten, that we had screwed out of the system. This tax package will see a lift in farm costs and the flow-on effects to interest rates. Nobody on the government side wants to talk about interest rates. They talk a lot about the high interest rates under the previous Labor government, and indeed they were. That is a matter of statistical record. But please do not foist on us the view that the Prime Minister, when he had his hands on the economic levers, was squeaky clean and white as the driven snow in this regard. We know for a fact that the Prime Minister presided over the daily double—double digit inflation and double digit interest rates. He has not been one to concede to the Labor Party that when he assumed government we had both the inflation rate and interest rates below double digit levels.The GST, the matter we are debating in this bill before the House, and its effect on financial and insurance services, is overall going to ramp up inflation and the level of interest rates. That will have a detrimental effect on farm incomes and farm families. One of the insidious features of the government's tax package for farmers is the deception that is contained in the rhetoric that the government has used out in the bush to justify what it euphemistically calls a `taxation reform'. The deception is this. They have somehow put before the farming community of Australia that this set of taxation proposals will lead to a simplification of the taxation system for farmers. That is a dishonest position that the government has put.The reality is that every farmer, sole proprietor, partnership or corporate entity is going to become Peter Costello's and John Howard's tax collector. The government has promised farmers benefits from the GST. Farming organisations have gone along for the ride. The National Farmers Federation, in the initial stages of its public discussion on the ANTS package, was certainly in favour of the GST. But the shine has gone off the coin as people have come to understand that involved in this tax are high compliance costs to the farming community, that at the end of the day farmers are going to be tax collectors for Peter Costello and John Howard, that it will lead to an increase in their costs and will probably lead to a higher level of interest rates which will affect their profitability.Mr McArthur interjecting—WU5O'Connor, Gavan, MPMr O'CONNOR—The honourable member for Corangamite interjects. I know how popular he is out in the sticks. He is a Liberal member in the western district of Victoria. He ought to take comfort from the fact that there is another political party and other members of this House who are further on the nose than he is in rural and regional Victoria, and that is the National Party and the National Party members. They love them out there in the bush!We saw in the recent Victorian state election just how popular they are. The great Liberal and National parties in Victoria, which had the most popular Premier in Australia and command of both houses of parliament, could not even win the election. I find that an extraordinary situation. That is going to be your position when it is finally understood in the bush what effects this insidious taxation package is going to have on farmers and their enterprises. One thing farmers do not love is having government auditors breathing down their necks. The honourable member for Corangamite would know how sensitive farmers are to that.The GST police will be out on farm saying, `Let us have a look in your shoe box.' You will not be able to get away with the shoe box anymore down on the farm. You will have to see your accountant every month to make sure you are extracting the maximum benefit, if there is any, from this GST package. You will have to visit your accountant on a very regular basis and pay for the privilege so that you can avoid Costello's GST police. They are going to come around when you put a few oranges, spuds and onions out at the front gate for your kids to earn a bit of pocket money. You will have to tot it all down or you will have Costello's GST police on farm going through your books and quizzing your kids about how much money they took out there on the road when they were selling food at the farm gate.The greatest deception of all has been the myth perpetrated out there that we are going to have a massive surge in exports as soon as this GST legislation is passed and implemented. This is part of the `fairies at the bottom of the garden' story the coalition has put out in the Australian bush. As far as evidence of this is concerned, let us go to the New Zealand farmers federation. It has had 13 years experience of the GST. Mr Tony St Clair, the Chief Executive Officer of the Federated Farmers of New Zealand, was asked on the ABC's Landline program on 6 June 1999 if he thought the claim that the GST helps agricultural exporters was right. He said, `Certainly not in what I have seen.'He is the executive officer of the Federated Farmers of New Zealand, with 13 years experience of the GST. I think this gentleman would be a professional who would have a very honest perspective on a goods and services tax as it relates to the rural sector. When he was asked about the claim that the GST will help agricultural exporters, he said, `Certainly not in what I have seen.' He has been looking at it for 13 years. I am interest ed in claims by the coalition members who run around Australian farming communities and the bush. They are saying, `Oh yes, this GST is the greatest thing since sliced bread because it is going to lead to a massive surge in your exports and will secure your incomes.'I have said time and time again in public forums in rural and regional Australia and on the floor of this House: this ANTS package is a two-sided coin. The GST is now starting to unravel and farmers are beginning to understand the sorts of imposts involved and the fact that at the end of the day they will get misery out of this. They will have the misery of the compliance costs, the misery of the compliance burden, and there will be a deliberate ramping up of their cost structures because of rises in inflation, and possibly an increase in interest rates that they are going to have to plan for.They were pinning their hopes on the other side of the coin. They were pinning their hopes on the business taxation package. The wheels are falling off that cart as well. If you read the output of the National Farmers Federation you will see that they have very substantial concerns. Representatives of the federation were in my office today with those concerns because they believe they are making no headway with the Liberal lawyers and stockbrokers on the coalition frontbench. They believe they have been sold out by the National Party lightweights who roll over every time the Treasurer wants to turn the screws on farmers and their families.SJ4TUCKEYMr Tuckey—What are you going to do about it?WU5O'Connor, Gavan, MPMr O'CONNOR—We are going to let you stew in your own pot, that is what we are going to do. We honestly stated to the farming community of this nation what was wrong with this taxation package. You are going to have to live with it. You will have nowhere to hide when the effects of Costello's curse finally wreak havoc on farm incomes and farm enterprises throughout the length and breadth of this country. The National Farmers Federation has put 11 substantial matters to the government in regard to their concerns about the impacts of the business taxation measures on farm enterprises.The honourable member for Corangamite is one of those wealthy Western District graziers who probably has an income in excess of $1 million and who can withstand some of the economic shocks that are going to come, but what about the battlers? What about the battling farmers? As we know, 70,000-odd battling farmers are going to be affected by this insidious tax, and now by the business taxation package.We are not going to oppose this legislation. Why would we oppose another 151 amendments? At every turn in this debate, we have attempted to improve this ANTS package and to lessen the impact on farmers and their families and on businesses and communities in rural and regional Australia, and we will continue to do so. We have given them the solemn undertaking that, in government, we will attempt to make sure that these taxation measures do not impact as harshly on them as they are going to.Let me say to the honourable member for Corangamite and to the Minister for Forestry and Conservation, who is at the table on behalf of the government: you will wear the electoral effects of Costello's curse. This will be your undoing. We cannot wait until the next election when you fess up to the damage that you are going to wreak on farm businesses and farm families and on rural businesses and rural communities throughout the length and breadth of Australia.18:38:0012570Secker, Patrick, MPMr SECKER848BarkerLP10—It may just be a coincidence, but I happen to have been reading a book called Twelve Red Herrings a while ago. I have lost that book, but frankly I think I have found those red herrings here today. The member for Rankin was continually suggesting that, by omission, this GST system was worse than the present system. This is from a party which wants to retain the wholesale sales tax. The member for Rankin kept referring to a compliance nightmare saying that, if his party had a policy beside the word no and worked for the betterment of the country, we could have had fewer compliance costs. But no, he will not work for the country.The member for Rankin also thought he was smart when referring to everything as the `Botswana streamlined system'. He should realise that even Botswana would not think his system is better than the present one. The member for Rankin brought up another red herring concerning the application of GST to vouchers. If we did not do that, then every shop and every consumer would use vouchers rather than cash or credit cards so that they could avoid the GST. How stupid can you get to bring up this red herring? What the member for Rankin is suggesting is that we allow this loophole to exist.The member for Rankin might like to tell the wine industry that their wholesale sales tax system is better than the system we are going to give them. Then he might see them laugh in his face. The wine industry is a great success for this country with over $1 billion in exports in the last year, and it is still growing. This is no thanks to the Labor Party which tried to tax the wine industry out of existence with a 26 per cent wholesale sales tax and a 15 per cent excise, resulting in an effective 39 per cent tax on wine.Let me show this chamber the benefits of the WET tax to the wine industry. At present, when you have cellar door sales of $100,000 you will have a pre-1 July 2000 wholesale sales tax bill of $26,000, plus a $15,000 excise, minus that $15,000 in a rebate coming from the states, which means a total tax paid of $26,000. Under our system, with a 10 per cent GST which is rebatable and a 29 per cent excise which adds $29,000 to it, there will be a 15 per cent rebate, which means $15,000 less, there will be a federal government top-up equalling 14 per cent, which is phased out at $300,000, reducing it by another $14,000, and the total tax paid for cellar door sales will be nil. They will be better off by $26,000.For someone with $200,000 cellar door sales, instead of paying $52,000, they will be paying nil. For someone with $300,000 cellar door sales, instead of paying $78,000, they will be paying nil. For someone with $400,000 cellar door sales, instead of paying $104,000 under the present system, they will pay $29,000, a saving of $75,000. For someone with $500,000 of cellar door sales, instead of paying $130,000, they will be paying $58,000, a saving of $72,000.In my electorate, the wine industry and the wine tourism industry are very important. The Coonawarra region, the Southern Vales region, Kangaroo Island, the Fleurieu Peninsula, the Padthaway region, the Wrattonbully region and the Kingston-Robe region are all very good areas for the wine industry, and wine tourism is a very important part of that industry. They are all going to benefit under the changes that we have brought forward for the WET tax system. All wineries will be better off under our system. Instead of being taxed to the hilt, as they were under the previous Labor government, we are making the changes.I seek leave to table a document which shows all these figures, so that people can check them out.ET4BEVISMr Bevis—I have not seen it.848Secker, Patrick, MPMr SECKER—Are you afraid of the truth?ET4BEVISMr Bevis—If you were aware of the rules of the House, you would have made it available. You have not done that. If you want to adhere to the rules of the House, I will look at it. I am not prepared to grant leave because I have not seen it.10000DEPUTY SPEAKERMadam DEPUTY SPEAKER (Hon. J.A. Crosio)—Leave is not granted. It will not be tabled.848Secker, Patrick, MPMr SECKER—Thankfully, we returned to some sanity when the member for Mitchell rightly showed that the new tax system is simpler and fairer. We do not have Labor's unfair wholesale sales tax system which taxes chocolate Quik at 12 per cent but strawberry Quik at 22 per cent. We do not have Labor's taxing of toothpaste at 32 per cent but no tax on toothbrushes. We will have a fair tax system that exempts fresh food, medicine and education—all those vital parts of our lives. Any exemption that you do bring in brings compliance problems. But perhaps the Labor Party is saying that we should tax food, medicine and education to make it a simpler system. Virtually no-one understands Labor's present wholesale sales tax system. But, as the member for Mitchell predicted, and I agree, after a couple of weeks we will know the new tax system far better than we do the present one.The member for Corio seemed confused when he first started off about what the term `a tonne' meant. He referred to that number of 1,000 as hitting the tonne. I am sure our wonderful cricketers hope that we do not change that term. The member for Corio also denigrated the ANTS package as `Costello's curse'. I term it `Costello's crowning glory'. He will be remembered for bringing this country a modern, fairer system. The member also referred to the effect of the tax on our electoral success. Let me say here and now that I am very comfortable with this system as far as it goes to our electoral success. Certainly in the electorate of Barker, the farmers, the small businesses and the large businesses are in favour of it. By and large, the general public are in favour of it.The member for Corio suggested that farmers were going to be very disappointed with this whole system. I suggest that the average farmer, who will be better off by over $7,000 per year, will be a lot happier than he is under the present system. The member seems to want to take credit for low inflation. There is no doubt that the previous Labor government did some good work on inflation. But he also seems to want to forget their dismal record on interest rates, unemployment and budget deficits. The member for Corio has failed the Corio challenge to come up with a better system and to work for the betterment of Australia. Further to the member's speech, he brought in another red herring by suggesting that farmers will be tax collectors. But they will also be tax receivers. For up to three months, farmers will be able to keep the GST they have collected for their own use, which certainly helps with their budget flows.Another red herring brought up by the member for Corio concerned the New Zealand farmers' experience. Let me say to the member for Corio that all the New Zealand farmers I have spoken to—and I have spoken to many—would not have any other system. The member for Corio brought up the Ralph business tax reforms as yet another red herring. This reform is in no way related to this legislation. But let us not let the facts get in the way of a good story.Thank you, Madam Deputy Speaker, for the opportunity to speak to this bill, A New Tax System (Indirect Tax and Consequential Amendments) Bill (No. 2) 1999 . Notwithstanding the political grandstanding over the issue of tax reform by those opposite, who still cling to an outdated, unfair and inefficient wholesale sales tax regime, because they have no policies of their own, this government has already brought benefits to consumers by reductions in the wholesale sales tax to a whole range of goods, such as TVs and stereos. This is just the beginning for delivering greater outcomes for the people I represent in the seat of Barker and the rest of Australia.Businesses will benefit greatly from the removal of a raft of taxes that inhibit their ability to grow and provide more employment. As I said previously, the average farmer will be over $7,000 per year better off. Consumers, especially in regional and rural areas, will benefit from cheaper goods due to the reduced cost of transporting those goods to and from their local shopping area. Families will be better off, with the biggest tax cuts in the history of this nation. The community as a whole will be better off. Those opposite are not prepared to support this package for purely political reasons. Their negativity is boundless, their negativity is dishonest and their negativity is not in the interests of this great nation.These amendments are a result of extensive consultation with industry, community representatives, other governments and Commonwealth departments. There has never been such a broad consultation process. We as a government have responded to this consultation process because we know that the people had genuine concerns to get this much needed tax reform right. For example, charitable institutions also needed to be consulted. We have listened because we realise the importance of this sector to the economy. As a result of these extensive consultations, the government, through this bill, will provide flexibility for charitable institutions, trustees of charitable funds, gift deductible entities and certain non-profit bodies that are income tax exempt to treat separately identifiable units of their organisations as though they are separate entities for GST purposes. This will be good news to bodies such as girl guides, boy scouts, surf lifesavers and many more. This is what they asked for and this is what we are delivering with these amendments. This bill will also ensure that non-incorporated bodies are carrying on the enterprise and not the individual members, which will of course be a great relief to those members.The key changes, however, relate to the treatment of insurance for the immediate deductibility of expenditure by small and medium sized businesses on GST related plant and software. In response to the submissions from the Insurance Council of Australia, we are moving an amendment to simplify the treatment of general insurance, which will mean that insurance companies will not be liable for a GST on any payouts they receive. It almost goes without saying that this treatment for the insurance sector is widely supported.On 19 August, the Treasurer, Peter Costello, announced that the government would legislate to allow an immediate income tax deduction for expenditure incurred by small and medium sized businesses on GST related plant and software, including upgrades. These amendments will give effect to this widely accepted announcement. The definition of small and medium sized businesses for the purpose of this bill is those entities with an annual turnover of not more than $10 million for the income year in which the cost is incurred. This seems to be a fair and reasonable cut-off figure to help the majority of businesses in Australia. It is a beneficial amendment that will help small and medium sized business in the transition period to this new tax system and encourage them to become GST ready.There are also a number of minor policy changes, which include amendments to the Diesel Fuel Rebate Scheme to limit the extension of the scheme for marine use to marine transport. They also provide that the rebate for the marine and rail category be equivalent to the primary production category. This has enormous benefits for marine transport and rail systems as it not only makes these industries more competitive but also has wide-ranging positive effects for the environment and positive implications for our road network in that it should lead to less use of our roads and more use of rail and marine transport, especially for heavy loads. In South Australia, nearly all grain is transported across the country to the ports via road transport. I can envisage greater use of rail in the future as a result of this bill.Another amendment important to many in the electorate of Barker is the one which deals with ensuring that the sale of farm land is GST free even if the entity supplying that land is different from the entity carrying on the farming business on the land. This is very good news for many farms that have structured their assets for safe intergenerational transfer by way of companies or family trusts and which are operating under a partnership, for example. They will still be GST free. Provided that that farming business has been carried on that land for at least five years, the supply of it is GST free.I am also pleased to report that the National Farmers Federation are strongly supportive of this measure, as they are with the further amendment that clarifies the position that the supply of land is only GST free if it is via the sale of land by way of a long-term lease. Through the extensive consultation process that this government nurtured, we found through numerous submissions that there needed to be adjustments for stock on hand for new registrants. This amendment will allow an unregistered entity to claim input tax credits for the GST included in the cost price of stock held at the date of sale or manufacture when it becomes registered. This is very important for businesses that often start out being a hobby or are just in the start-up process. They can come into the system without penalty. It is an important initiative that recognises that many businesses start off in this way.This bill is very wide-ranging, as indicated by the fact that it entails nearly 50 pages of legislation. Many of the changes are of a technical nature and refer to minor areas in drafting, including typographical errors and incorrect cross-references. It is a measure of the wish of this government's commitment to want to get this right that we have allowed so much time and discussion to bring in a system that we all know will be of great benefit to individuals and business.Another amendment deals with certain vouchers, such as gift vouchers, to ensure that they are subject to the GST at the time of redemption. It will apply to vouchers that have a specified monetary value. This should ensure that no loophole exists for dodging the GST in the marketplace. This amendment was requested after consultation with the Australian Retailers Association and will be welcomed by the industry.Bus tickets, postage stamps and vouchers for specified goods will continue to be taxed at the time the ticket or voucher is supplied. This bill clarifies that when the government holds unimproved land as of 1 July 2000 which is subsequently improved before supply, either by sale or long-term lease, the unimproved land is to be valued at the date of sale for the purpose of applying the margin scheme when calculating the amount of GST payable.Another amendment allows the tax commission to determine the appropriate apportionment methodology for working out the amount of input tax credits claimable by the financial supplier provided. This will give greater certainty to entities making financial supplies to determine the amount of input tax credits they are entitled to. It will permit them to better plan their budgets and forecasts.A further amendment ensures that the GST is payable where an individual carrying on an enterprise takes taxable goods from their stock for private or domestic use. This will ensure that, in these circumstances, a proper adjustment is made to the input tax credit previously claimed. It will be a simple process and a fairer one. Other minor amendments exclude the GST from the delivery of foreign postal articles in Australia on behalf of a foreign postal administration. What will be good news for many of my electors in Barker is the exclusion of GST from the tax base for calculating wool tax.This bill and the amendments contained within it are a result of the most extensive consultation process and are worthy of the support of this parliament. I commend this bill to the House.18:57:0012574Hatton, Michael, MPMr HATTONLN6BlaxlandALP00—We are today dealing with A New Tax System (Indirect Tax and Consequential Amendments) Bill (No. 2) 1999 . According to the member for Barker, people in the broad community have been given time to discuss these matters. However, when the No. 1 version of this bill and its 454 amendments, which are now in the Senate, were before this House, the bill was gagged and I was denied a right to speak. I also point out that when the main GST bills were in this House, those bills were gagged and I was denied a right to speak. I was also denied a right to speak in relation to the address in reply. So there has not been adequate discussion of the amendments or the primary bills in this House, because the government have not intended that there be. They just wanted them in without much discussion, and they want agreement. They want their simple propagandistic line to be the one that will take hold.I start by going to the core of what has been argued by the member for Mitchell, the member for Barker and by one government member after another, led by the Treasurer, the Hon. Peter Costello, and the Prime Minister. What has every member of the government, including the Treasurer and the Prime Minister, parroted about the deficiencies of the wholesale sales tax system? They did it in opposition as well. Year after year, they have complained that it is so complex and difficult. They complained bitterly when it was raised by the Hon. Ralph Willis. They continue to complain about it now.This is a tax system that, since it was introduced, every Liberal government has operated. This is an indirect tax system that the Menzies government operated for 23 years. This is a tax system that John Howard, as Treasurer from 1977 and with his first budget in 1978, operated throughout his time as Treasurer. This is a tax system that this government has operated since it was elected in 1996. I note that there has been no call from any government backbencher, parliamentary secretary or minister of this government to give back the money raised because they think the system is bad.The wholesale sales tax system served the Commonwealth from when it was introduced and it changed with different governments. It was modified, as all tax systems are—as this tax system which they intend to introduce has already been changed. We now have more than 1,000 amendments before both houses of parliament. It will be changed in the future. We can be utterly sure of that because of overseas experience and because the nature of societies and their demands change. So this new tax system—another name for a goods and services tax, a tax on everything except fresh food—will be changed in the future as well.The myriad of amendments that we have before us today, and that have been in this House before but about which I have not been able to speak, are not just technical amendments, they are primarily so. They are tinkering. The Treasurer told us in his second reading speech that this is just finetuning—just adjustment. What does he hope to adjust when you look at the larger picture?The wholesale sales tax system has been pilloried by the government despite the fact that, through most of their period in office, governments were the beneficiaries of that wholesale sales tax system. They have argued that there is fairness and simplicity in their new tax system. You can tell that to everyone in the Australian electorate—the 12 million plus voters who you have told it to before—at the next election. As this process gets put into place, people will find that it is not fair and it is not simple.Its lack of simplicity and its increasing complexity are indicated by the vast array of amendments that we have before us. As the member for Rankin pointed out in his speech, there is a two-foot high set of documents that relate to this new tax system. But the government argue that it is fair and it is simple. What fairness do they argue when you compare it with the wholesale sales tax system? The fairness is that there is one rate—a 10 per cent GST. Everybody pays it on everything except fresh food, and they say that is fair. The simplicity lies in the same thing—it is a 10 per cent GST on everything.In all those years that Liberal coalition governments operated an indirect wholesale sales tax system, they knew that there was a progressive income tax system in this country with different rates of income tax. On this very day, 24 November 1999, Australia still has a progressive direct taxation system, with different levels of taxation and different marginal rates according to income. Have I heard anyone in the government argue that that tax system is too unfair or that that tax system is too complex?A coalition Premier some years ago, in 1987, argued that that was the case. That coalition Premier was running for PM. He was not running for parliament but he was running for Prime Minister in 1987. It was Joh Bjelke-Petersen who said that it is not fair and it is not simple to have a progressive income tax system where you have different levels of income tax. What did Joh want? A 25 per cent flat tax for Australia. This lot over here have not yet come to that. Joh was before them in 1987.They have not reneged on the direct income tax system—although they want to pull it apart in various ways. What they have done is to introduce the opposite in this new tax system. They have introduced a regressive flat tax that is the goods and services tax. All of the complaints and the arguments from the member for Mitchell, the member for Barker and all of the other sundry members right up to the Treasurer and the Prime Minister are that the fairness and simplicity are in having a 10 per cent rate. It was so complex with the wholesale sales tax system because you had 12 per cent, 22 per cent, 32 per cent, 42 per cent and so on. So what if you have different rates? Why are the different rates there in the direct income tax system? They are there so that people who earn less money are taxed less.The central point of the indirect tax system, throughout its entire history, has been that the impacts on non-luxury goods should be low. Most goods are taxed at 12 per cent or 22 per cent. The goods that were taxed at those rates were used often, on a monthly, weekly or even daily basis. The goods that were used very little and were in the luxury class attracted a high 42 per cent. Those goods that you would only buy once every five or 10 years attracted a 32 per cent wholesale sales tax rate. What were they? Things like refrigerators, which people do not buy every day, and videotape recorders. Despite the changes in technology, you do not buy one every month. All of the other major electrical goods and so on in those categories that attracted 32 per cent were purchases made once every five or 10 years. So the higher rate related to strict luxury goods, like furs, jewels and imported luxury cars; the lower rates related to things people used a great deal.A 10 per cent goods and services tax equates to a 16 per cent wholesale sales tax rate. If you averaged it across the board, a wholesale sales tax run at 16 per cent—a flat tax—would be equivalent to a 10 per cent retail GST. The 12 per cent that was on most goods has not impacted as heavily as this 10 per cent GST will because that is equivalent to 16 per cent, a difference of four per cent.The government has attempted to bring down goods at 32 per cent to 22 per cent during the transition. It has not happened everywhere, despite what the member for North Sydney said yesterday and today. Today, in question time, the point he made about the bloke they had taken to court and so on was an entirely different matter to the transition effects and what the ACCC has been doing in relation to that.The experience of my constituents in Blaxland is that people are pushing up prices and they are not being caught. People know—not only in Blaxland but right around the country—that where the prices are supposed to be coming down they are in fact going up and people are pushing them up to make a greater profit. When you deal with that 32 per cent rate, which is supposed to be pulled down to 22 per cent, it is still higher than the 16 per cent wholesale sales tax that the 10 per cent GST is equivalent to.The core of this is very simple. The wholesale sales tax system used by all governments since its inception was a progressive system. It had different levels because people did not use the same products every day or every month. They did not buy them on that sort of basis. It was actually quite rational. What it was not was a flat tax. This 10 per cent GST is a flat tax which impacts more heavily on low income earners than it does on high income earners. The tax cuts are being written away by the Prime Minister for one year at least, with the increase in the Medicare levy for people earning over $50,000 or $100,000. I remember that in New South Wales Premier Greiner brought in a 3x3 rate—that was 3c a litre for three years. That is still there. Mr Deputy Speaker, you know it: you drive all round New South Wales. That is still there, and other governments have accepted that. And that has been embedded.The argument for fairness and simplicity rests on the fact that this is the introduction of a regressive flat tax, impacting most on people with lesser to middle incomes within our community. The argument is patently false. It is propaganda, and it is propaganda that has been peddled in this parliament for the last two years plus. The old wholesale sales tax system was not just Labor's; it belonged to this coalition government from 1996 until now, and it is still in place. It belonged to John Howard when he was Treasurer in 1978—and 1979, 1980, 1981 and 1982. For all those years, he operated under it. Why have we got all of these amendments before us here today? Why have we got this GST? It is yet another one of those things that Prime Minister Howard could not do as Treasurer Howard, one of those things he could not get through Malcolm Fraser's cabinet. The litany of failures of Treasurer Howard we now get in legislation before this parliament.There is no better example than this regressive flat tax, from someone who does not change his opinion on these matters ever. He might give out Order of Australia medals to Nelson Mandela, despite the fact that he has never supported Mr Mandela over his whole time in parliament. He might say, `You are the man of the century,' although he supported the South African government under Botha, Verwoerd and all the rest of those people. He wanted his cricket, and he wanted his cricket directly. This is a person of selective passions. The Prime Minister's selective passion is to overcome his past policy failings, and this is the big delivery of that. It is not something that is simple and fair but is something that is complex, rigid and riddled with difficulties. This Prime Minister and this Treasurer had a choice—either to go the road of the value added tax, which is what they have introduced here, or impose a retail sales tax. If they wanted something that is simpler than the very complex VAT, they could have gone for a retail sales tax. They did not do it. There is no fairness, there is no simplicity.And there are transitional effects. The vehicle industry in Australia have been to Senator Minchin. The vehicle industry in Australia, both manufacturers of cars and trucks, and unions, have been to our caucus committees. They have told the government that they are in crisis. We see no amendments here in terms of the transitional effect on the production or sale of cars and trucks in Australia. They are in crisis because of the GST and because the government have not introduced appropriate mechanisms to allow for a proper transition to that because they will not pull off from introducing this GST.It is time for Senator Minchin, well over a month since this issue was brought to our notice and his, in the months preceding, to act to save the vehicle industry in Australia, to take the pressure off all of the car sales people in my electorate and electorates right across the country, to take pressure off all of those people who no longer have holidays owing to them because they have had to take them, who no longer have sick leave, who have had to use all of that up. We have an industry that is going onto a part-time basis because this government is not flexible enough. It will not finetune it enough to really have a go at the significant problems raised by this transition.I know my time is short because this has to be abbreviated—although I cannot see anyone else coming in after me.UU5HORNEMr Horne—Add 10 per cent on.LN6Hatton, Michael, MPMr HATTON—Add 10 per cent? I might add 10 per cent while we are waiting for the next speaker. The critical thing here is that all of the government's propaganda effects in relation to fairness and simplicity fail on a simple test. A regressive flat tax that belts the Australian people is not fair and it is not simple. These technical amendments will go through. The Australian people should, at the next election, entirely reject this government which has brought in this regressive, harsh flat tax, which will flatten them when it is brought into play.19:13:0012577Horne, Bob, MPMr HORNEUU5PatersonALP00—I do not have any pleasure rising here tonight to speak about the A New Tax System (Indirect Tax and Consequential Amendments) Bill (No. 2) 1999 . The GST is something that the Australian people do not want and it is something which the Australian people did not vote for at the last election but which they are going to get. But I do like to think that every picture tells a story, and I am sure that every member here this evening can remember quite vividly the Treasurer standing at that dispatch box, with his folder before him, going through the folder, turning over page after page, form after form, and saying, `This is what people had to do with the wholesale sales tax.' Then, when he got to the end of it, he held up a single form and he said, `And that's what it is going to be replaced with. It is going to be replaced by a single form. We are going to simplify the tax system. Everyone in Australia is going to say that this tax system is wonderful.'Now we get to this stage: 900-odd amendments have been moved and still the government cannot tell us how it is going to be implemented. Business people out there have no certainty. They read in the paper on Monday that, if they are a small business person, they are going to have to buy a computer and invest in software; if they do not they are going to spend at least one day of a weekend doing their tax. My father was a private contractor—he did that; he made up quotes—so I guess it will be another day of a weekend. I guess you only got about 10 per cent of the jobs you quoted on. Now you will give up the other day, the only free day that you had, to do your tax for this government. That is what the GST means to small business people. It means giving up time that you really do not have, time that you would rather spend with your family doing the sorts of things that you had hoped you had worked for.We hear from the other side that there are a lot of stories going around about the GST, and that there is a conspiracy about the GST pushing prices up now. My office, I guess, is no different from any other office and I know that we have had a myriad of calls from people who are getting their green slips, their insurance policies and their accounts for club membership. Many of these people are pensioners, and they say to me, `But it doesn't come in until 1 July next year; why do we have to pay for it now?' I even had one gentleman say to me, `I rang the insurance company and said, "I have never defaulted on a payment. I will pay my GST on 1 July next year. I will send you a cheque minus the GST component." They said to me, "We'll send it back."'The question is this: is it law now? Is it right for these insurance companies to be collecting GST? If they are collecting the GST, what are they doing with it? Who are they paying it to? Are they paying it to the Australian Taxation Office? Are they putting it in the bank? We all know that they are putting it in the bank. They will be capitalising on that money and investing that money.Mr Deputy Speaker Nehl, I know that in your electorate, just like mine, many of the people are on a fixed income. They are retirees and they are people who cannot afford to pay an extra $10 or $20 on an insurance premium. They do not have that sort of cash available to them. But they have to pay it or their home, their car or whatever they are insuring will not be insured. They are being penalised now and the compensation payment they get will not come into vogue until 1 July next year. That is what this government has not thought out. People out there are hurting now because of the GST.I heard the Hon. Bruce Baird, the member for Cook, say, `There is a conspiracy that says prices are going up.' Let us just extrapolate this a little. If home owners have to pay an extra premium on their insurance because of GST, do not tell me the owners of supermarkets do not have to. They would have massive insurance bills, they would have public risk policies for tens of millions of dollars, they would have workers compensation accounts, and every account that goes past 1 July next year has a GST component on it. Those people who are paying those accounts and who are in business have the ability to pass that cost on and they will be doing that. They will be passing the cost on right now to the consumers, the pensioners and the low income earners. The Prime Minister, full of unction, yesterday said, `We're not going to tax those who earn less than $50,000.' No, maybe he is not, but they are paying a GST component now and they will be paying it up until 1 July next year and this government does not give a fig about those people. Already the Australian community realises what a grave error they made. We always say that 52 per cent of the people voted against this legislation, and they did; they did not want it. But only now they are realising how draconian it really is.As much as members on the other side do not like it, I happen to be a primary producer. I enjoy nothing more than going along to a cattle sale. I was at one last Saturday, as a matter of fact. I sold a few and I bought a few. Generally, when I go along to a cattle sale and I bump into some of the other farmers we talk about cattle prices, the season, the export market. These days when I go along they say, `How is the GST going to affect us?' I like to be across these things, so I say, `I have spoken with the minister, and you know what? I can't tell you.'SJ4TUCKEYMr Tuckey—Ha, ha!UU5Horne, Bob, MPMr HORNE—I often say, `Even Wilson Tuckey couldn't tell you that because no-one knows.' No-one has worked it out yet. As the minister leaves the chamber, I defy him to come back here and tell the people of Australia what will happen. Will the GST be on the price of a beast after it has been knocked down or will it be included? I have heard the story that it will be up to the individual auctioneer to decide. Fancy going to that. I know dealers who go to a sale in the morning and another one in the afternoon. How would it be, if you went to a sale in the morning where the GST was included in the knock down price and then you went to a sale in the afternoon where you had to add 10 per cent on?We were promised that the GST would not be on fresh food. Through you, Mr Deputy Speaker, I will address this question to the Minister for Aged Care, who is at the table. Minister, are you aware that live sheep, cattle, pigs and chooks are not food; they are a tradeable commodity? Actually, a live beast can be traded many times. When a producer grows a steer to slaughtering age and then sells it to the meatworks, that is still not food. It is not food until it is on the hook and sold to a butcher, because a carcass can be traded too as a commodity. Every time it is traded, 10 per cent is added on.SE4BISHOPMrs Bronwyn Bishop—You can have it refunded.UU5Horne, Bob, MPMr HORNE—Oh, I can get it back! Righto, I will ask the minister—again through you, Mr Deputy Speaker—this: at the very first sale I go to after 1 July next year I have a pen of prime steers there and I sell them. Is the purchaser going to take into account the fact that I can claim that GST back? The answer, I guarantee, is no. The answer is that there will be a movement against all primary producers and that their price will be depreciated by 10 per cent. You can guarantee that—it will be human nature—and primary producers will miss out.SE4BISHOPMrs Bronwyn Bishop—You are a peddler of fibs.UU5Horne, Bob, MPMr HORNE—I am not a peddler of fear.SE4BISHOPMrs Bronwyn Bishop—Fibs—f-i-b-s.UU5Horne, Bob, MPMr HORNE—So I will raise a few red herrings, and I guess red herrings are going to have 10 per cent added too. I will put milk into the situation. Are you aware that the bulk milk produced by a dairy farmer to go to the factory to be processed is GST liable? That is not regarded as food. That is regarded as a tradeable commodity. Bulk milk will be liable for GST. If I do not have cows but have goats and sheep and milk them and produce a specialist milk, then that is a pure food and that will not be GST liable. We are getting to the stage of the ridiculous.If I grow a crop of vegetables and my vegetables are fresh, there will be no GST because they are food. But as soon as that food starts to be tainted and to go off, and so someone might want to sell it to a pig farmer as food for his pigs, then it becomes GST liable. This is a state of the ridiculous. The Treasurer stands up here and berates us about the supposedly ridiculous thing of a wholesale sales tax, but let us be aware of one thing about wholesale sales tax: the majority of small business people did not have to worry about collecting it, they did not have to worry about paying for it and they did not have to worry about the paperwork. It was there; it was collected at the point of source and that was it.As a primary producer, from time to time I have been able to purchase things free of sales tax. Because I was a primary producer I was able to do that and I had to fill in a form, but now everyone who is in small business has to. I got my booklet and form the other day. I looked at them and I thought, when do I get a day free to fill this thing in? I know that the phone in my office has been running hot with people saying the same thing—`I'm a roof tiler. When do I get a day to do this? My wife does the books.' These are the sorts of things that every small business person—everyone who works for himself or herself—has to confront now with the GST.Let me talk about another industry that is dear to my heart, the housing industry. It is all very well for the Treasurer to stand up here today in question time and talk about the first home owners grant. Let me just advise the House what that grant has done: it has immediately meant that the price of a house increases on the day that comes in by the amount of the grant. That is what it will do. It will be the greatest inflationary move that the country has ever seen in home ownership.The Treasurer was also very confident—`You talk about tax on houses. Let's talk about wholesale sales tax.' Does the Treasurer realise or is the Treasurer aware—today in question time he was not aware—that there is no wholesale sales tax on timber, on bricks or on the steel that goes into the reinforcing? There is no wholesale sales tax on 90 per cent of the materials that go into a home but now there is 10 per cent on everything, there is 10 per cent on the labour that goes into it too and everyone who fixes every one of those materials has become a tax collector for the Howard-Costello government—that is what it is all about.It is about making the job easy for the Australian Taxation Office. It is about making it easy to collect those billions of dollars out of the pockets of the people that would not be affected if, I dare say, the Treasurer and the Prime Minister really were in touch with them—the battlers, the people who do earn less than $50,000 a year. As of 1 July they become the unpaid tax collectors for this government and they are the people that will be giving up one day of their weekend to collect it for the government.What will they get in return? They will get a higher rate of tax. The lie has been sold, and it is a lie: the GST is the greatest lie that has ever been sold to the people of Australia. I have no doubt that the people of Australia, if they are not fed up with it now or if they are not afraid of it now, will be so over the next 12 months or whatever it is to the election. It does not matter how much selling the Prime Minister and the Treasurer do; they will not sell it because as we approach 1 July there is an increase—and it is an exponential increase. Already the accounts are coming in showing the effect of a GST on ordinary, everyday commodities and it will grow.It is being passed on to us by big business and the shame of it is that it stops with the people who cannot pass it on. It stops with the low income earners and it stops with the pensioners. Big business are reaping the benefits now of having that money to invest on the short-term money market—there is no point in putting it into a bank account to get the interest—and they have the advantage of using that money at will until 1 July. They cannot pass it on to the tax office because, as far as the government is concerned, it is not a tax yet, but the people of Australia are paying for that tax now and will continue to pay it forever. That is the shame of the decision that has been taken by this government.Debate interrupted.Adjournment1258010000SPEAKERMr SPEAKER—Order! It being 7.30 p.m., I propose the question:That the House do now adjourn.1258019:30:0012580Hall, Jill, MPMs HALL83NShortlandALP00—One of the most disturbing aspects of Australian society today is the ever widening gap between the rich and the poor. The wages that Australian executives are being paid can only be described as obscene. The average executive pay packet has increased by 22 per cent in the year 1998 to 1999, whilst total male average weekly earnings have increased by only 2.5 per cent. That comparison in itself says a lot. Australian workers have to justify every pay increase they receive, and the government has fought every increase whilst attacking the working conditions and job security of Australian workers.But this is not the case for Australian executives. It would appear that the only justification for their pay increases is the greed of the CEOs and the inability of the boards to say no to them. It would appear that there is no relationship whatsoever between the pay increases that the CEOs have received and the profit growth, the share price gain or the return on equity of their company. There is no discernible relationship whatsoever between any obvious benchmark. It is impossible for an Australian executive to argue that their 22 per cent pay increase is performance based or is justified.These pay increases are even more obscene when you examine the widening gap between the rich and poor in Australia. One in nine Australians live in poverty, two million Australians live below the poverty line and four million Australians rely on government assistance for survival. That is just not good enough. How can we in a country like this accept those figures? In Shortland, the electorate I represent, the average individual weekly income at the last census was $236 a week.Let us look at BHP. BHP's managing director, Paul Anderson, receives a total package of $2,340,181. His predecessor, John Prescott, received a total of more than $11 million from BHP. Out of those workers who lost their jobs at BHP, there are still a large percentage of them who have not found any work. Out of 860 workers, only 130 workers have found jobs. Don't tell me that the packages that they received would come anywhere near the package that John Prescott received. The bulk of the $11 million he received from BHP was his severance pay.I would also like to run through some of the packages that the top CEOs in Australia receive. News Corp's Peter Chernin receives $18.8 million. Let us remember that the average weekly earnings in Shortland were $236 per week. Rupert Murdoch receives $9.75 million from News Corp. Leon Davis, Rio Tinto's CEO, receives $2.8 million a year. In the Hunter this week, 84 workers were sacked from the Rio Tinto Mount Thorley mine. For the people who lost their jobs there, what a Christmas present that was! What do they get? They get their severance pay, which is nothing like the severance pay John Prescott received from BHP. Then what have they got to look forward to? The dole.The CEO of Rio Tinto has been rewarded for downsizing, for sacking workers and for causing hurt and anxiety within the community. There is absolutely no justice when you look at this. On one hand you have a CEO who is receiving more than $2 million a year, which he is rewarded for by sacking workers—by giving them a Christmas present that gives them no hope for the future. All they can look forward to is unemployment. (Time expired)1258119:35:0012581May, Margaret, MPMs MAY83BMcPhersonLP10—It gives me great pleasure to rise tonight and to share with the House the success of an organisation which is changing perceptions about mature age workers and their ability to find satisfying and meaningful work. A Gold Coast man, Brandon Charlesworth, founded the Grey Army 2½ years ago. From one man's vision and hard work the Grey Army is now a very real and potent force assisting mature age Australians, many of whom have turned their backs on unemployment or inevitable redundancy and have entered into gainful employment with a better quality of life.Brandon Charlesworth, aged 57, is living proof that it is never too late to change direction and to start something new. In the process of turning his retrenchment into an opportunity, he has inspired thousands of older Australians to start up their own small business. Brandon had 35 years of work experience and a company car when he was retrenched from a senior management position. He went out on a track now trodden by many mature age workers who have found barriers to finding work as mature age Australians. He concedes that after several hundred interviews his self-esteem was low and he lost a great deal of self-confidence. Brandon recognised that he was like thousands of other middle aged Australians who were unemployed and could not get work but had a lot to offer, so he found a way to assist those with similar feelings—by kick-starting the Grey Army.The Grey Army is educating the general public and potential employers of the value of providing work for people over the age of 45. Today the Grey Army boasts 2,000 service providers who undertake household chores and maintenance. They include carpenters, bricklayers, plumbers, painters, cleaners, gardeners and general handymen. The Grey Army has expanded to incorporate new offices nationally. Its policy is that all people under the Grey Army umbrella have the right to earn a decent living. They should provide quality work at a reasonable price—a benefit to the householder. The Grey Army has had an overwhelming response from members of the general public seeking assistance in introducing them to qualified and reliable tradespeople in the over-45 age bracket who could be trusted to enter their homes to carry out repairs and maintenance work. Under the Grey Army approach, each person is essentially working as a small business, either as a sole proprietor or with family involvement. Details of the Grey Army approach were recently outlined to the inquiry of the House of Representatives Standing Committee on Employment, Education and Workplace Relations into issues specific to workers over 45 years of age following unemployment.Brandon is to be congratulated on his innovative approach and efforts to date. And he does not plan to stop there. His latest proposal involves the creation of the Grey Army Trades Training School. Its aim is to fast-track the training of over-40s tradesmen in a 12-month period, with the result of producing qualified, ticket holding tradesmen at work in the community. Brandon believes he could put 500 people in employment tomorrow if he could access 500 qualified carpenters, tilers, painters or bricklayers. He stressed that they would not take existing work from other qualified tradesmen. To achieve this, Brandon's Grey Army Trades Training School would provide on-the-job training, which would involve one person per discipline acting as a supervisor. This supervisor would go on site to monitor work done by tradesmen at least three times during each job to check quality and to give advice when needed. Administrative training would involve such facets as basic computer literacy and bookkeeping skills, access to government and semigovernment authorities and requirements, insurance requirements for small business operators, debt collections and public relations skills, including good customer relations, telephone manner and presentation. The Grey Army has restored Brandon's faith not only in himself but also in society. He gets a great kick out of helping others. According to Brandon, there is enormous potential for the Australian economy if we can unlock this source of labour. A combination of policies to increase the participation of 55- to 64-year-olds and to encourage the participation of 65-year-olds could deliver substantial benefits to the economy. Mature age unemployment is a very real social concern for this nation. The plight of mature age unemployed people until now has been largely overlooked. There is a need for us as a society to examine the messages that are being communicated to ensure that stereotypes about older people are not being inad vertently reinforced. There is also a need for us to identify clearly why mature age people have so much difficulty in gaining employment after they lose their jobs. An inquiry into mature age workers being carried out by the Commonwealth parliament is a step in the right direction. I applaud Brandon's efforts to create work for mature age Australians and would like to see the federal government get behind the Grey Army.1258219:40:0012582Danby, Michael, MPMr DANBYWF6Melbourne PortsALP00—The opposition have decided to support the government's proposed refugee legislation that would see three-year temporary visas being granted to refugees. However, I share the view of Con Sciacca, the opposition shadow minister for immigration, and the opposition that these temporary visas alone are hardly likely to act as a deterrent to the alleged 10,000 Middle Eastern villagers who, according to the Minister for Immigration and Multicultural Affairs, are apparently packing up their belongings and heading towards our shores. The Labor Party took the sensible view that, even if the coalition government's rhetoric was exaggerated, we could not stand by while people arrived illegally by boat or plane and pushed their way ahead of other refugees who come to Australia via our orderly refugee program. Money alone would determine your ability to come to Australia if that were the case, and we would allow the illegal onshore arrivals to push their way to the head of the queue. Even if the boat arrivals were real refugees, letting the current situation stand would mean illegals would force themselves on us over equally or more deserving refugees who may not have the financial resources or who may have been patiently waiting in wretched circumstances to come to Australia. Of course, not all of the new boat people who come are legitimate refugees, but it is interesting to note that a very large number of onshore arrivals have achieved refugee status under our strict Australian codes. I ask people to imagine that they are an Iraqi merchant now living in exile, perhaps in Amman, who has perhaps fled the `gentle embrace' of Saddam Hussein or to put themselves in the sandals of an Afghan woman or an educated Afghan professor living in a refugee camp in Pakistan in fear of the Islamic zealots of the Taliban. Do you think a three-year temporary visa would deter you from coming to Australia? It seems there are those in the government who think the three-year visa is a panacea for this problem. Those who are advising the current coalition seem more afraid, in my view, of a Hansonite backlash in Queensland than an Iraqi refugee invasion in Western Australia. The Labor Party has advanced an excellent plan for a special service or coastguard that would be mandated with handling this problem. But this is not the only thing the federal government should be doing. The federal government should send high-powered emissaries to Pakistan, Jordan, Indonesia and Iran to lobby these governments that are currently turning a blind eye to the people smugglers. We should be asking the assistance of these governments to stop these people at source. If the government is serious about these matters, then in my view there is an ideal person who would be such a senior emissary. The member for Farrer, the former Deputy Prime Minister, has excellent contacts in the Islamic world, and indeed has extensive contacts and influence throughout the Arab world. This may allow him to use persuasion that legislation or draconian action in this country would never achieve. Certainly in Iran, Australia ought to have some influence. A table supplied to me by the Minister for Trade shows that the Export Finance Incentive Scheme has supported exports from Australia to Iran of some hundreds of millions of dollars over the last few years. Australia has spent a lot of money subsidising agricultural exports to these countries; perhaps the Australian taxpayer could get a bit of a `quid pro quo'.We ought to see this problem in the context of the number of illegal immigrants who have gone to other countries. As Gerard Henderson and Mary Crook pointed out, the number of illegals received in Britain in the last year was 51,759; in Germany, 98,644; and in North America, including the United States and Canada, 427,135. I would urge the Australian people and this parliament not to panic. Let us act coolly. Let us not denigrate these new boat refugees. Let us think a little laterally about how this problem might be handled. I would conclude that the solution to this illegal trafficking in boat people probably lies more than anywhere in our relations with Jakarta. That is where the Australian government ought to be addressing its principal activities in response to this illegal trafficking of people by boat.1258319:45:0012583Bishop, Bronwyn, MPMrs BRONWYN BISHOPSE4MackellarLPAged Care10—Tonight I want to pay tribute to a great Australian—someone who was a constituent of mine and, more particularly, a valued friend: Morris West. Morris West was a profound man—a man of erudition, complexity and love. His voice had a certain cadence which I can and will forever hear in my head when I read his words. He could and did keep a dinner table spellbound by the sheer breadth of his knowledge, and yet his charm was incalculable. This was a man who left an indelible mark upon me and upon many others.Morris was born in Melbourne's bayside suburb of St Kilda in 1916, the eldest of six children of an Irish-Catholic Australian family. He left his local school at the age of 14 to enter a Christian Brothers College in Sydney where he trained for 12 years. He did not take his final vows but said of himself subsequently, `I am one of the faithful in spite of my reputation as a critic of the church.' During World War II Morris served as an intelligence officer involved in code breaking at Melbourne's Victoria Barracks where he got a job by telling the Director of Intelligence that he was `competent in half a dozen European languages and adequate in a few more'. Morris was posted to the Northern Territory and whilst based there he wrote his first novel, Moon in my Pocket, which was published in 1943 under the name of Julian Morris. He is recorded as having said, `After my experience as a novice, the disciplines of army training were a cakewalk.'Former Prime Minister Billy Hughes plucked Morris West from the armed forces and employed him on the recommendation of his publisher who described Morris as a `young man of promise'. For Billy Hughes, Morris West, like so many before and after him, had promise that lasted only three months. After that, he worked in Melbourne in radio. Next he headed to Europe where providence led him to Italy where he met Don Mario Borrelli, a priest who was caring for street children in Naples. His first successful novel, Children of the Sun, soon followed but he only became a household name after his eighth novel was published in 1959—The Devil's Advocate. In 1963 we saw the publication of what is perhaps his best known work, The Shoes of the Fisherman, which predicted the election of a Pope from behind the Iron Curtain—a prediction which of course came true.In between novels, Morris often wrote for newspapers, including the Sydney Morning Herald, the Age, the Bulletin and the Australian, where he grappled with the concept of political power and its impact on the future of the nation. Whilst some say A View from the Ridge was an autobiography, Morris had previously said that he did not need to publish an autobiography as, in his words, `the chronicles of my works and days have already been presented under the decent draperies of fiction'. In 1985 Morris West was appointed a Member of the Order of Australia and made an Officer of the Order in 1997 for service to literature, and I had the honour to be present, representing the Prime Minister, at Government House in Sydney in 1997 for that investiture.Morris and his wife Joy returned to Australia in 1990 and settled in Avalon in my electorate of Mackellar. Here both of them were vital members of the community and generous with their time. As a much admired, respected and loved person in her own right, Joy's contribution will continue. I often speak in my capacity as Minister for Aged Care of the need for the wisdom and experience of older Australians to be passed on to other generations. Morris did this. Vividly I recall his address to a prayer break fast which was part of the Pittwater Festival, which he helped found. He was a man who could convey the need for spirituality in a way which challenged your complacency and encouraged you to reach further than your own acknowledged limitations. As part of his wider contribution, he headed many important organisations.It was while he was busy working on yet another novel that Morris West passed away on 9 October 1999. He will continue to be greatly missed by the people of Mackellar and, indeed, the nation.1258419:50:0012584Mossfield, Frank, MPMr MOSSFIELDMK6GreenwayALP00—All members of this parliament would have been involved in the selection of outstanding senior Australians in their electorate and, like me, would have been impressed with the enormous contribution that our senior citizens have made and continue to make to the welfare of our country both in paid employment and in a voluntary capacity. All of the successful candidates in the Greenway electorate are involved in helping their fellow citizens. Tonight I would like to speak about just one of the successful candidates because of his work in the local mature age workers program.Providing work for mature age workers—now defined as over 45—is a major challenge for all governments. Although statistically unemployment is falling, there is still a degree of insecurity in the work force, and this is reflected in the high number of mature age people unemployed. The inability to find full-time employment in the second half of one's working life impacts on a person's ability to provide a high standard of living in retirement. So the contribution that people like Ted Cohen, who is the Project Officer for the Salvation Army Blacktown Mature Workers Program, make to our community is invaluable. Ted retires at the end of this year from that position.During the eight years that Ted has held that position he has assisted many clients to gain meaningful paid work and has promoted the mature age workers to employers, creating a network of contacts that have reduced the discrimination that often prevails when older job seekers apply for vacant positions. Ted has also worked with government and private agencies state wide to achieve outcomes for his clients and clients of other agencies.Changes in federal and state employment programs and funding have placed increased administrative duties on his time and resources, but Ted has dealt with them good-naturedly and efficiently to assist his clients. The effectiveness of Ted's work can be judged by the many clients who keep in contact with him even after they gain employment. Ted's networking skills are exceptional, and all who work with him have reason to appreciate his vast knowledge as a provider of information and assistance in the field of job seeking. Ted is an example to the community and industry of the contribution that mature workers can make to our society in paid employment in the final years of their working lives.Ted was born in Inverell, New South Wales. He spent 37 years in the New South Wales Police Force serving in country New South Wales as Officer-in-Charge and in metropolitan Sydney. During his period in the force Ted developed an audiovisual driving training safety kit and instructions. He also travelled overseas to demonstrate the kit to international police forces. During his working life, Ted has been involved with the Far West Children's Scheme and spent 10 years assisting the Boy Scouts and Girl Guides. He was also President of the Mudgee Rotary Service Club.I now return to Ted's current position as the Director of the Salvation Army JoblinkMature Workers Program, where he has developed a one person office into one of the highest achieving placement programs in the state. He enthuses clients to achieve paid work and assists them in overcoming the various setbacks encountered by this age group when seeking to rejoin the work force. Weekly development training and group working was instituted to give skills and support to job seekers, a service much needed in the community to prevent loss of self-esteem and despair. Ted lamented the lack of training opportunities for mature workers. He felt that preference was given by TAFE to younger students, which is understandable. TAFE does not seem to have the resources to provide the extensive training needed to allow mature workers to adapt to new technology.Ted also believed that large companies, instead of downsizing, should be required to retrain their work force so that workers could acquire new skills to be able to fit into new industries. He suggested that the now defunct training guarantee levy was and could have been a catalyst for the retraining of mature workers.The extent of Ted Cohen's work can be appreciated by the following figures that have been compiled since Ted commenced work with the Mature Workers Program in Blacktown: 12,000 client consultations, 3,500 clients assisted into employment; 4,000 into training for employment; and 5,000 job seeker sessions and workshops. Of the many fine words spoken about Ted's work, I will leave the final comment to one of his colleagues, who on the eve of his retirement had this to say:Ted developed and put into practice strategies to uplift and motivate despairing, defeated people who had all but given up. He nurtured, enthused and empowered them to achieve their goals towards employment and often effected many other positive changes in the lives of these people in the process.1258519:55:0012585Schultz, Alby, MPMr SCHULTZ83QHumeLP10—Once again I rise on the issue of Ovine Johne's disease. The recent announcement by the Victorian Labor government to undertake an inquiry into the Ovine Johne's disease control program is to be commended. The all-party parliamentary committee of inquiry, which will hear evidence on the social, economic and financial impact of OJD policy on producers and the wider community, is to be preceded by an independent scientific review by 31 January next year and should send a strong message to all governments that the national OJD program is flawed, harsh and regulatory to the extreme. As one New South Wales farmer recently commented in the Land newspaper:The New South Wales Department of Agriculture should ease up on the people being hurt by its regulatory approach and reassess its priorities.For months now, producers in the Hume electorate have been critical of both the national OJD program and the New South Wales OJD management program, calling for an inquiry into the way in which it is being managed. Surely it is time to re-evaluate the jackbooted approach of the New South Wales Department of Agriculture, which have yet to produce a document which justifies the basis of the current program. The continuing activity by the New South Wales government is without precedent in animal disease control, resulting in the destruction of businesses upon which the wool, sheep meat and live sheep export industry rely on for a sustainable future. Farmers and veterinarians have been pressured into common law agreements which have effectively removed safeguards and protection available under statute from farmers and veterinarians, leaving them open to cavalier and unreasonable directions from the state. To illustrate the point I make, let me quote from a letter from one of my constituents:My Husband and I have lived on a small farm (1,000 acres) for the past 15 years, and hereunder is a brief outline of the situation we are in due to the lack of a responsible programme regarding Ovine Johne's Disease.We have always purchased our merino rams from a stud in Grenfell, and approximately 18 months ago we were advised by the owners that some of their sheep had been found to have OJD.A meeting was held by the Rural Lands Protection Board at our Local Bowling Club a short while later. My Husband attended this meeting, along with other farmers who had purchased rams from this stud. A few options were given:All rams could be blood tested, but this was only 75 per cent accurate.De-stock for two years.Execute rams and if "negative" wait for 12 months and then your farm would be considered "free of OJD".After a lot of thought we decided to take option "3" and had our four rams executed and a post-mortem performed, and the result was "negative" on all rams.We were then advised by the RLPB that we were now rated "suspect" and had to have 450 of our sheep blood tested, and if they also were negative, then we would be on another rate, BUT not "free of OJD".The Board also encouraged us, very vigorously, to sign a form which stated that we were aware of our rating of "suspect" and could face a very hefty fine if any of our sheep strayed. Reluctantly we signed this form.The Department did phone about a month ago to inform us that if we did find OJD on our property, that as our summers were quite hot, after one year the disease would be gone. A few weeks later my Husband was talking to the Department about this matter and he was told, if he de-stocked, he would still have to wait for two years before re-stocking. We cannot understand why, if we de-stocked, it would take two years.We are now organising to have 450 of our sheep blood tested, but it has been suggested to us to wait as arrangements may be changed again.The problem is that the rules are being changed too much. We were given the wrong instructions at the first meeting. The Department seems very concerned about farmers making sure their sheep do not stray to other properties, but not very concerned about setting up a programme and sticking to it. OJD has been around for many years, and if a programme is to be instigated then it must be well thought out, and adhered to—no changing the rules halfway through.The most annoying thing is we had a post-mortem on our rams which proved "negative" and yet our stock is considered "suspect" and we are virtually quarantined, even though no OJD has been found on our place. With all the press this matter has been receiving, we are wondering whether we should organise a blood test on our sheep or not.Added to this, we are now told we have to pay $100 towards the eradication of this disease. I have a fear that all this money will be wasted because the Department has not got a responsible program in place yet, even though this matter surfaced a few years ago. I also heard where Victoria has decided to suspend their arrangements. It all seems as though it was not thought through in the first place.I also have grave misgivings about the way in which the New South Wales farmers organisation is supporting this program. I appeal to our minister and to all ministers of the crown at state and federal level to ensure that this absolutely disgraceful program is slowed down to stop this heartbreak and financial ruin for people such as the one I have just quoted, who is one of my constituents in the federal electorate of Hume.10000SPEAKERMr SPEAKER—Order! It being 8 p.m., the debate is interrupted.House adjourned at 8 p.m.Notices12586The following notices were given:Dr Wooldridge to present a Bill for an Act to amend the Therapeutic Goods Act 1989 to give effect to Australia's obligations regarding therapeutic goods under an agreement on mutual recognition with the European Free Trade Association, and for related purposes.Mr Slipper to move:That, in accordance with the provisions of the Public Works Committee Act 1969, it is expedient to carry out the following proposed work which was referred to the Parliamentary Standing Committee on Public Works and on which the committee has duly reported to Parliament: CSIRO Clayton (Eastern Precinct) Development works, Vic..Mr Slipper to move:That, in accordance with the provisions of the Public Works Committee Act 1969, it is expedient to carry out the following proposed work which was referred to the Parliamentary Standing Committee on Public Works and on which the committee has duly reported to Parliament: CSIRO Division of Building Construction and Engineering Development Works at Riverside Corporate Park, North Ryde, NSW.Mr Slipper to move:That, in accordance with the provisions of the Public Works Committee Act 1969, it is expedient to carry out the following proposed work which was referred to the Parliamentary Standing Committee on Public Works and on which the committee has duly reported to Parliament: CSIRO Riverside Corporate Park, North Ryde, NSW—Joint Research Complex for CSIRO Molecular Science and Food Science Australia.Mr Albanese to move:That this House:(1) recognises the importance of affordable, quality child care for Australian parents;(2) deplores the lack of childcare facilities available to Members, Senators and staff working at Parliament House, noting that this lack of workplace child care has led to increased difficulties for parents working at Parliament House following the Coalition's attacks on child care over the past 3 years;(3) condemns the Howard Government for its massive attacks on child care and expresses its concern that these cuts have resulted in fee rises, the closure of childcare centres and women being forced out of the paid workforce, instead of providing families with a choice about how they care for their children; and(4) calls for a study to assess the feasibility of establishing workplace child care facilities for Members, Senators and staff working at Parliament House.Dr Emerson to move:That this House:(1) acknowledges the irritation caused to television viewers by the broadcasting of advertisements at volumes or pitches greater than those of normal programs;(2) notes that neither the Broadcasting Services Act nor the Commercial Television Code of Practice requires television stations to broadcast advertisements at the same sound level as their programs;(3) notes that at present the only recourse for viewers unhappy about the volume of advertisements is to complain to the television stations or the advertisers; and(4) calls on the Government to amend the Broadcasting Services Act to empower the Australian Broadcasting Authority to regulate the volume and pitch of television advertisements.Mr Price to move:(1) That a Standing Committee on Appropriations and Staffing be appointed to inquire into:(a) proposals for the annual estimates and the additional estimates for the House of Representatives;(b) proposals to vary the staff structure of the House of Representatives, and staffing and recruitment policies; and(c) such other matters as are referred to it by the House;(2) That the committee shall:(a) in relation to estimates— (i) determine the amounts for inclusion in the parliamentary appropriation bills for the annual and the additional appropriations; and (ii) report to the House upon its determinations prior to the consideration by the House of the relevant parliamentary appropriation bill; and(b) in relation to staffing— (i) make recommendations to the Speaker; and (ii) report to the House on any matter its determinations prior to the consideration by the House of the relevant parliamentary appropriation bill;(3) That the committee consist of the Speaker and 11 other members, 6 members to be nominated by the Chief Government Whip or Whips and 5 members to be nominated by the Chief Opposition Whip or Whips or any independent Member;(4) That the committee elect a Government member as its chair;(5) That the committee elect a deputy chairman who shall act as chair of the committee at any time when the chair is not present at a meeting of the committee, and at any time when the chair and deputy chair are not present at a meeting of the committee the members present shall elect another member to act as chairman at that meeting;(6) That the committee have power to appoint subcommittees consisting of 3 or more of its members and to refer to any subcommittee any matter which the committee is empowered to examine;(7) That the committee appoint the chair of each subcommittee who shall have a casting vote only, and at any time when the chair of a subcommittee is not present at a meeting of the subcommittee the members of the subcommittee present shall elect another member of that subcommittee to act as chair at that meeting;(8) That the quorum of a subcommittee be a majority of the members of that subcommittee;(9) That members of the committee who are not members of a subcommittee may participate in the public proceedings of that subcommittee but shall not vote, move any motion or be counted for the purpose of a quorum;(10) That the committee or any subcommittee have power to send for persons, papers and records;(11) That the committee or any subcommittee have power to move from place to place;(12) That a subcommittee have power to adjourn from time to time and to sit during any sittings or adjournment of the House;(13) That the committee have leave to report from time to time; and(14) That the foregoing provisions of this resolution, so far as they are inconsistent with the standing orders, have effect notwithstanding anything contained in the standing orders. (Notice given 24 November 1999. )Mr Price to move:(1) That standing order 28B be amended by inserting the following paragraph after paragraph (b):(ba ) annual and additional estimates contained in the appropriation bills presented to the House shall stand referred for consideration by Members of the relevant committee (as determined in accordance with the provisions of paragraph (b) for the consideration of annual reports), and, for the purposes of this consideration: (i) six Members of each committee, determined by the committee in each case, shall consider the estimates; (ii) the Members of the committee selected to consider the estimates shall meet with Members of the relevant Senate legislation committee so that the Members and Senators may meet together for the purposes of considering the estimates; (iii) members of the relevant House and Senate committees, when meeting together to consider estimates, shall choose a Member or a Senator to chair the joint meetings; (iv) the provisions of Senate standing order 26 shall, to the extent that they are applicable, apply to the consideration of estimates under this paragraph, and (v) that, upon the completion of joint meetings at which evidence is received or written answers or additional information considered, it shall then be a matter for the Members of the relevant committee to consider the terms of any report to the House on the estimates.(2) That a message be sent to the Senate acquainting it of this resolution and requesting that it concur and take action accordingly. (Notice given 24 November 1999. )Mr Price to move:That the standing orders be amended by amending standing order 94 to read as follows:Closure of Member94 A motion may be made that a Member who is speaking, except a Member giving a notice of motion or formally moving the terms of a motion allowed under the standing orders or speaking to a motion of dissent (from any ruling of the Speaker under standing order 100), "be not further heard", and such question shall be put forthwith and decided without amendment or debate. (Notice given 24 November 1999. )Mr Price to move:That standing order 129 be omitted and the following standing order substituted:Presentation of petitions129 At the time provided for the presentation of petitions, the following arrangements shall apply to the presentation of petitions certified to be in conformity with the standing orders:(a) in respect of each petition, the petitioner, or one of the petitioners, may present the petition to the House by standing at the Bar of the House and reading to the House the prayer of the petition, and(b) where a petitioner is not able to present the petition in accordance with paragraph (a) of this standing order, the Member who has lodged the petition may present it to the House by reading to the House the prayer of the petition. (Notice given 24 November 1999. )Mr Price to move:That the standing orders be amended by inserting the following standing order after standing order 143:Questions to committee chairs143A Questions may be put to a Member in his or her capacity as Chair of a committee of the House, or of a joint committee, in connection with the work or duties of the committee in question. (Notice given 24 November 1999. )Mr Price to move:That the standing orders be amended by inserting the following standing order after standing order 145:Questions without notice—Time limits145A During question time:(a) the asking of each question may not exceed 1 minute and the answering of each question may not exceed 4 minutes;(b) the asking of each supplementary question may not exceed 1 minute and the answering of each supplementary question may not exceed 1 minute; and(c) the time taken to make and determine points of order is not to be regarded as part of the time for questions and answers. (Notice given 24 November 1999. )Mr Price to move:That standing order 275A be omitted and the following standing order be substituted:Statements by Members275A Notwithstanding standing order 275, when the Main Committee meets on a Thursday, the business before the Committee shall be interrupted at 1 p.m. and the Chair shall call for statements by Members. A Member, other than a Minister, may be called by the Chair to make a statement for a period not exceeding 3 minutes. The period for Members' statements may continue for a maximum of 1 hour. Any business under discussion at 1 p.m. and interrupted under the provisions of this standing order shall be set down on the Notice Paper for the next sitting. (Notice given 24 November 1999. )1999-11-24Mr DEPUTY SPEAKER(Mr Nehl) took the chair at 9.40 a.m.Statements by Members125901259012590Burke, Anna, MPMs BURKE83SChisholmALP00—I rise today to discuss the alarming state of funding and support for research in this country, in particular scientific research. My electorate of Chisholm is home to two CSIRO sites and two leading educational institutions—Monash and Deakin universities. Therefore, I was most disturbed upon hearing about the resignation of Professor Davies, the Dean of Science at Monash University. It has been alleged that Professor Davies was pressured to resign due to his opposition to budget cuts that have seen at least 70 full-time academic and general staff lose their jobs. One of the faculty employees is so outraged that they asked me to raise this matter in parliament. These allegations of intimidation are very concerning and demand further investigation, as they are undoubtedly affecting staff morale. A recent article in the Monash Campus Review states:The faculty has thus lost over one-third of its staff in under five years."Funding for the faculty of science has been drastically and disproportionately reduced," Davies said."Further cuts will mean that science is no longer viable at Monash. We will not be able to offer the full range of courses and some departments will go to the wall."This is also an illustration of the enormous pressures placed on universities struggling to cope with increased demands with fewer resources. The way ahead must lie in new ideas, more research and the marketing of Australian made inventions and products. As Labor leader, Kim Beazley, says, we need to develop ourselves as the `knowledge nation'. However, there is one key ingredient for achieving this which, as a country, we do not currently have: a federal government that is committed to resourcing and supporting research institutions in our quest to develop new industries.This government showed its hand very early by cutting a massive $800 million from higher education in the 1996 budget, slashing R&D incentives for business and, more recently, suggesting a new income stream for universities—a loans scheme that disadvantages students who can least afford it. In his infamous cabinet submission, even Dr Kemp has admitted:Universities are facing higher student:staff ratios, less frequent lecture and tutorial contact, the persistence of outdated technology and gaps in key areas of professional preparation.In my electorate of Chisholm, Monash University has suffered a range of cuts which staff say are threatening students' choice of subjects and undergraduate programs and will lead to a long-term decline in the quality of both teaching and graduates. This is most disturbing. It comes on top of cuts to the arts faculty and also recent cuts to CSIRO, most particularly in the division of forestry.Where are we going with our research in this country? If we do not put money into these areas, we will suffer. As the government said in its recent green paper, this will just lead to a continued brain drain, and our best and brightest will continue to go overseas. It is about time the government viewed targeted spending in education as an investment in our future rather than a negotiable item to enhance the budget bottom line.Our future prosperity is tied to Australia reaching out to new industries and capitalising on our wealth of people and knowledge. Until the federal government reassesses its ideologically driven desire to cut government services such as universities, Australia risks falling behind in the race to invent, innovate and stake out our place in the world as a `knowledge nation'. (Time expired)1259112591Cadman, Alan, MPMr CADMANSD4MitchellLP10—I wish to speak about the How to Drug Proof your Kids Program. Two programs of this type have taken place in Mitchell. The program involves parents who really can make a huge difference in the protection of children against drugs, gives the whole concept of the fight against drugs broader ownership, equips and assists parents with information and provides techniques and confidence. Parents have the compassion and the will; what they lack is understanding and confidence in many instances.The first meeting on How to Drug Proof your Kids was attended by 400 parents in Castle Hill. The purpose of that meeting was to train or identify facilitators. Six hundred facilitators have been trained throughout Australia. Their purpose is to get together with smaller groups of parents—about 20 parents—and work through a six-week program which is fully researched, fully Australian and a very positive program. The purpose of the program is to equip and empower parents with practical skills.Parents' roles have often been underestimated. Where parents are involved in the process of drug prevention, the risk factors for teenage drug use have been reduced. Parents are part of the solution but have been neglected by most programs to date. I have discussed these matters with the state Minister for Education and Training, Mr John Aquilina, and I will be looking forward to his response to having all schools in New South Wales offering How to Drug Proof your Kids as an option for parent programs in schools.The success in the Castle Hill area has been magnificent. A recent study of six schools examining the drug prevention lessons for children to complete at home with their parents showed the best outcome. The children reported significantly less perceived peer use of alcohol, tobacco and marijuana as well as significantly less susceptibility to peer pressure to experiment with cigarettes. Fathers, interestingly enough, also reported significantly greater motivation to help their children avoid drug use.The program, as I have said, is a six-week program for parents. There are notes, exercises and discussion points. Broadly, the program runs through the topics of why kids take drugs, how to educate kids to make good choices, prevention tools for parents, learning to intervene and where to get help, and a parents guide to handling relapses back into the drug scene.It is an excellent program. I recommend it to all members. The program is available for members to get behind, to promote and to run in their electorates. I thank Barry Denton and the team at Castle Hill for their interest in this important topic. (Time expired)1259112591Zahra, Christian, MPMr ZAHRA84HMcMillanALP00—Today I want to raise serious concerns about the Rural Doctor Retention Payment Scheme. Like the Central West Gippsland Division of General Practice, I want to indicate that I have serious misgivings about the scheme and how the government proposes to apply it.In the Latrobe Valley and West Gippsland, we often say that the government either does not know or does not care about the plight of our community. I think in this case it is simply that the government does not care enough to know, because in the application of this scheme it seems that it has made a number of significant blunders. From the original advice received, it was understood that the payments would be available and of benefit to all GPs who practised in any rural area in Australia, in accordance with their practice town category. This now turns out to not be the case, and the people in my electorate stand to miss out significantly as a result of this. Amongst the most serious concerns I have about the application of this scheme is the fact that it would appear that the government has based its decision not to include significant areas in my electorate in the program on incorrect statistics. I would like to point out some of them to the chamber in the time allotted today.The basis for its decision was that Moe's hospital existed. Moe's hospital was closed by the Kennett government about 18 months ago. So that is not true. It also assumed that there was a population centre in my electorate called Thomson and that there was a 40-bed hospital there. That does not exist either. There has not been a population centre named Thomson in the history of the Gippsland region. It also assumed that Traralgon had two hospitals, one for acute illness and one for mental illness. They both closed due to the privatisation process that the Kennett government initiated and were replaced by a hospital in Traralgon West.Traralgon West, it should be pointed out, is outside Traralgon. So there are not benefits associated with the Traralgon community being able to access it. I also understand that the Latrobe Valley, which consists of the main townships of Moe, Morwell, Churchill and Traralgon as well as a number of smaller towns and villages, has been lumped together and considered as a major regional centre similar to Ballarat, Bendigo or Geelong. This is clearly incorrect, as there are distances of several kilometres between each of these towns. There are numerous other anomalies and inconsistencies which I do not have time to deal with today.I also point out that the GPARIA Index is not complete and that it is not a satisfactory index for identifying which areas are in need of this type of support, because it does not take into consideration socioeconomic status. In the Latrobe Valley and West Gippsland, we do need this program to work for us. We have just as many concerns as other regions right across Australia, yet because of the rigid administration of the Rural Doctor Retention Payment Scheme we will miss out. This is clearly inequitable. (Time expired)1259212592Bartlett, Kerry, MPMr BARTLETT0K6MacquarieLP10—I would like to take this time to respond to an article in the Daily Telegraph earlier this week, subtitled `Pressure builds on Badgerys', about Sydney aircraft noise problems. I would like to make a couple of points. An airport at Badgerys Creek will not solve Sydney's airport noise problems; it will merely duplicate those problems. It is a fallacy to think that by building an airport at Badgerys Creek we will relieve the aircraft noise problems of Sydney. In fact, the EIS itself has said an airport at Badgerys Creek will not reduce aircraft noise; it may just briefly cap them.The problem of noise duplication is in addition to the obvious problems of air quality in Western Sydney. Ozone levels and fine particulates would increase dramatically as a result of an airport in Western Sydney—not to mention the problems of the cost of $6 billion to build an airport and the impossibility of trying to create adequate infrastructure to link an airport at Badgerys Creek with Sydney.The answer to Sydney's aircraft needs is not to duplicate the problems in Western Sydney; it is to better use KSA until we can provide longer term solutions. Kingsford Smith airport is not being used efficiently. Over 30 per cent of the flights in and out of Mascot airport are planes with a capacity of 30 passengers or less. The average number of passengers in a flight in and out of Sydney is less than 70. World best practice is well over 100 and, in fact, it is approaching 200. Until we use Kingsford Smith airport more effectively for international flights, it is ridiculous to think of building another international airport in the Sydney basin. Sydney is the gateway to Australia. Tourists visiting Australia want to land in Sydney; they do not want to land at Badgerys Creek—1½ hours west of Sydney. We need to work on more effectively using the resources that we have got—using Kingsford Smith more effectively.A solution to this is to move a lot of the lighter aircraft out of Kingsford Smith, thus allowing maximum capacity and landing rights for the larger aircraft. Moving some of the regional and lighter planes out to Bankstown is a feasible solution. It is not penalising the bush; it gives another option with cheaper landing rights. Therefore, with discounted fares we can actually give greater choice to people from the bush wanting to fly to Sydney. Those wanting to pay existing premium fares can continue to have the option of landing at KSA; those who want cheaper, discounted fares can, in fact, choose to land at Bankstown which, with more effective infrastructure connections, could be only 20 minutes out of the CBD.The answer is to use Kingsford Smith more effectively so that we can buy time—perhaps 15 or 20 years—to more effectively develop long-term solutions, instead of rushing into a hasty, unpractical, unviable, costly and environmentally destructive airport at Badgerys Creek, which people do not want and which will not solve our problems. (Time expired)1259312593Latham, Mark, MPMr LATHAMK26WerriwaALP00—The biggest and fastest growing industry in the Blue Mountains is tourism. How sad it is to see the local member from that area arguing for tourist operators to be denied access to international and domestic tourists through the second airport in Sydney. He wants to hurt tourist operators in his own electorate—a shameful thing for a local member of parliament.On another matter, the 60 Minutes program has once more shown itself to be unfit to broadcast current affairs in this country. It is unable to separate its editorial policy from the commercial interests of its owner. Its segment three Sundays ago concerning digital TV was a disgrace to the notion of journalistic independence. 60 Minutes failed to report the findings of the Productivity Commission, which are adverse of course to the Packer media group. It failed to show the very small difference in quality between high definition and standard definition TV. It failed to explain the prohibitive cost of high definition and the way in which it would deny Australian households fair access to other TV options, datacasting and the Internet. The Packers hate competition and, mark my words, high definition is a closed shop in TV.Channel 9 is a shameless mouthpiece for the pecuniary views of the Packer organisation and, in particular, for its vendetta against Mr Paul Keating. This was evident once again early last month. On 4 October, James Packer said that Mr Keating should either sue the Packer family or put their feud aside. The next night on a loaded segment on the Nightline program, Paul Lyneham, as is his style, parroted the Packer view, arguing that Keating has not sued. It is absurd for Channel 9 to argue that Mr Keating needs to take the civil remedy of defamation to prove his point in this matter. This has never been a standard of proof the Packer family has applied to itself.The next time James Packer and his parrot, Paul Lyneham, engage in such an argument, they might like to think of this: if defamation proceedings are needed to prove one's innocence, then by this standard Frank Packer would have been guilty of tax fraud in the matters raised in Newton's case in 1957; or, by such a standard, Clyde and Kerry Packer would have been guilty of break and enter in their notorious occupation of the Anglican Press building in June 1960; or, by such a standard, Kerry Packer would have been guilty of tax fraud numerous times in the 1980s—in the film scheme, the offshore auctions scheme, the Swiftsure Credit scheme, the Bishop and Sewell schemes, the Conpress Investments scheme and, most famously, the bottom-of-the-harbour tax scheme, in tandem with Brian Ray and Ian Beames. He has had more tax schemes than I have had hot lunches. But, then again, the Packers have never been keen on paying their fair share of tax, anymore than they have been keen on facing up to their fair share of market competition in the TV industry.1259412594Hardgrave, Gary, MPMr HARDGRAVECK6MoretonLP10—There is one thing for sure in this business we are in of representing people—if you smack of arrogance, they sort you out. We saw it at the end of the Keating era; objective commentators would say that that was what was the end of Jeff Kennett. The referendum yes case died because those who were promoting it were inside their comfort zone, satisfied they were right, without going out to talk to those who may have disagreed. In fact, since then they have been saying to Australians who voted no, `You are stupid or unAustralian.' That sort of arrogance does not go down very well in my electorate, and a lot of ordinary Australians are very angry with those who are making such statements.We see arrogance in my electorate also in the Soorley city hall administration in Brisbane. They are an administration which tells you rather than listens to you. They are causing people a great deal of harm and grief by their consultation style, which is essentially to mock up consultation and then to tell you what they think they have found out. People are starting to speak out. In fact, the response from the community is amazing. Ordinary citizens in Brisbane are now saying to the Liberal Party, `We would like to be candidates because of what is happening in our streets and in our suburbs. The Soorley administration is not listening to us.'Residents in Beverley Hills Street, Moorooka, were told earlier this year that they had been consulted over matters to do with a bus route going down their street when, in simple terms, they were not asked. A resident from that street, Stephen Walker, is now standing as the Liberal candidate in Moorooka ward. They were also told that traffic calming issues—roundabouts, speed bumps and so forth—had come about as a result of consultation in their street and their area, and of course that is not the case. In Yeronga West there were bus route changes which brought about such strange things as not even putting a bus stop at the local shopping centre—in fact, the bus went past the shopping centre at about 60 kilometres an hour—and even produced a bus stop on Fairfield Road where a bus does not even go past. These were the great results of the Soorley city council's consultation with the community—consultations that never took place—but of course people are being told that they were asked.People in Salisbury are angry, as well, that their buses are few and far between and that they wait an hour to get from Moorooka to Salisbury on the local buses which used to serve them far better. Now we find the local councillor in Moorooka ward and the local state member in Archerfield saying that, if the federal government does not build noise barrier fencing along Riawena Road, Salisbury, something is wrong. The simple fact is that, if those particular levels of government—local and state—were to put a submission to the federal government for funding for noise barrier fencing along Riawena Road, Salisbury, perhaps something could happen.The Soorley administration at city hall smacks of the same arrogance and has the same support from the elites such as News Limited's Courier-Mail and various radio stations, so they should go the same way as the referendum and the same way as Keating. They deserve to go. The people will speak in March next year.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Nehl)—Order! In accordance with standing order 275A, the time for members' statements has concluded.Bills12595r92212595Debate resumed from 22 September, on motion by Mr Truss:That the bill be now read a second time.09:58:0012595O'Connor, Gavan, MPMr O'CONNORWU5CorioALP00—I do not intend to take too much of the committee's time in dealing with this particular piece of legislation. The main purpose of the National Residue Survey Levies Regulations (Validation and Commencement of Amendments) Bill 1999 is to correct an inconsistency between the starting dates of the Primary Industries Levies and Charges (National Residue Survey Levies) Regulations 1998—the NRS Levy Regulations—and amendments that have been made to these regulations by statutory rule No. 182 of 1998.The National Residue Survey implements chemical residue monitoring programs and recovers the costs of the programs from participating industries. As far as the meat industry is concerned, these particular levies are mandatory and must be paid by producers. Cost recovery is in the form of a statutory levy. These programs form the basis for documentation that enables the Australian government to certify that raw food products bound for export and domestic consumption are free from significant chemical contamination. This is a very important process, because we are finding in many of the European markets that the demands being put on Australian producers are quite stringent and require that producers supply very accurate and precise information about the level of residues in the product.Last year, the government put through a new act to cover the NRS levies. That act was proclaimed on 8 July 1998. Before this act commenced operation, the industry sought a decrease in the NRS levy for sheep and an increase in the NRS levy on lambs. The government sought to implement this request from the industry by way of regulation, and that is statutory rule No. 182. The date of this regulation was 3 July 1998. In other words, the government was trying to make a regulation under an act that had not been proclaimed. The government was apparently unaware of the problem and collected the levies from sheep and lamb producers at the new rate from 1 August 1998.As a consequence of this inconsistency, sheep traders liable to pay a per head levy on sheep transactions were unintentionally liable for a higher levy rate than that collected from 1 August 1998. Lamb traders were technically liable for a lower per head levy rate than that which was collected. The problem only came to light when the Standing Committee on Regulations and Ordinances noted the inconsistency in the dates. On 6 May the Chief General Counsel from the Attorney-General's Department delivered an opinion that, because of the inconsistency between the dates, statutory rule No. 182 was invalid. The government amended the regulation as of 1 September 1999 to ensure that the rate currently being collected is that sought by the industry. This fixed the present problem, but it still meant that levies on sheep and lamb collected from 1 August 1998 until 1 September 1999 were at a rate other than prescribed in the legislation.The government had two options on this; it could have refunded the overpayment or retrospectively legislated to validate the rates of the levies collected between 1 August 1998 and 1 September 1999. It has chosen the latter with this piece of retrospective legislation. It is really interesting that, in other forums, the coalition has spoken very strongly against retrospectively legislating on a lot of matters, and here we have the government doing exactly that. It might not seem a big issue, but the principle that the coalition has enunciated in other forums obviously does not apply in this area.The other issue is the incompetence of the government in this whole process. I think it ought to be put on the public record that this situation was created by that incompetence and it is now being rectified by retrospective legislation. I see that the Minister for Agriculture, Fisheries and Forestry has chosen to join us in the chamber; I will not regard his presence as a red rag waved at a bull. I was in the minister's electorate the other day. I happened to be in Queensland and was invited up to Hervey Bay. I was invited by the press to make some comments on matters relating to sugar and regional forest agreements. My only regret on the day was that I had not informed the minister that I was coming into his electorateGT4TRUSSMr Truss—A massive breach of courtesy.WU5O'Connor, Gavan, MPMr O'CONNOR—Yes, it would have been a massive breach of courtesy. Although the reporter was very anxious for me to comment on those particular issues, I said no, that I had a private reason for coming to the minister's electorate. On that occasion I chose not to comment.I invite the minister to come to Geelong to see our wine and horticultural producers. The port of Geelong is a centre for the distribution of grain throughout the world, the largest bulk handling port. I would welcome the minister to come down at some stage, as I am sure he would welcome me into his electorate, and we will afford each other the usual courtesies of notification.As far as this bill is concerned, I am pleased that the government is rectifying its mistake. It is probably regrettable that it has to be done by means of retrospective legislation. The Sheepmeat Council are in agreement with the measures that are being taken by the government. They are quite happy for this legislation to proceed, so there will be support for the legislation on this occasion.10:06:0012596Truss, Warren, MPMr TRUSSGT4Wide BayNPAgriculture, Fisheries and Forestry10—I thank the honourable member for his comments on the legislation, the National Residue Survey Levies Regulations (Validation and Commencement of Amendments) Bill 1999, and the indication that the opposition will not oppose it. Thank you also for visiting my electorate, even if it was without my knowledge. I hope you spent some money on the businesses of Hervey Bay so they could benefit from a bit of Victorian capital.Hervey Bay was largely built on Victorian capital as people exited Victoria during its rust bucket days. It now has developed a very strong economy, with much assistance from the people of Victoria. I certainly accept your invitation to reciprocate the visit and I am sure that the same hospitality the people of Hervey Bay extended to you would be available to me in Geelong.As the shadow minister indicated in his comments, this is largely a technical bill in that it legitimises what everybody believed the situation always was. There is an element of retrospectivity about it, but it does not retrospectively legislate any disadvantage; it merely puts in place what the industry, the levy players and all those administering the program believed the situation to be until somebody discovered that there was a small technicality which at least some lawyers believed was not adequately addressed in how regulation 182 was put into place.This change follows a specific request from the industry. The new per-head levy rate was to have commenced on 1 August 1998 at the same time the National Residue Survey Levy Regulations were put in place. But, as the honourable member mentioned, the Standing Committee on Regulations and Ordinances was the first to draw attention to the fact that there may be an inconsistency here. The Chief General Counsel confirmed that, while the regulation had been validly made, there was this problem with the commencement date of the regulations.The sheep and lamb industry has recently confirmed its commitments to the levy rates provided for in statutory rule No. 182. The impact on levy players of this technical anomaly will be nil once the bill has been passed, as the levy has been collected since 1 August last year at the rate requested by the industry.I thank the shadow minister for his contribution to the debate and the committee for granting it smooth and rapid passage. It looks like you might get a very early day today. I commend the bill to the House.Question resolved in the affirmative.Bill read a second time.10000DEPUTY SPEAKERMr DEPUTY SPEAKER (Mr Nehl)—If no member wishes to consider the bill in detail, I will put the question forthwith. The question is that the bill be reported to the House without amendment.Question resolved in the affirmative.Main Committee adjourned at 10.11 a.m.Answers to Questions in Writing12598The following answers to questions were circulated:12598(Question No. 643)64312598Ferguson, Laurie, MPMr Laurie Ferguson8T4ReidALP00 asked the Minister Assisting the Minister for Defence, upon notice, on 1 June 1999:(1) How many Australian Defence Force (ADF) personnel received (a) Defence HomeOwner housing loans, (b) Defence Service Homes housing loans, (c) Home Purchase and Sales Expense Allowance (HPSEA), (d) Child Education Allowance, (e) Opportunity Seat Available Travel (OPPSAT), (f) subsidised married quarter or living quarter accommodation, (g) subsidised Board in barracks and similar accommodation and (h) funeral costs and expenses in the latest year for which data is available.(2) What is the estimated annual cost to the ADF for the provision of each benefit referred to in part (1).(3) Will each benefit referred to in part (1) be identified on group certificates under the provisions of the Government's A New Tax System (Fringe Benefits Reporting) Act; if so, what are the implications for ADF personnel.12598Scott, Bruce, MPMr Bruce ScottYT4MaranoaNPVeterans' Affairs; Minister Assisting the Minister for Defence10—The answer to the honourable member's question is as follows:(1) Records of the number of Australian Defence Force (ADF) recipients of the above entitlements are required for Fringe Benefits Tax (FBT) purposes. The following data was obtained from the 1998-99 FBT return and only relates to the FBT liability for these items:(a) an average of 3,252.(b) 28,719.(c) 2,434.(d) 146.(e) 974 ADF members and 1,709 dependants travelled on a individual sector.(f) an average of 32,901.(g) an average of 158.(h) not applicable as funeral costs and expenses are not subject to FBT.(2) The estimated annual FBT cost for each of the above is:(a) $3.146 million. (b) $8.013 million.(c) $6.772 million.(d) $0.480 million.(e) $0.749 million.(f) $101.034 million.(g) $0.174 million.(h) not applicable as funeral costs and expenses are not subject to FBT.(3) The legislation requires that a single FBT amount is reflected on each individual's group certificate. If a member receives more than one benefit the aggregated amount will be reported. Generally, for those conditions of service that are in the nature of a personal benefit, the effect on ADF members will be the same as the effect on other taxpayers and members of the community, ie the FBT amount reported on group certificates will be used to determine individuals' liabilities for superannuation and Medicare levy surcharges, entitlement to income tested government benefits and concessions, child support obligations and higher education contribution scheme (HECS) repayments. The Government has decided that conditions of service that are not solely in the nature of a personal benefit will not be reported on group certificates.12598(Question No. 840)84012598Albanese, Anthony, MPMr AlbaneseR36GrayndlerALP00 has asked the Minister representing the Minister for Family and Community Services, upon notice, on 11 August 1999:(1) What sum in rent assistance was paid by the Commonwealth in (a) total and (b) each State and Territory in (i) 1985-86, (ii) 1990-91, (iii) 1995-96, (iv) 1996-97, (v) 1997-98, (vi) 1998-99 and (vii) 1999-2000 (projected).(2) Within each State and Territory what sum in rent assistance was paid to recipients in (a) the capital city and (b) outside the capital city in (i) 1985-86, (ii) 1990-91, (iii) 1995-96, (iv) 1996-97, (v) 1997-98, (vi) 1998-99 and (vii) 1999-2000 (projected).(3) How many rent assistance recipients were there in each State and Territory in (a) 1985-86, (b) 1990-91, (c) 1995-96, (d) 1996-97, (e) 1997-98, (f) 1998-99 and (g) 1999-2000 (projected).(4) Within each State and territory how many persons receiving rent assistance in (a) 1985-86, (b) 1990-91, (c) 1995-96, (d) 1996-97, (e) 1997-98, (f) 1998-99 and (g) 1999-2000 (projected) were living (i) in and (ii) outside the capital city.(5) What was the average sum in rent assistance received by recipients living (a) in and (b) outside the capital city in each State ant Territory in (i) 1985-86, (ii) 1990-91, (iii) 1995-96, (iv) 1996-97, (v) 1997-98, (vi) 1998-99 and (vii) 1999-2000 (projected).(6) How many single/non-sharing rent assistance recipients in each State and Territory pay more than $172.26 each fortnight in rent.(7) Within each State and Territory how many single/non-sharing rent assistance recipients living (a) in and (b) outside the capital city pay more than $172.26 each fortnight in rent.(8) How many single/sharing rent assistance recipients in each State and Territory pay more than $138.93 each fortnight in rent.(9) Within each State and Territory how many single/non-sharing rent assistance recipients living (a) in and (b) outside the capital city pay more than $138.83 each fortnight in rent.(10) How many rent assistance recipients who are members of a couple in each State and Territory pay more than $211.86 each fortnight in rent.(11) Within each State and Territory how many rent assistance recipients who are members of a couple living (a) in and (b) outside the capital city pay more than $211.86 each fortnight in rent.12599Anthony, Larry, MPMr AnthonyXJ6RichmondNPCommunity Services10—The Minister for Family and Community Services has provided the following answer to the honourable member's question:I do not consider that extracting and compiling this amount of data is a suitable use of public service resources.Information on rent assistance is published in the annual reports of the Department of Family and Community Services.12599(Question No. 906)90612599McClelland, Robert, MPMr McClellandJK6BartonALP00 asked the Attorney-General, upon notice, on 20 September 1999:(1) Did Australia on 25 August 1998 ratify the 1993 convention on Protection of Children and Co-operation in respect of Intercountry Adoption, known as Hague XXXIII within the Hague Conference system (2) Did the Convention enter into force for Australia on 1 December 1998.(3) With which countries has Australia made, or is Australia preparing to make, arrangements under the Convention.(4) For which conventions in the Hague Conference system is his department responsible.12599Williams, Daryl, MPMr Williams7V5TangneyLPAttorney-General10—The answer to the honourable member's question is as follows:(1) Yes(2) Yes.(3) The Convention establishes legally binding standards and safeguards to be observed by State Member countries participating in intercountry adoption among themselves.—As such there is no need to make arrangements under the Convention with particular State Member countries to enable adoptions between them to occur. If prospective adoptive parents wish to adopt from a participating country they need to make an application through their State or Territory department responsible for adoption matters.Apart from the Convention, Australia has a number of current adoption programs pursuant to bilateral arrangements between the States and Territories and overseas countries. Those programs precede Australia's participation in the Convention but, in accordance with the Commonwealth, State and Territory agreements on ratification of the Convention, are to be renegotiated by December 2001 to ensure that those arrangements comply with the principles of the Convention.Further, the State of Victoria on behalf of all States and Territories, and the Commonwealth are currently negotiating with the People's Republic of China on a new bilateral adoption agreement.(4) Australia has ratified, or acceded to, the following Hague Conventions:XI Convention on the Conflicts of Laws Relating to the Form of Testamentary Dispositions;XII Convention Abolishing the Requirement of Legalisation for Foreign Public Documents;XVIII Convention on the Recognition of Divorces and Legal Separations;XX Convention on the Taking of Evidence Abroad in Civil or Commercial Matters;XXVI Convention on Celebration and Recognition of the Validity of Marriages;XXVIII Convention on the Civil Aspects of International Child Abduction;XXX Convention on the Law Applicable to Trusts and on their Recognition; XXXIII Convention on Protection of Children and Co-operation in Respect of Intercountry Adoption.The responsibility for all of these Conventions lies with this portfolio.12600(Question No. 909)90912600Crean, Simon, MPMr CreanDT4HothamALP00 asked the Treasurer, upon notice, on 20 September 1999:Does the GST apply to payments of taxes and other charges, except those taxes and other charges that are excluded from the GST by a determination of the Treasurer; if so, (a) how many determinations has he made and (b) what taxes and charges have been excluded from the GST by the determinations.12600Costello, Peter, MPMr CostelloCT4HigginsLPTreasurer10—The answer to the honourable member's question is as follows:All States and Territories signed the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations in June 1999. In signing, States and Territories agreed that the GST should not apply to some taxes, levies and charges. The parties to the Agreement are currently in the process of agreeing on a list of taxes, levies and other charges that will be outside the scope of the GST. The complete list will be promulgated by a determination by the Commonwealth Treasurer as set out in section 81-5 of A New Tax System Act 1999.12600(Question No. 913)91312600Murphy, John, MPMr Murphy83DLoweALP00 asked the Minister for Transport and Regional Services, upon notice, on 20 September 1999:(1) Has his attention been drawn to World Health Organisation (WHO) Environmental Health Criteria Series Volumes 100-187 No. 171 entitled `Diesel Fuel and exhaust emissions' which warns that diesel exhaust is probably carcinogenic to humans, and that inhalation of diesel exhaust contributes to both neoplastic and non-neoplastic diseases, including asthma.(2) Has his attention also been drawn to WHO press release WHO/57 31 July 1998 stating that European Ministers of Environment and Health are discussing and adopting the European Charter on Transport, Environment and Health; if so, will he be drafting, discussing and adopting a similar Charter for Australia; if so, when.(3) Is the consumption of diesel fuel promoted by reducing the diesel fuel excise. (4) Is diesel fuel exempt from the goods and services tax (GST).(5) Will he maintain or increase the diesel fuel excise in light of the WHO's findings.(6) Has the Government's attention been drawn to a 1998 report by the Scientific Review Panel of the California Air Resources Board recommending that diesel exhaust be classified as a toxic air contaminant; if so, has the Government (a) heeded the findings of the report that long term occupational exposure to diesel exhaust was associated with an increase in the incidence of lung cancer and (b) taken action to warn truck drivers, plant operators, rural workers, the transport industry and the general public of the increased risk of lung cancer that these workers have been shown to be exposed to; if so, what.(7) Is he able to say whether (a) the US Environmental Protection Authority has proposed listing diesel exhaust as a probably human carcinogen and (b) in 1990 California identified diesel exhaust as a chemical known to the State to cause cancer.(8) Will the Government adopt the Californian Air Resources Board proposals for controls on diesel emissions, including the use of economic incentives to encourage the introduction of cleaner engines and the replacement of diesel with alternative fuels.(9) Will the Government adopt measures in line with those that the Californian Air Resources Board now requires for the reduction of emissions of toxic air contaminants (TACs) from diesel exhausts; if so, will the Government take steps to reduce the emission of TACs from diesel engines by introducing regulations that (a) introduce standards that restrict the amount of particulate matter that can be emitted by new diesel cars, trucks and buses, (b) control the emission of oxides of nitrogen from diesel cars, trucks and buses and (c) introduce roadside testing of diesel vehicles for particle emissions.(10) Is the Government introducing more stringent emission standards for heavy vehicles under the Motor Vehicle Standards Act; if so, is it a fact that it will not be until 1 January 2006 that new vehicles will be required to meet the new standards and 1 January 2007 before all vehicles will be required to meet the new standard.(11) Is it also a fact that the (a) current ADR 70/00 emission standard for diesel vehicles was introduced with a lead time of 15 months and (b) GST will be introduced in only one year.(12) Is he able to say whether the two basic policy directions given in the Inquiry into Urban Air Pollution in Australia by the Australian Academy of Technological Sciences and Engineering were (a) reduce vehicle use, and (b) clean up the vehicles; if so, has the Government taken steps to implement those policy directions.(13) Has his attention been drawn to (a) warnings in the Inquiry into Urban Air Pollution in Australia that fine particle emissions may rise from current levels and could accelerate if diesel vehicles become more prevalent and (b) the statement by Dr D. Brand to the Senate Inquiry into the GST and a New Tax System that medical evidence is mounting on the dangers of fine particles in diesel exhausts; if so, what action is the Government taking to heed these warnings.(14) Was the Senate inquiry into the GST and a New Tax System informed that the flow-on effects of the diesel excise reduction would be significant, including the demise of the gaseous transport fuels industry and the collapse of the Government's policy to encourage the use of natural gas in Sydney and Melbourne.(15) Has the Government taken steps to implement the recommendation given in the Inquiry into Urban Air Pollution in Australia that the Government should encourage the use of vehicles using cleaner fuels in urban areas; if so, what.12601Anderson, John, MPMr Anderson4K4GwydirNPDeputy Prime Minister10—The answer to the honourable member's question is as follows:I am not prepared to authorise the time and resources required to prepare responses to this question. However, I would refer such enquiries to the Measures for a Better Environment Statement of 28 May 1999 and my second reading speech for the Diesel and Alternative Fuels Grants Scheme Bill 1999, which outlines the Government's initiatives in these areas.12601(Question No. 919)91912601Hoare, Kelly, MPMs Hoare83YCharltonALP00 asked the Minister for Education, Training and Youth Affairs, upon notice, on 21 September 1999:(1) Has the Government produced a glossy A4 double sided pamphlet entitled Federal Assistance for Government Schools; if so, does the pamphlet include an open letter to all parents.(2) Has the pamphlet been sent to (a) all public and (b) non public primary and high schools.(3) What was the cost of (a) producing and (b) distributing the pamphlet.12601Kemp, Dr David, MPDr KempBT4GoldsteinLPEducation, Training and Youth Affairs; Minister Assisting the Prime Minister for the Public Service10—The answer to the honourable member's question is as follows:(1) Yes.(2a) Yes(2b) No, the Government pamphlet was sent to government schools only. (3a) Production of the pamphlet cost $136,314.59(3b) Distribution of the pamphlet cost $63,616.95.12601(Question No. 929)92912601Albanese, Anthony, MPMr AlbaneseR36GrayndlerALP00 asked the Minister for Transport and Regional Services, upon notice, on 23 September 1999(1) What was the total sum of Government expenditure in relation to the Sydney (Kingsford Smith) Airport Community Forum in (a) 1997-98 and (b) 1998-99.(2) How many resolutions by the Sydney Airport Community Forum in 1996-99 were (a) carried and (b) implemented by the Government.12601Anderson, John, MPMr Anderson4K4GwydirNPDeputy Prime Minister10—The answer to the honourable member's question is as follows:(1) The costs of secretariat support for SACF operations are met from within appropriations to the Department of Transport and Regional Services. The Department advises that it incurred identifiable expenditure (excluding salaries of Department Officers) of (a) $14,850.81 in 1997/98 and (b) $18,902.57 in 1998/99.(a) & (b) I am advised that some seventy resolutions had been carried by the SACF up to (and including) the Twentieth Meeting held on 16 July 1999.Of these resolutions, some sought a single action outcome, some sought more than one action outcome, some sought similar outcomes to those sought in earlier resolutions, some expressed a general viewpoint (without an explicit action proposal), and some involved a combination of the above.Of the action outcomes specifically sought by the resolutions, approximately half have been implemented or have been accepted for implementation.12601(Question No. 937)93712601Hollis, Colin, MPMr HollisDH4ThrosbyALP00 asked the Minister Transport and Regional Services, upon notice, on 27 September 1999:Does Australia have low volume import arrangements with Japan regarding used motor vehicles; if so, (a) what are those arrangements and (b) what was the total importation of used motor vehicles from Japan for the period June 1996 to June 1999. 12602Anderson, John, MPMr Anderson4K4GwydirNPDeputy Prime Minister10—The answer to the honourable member's question is as follows:(a) Australia does not have low volume import arrangements with Japan regarding used motor vehicles.The Motor Vehicle Standards Act 1989 provides the legislative basis for the importation and supply of vehicles to the Australian market and its application does not differentiate on the basis of country of origin.(b) During the period June 1996 and June 1999 the total number of used Japanese vehicles commercially imported into Australia was 18, 414.12602(Question No. 938)93812602Hollis, Colin, MPMr HollisDH4ThrosbyALP00 asked the Minister for Arts and the Centenary of Federation, upon notice, on 27 September 1999:Further to his answer to question No. 859 (Hansard , 23 September 1999, page 10490), is he able to say whether the Treasurer announced in Nowra on Thursday, 17 September 1998 that $1.58m had been provided to the Nowra Naval Aviation Museum as part of the Federation Cultural and Heritage Projects Program.12602McGauran, Peter, MPMr McGauranXH4GippslandNPArts and the Centenary of Federation10—The answer to the honourable member's question is as follows:The Australian Naval Aviation Museum at Nowra will receive a grant of $1.6m towards the construction of the Federation Wing extending the existing museum premises. This is one of a number of major projects funded under the Commonwealth Government Federation Fund. It was not included in my answer to question No 859, which provided details in respect of applications and grants under the Federation Cultural and Heritage Projects program as this grant is not from that program.12602(Question No. 961)96112602Latham, Mark, MPMr LathamK26WerriwaALP00 asked the Minister for Sport and Tourism upon notice, on 30 September 1999:1 (a) Did the Government in 1998 refuse to finance the redevelopment of the Campbelltown sports ground.(b) If so, was finance refused on the basis that there was no guarantee of a National Rugby League (NRL) competition being played at the ground. (2) Did the Government receive a guarantee that the NRL competition would be played at Grahame Park, Gosford.12602Kelly, Jackie, MPMiss Jackie KellyGK6LindsayLPSport and Tourism; Minister Assisting the Prime Minister for the Sydney 2000 Games10—The answer to the honourable member's question is as follows:I am advised that:1 (a) An application was made by the Campbelltown City Council for a grant under the Federation Fund for the Campbelltown Regional Sporting Complex. That application was unsuccessful.(b) No.(c) No.12602(Question No. 962)96212602Bevis, Arch, MPMr BevisET4BrisbaneALP00 asked the Minister for Employment, Workplace Relations and Small Business, upon notice, on 11 October 1999:(1) What procedure is followed in the Office of the Employment Advocate upon receiving a complaint under the freedom of association provisions of the Workplace Relations Act.(2) What is the average time taken between receiving a complaint and any subsequent action before the relevant court.12602Reith, Peter, MPMr ReithWI4FlindersLPWorkplace Relations and Small Business10—The answer to the honourable member's question is as follows:(1) The policy adopted by the Office of the Employment Advocate (OEA) in this area has been to strive to ensure compliance with part XA of the Workplace Relations Act 1996.This will in the first instance involve receiving the complaint, determining whether it falls within the scope of Part XA and then planning an investigation. That investigation will usually involve statements being taken and documents being obtained and could involve the use of the authorised officer powers under s83BH. Once the investigation is complete (and if needed during that investigation) legal advice is sought as to whether a breach of the Act has occurred.If there has been such a breach then there are a number of options starting with putting the matters to the person about whom the complaint was made (with the complainant's consent) and seeking to obtain voluntary compliance—for example undertakings or an education campaign may be appropriate. The particular form of voluntary compliance will depend on circumstances of the matter.Should voluntary compliance not be successful the OEA could provide the material to the complainant and/or provide free legal representation. In addition the Employment Advocate could decide to take legal action in his own name.(2) Based on matters taken to court so far by the OEA—211 days.12603(Question No. 963)96312603Ferguson, Laurie, MPMr Laurie Ferguson8T4ReidALP00 asked the Minister representing the Minister for Family and Community Services, upon notice, on 11 October 1999:(1) Which non-government organisations have had funding terminated under the (a) National Secretariat Program or (b) Community Sector Support Scheme since March 1996.(2) For each organisation referred to in part (1), (a) on what date did funding cease, (b) what was the last annual sum provided and (c) what reason was given for withdrawing funding.(3) What sum was provided to the secretariat of Family Planning Australia in (a) 1995-96, (b) 1996-97, (c) 1997-98 and (d) 1998-99 and what sum will be provided in 1999-2000.(4) Has secretariat funding been provided to the Australian Federation of Pregnancy Support Services; if so, (a) when did funding commence, (b) what are the purposes for which funding is provided and (c) what sum will be allocated to the Federation in 1999-2000.12603Anthony, Larry, MPMr AnthonyXJ6RichmondNPCommunity Services10—The Minister for Family and Community Services has provided the following answer to the honourable member's question:The Community Sector Support Scheme was split across the Health and Aged Care and the Family and Community Services portfolios in October 1998. Funding for organisations previously assisted under the part of the Community Sector Support Scheme that moved to my portfolio is now administered alongside other funding for similar agencies that came from other departments, in a "National Secretariat" program. The responses to these questions relate to the period for which I have had portfolio responsibility for the Community Sector Support Scheme and its replacement program.(1) (a) None(1) (b) None(2) (a) Not applicable.(b) Not applicable.(c) Not applicable.(3) (a) This organisation has not been funded by Department of Family and Community Services.(b) Not applicable. (c) Not applicable.(d) Not applicable.(4) (a) This organisation has not been funded by Department of Family and Community Services.(b) Not applicable.(c) Not applicable.12603(Question No. 967)96712603Ferguson, Laurie, MPMr Laurie Ferguson8T4ReidALP00 asked the Prime Minister, upon notice, on 12 October 1999:(1) What are the respective roles of the Governor-General and the Queen in approving the official guidelines concerning the acceptance and wearing by Australian Defence Force personnel of foreign honours or awards.(2) Does the Queen act on the advice of the Australian Government or of the Government of the United Kingdom in exercising her powers in this area.12603Howard, John, MPMr HowardZD4BennelongLPPrime Minister10—The answer to the honourable member's question is as follows:(1) On advice from the Prime Minister, The Guidelines concerning the Acceptance and Wearing of Foreign Honours and Awards by Australians are approved by The Queen. Following approval, Government House arranges for the necessary gazettal of the approved guidelines.(2) The Australian Government.12603(Question No. 968)96812603Ferguson, Laurie, MPMr Laurie Ferguson8T4ReidALP00 asked the Minister Assisting the Minister for Defence, upon notice, on 12 October 1999:(1) Since the 1998 general election, what new clasps and what changes to the requirements for existing clasps has the Government approved for the (a) Australian Active Service Medal 1975-, (b) Australian Service Medal 1975-, (c) Australian Active Service Medal 1945-75 and (d) Australian Service Medal 1945-75.(2) Do the changes referred to in parts (1)(c) and (d) relate to service in South East Asia between 1955 and 1975; if so, did the Government seek the advice of the Independent Review Panel that it established in May; if not, why not.12603Scott, Bruce, MPMr Bruce ScottYT4MaranoaNPVeterans' Affairs; Minister Assisting the Minister for Defence10—The answer to the honourable member's question is as follows:(1) (a) to (d) The following new and amended conditions for Clasps to the Australian Active Service Medal (AASM) and Australian Service Medals (ASM) since the 1998 general election are:. AASM Clasp `Cambodia'—upgraded from ASM to AASM for ADF activities in Cambodia during the period 20 October 91 to 7 October 1993 (the ASM will continue to be awarded from 8 October 1993).. ASM 1945-75/ASM Clasp `Korea'—extended to cover 30 days or more service for UN Command (Military Armistice Commission) activities within the DMZ between North and South Korea from 27 August 1957 to 13 February 1975. The ASM is now awarded for the same activities commencing 14 February 1975.(2) No decisions on medal issues affecting South East Asia over the 1955-75 period have been taken by the Government since the independent review was begun in May 1999.12604(Question No. 970)97012604Ferguson, Martin, MPMr Martin FergusonLS4BatmanALP00 asked the Minister for Employment, Workplace Relations and Small Business, upon notice, on 12 October 1999:What action is the Government taking to ratify and implement ILO Convention 103 Maternity Protection at Work: Revision of the Maternity Protection Convention (Revised) 1952 and Recommendation 1952 (No.95), Report V (1), ILO Conference (87th: 1999).12604Reith, Peter, MPMr ReithWI4FlindersLPWorkplace Relations and Small Business10—The answer to the honourable member's question is as follows:The International Labour Organisation (ILO) is currently in the process of revising Convention No. 103 and Recommendation No. 95 concerning maternity protection, which were adopted in 1952 (these standards had revised earlier ones adopted in 1919). It is anticipated that a new Convention and a new Recommendation will be adopted by the 88th Session of the International Labour Conference in June 2000, following a second discussion on the subject. A first discussion was held at the 87th Session of the International Labour Conference in June 1999.In these circumstances, it would be inappropriate for consideration to be given to ratifying Convention No. 103. Recommendations do not have treaty status, and thus are not open to ratification. 12604(Question No. 972)97212604Price, Roger, MPMr PriceQI4ChifleyALP00 asked the Prime Minister, upon notice, on 11 October 1999:(1) Which countries have committed troops to INTERFET and what is the precise nature and numbers of troops committed.(2) If the troops have not been deployed, what is the likely date of deployment.(3) Are other countries considering whether to commit troops; if so, which countries.12604Howard, John, MPMr HowardZD4BennelongLPPrime Minister10—The answer to the honourable member's question is as follows:(1) and (2) I am advised that the following information reflects INTERFET coalition planning at 25 October 1999.Brazil :Land: 51 military police are deployed.Canada :Land: 23 headquarters staff are deployed. Additional headquarters staff, infantry and engineers (total of 233 people) will deploy by 28 October.Air: two C130 transport aircraft and an air support team (total of 117 people) are operating from Darwin.Sea: one tanker with two helicopters (total of 283 people) are deployed.Denmark :Land: headquarters staff officers (total of 2 people) to be deployed on 18 November.France :Land: headquarters staff, field surgical team, communications support and protection element (total of 133 people) are deployed.Air: three C130 transport aircraft and aero-medevac team (total of 119 people) are operating from Darwin.Sea: one frigate and one landing ship (total of 411 people) are deployed.Germany :Air: a casualty evacuation team and two C160 transport aircraft (total of 78 people)are operating from Darwin. Ireland :Land: headquarters staff and a security platoon (total of 39 people) are deployed. Two liaison officers are in Darwin.Italy :Land: headquarters staff and some infantry (total of 28 people) are deployed. Remaining infantry (total of 199 people) will deploy on 26 October. Two liaison officers in Sydney.Air: two G222 transport aircraft (total of 30 people) are operating from Darwin.Sea: one landing ship (255 crew) with four helicopters will deploy on 27 October.Malaysia :Land: 30 interpreters are deployed.New Zealand :Land: headquarters staff and infantry are deployed.Air: two C130 transport aircraft, four helicopters and air loading team are deployed.Sea: one frigate and one tanker are deployed.Total commitment is 1175 people.Norway :Land: civil affairs staff (total of 4 people) are deployed. Two additional civil affairs officers to be deployed on 31 October.Philippines :Land: infantry (total of 246 people) are deployed. Headquarters staff, engineers, medical teams and additional infantry (total of 354 people) to deploy on 12 November.Republic of Korea :Land: headquarters staff, infantry and an equipment team (total of 420 people) are deployed.Singapore :Land: medical team (total of 26 people) are deployed. Four headquarters staff are in Darwin.Sea: two landing ships (total of 220 people) are deployed. Thailand : Land: headquarters staff, infantry, engineers and medical teams (total of 612 people) are deployed. Additional infantry, engineers and medical personnel (total of 716 people) will deploy by 30 October. Further infantry (total of 309 people) to follow. Liaison officers (total of 2 people) in Townsville and Sydney.Air: one C130 transport aircraft (total of 32 people) is operating from Darwin. Four helicopters (total of 48 people) to deploy after 1 November.United Kingdom :Land: infantry, civil affairs team (total of 281 people) are deployed.Air: two C130 aircraft (total of 56 people) are operating from Darwin.United States :Land: communications staff, logistics staff, intelligence planning staff, strategic movement support staff and engineers.Air: two c130 transport aircraft and one C12 transport aircraft are operating from Darwin.Sea: a helicopter support ship is deployed.(3) The following countries have indicated they may provide personnel to INTERFET:Egypt, Fiji, Jordan, Kenya, Mozambique, South Africa, Sweden.12605(Question No. 980)98012605Andren, Peter, MPMr AndrenKL6CalareIND00 asked the Minister representing the Minister for Family and Community Services, upon notice, on 12 October 1999:(1) Is it a fact that assistance under the Jobs, Education and Training (JET) program administered jointly by the Department of Family and Community Services and the Department of Employment, Workplace Relations and Small Business, is available to recipients of Parenting Payment; Widow Allowance; Partner Allowance; Widow B Pension; Carer Payment and some Special Benefit recipients, but not recipients of the Disability Support Pension.(2) If so, why are Disability Support Pension recipients excluded from accessing assistance under the JET program and what alternative assistance is available for such pensioners.(3) Is it anomalous that a parent in receipt of the Parenting Payment or a carer in receipt of the Carer Payment can receive assistance under the JET program, but that a parent in receipt of the Disability Support Pension with a dependent child cannot access assistance under the program; if not, why not.12606Anthony, Larry, MPMr AnthonyXJ6RichmondNPCommunity Services10—The Minister for Family and Community Services has provided the following answer to the honourable member's question:(1) Yes.(2) Disability Support pensioners are excluded from access to JET because they are able to access more specialised assistance through Centrelink Disability Officers. Disability Officers work in a similar way to JET Advisers by helping Disability Support Pension recipients gain access to training, vocational rehabilitation and employment assistance, either through the Job Network or Family and Community Services specialist disability employment services.(3) No, it is not anomalous because parents in receipt of the Disability Support Pension can access more tailored assistance, as per (2).12606(Question No. 983)98312606Andren, Peter, MPMr AndrenKL6CalareIND00 asked the Minister representing the Minister for Communications, Information Technology and the Arts, upon notice, on 13 October 1999:(1) What financial support will the Government be providing to regional television broadcasters to help meet the cost of digital conversion.(2) Is it a fact that the networks' estimates of the cost of digital conversion are $195 million more than the Government's estimate; if so, what provision has been made for an independent assessment of cost.(3) Is the Government committed to providing Australia's 6 million regional television viewers with the same level of service and choice as Australia's metropolitan audience(4) When will the decision be made on the level of Government commitment to the cost of regional digital conversion. (5) Will concerns over budget outlays for Australia's East Timor military commitment influence the level or timing of funding for regional digital conversion.12606McGauran, Peter, MPMr McGauranXH4GippslandNPArts and the Centenary of Federation10—The Minister for Communications, Information Technology and the Arts has provided the following answer to the honourable member's question:(1) The Government is yet to determine the level of Commonwealth assistance or other support measures to be made available under the Regional Equalisation Plan to assist regional commercial television broadcasters make the transition to digital broadcasting technology.(2) In its 1998 Election Policy Statement Communications: Making Australia Stronger, the Government undertook to finalise assistance to be made available under the Regional Equalisation Plan after an independent analysis of the regional broadcasters' digital transition costs. This independent analysis, inter alia, estimates the digital transition costs for the regional broadcasters in aggregated markets at $261—$311 million. The $311 million estimated by the independent analysis is $195 million less than the $506 million in transitional costs estimated by these broadcasters.(3) The Government is committed to ensuring viewers in regional Australia have access to a full range of television services.The legislative provisions for the introduction of digital television require the Minister to conduct several reviews including a review into whether legislative changes are required to ensure that underserved regional licence areas are provided with up to three commercial television services. This review, which has involved extensive consultation, is currently being finalised and the outcomes are expected to be considered by Government shortly.In addition, subclause 64(1) of Schedule 4 to the Broadcasting Services Act 1992 requires the Minister to formulate as soon as practicable, a Regional Equalisation Plan which specifies the measures proposed to be taken by the Commonwealth Government to, inter alia, facilitate the provision of digital television and datacasting services by commercial television broadcasters in regional licence areas. In formulating the Regional Equalisation Plan, the Minister is required to have regard to the objectives specified in subclause 64(2) of the Act? including the objective of bringing to regional areas a similar range of entertainment and information services as are available in metropolitan licence areas.Following the recent sale of 16 per cent of Telstra, the Government will now be able to use proceeds from that sale to implement its $120 million Television Fund. The Television Fund, a 1998 Federal election commitment, will enable SBS television to be extended to transmission areas of more than 10,000 people, and will also be used to fix television reception `black spots'. Under the Fund, SBS will also receive $2 million to enable it to establish a New Media Unit and $10 million will be allocated to assist self-help communities in remote areas to provide a second terrestrial commercial television service.(4) The Government expects to be in a position shortly to finalise its consideration of Commonwealth support measures to facilitate the provision of digital television and datacasting services by commercial television broadcasters in regional areas.(5) The Government will properly and adequately fund our commitment to East Timor. Australia's involvement in East Timor will place considerable new demands on the Budget—expenditure which was not anticipated at the time of the last Budget. The expected budgetary impact of East Timor will be outlined in the 1999-2000 MidYear Economic and Fiscal Outlook Report. The Treasurer has indicated that the Government will need to prioritise spending so that the Commonwealth budget is maintained in surplus. As always, the Government will examine all expenditure carefully and objectively in the light of its medium term budget strategy and its overall policy priorities and objectives.12607(Question No. 988)98812607Kerr, Duncan, MPMr KerrRH4DenisonALP00 asked the Minister for Immigration and Multicultural Affairs, upon notice, on 13 October 1999:(1) Did he make remarks criticising the Kosovar refugee community for failing to care for the accommodation provided to them.(2) Did he refuse to allow Kosovar refugees living in the Tasmanian Haven Centre to invite the media and the Australian community to inspect the conditions of their centre; if so, why.(3) Is the Tasmanian Haven Centre well maintained.(4) Have the majority of Kosovar refugees put great efforts into maintaining and improving the conditions of the haven centres in which they live; if so, why did he give publicity to a small number of specific instances of poor care alleged to have occurred in one haven centre.12607Ruddock, Philip, MPMr Ruddock0J4BerowraLPImmigration and Multicultural Affairs; Minister Assisting the Prime Minister for Reconciliation10—The answer to the honourable member's question is as follows:(1) No, I merely confirmed reports of damage to Puckapunyal haven centre. (2) No, I refused open media access and was unaware that the Kosovars had issued an invitation to journalists. My departmental staff working at the haven centres have discretion to allow media access to havens. In the situation you are referring to the staff decided that it would not be convenient or appropriate to allow media access to the haven as a large number of Kosovars formerly living in Western Australia had just joined the haven. It would have been very disruptive to the comfort and privacy of the haven residents to allow the media access at that time.(3) The haven centre at Brighton in Tasmania is generally well maintained although there have been some instances of graffiti. Some rooms have been kept less clean than is desirable but there have been no major instances of damage.(4) While some Kosovars have put efforts into maintaining their accommodation, others have not. Damage at Puckapunyal was not an isolated incident. There has been serious damage to doors, fly screens, clothes lines, carpets and fences in most havens. There have been major issues with the removal of haven property including 50 per cent of cutlery and crockery. Electrical equipment has also been removed and heaters damaged. In one haven a computer virus was detected on a residents' only computer which could potentially destroy the whole computer network at the haven. Investigation pointed to a deliberate action.12607(Question No. 990)99012607Latham, Mark, MPMr LathamK26WerriwaALP00 asked the Minister representing the Minister for Industry, Science and Resources, upon notice, on 13 October 1999:(1) What sum in export income was earned by Australian car manufacturers (a) Holden, (b) Ford, (c) Toyota and (d) Mitsubishi in 1998-99.(2) For each manufacturer, what (a) sum of Export Market Development Grants was received, (b) was the major export destination (c) car models were exported and (d) tariff protection applied to the importation of the models referred to in part.12607Moore, John, MPMr MooreEI4RyanLPDefence10—The Minister representing the Minister for Industry, Science and Resources has provided the following answer to the honourable member's question:(1) In aggregate terms, the four Australian car manufacturers had a combined export income of $1.73 billion in 1998-99.(2) (a) No Australian vehicle manufacturers received assistance through the Export Market Development Grants scheme in 1998/99, as all companies were above the maximum annual turnover of $50 million threshold for assistance eligibility.(b) The major export destinations of these companies were the Gulf Cooperative Countries, including Saudi Arabia, Kuwait and the United Arab Emirates, the United States and New Zealand.(c) Models exported were the Ford Falcon, Holden Commodore, Mitsubishi Magna, Toyota Camry and their model variants, and the Holden Vectra.(d) The basic tariff rates applying to Australian vehicle exports to major markets were:Saudi Arabia—12 per centKuwait—4 per centUnited Arab Emirates—4 per centUnited States—2.5 per centNew Zealand—0 per cent12608(Question No. 996)99612608Theophanous, Andrew, MPDr TheophanousQJ4CalwellALP00 asked the Minister for Immigration and Multicultural Affairs, upon notice, on 13 October 1999:(1) Has the Immigration Parents category been capped at 500 visas per year.(2) Does the cap include other family reunion categories, including brothers, sisters, nephews and nieces; if not, is there a cap on this group; if so, what is that cap.(3) Are there up to 20,000 applicants for the parent's category; if not, what is the figure.(4) How many applicants are there in other family reunion categories.(5) Does his current policy make it impossible for families to join together, especially Australian residents wishing to bring their parents to Australia; if not, why not.12608Ruddock, Philip, MPMr Ruddock0J4BerowraLPImmigration and Multicultural Affairs; Minister Assisting the Prime Minister for Reconciliation10—The answer to the honourable member's question is as follows:(1) Planning levels for Parent entry were announced in the 1999-2000 Migration Program as 500 places. This translated into 400 places for the offshore Parent visa subclass 103 (overseas) and 100 places for the onshore parent subclass 804. I have determined caps at those levels under section 85 of the Migration Act. No caps have been set for the new Designated Parent category.(2) Caps may be imposed on any visa subclass during the course of the program year (except for spouses or children). At present I have only determined caps in respect of the parent subclasses mentioned above. Other subclasses may be capped during the course of the program year depending on levels of demand.(3) On the information currently available, there are some 19,400 applicants in the parent category.(4) Table 1 below provides details of the number of applicants currently in the pipeline for the remaining Family Stream subclasses including Parents.(5) No, this Government has maintained a strong commitment to family migration. The Family Stream of Australia's Migration Program enables the reunion of immediate family members such as spouses, fianc(e)s, interdependent partners, dependent children, adopted children, stepchildren, and certain other members of extended families such as parents, orphan relatives, carers, aged dependent relatives and remaining relatives.I have set processing priorities for visa applications in the Family Stream to ensure that immediate family members, such as dependent children (including children for adoption and orphan relatives), spouses, fianc(e)s and interdependent partners of sponsors and nominators in Australia are given the highest priority.The number of parent places available has decreased as this Government has sought to strike a more optimal balance between the skilled and family components of the Migration Program and give greater priority within the Family Stream to immediate family members such as spouses and children.The Government has had concerns about the increasing number of Family Stream applicants who are parents and the costs to the community associated with their entry. Research indicates that these migrants have a greater dependency on services being used by our ageing population, especially health and social security benefits. Parents of working age also experience extreme difficulty in obtaining employment. The Government believes it is reasonable that these people and their Australian sponsors and assurers should bear a fairer share of the costs associated with their entry.To achieve this objective, on 1 November 1998 I introduced changes to the entry arrangements for parents including:. limiting access to permanent migration to aged parents (with the exception for certain working age parents);. preventing parents from applying for permanent residence while they were within Australia, with the exception of long-term retirement visa holders; and. increasing the second instalment of the Visa Application Charge (the health charge) from $945 to $5,000. On 31 March 1999, non-Government Senators voted to disallow these changes to entry arrangements for parents. As a result of the disallowance, many Australian citizen and permanent resident sponsors were denied the opportunity to bring their parents to Australia. Moreover, the Government was forced to reduce the number of places available in order to manage the increased financial burden on the Australian community.Following discussions with the Opposition spokesman on Immigration, I have recently introduced regulations that will allow parent applicants affected by the disallowance in March 1999 to have their applications reactivated under a new Designated Parent class. The introduction of this new visa class will provide over 2,000 parents with an avenue to join their children. This will be on the basis that they are still prepared to pay the higher health charges involved in the disallowed categories.I am also looking into the long-term options for allowing more parents to enter Australia without placing an unsustainable burden on Australia's health and welfare systems and the Australian taxpayer. I look forward to working with the Opposition spokesman on Immigration on these options.TABLE 1: FAMILY STREAM APPLICANTS AS AT 30 SEPTEMBER 1999Visa Subclass (No)OffshoreOnshore1Spouse 11,3497,425Prospective marriage 2,955naChild1,320228Parent15,9303,466Preferential Family5,5613,120Interdependents102192Total37,21714,431Source: DIMA MPMS and RESI2 data 1 Onshore data is at 30 June 1999. More recent data is not currently available due to the introduction of the new Integrated Client Service Environment (ICSE) onshore processing system and a temporary hiatus in reporting capability. Actual numbers would not differ significantly from those provided.12609(Question No. 1001)100112609Bevis, Arch, MPMr BevisET4BrisbaneALP00 asked the Minister for Employment, Workplace Relations and Small Business, upon notice, on 18 October 1999:(1) Did his Department advertise or call for tenders in relation to the independent review of the financial, accounting, auditing and reporting provisions of the Workplace Relations Act 1996; if so, how many tenders were received.(2) What was the cost of the report entitled "Review of current arrangements for Governance of Industrial Organisations" prepared by Blake Dawson Waldron.(3) Did his Department provide personnel during the preparation or research of the report; if so, what assistance was provided and how much did it cost.12609Reith, Peter, MPMr ReithWI4FlindersLPWorkplace Relations and Small Business10—The answer to the honourable member's question is as follows:(1) My Department conducted a limited tender, writing to law firms that it considered (based on its knowledge of the market) had appropriate expertise to conduct the review. Six (6) tenders were received.(2) The consultant which prepared the report was paid $53,000.(3) My Department provided limited secretariat support (forwarding submissions received), and met with the consultant in Melbourne on two occasions to discuss progress. My Department estimates salary and travel costs at approximately$3500—$4000.12609(Question No. 1005)100512609Albanese, Anthony, MPMr AlbaneseR36GrayndlerALP00 asked the Minister for Foreign Affairs, upon notice, on 19 October 1999:(1) Has his attention been drawn to allegations of human rights violations taking place in the People's Republic of China with regard to the Chinese Government's repression of the practitioners of Falun Dafa.(2) Is the Australian Government taking actions to place pressure on the Chinese government to uphold the UN Covenant on Civil and Political Rights and to ensure, in line with the UN covenant, that practitioners of Falun Dafa are allowed freedom of expression and assembly; if so, what.(3) Has the Australian Government raised these issues in the bilateral human rights dialogue with China.12610Downer, Alexander, MPMr Downer4G4MayoLPForeign Affairs10—The answer to the honourable member's question is as follows:(1) My Department has been following closely reports of actions taken against Falun Gong practi tioners in China since the Chinese Government banned the group on 22 July.(2) The Australian Government has raised its concerns about the treatment of Falungong with the Chinese government: first, to the Chinese Charg d'Affaires in Canberra on 23 July 1999; secondly, to a senior official of the Chinese Foreign Ministry in Beijing on 29 July; and thirdly, in a number of senior-level meetings during the third round of the Australia-China Human Rights Dialogue, held in China from 16-20 August. On each occasion, we told the Chinese that, although we take no position on the beliefs of Falungong, we consider that actions taken against its adherents are in breach of the international human rights covenants which China has signed.(3) See answer to (2).