1998-03-233816SENATE101501998-03-23The PRESIDENT(Senator the Hon. Margaret Reid) took the chair at 12.30 p.m. and read prayers.Bills1015r354Billsr322Billsr323Billsr3351015Debate resumed from 27 October 1997, on motion by Senator Minchin:That these bills be now read a second time.12:31:001015Cook, Sen PeterSenator COOKRF4WAALP00—This package of legislation is one of the most important to come before this parliament in the taxation area during the period of the Howard government. It is important for two distinct and clear reasons. Firstly, it is important because the measures that it contains are necessary to improve the equity of the tax system—however, I acknowledge that they are vehemently opposed by many in the tax and legal professions—and, secondly, it is especially important because the process leading to this debate today is indicative of the approach of the government in dealing with tax avoidance.On the subject of tax avoidance, the government has squibbed the challenge. The government has chosen not to come down as heavily on tax avoidance as Labor had originally proposed. This is despite the fact that the Treasurer has repeatedly told the parliament that he is tough on tax avoidance. It is my intention to move at the conclusion of my remarks an amendment to the second reading motion on the Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 which has been distributed in the chamber and deals specifically with this point: that the government has caved in to its trust-owning backbenchers on the issue of these bills. On 20 June 1996, on page 2423 of Hansard, when promising to be tough on tax avoidance, the Treasurer said:I make it clear on behalf of this government that where anomalies and exemptions are being unfairly exploited they will be addressed.On 2 September last year he stated:The government takes such measures as are required to prevent legitimate taxation liabilities being avoided.Furthermore, the rhetorical charade continued with Mr Costello saying on 2 October last year:This government is serious about making sure that corporations—and, indeed, individuals—pay their fair share of tax.Despite these brave words and many others of the Treasurer, the legislation before us has an extraordinary, possibly unprecedented gestation period for tax avoidance legislation. Labor recognised a significant problem and announced a wide-ranging package to deal with the abuse of trust losses in the 1995 budget. This announcement was made on 9 May 1995, almost three years ago. We duly announced legislation and introduced it into the parliament in 1995. The opposition—now the government—sent the legislation to a Senate committee and achieved its objective of delaying consideration of the legislation by the Senate until the election intervened. No doubt there were some in the coalition who hoped that the issue would be dropped after the election.The issue has not been dropped completely but it has been fumbled repeatedly over the last 22 months. After a deafening silence for the first five months of the government on the issue, we saw an announcement in the 1996 budget which affirmed that the government would pursue the issue but with modifications—beware the modifications. Six months later, draft legislation was released. Then a further three months later, a subsequent announcement was made in the 1997 budget which contained further changes from the draft legislation released in February. It then took a further five months for this legislation to be presented to the House. Now here we are, a further five months later, finally debating what is essentially a non-controversial measure between the government and the opposition.Ironically, it was introduced in the House at the end of the last two-week sitting period and the government immediately said that they wished to have quick passage into the Senate. The opposition obliged with swift passage through the House and this legislation has sat in the Senate for an unnecessary further three months because the government refused to put it through last year, even though we indicated that this could be achieved.The process leading up to this debate has been ridiculously delayed. The opposition sympathises with the business community's anger at this delay. There is only one reason for it—that is, the procrastination of the government.I speak today in the context of the broader agenda of tax reform. The government is currently undertaking a secret bureaucratic exercise, crunching the numbers to develop various options for tax reform. It has repeatedly refused our invitation to make the information public so that the people of Australia can be truly informed as to what the options are. Yet the government pretends that Labor is against reform. Nothing could be further from the truth.The only basic matter of principle that Labor has ruled out is the adoption of a GST. This has infuriated the government because, as we have always known, the implementation of a goods and services tax is the only real objective of the tax reform exercise which they are undertaking.We have heard the Treasurer repeatedly in the parliament and in public debate carefully saying that all tax options are on the table and that everything will be considered by the government. Whilst this rhetoric is obviously designed to appease interested stakeholders such as ACOSS, we know that the government has already decided what it wants to do and is simply stringing along welfare sector participants to try to get some chimera of consensus in the proposals it will release. We know as well that all of the options that it has committed its task force to come up with involve a GST—none of them does not.The time has now come for the government to release the various options that have been generated by the tax reform task force. This would enable a truly informed debate on the full range of options that have been presented to the government. Instead, we are getting a constant stonewalling from the government on even the most basic details of what they propose. They will not even admit that they are planning a GST as the centrepiece of their package.It is important that the full options generated by the bureaucrats be released, because that will mean that the public will be able to evaluate the policies announced by the government in the context of which options were possible. The strategy of the government is obviously to present its own package as late as possible in the electoral cycle to not allow more than rudimentary scrutiny—in other words, to ambush the electors of Australia with a predigested package on a take it or leave it basis.Why would any government pursue such a strategy unless it was concerned that debate and analysis of its policies would show them to be seriously flawed? Exactly what is the government afraid of? I wonder what the welfare sector thinks about this type of approach. I wonder what the churches think about this type of approach.We are constantly being told that the tax system is broken, that it is in crisis and that it must be remade. The opposition has taken the responsible position of agreeing that the tax system needs constant repair and some occasional renovation. It is not fundamentally broken, but all sensible options outside of a GST can be looked at. Accordingly, we have not attempted to derail the reform task force procedure at all. We have not availed ourselves of the many opportunities that could have been taken to beat up taxation related issues, nor have we sought to use the procedures of the parliament to delay or frustrate important tax matters which have arisen. By contrast, the government has been delaying important reforms like the trust loss measure before us today, because it cannot control its backbench.I provide some examples to buttress the point that I have just made. Firstly, the resolution of the half-decade-long problem concerning the impact of the petroleum resource rent tax on Victoria was dealt with by the shadow Treasurer in conjunction with the Treasurer as it should have been—on a completely apolitical basis. The necessary legislation was dealt with swiftly in the national interest and no attempt was made to derail the settlement nor to misinform the public. The result was a successful outcome to a difficult public policy dilemma.Secondly, in the aftermath of the Ha & Lim and Walter Hammond judgments an immediate fiscal crisis arose for the states and territories. Around one-sixth of the revenue base of these governments was eliminated, and the prospect of gigantic repayments of past tax collections loomed. Quite literally, the financial solvency of the states was on the line. Here, surely, was a heaven-sent opportunity for politics to override good governance and for the opposition to wreak havoc. A huge tax rescue package—of around one per cent of GDP—was needed quickly to shore up confidence in the financial position of the states and territories. The opposition gave the legislation immediate passage through both houses of this parliament—because it was indisputably in the national interest to do so.Indeed, I note in passing that the government so badly bungled the compensation payments issue arising from new safety net arrangements that the Queensland situation was solved only months after the original announcement. Again, federal Labor did not in any way undermine that process—even though there were significant opportunities for us to do so.Furthermore, all of the other tax bills which have come before this parliament in the term of this government dealing with tax avoidance have been passed by the opposition. Unlike the coalition, Labor has been a constructive and honourable opposition in the area of taxation. Our record, I submit, is about as good a record on supporting clamping down on tax avoidance as any opposition has had in recent decades at least. Contrast this with the various coalition oppositions over the past 13 years. These people opposed every decent taxation measure—capital gains tax, fringe benefits tax, proper taxation of foreign source income, improving the equity of retirement benefit taxation et cetera. Those opposite are the wreckers of decent tax reform, not Labor. We come to the tax reform debate with clean hands.Having dealt with the history of these bills I turn now to the substance of the measures before us today. These bills will insert rules into the income tax law to limit the circumstances under which trusts can deduct current year and prior year losses and debt deductions. Labor supports such an approach without any reservations.The reason for introducing these limitations is to ensure that the persons who bore the economic effect of the tax losses are the persons who obtain the tax benefits associated with recouping of those losses against other income. The public policy behind this approach is simple: people should not be able to avoid their proper tax liabilities by sheltering their income through the use of tax losses incurred by other taxpayers. This has long been accepted in the context of losses incurred by companies. In the case of companies, losses can only be recouped if the company passes a majority underlying shareholding test or if the company passes the same business test. Bearing this in mind, the introduction of a regime to regulate the claiming of losses incurred by trusts is an important and overdue step in securing the direct tax base in Australia.Obviously, the proposed rules that are to apply to trusts differ somewhat from the regime which applies to companies. However, this generally reflects the differing legal relationships which apply in the case of trusts rather than a fundamentally different approach to the question of the legitimacy of recoupment of losses.However, the key issue now for these bills is not the differences between the treatment of companies and trusts but the treatment of family trusts under the Labor legislation and the treatment in this legislative package. I borrow from the Treasurer's press release of 13 May this year. Press release No. 42 opens with the words:On 10 February 1997, the Government released an exposure draft legislation on trust loss measures. After receiving comments and submissions, the Government has decided to modify the draft legislation to restrict its application. The income injection test will not apply where entities and individuals within a family group inject income into a family trust with losses. This modification will have effect from 7.30 pm AEST 9 May 1995 . . .These words sound innocent enough to someone not familiar with the very complex legislation before us today—but they represent a huge change in the effect of this legislation.Under the original Labor legislation, the income injection rule did not apply to family trusts where a beneficiary of a loss trust introduced income into the trust to be offset against the losses. This concession was allowed because the beneficiary actually bore the economic effect of the loss as he or she was a beneficiary at the time when the losses were incurred. This is a perfectly appropriate concession.However, where a family member—for example, a brother—who was not a beneficiary of the trust injected income into the trust to derive the tax benefit of the losses within the trust and then got the income tax back free, then these anti-avoidance provisions would apply to that scheme. For examples of these two separate situations I draw members' attention to page 171 of the explanatory memorandum for Taxation Laws Amendment Bill (No. 4) of 1995, examples 3 and 4.The rules under this legislation propose that any member of the family group as defined—which includes spouses, children, grandparents, nephews, nieces and their spouses—can inject income into any other family member's trust and thereby gain the benefits of the losses.Clearly this is a huge change and is not one that the opposition is happy about. Senators could just imagine that the wealthy families of Australia, where many members of the broader family have significant assets, will be able to traffic in trust losses between themselves, and hence be largely, if not completely, exempt from these new provisions.Now that is not fair by any reasonable analysis. This change is simply dressed up as being a family friendly change but it is really a tax avoidance friendly change. That is one of the key reasons why we are moving the amendment to the second reading motion. There is no doubt Liberal Party backbench pressure has forced the Treasurer down this course.The Prime Minister, speaking to Alan Jones on 14 August 1997, summed it up rather well when he said:I mean, it is aggravating in the extreme if you are a PAYE tax battler, you're having your money taken out each week when you hear of people through all sorts of dodges, the cash economy as well as some people at the big end of town not paying their fair share.I doubt that many PAYE tax battlers will be very happy to learn about this brand new tax dodge now available to the big end of town. Most families, of course, will not benefit from these new rorts for family trusts—because they do not have any connection with a family trust.The Treasurer was asked about this matter on several occasions in the other place. He consistently dodged the questions, and refused to acknowledge that his changes had quite deliberately weakened the legislation and that this would be reflected in lower collections of tax.When the Senate Economics Legislation Committee examined this legislation last year, naturally some of the committee members were interested to find out what the officials thought would have been the effect of the family trust loophole inserted by Mr Costello.Evidence from very senior Taxation Office officials confirmed that this policy change will cost revenue, although it cannot be precisely quantified. So the pious position of the Treasurer has been proven to be completely bogus. He has deliberately weakened his own anti-avoidance proposals in the full knowledge that it will cost revenue. This leaves the opposition in a difficult position. Given the delay in this legislation, if we were to try to amend the bills back to the previous position, it would involve a significantly retrospective measure which would be unreasonable on taxpayers. Accordingly, we consider on balance that it is better to support the legislation as it is and that is what we will be doing here today.Some of this legislation has been delayed in an unprecedented fashion and has been watered down in some key respects for family trusts. The delay shows a lack of political will on behalf of the government. The watering-down shows a lack of fairness and commitment to treating all taxpayers equally. When both of these events occur, the opposition is entitled to ask why.A cursory examination of the pecuniary interest register of ministers and parliamentary secretaries is very instructive in this regard. These publicly available documents show that 12 of the 30 ministers and six of the 11 parliamentary secretaries in the coalition government have family trusts. Suddenly the delay and the watering-down become readily understandable. The interests of almost half of the executive government are directly affected by the legislation. Clearly, the question of conflict of interest screams in this context.I wish to place on record that the Treasurer does not have a family trust, nor is it illegal or wrong to have a family trust. But it is undoubtedly a conflict of interest for members of the government to consider such legislation in cabinet or in other processes of approval where they have such a clear conflict of interest. Did the relevant members of cabinet with family trusts exclude themselves from the consideration of these issues? With such a level of conflict of interest, how can this government fairly and properly evaluate revenue issues?Was this the same reason why the Prime Minister promised, last year, to members of the government in the party room that trusts would be okay in the context of the tax reform process? He then took the extraordinary step of coming into the House to pretend that he really did have an open mind on the issue of trusts and tax reform. Nobody believed him because there was no evidence of such commitment. In relation to the Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 I move:At the end of the motion, add ", but, while strongly supporting the passage of this bill, the Senate deplores the fact that, due to pressure from trust-owning members of the Coalition, it has been significantly watered down compared to the bill presented to the Senate by the then Labor government in 1995."(Time expired)QD4BROWNSenator Brown—I raise a point of order, Madam Acting Deputy President. I want to draw your attention to page 144 of the Senate Standing Orders which says, in short, that any senator shall declare any relevant interest before they speak or vote on a matter in which that interest may have a bearing.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator Knowles)—I am sure senators are aware of that standing order Senator Brown.12:52:001019Murray, Sen AndrewSenator MURRAY3M6WAAD00—Senator Brown stole my thunder because I was about to make a declaration, as I did at the public hearings, as I did with my minority report and as I now do. I declare that I am a trustee for a family trust. I also declare that the family trust has no trust losses and is therefore not affected by this bill.Trusts are an extensively used legal mechanism for conducting family and business affairs and have long been so used in Australia. There are varying kinds of trusts. All trusts have characteristics which make them less transparent and often more complex than corporations. Tax benefits are derived from the use of trusts. These tax benefits have less transparency than corporations and make trusts a legitimate target for reformers. For some, trusts have a reputation that they can be used in a manner which is not conducive to good social conduct. However there is no proof that the majority of families and businesses that use trusts operate in this way or that they operate outside the law.Successive federal and state governments have continued to support the use of trusts by Australians. There are those who take a very dim view of trusts. The eminent economist Professor John Quiggin, in an article in the Australian Financial Review, 16 April 1997, said:There are almost no trusts in Australia established for legitimate purposes . . . The vast majority of trusts are set up with the primary purpose of avoiding tax that should be paid by high-income earners, thereby transferring the burden onto the rest of us. It is these trusts that are typically referred to as `legitimate family trusts'.In the article, Professor Quiggin does not indicate what research informs him on the vast majority of trusts.Those characteristics of trusts which distinguish trusts from corporate entities may be summarised as follows: that the beneficial and ultimate control of the trust is shielded from public disclosure; that the distribution of income in a trust is generally discretionary and can vary between the beneficiaries year by year; that the beneficiaries of trusts are shielded from the public eye, and that trusts may be used to maximise tax effectiveness and tax planning in ways which are not available to incorporated bodies.In a trust arrangement there is a separation of the management powers of the trustee and the beneficial interests of the beneficiaries. The trustee holds the legal interest in the trust property and has a fiduciary obligation to the beneficiaries. Interestingly, legislation for the control of trustees is a matter for the states and territories and not for the Commonwealth. The Commonwealth largely derives its control over trusts from its taxation power. Depending on the trust concerned, however, the corporations power, the pensions power and the marriages power may also come into play. Nearly 28 per cent of small business proprietors surveyed use trusts. The executive editor of the Business Review Weekly, Robert Gottliebsen, described income splitting trusts as `the cornerstone of the structure of a large number of the country's very small businesses'.I have had sight of the 1994-95 taxation statistics. The Treasurer would have relied on such statistics in making his trust losses announcement of 9 May 1995. Those statistics do not identify the number of family trusts or other trust types and do not distinguish between trust types. Partnerships and trusts are analysed together. Consequently, it is difficult to draw conclusions on the nature of trustees, beneficiaries, income, losses and taxation from those statistics, not only on trusts generally but specifically by type of trust.In 1997 the Australian Taxation Office still, somewhat surprisingly, did not have complete analytical data concerning trusts. They knew that in the 1995-96 tax year there were 372,000-odd trusts that lodged tax returns. On this number, it would be safe to assume that one million to two million Australians are therefore involved in trusts, which is a substantial number of Australians. In May 1997 I asked the ATO a question concerning family trusts. As a result of my question, the ATO randomly selected 224 trusts out of 16,000 trusts in Sydney and Melbourne which used `family' in their title. They reported that there was an average of 2.49 beneficiaries per trust; 87 per cent of individual beneficiaries were adults; 87 per cent of beneficiaries were individuals; eight per cent were companies and five per cent were trusts. Of the 224 trusts, 109—or about half—had business income. The total average business income was less than $1 million.3L6CONROYSenator Conroy—Stop justifying trusts and start talking about the bill.3M6Murray, Sen AndrewSenator MURRAY—The average net business income was $103,000.3L6CONROYSenator Conroy—Talk about the bill.3M6Murray, Sen AndrewSenator MURRAY—Average assets were $1.2 million and average liabilities were $966,000. I take the interjection from Senator Conroy who knows nothing about trusts and very little about anything else.3L6CONROYSenator Conroy—Income splitting—that's what they are about; that's all you need to know. You are just playing with the tax threshold.3M6Murray, Sen AndrewSenator MURRAY—Senator Conroy deals with trusts like the coalition deals with unions—he sees one and he wants to kick it. Of the 115 trusts that were investment trusts and did not have business income, average assets were $542,000 and average liabilities were $211,000. While better off than the average, these trust statistics do not seem to reflect the high wealth individuals and trusts on which publicity has focused. Practitioners in the field do not have analytical data available on trusts either.I believe that neither the ATO nor the practitioners and representative organisations have a clear analytical picture by type of trust, of trustees, beneficiaries, assets, liabilities, income, taxation, and so on. Neither does the coalition, neither does the ALP and neither do the Democrats. That, surely, must make it difficult to develop appropriate policy responses, and it makes it problematic for government or parliament to reach firm conclusions to substantiate some trust policy legislative intentions.Significant legislative change has been initiated since 1980 under the Labor government to curb the legal minimisation or legal avoidance of tax by the use of trusts and discretionary trusts in particular. Illegal tax evasion is subject to the full force of the law. Trusts gained particular attention in recent years as a result of Treasurers' Willis and Costello both rightly highlighting tax avoidance by high wealth individuals.A proposal to tax trusts as companies was made in a Treasury submission to the Tax Summit of 1985. The House of Representatives Standing Committee on Finance and Public Administration in its report Follow the yellow brick road in March 1991 recommended that the government should examine the feasibility of taxing all trusts in the same way as companies. Regrettably, the Labor government of the time did not pursue that. The Australian Democrats believe that these are sound reasons to favourably consider a common taxation structure for all entities engaged in business activity. That means individuals, trusts, partnerships and companies that participate in business activity should be taxed on an equivalent basis.The Treasurer and the ATO are presently conducting a review of trusts, but do not intend to make it public. I will move a second reading amendment, which I have already circulated and it is No. 868, to oblige them to do so. There is undoubtedly a momentum for tax reform of trusts. In fact, all parties in this Senate, as I understand it, support that position. These bills are complex and lengthy. One of the witnesses at the hearing was quite rude to us all by describing how ignorant we were about the bill, how stupid we were and how complex the bill was. In respect of this bill he was probably right because very few of us could get to the bottom of it and neither could most of the witnesses.3L6CONROYSenator Conroy—Speak for yourself.3M6Murray, Sen AndrewSenator MURRAY—And I do include myself, Senator Conroy. It is an exceptionally complex bill. I will be very interested to hear Senator Conroy explain it fully to all of us. I am sure he understands every aspect of it.The Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 alone is 142 pages long and the explanatory memorandum on all four bills is 187 pages long—this from a government supposedly committed to less red tape and which proposes substantial tax reform to deliver a simpler and fairer tax system. This lot is not simple. It seems to me that it would have been best if the government had evaluated these bills against three criteria: its current review of trusts, analysis by the ATO and practitioners, and the place this legislation should have in overall tax reform. I believe that significant changes to trust taxation should have been made in conjunction with overall tax reform.Trafficking in trust losses means that a person or entity who did not bear the economic loss gains a tax benefit by buying a trust loss from another unconnected person or entity who did bear the economic loss. The ATO identified for us two types of trust loss trafficking. One is where a trust with a loss is bought and the new owner injects otherwise taxable income into it to set the income against the loss and to produce a tax benefit. The other is where a fee is paid to a trust so that otherwise taxable income can be injected into it by an unrelated party, it is set against the loss and then extracted tax free. The ATO did not provide the committee with empirical evidence or hard data to outline either the prevalence or extent of these types of trust loss trafficking.It is apparent from the public debate and from the evidence to the committee that there was no disagreement between the political parties, the government, the ATO, accountants, lawyers and the private sector on trafficking in trust losses. All are in agreement that trafficking in trust losses must be outlawed, and you heard Senator Cook strongly emphasise that. In the public hearing, evidence was led that in this respect trafficking in trust losses had been outlawed by Mr Willis as Treasurer and that the legislation was largely unnecessary. I do not agree, but I think a few pages would probably have resolved that particular problem.The witnesses to the hearing were all in agreement that trafficking in trust losses had ended as a result of Treasurer Willis's announcement on 9 May 1995. All anyway were of the opinion that the anti-avoidance provisions of part IVA of the Income Tax Assessment Act 1936 already gave the ATO ample powers to prevent trafficking in trust losses. The ATO was of a contrary opinion.What was surprising at the hearing was that only one witness seemed to have any real knowledge of how the market for trafficking in trust losses operated. Every other witness claimed that they did not know anyone who was or had been trafficking in trust losses and none had or would advise their clients to engage in the practice. That being so, it is irrelevant because we are all agreed that it must go and, in fact, it has gone.When questioned as to the size of the market in trust losses there was again no hard data available. The evidence was that trafficking in trust losses had largely been achieved by advertising. It emerged that the extent of advertising was actually very small. This implies that trafficking in trust losses might not have been significant in terms of the number of trusts affected. It is possible, of course, that it could have been significant in terms of the quantum of loss trafficked in just a few trusts.Once again hard data from the ATO would have been useful. I am always suspicious when there is no hard data and there is just a bit of head kicking going on. Most telling of all, the ATO has not identified any improvement in its revenue as a result of trafficking in trust losses ending on 9 May 1995. All witnesses agreed that trafficking in trust losses did cease on 9 May 1995. If there was significant trust loss trafficking prior to that date, then there should have been a revenue improvement after that date.The witnesses to the committee did believe that the $550 million gain to revenue projected by the ATO to accrue in the six tax years from 1995-96 to 2000-01 as a result of these bills arises from attacking trust losses, not from attacking trafficking in trust losses. As you know, the setting off of losses against income is a standard business technique used by private individuals, companies, trusts and partnerships. For the record it should be noted that the Australian Democrats support legislation that outlaws trafficking in trust losses.It is a worth repeating the majority report's summation of evidence. The majority report said: `Each witness held similar views that the legislation is flawed, manifestly unfair and that it focuses on the loss rather than the trafficking.' I have seldom experienced a committee where the evidence offered in submissions and by witnesses was so opposed in content and conclusions from that of the ATO and the government. The submissions of witnesses universally were that the legislation targets trusts and trust losses rather than trafficking in trust losses and that the net effect was similar to extensive tax penalties being wrongly imposed.Further, evidence was offered that this legislation treats trusts detrimentally, relative to companies. The evidence was persuasive that the government has moved from the consideration of tighter anti-avoidance measures to regulatory measures designed to change tax policy and the tax regime for trusts. We have got no quarrel with that. It is just disguised in something else.The nub of the non-ATO evidence is that some categories of trust losses legitimately incurred, which should be capable of being set off against future profits, with legitimate connection between persons and entities will now lose that tax benefit because of this legislation. These bills are seen as aimed at legitimate non-traffickers and as using the excuse of trafficking legislation to attack trusts at large.In passing it is worth noting that the ATO cannot necessarily be relied on to get its revenue estimates right. That is quite understandable. Sometimes the ATO's miscalculations are spectacular, such as with the introduction of FBT and CGT, and the precedent for ATO error in this difficult area of revenue forecasting does require us to be cautious.Critics contend that the ATO figures are unsubstantiated and are derived from limited sample and field audits. To go through the figures: a $550 million gain to revenue is projected by the ATO to accrue in the six tax years from 1995-96 to 2000-01 as a result of these bills. It is not known how many trusts will fund this revenue gain and how many will be spared. The gain to revenue for 1995-96 is projected by the ATO at $90 million. Since the evidence was that trafficking in trust losses ceased as a result of the Treasurer's announcement on 9 May 1995, these revenue gains must presumably be as a result of other measures now introduced.We are advised by the ATO that, out of over 372,000 trusts, the number of trusts with prior year losses in 1995-96 was 54,802. The total amount of prior year losses in 1995-96 per the tax returns is computed by the ATO at $5,160 million. Dividing the one into the other gives us an average of nearly $100,000 trust losses per trust. If we revert back to the analysis that I provided earlier, that loss per average trust seems unlikely. It appears that most trusts do not carry forward losses, and most trusts with losses are at the lower end of the scale. It may therefore be that high losses are accumulated in a few trusts only, which have been the target of the activities of the treasurers of both Labor and coalition governments.We have no way of knowing whether the ATO has underestimated the revenue effects of these measures. The ATO advises that it expects to raise $550 million out of $5.2 billion trust losses, and out of 55,000 trusts. That money raising represents about $10,000 additional revenue, based on the average from each of those 55,000 trusts.Other issues raised in evidence to the committee included compliance costs, family definitions, family trust elections, interposed entity elections, the distribution test, the income injection test, the definition of benefit, the continuity of ownership test and the effects on joint unit trusts. Discontent was strongly expressed in terms of cost, complexity, unfairness and bad policy. With regard to unit trusts, evidence was led that, with regard to the business test, it was inequitable for publicly listed unit trusts to receive a tax concession not available to unlisted unit trusts.The Australian Democrats recognise that, with our limited resources, it is impossible for us to deal with all these problems. Consequently, I will only be moving amendments in the committee stage that affect retrospectivity and definitions. Retrospectivity is something which has always attracted the ire of parliament.DX5MARGETTSSenator Margetts—And of the coalition, too.3M6Murray, Sen AndrewSenator MURRAY—Usually of the coalition too. The majority report correctly summarised the fact that the legislation before the Senate differs considerably from the original announcement of 9 May 1995 and, as Senator Cook clearly outlined, differs considerably from the intentions of the Labor bill. In submissions and evidence to the committee, witnesses showed that they universally believe that the bills before us are far different in intent and consequence from what was foreshadowed by Treasurer Willis on 9 May 1995. They felt that the bill was so materially different from the original announcement that people would be unfairly prejudiced if the legislation were effective retrospectively. The ATO does not agree with those views, and that makes for a very difficult analysis for us to determine between the two contending views.The claimed consequences of this legislation are as complex as the legislation itself. Evidence was offered that the retrospective effects could extend back to the late 1980s and forward for a number of years. It is claimed that losses legitimately incurred prior to 9 May 1995 that were not as a result of trafficking in trust losses will be detrimentally affected by this legislation. Making the legislation retrospective from 9 May 1995 could mean that many trusts would be unable to claim a deduction for losses legitimately incurred during the years from 1995 onwards as well, when there was no trafficking in these losses.In conclusion, I doubt whether any party within this parliament or the ATO can clearly forecast the consequences of this bill. Its complexity and difficulties are such that we are left to deal with some legislation which is very difficult indeed. (Time expired)10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator Knowles)—Senator Murray, the Senate notes that you have foreshadowed an amendment in the second reading stage.13:12:001024Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—The trust loss issue has returned. Unfortunately, the new legislation raises more issues than it resolves. In the previous incarnation of the Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 , the issue that was supposed to be motivating the change in legislation was the beginning of trafficking in trust losses. This was something that a small group of wealthy individuals could take advantage of. It was something normally done by small businesses, which were set up as trusts, often under advice from government agencies, in order to isolate possible losses from family businesses so that business losses would not mean the loss of, for example, the family home.It was also not something that was normally done by unit trusts and other superannuation type vehicles where a large number of people may have been involved and moved in and out of unit trusts. The problem with the former legislation was that, in attempting to prevent slick operators from manipulating the law, a great many trusts were penalised and treated as though their primary objective was to run trust loss scams. The target of the legislation seemed to be any trust trying to carry a loss forward, rather than trusts involved in loss trading schemes. The solution therefore seemed to penalise many legitimate schemes.Unfortunately, while there are improvements in this incarnation of the legislation, it still seems to be an approach which penalises trusts for claiming deductions on losses, rather than targeting the loss trading schemes. The onus seems to be on the wrong thing: it is on the trust to prove that it is not involved in a loss trading scheme rather than simply making such loss trading schemes illegal, and leaving the work and onus of proof on the Australian Taxation Office to make a case against trusts suspected of this.A further issue appears here, which I hoped the committee would have come to grips with. What is the basis of trading trust losses? It is a justified concern that losses in one area are being used to offset profits in another, thereby benefiting both the loss making investment and the profit making investment, at the expense of public revenue. This had certainly not been done much until a few years ago as an explicit deal in terms of trading trust losses by the clever buying or selling of trusts, or by injecting funds—that is, profits—into loss making trusts. But it is hardly a new concept or practice.The essence of the ethical argument by government and the tax office is that the purpose of carrying forward losses is to allow for a single business, engaged in a real, productive activity, to take account of the fact that there are good years and bad years, and that investing in a business, especially in establishing a business, may involve some period of expenditure and investment in excess of income. In other words, a business may either when being established or when going through a period of re-tooling or expansion, make a loss, perhaps for two to five years, before the investment begins to pay off as a profit.That loss would be seen as part of the process of establishing a business and should be able to be carried forward and used to balance the profits made in later years. This is before things like the multilateral agreement on investment and other aspects of the international free market. I guess things are changing somewhat. Real businesses may take several years to establish but should then exist for decades, run conservatively for the long haul. This was certainly the traditional economic model, though it sounds dreadfully old fashioned today. Losses were also intended to be carried forward in situations where the economy went into recession and sales may have fallen off drastically while overheads had not.The principle in either of those cases was that a business had a natural life cycle and process of maturation that was not bound by the financial year. Businesses were there to make long-term profits, to provide at least a slight profit most of the time, and should be run cautiously enough in good times to assure that it could survive through hard times. Running a business in that context could be seen as a commercial investment but often was seen as investing in a vision of production of a certain type of product or service. The idea of carrying losses was built on the idea of evening out annual taxation over the life of a single business. Modern businesses do not fit that model quite so well.Since financial deregulation in the early eighties, businesses begin to work more intensively in a global economy and global speculation took off in a massive way. Until then, the globalisation process had been proceeding slowly since the sixties, bound by national regulation of economies. But with the rapid opening up of national economic borders, the race was suddenly on for market share in the global big pond. One way for a company to finance rapid expansion was to turn its productive assets into financial assets, negative gear and debt finance expansion. Everyone was doing it and not to take that jump meant not to have that global presence.Suddenly older monopolistic practices, such as vertical or horizontal integration, took on new meaning and companies began swallowing overseas companies in takeovers and leveraged buy-outs, and the whole thing being used as assets for further loans to finance another round of expansion. It was the era of the entrepreneur shark, the snake-oil flash businessman with attitude, here in Australia and various other figures in the bigger realms overseas.We loved them. We praised them. They engaged in their ruthless expansion game and we did not look too hard if some of that cash stream went off in odd directions. It all went swimmingly until around 1987 when we saw the bubble burst and the first major period of `shake-out'. The card houses of debt financed expansion collapsed and the trick was to see whether you were big enough to ride out the collapse, gobbling up fire-sale assets and divesting of peripherals, and whether there would be enough real income and assets to survive by the time the tsunami of financial collapse reached your conglomerate empire.Unfortunately, a lot of Aussie businesses, famous old businesses, with nothing wrong with their core structures did not make it. The entrepreneurs all developed memory problems or vanished to Spain for health reasons, leaving the husks of the companies they had violated. But the heritage of those times is still with us. The speculative boom did not stop after 1987; it just developed. It developed into ways of diversifying speculative investment for risk management. It developed devious derivatives and business remains as something pretty fluid.A real business making widgets, good high-tech widgets, may also have a significant investment portfolio. It gets reported in the annual reports. In fact the investment section which might engage in a bit of currency speculation, hold various stocks and various derivatives may still be more lucrative than the business of making widgets, which, after all, requires a real plan to enter markets and sell product competitively. There are high-tech companies which seem to primarily survive on their speculative investments while they try to interest someone in their admittedly good innovative technology.The problem is: business has become very clever, too clever by half. They are, with their diversified portfolios, quite good at playing losses in one sector of their investments against profits in another. Of course this also translates down to the personal, with financial advisers advocating negative gearing and property investments to reduce tax liability. The use of losses in one field of investment to reduce tax liabilities in areas of more profitable investment are not new at all. The only new wrinkle in the last few years is that someone twigged to using loss making trusts as a new means of reducing tax while maintaining or requiring assets—assets which may appreciate in value. Some financial advisers figured out this was a good scam and sold it openly as such.I wonder why, after the long committee hearing and several years of thought, there has not been more fundamental consideration of this issue of losses. I think the principle that the Australian Taxation Office, through both this government and the last, is trying to get on to is to say that a loss on investment really should only be allowed to reduce tax on subsequent profits on the same investment. Really, who cares who owns the investment?Why should we say that someone who owned the loss making investment can use it to reduce tax on their other profit making investments but someone else cannot buy that loss making investment to use against their profit making investments? I think no-one should be able to use the losses on one investment against the profits on another investment. I think if someone buys a loss making investment, say, a loss making business, they should be entirely able to carry those losses and deduct them against future profits on the same investment.In other words, in terms of this bill, I think the government has basically got it wrong. I am glad it has taken some measures to address some of the worst aspects of the earlier legislation. I do not really see why it thinks exempting family trusts, which are just as liable to be on the Dallhold model as on the model of a small family trust set up to run a small business, will solve anything. I believe it is more likely that it will simply mean that anyone with enough money to see value in playing at trading trust losses will simply assure that they have a family trust with which to do so. I hope people are taking note of the mention made by Senator Brown in terms of the conflict of interest when this bill comes to a vote.I believe that whatever the Greens or Democrats do at this point the bill will pass in essentially its current form. I think it is highly likely because it is fundamentally legislation introduced by the ALP and now reintroduced by the coalition. They will have the numbers, and I am not going to bother with a lot of amendments because it is quite clear what will happen.I will, however, push for one particular amendment. In the section on family trusts, `members of the family group' is a defined term. It is set as the siblings, parents, children, children of children and children of siblings for both the elected person and their spouse. It states that by spouse it means either a married or de facto spouse. This brings us to a point where it seems once again we are going to create a discriminatory situation. If we are going to give people the ability to create trusts that allow benefits to be paid out of their de facto's mother's adopted son's ex-nuptial daughter, why on earth can we not include somebody's same sex domestic partner—the person they live with and who may have spent years with them, bought a house with them, established a business with them and so on?They cannot legally marry according to the Marriage Act. It does not matter how committed they are, how loving they are and how much they may have tried to provide for each other in their wills. It does not matter that they may have had a ceremony blessed by religious clergy. They cannot legally be married.Why should this mean that they are also excluded from consideration of each other in a family trust? That is what this particular section, in defining what a family member of a family trust is, does to everyone in a same sex relationship. It says, yet again, that they will be excluded from a legal form which may actually work, in the absence of the action of any section of the Family Law Act, to recognise and formalise some financial obligation between partners and possibly to provide for their children and parents.Why should we prevent same sex couples from a legal means of making such provisions for their families? This does not prevent them from trading in trust losses. Each could set up independent family trusts, if trading trust losses were the main purpose. This law does not prevent them from trading. It prevents them from having a family trust together as a family. Consequently, I am following my general course of action and foreshadowing an amendment to change the definition of de facto spouse to include same sex spouses.Since the last time that I moved such an amendment, we have seen the report of the committee looking into the Sexuality Discriminatory Bill finally tabled in the Senate. It was tabled on the second to last day of last session in the middle of the Wik debate and with virtually no real comment. Aside from Senator Brown's comments, we got to read the views of everyone else in Hansard a day or more later when there was no chance it would actually generate any more notice or discussion. Nonetheless, the majority report of the committee absolutely not dominated by the Democrats or the Greens recommended:That a consistent and gender neutral definition of . . . domestic partnership or relationship be established and used . . .That all couples and personal partnerships achieve legal recognition at Commonwealth level . . .As I have indicated in the past, the broad spectra of submissions to the inquiry included that of the Catholic Bishops Conference and other major Christian churches. While often opposing same sex marriage, they supported the idea of treating same sex couples at least in the same way as de facto couples.I understand that the ALP has been considering its position on the issue of the recognition of same sex couples. Since they participated in this report one would like to see them acting consistently with the report they signed. Hopefully, Labor senators will be able to clarify their position on this issue and say whether or not they actually support such recognition, or whether it is only for report on anti-discrimination, and, if so, what they intend to do to ensure that there is such recognition and when they intend to do something about this inequity.I would like to speak briefly to the second reading amendment moved by Senator Cook on behalf of the ALP. It is on record the severe flaws the Greens (WA) found in the legislation when it was presented by the previous government. It would be hypercritical of me to support an amendment which says, `while strongly supporting the passage of this bill'. As I have mentioned, many of the flaws that existed still exist now or have not really been dealt with. I would not be able to support the second reading amendment moved by Senator Cook unless we deleted the words `while strongly supporting the passage of this bill'. I will be moving an amendment to that amendment which would read:"but while strongly supporting the passage of this bill, the Senate deplores the fact that, due to pressure from trust-owning members of the Coalition, it has been significantly watered down compared to the bill presented to the Senate by the then Labor Government in 1995".This, I believe, does not indicate that the Greens were supportive of the Labor government's 1995 bill because we quite clearly saw huge flaws in that bill. Many people in the small business sector in Australia agreed with us. The issue in relation to deleting the specific section of family trusts is bizarre, to say the least. I would consider supporting the opposition's second reading amendment with that deletion. Therefore, I move:Omit, "while strongly supporting the passage of this bill,".I also indicate that the second reading amendment to be moved by Senator Murray is acceptable the Greens (WA). I think it is reasonable. The Greens (WA) were certainly pushing to make sure that these issues were looked at carefully by the bodies that could look at them, whether in the Senate or the Australian Taxation Office, at the time of the original debate and we, therefore, think it is not unreasonable for the community and the Senate to have access to those reports on revenue from such issues as tax trust losses. I will be making further contributions during the committee stage of the debate.13:28:001027Bishop, Sen MarkSenator BISHOP2L6WAALP00—From the outset it is important that I acknowledge the support of the Labor Party for the principle inherent in this package of bills. The stated intent of cracking down on tax avoidance is worthy of support and any legislation that takes a step towards the same is both important and valuable. However, while we will be supporting the crackdown on tax avoidance, there are a number of concerns with this package of bills that the government would be wise to address.The government and, in particular, the Prime Minister and the Treasurer have had much to say about their commitment to cutting down on tax avoidance. The government's much spoken of commitment to reducing tax avoidance has been central to their cynical campaign at wooing Australia's battlers. The government has made plenty of noise on this issue to ensure that they present themselves as defenders of equity within the tax system.Nothing could be further from the truth. This package of bills, while acceptable in principle, provide an illustration of the deception this government is placing over the Australian community. The Prime Minister said on 14 August:. . . it is aggravating in the extreme if you are a PAYE tax battler, you're having your money taken out each week when you hear of people through all sorts of dodges, the cash economy as well as some people at the big end of town not paying their fair share.The Treasurer has made many comments regarding his commitment to cracking down on tax avoidance. It is worth repeating his comments, as was done during this debate in the House of Representatives. On 20 June the Treasurer said:I make it clear on behalf of this government that where anomalies and exemptions are being unfairly exploited they will be addressed.On 2 September he said:The government takes such measures as are required to prevent legitimate taxation liabilities being avoided.Again, on 2 October he said:This government is serious about making sure that corporations and indeed individuals pay their fair share of tax.However, this package and the way it was introduced fails to meet the commitment of both the Prime Minister and the Treasurer. This lack of follow through on commitment by the government is disappointing but not unexpected. The coalition has been ducking and weaving around the issue of tax avoidance for many years.While the issue is clearly an urgent and important one, it would appear there are significant pecuniary interest reasons why the coalition has backtracked and avoided this issue for so long. It is worth discussing the history of attempts to cut down on tax avoidance. The challenge to cut back on tax avoidance, particularly through the tightening of regulations on family trusts, was instigated by the previous Labor government and in particular the former Treasurer, Mr Willis. This resulted in legislation proposed and introduced by the former Treasurer in the 1995 budget. That legislation was introduced two years ago. While the legislation passed through the House of Representatives with the support of Labor Party numbers, the legislation was blocked in the Senate by the coalition and other non-government parties.ZS6QUIRKESenator Quirke—What other non-government parties didn't support it, Senator Bishop? I would like to know. The group that's been lecturing us all day about this?2L6Bishop, Sen MarkSenator BISHOP—I think they may well be, Senator Quirke. The then non-government senators sent the legislation to a Senate committee which succeeded in delaying the Senate dealing with the legislation before the calling of the 1996 election. That is why comments made by the coalition regarding a crackdown on tax avoidance during the 1996 campaign were such a farce. The now government was promising during the campaign to introduce the same kind of legislation they had just blocked in the Senate. This reveals the true hypocrisy of the coalition when it comes to tax reform.Upon winning the 1996 election, the now government took five months to introduce legislation they had claimed during the campaign was so vitally important and equitable for all. Another six months later draft legislation was produced for consideration and comment, with significant modifications to that of the previous government's legislation. Further modifications to that draft were announced in the 1997 budget. It has now taken another five months for this piece of legislation to be brought before the parliament. Then after all of this, particularly prime ministerial procrastination, the government called on the House of Representatives to immediately pass the legislation without appropriate review and comment.This scenario illustrates the true commitment of this government to a crackdown on tax avoidance. This delay, however, could have been overlooked if the end product had been one that met the promises of the Prime Minister and Treasurer with regard to tax avoidance and led to a significant shift towards greater equity in the taxation system. Unfortunately, the much awaited legislation has not achieved this. This is most obvious in the application of the legislation to family trusts.Before discussing this government's lack of commitment to cracking down on avoidance through these trusts, I will briefly explain the history and purpose of this legislation. This legislation will bring about a situation whereby rules will come into force that limit the circumstances under which family trusts can deduct current year and former year losses and debt deductions. This type of legislation means that only those people who bore the consequences of a loss are able to receive any tax benefits in recouping those losses. Such a piece of legislation will ensure that those who do not bear the burden of a loss are not able to benefit financially from any avoidance. This is the same approach applied to company tax law and, in that sense, it is a welcome reform.However, in tightening up the variation between company tax law and trust tax law the government has avoided the real issue—that is, the difference between general trusts and family trusts. In this regard, there is a significant variation between the former Labor government's proposals and the current proposals in this legislation. The difference is centred around the application of an income injection test and this government's unwillingness to make it apply equally to all trusts. The Treasurer outlined the coalition's position in a press release on 13 May. The press release stated:On 10 February 1997, the Government released an exposure draft legislation on trust loss measures. After receiving comments and submissions, the Government has decided to modify the draft legislation to restrict its application.The income injection test will not apply where entities and individuals within a family group inject income into a family trust with losses. The impact of this decision is to allow family members who are not directly bearing the cost of losses in the trust to inject income into the trust to offset against losses, thus receiving the benefit of the losses incurred by the trust.There are two ways in which this trust trafficking occurs. The first option is where an individual purchases a trust with a loss and then injects income into that trust that would have been taxable under current taxation laws. The result is to offset the previously taxable income against the loss of the purchase trust. This results in a tax windfall for the purchaser. The second option is the use of a fee system to inject previously taxable income into a trust that has made a loss, have that income offset against the loss and then retrieve the money without paying tax. By failing to close this loophole, the government is allowing family members not incurring a loss in a trust to receive a tax benefit from a family member's trust that has incurred such a loss.This is the type of tax avoidance that the coalition pledged to stop during the last election campaign. This will mean that, while PAYE families continue to pay high levels of income tax, wealthy Australian families will be able to avoid paying their tax share by injecting income into trusts of other family members purely so they can financially benefit from the trust losses even though they do not bear the burden of those losses themselves. This is hardly fair to ordinary battling Australians who do not have access generally to family trusts.To add insult to injury, the government claims this to be a family friendly change rather than straight out tax avoidance. This shift in policy by the coalition is a significant watering down of the original legislation and the rhetoric offered in the election campaign. Equally, it will cost the government a significant amount of money through revenue losses. The willingness of the Labor Party to cut down this type of tax avoidance should not be confused with the ALP's policy on family trust concessions. The Labor Party accepts that family trusts should be treated as a separate category. Additionally, as our minority report outlines, we also support the system of the trustee making an election for the family trust provisions to apply. As the minority report stated:This simple system will avoid the need for costs to be incurred in amending trust deeds to comply with the definition of a family trust.This concessional nature should also apply to family trusts in the situation of income being injected into the trust by the beneficiaries of the trust. The coalition's legislation, however, goes well beyond this criteria and allows family members not benefiting from the trust to inject income and receive a benefit. Use of this loophole is illustrated by the ATO's admission that tax revenue is reduced as a result of such a law. For these reasons, the issue of an inquiry was always worth considering. While the legislation in broad principle is supportable, there is a wide range of amendments to be considered, and all need to be examined fully.I would now like to specifically address some other concerns with this package as they arise in the committee's report with particular focus on the minority reports. Firstly, retrospectivity is a significant concern. A vast majority of submissions to the inquiry called on the Senate to amend the legislation so that the proposed commencement of the legislation would be delayed. Retrospective legislation is not uncommon when dealing with tax.This accepted and commonly practised rule ensures that tax loopholes are closed immediately upon being identified and announced by the Treasurer, rather than waiting for the legislation to be passed by the parliament, often at some considerably later time. This practice has the effect of protecting government revenue by solving problems identified as against policy objectives. If retrospectivity did not apply, the parliament would have been in a position of allowing trafficking in family trusts and other avoidance measures to have continued well beyond that which is necessary. This would have cost the government $435 million in revenue from trusts alone.While the government prolonged the problem by procrastinating on this legislation, the Labor Party sees no reason to further aggravate the problem. Indeed, any procrastination would only establish a precedent that would allow future, and as yet unidentified, tax loopholes to avoid immediate closure by affected peoples arguing for government inattention. This is not in the best interest of reducing the tax burden for PAYE earners.However, while the opposition cannot support attempts to have the commencement date of the legislation delayed, we do recognise the confusion that exists within the community as a result of the government's poor management and lack of commitment to meaningful tax reform. The government has unnecessarily delayed the passage of this legislation. Rather than making it a priority, as its rhetoric would have us believe, the government has waited over two years to address the issue of tax avoidance.Senator Murray in his minority comments has alluded to the lack of detailed information on family trusts in Australia. The lack of such information makes it very difficult for policy makers to accurately form assumptions on the impact of particular policy changes. It is agreeable that this deficiency should be rectified.It is worth noting that, while the government is performing a backflip on tough sanctioning of tax avoidance that is exercised by some wealthy people in our community, it is pursuing vigorously other tax reforms that will hit at the family budget for the battlers of Australia. This is most noticeable, of course, with the attempt to introduce a GST.As I mentioned at the outset, any legislation that heads down the path of reducing tax avoidance is worthy of support. For this reason, the opposition supports the intent of this package of bills. However, we note that the legislation is significantly less tough on tax avoidance than the rhetoric the government would have us believe. The consequence of this is to deprive the Commonwealth of revenue that could have been used to offset government cutbacks. More importantly, though, this backflip by the government in cracking down on tax avoidance is another reason why the Australian community is becoming so distrustful of Mr Howard and the coalition government.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator McKiernan)—I call Senator McGauran.3L6CONROYSenator Conroy—Senator McGauran is not on the list.XH4McGAURANSenator McGauran—I will yield to Senator Conroy.13:41:001031Conroy, Sen StephenSenator CONROY3L6VICALP00—I have to make a declaration at the beginning that I do not have a family trust, but that actually magically does not mean I do not know anything about them. If you listen to Mr Moore, the Minister for Industry, Science and Tourism, who is in that other chamber, I guess I fall into the category of a public sector bludger. That is what this debate is about. John Moore stood up in that other chamber and said, `If you don't have a unit trust, you're a public sector bludger.' I plead guilty, on his own words in Hansard . This debate is about fairness and equity.Senator Murray wanted to talk about how trusts work and why the Labor Party is opposed to them. Senator Murray, as you well know, they are nothing more and nothing less than income splitting to take advantage of the tax free threshold. That is what they are about. `How does it work,' you ask.XH4McGAURANSenator McGauran—Mr Acting Deputy President, I rise on a point of order, and I would ask you to use your discretion, if not the black and white reading of the standing orders. I know I yielded to Senator Conroy at the time but, as you are aware, it was the government's right to take up a speaking position. Having now listened to Senator Conroy speak to this point, he is not only irrelevant but also not focusing on the true nature of this debate. He has just launched into another one of his diatribes. So, therefore, I would ask you: can I now reconsider my position of yielding initially to Senator Conroy?10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—There is no point of order.3L6Conroy, Sen StephenSenator CONROY—Senator McGauran probably does not realise that there have been a number of amendments moved, particularly by the Democrats. So I am actually speaking to the bill and the amendments, Senator McGauran. I invite you to have a look at the papers in front of you.XH4McGAURANSenator McGauran—Mr Acting President, I rise on another point of order. I accept that you ruled on that point of order but, just as an assistance, I ask: can I reconsider my yielding to Senator Conroy on the speaker's list?10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—You can reconsider it, but it is not within the standing orders for me to reconsider it. Senator Conroy has the call, and he now has something like 18 minutes to finish his deliberations.3L6Conroy, Sen StephenSenator CONROY—How does a trust work? I am indebted to Phillip Hudson from the Age for what he wrote on Saturday, 28 February. I will take Senator Murray through it just in case he is confused on this issue. If a company earns an income of $50,000, the tax it pays is $18,000. If a PAYE individual earns $50,000, the tax paid is $14,000.2L6BISHOPSenator Bishop—Fourteen thousand dollars?3L6Conroy, Sen StephenSenator CONROY—But, if you have a family trust—3M6MURRAYSenator Murray—Mr Acting Deputy President, I rise on a point of order. Are the existing laws we are talking about those laws which obtained under Labor's rule for 13 years?10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—You have risen on a point of order, Senator Murray. That is not a point of order.3L6Conroy, Sen StephenSenator CONROY—If you have a family trust with two beneficiaries, you are able to split the income. Beneficiary 1 receives, say, $29,000 and that individual pays $5,984 in tax. Beneficiary 2 receives $20,000 of the $50,000 and pays $3,060 in tax. That is a total tax paid for the trust of $9,000.3M6MURRAYSenator Murray—Mr Acting Deputy President, on a point of order: is it permissible for me to sit behind Senator Conroy so he can appreciate that he is talking to the government about their bill and not to me—3L6Conroy, Sen StephenSenator CONROY—I am talking about your amendment.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—That again, Senator Murray, is not a point of order. I call Senator Conroy.3L6Conroy, Sen StephenSenator CONROY—The reason what I am saying is relevant, Senator Murray, is that you have foreshadowed that you will move an amendment. You will move to reinsert extra family members into this. What I want to ask you is that you declare when you vote on your amendment—3M6MURRAYSenator Murray—On a point of order: isn't it more appropriate to consider this in the committee of the whole?10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—Senator Murray, this is the second reading debate. It is appropriate that the matters contained in the bill are canvassed at this particular point in time, so there is no point of order.3L6Conroy, Sen StephenSenator CONROY—You may well squirm, Senator Murray, because what your amendment does—3M6MURRAYSenator Murray—Mr Acting Deputy President—3L6Conroy, Sen StephenSenator CONROY—You may well want to waste more time.3M6MURRAYSenator Murray—On a point of order going to relevance: Mr Acting Deputy President, could you rule that the amendment and the matters that Senator Conroy is referring to are not appropriate for a second reading debate?YW4MACDONALDSenator Ian Macdonald—Mr Acting Deputy President, on the point of order and just to add something further at the same time: perhaps if you asked Senator Conroy to address you rather than Senator Murray, the debate would proceed much more generally, rather than with the personal conversation which seems to be happening between the two people involved.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—On the point of order, it is the practice during the second reading debate to canvass all issues associated with the debate and with the matter before the chamber. I call Senator Conroy.3L6Conroy, Sen StephenSenator CONROY—I take Senator Macdonald's point. What I would like Senator Murray to declare—and he has been declaring that he does have a trust—is whether or not his family trust includes parents, grandparents, aunts, uncles, brothers and, importantly, the beneficiaries that he is adding back into this bill. Does his family trust reinsert beneficiaries that were not in this bill? That is a very important issue, Senator Murray: are you putting back into this bill beneficiaries that are in your family trust but would be excluded in this bill?3M6MURRAYSenator Murray—On a point of order: I rise to inform the Senate that none of those inclusions refer to me and the family trust which I refer to has four people—two parents and two children.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—That is not a point of order again, Senator Murray. I will be very careful in calling you again. I think this is the fourth occasion that I have called you for a point of order and they have not been points of order.3L6Conroy, Sen StephenSenator CONROY—I seek leave to continue my remarks later.Leave granted; debate adjourned.Miscellaneous103213:48:001032Parer, Sen WarwickSenator PARERKI4QLDLPResources and Energy10—by leave—Over the past 12 days, I and my family have had to endure one of the most vicious campaigns of innuendo, lies and vitriol directed in recent times to a federal senator. There have been no lengths to which the Labor Party and sections of the media have been prepared to go in their attempts to smear my good name and my reputation. It has been a campaign of character assassination and, in the end, it will backlash against those who initiated it, who are already being seen by the Australian people as the grubby muckrakers that they are.Consequently, I have written to the Prime Minister (Mr Howard) and will table the following documents—one, a letter from me to the Prime Minister; two, a copy of my department's review of decisions I have taken since becoming a minister; three, a copy of Minister Beddall's letter of September 1995 approving exports of Jellinbah coal; four, a copy of my Japanese itinerary in October 1996; five, a copy of a record of conversation in Japan of meetings with Japanese trading companies, in particular Marubeni and Nissho Iwai—these records, I might point out, were prepared by Australian embassy officials; six, a file note copy from my senior adviser on the above meetings; seven, a copy of a letter from Brisbane stockbrokers Nevitts to the Prime Minister in relation to (a) divestiture of public company shares in mining companies and (b) the sale potential of 16 non-voting shares in QCMM Pty Ltd; and, finally, a letter to the Prime Minister from Mr Harold Shand.13:50:001033Faulkner, Sen JohnSenator FAULKNER5K4NSWALP00—by leave—Let me first make this point: the Minister for Resources and Energy (Senator Parer) comes in a few minutes before question time and seeks leave, which was granted by the opposition, to table certain documents. Because of the time these documents were tabled, there will not be an opportunity for the opposition to adequately scrutinise them before question time. Effectively, that means that this minister will be able to skate through question time today without the opposition having had the opportunity to examine those documents and, therefore, without questions on them being asked of this minister in the Senate or of the Prime Minister (Mr Howard) in the House of Representatives. I have got to say that I think it is both cowardly and churlish of the Minister for Resources and Energy to make this statement—YW4MACDONALDSenator Ian Macdonald—Mr Acting Deputy President, on a point of order: those words are clearly not becoming of any senator, and I would ask you to have the senator withdraw them.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator McKiernan)—I think in the circumstances the words ought to be withdrawn.5K4Faulkner, Sen JohnSenator FAULKNER—I withdraw that, Mr Acting Deputy President, but I make this point: there were many in the gallery who were apprised of the fact that the minister was proposing to make a statement in the Senate before question time. That was not a courtesy that was extended to the opposition until only a few minutes ago. But it does not alter the facts: Senator Parer can table any document in this chamber he cares to table, but he cannot escape the fact that, since he has been a minister in the Howard government, he has not complied with the Prime Minister's own requirements in relation to ministerial conduct. He has not complied.This is the Prime Minister's own code. Let me read it:Ministers are required to divest themselves of all shares and similar interests in any company or business involved in the area of their portfolio responsibilities.No amount of documentation tabled by the minister can allow this minister to duck away from the fact that he has not complied with that responsibility and no amount of documents tabled can allow the Prime Minister off the hook on this matter either.We know, of course, that the minister for coal, Senator Parer, had meetings on coal with the managing director of Queensland Coal Mine Management Pty Ltd, Harold Shand, despite telling the Senate in the last sitting week that he had nothing whatsoever to do with that company. We also know that Mr Shand, of course, was appointed last year as company secretary for Senator Parer's family trust. I assume that that would mean that there would be considerable contact between Senator Parer and Mr Shand. We know that Senator Parer—not once, not twice, but on three occasions—was warned through the processes of the Senate that he was required to list all details of his shareholdings and interests in the Senate's own register of pecuniary interest. We know, of course, that he did not do that even though he was officially warned on three occasions.We have also learnt that this same minister for resources, during a ministerial visit to Japan in June or July of last year as the minister for coal, met with joint venturers in one of his own interests, the Jellinbah coal mine. We know that that took place and, of course, we know that that is a mine in which this minister for resources has over $2 million in shares. We know that representatives of those joint venturers—in this case, the Marubeni Corporation—have confirmed that they had discussions with Minister Parer, the minister for coal, while he was on an official trip conducting ministerial business in Japan.We have asked consistently why that is not proof positive that a conflict of interest exists in relation to this minister and his ministerial responsibilities. What we say is this: there is a clear conflict in the case of Senator Parer between his personal interests and his public duty.YW4MACDONALDSenator Ian Macdonald—I rise a point of order, Mr Acting Deputy President. As I understand the position, Senator Faulkner is speaking following Senator Parer. Senator Parer sought the leave of this chamber to table some documents. Senator Parer did that and spoke very briefly. I do not know what is in the documents but I assume—UI4RAYSenator Robert Ray—Neither do we!3L6CONROYSenator Conroy—That is the point.YW4MACDONALDSenator Ian Macdonald—The point, Mr Acting Deputy President, is that Senator Parer spoke by leave. Subsequently, Senator Faulkner asked for leave to address the matter. I appreciate that in giving leave and speaking by leave there is no curtailment on what exactly is said. But surely, Mr Acting Deputy President, someone speaking by leave following the tabling of documents for which leave was originally given, must be required to confine his remarks to really the matter in issue, and the matter in issue is Senator Parer tabling some documents. Senator Faulkner spoke for some time about the tabling. He is now going much further—far and wide—on matters which really are not related to the matter that Senator Parer sought leave to speak on.3L6CONROYSenator Conroy—Is this a point of order or a speech?YW4MACDONALDSenator Ian Macdonald—What do you think it is? You take the choice.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator McKiernan)—Order!YW4MACDONALDSenator Ian Macdonald—I am sorry, Mr Acting Deputy President, I have been provoked by interjections from the other side.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—Senator Macdonald, I will seek to protect you, but I would ask you to very quickly come to the point of order that you rose on.YW4MACDONALDSenator Ian Macdonald—The point, Mr Acting Deputy President, which I think you are now well aware of, and you have made this assumption yourself, is that Senator Faulkner is speaking well beyond the bounds of the matter for which he was given leave to speak. So I would ask that perhaps you might ask him to conclude his remarks on the matter for which he was given leave or otherwise that you rule him out of order.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—There is no point of order. Senator Faulkner is speaking by leave.5K4Faulkner, Sen JohnSenator FAULKNER—Thank you, Mr Acting Deputy President. What I want to say is this: because of the time at which Senator Parer came into this chamber and made his statement, there has not been an adequate opportunity for the opposition or other senators in the chamber to look at that documentation. There has not been and there will be no opportunity for senators to ask Senator Parer today at 2 o'clock at question time questions about these particular matters. So I have got to say, Madam President, I am very doubtful that Senator Parer has come clean.H15CAMPBELLSenator Ian Campbell—I rise on a point of order, Madam President. I certainly gave Senator Faulkner leave to speak because I thought he was going to apologise to the Baillieu family, and particularly to the family of the two Baillieu's—10000PRESIDENTThe PRESIDENT—Senator Campbell, there is no point of order and that is not relevant to what is being discussed.H15CAMPBELLSenator Ian Campbell—I am just saying that that is why I gave him leave and I thought he would apologise, and I am waiting for the apology, as is the Baillieu family. The children of the Baillieu—10000PRESIDENTThe PRESIDENT—Senator Campbell, there is no point of order. Resume your seat.5K4Faulkner, Sen JohnSenator FAULKNER—Thank you, Madam President. What we do expect from Senator Parer is for him to have provided documentation and information to the Senate today that outlines all his interests, all his shareholdings in all the—LD4ALSTONSenator Alston—Why do you assume he hasn't?5K4Faulkner, Sen JohnSenator FAULKNER—Senator Alston says, `How do I assume he hasn't?' That is the whole point, Senator Alston: this material has not been made available to the Senate or senators before question time today. Of course we are very doubtful, given the fact that this minister has such a record of muddying up his private interests and his public duty. I would have thought this cowardly performance by the minister, coming in just a few minutes before question time and tabling that material, means the minister yet again stands exposed for not fulfilling his ministerial responsibilities. (Time expired)Questions Without Notice103510351035Faulkner, Sen JohnSenator FAULKNER5K4NSWALP00—My question is directed to Minister for Resources and Energy. Minister, on 26 May 1996 you told Meet the Press that you had disposed of your BHP and Santos shares, presumably because you believed them to be in perceived or actual conflict with your portfolio responsibilities. Minister, why did you not at the same time reveal that you also owned shares in coal mining? Was it that you simply failed to comprehend that these shares could also result in a perceived or actual conflict of interest? Why did you resign as Chairman of Queensland Coal Mine Management Pty Ltd but fail to dispose of your shares? Minister, is it not the simple truth that you disposed of your BHP and Santos shares because these shares were in public companies and were thus readily discoverable, whereas your shares in private coal mining companies were not as readily discoverable?1035Parer, Sen WarwickSenator PARERKI4QLDLPResources and Energy10—Madam President, it is quite true that I said, on whatever date Senator Faulkner quoted, that my wife and I had disposed of public company shares. I also point out that at that time I had fully disclosed to the Senate that the family had a trust company of which I happened to be just a beneficiary. I thought I made it very clear in this place last week that these shares were 16 non-voting shares.UI4RAYSenator Robert Ray—Why didn't you reveal them? That's all you had to do. Why hide them?10000PRESIDENTThe PRESIDENT—Order! Senator Ray, there will be an opportunity for you to follow up these matters and now is not the time.KI4Senator PARER—Madam President, disclosure was made in accordance with the Senate requirements as I knew them at that time. I know that Senator Faulkner wanders on about three notices. The fact is that I was unaware that the Senate had changed the language used in disclosure, that rather than just put trusts down as investment-type trusts, more detail was required in regard to the trusts. As I pointed out last week in the Senate, if I had known that, I would have had no compunction in doing so. When I looked again at this information, which was drawn to my attention afterwards, I found that it includes other things as well. That particular trust does have real estate interests and does have public company shares which are non-mining shares. From my own perspective, with the facts that were known to me, I made full disclosure.1035Faulkner, Sen JohnSenator FAULKNER5K4NSWALP00—Madam President, I ask a supplementary question. Minister, can you confirm that in order to achieve the same dividend stream provided to you by QCMM Pty Ltd you would have needed to own 588,235 shares in BHP at a value of $9.2 million or 1.2 million shares in Santos at a value of $6.6 million, or indeed 4.3 million Telstra shares at a value of $16.7 million?1035Parer, Sen WarwickSenator PARERKI4QLDLPResources and Energy10—Let me clarify this very quickly. The shares are non-voting shares. The dividends on those shares are determined by the ordinary shareholders of the company and they can decide whether you get nil, $5 or whatever figure you like. When Senator Faulkner decides to look at the documents I have tabled, he will find in those tables a letter from one of the leading stockbrokers in Nevitts pointing out the difficulties involved with those particular shares.10351035Patterson, Sen KaySenator PATTERSONLI4VICLP10—My question is addressed to the Minister representing the Prime Minister. The coalition government inherited and is successfully turning around the $10.3 billion budget black hole which resulted from 13 years of economic mismanagement by the former Labor government. How have the government's sound economic policies resulted in expanded job opportunities, increased wealth generation and an improved living standard for all Australians?1036Hill, Sen RobertSenator HILLBH4SALPEnvironment10—Madam President, I would certainly like the opportunity to answer the question because this is the big issue, this is the important issue: the matters that give hope and faith to the Australian people because they can rely on a government that has delivered so effectively in the areas of vital importance to them. In just over two years this government has delivered record low inflation so that businesses are now confident to invest and to expand. This government has delivered interest rate levels which are back to those of the 1960s and has delivered interest rates on housing loans which, for an average home owner with a $100,000 mortgage, allow a saving of about $330 per month.This government has been able to reduce the government deficit from the $10.3 billion that it inherited to a surplus by the time of the next budget and has been able to face up to the appalling industrial relations circumstances in this country, to provide a more harmonious industrial relations environment for the Australian work force through encouraging employers and employees to work together to provide terms and conditions of mutual benefit.This government has been prepared to tackle Labor's unfair dismissal laws which created a major disincentive to employment and jobs generation and has addressed constructively the tariff protection issues in relation to the motor vehicle and textiles, clothing and footwear industries—the former, of course, has been responded to by industry positively.It is worth reflecting that in just over two years this government, through its initiatives, has been able to contribute to the creation of an extra 235,200 jobs—something of which not only the government can be proud but no doubt all Australians appreciate. How has it done this? Through sound and sensible economic policies it has enabled growth, particularly within the small business sector. The small business sector has in fact been able to grow by some 6.5 per cent since 1995.Private sector wealth has increased by some 11.8 per cent, the highest growth since 1989—or in other words, the highest levels of growth since before the recession that we had to have, something that we will not forget and that the Australian people will not forget.This government, through its industrial relations reform to a background of positive economic growth, has been able to achieve an 85-year low in working days lost—a 43 per cent decline in the number of working days lost in 1997 alone. It is a fantastic performance from which all Australians gain benefit.This has been to a background where the opposition, the Labor Party, has sought to frustrate every constructive move that this government has made. It sought to block and frustrate the budget initiatives the government took—XE4BOLKUSSenator Bolkus—That's rubbish. That is absolute garbage, and you know it.BH4Senator HILL—to haul in expenditure and meet the $10.3 billion it inherited. It has, as you know, Senator Bolkus, fought against the unfair dismissal law reform which is so essential to the results that have been achieved. And it is continuing to fight against the unfair dismissal reforms that can go even further.I should remind the Senate that a recent survey by the New South Wales Chamber of Commerce of 700 businesses found that 85 per cent of small businesses had nominated unfair dismissals as a key factor affecting businesses of 15 employees or fewer. So there is finally a chance for Labor to face up to a real responsibility and contribute constructively to a better economic environment. (Time expired)1036Patterson, Sen KaySenator PATTERSONLI4VICLP10—Madam President, I ask a supplementary question. Minister, you mentioned expanded job opportunities: what specific job opportunities have been created by the coalition government?1037Hill, Sen RobertSenator HILLBH4SALPEnvironment10—I use the one minute to remind the Senate of a few of the specific initiatives that are well worth remembering. The government's mutual obligation or work for the dole program has committed $100 million to fund 44,000 places in 1998-99 alone, with a total of $382 million over a four-year period—a major initiative which is being well received by the Australian people. This program includes assistance with literacy and numeracy training programs for 18- to 24-year-olds as well as an expanded job placement employment and training program.I remind you also of the government's new apprenticeship scheme which has committed some $560 million in incentives to employers, apprentices and trainees to support up to 220,000 places during the period of 1997-98 to 1998-99. (Time expired)10371037Faulkner, Sen JohnSenator FAULKNER5K4NSWALP00—My question is directed to Senator Parer, the Minister for Resources and Energy. My question relates to the major thrust of your defence, Minister, against allegations of perceived or actual conflict of interest—that is, that you have derived no benefit from your coal interests since becoming a minister. Minister, will you confirm that Investment Management Pty Ltd has a total share allocation of nine shares, of which you own eight and your spouse owns one. Minister, is it not a fact that all dividends from your coal interests are paid direct to your company, Investment Management Pty Ltd, and are later disbursed to your family through a secondary process involving your family trust? Minister, hasn't Investment Management Pty Ltd, from a 16 share investment in 1993, received over $800,000 in fully franked dividends?1037Parer, Sen WarwickSenator PARERKI4QLDLPResources and Energy10—Senator Faulkner has asked a number of questions. Any dividends to flow to the trust go to the trust.UI4RAYSenator Robert Ray—Try it again, Warwick!10000PRESIDENTThe PRESIDENT—Order, Senator Ray. Senator Ray, do not shout across the chamber.KI4Senator PARER—They go to the trusts, and trusts are required to distribute moneys. They go to beneficiaries under the trust. As regards the nine shares, they are held in the names of the seven children, my wife and me.UI4RAYSenator Robert Ray—Investment Pty Ltd.LD4ALSTONSenator Alston—Don't be distracted.10000PRESIDENTThe PRESIDENT—Senator Parer, ignore the interjections and answer Senator Faulkner's question.KI4Senator PARER—As I have pointed out, these 16 non-voting shares were shares that were not part of the ordinary shareholders of the company. The company itself was controlled by at one time four major shareholders and now, in more recent times, it is controlled by three, because of a dispute between the shareholders. When it comes to decision making as to how much profit should be given to the non-voting shareholders—over which the current three shareholders have pre-emptive rights—that is their decision. The total amount—I presume Senator Faulkner is right; I have not gone and totalled it up—UI4RAYSenator Robert Ray—Don't worry about the $800 grand!KI4Senator PARER—When I came into that company in 1989, there was no hiding of it; everyone knew about it.AW5CARRSenator Carr—Eight hundred grand! Everyone knew about it!KI4Senator PARER—Kim Il Carr or whatever his name is over there likes to interject—10000PRESIDENTThe PRESIDENT—Senator Parer, just a moment. There are too many interjections in the chamber and there is far too much noise. Senator Parer, address your remarks to the chair and not to those who are interjecting.KI4Senator PARER—Thank you, Madam President. Senator, if you wish to have a look at the documents I have tabled, you will see the process that went through, in great detail. There has been no cover-up, no hiding—nothing whatsoever. I have been totally transparent. The only thing, as I mentioned the other day, in the absence of knowledge of that circular letter of 20 March 1997, I would have had no hesitation whatsoever in disclosing the interests of the trust company. And I said here the other day, I am only too happy to disclose that information.Going back to the issue of dividends; whatever the dividends are, it does not necessarily reflect, and in fact does not reflect, what could be the actual value of those particular shares. I asked the stockbroker the other day, `These are the conditions under which these shares are available to the family trust; what are they worth?' He said, `I'll give you $2.'Opposition senators interjecting—KI4Senator PARER—You are not prepared to listen. You are on this trail of `let's wrap it up as a big deal'. It is no big deal. It is a form of arrangement that companies involve in where non-executive directors and shareholders are given the opportunity to participate in the profits.1038Faulkner, Sen JohnSenator FAULKNER5K4NSWALP00—Madam President, I ask a supplementary question. Minister, you tell us about dividends. Given that your family trust has received over $800,000 in dividends on your $2 million worth of coal shares since February 1993, how much tax would you have avoided by holding the shares in your trust rather than holding them in your own name?1038Parer, Sen WarwickSenator PARERKI4QLDLPResources and Energy10—Madam President—Opposition senators interjecting—10000PRESIDENTThe PRESIDENT—Order! Senator Parer, we will wait for silence.1038Parer, Sen WarwickSenator PARERKI4QLDLPResources and Energy10—The trust receives a number of forms of income: one is franked dividends, on which tax has been paid—okay? The other sorts of returns that come into that trust are property investments, on which full tax is paid. I will explain it to you again: under the taxation laws, you cannot hold dividends in trusts; they must be distributed.10381038Calvert, Sen PaulSenator CALVERT5F4TASLP10—My question is to Senator Kemp, the Assistant Treasurer, and it relates to a real issue—that is, fundamental tax reform. The need for tax reform is broadly supported throughout the Australian community except, of course, by the economic dinosaurs of the Australian Labor Party. Will the minister identify the unfairness of the current tax system and explain why taxation reform is so critical?1038Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I thank Senator Calvert for focusing on a really key issue which virtually all of the community believe is a very important issue, and they are looking to the major political parties to make their positions very clear on this.RF4COOKSenator Cook—No GST!WW4Senator KEMP—The fact of the matter is that Senator Cook is the only known Australian who thinks we have a first-rate tax system. Senator Cook, it will get lonely because no-one agrees with you.RF4COOKSenator Cook—Tell the truth, why don't you?10000PRESIDENTThe PRESIDENT—Senator Kemp, resume your seat. Senator Cook, I ask you to stop shouting across the chamber. It is not interjecting; it is just being disruptive and shouting.WW4Senator KEMP—What I was going to point out to Senator Cook, and the very few people who happen to agree with his position in relation to the need for no tax reform, is that most Australians are very worried, and quite rightly, about the very high levels of personal income tax, particularly on the margins—the very high levels that the average Australian is facing on his marginal tax rate. That is one of the major problems with the current system.Another major problem with the current system is the wholesale sales tax, a system invented in the 1930s, which, as most people understand, possibly with the exception of Senator Cook, is riddled with anomalies and is causing great confusion and great cost to industry. The fact of the matter is that, for a variety of reasons, the current tax system is seen by many people to be unfair. As I said, they are facing very high levels of marginal taxation and, of course, the very old-fashioned wholesale sales tax system, which is exceedingly costly and hard to administer.What we have seen in recent months is a lot of people in industry and in community groups putting forward their ideas for tax reform. To be quite frank, it is a very sad reflection on the Labor Party that so few members of that party have been prepared to come forward and constructively join this debate. There is an old saying which, I think, typifies the Labor Party: if you believe in nothing, you will say anything. Indeed, we had this over the course of the weekend when the shadow Treasurer was asked to put forward some of his views on tax reform. What he had to say caused quite a flurry in the media, I have to say, and certainly in New South Wales.We had him saying that a Labor government would contemplate abolishing negative gearing. That is what the shadow Treasurer said on Melbourne radio. He said that negative gearing was certainly one option that could be contemplated. He followed that up with a comment that abolishing negative gearing was—Opposition senators interjecting—WW4Senator KEMP—I quote your shadow Treasurer. He said that abolishing negative gearing was `one of many, many options that we are certainly considering.'Honourable senators interjecting—10000PRESIDENTThe PRESIDENT—Order. There are too many interjections on both sides of the chamber.WW4Senator KEMP—We thought at last we had at least some hint of the possible tax reform program that Labor were putting forward and, as I said, it did attract a huge amount of interest around the community. But within 24 hours, the shadow Treasurer, Gary Evans, dropped this proposal. He then said, `We are not embracing a proposal to end negative gearing.' Of course we all hark back to a previous occasion—(Time expired)1039Calvert, Sen PaulSenator CALVERT5F4TASLP10—Madam President, I ask a supplementary question. Minister, this is a very important national issue. Could you inform the Senate of the wide variety of advice you have been receiving on tax reform?1039Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Indeed, there is a very wide variety of advice we are receiving on tax reform but the Treasurer, Mr Peter Costello, did pass me a copy of a journal called the Gary—sorry, Madam President, the Gareth—in which he did not mention death duties and he did not mention negative gearing. But he did say that he would be very happy to supply some information on a GST. This—so far, apparently—is the only thing we have on the Labor Party tax reform package. It is a pathetic effort and the community rightly expect more from the Labor Party on this very important issue.10391039Cook, Sen PeterSenator COOKRF4WAALP00—My question is to the Minister for Resources, Senator Parer. In failing to declare your direct personal shareholding in QCMM (ESP) Pty Ltd, did you do so in order to hide that company's 760,000 share interest in the publicly listed company Pan Australian Resources NL?Government senators interjecting—10000PRESIDENTThe PRESIDENT—Order! Senators on my right should allow Senator Parer to hear the question.RF4Senator COOK—Did you do so in order to hide that company's 760,000 share interest in the publicly listed company Pan Australian Resources NL? Did you tell the Prime Minister about your shareholding, through QCMM (ESP), in Pan Australian Resources? Did you tell the Prime Minister that that company is engaged in major exploration in Western Australia and Queensland for gold, nickel, diamonds, copper, lead, zinc and silver? Can you assure the Senate that you—as minister for gold, nickel, diamonds, copper, lead, zinc and silver—have never taken a decision to advantage Pan Australia? (Time expired)1039Parer, Sen WarwickSenator PARERKI4QLDLPResources and Energy10—I explained in the Senate last week, when asked about this, that the whole purpose of QCMM (ESP) was, in fact, as a form of superannuation or retirement benefits. At the time, I thought that the thing had become defunct. Contributions were made, I think, for two years—but all contributions to it ceased in 1995.Let me say that I have had no interest in what shares that particular company has. If you want to talk about it, there is a company that has something of the order of—from memory—$4 million that applies to other people who have been part of the employee share program. That is what ESP stands for. I have had no involvement whatsoever in what it invests in. One of the things often spoken about, Madam President, in this place, are blind trusts. I have no knowledge whatsoever of any investments. On the information that I had on it, I had no record of any investments in Pan Aust. Now, maybe they do; maybe they do not. But I have no knowledge of that investment whatsoever.RF4COOKSenator Cook—Did you tell the Prime Minister?KI4Senator PARER—No. I did not know about it.1040Cook, Sen PeterSenator COOKRF4WAALP00—Madam President, I ask a supplementary question. I took you to say you did not know about it, Minister. Is it also a fact that QCMM, the company in which you own $2 million worth of shares, owns 100 per cent of another company called Kiskin Pty Ltd which itself owns a further 3.7 million shares or 4.9 per cent of Pan Australian Resources. Is that a fact? As the web of deceit is growing by the day, Minister, have you disclosed all of your shareholdings—10000PRESIDENTThe PRESIDENT—Senator Cook, I regard that as an imputation and would ask you to withdraw that phrase.RF4Senator COOK—I withdraw that phrase. Have you disclosed all of your shareholdings to the Prime Minister and how can you sustain any argument that these holdings do not constitute a flagrant conflict of interest?1040Parer, Sen WarwickSenator PARERKI4QLDLPResources and Energy10—Let us correct the innuendo again. I do not hold shares in Kiskin. The family trust does not have shares; it has interest in what I understand is the Kiskin Unit Trust. And it is also my understanding that the Kiskin Unit Trust investments are pretty much limited to real estate and property investments. But I have no knowledge whatsoever of the interests of the family trust in another trust which is much larger, like one per cent. There is no involvement whatsoever in it since the days that I resigned from the major company and any subsidiary associated with it or any unit trust company associated with it.10401040Lees, Sen MegSenator LEES8U4SAAD00—My question is to Minister Parer, Minister for Resources. Minister, I refer to the significant influence you brought to bear on Australia's climate change position in the lead-up to Kyoto. At the time the Australian Democrats, along with many governments, were astonished at the position your government took to Kyoto. Your stance was—Government senators interjecting—10000PRESIDENTThe PRESIDENT—Order! Senators on my right, I cannot hear Senator Lees.8U4Senator LEES—Your stance was based on a completely discredited, blatantly biased and debunked ABARE modelling exercise and I ask: isn't it correct that your real agenda on climate change was to protect the Australian coal industry and, in particular, to increase exports of the Australian coal industry? Is that not exactly what you achieved? If this is not a conflict of interest, what is?1040Parer, Sen WarwickSenator PARERKI4QLDLPResources and Energy10—The question of greenhouse and the greenhouse approach at Kyoto was a whole of government approach led very well, I might say, by Senator Hill. The whole of Australia gained from that outcome, including you, Senator Lees. Let us get more specific. You talked about the export market. Any decisions or agreements made by other countries in respect of what they use in their blast furnaces or what they use in their power stations is entirely a matter for them, not for us. We were looking at the Australian scene. From an Australian perspective, the concern in regards to greenhouse gas related to the power generation in our power stations from coal.An incident having occurred in the gallery—KI4Senator PARER—And the worker, too—I'm with the worker! If we had gone down the Labor Party and the Democrat track, some hundreds of thousands of workers would have lost their jobs, not because of the export market but because of the generation of power in places like the Latrobe Valley, the Illawarra, the Hunter Valley and the Bowen Basin. They refer specifically to the generation of power in Australia. So you have got the steel industry, the aluminium industry and all those industries. As regards exports, the volume of coal that is exported depends on the demand in other countries for those sorts of materials for power generation, for the chemical industry, for the cement industry and for the steel industry.You are trying to track this back to a conflict of interest. The mine that I chaired does not sell any coal on the domestic market—it exports the lot—so any decisions that came out of Kyoto did not affect in any way the coal exports unless other countries decided that they were going to cut back. We had no control over that whatsoever. All that Senator Hill was doing was coming up with a solution that was in the interests of Australians, that was fair and equitable, and that preserved hundreds of thousands of Australian jobs.1041Lees, Sen MegSenator LEES8U4SAAD00—Madam President, I ask a supplementary question. I wish, indeed, that it had been the environment department that led us in the Kyoto debate, but, unfortunately, it was not the environment that was foremost on this government's agenda. Minister, you are basing those figures, which I think have been debunked well and truly by the Ombudsman, on the ABARE modelling exercise. Therefore, Minister, is one of the processes that you are going to review the entire ABARE modelling exercise? After all, the Ombudsman said that it was both blatantly biased and heavily in favour of the fossil fuel industry. It was on that document that you then jumped ahead and ran the argument at Kyoto. This was not losing jobs, Minister. Indeed, the whole argument at Kyoto was that, if we protected the environment, we actually increased jobs, particularly in the sustainable energy industries.1041Parer, Sen WarwickSenator PARERKI4QLDLPResources and Energy10—First of all, I did not run the argument at Kyoto, Senator Hill did. Let me also correct a statement that you have made which is totally incorrect. The Ombudsman did not say the ABARE report was blatantly biased. I might say that a lot of the comments made by the Ombudsman have been taken on board by the ABARE people. Of course, as I have said here often—and no-one from that side has disputed this, because they have been in government and you never will be, Senator Lees—ABARE is there to give unbiased reports to the government of the day, whomever that government might be. The Ombudsman did criticise ABARE for the sort of nomenclature it used when it described the funding provided by some of the outside sources in the preparation of the Megabare model and, subsequently, the Gigabare model.10411041Cook, Sen PeterSenator COOKRF4WAALP00—My question is to the Minister for Resources and Energy. Senator Parer, I remind you of your statement to the Senate that, since resigning your chairmanship of Queensland Coal Mine Management Pty Ltd, you have had—and I use your words- `nothing whatsoever to do with the company'. How do you explain Mr Harold Shand's comment that not only had he met with you but the mine had been discussed in general terms? Minister, have you had contact with Mr Shand or any other company official from after question time on Wednesday, 11 March this year to now? If so, why did you initially deny it?1041Parer, Sen WarwickSenator PARERKI4QLDLPResources and Energy10—The comment I made was that I have had no involvement with the management or the operation of that company. If you want to verify that in the documents that I tabled, you will see that Mr Shand has very clearly spelt that out and that any discussions that I have had with him have been of a general nature. There has been no reason for me not to.UI4RAYSenator Robert Ray—You heavied him this week!KI4Senator PARER—Here we have from the old Labor side over there—`You heavied him'. What a trade union remark.10000PRESIDENTThe PRESIDENT—Order! Senators will cease shouting across the chamber.KI4Senator PARER—Since questions were raised of me last week certainly there have been queries raised by some of my staff with the company in respect of some of the detail—nothing more, nothing less, and you would not expect otherwise.1041Cook, Sen PeterSenator COOKRF4WAALP00—Madam President, I ask a supplementary question. Minister, in the light of your admission that your discussion with Mr Shand covered the Asian financial crisis, can you assure the Senate that you did not pass Mr Shand any sensitive government information relating to the Asian situation and its effects on the company's interests such as export coal prices? Can you give that categorical assurance to this chamber?1042Parer, Sen WarwickSenator PARERKI4QLDLPResources and Energy10—Yes, I can give you the assurance. Let me tell you, Senator, and you should know because I think you were previously a minister of the resources department, that the information that comes to me from the department—which I might tell you, Madam President, is public knowledge the moment it hits the deck—comes to me in a consolidated form. It does not mention companies or anything like that whatsoever. As you would also be aware, in the main the major companies settle and they become the sorts of prices which others follow. I just reiterate that under no circumstances was there any sort of sensitive information. You talked about the Asian crisis: the only discussion was on the Asia meltdown—which, incidentally, you people on the other side have shown no interest in whatsoever. (Time expired)10421042Brown, Sen BobSenator BROWNQD4TASAG00—My question is to the Minister for the Environment. Today, 10 western Sydney councils and 38 community groups representing the 1.5 million people of western Sydney released a damning report of the government's draft EIS for Badgerys Creek airport. These groups totally oppose any airport in western Sydney because of the impacts on noise, air and water quality, as well as lifestyle. What is the government's response to this united opposition to its proposals? In particular, does the government stand by the use of the Australian noise exposure forecast system used in the EIS for Badgerys Creek, knowing that this is the same system which was used for the third runway at Kingsford Smith airport and that it proved to dramatically understate noise impacts on residents?1042Hill, Sen RobertSenator HILLBH4SALPEnvironment10—Of course, the whole purpose of the EIS process is to isolate, analyse and publicly debate the environmental issues that need to be considered in making a sound decision. It has been a widely held view for a long time that Sydney needs a second airport, and it would be irresponsible to plan otherwise. Badgerys Creek was the favoured location of the Labor Party and, as I understand it, the federal Labor Party at least continues to support the Badgerys Creek location.As you know, we looked at another possible site at Holsworthy and found that that should be ruled out quite early in the environmental impact process. We nevertheless found at the same time that the Badgerys Creek site was such that it justified further examination of the environmental issues, and that is what is taking place at the moment. It is a comprehensive process. It is a process that we believe will give public confidence in the final outcomes.We want to see the development of a second airport for Sydney, but if it is to occur it has to occur in the environmentally best way possible. That is what this process is all about. If the people of Sydney are engaging in that process, then I applaud them for doing so. I look forward to reading the report that has been issued today. It may well help us in that debate.1042Brown, Sen BobSenator BROWNQD4TASAG00—Madam President, I ask a supplementary question. The people representing the 1.5 million western Sydney residents are not engaging in the process. They have opposed the Badgerys Creek option. I ask the minister: will he and the government, notwithstanding the influence the Labor Party has on his thinking, now move to reassess the whole business of a second airport for Sydney in light of the needs of the 21st century and the other options which are available to the government, including new evidence from the civic leaders of Sydney and experts in this field from right around the world?1042Hill, Sen RobertSenator HILLBH4SALPEnvironment10—I do not quite know what the honourable senator means in that regard. I think we are going to need air travel and we are going to need airports into the foreseeable future and, in the largest city in Australia, there has to be adequate airport capacity. I think the honourable senator is also incorrect when he assumes that all Sydneysiders in the west of Sydney are opposed to it. In fact, there are varied views. Some councils are in favour of it; some are opposed to it; some actually see new job opportunities, commer cial investment and other community benefits that can flow from investment of this type.But the important bottom line is that if commercial investments in transport infrastructure projects of this kind are to go ahead, they are to go ahead in the best environmentally possible way. That is why we have engaged in a uniquely comprehensive and detailed environmental impact study. We look forward to that reaching its ultimate conclusions because, through our commitment to that study, we can give confidence to the people of Sydney. (Time expired)10431043Faulkner, Sen JohnSenator FAULKNER5K4NSWALP00—My question is directed to the Minister for Resources and Energy. Minister, as you are aware, your last published declaration to the Senate Registrar of Senators' Interests was lodged in May 1994 and was notable more for what it failed to disclose than for what it actually disclosed. But, in the interests of setting the record straight, Minister, can you advise the Senate of whether you have now amended your declaration to comply with the March 1997 requirements of the Senate Registrar, complied with the 1994 requirements of the Senate Registrar in so far as declaring your 44 shares in QCMM Group (ESP) Pty Ltd is concerned, and have amended your declaration to reflect your 1996 divestment of shares in BHP and Santos? Minister, if you have not amended your declaration as outlined, why haven't you?1043Parer, Sen WarwickSenator PARERKI4QLDLPResources and Energy10—Let's go to the second question first. In 1994, when those declarations were made, there was no requirement actually through a trust company to list the shares themselves.5K4FAULKNER Senator Faulkner—These were 44 shares you owned.KI4Senator PARER—No, you are talking about BHP and Santos, and the instructions that I gave to my wife who ran the trust—XE4BOLKUSSenator Bolkus—You gave her instructions?KI4Senator PARER—Absolutely, because I said that it was important that we did not have any publicly listed mining shares, right?Opposition senators interjecting—KI4Senator PARER—No, to make sure, because she was responsible for the share portfolio. I indicated the other day here in the Senate that I was unaware—and so was my staff—of this change that occurred, and that if we had, we would abide by that. I have not changed in that, and I will.UI4RAYSenator Robert Ray—You've had 12 days!1043Faulkner, Sen JohnSenator FAULKNER5K4NSWALP00—Madam President, I ask a supplementary question. My question to you, Senator Parer, was that if you had not amended your declaration, given the furore that has surrounded this issue, why haven't you? You have had now two weeks to amend the register in which, at least on this issue, you have said that you are in technical breach of the requirements. Why haven't you fixed it up, Minister?1043Parer, Sen WarwickSenator PARERKI4QLDLPResources and Energy10—I have said I will and I will.10431043Bourne, Sen VickiSenator BOURNETW4NSWAD00—My question is directed to the Minister for Communications, the Information Economy and the Arts. Let me start by saying that I note the minister's recent statements that, firstly, the ABC has an important role to play in the future of digital television and, secondly, the government will be wanting to ensure that the ABC does have fair access to the spectrum. Will both the ABC and SBS each receive full access to 7 megahertz of spectrum, allowing them to provide the enhanced service to all Australians that he has said he will give to the other free to air channels? Will the government provide the spectrum to the ABC and SBS free, as it is announced will be done for the commercial free to air commercial broadcasters? Will the minister provide an undertaking that the ABC and SBS will be fully funded for the digital conversion of all their production and transmission facilities?1043Alston, Sen RichardSenator ALSTONLD4VICLPCommunications, the Information Economy and the Arts10—We have not yet made any formal announcements on this matter. Let me say that I do support the proposition that the ABC and SBS should be treated separately. Indeed it was the Labor Party, as you will recall, under the current failed shadow treasurer, that was very keen to actually merge the ABC and SBS. We are not proposing to go down that path. Therefore, they each have their business plans. They have each made separate submissions. I think they each stand on their individual merits.I also think it is fair to say that there is no basis in principle for denying them access to the same quantity of spectrum that would be made available to the free to air networks. Similarly, I think it is also fair to say that if you go down the US and the UK paths then you proceed on the basis that spectrum is not charged for as long as it is used for the purpose of digital television. On that basis, the ABC and SBS are entitled to expect that they will have an equivalent treatment to the free to air networks.As far as the cost of digitisation is concerned, we have had an independent survey commissioned by Arthur Anderson. I have only recently had a look at that document. I have had discussions with ABC management about its contents. I think I have made it clear to them and I think they agree that more work needs to be done to flesh out precisely what might be involved in the cost of digitisation. Certainly, if you want to take a global view you have to include not only the cost of digitising cameras, edit suites and post production facilities but also the cost of transmission. I do not believe we are in a position to make a judgment about the true cost of digitisation for the ABC in that regard.Ultimately, the amount of money that might be made available by the government would depend to a significant extent on efforts that the ABC itself has made to minimise the cost that might be necessary. That is of course tied up with questions of outsourcing. I noted from what was said by one of the directors the other night that the ABC has reached close to 50 per cent of outsourcing for non news and current affairs. If that figure is accurate, then it suggests they are in the process of reducing the amount that might be required in-house because the cost of digitisation will be borne by the independent production houses and therefore built into the leasing or other arrangements that might be entered into by the national broadcasters.There is still a way to go in looking at precisely what costs are involved. We accept that there will inevitably be additional costs flowing to all free to air networks from the conversion to digital. It is, I think, going to be a very exciting experience even though in some respects it is not possible to anticipate precisely what the ultimate business case might be, but certainly there will be plenty of opportunities there for all the free to air networks.1044Bourne, Sen VickiSenator BOURNETW4NSWAD00—Madam President, I ask a supplementary question. I thank the minister for that answer. There were two things in it, though, that I would like him to expand on a bit if he can. First of all, he mentioned the independent consultants Arthur Anderson's report. Will the minister be tabling that report or making it public? I think we would all be very interested in what was in it. Secondly, does the minister agree that, in principle, the ABC and SBS will need to be funded by the government for the changeover from analogue to digital for both production and transmission because otherwise it just will not happen?1044Alston, Sen RichardSenator ALSTONLD4VICLPCommunications, the Information Economy and the Arts10—We will certainly be wanting to ensure that it does happen. The ABC itself does not take the view that all funds need to come from government. Certainly, they are not asking for that. They have identified a figure to which they would like us to contribute, but it is significantly less than the full amount. I think you should proceed on the basis that the ABC itself is able to identify ways in which it can raise additional funds. Certainly, some of those might also derive from the ultimate opportunities that become available from digitisation. As far as the report is concerned, I do not have any intention of releasing that at the present time. I will have a look at it and see whether we might have a different attitude.10441044Faulkner, Sen JohnSenator FAULKNER5K4NSWALP00—My question is directed to the Minister for Resources and Energy. Minister, can you confirm that you have indicated to the Prime Minister in your letter to him today, just tabled, that arrangements were made last Friday for you to divest yourself of your family trust interest by `vesting complete authority in our seven adult children under an amended trust arrangement'? Can you explain, Minister, how that is consistent with the Prime Minister's code of ministerial conduct, which says, `The transfer of interest to a family member or to a nominee or trust is not an acceptable form of divestment'? Why don't you comply with the Prime Minister's code? Why don't you resign?1045Parer, Sen WarwickSenator PARERKI4QLDLPResources and Energy10—You are scraping at the bottom of the barrel, aren't you, with all the muckraking you can do! I do confirm that those arrangements are in the letter to the Prime Minister and I will tell you why they are. I made the point right from the word go that the reason for the setting up of this trust and its whole purpose was for the benefit of seven children, who are now adults—and there are some of us who when we work in business for 30 or 40 years do this in a way that is going to benefit our children. Amending it in this way, by transferring it to a new trust company in which neither my wife nor I have directorships or shares or are beneficiaries of, reflects legally what has been the case for quite a long time.1045Faulkner, Sen JohnSenator FAULKNER5K4NSWALP00—Madam President, I ask a supplementary question. Senator Parer, is not divesting yourself of these shareholdings a final admission from you that they result in a flagrant conflict of interest? The Prime Minister's code states:Ministers are required to divest themselves of all shares and similar interests in any company or business involved in the area of their portfolio responsibilities.You admitted guilt by doing that today. You have not complied with the code. You have ignored the code again because the code states:The transfer of interests to a family member or to a nominee or trust is not an acceptable form of divestment.You have breached the code again. You have no alternative, Minister, but to resign.1045Parer, Sen WarwickSenator PARERKI4QLDLPResources and Energy10—The whole purpose of disclosure whether it be in the Senate or for the Prime Minister's guidelines is to address conflict of interest. Not once has anyone on that side shown that in my ministerial capacity I have had a conflict of interest.Opposition senators interjecting—10000PRESIDENTThe PRESIDENT—Order! There is too much shouting in the chamber.KI4Senator PARER—If you look through the documents from my department, that I have tabled today, talking about the decision making process you will find that there is no conflict of interest. What does conflict of interest mean? I will tell you what it means. It is something that you do as a minister that enhances your own financial position. I have never made a decision within my portfolio that has had that effect and it is very hard to see the potential to do so.10451045Ferguson, Sen AlanSenator FERGUSONEP5SALP10—My question is directed to the Minister for Communications, the Information Economy and the Arts. The government intends to seek a mandate at the next election to enable Australians to take a further stake in Telstra. Will the government use the overwhelming majority of the proceeds from floating the rest of Telstra to reduce Commonwealth debt? How does the government's position on these important issues compare with the record of the previous Labor government that sold both the Commonwealth Bank and Qantas?1045Alston, Sen RichardSenator ALSTONLD4VICLPCommunications, the Information Economy and the Arts10—That is a very important question from Senator Ferguson because there is an absolute chasm between the parties on this issue. We said prior to the last election that we would seek a mandate before we embarked on any privatisation of Telstra. We obtained that mandate and we proceeded to provide Australians with an opportunity to buy shares, which I am sure none of them regret for a moment.We have now sought the opportunity to seek to be in the same position after the next election. What is the Labor Party's position? They will say one thing and do another. What did they do in relation to the Commonwealth Bank? Before the 1990 election they said they would not sell it at all. They swore blind that they would keep it 100 per cent government owned. What did they do after that? They started to sell down. Before the 1993 election they swore blind that they would not sell any more. What did they do after the election? They sold even more.What is particularly significant about this whole debate is the fact that there were a couple of stories written about what a former senior Labor minister told Mr Frank Blunt about Telstra being privatised in the early 1990s. Mr Blunt went on to say that he was still a very active person. You do not have to be too smart to work out who that was. The minister for communications at that time was Mr Beazley.Mr Beazley was invited to go into the House and deny that proposition, but he has not. Never for a moment has he done that. What he did was call a press conference and say weasel words like, `I was leading the charge. I was doing this, that and the other and that time.' He said, `I have had a discussion with Mr Blunt and his recollection of events has confirmed mine.' If Mr Beazley is really saying that it was not him that talked about privatising Telstra let him have the courage to go into the parliament and say in front of the Speaker that, in fact, it was not him. He has never had the guts to do it.5F4CALVERTSenator Calvert—Gutless!LD4Senator ALSTON—He is certainly not gutless in other respects, Senator Calvert! I noted with a great deal of interest that Mrs Kernot has recently been appointed to handle the Telstra issue. This is the shadow minister for the me generation yuppies, presumably the ones who have been into Telstra shares in spades. Mrs Kernot has said a few things about Mr Beazley and the Labor Party on this very issue. They are very pertinent remarks. She said, `I think Labor in opposition won't sell Telstra, but I'm more worried about Labor in government.'In other words, she knows that this mob lie their heads off. What she ought to be doing is keeping the bastards honest instead of lying down for Labor as she intends to do no doubt. She is so obsessed with getting on to the front bench and maybe one day having the opportunity to be in a position of power that she is not interested in the slightest about the remarks she has made. She said to Mr Beazley, `Listen, we are not buying these empty assurances. We're very dubious about commitments that are later breached.'That says it all. If your own person nominated to get out there and argue your case does not believe the case what hope have you got? The fact is that this is utterly opportunistic. We are the ones who will apply the overwhelming proceeds of sale to retire debt. We will not splash it up against the wall as this mob did when they privatised Qantas and Commonwealth Bank—used it for recurrent expenditure. Now you have Mr Crean saying we would use it for everything else under the sun. They are not to be believed in any shape or form. We are the ones who accompanied the first sell down with a regional telecommunications infrastructure fund which you opposed. (Time expired)1046Ferguson, Sen AlanSenator FERGUSONEP5SALP10—Madam President, I ask a supplementary question. Minister, is the government aware of any threats to this historic opportunity to wipe out 40 per cent of the Commonwealth's debts?1046Alston, Sen RichardSenator ALSTONLD4VICLPCommunications, the Information Economy and the Arts10—Yes. Funny you should mention that, because it is precisely Mr Beazley's debt. He was the finance minister at the time. He has no interest in actually bringing down any of that debt. They would simply use the proceeds for any expedient purposes that they saw fit. I will give you a classic example of how far off the mark they are. In arguing that Telstra should not be sold, the current shadow minister for communications said: `In daily life, every Australian relies on Telstra and therefore the government should retain control of it.' This is the ultimate in communist nonsense I would have thought. We rely on fresh air, we rely on clean water and we rely on roofs over our heads. The government should own all these things? It is a nonsense. They know it. They do not have a leg to stand on. They are not interested in doing anything other than trying to gain a few bits of support from the people who might be otherwise misled, by pretending that they do not understand why this is happening. They know it is happening in every other country in the western world, but they are not prepared to stand up and do the right thing.BH4HILLSenator Hill—Madam President, I ask that further questions be placed on the Notice Paper .Questions Without Notice1047104715:02:001047Faulkner, Sen JohnSenator FAULKNER5K4NSWALP00—I move:That the Senate take note of the answers given by the Minister for Resources and Energy (Senator Parer), to questions without notice asked today relating to the financial interests of Senator Parer.What Senator Parer has done today is come into the parliament a few minutes before question time and table certain documents relevant to the travails he has at the moment, the troubles he has at the moment. But you have to read Senator Parer's letter to the Prime Minister (Mr Howard). That letter is dated today, 23 March 1998. You have to flick through the first few pages. You have to get to page 9 before you find out what Senator Parer is up to. It comes under the subheading `Revised arrangements'. Senator Parer's letter says this:Accordingly arrangements were made last Friday by Brisbane lawyers, Corrs Chambers Westgarth and our accountants Howarths, for my wife and I to renounce any interest as beneficiaries in both family trusts, to resign all offices and directorships, and to vest complete authority in our seven adult children under an amended trust arrangement.What that says is that Senator Parer's decision to divest means he is guilty as charged by the opposition of a conflict of interest. He is guilty as charged. What he has done is make a final admission that his shareholdings place him in an impossible position—a flagrant conflict of interest, a conflict between his public duty and his personal interests. Because of that, he has made a decision to divest through this mechanism. But look at the mechanism he uses. Let me quote it again. It says:. . . vest complete authority in our seven adult children under an amended trust arrangement.That is what Senator Parer's letter to the Prime Minister says today. But what do the Prime Minister's own requirements say about this particular matter? Let us not forget from day one—not when Senator Parer failed to disclose these shareholdings and his interests in his family trust but since the opposition has exposed his deceit in this matter and exposed the fact that he did have interests, very substantial interests, in a mining company in the same area where he has ministerial responsibilities—we have always pointed to the Prime Minister's discredited guide on key elements of ministerial responsibility. We have always pointed to that clause that says this:Ministers are required to divest themselves of all shares and similar interests in any company or business involved in the area of their portfolio responsibilities.That is what Senator Parer is supposed to have done. He has failed to do that. He has failed to declare those interests to the Senate register of pecuniary interests. He has failed to comply with the Prime Minister's own guide. Now he tries to slime and sneak and snivel his way out of this by proposing this form of divestment of his company to his adult children. He now says that he will vest authority in his seven adult children under an amended trust arrangement. The problem is that that is a clear breach of the Prime Minister's own guide. That is a clear breach of what the Prime Minister said he must do. The same clause of the Prime Minister's guide to ministerial responsibility that says that a minister who has business interests in the area of their portfolio responsibilities must divest them also goes on to say this:The transfer of interests to a family member or to a nominee or trust is not an acceptable form of divestment.What Senator Parer has done is propose a form of divestment that is disallowed under the Prime Minister's own guidelines. That is what the minister here has done.We now have a brief opportunity to have a look at the material that Senator Parer tabled prior to question time today. He does not come clean at all. We do not know what all the details are in relation to his interests and his shareholdings. We have never believed that Senator Parer has been telling us all of the details before the Senate. What we say now is that this proves that Senator Parer is guilty as charged. The only issue remaining is the sentence, and there is only one appro priate sentence—that is, that Senator Parer should resign or should be sacked by the Prime Minister. (Time expired)15:07:001048Macdonald, Sen IanSenator IAN MACDONALDYW4QLDLP10—Senator Faulkner has lost it. He knows it, and so do the people behind him. Everybody in this chamber, everybody in the parliament, knows that Senator Parer is as honest as the day is long. There has been absolutely no conflict of interest. In spite of two weeks of muckraking and guttersniping by the Labor Party, they have not come up with one piece of concrete evidence about any personal benefit to Senator Parer over this matter. People are seeing this as simply another slimy Labor Party muckraking effort.The Labor Party were not so outraged as they are pretending to be now when Senator Bolkus, as the then Minister for Administrative Services, negotiated to move the audit office into the ALP-owned Centenary House. Where was all this feigned outrage at that particular time? Where was the outrage of the Labor Party when their leader Bob Hawke, a personal friend of Sir Peter Abeles, used the armed forces to crush a union at the time of the pilots' strike? Where was all of this feigned outrage at that time?Where was the outrage when Mr Hawke used his position as Prime Minister to collect $1 million from four Western Australian business leaders? Why were you not objecting to that, Senator Forshaw, at the time? What about when then Senator Evans wrote the blue book on diplomacy using ANU academics without giving acknowledgment of their contribution? Where was the outrage with that? That was genuine fault. In the case of Senator Parer, there is not a thing wrong, nothing has been proved. We could go on to Mr Keating, of course, and his conflicts of interest which are absolutely legend.C16HEFFERNANSenator Heffernan—Good old Warren!YW4Macdonald, Sen IanSenator IAN MACDONALD—As my colleague says, there was Mr Warren Anderson. We all know about the length that Mr Keating went to and the conflict of interest at the time, and not a word from these people who are so vocal today.It is a pity that Senator Alston, the Minister for Communications, the Information Economy and the Arts, has gone because I want to raise an issue for him to clarify for me. There were a couple of serious questions today. The Labor Party have not asked one question this session on jobs, on tax reform, on the real issues that are important to Australian people, but there was one that came from the Democrats about the ABC. If there is this question about supposed conflict, I want Senator Alston to have a look at the former general manager of the ABC. You will remember David Hill, lovely fellow. He used to be involved with the North Sydney Leagues Club. He was not a bad fellow. Do you remember that he got his contract paid out?TH4KNOWLESSenator Knowles—That's right.YW4Macdonald, Sen IanSenator IAN MACDONALD—He got his contract paid out. Everybody thought that the ABC had sacked him because he was pretty hopeless at the job.UNKNOWNOpposition SenatorOpposition Senator—Like Grahame Morris?YW4Macdonald, Sen IanSenator IAN MACDONALD—He was sacked. Do you know what the ABC board did? They paid out his contract because his term had been terminated before time. We all thought that was probably fair, but then we found out in the estimates committees—and I remember asking about this—that in fact Mr Hill was not sacked; he resigned of his own volition. That is fair enough. Nobody wanted him and he knew the time was up, but he resigned.Tell me, Senator Cook, you are the alternative finance minister, why if you resign does your employer still pay you out for the balance of your term? What was it—$300,000 or $400,000 that Mr Hill got? We should look into that. You have spent a lot of time going through the ASC records and Senator Parer. You will probably want to go back and have a look through the ABC records and at this guy who resigned of his own free will, according to him and according to the Senate estimates Hansard. Who pressured the ABC board to pay him out? This is all in this New South Wales Right stuff, Senator Forshaw. You perhaps would know the answer to that. Did anyone pressure the ABC board into paying out Mr Hill $300,000 or $400,000 when he, of his own volition, resigned from a position? (Time expired)15:12:001049Cook, Sen PeterSenator COOKRF4WAALP00—That was a big red herring. If there is something wrong, investigate it, set it right, but do not try to change the focus of this debate. What do we have here? We have Senator Parer looking much like the bloke who has been pulled aside by the speed cop who says, `You were speeding,' and he says, `I wasn't driving,' and then the cop says, `But you're the only one in the car.' That is what you have here. Senator Parer gets sprung, and then he confesses. Then he puts out a notice saying that all the things we have been saying are right. That is what we have here. Let us not confuse the matter. Do not blame us. These are your guidelines imposed on you by your Prime Minister (Mr Howard), who now disobeys them.There is a clear conflict between public duty of a minister and private interests of this minister. That is a conflict of interest that not only should not be the case but also should not be seen to be the case. The Prime Minister is on the record often enough saying, `It's got to be not only a conflict but also an apparent conflict.' Other people went on that basis, why doesn't Warwick Parer go?The whole situation here is quite simple. Just before question time we had a pre-emptive strike, an attempt to try to clear the air by dropping a massive paper on the table and saying, `That clears it all up.' We are told it will take an hour to photocopy these documents before we can actually look at them, but it does not clear the air. What we have seen now in fact complicates the issue. What is the whole truth here? Remember, when you talk about the truth, you do not just talk about the truth—you talk about the whole truth and nothing else but the truth. What we got was never the whole truth.Let us have a look at what the whole truth is here. We, of course, know that he is a minister in charge of an area where he owns a private company and he regulates the behaviour of companies in the area which he controls. We know that he has $2 million worth of shares in one of the companies in the industry he regulates. We know as a minister he is in regular contact with the chairman and managing director of his company. We know that he visited Japan and spoke to two other partners associated with his mining company. We know he sat through the native title debate in this chamber and did not declare his interest, despite the fact there was a clear conflict of interest between his ownership of that company and native title claims.Now the web of deceit widens even further. Enter the company Pan Australian Resources NL. Who is Pan Australian Resources, the new entry into this debate? It is a company listed on the stock exchange worth $11 million.N26ABETZSenator Abetz—Madam Deputy President, on a point of order: during question time, Madam President made Senator Cook withdraw certain words. He has now flagrantly, in disregard of her request, repeated those words during his speech and you, Madam Deputy President, ought require him to withdraw.10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—Senator Cook, if you have said anything unparliamentary, would you please withdraw it?RF4Cook, Sen PeterSenator COOK—I said `web of deceit'. That is what we have here but, if you rule those words unparliamentary, I will withdraw them. The plot has thickened to the extent now that very serious suspicions are raised about deceit. Do you prefer that, Senator?Let me go to Pan Australian Resources. It is a company listed on the stock exchange worth $11 million. The Parer family trust holds 16 shares in QCMM Pty Ltd, and QCMM Pty Ltd in turn holds 100 per cent of Kiskin Pty Ltd, and Kiskin in turns holds $3.7 million or 4.9 per cent of the issued capital of Pan Australian. That is the truth, the whole truth.The truth was, `I don't have any interest in a mining company.' When you go through the blinds and who holds what in whom, who holds what in whom and who holds what in whom again, you find that Kiskin holds $3.7 million or 4.9 per cent of the issued capital of Pan Australian, and Kiskin is Pan Australian's third largest shareholder. It is not insignificant.Also, Minister Parer directly holds 44 shares in QCMM Group (ESP) Pty Ltd. QCMM Group (ESP) Pty Ltd in turn holds 726,355 shares, or 0.96 per cent, of the issued capital of Pan Australian Resources. Collectively, he holds over five per cent of Pan Australian. Pan Australian is involved in major gold, nickel, copper, lead, zinc and silver exploration projects in Western Australia and Queensland. At no stage has Senator Parer declared his indirect interest in this mining and exploration company, yet he regulates activities in all those areas of gold, nickel, copper, lead, zinc, silver and so forth. He is not just the minister for coal; he is the minister for resources. Why didn't he fess that up? Why didn't he tell the whole truth? Why did he just tell that truth which he knew we had found out and argue that as a protection? Why did he say that he did not know he had to put it in his declaration? Ordinary Australians cannot get away with not knowing what the law means. (Time expired)15:17:001050Abetz, Sen EricSenator ABETZN26TASLP10—On 3 October 1995, Senator Faulkner was awarded the Dr Meredith Burgmann award for the most hysterical outburst at an ALP conference. I think he should also receive an award for his hysterical outburst today. What we know about Senator Faulkner is that, whenever he does not have the facts on his side, he becomes hysterical because he thinks that somehow noise is going to obviate the need for evidence and facts.The reality is that nothing at all has been pinned on Senator Parer. The reality is, as was so very well put in the Australian Financial Review of 19 March 1998, that the Labor Party are bereft of policies. They have no policies, no solutions and no alternatives, so what do they do to try to create an atmosphere of activity? They engage in muckraking. They have defamed people who have been dead for half a century—the Baillieu family—but when they are proven wrong, when their researchers are shown to be wrong, do you think they have the good grace to come back into this chamber and apologise and say, `We made an honest mistake'? No, it is beyond them, because there is no sense of decency about their attacks on this government. As former Senator Richardson said about the Labor Party's modus operandi, they do `whatever it takes'. They will do whatever it takes to try to score an easy, sleazy point.This article that I referred to in the Australian Financial Review of 19 March 1998 was very telling, and allow me to quote from it. It states:And does the opposition usually ask stupid, nitpicking questions? Well yes, actually.Of the 67 questions asked by the Opposition in the House so far this year, 22—or pretty well one-third—had nothing to do with policy, and only five dealt with the economy, 12 with employment and four with industrial relations. The Opposition Leader, Kim Beazley, asked one question on the economy and one on employment.That ought to tell the Australian people that these are the priorities of the Leader of the Opposition, the would-be Prime Minister, the alternative Prime Minister. In all that time, he asked one question on the economy and one on employment.But what about all the sleazy allegations that have been made against Senator Parer and others? Mr Beazley is in there fighting thick and hard but, when it comes to alternative policies for this country, he is nowhere to be seen. Of course, the situation is no different in this place. As the article stated:Of 583 questions asked in 1997, only 79 dealt with jobs, debt, inflation, budget issues, small business and the general economy.And guess what it said about Senator Faulkner?The Senate Leader, John Faulkner, asked three questions on unemployment.That was what he asked for the whole year. That is his commitment to creating jobs in AustraliaWhat is Senator Faulkner doing? He is attacking a man who, by his own investments and by his own diligence, has created jobs for Australians—something Senator Faulkner has never done and something Mr Beazley has never done. Senator Parer has earned export dollars for this country—something Senator Faulkner and Mr Beazley have never done. Indeed, Mr Beazley's record is creating the huge foreign debt that the Commonwealth faces and that we, in a very appropriate manner, are seeking to repay.So if the Labor Party wants to talk about standards, let it just reflect on who would be the Attorney-General under its regime. It would be Senator Bolkus. He would have direct responsibility for the Skase matter—the man who deliberately leaked Federal Court documents that prejudiced the whole action. That is the Labor Party's standard. While Senator Bolkus remains on the front bench of the Labor Party, the Labor Party has no right in any shape or form to seek to attack the propriety of our ministers, let alone someone who is so highly regarded as Senator Parer.15:22:001051Lees, Sen MegSenator LEES8U4SAAD00—I am very pleased to be able to join in this process today of taking note of Senator Parer's answers and, in particular, to note his answer to me regarding this government's stance on greenhouse. Since Senator Parer became the minister for resources, it has been, much to the Democrats' annoyance, really a ministry focused on the coal industry, a ministry focused on the past. Yes, it is focused on an industry that is very important, but in emphasising this one particular part of his portfolio he has deliberately ignored—indeed, I would go so far as to say he has not just ignored but has undermined, de-funded and actually worked against—alternative energy sources.If we look at his answers to questions asked today, again he seems to wish to completely avoid and indeed pretend, I suspect, that he does not really understand the link between our stance at Kyoto and the interests in his industry. Let us just look at the position that the Australian government took. We were the only country to go over there and argue for an increase. That was certainly an embarrassment to those people in Australia who care about these issues, to the conservation movement, to indeed the many scientists who have worked for many years and I believe have shown this government very clearly where our future should lie.Senator Parer suggests today that he does not understand the link between coal exports and the fact that we went to Kyoto trying to destabilise the world agreement, trying to pull the world back from the 10 per cent or eight per cent reductions. We then went down even below that to the point where we have managed to get it to where we can actually increase ours, and the rest of the world got away with a lot less, particularly Europe, than those of us who care about the environment had hoped for.Let us look at the link. If the world is not pushed to do something about alternative energy—in other words, people are going to be allowed to rely on coal into the future year after year—if people are going to be allowed to continue using coal, then our coal exports, which are the minister's priority, will flourish. It is no good, Senator, to stand up in this place and say it is all about jobs. Firstly, the ABARE model has been debunked. It has been shown to be the nonsense that it really is. No-one else in the world believes it. It has never been substantiated by any other modelling exercise anywhere. We see very clearly that this government's emphasis on coal has detracted from the adoption of a range of alternatives. For every percentage point we managed to pull back at Kyoto—away from that 10 per cent reduction which was I believe the minimum—we see the benefits to Australia of coal exports and not the benefits in jobs. The coal industry is rapidly shedding jobs. I suggest that if this minister does not understand that he should read the daily papers for a few weeks as we see coalmine after coalmine closing down and many of those that are staying in business shedding workers.I also suggest that this minister does some reading on alternative energy; that he looks to Europe, particularly to Denmark and the new jobs being created there in wind energy; that he looks at the papers that have been prepared on what Australia could be doing in the solar industry area, particularly the fact that we are leaders in a range of different facets in this field at the moment and that we should now be exporting this technology far more than we are doing. Part of the reason that we are not able to have the strong base here in this country on which to build and to export is because this government is simply not encour aging that industry, amongst others. Just look at the penetration of solar hot water services in this country. We see an appalling rate of somewhere around four per cent for a country where 65 to 70 per cent of our landmass is suitable for solar technology.If we can see the direct link between this minister's mind-set on the coal industry, how it has to be protected to the detriment of all other industries, and we now understand what his personal links are to the coal industry, I have to ask him: what is a conflict of interest, if this is not? I look forward to the opportunity later on in the MPI to go through other areas, other decisions of this government, that are directly linked to the support for the coal industry and against alternative energy sources.15:27:001052Calvert, Sen PaulSenator CALVERT5F4TASLP10—I thought that was a very interesting contribution from the Leader of the Australian Democrats. Senator Lees talked about solar energy and all the rest of it. The fact is that when Senator Parer has been attacked for his so-called conflict of interest, no-one has accused him of a direct conflict of interest. I say that sincerely because there is no direct conflict of interest. One thing I know about Warwick Parer, and I have known him for 10 years, is that he is not a dreamer like the Democrats—he is a realist.The realism in this case is that if Senator Robert Hill had gone to Kyoto and succumbed to the world pressure, with the Democrats and Duncan Kerr running around and working against the national interests of Australia, the couple of mine closures that we have seen with the loss of a few thousand or a few hundred jobs in Australia would have been something like 90,000 to 100,000 jobs. If the Democrats are serious about being interested in jobs, they would have taken a different view and proposed different criteria to what they are pushing now. The only alternative they can come up with to the reality of coal power is solar power. We all know how expensive that is. Sure, there have been a lot of investigations and the like into solar power, but the realistic view is that, at this point in time, if we had not got those concessions in Kyoto 100,000, Australian jobs would have been lost in Australia. That is the reality of the whole thing.I was most disturbed to hear the word `deceit' being used about Senator Parer. There is one thing about Senator Parer: he is not deceitful and he is an honest man. There is no question about that. Senators opposite should take the time to look at the documents that he tabled today. In the letter to Prime Minister, he establishes where he is coming from when he says:Starting with no special privileges I worked hard to establish and develop business interests and I make no apology for my success.And neither should he. Neither should anybody who is a successful businessman. It seems to me, all that ever happens in this place, if you are a successful businessman, is that the minute you put your head up it is the old tall poppy syndrome—knock them down! I think the taxpayers out there who are subsidising politicians to act on their behalf should look at the value they are getting from Senator Parer who has that business acumen. He is a self-made man who has shown his ability to make a dollar, which is more than we can say for senators opposite. All they know is how to spend money.When they come in here and start talking about conflict of interest, I start thinking about some of the people on their side over the years. Alan Griffiths owned a sandwich shop while he was the minister for industry. Was that a conflict of interest? They would probably say no. Graham Richardson: remember him? He was a director of radio station 2HD while he was a minister. He did not declare his interest. I do not suppose he thought it was necessary. He used his position as minister to try to influence the President of the Marshall Islands on behalf of his cousin. Do you remember that? Talk about conflict of interests!We all knew that former Prime Minister Bob Hawke was a great personal friend of Sir Peter Abels. What happened when the pilot strike was on? Who put the defence forces in to help Ansett and Qantas? Really and truly, these people on the other side are criticising someone who is a self-made man, who has come in here and tabled all the documents and has not been proven to have any conflict of interest whatsoever. As some of these documents from his sharebrokers show, he gave instructions when he was appointed as minister, without any question at all, concerning Kathi Parer. I says here:Upon Senator Parer's appointment as Minister in 1996, she instructed us to review the share portfolio held . . . where there may be an appearance of conflict of interests—They have gone ahead to do that in good faith and I believe that Senator Parer did exactly that. He is a man of honour and trust and, as the Minister for Resources and Energy, he would want there not to be any doubt at all that he had any conflict of interest. I do not believe that has been proven, nor will it be proven. I am sure he will continue to be a very good Minister for Resources and Energy for this country.10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—Order! The time for the debate has expired.Question resolved in the affirmative.105310001CLERK ASSISTANTThe Clerk—Petitions have been lodged for presentation as follows:105321TW4Bourne Sen VickiTo the Honourable the President and Members of the Senate in the Parliament assembled.The petition of the undersigned recognises the vital role of a strong and comprehensive Australian Broadcasting Corporation (ABC) and asks that:1. Coalition Senators honour their 1996 election promise, namely that "The Coalition will maintain existing levels of Commonwealth funding to the ABC".2. The Senate votes to maintain the existing role of the ABC as a fully independent, publicly funded and publicly owned organisation.3. The Senate oppose any weakening of the Charter of the ABC.Senator BourneTW4Senator Bourne(from 21 citizens)105319TW4Bourne Sen VickiTo the Honourable the President and Members of the Senate in the Parliament assembled.The Petition of the undersigned draws to the attention of the Senate, the deleterious effects of the Multilateral Agreement on Investment.Your petitioners ask the Senate to call on the Australian Government to: 1. Make available the draft text of the Agreement2. Make a public statement about its intentions with regard to the signing accountability measures for all corporations3. Not sign the MAI unless substantial amendment is made, including the observance of international agreements including environment, labour, health and safety and human rights standards4. Extend the deadline for signing the MAI to enable full and proper public consultations to be heldSenator BourneTW4Senator Bourne(from 19 citizens)105335O15Tierney Sen JohnTo the Honourable the President and Members of the Senate in Parliament assembled.This petition of the undersigned shows:-1. Federal Government in consultation with the State Governments should set up a task force to investigate the illegal operators of the sex industry and other related industries that are perceived to offer sex.2. The sex industry as a whole is uncontrolled in the operation of so called "Sex Services"—or related industries.3. Illegal operators should not be allowed to advertise their services.4. The Federal government in consultation with the state governments set up a registry to register all escort services, massage services and introduction agencies in accordance with drawn up legislation and be given a registration number which must appear on advertising of their services. Any sex offered in these services for money should be regulated and strictly controlled according to drawn up legislation.The petitioners ask that:-1. A Federal Commissioner is appointed to control all sex services and other related industries.2. There is strict legislative control of legal sex services and other related industries. The Federal commissioner takes unlicensed sex workers off the streets by a special police force as set up, separate to the uniformed state police. Drug dependent prostitutes from the streets are given drug rehabilitation in an authorised drug rehabilitation agency and those who live off the money from illegal sex workers are dealt with as by a criminal court according to law. 3. No illegal agencies or workers are allowed to advertise their services.4. Any reference to the ethnicity or race of person is excluded from all such advertisements.And your servants will ever pray that it be so.Senator TierneyO15Senator Tierney(from 35 citizens)Petitions received.Notices105410541054Bourne, Sen VickiSenator BOURNETW4NSWAD00—On behalf of Senator Woodley, I give notice that, on the next day of sitting, he will move:That further consideration of the Native Title Amendment Bill 1997 [No. 2] be postponed till after the Government has complied with the order of the Senate of 11 March 1998 for the production of legal advice on how the bill satisfies the requirements of section 57 of the Constitution.10541054Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—I give notice that, on the next day of sitting, I shall move:That the Senate—(a) notes, with grave concern: (i) the recent attacks on the Karen refugee camps in Thailand by the Democratic Karen Buddhist Organisation and the State Peace and Development Council (SPDC) at Hway Kalok and Mae La, (ii) the failure of the SPDC to implement any meaningful socio-economic and political reforms in Burma and its continued refusal to hand over power to elected representatives of the May 1990 general election, (iii) that, despite the lack of genuine reform in Burma, the Government of Japan has decided to resume overseas development aid to Burma, and (iv) the decision by the Food and Agricultural Organisation (FAO) to hold its forthcoming meeting in Burma;(b) applauds the response by the Minister for Foreign Affairs (Mr Downer) by way of a strong media release condemning the attacks on refugees and the allocation of $1 000 000 for humanitarian relief for refugees on the Thailand-Burma border;(c) notes that selective purchasing legislation has been introduced by Marrickville City Council in line with 23 city councils in the United States of America (US) and economic sanctions by the US; and(d) calls on the Australian Government to: (i) use its good offices to make representations to the Government of Japan in a bid to have it delay overseas development aid to Burma until such time as there are genuine political reforms in Burma, and (ii) use its good offices to make representations to the FAO to change Burma as the venue for its forthcoming meeting.10541054Payne, Sen MariseSenator PAYNEM56NSWLP10—I give notice that, on the next day of sitting, I shall move:That the Senate—(a) notes: (i) the recent launch of the `Reach Out' on-line youth suicide prevention service, designed to provide information and assistance anonymously for young people, their families and friends, and professionals working in the area of youth suicide and congratulates its developer and promoters, and (ii) the vital importance of such a service in communicating with young people in a way that is accessible, relevant and comfortable for them, particularly in light of the alarmingly high level of youth suicide in Australia; and(b) commends the involvement of the Department of Health and Family Services in funding this service, as well as the support of those in the wider community, including Triple J, Microsoft and Corrs Chambers Westgarth.10541054Lees, Sen MegSenator LEES8U4SAAD00—I give notice that, on the next day of sitting, I shall move:That the Energy Research and Development Corporations Regulations (Repeal), as contained in Statutory Rules 1998 No. 6 and made under the Primary Industries and Energy Research and Development Act 1989, be disallowed.10541054Quirke, Sen JohnSenator QUIRKEZS6SAALP00—I give notice that, on the next day of sitting, I shall move:That the Senate notes: (a) that, on 7 May 1992, the now Prime Minister (Mr Howard) said, `The Australian people will judge this Prime Minister on the standard of probity that he is prepared to defend. The supreme test of the courage and probity of the Prime Minister is whether he insists on ministers observing the basic requirement of a minister, that is, that they tell the Parliament the truth';(b) that Senator Parer's declaration in the Register of Senators' Interests, tabled in the Senate, did not disclose the shareholdings held by his family trust, in breach of the requirements introduced in March 1997;(c) that, on 12 March 1998, the Minister for Resources and Energy (Senator Parer), in answer to a question from Senator Ray, stated in relation to the mine operated by Queensland Mine Management, `I have no involvement whatsoever in its operation and have not since March 1997';(d) the statement by the Chief Executive Officer of the trust's coal mines, Mr Harold Shand, admitting that he discussed the mine's operation and the coal industry during his regular contact with Senator Parer since he became the Minister for Resources and Energy; and(e) that in relation to his declaration in the Register of Senators' Interests and his answer of 12 March 1998, Senator Parer has failed the Prime Minister's own test of the basic requirement of ministers, `that they tell the truth'.10551055Lees, Sen MegSenator LEES8U4SAAD00—I give notice that, on the next day of sitting, I shall move:That the Senate—(a) notes that the removal of export controls on the coal industry was the first initiative in the Senate of the new Minister for Resources and Energy (Senator Parer);(b) notes that this removal of Commonwealth controls: (i) significantly disadvantages the environment as it removed any lever the Commonwealth had to order environmental assessments or conditions, and (iii) significantly advantages those with an interest in the coal industry; and(c) calls on the Government to reinstate the export controls on the coal industry. 10551055Ray, Sen RobertSenator ROBERT RAYUI4VICALP00—I give notice that, on the next day of sitting, I shall move:That the Senate notes that—(a) the Prime Minister's guide on the key elements of ministerial responsibility states that `ministers are required to divest themselves of all shares and similar interests in any company or business involved in the area of their portfolio responsibilities. The transfer of interests to a family member or to a nominee or trust is not an acceptable form of divestment'; and(b) it is now 13 days since the Prime Minister (Mr Howard) defied his own guidelines.10551055Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—I give notice that, on the next day of sitting, I shall move:That the Senate—(a) notes that: (i) the peaceful community blockade of the proposed Jabiluka uranium mine commenced on 23 March 1998, (ii) the evaluation by Environment Australia of the proposed Jabiluka uranium mine project has confirmed concerns relating to impacts on wilderness and world heritage values, (iii) the Mirrar, the Aboriginal traditional owners of the area, are opposed to the project, and. (iv) according to recent surveys approximately 80 per cent of the Australian electorate does not support mining in national parks; and(b) calls on the Australian Government to reverse its decision and proceed no further with the Jabiluka uranium mine proposal.10551055Evans, Sen ChrisSenator CHRIS EVANSAX5WAALP00—On behalf of Senator McKiernan I give notice that, on the next day of sitting, he will move:That the Legal and Constitutional References Committee be authorised to hold a public meeting during the sitting of the Senate on 26 March 1998, from 4 pm, to take evidence from the Australian Law Reform Commission, the Administrative Review Council and the Commonwealth Attorney- General's Department, as part of the committee's inquiry into legal aid.10561056O'Chee, Sen BillSenator O'CHEEEU4QLDNP10—On behalf of the Standing Committee on Regulations and Ordinances, I give notice that, at a later hour of the day, I shall withdraw business of the Senate notice of motion No. 1 standing in my name for today for the disallowance of public interest determination No. 7 made under part VI of the Privacy Act 1988. I seek leave to make a short statement.Leave granted.EU4O'Chee, Sen BillSenator O'CHEE—On 27 November 1997 I reported to the Senate on the committee's concerns with this determination which related to uncertain provisions concerning the development of and legislative authority for guidelines and the steps to be taken to ensure general public awareness of the determination. The minister has now agreed to amend the determination to provide for a mandatory provision to remove the uncertainty and has provided other information which meets our concerns. I seek leave to incorporate in Hansard the committee's correspondence concerning the determination.Leave granted.The correspondence read as follows—Public Interest Determination No 7 made under Part VI of the Privacy Act 19883 December 1997The Hon Daryl Williams AM QC MPAttorney-GeneralParliament HouseCANBERRA ACT 2600Dear MinisterI refer to Public Interest Determination No 7 made under Part VI of the Privacy Act 1988, which permits the disclosure of personal information about Australians overseas to their next of kin in certain limited circumstances.Subclauses 2(2) and (3) would appear to be of no effect. Firstly, to provide that the Department `should' engage in some action is not the language of a condition, but merely a request. Secondly, there is no indication of the time within which either the guidelines referred to in subclause 2(2) are to be developed, or the reasonable steps referred to in subclause 2(3) are to be taken. The Determination is therefore subject to wholly uncertain conditions. There also appears to be no legislative authority for the Privacy Commissioner to impose the further condition that the guidelines referred to in subclause 2(2) must be made with her approval. This condition also renders the whole subclause uncertain. For instance, if guidelines are developed but not approved, would this retrospectively render any earlier disclosures unlawful? Also, on what basis is the Commissioner to give (or withhold) her approval?The Committee would appreciate your advice.Yours sincerelyBill O'CheeChairman12 MAR 1998Senator O'CheeChairmanStanding Committee onRegulations and OrdinancesParliament HouseCANBERRA ACT 2600Dear Senator O'CheePUBLIC INTEREST DETERMINATION NO. 7Thank you for your letter dated 3 December 1997 seeking my advice on certain aspects of Public Interest Determination No. 7 made under Part VI of the Privacy Act 1988. As you will recall because the determination to which you refer is made by the Privacy Commissioner I sought her advice on the questions you raised. As the Privacy Commissioner is on leave the Deputy Privacy Commissioner has now provided that advice, and I apologise for the delay which that has occasioned.In relation to the Committee's concerns regarding the use of the word `should', I am informed that the Deputy Privacy Commissioner agrees that it would have been clearer to use the word `shall' in all instances, however, in his view, as subclauses 2(2) and 2(3) follow the overriding provisions of clause 2 that "the determination shall be subject to the following conditions" they cannot be regarded as merely advisory. Moreover, I am advised that the Deputy Privacy Commissioner wishes to bring to your attention the discretion possessed by the Privacy Commissioner by virtue of clause 3, to monitor the operation of the Determination and to make a further determination revoking or varying it if she considers that the conditions are not being met.I am also informed that the Deputy Privacy Commissioner wishes me to inform you that he will seek to have the Privacy Commissioner amend the Determination changing `should' to `shall' in subclauses 2(2) and 2(3) at the earliest opportunity. The Deputy Privacy Commissioner understands that this would involve having the amended Determination (renumbered as 7A) gazetted and tabled in Parliament.In relation to the Committee's concerns regarding the time frame for the guidelines and the public awareness activities to be undertaken, I understand that the Deputy Privacy Commissioner concedes that the Determination could have been more specific about the time frame for the development of guidelines and the public awareness activities to be undertaken. I am informed that the intention was that the guidelines should be established prior to any disclosure decisions being made pursuant to the Determination and that the public awareness activities would be an ongoing responsibility of the Department of Foreign Affairs and Trade. At the time of drafting the Determination the Privacy Commissioner's office understood that the following series of steps would be taken to implement the Determination:1. circulation of written instructions to all consular officers in Canberra outlining the Determination, and providing Departmental definitions for particular terms (such as next of kin, humanitarian grounds, publicly available information); followed by an information session held in Consular Branch;2. informing the Minister of the Determination, and asking that he designate particular positions within the Consular Branch as having the decision-making power in consular cases involving the Determination;3. creation of a central register in Consular Operations which would keep track of how many consular cases involve the Determination, in order for the Department to be able to report annually on the number of cases utilising the Determination to the Privacy Commissioner;4. information cable sent to all Departmental posts outlining the Determination.5. amendment of the relevant sections of the Consular Instructions (for example: Ch 6—Confidentiality, FOI and Privacy; Ch 29—Arrest and Detention; Ch 33 Welfare and Whereabouts enquiries; Ch 35—Disasters and Emergencies) and of the Consular Training Course.I am informed that the Deputy Privacy Commissioner expects that the Privacy Commissioner's office will be closely involved in at least the first three steps of the process. I understand that the Department of Foreign Affairs and Trade has indicated that it will seek the Privacy Commissioner's approval of the guidelines before they are made operational.The Deputy Privacy Commissioner has informed my Department that he has a written assurance from senior officers of the Department of Foreign Affairs and Trade that:1. the guidelines are in a draft stage and will be finalised in six to eight weeks;2. the Minister is being asked to designate particular positions within the Consular Branch as having the decision-making power in consular cases involving the Determination;3. the remaining steps to implement the Determination, including reasonable steps to ensure that there is general public awareness about the Determination, will be undertaken as soon as the guidelines are finalised; and4. the Department will not make a decision to disclose personal information pursuant to the Determination until all the conditions to which the Determination is subject have been met.I am advised that the Deputy Privacy Commissioner accepts the assurance of the Department of Foreign Affairs and Trade that all the required steps will be undertaken. However, I am advised that if the guidelines are not finalised within four months from the date on which the Determination comes into effect, the Deputy Privacy Commissioner has informed the Department of Foreign Affairs and Trade that he will advise the Privacy Commissioner that she should revoke the Determination.I trust this information will assist you in the resolution of the issues you have raised.Yours sincerelyDARYL WILLIAMS10571057Stott Despoja, Sen NatashaSenator STOTT DESPOJA3I6SAAD00—I give notice that, on the next day of sitting, I shall move:That the Senate—(a) notes: (i) the advertisement on page 24 of the Australian Financial Review of 23 March 1998 regarding funding for human cloning research, and (ii) the possibility of this being a hoax; and(b) expresses concern that the Government is not taking a leading role in assisting the Australian community to understand and deal with this new technology.10571057Hill, Sen RobertSenator HILLBH4SALPEnvironment10—I give notice that, on the next day of sitting, I shall move:That the provisions of paragraphs (5) to (7) of standing order 111 not apply to the following bills, allowing them to be considered during this period of sittings:Child Care Legislation Amendment Bill 1998Legislative Instruments Bill 1996 [No. 2]Parliamentary Service Bill 1997 [No. 2]Public Service Bill 1997 [No. 2]Public Employment (Consequential and Transitional) Amendment Bill 1997 [No. 2].I also table statements of reasons justifying the need for these bills to be considered during this sittings and seek leave to have the statements incorporated in Hansard .Leave granted.The statements read as follows—CHILD CARE LEGISLATION AMENDMENT BILL 1998The purpose of the Bill is twofold: firstly, to amend the Child Care Payments Act 1997 to allow the commencement date of some components to be deferred and secondly, to amend the Child Care Act 1972 and the Childcare Rebate Act 1993 to enable changes to payment arrangements and implementation of the 1997 Budget measures as an interim measure until the full implementation of the Child Care Payments Act 1997.Introduction and passage in the Autumn sittings is essential. If the Bill does not receive Royal Assent before 8 June 1998 then the existing payment legislation will automatically be repealed and child care payments will have to be made under the Child Care Payments Act 1997 but systems will not be in place to do so. In this situation, child care payments could not be made.The need for amendments was not foreseen earlier because not until all the detail of the proposed system had been developed did it become apparent that the Child Care Payments Act 1997 in its current form places unreasonable demands on parents. These demands will be greatly reduced with the introduction of the proposed Child Care Card (smart card) in 1999, at which time it is proposed the 1997 Act be proclaimed(Circulated by authority of the Minister for Family Services)LEGISLATIVE INSTRUMENTS BILL 1996 [No. 2]The Legislative Instruments Bill is an important piece of legislation which returns some role and responsibility to parliament from the executive in the making of delegated legislation. The Bill establishes new mechanisms for the making, scrutiny and publication of legislative instruments. It provides for the establishment of the Federal Register of Legislative Instruments, which will enable wide public accessibility. The Bill also provides for a mandatory consultation process in relation to legislative instruments directly affecting business and a sunsetting regime to ensure that delegated legislation remains relevantThe Bill was introduced into the House of Representatives on 24 June 1996 and passed that House on 11 September 1996. The Bill was introduced into the Senate on 8 October 1996 and finally debated in that Chamber on 24/25 September 1997 when a large number of government and other amendments were passed.On 17 November 1997 the House of Representatives returned the Bill to the Senate. The Bill passed by the House accepted some and rejected other Senate amendments. The Bill also included some Government amendments.On 5 December 1997, after the Senate had again considered the Bill and amendments and insisted on its previous amendments, the House laid the Bill aside.The Bill makes provision for backcapturing of existing instruments and early backcapturing of some instruments has occurred. The delay in passage of the Bill means that some of that material is no longer relevant because of subsequent amendments and duplication of registration is necessary. This problem can only be amplified by further delay in passage.The Legislative Instruments Bill is an important reform which will have a significant impact on the delegated legislation process. It has been awaiting parliamentary approval in one form or another for over four years.(Circulated by authority of the Attorney-General)PARLIAMENTARY SERVICE BILL 1997 [No. 2]The Parliamentary Service Bill 1997 [No. 2] provides for the establishment and administration of a separate Parliamentary Service to support the operations of the Houses of the Australian Parliament, and is to replace the Public Service Act 1922 in respect of the Parliamentary Departments.The bill was introduced in the House of Representatives on 10 March 1998 and was passed by that House on 11 March 1998. If passed by the Senate, it is due to commence on the same day as the Public Service Bill 1997 [No. 2]. The bill is identical to the Parliamentary Service Bill 1997, which was passed by the House of Representatives on 30 October 1997, but which was laid aside by that House on 5 December 1997 after it was returned from the Senate with amendments to which the House would not agree.It is highly desirable that the Parliamentary Service Bill 1997 [No. 2] be considered by the Senate at the same time as the Public Service Bill 1997 [No. 2] and the Public Employment (Consequential and Transitional) Amendment Bill 1997 [No. 2], which have also been reintroduced. This is so that the new Parliamentary Service can come into being at the same time as new arrangements for the Public Service should the bills be passed by both Houses.PUBLIC SERVICE BILL 1997 [No. 2]PUBLIC EMPLOYMENT (CONSEQUENTIAL AND TRANSITIONAL) AMENDMENT BILL 1997 [No. 2]The Public Service Bill 1997 provides for the establishment and management of the Australian Public Service (APS) and is to replace the Public senate Act 1922 and the Merit Protection (Australian Government Employees) Act 1984.The Public Employment (Consequential and Transitional) Amendment Bill 1997 deals with consequential and transitional matters arising from the repeal of the Public Service Act 1922 and the enactment of the Public Service Act 1997. The Bill is a necessary companion to the Public Service Bill 1997.The Bills were introduced into the House of Representatives on 26 June 1997, with the intent that the Bills would be passed and take effect from 1 January 1998. Following detailed consideration of the Bills by the Joint Committee of Public Accounts (JCPA) the Bills passed through the House of Representatives on 30 October 1997The Bills were subject to substantial amendment during debate in the Senate. The Senate amendments were considered by the House of Representatives on 5 December 1997 and formally rejected.The Bills are regarded as an essential element of the Government's micro-economic reform strategy and their implementation has been significantly delayed. Failure to introduce and pass the Bills in the 1998 Autumn sittings will further frustrate the introduction of efficiencies and economies to the Australian Public Service which were to be facilitated by the Bills.(Circulated by authority of the Minister Assisting the Prime Minister for the Public Service) 10591059Bartlett, Sen AndrewSenator BARTLETTDT6QLDAD00—I give notice that, on the next day of sitting, I shall move:That the Senate—(a) notes that: (i) the Victorian duck hunting season commenced on 21 March 1998, (ii) the practice of duck hunting not only results in the immediate death of many thousands of native birds, but also in many others dying slowly and painfully from their injuries, (iii) there is strong public support for a nationwide ban on duck hunting, as evidenced in the South Australian Parliament, and (iv) duck hunting is already banned in New South Wales and Western Australia; and(b) calls on all State and Territory Governments to ban the cruel and environmentally damaging practice of duck hunting.10591059Knowles, Sen SusanSenator KNOWLESTH4WALP10—I give notice that, on the next day of sitting, I shall move:That the Senate notes that:(a) the former Prime Minister, Mr Paul Keating, gave no indication whatsoever in his declaration of members' interests of his holding in the company of Brown and Hatton, and gave no hint in his declaration that he would get a benefit from a multi-million dollar joint deal with a multi-national company; and(b) the then Australian Labor Party Government condoned Mr Keating's action in not declaring such interests.10591059Stott Despoja, Sen NatashaSenator STOTT DESPOJA3I6SAAD00—I give notice that, on the next day of sitting, I shall move:That the Senate—(a) notes that, as a result of funding cuts to operating grants, the Australian National University (ANU) Arts Faculty is in crisis, and that: (i) the English department has reduced contact hours by one-sixth, (ii) the French department has reduced contact hours by two-thirds, (iii) class sizes have increased in several departments, (iv) philosophy tutorials are now offered only fortnightly, (v) Russian will no longer be offered at the ANU, and (vi) Australian studies and art history have closed several courses;(b) supports the campaign to maintain quality teaching in the ANU Arts Faculty; and(c) condemns the Federal Government's funding cuts to operating grants, which have undermined the quality of education at the ANU.10601060Allison, Sen LynSenator ALLISON1M6VICAD00—I give notice that, on the next day of sitting, I shall move:That the Senate—(a) notes the statement by the National Biodiversity Council of 22 March 1998 that the changes to land use proposed in the Government's Native Title Amendment Bill 1997 could have profoundly negative impacts on Australia's biodiversity;(b) recognises that members of the National Biodiversity Council are some of Australia's most eminent scientists and experts on biodiversity matters;(c) believes the Government should be doing all in its powers to better protect Australia's biodiversity, cited in the `State of the Environment' report as the number one environmental issue facing the nation; and(d) calls on the Government to withdraw its amendments to the Native Title Act: (i) which permit land use changes on pastoral leases, (ii) that remove any need for reference to native title holders over rivers and water, and (iii) which allow development within conservation reserves without reference to native title holders.10601060Calvert, Sen PaulSenator CALVERT5F4TASLP10—On behalf of Senator Patterson I give notice that, on the next day of sitting, she will move:That the time for the presentation of the report of the Environment, Recreation, Communications and the Arts Legislation Committee on the examin ation of annual reports be extended to 26 March 1998.Committees106010601060Motion (by Senator Sandy Macdonald)—by leave—agreed to:That the time for the presentation of the report of the Foreign Affairs, Defence and Trade Legislation Committee on the examination of annual reports be extended to 6 April 1998.Leave of Absence1060Motion (by Senator Carr)—by leave—agreed to:That leave of absence be granted to Senators Bob Collins and George Campbell from 23 March to 26 March 1998.Committees106010601060Motion (by Senator Calvert, at the request of Senator Chapman)—by leave—agreed to:That the time for the presentation of the report of the Joint Committee on Corporations and Securities on the provisions of Company Law Review Bill 1997 and the Managed Investments Bill 1997 be extended to 30 March 1998.Business10601060Motion (by Senator Margetts) agreed to:That general business notice of motion No. 1003 standing in the name of Senator Margetts for today, relating to human rights in East Timor and Indonesia, be postponed till the next day of sitting.1060Motion (by Senator Chris Evans, at the request of Senator Forshaw) agreed to:That business of the Senate notice of motion No. 2 standing in the name of Senator Forshaw for today, relating to the disallowance of the Therapeutic Goods Regulations (Amendment) contained in Statutory Rules 1997 No. 401, be postponed to 31 March 1998.1060Motion (by Senator Bourne) agreed to:That general business notice of motion No. 795 standing in the name of Senator Bourne for today, proposing orders for the production of documents by the Leader of the Government in the Senate (Senator Hill), be postponed to 14 May 1998.1061Motion (by Senator Chris Evans, at the request of Senator Faulkner) agreed to:That general business notice of motion No. 931 standing in the name of Senator Faulkner for today, relating to the appointment of a select committee on certain government accountability matters, be postponed to 30 March 1998.Miscellaneous1061Motion (by Senator Reynolds)—as amended by leave—agreed to:That the Senate—(a) welcomes the Israeli Government's recent decision to remove Mordechai Vanunu from solitary confinement;(b) notes calls by Amnesty International and other non-government organisations for Mordechai Vanunu to be immediately released from imprisonment; and(c) urges the Israeli Government to consider Mordechai Vanunu's early release on humanitarian grounds.Committees106110611061Motion (by Senator Calvert, at the request of Senator Watson) agreed to:That the Select Committee on Superannuation be authorised to hold public meetings during the sittings of the Senate on 23 March and 24 March 1998, from 7 pm, to take evidence for the committee's inquiry into the provisions of the Commonwealth Superannuation Board Bill 1997, the Superannuation Legislation (Commonwealth Employment) Repeal and Amendment Bill 1997 and the Superannuation Legislation (Commonwealth Employment—Saving and Transitional Provisions) Bill 1997Matters of Public Importance1061106110000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator West)—The President has received a letter from Senator Faulkner proposing that a definite matter of public importance be submitted to the Senate for discussion, namely:The failure of the Secretary of the Department of the Prime Minister and Cabinet to draw to the attention of the Prime Minister blatant breaches of the Prime Minister's `Guide on Key Elements of Ministerial Responsibility' by the Minister for Resources and Energy (Senator Parer).I call upon those senators who approve of the proposed discussion to rise in their places.More than the number of senators required by the standing orders having risen in their places—10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—I understand that informal arrangements have been made to allocate specific times to each of the speakers in today's debate. With the concurrence of the Senate, I shall ask the Clerks to set the clock accordingly.15:51:001061Faulkner, Sen JohnSenator FAULKNER5K4NSWALP00—This is an important matter. Public debate on federal politics over the past couple of weeks has been dominated by the imbroglio that surrounds Senator Parer. But what the opposition would like to do this afternoon in this debate on a matter of public importance is to focus on the role of Mr Moore-Wilton, who is the Secretary to the Department of the Prime Minister and Cabinet and the Prime Minister's right-hand man. He is the nation's most senior public servant, and it appears that he has committed either a massive sin of commission or a massive sin of omission in his scrutiny of Senator Parer's investment arrangements.As you know, 30,000-odd Australian public servants who have become unemployed as a result of the decisions of the Howard government describe Mr Moore-Wilton as `Max the Axe'. But I think we have to say that, when it comes to checking out Mr Howard's millionaire row of ministers and the process of scrutiny that Mr Moore-Wilton has engaged in, you really would have to describe Mr Moore-Wilton as, `Max the Lax', because he has been closely involved in the Parer shares affair from the outset. From the start, Mr Moore-Wilton was appointed as the gatekeeper for the Prime Minister on ministerial pecuniary interests.In April 1996, the Prime Minister, Mr Howard, circulated his now completely discredited document A Guide to Key Elements of Ministerial Responsibility. In the very puffed up foreword to this particular document, he gave a warning to ministers and staff. He said, `The emphasis in the guide is on the necessity of adherence to high standards by people occupying positions of public trust.'Mr Howard tabled this guide on 30 April 1996. He announced at that time that ministers would be required to make declarations to him by 27 May 1996. What occurred was that later in that same year Mr Howard's own guide and his failure to properly police and implement it led to the careers of Assistant Treasurer Short and Parliamentary Secretary Gibson being claimed. Following that, Mr Moore-Wilton was required to scrutinise all ministers' declarations for compliance with the Prime Minister's much touted new ministerial standards.In a press conference on 16 October of that year, Mr Howard stated that Mr Max Moore-Wilton had carried out certain examinations of trust holdings and had had further discussions on the matter. It is worth recalling that, at that press conference, Mr Howard put the onus on his own ministers to be `above reproach'. He said that he had `forcibly reminded'—could you imagine Mr Howard forcibly reminding anyone to do anything?—his ministers, who, of course, included Senator Parer, of their obligations under these ministerial guidelines.It was in that same month that Mr Howard in fact commissioned a report on blind trusts to see whether that particular device might make it easier for the coalition frontbenchers, ministers and parliamentary secretaries to meet what seemed to be increasingly impossibly high standards. That report on blind trusts was, of course, authored by the same Mr Moore-Wilton, with the assistance of a couple of other departmental secretaries. It was released for public comment early in February last year. Of course, it has not been heard of since.7L6HOGGSenator Hogg—They have got a search party out.5K4Faulkner, Sen JohnSenator FAULKNER—I think you have to conclude, Senator Hogg, that blind trusts are obviously not a favoured option for millionaires row over there, the government front bench. On 20 March last year, the Senate Standing Committee on Senators' Interests clarified again the rules for disclosure of shareholdings in trusts, and that followed a similar clarification that occurred in the House of Representatives.We ask the question: how could the Secretary to the Department of the Prime Minister and Cabinet, Mr Moore-Wilton, possibly have been oblivious to that process taking place? We know that a letter clarifying the disclosure guidelines was hand-delivered by a senior parliamentary officer to Senator Parer's office on 20 March. A further letter was sent on 26 March, together with a copy of the revised guidelines. All that followed a statement in the Senate by Senator Denman as chairman of the committee.We must say that some coalition frontbenchers, some ministers and some parliamentary secretaries did respond. We know that Senator Alston responded to the correspondence. We know that Senator Newman responded to the correspondence. Even poor old Senator Ian Macdonald responded to the letter that was hand-delivered and which bore Mr O'Keefe's signature. They amended their declarations of interest accordingly. But, in May last year, Mr Howard again asked his probity gatekeeper, if you like, to check his ministers' confidential disclosures, presumably in the context of some sort of annual updating. These disclosures, including Senator Parer's, were passed to Mr Moore-Wilton on 7 May 1997. Mr Howard tells us that Mr Moore-Wilton reported back on 9 May—two days later.Mr Moore-Wilton had just devoted two days to this very complex task of working through the mire, the myriad, the web of financial arrangements that much of the Howard government frontbench seemed to have, at a time when the trust shareholding rules had been tightened in both chambers. Mr Moore-Wilton took only two days to examine the investments of 36 ministers and parliamentary secretaries in the Howard government, but he was able to very confidently provide Mr Howard with an assurance that `Senator Parer's statement was in accordance with the guidelines'. We assume that is the same confidence that he expressed in relation to other frontbenchers from the coalition.On 10 March this year what do we find? Senator Parer has not conformed with the guidelines and certainly has not conformed with the ministerial code of conduct that Mr Howard brought down with such fanfare in the early days of his government. It was left to the opposition to reveal that Senator Parer controls an investment company which runs his family trust. He has got 16 shares worth over $2 million in a coalmine which sells to Japan. We know he visited Japan in an official capacity in June last year. He met executives from both the Marubeni Corporation and Nissho Iwai, which were both his business partners, joint venturers, and coal customers. Senator Parer also has direct shareholding in Queensland Coal Mine Management (ESP), which in turn has 706,000 share interests in Pan Australian Resources—this was exposed in question time today—which is a company that has numerous and diverse mining interests in Queensland and Western Australia.This is not just a perception of a conflict of interest; this is an open and shut case of a conflict of interest and a vertically integrated conflict of interest from Senator Parer. Yet on 10 March, again the Prime Minister referred the matter to whom? Whom do you reckon? Mr Max Moore-Wilton. Again Max Moore-Wilton gave Senator Parer the big tick. He advised in early March—on 11 or 12 March—that he had taken into account the following issues: first, the Parer family trust vehicle, IMPL, has been in operation for a considerable time predating Senator Parer's appointment to the ministry; second, that the shares held are non-voting shares; third, the company QCMM Pty Ltd is a private company whose shares are neither listed nor traded; and, four, that Senator Parer and his wife have not received income from the trust holdings in either 1995-96 or 1996-97.That is just nonsense, absolute nonsense. The shares were worth well over $2 million. They provided the family trust with an income stream of over $800,000 over the past three years. There was income derived from the trust in 1995. The shares are tradeable. Senator Parer mused aloud on television last week that he might sell them. But Mr Moore-Wilton certified this whitewash. He has certified it in writing and he has sent it off to the Prime Minister.Senator Parer said on A Current Affair on 12 March: `I have in all the time I have been in parliament made full disclosure for years. Everyone knew we had a family trust for years on the Senate records and this is why full disclosure was given to the Prime Minister and was ticked off.' It was ticked off by Mr Moore-Wilton. That is the truth. On the television news on the morning of 14 March, Mr Moore-Wilton was there saying that Senator Parer had complied with the guidelines.Mr Moore-Wilton must have examined Senator Parer's affairs at least three times: in October 1996 when Senators Short and Gibson lost their jobs; in May 1997 when ministerial declarations were updated; and on 10 or 11 March this year when Senator Parer's own shares became public. Mr Moore-Wilton was formerly a senior director of the Australian Stock Exchange. He had an intimate knowledge of investment structures. But he could have missed the significance of the minister for coal having such interests in a coalmine through an investment company in which the minister has eight out of the nine shares! That just beggars belief. He either missed it—in that case we are dealing with monumental incompetence on the part of Mr Moore-Wilton—or he was fully aware of it—and in that case how on earth could he have approved it?We have to say that even Senator Parer now has come to the conclusion that he should divest himself of these interests. He is proposing to divest complete authority in seven adult children under an amended trust agreement. He wrote to that effect to the Prime Minister, even though the Prime Minister's own guide says that the transfer of interests to a family member or to a nominee or trust is not an acceptable form of divestment.What is Mr Moore-Wilton up to? He is up to knocking out the walls of bus shelters, redeveloping the departmental foyer, approving substantial allowances for himself, getting the taxpayer to pay for a cleaning lady in his Canberra flat, and chasing departmental officers about why he found out about a Public Service commission inquiry into himself only recently. That is what he is up to. He is not doing his job. The opposition say that not only should Senator Parer go but Mr Max Moore-Wilton should resign.16:07:001064Hill, Sen RobertSenator HILLBH4SALPEnvironment10—That was an extraordinary contribution. When I was advised this morning of this matter of public importance as alleged by the Leader of the Opposition in the Senate, I was puzzled that it was directed against Mr Max Moore-Wilton, the Secretary to the Department of the Prime Minister and Cabinet. I understand that the opposition has been trying to establish a case against Senator Parer. That is within the nature of politics. The opposition has clearly alleged and is attempting to prove that he was conducting the business of a minister subject to some conflict of interest.However, today, the opposition has headed out into left field, lashing out at the head of the Department of the Prime Minister and Cabinet. It was not until the last few seconds of Senator Faulkner's speech that he said that the objective was not only to get the resignation of Senator Parer, but also to make Mr Max Moore-Wilton resign—to bring them all in the net and make everyone resign.One thing you learn pretty quickly about Senator Faulkner is that, firstly, when he is a bit short on evidence he starts to shout. When he is shouting you know that he does not have a strong case. Secondly, instead of making allegations, he always states the allegations as fact. For example, he shouts that Senator Parer is the owner of $2 million worth of shares. He repeats it—and, of course, Senator Parer is not. Most of the questions asked in question time today were falsely premised, but it does not matter to the members of the Labor Party. They will make the allegation and they will repeat it often. They will shout it as if to demonstrate its accuracy when, if you explore the matter, you will see that their case is wanting.Similarly, Madam Acting Deputy President, you might have noticed that the Labor Party is interchanging the two sets of rules to suit its circumstances. The Senate has applied a set of rules to senators in relation to potential conflicts of interest, and they are different from the set of rules that the Prime Minister has applied to his ministers. If you were listening to Senator Faulkner, Madam Acting Deputy President, you would have noticed that he was attacking Mr Max Moore-Wilton for not applying the Senate's set of rules in his analysis—not the Prime Minister's set of rules.I will remind you of the detail. Senator Faulkner referred to Senator Parer failing to meet the extra terms of the latest explanatory memorandum. Some little time ago, the chairman of the committee sent around a new explanatory memorandum. Some senators got it and, apparently, some did not. Senator Parer did not get it, and therefore he failed to act upon it.5K4FAULKNER Senator Faulkner—It was hand delivered to his office.BH4Hill, Sen RobertSenator HILL—Senator Faulkner said that Mr Max Moore-Wilton failed to keep Senator Parer to that explanatory memorandum.5K4FAULKNER Senator Faulkner—What was he doing?BH4Hill, Sen RobertSenator HILL—The next thing Senator Faulkner will be suggesting is that it was hand delivered to Mr Max Moore-Wilton as well. I did not pick that up, so he must have missed that in his address. Mr Max Moore-Wilton was asked by the Prime Minister to check off ministers' returns against the ministerial guidelines. He did that in relation to all ministers and parliamentary secretaries. He reported that, in relation to Senator Parer, he had met the terms of the guidelines—job done, and job done correctly. The Prime Minister has said exactly the same thing: Senator Parer has met the requirements of his guidelines.We have been at this for over a week now, and we still have not had any allegations of any specific conflict of interest. There has been no allegation that Senator Parer has in any way abused his position for personal advantage. Some of those on the other side have even had the decency to say that they see Senator Parer as an honourable man. He is not only an honourable man, but I must say that he is doing his job very well as a minister.Therefore, one wonders what is behind this attack. What is the real motive of the attack? Senator Faulkner hinted at it today when he talked about the `millionaire row of ministers on the other side'. A little while later he talked about the `web of arrangements on the other side'. This is the politics of envy.5K4FAULKNER Senator Faulkner—When are you going to talk about Max Moore-Wilton and what an incompetent, useless dope he is?BH4Hill, Sen RobertSenator HILL—What the Labor Party cannot cop is that some ministers in this government have been financially successful in their lives—have built up assets and are interested in the welfare of their seven children, even if they happen to be adults.5K4FAULKNER Senator Faulkner—What about Max Moore-Wilton? What about the Prime Minister's code?BH4Hill, Sen RobertSenator HILL—When the Labor Party was in office, its ministers were nearly all either ex-trade union or ex-party officials—9L6MACKAYSenator Mackay—What's wrong with that?BH4Hill, Sen RobertSenator HILL—There is nothing wrong with being an ex-trade union official. Generally speaking, with a few exceptions, they had not built up large capital assets. I do not mind that. Good luck to them. But what you do not like is that there are some on the other side who have. You do not believe that there should be successful people within the ministerial ranks of an alternative government. Fortunately, this government is proud that its ministerial ranks are made up of people with a range of skills and experience—which includes experience in business and includes successful business people.5K4FAULKNER Senator Faulkner—There are very few with any skills.BH4Hill, Sen RobertSenator HILL—Senator Parer has done his job well as a minister. I remind you of his record as a minister. Forty new projects have been commissioned in the last 12 months, with $7 billion worth of investment. Some 120 resource and energy projects currently under construction are being committed—5K4FAULKNER Senator Faulkner—What about Max Moore-Wilton?10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator Knowles)—Senator Faulkner, you have constantly interjected. I ask you to stop.BH4Hill, Sen RobertSenator HILL—$20 billion will create 7,000 direct and 20,000 indirect permanent jobs. One hundred and sixty additional projects are currently under consideration, which of course will create thousands of more jobs. Since I am going to be followed in the debate by Senator Lees, I must say that her attack on Senator Parer in question time today was extraordinary because what Senator Parer was interested in in relation to the greenhouse debate was not only a good environmental outcome—Senator Ferris interjecting—5K4FAULKNER Senator Faulkner—Madam Acting Deputy President, on a point of order: I draw your attention to the fact that Senator Ferris interjected.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—There is no point of order.BH4Hill, Sen RobertSenator HILL—But Australian jobs as well. Senator Parer, as a successful resource minister, is interested in growing the Australian work force.Senator Crane interjecting—5K4FAULKNER Senator Faulkner—Madam Acting Deputy President, on a point of order: I point out to you that Senator Crane has just interjected. Could you call him to order, please?10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—Senator Faulkner, I would ask you to try to maintain some semblance of order in the chamber. Stop taking points of order of that nature.5K4FAULKNER Senator Faulkner—On a point of order—BH4Hill, Sen RobertSenator HILL—Can't take it.5K4FAULKNER Senator Faulkner—Madam Acting Deputy President, I would hope that you would not be calling people to order in a transparently partisan way. I think it is reasonable to call senators who are interjecting to order. Unfortunately, as is the nature of the chamber, given that it is adversarial, senators on both sides of the chamber interject. That is the point I am making.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—Senator Faulkner, you were constantly screaming your interjections across the chamber. I did not hear Senator Ferris and I did not hear Senator Crane. I simply asked you to cease screaming across the chamber.BH4Hill, Sen RobertSenator HILL—Senator Faulkner has taken most of my time, but I think it can be summed up in this quote from the Courier-Mail of 21 March this year. It said:The opposition has yet to mould itself into an alternative government. What the debate shows is that two years after its defeat Labor is lacking policy depth and credibility.That is what this is all about. If they cannot develop policies as an alternative government, if all they can do is knock and seek to undermine the existing government—attack it in its attempts to bring expenditure under control; attack it in its reforms on industrial relations that have actually resulted in the best industrial relations record in some 70 years; oppose this government on Wik which is designed to give some certainty to Australian investors as well as justice to indigenous people; oppose the reforms that we are seeking to introduce on the waterfront because they support the rorts of the Maritime Union on the waterfront; and oppose any attempt for sensible reform of Australia's outdated taxation system—if all they can do is knock and oppose, what else can they do to camouflage their inadequacy and failure but simply attack Senator Parer and if that is not working then attack the head of the Department of the Prime Minister and Cabinet.This was a pathetic contribution by Senator Faulkner. He should hang his head in shame. I can only hope his successors will do a better job.16:18:001066Lees, Sen MegSenator LEES8U4SAAD00—The Prime Minister in the other place has challenged us to demonstrate where Senator Parer has had a conflict of interest and in particular where he has failed in his job as a minister. This means that we have to show where the minister has failed to objectively consider any issue because his judgment was compromised by the need to protect his own private or personal interests.Before question time Senator Parer tabled a number of documents. I think the way in which they were tabled was designed to make sure that none of us actually managed to read them before we got to our feet during the MPI today. But in skimming through them I have managed to find that on page 7 of this document he makes the assessment that, `An examination of all the decisions I have taken as Minister demonstrates no conflict of interest.' There is an 11-page attachment from his department to that letter. That outlines all of the executive decisions taken by the minister to support this claim. That attachment is basically only relating to his role as minister for coal. It does not refer at all to his real job, and that is minister for energy.The approach is an incredibly narrow view of what this minister does, and this has been the Democrats' complaint all along. If the duties of a minister consist merely of exercising administrative functions, then we should pension the whole cabinet off, I would argue, and replace them with just a few administrative officers. I would argue very strongly that the real job of a minister is policy work—the development of policy. Despite all the paperwork that Senator Parer tabled today, his extensive policy work to prop up and protect interests in the coal industry is not documented at all. The whole area is ignored. This is the key failing of Senator Parer, the Prime Minister and the head of the Prime Minister's department in defining what is a conflict of interest.If the minister directly owns a large share of a large coalmine and he deliberately sets out, as Minister for Resources and Energy, to ruthlessly reduce government support for energy conservation and promotion of renewable energies that would directly affect the demand for coal, then surely this is a conflict of interest. The minister's private interest basically is to sell more coal, prop up the coal industry, promote other industries, promote anything that will actually help to sell more coal. Yet the public interest—indeed the public interest that the minister swore to uphold—is to cut greenhouse gas emissions, reduce global warming, improve energy conservation and promote low cost renewable energy sources. What way did this minister go? I will let his actions speak. I will list five of them.Firstly, the move to lift the export controls on coal was one of his first acts as the Minister for Resources and Energy. This basically means that the Commonwealth no longer has any lever to protect the environment where a coalmine is concerned. We cannot ask now for a federal assessment. Secondly, there was the abolition of the ethanol fuel bounty. This renewable energy resource would have been a boom in rural Australia. So along with the abolition of the fuel bounty went the abolition of the jobs that were there waiting to be done depending on the waste that industry was going to use—whether it was from the sugarcane industry in Queensland, or from growing wheat in western New South Wales or from growing rice in the Riverina. The small local facilities that would have been developed are gone.Thirdly, there was the abolition of the Energy Research and Development Corporation which was at the forefront of developing renewable energy sources and had enormous support. Within Australia and overseas it was highly successful but it was in direct conflict with the coal industry. Fourthly, he refused conservationists a position in his round table working group on sustainable energy. He stacked 10 of the 11 places—and I repeat that this group was working on sustainable energy—with representatives of the fossil fuel industry.Fifthly, we had the abolition of the white paper on sustainable energy. This was an election commitment. But it turns out that it was not a core commitment. It was a document that this parliament had been waiting on and was promised several times in this chamber. All of these decisions were made by Senator Parer or promoted by Senator Parer as a minister. All had the direct effect of helping to maintain the value of his mining interests.Senator Parer has been somewhat disingenuous in his approach to dealing with conflicts of interest. Today he told us that as Minister for Resources and Energy he had little role in developing the government's greenhouse gas position. This will come as news to his department which trumpeted in its 1997 annual report that it has been `very active in developing policy for and negotiating support for an approach to climate change that protects Australia's interests'. Those interests were defended very strongly by Senator Parer as minister.Australia's position on greenhouse gases, coordinated by Senator Parer and his department, was criticised by every other western country. President Clinton, on his visit last year, directly criticised our stand, as did Chancellor Kohl and the British Prime Minister, Mr Blair. It was, and still is, an embarrassment.What did industry stand to lose most from a stronger position on greenhouse gas emissions? In response to a question in question time on 29 October last year, Senator Parer said that there was no doubt that the majority of job losses talked about by ABARE would relate either directly to the portfolio he represented or to the downstream processing that comes from energy and minerals. He identified three areas of Australia that would be most adversely affected by any concentrated effort to cut greenhouse gas emissions in this country—Yallourn, the Hunter Valley and the Bowen Basin. We now understand that the Bowen Basin is the home of the Jellinbah mine which is partly owned by him.It now emerges that the Prime Minister and his department chief knew all the time that Senator Parer had a personal interest in the coal industry and, therefore, a personal interest in not seeing a strong decision on greenhouse gas emissions. Was he removed from this area of policy making? No.Let us look back in history. We saw Geoff Prosser removed from the portfolio dealing with retail leases as he was a shopping centre owner. That was okay for Mr Prosser. He was removed from an area where he stood to benefit. It now seems that there are very different rules for Senator Parer.At this time, was this interest made public? No, it was not. Senator Parer continued through 1997 to take a direct interest in energy matters and in the greenhouse gas question in particular. I wish it were true that the environment department won out. If the advice from the environment department had won out, Australia would have gone to Kyoto with a different position.Last year the Democrats called for conflicts of interests to be regulated by an independent commissioner of ethics. The fact that we have gone so far on this issue and that this issue continues to rumble on shows us that it cannot be policed by ministers and policed by the Prime Minister and there must be an independent body out there that looks at this once and for all. We have been calling for that for many years. We called for that right through the list of scandals that went on at the time the Labor Party was in government. We will continue to insist on this and we believe it is the only way that the public interest, as opposed to any private interest, however we define them, can come to the fore.The public must have confidence in this chamber and in parliament generally. I think that confidence is being undermined by what is happening now. We must make sure that there is an independent body to oversee this whole area and that an independent commissioner for ethics steps back away from parliament so that we do not spend hours in this chamber or the other place debating these issues. Once matters are raised there needs to be somewhere they can be taken and the public can be confident that their interests are at the top of the list as an independent body is dealing with them.16:28:001068Knowles, Sen SusanSenator KNOWLESTH4WALP10—I find the selective memory of the Labor Party purely and simply breathtaking. Yesterday, to hear Simon Crean, a member of the other House, say that the interest that the former Prime Minister had in a piggery was declared is simply a case of rewriting history. Our former college Senator Michael Baume pursued this issue for years, and who defended the former Prime Minister incessantly—his Labor colleagues. He refused to declare what was happening in a multimillion dollar scheme of a multimillion dollar company.The Labor Party has the audacity to come in here and, through the politics of envy, pick on what Senator Faulkner called before `millionaires row'. The problem the Labor Party and, unfortunately, the Australian Democrats have is that they believe that every minister in a coalition government should be a failure like their own—a person who has never employed people, a person who has never had to pay the rent, a person who has never had to pay the wages of other people, a person who has never had to pay other people before they pay themselves. To have self-made successful people in a coalition government is somehow a sin.The other standards that they failed to comply with are also the standards that they are now asking our government to comply with. I want to run through a couple of things. In 1992 Senator Richardson was censured by the Senate. But let me start before then: 1973, Senator Murphy; 1974, Senator Gair; 1974, Senator Willessee; 1984, Senator Walsh; 1989, Senator Cook; 1989, Senator Richardson; 1989, Senator McKiernan, who at that stage was the Government Deputy Whip; 1990, Senator Tate; 1991, Senator Richardson again; 1992, Senator Richardson again; 1992, the Prime Minister; 1993, the then Senator Gareth Evans; 1994, Senator McMullan; 1994, Mr Brereton, the then Minister for Transport; 1995, the Prime Minister, the Leader of the Government in the Senate, Senator Gareth Evans, and the Minister for Primary Industries and Energy, Senator Collins, were all censured; 1995, Mr Lee and then Senator McMullan; 1995, Senator Bolkus; 1995, again Senator Gareth Evans; and of course most recently—only last sitting week—Senator Bolkus for giving out the Skase material.These are all Labor Party senators and members who have been censured by the parliament who did not walk the plank. Why didn't they walk the plank? Here we have a case where no case has been proven of any conflict of interest. Senator Parer has put the information into his declaration, unlike Prime Minister Keating, and they are wanting him to go.UI4RAYSenator Robert Ray—And still hasn't done it.TH4Knowles, Sen SusanSenator KNOWLES—Senator Ray is someone for whom I have a great deal of respect. Senator Ray, I believe it is up to you now to explain to the Senate why your colleagues did not walk the plank when they should have. Why was it that Minister Lee refused to abide by the Westminster tradition by refusing to resign after knowingly misleading the parliament about an alleged secret deal to change the cross-media ownership rules? Why did Senator Faulkner and Mr Beddall refuse to resign after the woodchipping debacle? Why did Minister Tickner refuse to resign after the Hindmarsh Island bridge court decision? Why did Minister Brereton refuse to resign after the scandals of Seaview, the Australian National Line and the third runway debacles?Minister Collins should have also resigned over the pay television decision and the failed drought policy. He also failed to live up to his commitment to resign if waterfront reform did not continue. We are still waiting for that because he still has not gone. He is still hanging on the payroll here, but he certainly did not resign after that. Mr Crean refused to resign after comparing AIDS patients to child molesters and paedophiles. It is just beyond a joke. Senator Cook refused to resign after altering a Hansard answer. Senator Bolkus refused to resign after appointing a Labor candidate to the Immigration Review Tribunal.The list goes on. Unfortunately, I probably do not have time to finish it. Former Prime Minister Keating refused to resign despite having told untruths to the Australian people at the 1993 election. Do you remember what he was saying? He said, `The l-a-w tax cuts. You don't need a GST. We'll give you the tax cuts that the coalition's offering, but you don't have to have a GST.' He got elected and then said, `Whoops, sorry, you're not going to have the l-a-w tax cuts.' What is Mr Beazley doing today? He is saying, `We'll give you the tax cuts but we won't give you a GST.' Here we go again.Former Treasurer Dawkins refused to resign after covering up the Victorian and South Australian loan affairs deal. Senator Beahan refused to resign from the parliament after his involvement in the Brian Burke affair. Minister Baldwin did not resign after a $2 million fraud in the Department of Social Security. Prime Minister Hawke refused to resign after misleading the parliament over gold tax. In 1992 Carmen Lawrence refused to resign after the Notre Dame scandal in Western Australia. She still refused to resign even after the royal commission in Western Australia said she was untruthful. And here is the Labor Party saying that Minister Parer should resign purely and simply because he has been successful and is successful. He is doing the correct job in his portfolio and for the people of Australia.16:35:001069Ray, Sen RobertSenator ROBERT RAYUI4VICALP00—We have come to expect low standards from this government in their approach to public life. But we did not expect the secretary of the premier department, the Department of the Prime Minister and Cabinet, to seminally endorse those attitudes. The real question in this matter of public importance today is: why didn't the secretary pick up the problems in Senator Parer's declaration? When you read Senator Parer's declaration to the Prime Minister today, there is an admission of guilt. Senator Parer and his spouse are fully divesting themselves today, something they should have done on 18 March 1996 but they are finally doing today. That is an absolute admission of guilt by Senator Parer that these shares that he owned involved a conflict of interest.However, it is not just Mr Max Moore-Wilton that should have picked this up. What about the Prime Minister? Senator Hill came into this chamber on 15 October 1996 and said in addition to an answer that the Prime Minister required that all ministers provide their returns—disclosure of interest—to him by 27 May 1996 and that the Prime Minister had indicated that he had looked at those returns when they came in. Here we have the Prime Minister, Mr Howard, back in May 1996 saying that he examined all the forms of his ministers. So he knew 21 months ago. He knew what Senator Parer held 21 months ago, several months before Mr Max Moore-Wilton came into the job at Prime Minister and Cabinet. So John Howard knew 21 months ago.It is not as though Senator Parer did not get the hint. When he was pinged on Meet the Press on 26 May 1996, he proudly said, `There'll be no conflict of interest. I've got rid of my BHP and Santos shares.' He did not let us in on the secret that he had coal shares, just that he had got rid of those in public companies, those which have a register that we could discover his shareholdings on. So he gets rid of those—not great performers at the time—but he keeps the key performance ones.For whatever transparency that might exist in this system, the one way that we are entitled to know whether a conflict of interest exists or not is on the Senate register. He has failed to declare his coalmining interests on the Senate register. This was revealed 12 days ago, so what does he do when he comes in here today and is asked? He has not even bothered to update it in the last 12 days. He has had 12 days to get his affairs in order. What is he eventually going to do? Having divested himself of all this, is he then going to virtually put in a nil return to the registrar of pecuniary interests or not? Is he going to go back and detail what he should have done in the last two years so everyone can have a look at what he has been up to for the last two years? I think not.The Secretary to the Department of the Prime Minister and Cabinet had all this material. He did not have all the testimonials that have flooded in today. Why did he not ask for them? Why over that critical period 7 May and 9 May did he not query Senator Parer's holdings and challenge them? After all, he is a former member of the Australian Stock Exchange. That was his last job before he came over to the department. Surely he knew the implications of that. Surely he knew that having a minister for energy and minerals holding coal shares is simply not on in terms of the Prime Minister's guidelines.But, to make matters worse, today we have Senator Parer, having admitted guilt in his letter to the Prime Minister and on Friday divested himself of all these interests, again breaking the prime ministerial guidelines which specifically say you cannot divest to family members or a nominee. Having embarrassed the Prime Minister by having shares that involve a conflict of interest, his very disposal of those shares breaches yet another prime ministerial guideline. How long is this to go on? How long is Senator Parer going to be in a position to defy his Prime Minister?We have the unseemly timing today of Senator Parer coming into this chamber and tabling certain documents. We knew about this. We knew about this at about half past 12. Why? Because Senator Parer's office had got on to the media and said he was going to do it at 10 minutes to two simply so we could not examine those documents before question time. That did not help him much. None of the stuff covered in those documents reflected on the very questions we were going to ask here today—not one of them reflected—although it gave us material for question No. 7; there is no doubt whatsoever about that.So we have a position, but Senator Hill comes in here and says, `This is all class envy. This is all envy of someone who has been successful.' We have the old lines run: this family trust is 28 years old. For heaven's sake, this deal, this issue of 16 shares, was done in 1993 when Senator Parer was a shadow minister. We go back to 1990 when he gets out of Gashbah, the other company, and his spouse says, `He's got out of that.' That was not because they owed East Court $250,000 on call—no, that was not the reason. He got out of that because of increasing pressure of parliamentary duties, but he still has time to chair this company. He still has time to pay $16 for 16 C-class shares. They keep saying these are non-voting shares. For heaven's sake, the dividend on these shares is bigger than the ordinary shares. For Senator Parer to come in here today and say he has been advised that these shares may be worth $2 for the totality, having had an income stream of $850,000 over the last five years, is laughable. The implication of that is, if he disposes of the shares, his mates who have been giving him the $850,000 are no longer going to give their new shareholders anything.What has he done to earn this particular amount of money, $850,000 fully franked? What has he done, if he has had no contact with the company? They are non-voting shares and he does not play a role, but he still gets the money. They object to our saying these shares are worth $2 million. Because it is a private company, the only way of establishing the worth of the shares is to take the net asset of the company and divide it by the percentage held; then you get to $2.3 million. But, more importantly, go to the income stream and see what that tells you. If you had to get the same income stream fully franked from BHP, you would have to own $9 million worth of shares to get that money, or you would have to own 4.2 million Telstra shares or 1.2 million Santos shares to get that same dividend stream.We have a position. This is not a matter of class envy or anything else; this is a minister who has been given the honour of representing himself in government, and what is involved there is the occasional small sacrifice. One of the sacrifices is you do not own shares directly within your portfolio area. That is a sacrifice you have to make if you come into government. If you are not willing to make it, do not serve on the front bench. The fact is he has survived not because there is not a conflict of interest but because we are told he is a nice guy. I agree with that, but Brian Gibson was a nice guy and Jim Short was a nice guy. What distinguishes Senator Parer from them? They were small time petty offenders. They owned $50,000 or $60,000 worth of shares, not $2 million worth of shares. So the nice guy defence simply does not work in this particular case.Senator Parer has not come into this chamber and properly defended himself. He called one press conference last week. He excluded the radio journalists and excluded the print journalists. When the electronic television journalists filmed his press secretary throwing out a photographer, he then turned around and said, `If any of you run that footage, you're barred from now on.' What sort of approach is that to public life? All this has occurred because Mr Max Moore-Wilton has ticked him off. He is a partisan political appointment. He should do the right thing: he should go in the library, write out his letter of resignation and go back to the Stock Exchange because he has been induced in some way to endorse this absolute sham of approach.16:44:001071O'Chee, Sen BillSenator O'CHEEEU4QLDNP10—If you had paid any attention to the media lead-up to today, you would have thought this was going to be one of the grand show trials of the century. For example, today's Canberra Times —which obviously relied upon the media statements of the opposition yesterday—has the headline `New Parer allegation: Crean', and the opening paragraph says:The row surrounding Resources Minister Warwick Parer deepened yesterday with claims that he has failed to disclose another family company—That was very interesting, because the family company to which the reference is made was a company in which the Minister for Resources and Energy (Senator Parer) had no shareholding. He had no shareholding, but that did not bother these people opposite. We have seen time and time again that they never bother to get the facts right before they run off with one of these allegations. I understand it was Senator Parer's son, but that has never bothered them.We saw the conduct of Senator Faulkner in relation to the Baillieu family. He did not bother who he happened to name. These people just happened to be dead for 53 years, yet that was the basis of another Labor Party allegation. They were going to dump a bucket all over Senator Parer because they said he had not disclosed a company, and it turned out that he did not even have any shares in the company. That is how thorough their research is. Heaven help us! Thank goodness none of those people over there are practising medical doctors. Could you imagine going to Senator Faulkner if he was a GP? If you had bubonic plague, he would probably tell you to take an aspirin and go home because he would not bother to check properly. These people never bothered to check once all of the allegations they went on with.I think it is interesting to note the standard that they set in government. That is very interesting. Let us look at the former Prime Minister. These people on the other side want to talk about conflict of interest; let us talk about the former Prime Minister. What sort of disclosure did we have from the former Prime Minister in relation to his interests in a piggery? None. He mentioned—UI4RAYSenator Robert Ray—It will not get a run.EU4O'Chee, Sen BillSenator O'CHEE—You are right, Senator Ray; the piggery will not go away. Why won't the piggery go away? Because it is a gleaming example of the hypocrisy of the Labor Party and the hypocrisy of the former Prime Minister. What was his declaration of interest in relation to that piggery? He told the parliament via his declaration of interest that he had shares in a company called Euphron Pty Ltd. Of course, he did not mention that that company had interests in other companies and an interest principally in a massive piggery joint venture with a foreign company while he was Prime Minister. He did not make any mention of the fact that, during the period that this was all being planned, the Foreign Investment Review Board guidelines were changed so that this company would not have to apply for permission from the Foreign Investment Review Board to make that investment. That is the standard of disclosure we saw from those people when they were in government.Isn't it interesting that it has all gone quiet over there? They are shamed by the actions of the people whom they elected to occupy the front benches when they were in government. When we were in opposition, we looked across here and it was like looking at rogues' gallery. Senator Knowles has already outlined to the Senate the number of Labor ministers who were censured by this parliament and who refused to resign. They could be censured for the most blatant misleading of the Senate and they would refuse to resign. They could be censured for the most outrageous conduct and they would refuse to resign. Of course, in every one of those cases, it was not just allegations that were made; cases were built up over a period of time which were irrefutable. That is why censure motions were passed—because the cases were irrefutable. So these people were convicted by the court of the Senate, but they sat in here on the front bench.In the Labor days, the front bench was like one long defendants' dock because every one of them had a charge sheet. Importantly, most of them were actually convicted, but they still sat in here on the front bench, they still received the title `The Honourable', they still received the salary and they still received all the perks because they never bothered about proper propriety. And why would you bother about proper propriety when your leader, the Prime Minister, was the biggest rorter of the scheme who ever existed? He was the biggest rorter of the scheme of parliamentary disclosure who ever sat in this parliament.We had instances where the Prime Minister would deny that his interest in the joint venture piggery with Danpork had ever been subject to any ministerial discussions. We later unearthed—and Senator Crane was there and he is aware of it—minutes of meetings between Mr Crean, who is now one of the chief accusers of Senator Parer, and the Danish agriculture minister showing they discussed the joint venture piggery in which the Prime Minister of Australia had an interest.UW4CRANESenator Crane—And remember the Commonwealth Bank?EU4O'Chee, Sen BillSenator O'CHEE—And the Commonwealth Bank. But, Senator Crane, the interesting thing is the subject of the discussions between then Minister Crean, now accuser Crean—he seems to think he is judge, jury and executioner all rolled into one—and the Danish agriculture minister. The subject of those discussions was the importation of pig semen and genetic material contrary to the then existing quarantine guidelines for the benefit of the then Prime Minister's interest in a joint venture piggery. Of course, none of the people opposite thought this was a bad thing at the time. They all thought it was rather good because they kept on coming in here and saying what a wonderful Prime Minister he was. His only interest as Prime Minister was in himself and he flagrantly failed to disclose to this parliament at any time the depth of his financial interest in that venture—an interest that ran to millions and millions of dollars. I think it was a $50 million joint venture and he had a substantial interest in it. He did a substantial multimillion dollar deal with a foreign company whilst he was Prime Minister, and then that foreign company used the Danish agriculture minister to lobby this government to try to change the quarantine requirements which exist for the protection of this country—UW4CRANESenator Crane—Prepared to put an industry at risk.EU4O'Chee, Sen BillSenator O'CHEE—Yes, he was prepared to put an industry at risk. Why? Because it would benefit himself. These people opposite have the audacity to come in here after trumpeting around this nation that they are going to bring new accusations against Minister Parer, and what happens? They got the wrong company. They got the wrong Parer. What is new? They have had it wrong, wrong, wrong, time and time and time again, and all it goes to show is that they are the ones who need the change in the front bench because they cannot perform. (Time expired)Documents10731073UNKNOWNThe ACTING DEPUTY PRESIDENT (Senator Knowles)The ACTING DEPUTY PRESIDENT (Senator Knowles)—I present the 1997 Supplement to the Register of Senate Committee Reports.1073107310000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT— In accordance with the provisions of the Audit Act 1901, I present the following report of the Auditor-General:Report No. 37 of 1997-98—Performance Audit—Protection of Confidential Client Data from Unauthorised Disclosure: Department of Social Security—Centrelink. Committees1073107310731073O'Chee, Sen BillSenator O'CHEEEU4QLDNP10—On behalf of Senator Knowles, I present report No. 1 of 1998 of the Community Affairs Legislation Committee on the examination of annual reports.Ordered that the report be printed.107310731073O'Chee, Sen BillSenator O'CHEEEU4QLDNP10—On behalf of Senator MacGibbon and the Joint Committee on Foreign Affairs, Defence and Trade, I present a report entitled Defence Sub-Committee: Visit to Sydney Harbour foreshores defence properties, 14 November 1998 , together with minutes of proceedings.Ordered that the report be printed.EU4O'Chee, Sen BillSenator O'CHEE—I seek leave to move a motion in relation to the report.Leave granted.EU4O'Chee, Sen BillSenator O'CHEE—I move:That the Senate take note of the report.I seek leave to incorporate Senator MacGibbon's tabling statement in Hansard and to continue my remarks later.Leave granted.The statement read as follows—Almost since the arrival of the First Fleet in Port Jackson, Defence has played a major role in development of the Sydney Harbour foreshores. The current site of the Opera House on Bennelong Point was initially a military fort, and military occupancy on Middle Head dates back to 1801. To a large extent, military establishments have contributed heavily to the current shape of the harbour, its foreshores and environs.In many instances, that occupation has been beneficial. Military tenancy on North, South and Middle Heads, Georges Heights, and Woolwich has protected those areas from the last century of encroachment by civilian developers. The product of this fortunate occurrence has been the Harbour that residents of Sydney are so fortunate to have—with headlands naturally vegetated, and now undergoing transition in many cases to become part of the Sydney Harbour National Park.In addition, military occupation of those sites has also left a legacy of history—a heritage of military construction dating back almost to the time of first settlement. The headlands of both North and Middle Heads are worked with tunnels, and gun emplacements lie half-hidden over the headlands. In several cases, this construction dates back over a century. For a young country, this is an important source of history. In a way, this is almost our `Tower of London'.But now the time has arrived when the current strictures on Defence funding has forced the Department of Defence to rationalise its land holdings. The Department does not readily give up prestige, inner-city, harbour-front sites on Middle Head, Garden Island, North Head and Neutral Bay, and treasured heritage mansions such as `Tresco', with their long military history. Defence has been forced to make some hard decisions, and has determined that these sites must be sacrificed in the name of rationalisation. Through the proceeds of sale from these properties, Defence is able to finance relocation of military units to sites in often less salubrious surroundings further north, where they may better contribute to Australian security. In some instances, the proceeds of sale will be used almost entirely to meet the cost of remediating the site, to rid maintenance sites of up to a century of accumulate industrial contamination.Many residents of Sydney are currently concerned at this disposal action. This is understandable. The past century or so of benevolent tenancy by the Australian Defence Force has given a number of privileged harbourside residents an undemanding neighbour, allowing special access to the headlands and harbour foreshores.The Defence Sub-Committee was also concerned at what might be lost, were the Department of Defence to suddenly abandon this land, which contributes so much to the nature of Sydney Harbour, giving free reign to profit-driven development. This was the reason for the Committee's visit to a number of Defence properties in November last year.The Committee sought to determine whether this disposal would cause irreparable damage to one of the most beautiful harbours in the world. This report gives their findings.In almost all cases examined by the Committee, Defence has consulted closely with local community groups, and the proposed developments are sensitive to environmental concerns. Where construction is proposed, to provide the funding which makes the disposals economically viable for Defence, that construction is restricted to areas currently occupied by Defence infrastructure. In many cases, Defence also proposes to revegetate large areas, or increase open space provisions beyond what is currently in place. Under Defence's current development plans, unattractive and contaminated industrial sites such as Cockatoo Island and HMAS Platypus at Neutral Bay will be cleaned up, and access will be returned to the public.Some local groups have made clear their disapproval of Defence's disposal option. This is also understandable, as some privileged residents may lose the advantage of some views or open space. However, the Committee believes the planned disposals will not result in a blemish to the harbour foreshores, nor cause loss of the character of the harbour. Considered collectively, the planned developments and associated remediation work will improve the appearance of the harbour environs. As some development is necessary to make the disposal viable to Defence, the Committee believes the proposed option offers a generally satisfactory compromise.The only area where the Committee was critical of Defence's planning is in its current provisions for protection of some military heritage sites, particularly on Middle Head. The Committee was concerned that some areas of irreplaceable heritage value may be lost through neglect under current Defence planning. Some sites on land already transferred to the Sydney Harbour National Park are already being damaged by overgrowth and vandalism in areas where the State Government has been unable to adequately preserve and maintain them. This is an aspect of the impending disposals where the Committee recommends urgent action, at the Federal level, if this is needed.I am also aware that the Prime Minister is considering use of the Federation Fund to purchase a number of these Defence properties as a gift for public use. Should he reach that decision, this would address the interests of the local residents unsatisfied with Defence's development plans. It would also meet the Defence objective of generating the funding which was the original intention of the rationalisation. The Committee believes this would remove the need for the current compromise. Should the Prime Minister decide against that purchase, the Committee believes that the option intended by the Department of Defence's current planning, while less desirable, would offer a satisfactory compromise between the competing interests. I commend the Committee's findings to the House.Debate adjourned.Bills1075r36510751075O'Chee, Sen BillSenator O'CHEEEU4QLDNP10—On behalf of Senator Abetz, I present the report of the Legal and Constitutional Legislation Committee on the provisions of the Migration Legislation Amendment (Strengthening of Provisions relating to Character and Conduct) Bill 1997, together with submissions and Hansard record of proceedings.Ordered that the report be printed.Bills1075r445Billsr440Billsr442Billsr443Billsr438Billsr4361075Bills received from the House of Representatives.1075Ellison, Sen ChrisSenator ELLISON9X5WALPSchools, Vocational Education and Training10—I indicate to the Senate that those bills which have just been announced are being introduced together. After debate on the motion for the second reading has been adjourned, I will be moving a motion to have two of the bills listed separately on the Notice Paper . I move:That these bills may proceed without formalities, may be taken together and be now read a first time.Question resolved in the affirmative.Bills read a first time.107516:57:001075Ellison, Sen ChrisSenator ELLISON9X5WALPSchools, Vocational Education and Training10—I move:That these bills be now read a second time.I seek leave to have the second reading speeches incorporated in Hansard .Leave granted.The speeches read as follows—LEGISLATIVE INSTRUMENTS BILL 1996 [No. 2]The Legislative Instruments Bill 1996 [No. 2] comes to this Chamber after debate in the House where the Opposition abdicated its responsibilities to the House. The Opposition did not debate the issues or suggest solutions. Rather, they merely indicated that the bill was not acceptable without attempting to identify ways of achieving an acceptable bill.This bill is a major reform of the processes for the making, publication, scrutiny and sunsetting of Commonwealth delegated legislation.As part of its Law and Justice and New Deal for Small Business policies, the Government undertook to introduce a Legislative Instruments Bill, with limited exemptions and specific provision for five-year sunsetting of regulations.This bill implements those policies. In addition, the bill performs a gatekeeper role in relation to legislative instruments, by preventing the unchecked proliferation of delegated legislation.The previous Government had introduced the Legislative Instruments Bill 1994. That bill was considered by several Parliamentary Committees, including the House of Representatives Standing Committee on Legal and Constitutional Affairs, and many suggestions for change were made. The bill was awaiting passage in the Senate when Parliament was prorogued prior to the 1996 election.The extent of scrutiny to which the 1994 bill was subjected is indicative of the importance of this legislative reform.The Legislative Instruments Bill 1996 drew on that earlier work. In particular, this bill overcame the deficiencies of the 1994 bill by the introduction of a structured sunsetting regime, more structured consultation principles and processes that had been developed in the Council of Australian Governments, and the reduction of the exemptions from the operation of the bill. The bill represents the best achievable package of reforms. It represents a significant shift in control over delegated legislation back towards the Parliament, and increases Government accountability through improved access and consultation mechanisms.This is the same bill that was introduced into the House of Representatives on 24 June 1996 and passed by that House on 11 September 1996 . The bill was introduced into the Senate on 8 October 1996 and, notwithstanding the strong general support of the Senate for the bill, finally passed on 25 September 1997 with 18 government and 35 other amendments. A large number of the non government amendments emasculated the stringent consultation principles and processes and removed the sunsetting regime.On 17 November 1997 the House of Representatives considered the Senate amendments and returned the bill to the Senate. he House accepted the government amendments but rejected the other Senate amendments. The House accepted that many of the non government amendments were unnecessary and the major amendments made aspects of the bill unworkable. Further, the House also passed some additional government amendments.On 5 December 1997, after the Senate had again considered the bill and amendments and insisted on its previous amendments, the House finally laid the bill aside.The government is reintroducing this bill because it has a mandate to enact it and has a clear commitment to it . The government believes that the people of Australia have an expectation of a right of access to all legislation applying to them and that they have a right to participate in the development of all delegated legislation being made which will or might affect them.The Government's Law and Justice Policy statement commits the government to ensuring that the consultation process under the bill would include the preparation of a regulatory impact statement which would clearly indicate the objectives of the proposed regulation, the alternatives for achieving those objectives, the costs and benefits of each alternative and the reason for the adoption of the measure advanced. This bill gives effect to that commitment and is welcomed by the business community and, no doubt , the broader community. The regulatory burden on business, and small business in particular, has been a major impediment to business efficiency and the creation of more jobs and should be significantly diminished as a result of this billThe government will not accept amendment of the bill which would alter the principles of the bill or reduce the compliance requirements that rule-makers will need to follow. The Parliament expects no less accountability and information for legislation made pursuant to delegated powers than is available for primary legislation.As I have said there is broad support for this legislation. What is disturbing in this matter is that both Houses have considered and passed each of the provisions of this bill and yet were unable to agree on passage of the bill as a whole. It is the classic case of playing politics to try and get concessions from government which restricts the government's capacity to control its important programs. This was evident in the delay in passage of the provisions relating to non-disallowance of certain migration instruments and the exemption from the regime of a limited range of public sector terms and conditions instruments.The Chair of the Senate Standing Committee on Regulations and Ordinances has sought to remove exemptions from disallowance for instruments made under national schemes of legislation and Proclamations under the Quarantine Act.I met with the Chair on these matters on a number of occasions and explained why I could not accede to his proposals . I have also written to the Chair setting out the reasons for my position and those letters have been tabled in the Senate.The views on national schemes of legislation are founded on the R& O Committee's Position Paper about Scrutiny of National Scheme Legislation which canvasses the desirability of Uniform Scrutiny Principles for national schemes. My Department made a substantial submission on an earlier Issues Paper on this subject drawing attention to a range of difficulties that needed to be considered. I understand that the Committee is currently considering a draft of its Report in the matter. To remove the exemption for national scheme legislation at this time would be premature without knowing the Committee's approach, the rationale for it and whether implementation of the Committee's Report is desirable, as it has major significance for both the Commonwealth and the states. Knowing the present uncertainty about final arrangements for a uniform scrutiny regime, clause 72 of the bill provides specifically for issues arising from national schemes of legislation to be considered in the course of the review of the operation of the legislative instruments legislation. That is the only appropriate way to approach the issue at this time.The exemptions for quarantine proclamations are necessary because they are the only way to provide specific control mechanisms to prevent the entry and spread of disease and pests affecting humans, animals and plants in Australia.Typically the detailed conditions under which importation of a particular commodity from a particular country or region may be allowed are set out in protocols developed by the Australian Quarantine and Inspection Service within the scope of the relevant quarantine proclamation. Each set of protocol conditions is developed on the basis of consideration of relevant scientific information and risk analysis.Quarantine proclamations have never been subject to disallowance by the Parliament. This approach is being continued in the bill, on the basis that it is not appropriate to task the legislature to consider whether to disallow such highly technical instruments. Remedies on alleged procedural defects in the making of these instruments are available under the Administrative Decisions (Judicial Review) Act 1977.Sunsetting of delegated legislation is an important component of the Government's policy on regulation review. It will ensure that business regulation is reduced to the minimum necessary for effective accountability and control and that remaining delegated legislation is regularly considered for appropriateness, currency, effectiveness and necessity.The Administrative Review Council's report "Rule Making by Commonwealth Agencies" which led to this legislation recommended that all existing principal instruments of a legislative character and all instruments subject to the Legislative Instruments Act should be sunsetted. The House Committee in its report on the 1994 bill, which did not provide for sunsetting, recognised the resources issues associated with sunsetting and recommended that a sunsetting regime be introduced in relation to all existing and future legislative instruments as soon as possible . The House Committee's report on Clearer Commonwealth Law , and the Access to Justice Advisory Committee's report Access to Justice also supported the early introduction of a sunsetting program.This bill gives effect to the Government's policy of ensuring that all new regulations are subject to a 5 year sunset clause. This is an important policy that the government can not, and will not, back away from. It is part of a range of policies that remove unnecessary burdens from the business community and benefits the whole community.I commend the bill to the Senate.COMMONWEALTH PLACES (MIRROR TAXES) BILL 1998The mirror tax provisions will ensure that stamp duties, payroll taxes, financial institutions duties and debits taxes can be applied in respect of Commonwealth places within each state. As only the Commonwealth has the power to make laws with respect to those places, the Commonwealth and the States have worked together to find a legislative solution which will allow the States to continue to collect these revenues.Full details of the measures in the bill are contained in the explanatory memorandum circulated to honourable senators.I commend the bill to the Senate.COMMONWEALTH PLACES WINDFALL TAX (COLLECTION) BILL 1998The windfall tax provisions work in tandem with the mirror tax provisions to ensure that stamp duties, payroll taxes, financial institutions duties and debits tax paid before the mirror tax arrangements take effect are able to be legally retained by the States. This bill provides for the determination, collection and administration of the Commonwealth places windfall tax which applies to claims for refunds of amounts paid under State taxing laws before 6 October 1997.I commend the bill to the Senate.COMMONWEALTH PLACES WINDFALL TAX (IMPOSITION) BILL 1998This bill imposes the Commonwealth places windfall tax at a rate of 100 per cent.I commend the bill to the Senate.COMMONWEALTH PLACES (CONSEQUENTIAL AMENDMENTS) BILL 1998This bill makes consequential amendments to the Commonwealth Places (Application of Laws) Act 1970 (the 1970 Act), the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997. These amendments ensure that the provisions of the State tax laws which will be mirrored by the Commonwealth Places (Mirror Taxes) Act 1998 will have effect under the 1998 act rather than the 1970 act. The amendments also ensure that income tax will not apply to refunds of State taxes subject to the windfall tax and that no deduction will be available for payments of windfall tax.I commend the bill to the Senate.CHILD CARE LEGISLATION AMENDMENT BILL 1998Following the passage of the Child Care Payments Act 1997 last year the Government received numerous representations about the likely administrative impact on parents and on services which would flow from its full implementation in April 1998. As a result I announced on 23 January that the Government has decided to defer the implementation of the changed payments arrangements aspects of the bill until a child care card or similar technology is available. This technology will allow us to introduce a system which is more efficient for all parties.To implement this decision, this bill seeks to defer implementation of the Child Care Payments Act 1997, and to amend the Child Care Act 1972 and the Childcare Rebate Act 1993 to allow the implementation of the other decisions taken in the 1997 Budget and reflected in the Child Care Payments Act 1997. The bill introduces a head of power to allow the work related circumstances of a family to be taken into account when determining the amount of Childcare Assistance payable. Using this power, a limit of 20 hour of Childcare Assistance per week will be introduced for children of non working families. This measure ensures Commonwealth funds are more efficiently targeted to the primary objective of the program, that is, work related care.The limit will be applied following the same policy parameters would have been used under the Child Care Payments Act 1997. Work related care is defined by reference to the Childcare Rebate Act 1993 and includes care required by families where both parents are or the single parent is working, looking for work, studying or training. It includes families where one parent is working and the other, because of a disability is unable to have work-related commitments or care for their child or children.The bill also provides for exemptions from the 20 hour limit. Families in receipt of Child Disability Allowance for any child will be able to access more that 20 hours of Childcare Assistance in respect of all their children in care. Children at risk of neglect or abuse will also be able to access as much Childcare Assistance as they need as will children of families in crisis and children who have two disabled parents.Finally, exemptions will exist for operators where they are the sole provider of care in an area. Guidelines setting out these exemptions will be in the form of a disallowable instrument presented to the Parliament.A disallowable instrument will be made available to the Parliament which sets out the full detail of how the 20 hour limit will be applied.In many areas of Australia there are too many child care centres while families in other areas have little or no access. The Child Care Payments Act 1997 sought to rectify this situation by imposing an effective limit of 7000 new places per year over the next two years. With the deferral of the Child Care Payments Act 1997 it is necessary to amend the Child Care Act 1972 to provide for this limit. Guidelines setting out the requirements for approval of places will be presented to the Parliament in the form of a disallowable instrument.The government has also indicated its strong commitment to measures which encourage parents to properly immunise their children. The Child Care Payments Act 1997 contained provisions which required that children be immunised to qualify for child care subsidies. This bill replicates the immunisation requirements contained in that act and ensures that there is no further delay in implementing this important health initiative. Appropriate exemptions will be made to ensure that children at risk of abuse of neglect are not subject to these re quirements. Guidelines for this purpose will be in the form of a disallowable instrument and will be presented to the Parliament.Finally, the bill introduces for the first time confidentiality provisions into the Child Care Act 1972. These provisions follow very closely the provisions of the Child Care Payments Act 1997 and are necessary to ensure that families' information is secure.Ordered that the second reading of these bills be adjourned until the first day of the winter sittings, in accordance with standing order 111.Ordered that the Legislative Instruments Bill 1996 [No. 2] and the Child Care Legislation Amendment Bill 1998 be listed on the Notice Paper as separate orders of the day.Notices1078107816:58:001078O'Chee, Sen BillSenator O'CHEEEU4QLDNP10—Pursuant to notice given at the giving of notices today, on behalf of the Regulations and Ordinances Committee, I now withdraw Business of the Senate notice of motion No. 1 standing in my name, for the disallowance of Public Interest Determination No. 7 made under part VI of the Privacy Act 1988.Bills1078r354Billsr322Billsr323Billsr3351078Debate resumed.16:59:001078Conroy, Sen StephenSenator CONROY3L6VICALP00—I am disappointed that Senator Murray has not rejoined us yet for the debate. I am hoping that he will get here because we were involved in a bit of a discussion about the amendments that the Democrats will be moving. Senator Murray was concerned that we seemed to have a lack of understanding about both this legislation and trusts in general.If I can re-cap where I was before. We were discussing how much tax a company, a PAYE individual and a trust with two beneficiaries was paying. The comparisons for $50,000 were: $18,000 for the company; $14,000 for the PAYE individual; and for the two beneficiaries of the trust, a grand total of $9,044. That is half the tax of a company and about a third of the tax less than a PAYE individual. And they say, `Why do we want to have trusts? Why is it such a big issue that anybody has got trusts? What is the problem?' As John Moore said in that other chamber, `If you have not got a unit trust, you are just a public sector bludger.' We will tell you who the bludgers are. That is what involved here.The bigger the number of beneficiaries, the bigger the tax avoidance. That is why Senator Murray and the Democrats are reprehensible for the amendments which they are moving here. If a company earns $100,000, it pays $36,000 in tax. If you are a PAYE earner, you pay $37,000 in tax. But if you have a trust with two beneficiaries, the total tax paid is $28,204.EU4O'CHEESenator O'Chee—On a point of order: Senator Murray is not here, but I ask whether it is parliamentary to say that moving an amendment is `reprehensible'. Is that not an unparliamentary reflection?3L6Conroy, Sen StephenSenator CONROY—They are sensitive on these trusts.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator McKiernan)—Order! It is a debating remark.3L6Conroy, Sen StephenSenator CONROY—So a trust with an income of $100,000, with just two beneficiaries—perhaps a husband and a wife—pays $28,000 compared to $37,000 if you are a PAYE earner or $36,000 if you are a company. But if you have four beneficiaries—and Senator Murray stood up earlier today and said, `No, mine is just two beneficiaries; two children, me and my wife'—with an income of $100,000, the total tax paid is $18,000 compared to $37,000 for the same PAYE earner. Who are the bludgers, John Moore? Who is avoiding paying tax?It gets worse. At Thredbo recently—you were there, Senator Kemp, and I am sure you were involved—Peter Costello said that the existing rules encourage the wealthy, and business, to chase tax breaks rather than real job creating investments. He also said:Wage and salary earners do not generally have the opportunity to exploit tax loopholes in the same way.. . . . . . . . .The tax is paid by their beneficiaries, not by the actual trust. The key to their appeal is that they allow the well-off to legally exploit the $5,400 tax free income limit . . . In their simplest form, family trusts can turn a high income of $200,000 a year—so here is a $200,000 example—into a middle income of $50,000, split four ways—WW4KEMPSenator Kemp—Just refresh my memory; R & D syndicates—how did you vote on R&D syndicates?10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—Order!3L6Conroy, Sen StephenSenator CONROY—Thank you, Mr Acting Deputy President. Assuming there is no other income and that there are four beneficiaries—two children, the breadwinner and the spouse—each beneficiary pays $14,000 in tax, plus $750 for the Medicare levy. The total family tax bill comes to $59,408, or an effective tax rate of just under 30 per cent. So the trust with four beneficiaries—Senator Murray—pays tax, if earning $200,000, of just under 30 per cent. If that $200,000 were assessed in the hands of the chief breadwinner, the tax bill would come to $84,000, plus the Medicare levy of $3,000, that is, an effective tax rate of almost 44 per cent. That is right: you have a choice between a 30 per cent tax rate, if you are in a trust, and 44 per cent, if you are a poor mug PAYE earner.What the government and the Democrats are doing today is opening the loophole further. They will tell you that the Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 is about being tough on family trusts. I say to ACOSS and those other welfare groups which are involved in discussions with the government and business over the GST and a tax package that this govern ment is not serious about taxing trusts. The loopholes in this bill are a disgrace.The government have already ruled out negative gearing—they will not touch it. They are opening the gap for families to traffic in trust losses in this bill. They say, `Trafficking in trust losses is a terrible thing. We'll stop it. but if you are a family, that's okay, you can turn around and open up all sorts of extra provisions under this legislation,' which was not our legislation. That is what is going on with trusts in this bill. And Senator Murray is making it worse. The Democrats' position is to open up further holes for families to traffic in trust losses—quite extraordinary.The evidence given before the Senate committee contradicted the Treasurer who stood up and said, `We had the Labor bill and this is what the gains were going to be. This is the new bill and this is what the gains are going to be. We are going to gain more money than the Labor Party would have under the same bill.' That was an untruth. The Treasurer misled the parliament. We had a Treasury official say before the Senate estimates committee, `Actually, more money will be lost under the new bill than under the previous Labor bill.' That is the truth of this bill. That is what they do not want the public to know.Senator Parer probably put the cat among the pigeons last week when he talked about effective tax planning. He had been advised to set up his share plan, as he described it, because lawyers had told him that this was the best way to effectively minimise his tax. It is completely legal, but I call it a rort.XE4BOLKUSSenator Bolkus—It is avoidance.3L6Conroy, Sen StephenSenator CONROY—It is avoidance. That is what this lot are about. They are about opening up the rules so that there is more tax avoidance. The irony is, as George Megalogenis pointed out in an article in the Australian on 4 March, that the tax office has exposed this. Quite by accident, the tax office produced a report into the compliance costs of the taxation system. They found—I will quote from the article in the Australian —that:The second headache for Howard arising from the ATO report was the evidence that a huge slice of the present tax compliance costs suffered by small business was self-inflicted.The report revealed that small businesses run through a trust structure faced double the tax compliance costs of those run as a sole trader, partnership or company.Twice the costs. Why would you do that? Why would you voluntarily agree to pay twice the costs by setting up as a trust? The article continues:The results shocked the ATO, which thought the red tape costs of a trust and company would be similar. The only conclusion that can be drawn is that small businesses using trusts are spending a lot of extra money on lawyers and accountants to get around the tax laws.The whistle has been blown by the tax office. Trusts are being used by small business to avoid tax. Half your frontbench are avoiding tax. That is the reality.BE4NEWMANSenator Newman—Oh, come off it!3L6Conroy, Sen StephenSenator CONROY—Nothing illegal. I am not accusing anyone of doing anything illegal. `Effective tax planning' I believe it is referred to as in the industry. That is what is going on here. And we have had the Treasurer claiming, `We will do a study. We will get Treasury, we will get Ken Henry with that magnificent memory of his. He is the head of that task force. We will get him in and he will do the report.' All of a sudden the report has vanished. Where is it? It has been subsumed. We do not want to see the study on trusts, do we? Half your frontbench would have to hang their heads in shame if that study came out.XE4BOLKUSSenator Bolkus—They know no shame.3L6Conroy, Sen StephenSenator CONROY—If they knew any shame. Thank you, Senator Bolkus. If they knew any shame, they would hang their heads in shame. You have seen the tax commissioner stand up and also blow the whistle on trusts. He recently said that he had discovered that massive tax avoidance was being used by people setting up trusts. I quote from Mr Carmody's speech to CIDA:However, our examination does reveal that during the 1995 income year alone the total amount of tax free distributions from reserves to beneficiaries of the trusts was around $50 million. In one case, an amount of $19m was distributed to a wealthy individual. No tax—distributed from a trust. How did that happen? He continues:In another case, a wealthy individual received distributions of $5m per annum over at least three years from trusts.No tax. Our bill was moving towards dealing with these. You have opened up the loopholes again. Mr Carmody continues:As noted these are extreme examples of the types of tax benefits available to taxpayers using trusts.But he goes on:It should be noted however that the tax advantages of trusts are not restricted to high wealth individuals.To get away with this, you do not have to be one of the people earning millions and millions; you just have to be a small business. As the tax office report on compliance costs shows, you just have to be a small business. What has John Howard said? And what has Senator Kemp said? `Oh, we are not going to do anything about taxing trusts if you are a legitimate small business. No, that is way out of line.' Well, that is where the majority of the avoidance is.So if you are fair dinkum when you meet with ACOSS and with the churches, and you want to convince them on a GST, you cannot duck the issues like negative gearing but you are certainly not going to get away with ducking the issues on trusts.WW4KEMPSenator Kemp—Did he say negative gearing? I cannot believe that.3L6Conroy, Sen StephenSenator CONROY—You are not going to get away with family trusts. As I said, it is a pity Senator Murray is not here to respond. I would like to refer to a document I have just been passed which confirms the point I made before. In the Senate estimates committee, Senator Cook asked:Does the new family trust concession mean that, for example, wealthy families can continue to traffic in losses incurred by their family trusts within the extended family group?Mr Manoranjan answered:. . . within that family group, and within companies and trusts that form part of that family group, you could transfer losses without falling foul of the legislation. What a fraud you lot are. This was a bill to stop trafficking in trust losses. And what do you see happening?WW4KEMPSenator Kemp—You are supporting the bill; hasn't someone told you?3L6Conroy, Sen StephenSenator CONROY—Yes, we are going to support it, because this is at least going in the right direction. But it is not the bill we put up. I will be voting for it, because at least it is going to stop some of the traffic in trust losses. But what it does and what should be on the public record is that you have opened up a massive hole for families to continue to traffic. They do not even have to be two individuals; they can have a corporate entity set up in their trust and they can pass the trust losses around. I will just finish Mr Manoranjan's quote. Senator Cook went on to ask him:What is the difference in the effect on revenue of the first proposal and now the second proposal?WW4KEMPSenator Kemp—Why don't you quote everything Peter Cook said?3L6Conroy, Sen StephenSenator CONROY—I am quoting Mr Manoranjan—your tax office official, your Treasury official:. . . but that positive impact is the sum of some negative impacts because of the fact that these trusts could not merge profits and losses and some positive impacts which arose from some adjustments that were made to the previous revenue estimates.. . . . . . . . .Subsequently, we realised that that the ongoing losses that were made by trusts could also be trafficked and therefore this gave to a positive figure, additional revenue.. . . . . . . . .Under the second set of proposals, by then we had refined the estimates because of information received and that again gave rise to an increase in revenue. The minus in revenue stems from the fact that there could be no transfers between trusts between the same family group and that gives you a minus figure.He goes on:Without going into an accurate estimation, I would say the general impact would be a slight reduction in revenue.So there you are. The Treasury official who worked on this blew the whistle on your rhetoric where you said that your bill would pull in more revenue than our bill. And you have tried to pretend that that is the case and you have maintained that for months, but you know it is not true. And you know it is not true because you opened up a massive avenue for tax avoidance within families under the guise of Senator Parer, for example, complaining, `Oh, I should be allowed to pass all my dividend income on to my children. I should be allowed to distribute it freely into the family trust so that my income can be called their income and I do not have to pay any tax on it.' Well, that may be how you see the world.There are all these screams of `It's about envy', but no, it is about paying your tax when you should. That is why Carmody is leading the charge. That is why the tax office has blown the whistle on you. That is why the Treasury official has blown the whistle on you—because they have to sit and watch while you mouth the rhetoric to ACOSS and everybody else that you want to make the tax system fairer. This bill could have gone a lot further than it does. Senator Murray's amendment and your amendments to our original bill are a disgrace, and you should be willing to go back to the original Labor bill.17:14:001082Murphy, Sen ShayneSenator MURPHYFX5TASALP00—I rise to make a brief contribution with regard to the bills before the Senate. Unlike Senator Conroy I have to declare an interest in this, because I actually do have a property trust.WW4KEMPSenator Kemp—Oh, resign!FX5Murphy, Sen ShayneSenator MURPHY—I suppose you have one too, Senator Kemp; I wouldn't know. I wish that the measures we proposed with this legislation in 1995 were the ones we are debating now, because I think we would have at least taken some reasonable steps towards bringing about changes to taxation laws that would have some meaning. What is proposed by the government and, as pointed out by Senator Conroy, what is proposed by way of amendment by the Democrats, is going to achieve very little, if anything, in taxation reform. This government has been applying rhetoric to the debate about taxation reform. You talk about introducing a GST—lumping that on the battlers of this country; but you are not prepared in any way, shape or form to address this question of tax avoidance through trafficking in trust losses. It is simply not acceptable. When this legislation does finally go to the vote I will be voting for it; but I wish that I was voting for something much stronger. I will not be supporting the Democrats' amendment. Hopefully, one day, we will see decent legislation brought into this parliament that will actually deal with the type of tax avoidance problems that do occur as a result of trafficking in trust losses.17:16:001082Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I will respond briefly to the comments which have been raised on this legislation. First of all, let me make a couple of points in relation to Senator Conroy's speech. It occurred to me that there should be a standing order against overacting and, if there had been, Senator Conroy would have been warned, at least once or twice—and then thrown out. I have never heard such a lot of nonsense in all my life. I had to remind Senator Conroy that he was supporting the bill. He seemed to have forgotten that until I reminded him about two-thirds of the way through his speech, and a look of surprise came over his face. But Senator Conroy, that is your party's position on this.And then Senator Conroy got into an absolute lather about tax avoidance. It occurred to me, as I thought back, Mr Acting Deputy President, that when we brought in, for example, the measures on R&D syndicates—which of course was a major hole and being exploited in the taxation system—the Labor Party, led by Senator Cook, fought us tooth and nail. When we brought in the measure on the superannuation surcharge—which was to bring greater equity to the superannuation system—we looked in vain for support from the Labor Party. This was a surcharge on higher income earners, and the Labor Party went missing in action. Then I remembered the debate on the infrastructure bonds: boy, were you blokes woolly on that one, too.So, Senator Conroy, it is all very well to run these lines. It is good class war stuff, and it might excite the troops back home when you post a copy of your speech to the local branches. But the local branches should be aware that when the Labor Party is tested on tax avoidance, it has always been my experience that they go missing in action. When we seek, as we did with the superannuation surcharge, to bring greater equity to the system, you guys are nowhere to be seen; in fact, you fought it tooth and nail. Then I thought that Senator Conroy—3L6CONROYSenator Conroy—You are making the poor pay for it; you are making the poor pay to collect your tax.WW4Kemp, Sen RodSenator KEMP—Oh, he is still opposing the surcharge on higher income earners—well, thank you for that; we will get that recorded as well.And then, for reasons totally unknown to me and, I am sure, to my advisers—and I shall read the Senate Hansard closely—Senator Conroy brought up the issue of negative gearing. Last week the Labor Party made a total goose of itself over that issue, as you are well aware. Gary Evans raised this issue on the radio—RF4COOKSenator Cook—Use his correct title, please.3L6CONROYSenator Conroy—It's Roddy Kemp; go Roddy.WW4Kemp, Sen RodSenator KEMP—Oh, sorry—Gareth. All I can say is when I went to university with former Senator Evans, he was called Gary. Then he became Gareth. If you feel that it is a name that we should be referring to him as, I will call him Gareth. I do not want to cause offence. But I have to tell you, in the days of yore—well before your time Senator Conroy, because you are too young—he was well known as Gary.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator McKiernan)—The protocol, Senator Kemp, is to use a member's correct title.WW4Kemp, Sen RodSenator KEMP—The shadow Treasurer did raise the issue of negative gearing and, as I said in question time, did we have an inkling here of a Labor Party tax policy! And what happened? Within 24 hours, there was another one of these ungracious backflips, a la death duties, as this was ruled out by the shadow Treasurer. So Senator Conroy, the Labor Party has got form—and it is not form which gives anyone any confidence that the Labor Party is serious on the issue of tax avoidance because, as I said, you go missing in action each time these issues are raised.Senator Conroy also said how upset he was about trusts; trust was such an important guiding issue to the Labor Party; and then there was what he sees as the misuse of trusts. Let me make two points on that: I do wish you would give a consistent message to all those people who come to see you, because I have to say that there are a lot of people around who thought the Labor Party was going to pick up some of their views and attempt to modify this bill.3L6CONROYSenator Conroy—The battlers in Brighton? They are up in arms at you.WW4Kemp, Sen RodSenator KEMP—No it was not the battlers. It was the big end of town, which so fascinates you people.3L6CONROYSenator Conroy—The battlers of Brighton are up in arms at you.WW4Kemp, Sen RodSenator KEMP—No, it was not the battlers. As they come to see you, you give them one message; then, of course, you came into this chamber and give a totally different message. I did make the point today that the Labor Party has this huge dilemma that because it believes in nothing it will say anything, and that is true on negative gearing, on death duties, on trusts. My second point on trusts I was going to make for you—3L6CONROYSenator Conroy—Have you got one?WW4Kemp, Sen RodSenator KEMP—This is so important to you. You are so opposed to trusts. The Labor Party, apparently, was so opposed to the use of trusts. It did occur to me to wonder how long it took the Labor Party—13 years in government—to bring in its legislation on trusts. Thirteen years—so there is this massive concern that Senator Conroy evinced, and how long did it take the Labor Party to do anything about it? Well, of course, they did not. By the time they had brought it in, the Labor Party was history as a government—as it should have been. We indicated, when that bill came in, that we would accept the starting date, but we wanted to make sure there was proper consultation in the wider community, and that certainly occurred.Senator Conroy, what I have to say about all this rhetoric and all this passion is that when you examine the history, when you examine the taxation system which you left to us—which we are now trying to repair—I would have thought a modicum of modesty would have prevented you from getting up and carrying on like a goose. It is not as though I have done much research on my response to your speech but, as you spoke, the lines were so desperately obvious.It was an extraordinary speech. It struck me that it completely lacked any understanding of the history of his party on issues to do with trusts and issues to do with tax avoidance. Let me quote one further example. How dead serious is the Labor Party on tax avoidance? After 13 years in office, what did they discover during the election campaign? Remember all that? They discovered high wealth individuals. After 13 years in office, this was suddenly raised by the then Prime Minister.The truth of the matter is the Labor Party is not serious on tax. The Labor Party has not got a clue where to go on tax. That is why you get yourself into such trouble. You have not got a clue what to do. It would be a good thing, rather than making these sorts of speeches, Senator Conroy, if you and your colleagues sat down and did some jolly hard work on taxation because the community is noting that, every time the contributions are made by your leaders and your senior people, they last for a brief period of time before they are reversed by Mr Beazley or reversed by the heavyweights in the party.I listened to Senator Cook's remarks very carefully, as I always do, because he is the Deputy Leader of the Opposition in this chamber. Senator Cook said:. . . the tax system needs constant repair and some occasional renovation.Was that correct, Senator Cook? I wondered if you were going to provide further enlightenment on the tax policy of the Labor Party, but you did not. Again, Senator Cook did not make it crystal clear to people listening that the Labor Party was supporting this bill before the chamber—as it should. I think a lot of people will look with great interest at the remarks on trusts which a number of Labor senators have made in the course of debating this bill.3L6CONROYSenator Conroy—Deny they are not true; come on. Deny it is about income splitting.WW4Kemp, Sen RodSenator KEMP—Let me clarify that: on the pointers it gives to Labor Party policy. Let me make that quite clear, Senator Conroy, because people will examine very closely what you have said.3L6CONROYSenator Conroy—What about Costello? Encouraging the wealthy to chase tax breaks. That's your Treasurer—your boss.WW4Kemp, Sen RodSenator KEMP—You lost your right to take part in taxation debates when you voted against the superannuation surcharge. That was a fair measure to make sure that higher income people pay a surcharge. Senator Conroy, you opposed that. You strongly supported—3L6CONROYSenator Conroy—They are not going to pay it. They have already packaged all of it. You have hit two million people by $70,000 paying the surcharge.WW4Kemp, Sen RodSenator KEMP—We know why you are opposing it, Senator Conroy. This is a different debate, so I will not be so ungracious as to raise it in this chamber.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator McKiernan)—Order! It would help, Senator Kemp, if you directed your remarks through the chair.WW4Kemp, Sen RodSenator KEMP—Thank you for that advice, Mr Acting Deputy President. The purpose of the trust loss measures is to restrict the recruitment of losses and other deductions of trusts in order to prevent the transfer of the tax benefit to the losses. This occurs when a person who did not bear the economic effect of a loss when it was incurred by the trust obtains the benefit as a result of the trust's ability to deduct the loss. The proposed measures which are before this chamber will prevent a significant erosion of the tax base that would otherwise arise from the transfer of tax benefit of trust losses. There are no provisions in the income tax law similar to those which apply to companies which effec tively regulate the deductibility of trust losses against current and future income.`During the debate some non-government speakers raised concerns about the time taken to introduce this legislation into the parliament. I think that it is important to recall that the delay has largely been a result of the government's desire to consult widely on this important item of legislation, which the government did. The consultation has resulted in legislation that takes account of the legitimate concerns of taxpayers while preserving and, in some respects, improving the integrity of the measures.In the debate, some non-government senators raised concerns about the government's decision to change the application of the income injection test to family trusts. People will look very closely to see what the Labor Party's policy is on family trusts as we go to the next election. I think that people will be reading very closely what was said. In making the change in relation to family trusts, the government has recognised a concern raised by small business—that not allowing family members to inject their income into their own family trusts was unfair.We consulted very widely on this bill. It was a great pity that Senator Conroy was not better informed before he gave us that earlier performance this afternoon, which may well come back and haunt him, I suspect. The changes made to the income injection test fully implement the policy that the tax benefit of trust losses should be able to be transferred only within a family group. This policy was recognised in part in the previous government's legislation which allowed individual family members to inject their income into their family trust.Mr Acting Deputy Speaker, normally one likes to thank senators for their contribution in the second reading debate. I am not sure that I could make that comment in all sincerity but, out of deference to you, we welcome the chance to debate this very important bill.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—Order! Senator Cook has moved an amendment to the second reading of the bill, to which Senator Margetts has moved an amend ment. I put the question that the amendment moved by Senator Margetts be agreed to.A division having been called and the bells having been rung—YW4MACDONALDSenator Ian Macdonald—I am not quite sure whether this is necessary but, in view of everything, I am going to err on the side of caution by indicating to the Senate, as my register of interests shows, that I have one share in a private company, of which my wife is the sole director, which is the trustee of the Ian Macdonald family trust. I disclose that to the Senate.9X5ELLISONSenator Ellison—I advise the Senate of my interest in the family trust which is outlined in my registration of interests.6E4TAMBLINGSenator Tambling—Similar to Senator Ellison, I draw to the attention of the Senate my declaration of interests with regard to the Tambling family trust.5F4CALVERTSenator Calvert—I draw the Senate's attention to the family trust which looks after my farm.GX5TROETHSenator Troeth—I also draw attention to my family trust, which is part of the family farm.KI4PARERSenator Parer—I was the potential beneficiary of a family trust. I no longer am.VW4HERRONSenator Herron—I refer the Senate to my declaration of interests.BX5GIBSONSenator Gibson—I also draw the Senate's attention to my declaration of two family trusts.XH4McGAURANSenator McGauran—I also draw the Senate's attention to my declaration of interests.FF4CHAPMANSenator Chapman—I likewise draw attention to the fact that I am the potential beneficiary of a discretionary trust, as declared in my declaration of interests, but I have no vested interest.EU4O'CHEESenator O'Chee—I draw the Senate's attention to my declaration of interests.RD4BROWNHILLSenator Brownhill—I draw the Senate's attention to my declaration of pecuniary interests.C16HEFFERNANSenator Heffernan—If it is necessary—and I do not think it should be—I draw attention to my interest in the Bill Heffernan family trust. If Robert Ray would like to take a share in it, I would give serious consideration to putting him into it as well. He can have a share of the drought stricken farm.LD4ALSTONSenator Alston—I refer to and repeat the particulars set out in my declaration of interests.N26ABETZSenator Abetz—I seek to do the same as Senator Alston.WP6LIGHTFOOTSenator Lightfoot—I draw the Senate's attention to my register of interests and the family trust therein.2M6COONANSenator Coonan—I draw the Senate's attention to my register of interests.FX5MURPHYSenator Murphy—I also draw the Senate's attention to my register of interests statements.FF4CHAPMANSenator Chapman—Madam President, I should point out that every senator in this place is the potential beneficiary of a discretionary trust, depending on what decisions the trustees take in any particular year.10000PRESIDENTThe PRESIDENT—We will now come to the vote. Four matters are to be put to the Senate. I ask that you remain in the chamber until we complete the four votes because that will enable us to do it more speedily.LI4PATTERSONSenator Patterson—My father has a trust. I do not know whether or not I am a beneficiary, but it should be noted here.10000PRESIDENTThe PRESIDENT—The question is that the amendment moved by Senator Margetts to the amendment moved by Senator Cook be agreed to. Question put.17:34:00The Senate divided. (The President—Senator the Hon. Margaret Reid)27Bishop, M. Bolkus, N.Brown, B. Carr, K.Collins, J. M. A. Colston, M. A.Conroy, S. Cook, P. F. S.Cooney, B. Crowley, R. A.Denman, K. J. *Evans, C. V.Faulkner, J. P. Forshaw, M. G.Gibbs, B. Hogg, J.Mackay, S. Margetts, D.McKiernan, J. P. Murphy, S. M.O'Brien, K. W. K. Quirke, J. A.Ray, R. F. Reynolds, M.Schacht, C. C. Sherry, N.West, S. M.34Abetz, E. Alston, R. K. R.Brownhill, D. G. C. Calvert, P. H. *Campbell, I. G. Chapman, H. G. P.Coonan, H. Crane, W.Eggleston, A. Ellison, C.Ferguson, A. B. Ferris, J.Gibson, B. F. Harradine, B.Heffernan, W. Herron, J.Kemp, R. Knowles, S. C.Lightfoot, P. R. Macdonald, I.Macdonald, S. MacGibbon, D. J.McGauran, J. J. J. Newman, J. M.O'Chee, W. G. Parer, W. R.Patterson, K. C. L. Payne, M. A.Reid, M. E. Synon, K. M.Tambling, G. E. J. Tierney, J.Troeth, J. Watson, J. O. W.Campbell, G. Vanstone, A. E.Collins, R. L. Boswell, R. L. D.Lundy, K. Hill, R. M.Neal, B. J. Minchin, N. H.* denotes tellerQuestion so resolved in the negative.10000PRESIDENTThe PRESIDENT—The question now is that the amendment moved by Senator Cook be agreed to.Question resolved in the negative.10000PRESIDENTThe PRESIDENT—An amendment was foreshadowed by Senator Murray, but he is not here to move that amendment, so that question will not be put. The question is that the bill be now read a second time.UI4RAYSenator Robert Ray—On a point of order: in respect of Senator Cook's amendment, I thought I heard two voices saying that the ayes had it and calling for a division.10000PRESIDENTThe PRESIDENT—I did not hear that. I heard one voice and I—UI4RAYSenator Robert Ray—You all know that I have a very quiet voice so it probably did not carry, but I did actually say it.10000PRESIDENTThe PRESIDENT—I put the question again that the amendment moved by Senator Cook be agreed to.A division having been called and the bells having been rung—10000PRESIDENTThe PRESIDENT—Senators have indicated that they wish to make similar declarations to those which were made before the previous motion was put. Is it the wish of the Senate that the same names be recorded in relation to this vote? There being no objection, it will be so recorded. Question put: That the amendment (Senator Cook's ) be agreed to.17:45:00The Senate divided. (The President—Senator the Hon. Margaret Reid)26Bishop, M. Bolkus, N.Brown, B. Carr, K.Collins, J. M. A. Conroy, S.Cook, P. F. S. Cooney, B.Crowley, R. A. Denman, K. J. *Evans, C. V. Faulkner, J. P.Forshaw, M. G. Gibbs, B.Hogg, J. Mackay, S.Margetts, D. McKiernan, J. P.Murphy, S. M. O'Brien, K. W. K.Quirke, J. A. Ray, R. F.Reynolds, M. Schacht, C. C.Sherry, N. West, S. M.35Abetz, E. Alston, R. K. R.Brownhill, D. G. C. Calvert, P. H. *Campbell, I. G. Chapman, H. G. P.Colston, M. A. Coonan, H.Crane, W. Eggleston, A.Ellison, C. Ferguson, A. B.Ferris, J. Gibson, B. F.Harradine, B. Heffernan, W.Herron, J. Kemp, R.Knowles, S. C. Lightfoot, P. R.Macdonald, I. Macdonald, S.MacGibbon, D. J. McGauran, J. J. J.Newman, J. M. O'Chee, W. G.Parer, W. R. Patterson, K. C. L.Payne, M. A.Reid, M. E.Synon, K. M. Tambling, G. E. J.Tierney, J. Troeth, J.Watson, J. O. W.Campbell, G. Vanstone, A. E.Collins, R. L. Boswell, R. L. D.Lundy, K. Hill, R. M.Neal, B. J. Minchin, N. H.* denotes tellerQuestion so resolved in the negative.Original question resolved in the affirmative.Bills read a second time.108710000CHAIRMANThe CHAIRMAN—Before we commence the consideration of the Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 and three associated bills, there is a statement that I wish to make. The government amendments to the Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 have been presented in the form of requests. It is not a bill which imposes taxation so is amendable by the Senate. There appears to be no reason for the amendments taking the form of requests. The supplementary memorandum accompanying the amendments states they have no financial impact. They will therefore be treated as amendments. The committee is considering the Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 and three associated bills. We will first consider the Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 .TAXATION LAWS AMENDMENT (TRUST LOSS AND OTHER DEDUCTIONS) BILL 1997The bill.17:49:001087Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I table a supplementary memorandum relating to the government amendments to be moved to the Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 , including an addendum to the explanatory memorandum. This memorandum was circulated in the chamber on 5 March 1998. I will be moving two requests for amendment and also moving other amendments on behalf of the government.10000CHAIRMANThe CHAIRMAN—They are amendments; they are not requests.WW4Kemp, Sen RodSenator KEMP—I note the comments you have made and how you will treat them. I have received advice from the A-G's, but I note what you will be doing. The government has considered the Senate Economics Legislation Committee's report on the bill. In accordance with comments in the majority report, the government has also considered submissions and evidence given to the committee in order to determine whether any amendments to the legislation are warranted. Many of the government's amendments arise from this examination and from other comments made since the introduction of the legislation.The amendments essentially deal with technical issues designed to clarify the intended operation of the proposed provisions. The amendments also include a change to the transitional rules dealing with the making and revocation of family trust and interposed entity elections. Requests 1 and 2 will ensure that a unit trust held by a discretionary trust is not treated as a widely held unit trust. Amendments 1 and 2 will ensure that the measures do not operate in relation to excepted trusts. Amendments 3 and 9 will ensure that entities owned by one or more family trusts can be members of a family group.Amendments 7 and 8 will ensure that a family trust or other family entity will pass the family control test if it is owned by one or more family trusts of the family concerned. Amendment 7 will also ensure that one or more legal or financial advisers can control a trust, along with the family, for the purposes of the family control test.Amendments 11 to 16 will ensure that the transitional provision dealing with the pattern of distributions test applies to all relevant distributions that need to be taken into account. Amendments 17, 18, 20 and 21 and amendment 10—new item 11A—will implement the new transitional arrangements for the making of family trust and interposed entity elections.In broad terms, the arrangements are as follows: taxpayers wishing to make the election for the 1997-98 or earlier years will be required to do so by the term of lodging their 1997-98 tax returns. The election will need to be in a form approved by the commissioner but will not need to be lodged with the commissioner. Rather, the taxpayer will be required to keep the election. A taxpayer who made the election by the time of lodging their 1997-98 return will be required to lodge details of the election as part of their 1998-99 tax return.Amendment 19 will implement a new transitional arrangement for the revocation of family trust elections. In broad terms, this arrangement provides for revocations in respect of the 1994-95, 1995-96, 1996-97 and 1997-98 income years to be made in tax returns for the 1998-99 income year. Amendments 4 to 6, 10—new item 11—and 22 will correct minor drafting errors. The changes to the transitional arrangements for family trust and interposed entity elections have been necessitated by the delay in enactment of the legislation.10000CHAIRMANThe CHAIRMAN—A running sheet has been circulated in the chamber. If it is the wish of the committee and there is no objection that would be the order in which I would intend the committee to deal with the amendments. There being no objection, it is so ordered.17:53:001088Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—by leave—I move:(1) Schedule 1, item 1, page 45 (line 19), omit "family", substitute "excepted".(2) Schedule 1, item 1, page 45 (line 25), omit "a family", substitute "an excepted".Amendments 1 and 2 will ensure, as intended, that the measures do not operate in relation to accepted trusts—for example, family trusts and complying superannuation funds. The accepted trusts are exempt from particular rules denying loss deductions. The provision that is being amended currently only exempts family trusts from its operation. The amendments will ensure that all accepted trusts are exempt.17:54:001088Cook, Sen PeterSenator COOKRF4WAALP00—The opposition supports these amendments. I notice that the government has 10 amendments to its own bill. It is quite comprehensively amending its own legislation by what it is proposing to this chamber. In view of that, I have a question about the government's policy on trusts and, in particular, what you have said about this matter. I have in front of me the Senate Hansard of 27 October 1997 in which Senator Murray was asking you a number of questions. In part you replied:We will release a discussion paper outlining relevant tax issues and broaching policy options. The timing of this will enable the government to consider the matter in the context of the 1998-99 budget.That is a reference to a discussion paper on trusts. You go on to say:Of course, the government reserves the right to take earlier legislative action to prevent tax minimisation or avoidance through the use of trusts. It is a complex area and that discussion paper will be very informative to the community.You raised a number of issues in relation to equity and neutrality. These are always important issues in the consideration of taxation legislation.My question in relation to that statement is: is it true that you have now been overridden by the Treasurer and he has negated that statement you made to the Senate and that it is now no longer true—that is, you will not be issuing such a discussion paper?17:56:001089Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—This issue was discussed more recently than October, Senator Cook. I think you have gone back to quote from an October estimates committee hearing. I can recall an estimates committee hearing—it seems like an eternity ago—only three or four weeks ago at which time this issue was very extensively discussed. We made it clear what the government's intentions were. The government has already announced a review of the tax treatment of trusts. The Treasurer has recently announced that this review would be rolled into the tax reform area. There was an extensive discussion of this at that Senate estimates committee which postdates the October hearings.17:57:001089Cook, Sen PeterSenator COOKRF4WAALP00—Since you are confirming that you have been overridden by the Treasurer and that this statement no longer holds as being a true exposition of the government's position, I ask: have you been overridden in every respect or just in respect of the publication of the paper? For example, you state in the Hansard :Of course, the government reserves the right to take earlier legislative action to prevent tax minimisation or avoidance through the use of trusts.Does that still hold good or are you awaiting the eventual publication of this paper—if, in fact, it does ever see the light of day? Does that assurance that you will take action to prevent tax minimisation still hold or are we to wait breathlessly for the so-called `tax deform package'?17:58:001089Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I thought you were half serious, Senator Cook, until you finished on that low note. The government always reserves the right to take action if it becomes apparent that immediate steps are needed to deal with an issue which has arisen. This is a matter for the Treasurer and not a matter of overriding me or anything else. These are decisions that the Treasurer makes. As I said, it was carefully explained why he made those announcements in relation to the review.17:59:001089Cook, Sen PeterSenator COOKRF4WAALP00—Senator Conroy referred to an interchange at a hearing, I think, last November in which the tax office gave evidence—and I am relying on memory here; these are not the precise words—that essentially the amendments that you are proposing to this legislation will mean a slight cut in revenue or a slight drop in revenue. I am referring specifically to the slight cut or slight drop in revenue. Can you quantify what a slight cut or a slight drop in revenue is? In other words, how much will your now reworked bill mean that revenue is dudded compared to what would have been the case had the original legislation remained intact?17:59:001089Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I would want to read entirely what Senator Conroy says before I comment on any quote that Senator Conroy may or may not have made.3L6CONROYSenator Conroy—You were sitting two seats from the Treasury officials at the table.WW4Kemp, Sen RodSenator KEMP—Senator, I try to remember everything you say. It is always my intention, Senator Conroy, to absorb as much as I can of the comments you make, mainly so I can use them against you at a later date. The fact of the matter is that we announced the revenue effects of this bill in the budget papers, which were released last May. I am not sure that I have any particular information now which I am able to share with you. I am advised that the changes in this bill have no impact on the budget estimates. There is no change to the forward estimates.18:01:001090Cook, Sen PeterSenator COOKRF4WAALP00—That is not the question I asked, Minister, as you would know. I go back to the question I asked. This bill is, in sequential form, the son or daughter of the previous bill that was announced by Treasurer Willis at the time he was Treasurer. That part is common ground between us. The second part is that you announced further changes to the legislation, which is now the document before us. This document, the explanatory memoranda and elsewhere refer to what the impact on revenue will be. My question, however, is: what is the difference between the impact on revenue of the Willis bill and the impact on the revenue of this bill?I ask that question because, as you would be aware, on Friday, 14 November 1997 an officer nominated by Treasury to answer questions of honourable senators on tax in the estimates committee said on the relationship of this bill to the previous bill:Without going into an accurate estimation, I would say the general impact would be a slight reduction in revenue.That is a direct quote from Mr Manoranjan, the Treasury official who I understand is first assistant secretary in the tax office. This is what the government knew on 14 November. It is now 23 March 1998. That is some four months ago. In that four months surely you have calculated what the reduction in revenue is. My question is: how much is it?18:04:001090Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I have shared with you the information that I am able to share. There were some related questions on notice from Senator Murray regarding the proposed trust loss measures. As it is rather extensive, I do not propose to read it in the chamber, but that is available. There were questions in relation to the revenue targets. Those questions were: on what are the figures based; is there a list of previously lodged claims; are we prepared to target this revenue; have these estimates been adjusted since 1995; and what impact did the family amendments announced on budget night this year have on these estimates? Answers were given to that. I cannot shed any further light on the matters you have raised. As I said, we gave forecasts in the budget papers which I am advised still hold. I do not know what the officer may have had in mind and I do not have any information I can give you.3L6CONROYSenator Conroy—You were sitting two seats from him when he said it. Didn't you know this?WW4Kemp, Sen RodSenator KEMP—Big deal. All I am saying is that you did not ask me where he was sitting. I accept your proposition that he was sitting close to me. But you have asked me to comment on a comment he made. I am telling you that I do not have any information I am able to share with you.18:05:001090Cook, Sen PeterSenator COOKRF4WAALP00—Minister, this is the third time I have asked this question. Each time you have answered it incorrectly—that is to say, you have not addressed the question I put; you have addressed another question. I understand what you say about the forward estimates in the budget. This bill represents the bill that you had in mind when you put those forward estimates there. So it is not surprising that this bill should reflect those forward estimates.That is not my question. I suspect you full well know what my question is because it is very plain. What is the difference in revenue forgone between this bill and the Willis bill? That is all I want to know. The tax office told us back in November that there was a slight difference or a slight reduction. How much does it amount to?18:06:001091Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator, I did hear what you said. Sometimes we have trouble in communicating, Senator Cook. I did hear what you said and I gave you the answer which I proposed to give to your question. We do have this difficulty in that sometimes you do not like my answers, and I understand that. I asked you many questions over the years and I often did not like your answers either. I can well understand what you are on about.I do not have figures which can assist you there. All I am saying is that the figures that the government released on these issues are in the forward estimates. They were stated clearly in the budget papers. There was some additional information given to Senator Murray in his questions. Senator Cook, I have listened carefully to your question. I do not have any further additional information I am able to give to you on that matter.3L6CONROYSenator Conroy—This is just extraordinary.3L6Kemp, Sen RodSenator KEMP—It is not extraordinary. The government has released the figures in relation to this in the forward estimates and the effect of this bill on the forward estimates, and those figures still stand. Those are the figures the government gives.18:08:001091Cook, Sen PeterSenator COOKRF4WAALP00—Thank you, Minister. You have just now said in this most recent answer that you do not have the information. Will you now get the information and let the Senate know what that information is?18:08:001091Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—You have already asked those questions on notice, so we have responded to them in the way the government proposes to respond. I have nothing further to add.18:08:001091Cook, Sen PeterSenator COOKRF4WAALP00—You say that you have responded to them. I do not recall that you have actually ever given a figure. I now ask: will you give us a figure? Please take it on notice, but will you please indicate to the chamber that you will provide the chamber with a figure?18:09:001091Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator, I do not have the figure. If, indeed, there is a figure, my adviser does not have a figure here.3L6CONROYSenator Conroy—Are you going to ask for it?WW4Kemp, Sen RodSenator KEMP—As always with this chamber, which I hold in the greatest of respect, if people seek information—656FORSHAWSenator Forshaw—Answer the question.WW4Kemp, Sen RodSenator KEMP—Senator Forshaw, you have made no contribution to this debate. You have shown no interest in this debate whatsoever. Senator Forshaw, you have come in and indulged in what can only be described as disruptive behaviour. I will take that question on notice. I will refer it to the Treasurer and see whether the Treasurer is able to provide an answer.Amendments agreed to.18:10:001091Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—by leave—I move:(3) Schedule 1, item 1, page 73 (lines 14 and 15), omit subparagraph (iii), substitute: (iii) the trustees of one or more family trusts, provided the individual is specified in the family trust election of each of those family trusts;(9) Schedule 1, item 1, page 110 (lines 29 and 30), omit paragraph (c), substitute: (c) the trustees of one or more family trusts, provided the primary individual is specified in the family trust election of each of those family trusts;Amendments Nos 3 and 9 will make it clear that, as intended, the entities owned by one or more family trusts of the same family as opposed to just one family trust can be members of the family group.Amendments agreed to.18:11:001091Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—by leave—I move:(4) Schedule 1, item 1, page 85 (line 4), after "primary", insert "interposed".(5) Schedule 1, item 1, page 85 (line 6), after "primary", insert "interposed". (6) Schedule 1, item 1, page 85 (line 8), after "primary" insert "interposed".Amendments Nos 4 to 6 will correct minor drafting errors by ensuring that the incorrect references in section 271-65 to `primary entity' are correctly labelled as `primary interposed entity'.18:11:001092Cook, Sen PeterSenator COOKRF4WAALP00—I understand what the minister says of these amendments, and I understand the purpose of these amendments. Can I ask, though: did the government's reconsideration leading to these amendments arise from the task force into trusts whose report is now deferred, or was that a matter that did not concern this task force?18:12:001092Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator, these did not arise out of the task force. As I stated in my introductory comments as we went into the committee stage, these arose out of the committee hearings and consultations that have been held over this bill. As you would be aware, this bill has attracted a lot of interest.Amendments agreed to.18:12:001092Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—by leave—I move:(7) Schedule 1, item 1, page 108 (lines 16 to 32), omit subsection (1), substitute:Trusts (1) A trust in respect of which a family trust election or an interposed entity election is proposed to be made passes the family control test if: (a) the requirement in any of the paragraphs of subsection (2) is satisfied in relation to a group consisting of: (i) the individual (the primary individual ) who is to be specified in the family trust election or, in the case of an interposed entity election, who is specified in the family trust election to which the interposed entity election will relate; or (ii) one or more members of the primary individual's family (see section 272-95); or (iii) the primary individual and one or more members of the primary individual's family; or (b) the requirement in any of paragraphs (a) to (e) of subsection (2) is satisfied in relation to a group consisting of a person or persons covered by subparagraph (a)(i), (ii) or (iii) of this subsection and one or more legal or financial advisers to the primary individual or to a member of the primary individual's family; or (c) the requirement in paragraph (f) of subsection (2) is satisfied in relation to a group consisting of: (i) the trustees of one or more family trusts, provided the primary individual is specified in the family trust election of each of those family trusts; or (ii) such trustees and a person or persons covered by subparagraph (a)(i), (ii) or (iii).(8) Schedule 1, item 1, page 109 (lines 28 and 29), omit paragraph (3) (c), substitute: (c) the trustees of one or more family trusts, provided the individual is specified in the family trust election of each of those family trusts; or (d) any persons covered by any combination of the above paragraphs;Amendments Nos 7 and 8 will make it quite clear that a family trust or other family entity will pass the family control test if it is owned by one or more family trusts of the family concerned as opposed to just one family trust. A trust or other entity must pass the family control test to make a family group trust election or an interposed entity election to be part of the family group.Amendment No. 7 will also make it quite clear, as it intended, that one or more legal or financial advisers, as opposed to just one, can control a trust along with the family for the purpose of the family control test. A trust or other entity must pass the family control test to make a family trust election or an interposed entity election to be part of the family group.18:13:001092Cook, Sen PeterSenator COOKRF4WAALP00—This is not a routine amendment to correct a technical error in the original drafting; this goes to the operational nature of the legislation. I ask the same question again—and this is a more substantive question: did the consideration of this matter and matters related to it entertain the task force that wrote the paper on family trusts, the paper we have not yet seen and that is not apparently going to be released?18:13:001093Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—No, it did not. We can argue whether it is a technical amendment or one of more substance. The government's view is that this is a technical amendment, but others can well have alternative views. My advice is that it came out of the consultations which occurred after the bill was released.Amendments agreed to.18:14:001093Murray, Sen AndrewSenator MURRAY3M6WAAD00—by leave—I move:(1) Schedule 1, item 1, page 113 (lines 9 to 12), omit paragraph 272-95(a), substitute:(a) any parent, grandparent, aunt, uncle, brother, sister, nephew, niece, first cousin, child, step-child, grandchild or child of a grandchild, of: (i) the test individual; or (ii) the test individual's spouse;(4) Schedule 1, item 25, page 137 (line 34), after "child", insert", step-child, first cousin".(5) Schedule 1, item 25, page 138 (line 9), omit paragraph (e), substitute: (e) a child of: (i) a child; or (ii) a grandchild;of the test individual;I put on record that the Senate would have noted that the Australian Democrats abstained from Senator Cook's second reading amendment. We did so, I am advised—I was not here—because in 1995 we were prepared to pass Labor's trust loss bill but not the cumbersome unworkable bill that they had come up with. We felt it was consistent with that position that we should show support neither for nor against that particular amendment. I must say that, once we knew that someone who lacked seriousness in this place had come in to debate the issue, we felt our position even more confirmed.I will move to our amendments 1, 4 and 5. Those amendments extend the government's definition of family to include first cousins, aunts, uncles, great-grandchildren and step children. It is our belief that this will allow the multicultural businesses operating in Melbourne, Sydney, Perth and other centres—3L6CONROYSenator Conroy—You're a fraud.WW4KEMPSenator Kemp—Madam Temporary Chairman, on a point of order: I do not think Senator Conroy has made a notable contribution to this debate, and the abuse which just emitted from his mouth in relation to Senator Murray is not acceptable. I urge Senator Conroy to withdraw it.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Patterson)—I did not actually hear it but, Senator Conroy, I would ask you to withdraw it.3L6CONROYSenator Conroy—I withdraw that I called Senator Murray a fraud.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—I beg your pardon?3L6CONROYSenator Conroy—I said that I withdraw that I called Senator Murray a fraud.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—It is not really an appropriate way to do it, Senator Conroy.3M6Murray, Sen AndrewSenator MURRAY—I think the nature of the withdrawal says much about the man's character. As I said, this will allow the multicultural businesses operating in Australia today to fall within a more appropriate and relevant definition of family, as opposed to the ATO's unilateral determination of who should be the beneficiary of a family trust. Amongst others that I am advised this would assist are farming trusts—which are particularly important in the rural community—education trusts, disability trusts and, as I said, the multicultural community.I should point out the addition of the words `aunt, uncle, first cousin, stepchild or child of a grandchild' to the definition. The entire clause reads:. . . any parent, grandparent, aunt, uncle, brother, sister, nephew, niece, first cousin, child, step-child, grandchild or child of a grandchild—I wish to remark that I, as you know, have declared an interest in a family trust. In that family trust is no grandparent, aunt, uncle, brother, sister, nephew, niece, first cousin, stepchild, grandchild or child of a grandchild, so I would indicate that there is no conflict of interest.18:18:001094Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator Murray, we listened carefully to your remarks but I have to advise you that we do not accept the amendments. In our view, they would unacceptably expand the family members who could benefit from the family trust concession. To preserve the integrity of the measures, it is not appropriate to define the family members too broadly. Stepchildren are already included in the definition of family members because the income tax law defines a child to include a stepchild. The amendments are in fact technically deficient, I am advised, because they will exclude step-grandchildren, who are included under the bill as it stands.18:19:001094Cook, Sen PeterSenator COOKRF4WAALP00—I note the amendments from the Australian Democrats and I wonder if the government might assist the chamber. Could the government indicate to us what the effect on revenue would be if these amendments were carried?18:19:001094Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator Cook, I have looked towards my adviser, but that is a big ask and I do not think we can provide those figures. We do say that it broadens it in some areas in an unacceptable way. I pointed out a technical problem that we would have and the issue of stepchildren, who are already included.18:20:001094Cook, Sen PeterSenator COOKRF4WAALP00—If you cannot give us a figure, could you give us an idea of what the dimensions of the impact would be? We have the evidence of the tax official that overall your amendments amount to a slight reduction in revenue. This does, as you say, widen the definition, suggesting that a further reduction in revenue would occur. Can you give us some sort of indication of what the dimensions of that might be?18:20:001094Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—No, I am not able to. I could see whether there is any information we could provide to you, but I do not have any figures here that I can give to the chamber.18:21:001094Cook, Sen PeterSenator COOKRF4WAALP00—Well, I have been given a figure of $400 million—3L6CONROYSenator Conroy—That's the wrong one.RF4Cook, Sen PeterSenator COOK—I have not been given a figure of $400 million on this matter; I have been given a figure of $400 million on another matter. You do put us in the situation that this will open up the exemptions to some extent but, without being able to quantify that, I must say that the information before the chamber on which to make one's mind up is therefore less than satisfactory. However, because there will be an impact on revenue and we think the impact on revenue is too great thus far, I have to inform the Australian Democrats that we will not be voting for their amendments on this occasion.Amendments not agreed to.18:22:001094Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—by leave—I move:(1) Schedule 1, item 1, page 114 (lines 7 to 11), omit subsection (2), substitute:Closely held—income test(2) A trust is closely held if: (a) an individual has, or up to 20 individuals have between them; or (b) no individual has, or no individuals have between them; directly or indirectly and for their own benefit, fixed entitlements to a 75% or greater share of the income of the trust.Closely held—capital test(2A) A trust is also closely held if: (a) an individual has, or up to 20 individuals have between them; or (b) no individual has, or no individuals have between them; directly or indirectly and for their own benefit, fixed entitlements to a 75% or greater share of the capital of the trust.(2) Schedule 1, item 1, page 114 (line 13), after "subsection (2)", insert "or (2A)".Amendments 1 and 2 will ensure, as intended, that a unit trust held by a discretionary trust is not treated as a widely held unit trust. This means that a unit trust owned by a discretion ary trust will not be able to deduct losses if there has been an effective change in the underlying ownership of the unit trust. It also means that such a unit trust will get the benefit of a test which will allow losses to be used if there has been no change in the underlying ownership.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—Minister, if you could clarify that. It is sheet B98BZ292.WB.WW4Kemp, Sen RodSenator KEMP—I am advised that that is the case. These were ones which we described as requests and which I think the Deputy Clerk and others felt better described in another manner.Amendments agreed to.18:23:001095Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—by leave—I move:(1) Schedule 1, page 123 (after line 19), before item 2, insert:2A Section 6 (definition of spouse ) Repeal the definition, substitute: spouse , in relation to a person, includes another person who, although not legally married to the person and regardless of whether that other person is of the same sex as or opposite sex to, the person, lives with the person on a bona fide domestic basis in a marriage-like relationship.(2) Schedule 1, page 125 (after line 3), after item 8, insert:8A Section 159TC (paragraph (a) of the definition of spouse ) Repeal the paragraph, substitute: (a) includes another person who, although not legally married to the person and regardless of whether that other person is of the same sex as, or opposite sex to, the person, lives with the person on a bona fide domestic basis in a marriage-like relationship;(3) Schedule 1, page 140 (after line 3), after item 28, insert:28A Subsection 995-1(1) (definition of spouse ) Repeal the definition, substitute: spouse of a person includes a person who, although not legally married to the first person and regardless of whether the person is of the same sex as, or opposite sex to, the first person, lives with that person on a genuine domestic basis in a marriage-like relationship. These amendments relate to the definition of spouse. This is not about tax evasion. My amendment seeks to change the basic definition of de facto spouse through the Income Tax Assessment Act. It changes the definition to remove the implication that living as the husband or wife of the person refers to the specifics of the Marriage Act rather than the common usage where a lesbian might say, `This is my wife', or a gay man might say, `This is my husband', in order to explain the relationship. In practice, of course, society has moved to the point where either same or opposite sex couples who are not actually married, or even some who are, are likely to introduce the person they have a life bond with by saying, `This is my partner.' In fact, there is really no conceivable argument for denying same sex partners the same recognition that opposite sex de factos are given.We are not talking here about marriage. Even the Catholic bishops have stated that, in the interest of simple human decency and justice, committed same sex couples should at least get the recognition given to unmarried heterosexual couples, particularly since we persist in denying same sex partners any legal recognition, even when they make their bonds formal through public and/or religious ceremonies. Note that we deny them the right of legal recognition of a formal bond, but we go much further in denying them the right of recognition granted to every unmarried same sex couple. As with opposite sex couples, sometimes one is dependent or relatively dependent and sometimes both have jobs. The point is that what is granted by right to any unmarried opposite sex couple, almost regardless of their circumstance is denied to all same sex couples regardless of their commitment.These are real things—not just simple public recognition and acceptance. They are things like being recognised as next of kin in hospital decisions about a partner who has been in an accident; sometimes surprising things like the impact of proposed aged care measures; things like having wills overridden by family on the basis that there was no real recognised legal relationship; things like custody of children who may have grown up with the couple in the case where one dies, or the treatment of partners under superannuation where a devoted life partner of decades gets no recognition because they are a same sex partner, while someone of the opposite sex with a loose association for a couple of years is granted automatic de facto status.I understand the Democrats will support these amendments, as they have done in the past. The indication that we have got from the ALP so far is that this time their objection will be based on the fact that this is a bill about tax minimisation. That may be so, but this is not an issue about tax minimisation. Our first amendment is to section 6 of the definition of spouse through the Income Tax Assessment Act of 1936. Our second amendment is to 159TC where the definition is replicated to prevent same sex couples from contributing to a spouse's superannuation, a right granted to any de facto opposite sex couple. The issue is central and one of human rights and blatant discrimination.The definition of family members for the purposes of a family trust, which is the definition, whether or not there is any reference to trust losses, is a basic definition of who is in a family trust, even though it is in a new schedule having to do with trust losses. Even on this issue, I am unclear on what basis, other than blatant discrimination, anybody could possibly object. If granting family trusts the ability to trade losses is something other than simply handing people a tax rort on a platter, then whatever justification there is for doing so with heterosexuals applies equally to homosexuals or bisexuals. If, for example, the ability to trade trust losses if seen as important for family trusts because they may have been established to manage a family business, then what justification is there for excluding people who establish a trust to manage a completely similar trust with no grounds other than that they are a same sex couple.This is actually a very good example of the inequity and complexity of discrimination. The government, in 27295, seeks to define family for the purposes of distributing benefits within family trusts as an individual and their spouse and any of their parents, siblings, nephews and nieces, children and children's children, and the spouse of any mentioned family member. Child is defined liberally to include ex-nuptial, adoptive and other kinds of children which may not be biological children. If there is any benefit to the treatment of trust losses for family trusts, those benefits can be passed to an ex-nuptial child of a spouse of an adopted child or a de facto spouse. These people are allowed to benefit. Paradoxically, they are allowed to benefit regardless of their sexual orientation. A same sex partner who has been living with the test individual, and therefore all their family regardless of sexual orientation, would however be excluded, in spite of having lived as the partner of that person for decades or having been married in any one of the churches like the Metropolitan Community Church.Let me reiterate: we will give benefits from a family business run through a trust to the gay adopted grandchild of a short-term de facto partner but deny it to the straight child of the same sex partner in a long-term committed relationship. This is absurd. Of course, we extend our discrimination to the same sex partners of any family member, although we recognise all opposite sex partners. I could imagine arguing that no-one in a family trust should get an exemption on this trust loss legislation. Nobody has put out such an amendment. I therefore cannot see why any party here should tolerate or promote discrimination in tax treatment based only on sexual orientation. That is what is being done here and what my amendment seeks to reverseMy first amendment, to section 6 of the 1936 act, would eliminate the discrimination against same sex couples through the Income Tax Assessment Act—the primary change that needs to be made. There are two contingent changes that should be made at the same time. My second amendment would change the 159TC definition of de facto spouse, which was replicated from section 6, for the purpose of superannuation contributions to a spouse, which was passed last year.Sitting suspended from 6.30 p.m. to 7.30 p.m. DX5Margetts, Sen DeeSenator MARGETTS—I was in full flood at the time the dinner break was called and I was getting to the point of explaining the final part of my three amendments. My third amendment to the new Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 is where the definition or interpretation section was put at the back. This simply replicates the old definition in the new act and therefore must also be changed. I do hope honourable senators will have given careful consideration to what I have to say. It is not even something you can think of in terms of considering whether or not there is a revenue implication because it is not a matter of extending the family wider; it is simply a matter of addressing an issue of discrimination within existing family structures.19:31:001097Murray, Sen AndrewSenator MURRAY3M6WAAD00—The Australian Democrats advise the chair that we will be supporting the Greens (WA) amendments.19:31:001097Cook, Sen PeterSenator COOKRF4WAALP00—The Labor Party has considerable sympathy with this amendment. The problem with it is this. You look at me somewhat askance, Senator Kemp. I hope I am not misinterpreting the somewhat surprised, if not curious, look on your face. What is being argued here is that the recognition of same sex unions ought to be extended to single sex unions, if that is the right terminology. We are not particularly opposed to that idea—although it does have some implications for tax law—but putting it up in the context of this legislation does create for us a problem.My advice is that the areas in which it would have an impact, if this amendment were carried, extend far beyond the legislation now before the chamber and impact on things such as the superannuation spouse rebate, the family tax initiative, Austudy benefits, zone rebates, the Medicare levy calculation, and so on. It seems to me, if this matter is to be given the attention in the chamber that obviously the support for it suggests it ought be given, then perhaps it ought to come forward as a measure to be dealt with on its own, rather than being dealt with in the context of a particular bill without us being aware of all of the implications of what we are voting on. Therefore, I reserve my position on it. The opposition will not be supporting the amendment.19:34:001097Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—There is always a reason from the Labor Party. Sometimes it is, `No, we can't just deal with this particular measure in this particular bill because we want it to be more applicable if we are going to do it.' Here we have a situation where we are saying, `Okay, we would like to change the legislation in a way that is more encompassing and starts dealing in reality with honesty and with the discrimination that has been felt by a number of people in our society in a systematic way.' The opposition is suggesting that the problem is not just the Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 —so it is not the `tax rorts for heterosexuals bill' in particular. They are saying the problem is that we are now suggesting, if we make this amendment, that it could be more generally applied.The irony is that we have had complaints when we have mentioned these various bills and the opposition has said, `Oh no, we can't do this piecemeal because we want to deal with it in a general sense'. `We can't deal with it because it has a revenue implication.' `We can't deal with it this time because it has implications for other bills.' There is always an excuse. There will be a time at some stage when the Labor Party will actually have to deal with its own policies, and there will be a time when the Labor Party will have to explain to the gay and lesbian community in Australia exactly why they are acting in this way.19:35:001097Brown, Sen BobSenator BROWNQD4TASAG00—I totally support the amendments put forward by Senator Margetts. I think the argument put forward by the opposition is bereft. What it says serially, in response to the amendments that are consistently brought forward by Senator Margetts, is that this needs to be dealt with in some other way. But the opposition never comes up with that other way, despite its ability to do so and despite its so-called commitment to the end of discrimination against gay and lesbian people. It always says, `Another day, in some other form.' I am not only sick of that but I brand it as nothing other than discriminatory.Let me declare an interest: I have a male partner. I understand the situation that people who feel strongly about this take. I take umbrage on their behalf at the fact that we have not only the government not accepting the logic of Senator Margetts's amendment but the opposition saying, `This is not important enough for us to deal with tonight. Indeed, it has beneficial flow-on effects for those people who are discriminated against. Therefore, we have to be wary of it.'I would have thought that the argument Senator Cook put forward is an excellent one for voting for this. The process has to start somewhere. Time and again, on social justice legislation, Senator Margetts has said that it is socially unjust to have this constricted definition of spouse which effectively includes a partner but not when it is a same-sex couple. It is effectively restricted to heterosexual couples. That is of itself discriminatory.Long ago this parliament passed legislation recognising that to single out people who are homosexual is to be discriminatory. Senator Margetts time and again says, `Here is the opportunity to end this discrimination, to turn it around, at least in so far as the legislation before the Senate is concerned.' The government sets its steely face against the end of such discrimination, and the Labor Party says it is not the time to do it. Well, when is the time? I challenge the Labor Party to come forward with the broad brush legislation it repeatedly says is going to end this discrimination.Short of that, I have to say that we are involved in a discriminatory process involving perhaps a million Australians. And that is not what the Labor Party stands for. It may be something we can associate with Liberal Party ideals, although, as I recollect it, it was the Fraser government that led the way in this country in bringing to an end the discrimination against homosexual people as far as relationships are concerned under the law. But it did not go far enough. I challenge the government to make sure that that end to discrimination goes right through the laws of the Commonwealth.I challenge the Labor Party to do the same. And I ask the question: when is the time for this? After 13 years of Labor in office, after two years of the coalition in office, there is no sign of adopting, for example, the very strong move by the Democrats to end such discrimination. It is left to the smaller parties to continue to try to pick away at this. It is a challenge to the big parties, the alternative governments. Is the Labor Party going to come up with an election platform which says, `We will act as a matter of priority to end this discrimination'? Is the government going to announce in its election policy that it is going to end this discrimination and in fact show good faith by doing it before the election or is it going to stand indicted for its continuing discrimination on a whole range of social justice issues such as this? I commend Senator Margetts on her forbearance, her persistence and her stoicism, because it is a very important matter which she raises. I only wish we were getting a more positive response from the major parties in this place.19:41:001098Cook, Sen PeterSenator COOKRF4WAALP00—I must say I am rather disappointed in the views that have just been expressed. I want to take a moment on behalf of the Labor Party to express a clear understanding of where we stand on this matter.We have just had two contributions, both of which began by attacking the Australian Labor Party for the reply I gave a moment ago on this measure. The first and most obvious point I want to make is that neither of those attacks—and they were modified a little later on, I must say—went to the government. It just so happens that we are not in government, we have not introduced this legislation to the chamber and we are not the ones who command a majority here most of the time. I would have thought that if there were sincerity in the points of view being expressed then they would have been expressed to the government whose legislation this is and not to the Labor Party who are manfully trying to improve the legislation. I put that as a first, albeit not very significant, point. But it is a point of demeanour or approach. You people get up and are pleased to slag off at the Labor Party. It is not our legislation; it is the government's legislation. If you have something to say, why don't you say it to the government?DX5MARGETTSSenator Margetts—I know what their policy is. What is your policy?RF4Cook, Sen PeterSenator COOK—I will take that interjection on board in a moment and reply to it. Secondly, what did I say when I responded to this amendment? I thought I gave a fairly reasoned and sympathetic response to the principle being enunciated here. I do not for one moment resile from those words. In fact, when I look at what previous spokespersons have said when this amendment has been trotted up I think I might have given a more sympathetic response to it than my predecessors have, although by no means do I gainsay the position that they put.I do think that this is not a matter that can seriously be dealt with in a particular bill like this. Let me explain that. I have just been reading a book about the origins of democracy and the emergence from feudal states and kingdoms into a democratic form of many middle European and eastern European countries.WW4KEMPSenator Kemp—Who's it by?RF4Cook, Sen PeterSenator COOK—It is by Norman Davies, and it is called Europe: A History .WW4KEMPSenator Kemp—It's a good book. I've just started it.RF4Cook, Sen PeterSenator COOK—I doubt that you have, Senator. I think that that is a frivolous interjection. I doubt that you have, because you display none of the scholarship that is inherent in this book, I might say, with the greatest of respect. One of the points made in the book is that in early democracies there was such a thing as `facade democracies', where people claimed they had a form of democratic society but it was really a facade; there was no practice of it. I must say that there is a facade here of principle. I have not been approached by Senator Margetts. I am not aware that the shadow Treasurer has been approached either. I am not aware that there is any letter to the Labor Party raising this matter.DX5MARGETTSSenator Margetts—When? When—appointment.DX5Cook, Sen PeterSenator COOK—No. It is too late, Senator Margetts, while I am replying to what you said about us, to now want to say, `Well, let's go and have an appointment.' If you were serious about this, you would not have waited for me to stand here and defend myself from an attack by you; you would have done something constructive about it. Facade principle: pretend to the principle; go to the grandstand; wave to the crowd; pretend you are trying to do something when your actions are no constructive move to correct what you see as the injustice.A logical first step would be to go and talk to those parties who you think might be an ally in this case and develop a meaningful dialogue about getting a majority here and in the other place to actually change the law, rather than drop an amendment on us at the last minute, without any attempt to explain it to us, and say, `Here, cop this!'As I have said, there are implications for several pieces of legislation: the spouse rebate, the superannuation spouse rebate, the family tax initiative, Austudy benefits, zone rebates and Medicare levy calculations—to name just a few. I do not know what the implications of this amendment are across all of that. I do not know that anyone knows and, until there has been a good look at it, I do not know that anyone can say with confidence what their position is with respect to the full implications of it.There is a principle here. I do not know what the cost element is either, and I do wish to know that. All I am saying is this: I tried to give a sympathetic response to your amendment, and I believe I did. I think I tried to give a constructive response as well, and I said, `Well, this is a serious matter; take it up properly.' I do not appreciate, on behalf of my party, being attacked that the Labor Party is somehow reactionary or recalcitrant in this; we are not. We have a good record on social reform in this country, and I do not expect anyone to criticise it. But I do think that if people are serious, they should not be en gaged in facade-ism. They should be engaged in positive, constructive acts to achieve an outcome. While they do not, and while they criticise, I must say that I find it difficult to treat the argument seriously.If we want to go on to debate this further, I am happy to engage in it further. But I would suggest that it may well be better if we saw some constructive initiative rather than the damaging criticism that has been made up until now.19:48:001100Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—I cannot let that go unanswered. With bill after bill, the Greens have tried to negotiate the principles of decency with the ALP. The fact that, bill after bill, you are finding excuses should not be the basis for you criticising the Greens for trying to put a model on the table to put pressure on whichever government is in power.The fact that you did not do anything for 13 years means that you have the opportunity of agreeing to a model which might, if the sky falls down, if the pigs fly, be something that you would take as a principle into government. We have, bill after bill, talked to you, tried to talk to the Labor Party, about putting this principle into practice. If that is not something positive, I do not know what is.We have worked with the Democrats. Senator Brown has got up on several occasions to try to find out what has happened to the inquiry on discrimination based on sexuality. We are working on this issue on a daily basis. What is not positive about that? We are on the crossbenches; we, of course, are not in government, but we have the ability to speak out. I think what you have said tonight is an atrocious, appalling cop-out.19:49:001100Brown, Sen BobSenator BROWNQD4TASAG00—I will add to that: the accusation of facade-ism is disgusting. The Labor Party ought to be more responsive to the repeated efforts by the gay and lesbian community to get the end of discrimination into legislation, and all parts of legislation, in this national parliament. To accuse the Greens of facade-ism, that is, of putting up a front they do not believe in, after what I had to say earlier, is, to me, just rotten politics. In my earlier contribution, I said that I did not expect better of the government. I think they have lost the carriage of justice which the Fraser government got under way in this realm. I think they have such reactionary strength within their ranks that it is a hopeless case, although we must never give up on them. But for the Labor Party to say that this is facade-ism and to accuse me, and in particular Senator Margetts, who has, as she said, raised this issue time and time again, and for it particularly to hide behind the specious argument that there may be other beneficial flow-ons to other pieces of legislation from the disadvantaged and discriminated sector of our community, is to lose itself as far as having any shred of justification for the position it takes is concerned.I reiterate: to vote against this amendment by Senator Margetts is to vote for the inherent discrimination of the constrictive definition of spouse, which says that this applies to heterosexual relationships but not to homosexual relationships in this country. That is directly, on the face of it, unarguably discriminatory. Senator Margetts has brought forward this amendment to end that discrimination.Whatever the argument, the Labor Party cannot say it has not been lobbied for many years on these issues, on ending discrimination in all areas of social justice law, by the community that Senator Margetts is defending.The Democrats moved long ago for a Senate committee to look at this matter. Essentially, the findings were that discrimination should be ended. Here is an opportunity to move in that direction, and the best we get from the Labor Party is, `You go out and get the community, which is already exhausted by lobbying us and getting no result, to come and lobby us.' I do not cop that, Senator Cook.RF4COOKSenator Cook—I never said that either.QD4Brown, Sen BobSenator BROWN—That was my interpretation of what you said.RF4COOKSenator Cook—Well, it was wrong.QD4Brown, Sen BobSenator BROWN—It is not wrong; it is right. I will not wear it. If the Labor Party is going to vote against this amendment, it is voting for discrimination. That is the short and the long of it. You move the way you want to, but that is how it is. No argument you have brought forward tonight is going to alter that fact. Question put: That the amendments (Senator Margetts's ) be agreed to.19:58:00The committee divided. (The Chairman—Senator S. M. West)9Allison, L. Bartlett, A. J. J.Bourne, V.* Brown, B.Lees, M. H. Margetts, D.Murray, A. Stott Despoja, N.Woodley, J.48Bishop, M. Brownhill, D. G. C.Carr, K. Chapman, H. G. P.Collins, J. M. A. Conroy, S.Cook, P. F. S. Coonan, H.Cooney, B. Crowley, R. A.Denman, K. J. Eggleston, A.Evans, C. V.* Ferguson, A. B.Ferris, J. Forshaw, M. G.Gibbs, B. Gibson, B. F.Harradine, B. Heffernan, W.Herron, J. Hogg, J.Kemp, R. Knowles, S. C.Lundy, K. Macdonald, I.Mackay, S. McGauran, J. J. J.McKiernan, J. P. Murphy, S. M.Neal, B. J. Newman, J. M.O'Brien, K. W. K. O'Chee, W. G.Parer, W. R. Patterson, K. C. L.Payne, M. A.Quirke, J. A.Reid, M. E. Reynolds, M.Schacht, C. C. Sherry, N.Synon, K. M. Tambling, G. E. J.Tierney, J. Troeth, J.Watson, J. O. W. West, S. M.Question so resolved in the negative.20:01:001101Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I move:(10) Schedule 1, item 11, page 126 (lines 10 to 12), omit the item, substitute:11 After paragraph 170(13)(b) Insert: (c) Division 270 of Schedule 2F to this Act;11A After subsection 262A(4AK) Insert: (4AL) A person who makes an election in accordance with subitem 21(2A) or 22(3) of the Taxation Laws Amendment (Trust Loss and Other Deductions) Act 1998 must retain the election until the end of 5 years after the election was made.Amendment 10 new item 11 will correct a minor drafting error by ensuring that the proposed amendment to section 170 of the Income Tax Assessment Act 1936 will fit in with the new drafting recently put in place as part of the tax law improvement project. Amendment 10 new item 11A is part of the package of amendments that will implement new transitional arrangements for making family trust elections. The item will add a provision to the record-keeping provisions of the income tax law requiring an entity that will make a family trust or interposed entity election in 1997-98 to retain that election for five years. This is the standard record retention period for income tax matters.Amendment agreed to.20:02:001101Murray, Sen AndrewSenator MURRAY3M6WAAD00—I move:(2) Schedule 1, page 127 (after line 8), after item 12, insert:12A General applicationNotwithstanding any other provision in this Act, the Commissioner is to apply the following principles to the administration of this Act:(a) the Act has operational effect from 1 October 1997 and applies only to unused losses on and from that date;(b) no penalty available under this or any related Act applies to any use of trust losses or other deductions between 1995 Budget time and 1 October 1997;(c) any loss incurred by a trust before 1995 Budget time which has been declared in the trust's taxation return for the 1994-95 year of income remains available for ongoing reduction of trust taxable income, without penalty, until the loss is fully utilised;(d) any loss incurred by a trust before 1995 Budget time which has been declared in the trust's taxation return for the 1994-95 year of income is exempt from the income injection test in Division 270.As senators know from my remarks in the second reading debate, it was our understanding that it was the view of all the witnesses that trafficking in trust losses ended on 9 May 1995. It was also made very clear by the witnesses that they believed that the bill introduced in October 1997 was quite materially different from that foreshadowed by Labor on 9 May 1995 and later prepared. It was that view that things were so materially different which occasioned a great deal of distress. In the remarks made by Senator Cook earlier and confirmed a couple of times, it is Labor's view that this bill is quite different in a number of respects from that that they intended to move.The Senate Standing Committee for the Scrutiny of Bills reviewed the question of retrospectivity and came to the view that this bill did infringe the rights and liberties of individuals. The Democrats and, indeed, other political parties in the Senate have a long history of not supporting retrospective activities. The view was expressed by Senator Bishop today—correctly—that at times tax retrospectivity has been approved. However, since this bill was directed originally at trafficking in trust losses and since the belief was that trafficking in trust losses had ended on 9 May 1995 after Treasurer Willis's announcement, our view is that a substantial number of trust losses which have been legitimate to date are put at risk by the dating of the bill.We believe that the bill requires amendment to ensure that losses on foot at 9 May 1995, rather than being at risk of extinguishment by the bill, remain available and without taxation penalty. The stated intention of this government is that the bill will apply, effective 9 May 1995, to losses on foot at that time—some two years and 10 months ago and covering some four consecutive tax years. To eliminate its retrospective operations a simple operational clause needs to be inserted or the existing operational references need to be amended so that the bill is only effective from the time of its introduction to parliament—in other words, from the time that the profes sions and their clients understood its operation; that is, 1 October 1997. Its operational effect limited to extinguishing losses on foot at that time is to allow the test and penalty provisions to apply to unused losses from that date only.The effect intended by limiting the retrospective operation of the bill is to ensure that losses used between 9 May 1995 and 1 October 1997—that is when the impact and the detail of the bill was unknown to trust users—will attract no penalty from the bill. We have got together, therefore, amendment No. 2. The entire purpose of that is to prevent retrospective application to matters other than trafficking in trust losses. I accordingly look for Senate support for amendment No. 2 on sheet 871.20:07:001102Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—I cannot remember the number of times that I have been in this chamber—especially when we were sitting on those crossbenches rather than on these crossbenches—that we have heard outrage from a range of frontbenchers and backbenchers from the coalition in relation to retrospectivity. It was a principle upon which they stood very strongly. Senator Murray is not suggesting that we allow a tax rort to be gotten away with retrospectively, but he is suggesting that the normal ability to write off tax losses without the trafficking in tax losses be available retrospectively.If we are after retrospective behaviour modification or the implementation of what was suggested as the publicly stated basis for these actions several years ago when Labor was in power, what is being asked for by the Democrats is perfectly sensible. If they were here, there are several people from your side that I can think of who would be strongly supporting this. I do not know why, but they do not seem to be here at this time. I would like to think that this is a principle that has been strongly enunciated by the coalition on many occasions. In this particular instance, we are not talking about not backdating a tax rort, but of legitimate practices that have gone on and have been encouraged by government departments in terms of rolling over tax losses. 20:09:001103Cook, Sen PeterSenator COOKRF4WAALP00—The Labor Party will not be supporting this amendment. Ralph Willis's last budget as Treasurer announced this legislation in May 1995—or at least it announced the original, virile, muscular version of this legislation, and not the watered-down piece of legislation that we have in front of us now. The then opposition—now the government—referred it to a committee, held it up, and we were not able to legislate it. Back then we said, `Here is an area of tax avoidance that needs to be dealt with promptly. When bills relating to tax are announced, they ought to come into effect immediately. That is the end of the rort period. Bang! This is where the government is going to go. All those who engaged in this sort of behaviour, beware, because anything you do from now on will be taken away from you.' That is a consistent principle on taxation, and it would be wrong for us to depart from that now. We will not and, therefore, we will not be supporting this amendment.The other reason why we will not be supporting this amendment is the cost of it. One has to have regard to cost. The tax system in Australia is constructed to raise a certain amount of revenue in order to meet the costs of delivering public services and benefits to the community. Quite clearly, if some revenue is not raised in one way, then inevitably it will be raised in another.One of the points made by my colleague Senator Conroy in his contribution on the second reading went to this very issue. If tax avoiders—that is, people who are wealthy—have income which enables them to retain legal and accountancy advice to minimise their tax payments and arrange their affairs so as to avoid taxation, and thus escape the tax obligations that ordinary citizens feel and are obliged to meet, it does not mean that there is a gap: someone else meets it. Those people who cannot necessarily afford all the advantages of a well-incomed person—people on low incomes—end up meeting it. Tax avoidance usually favours the wealthy and imposes a penalty on low income people—on the poor.I am advised that bringing forward the operational date to 1 October 1997, which is more than two years after it was announced that this measure should be introduced, would mean that the revenue would forgo $400 million. That is a substantial amount. I do not know whether the government will confirm it, but that is my advice. I think it is good advice and I think that that is a reasonable ballpark figure. That is $400 million that people who are wealthy enough to form trusts can avoid, but people on pay-as-you-earn incomes—people who pay tax because it is taken out of their income every week, fortnight or month according to how they are paid—cannot avoid it.Those people will pay the end bill of $400 million because the government will end up raising the amount of revenue that it wants. I do not think that is a fair thing to do, and the interests of low paid people have to be considered when the interests of all people are being considered in this. Everyone has been on notice since May 1995, so it is not as though they did not know that this legislation was coming. Certainly, they might be a bit surprised about how slow this government was in bringing it forward, but they did know that it was coming. For that reason, I do not think this amendment should succeed.The two issues that I have dealt with do not quite go to one of the points raised by Senator Margetts when, in supporting this amendment, she made an observation about the lack of voices on the government benches opposed to retrospectivity. I have heard that argument too. I know who the advocates of it are. For the record, I just want to say that retrospective application of the law is, as a principle, unjust. People do things which are legal, and to have them subsequently declared illegal and have the law reach back in time and penalise them for what they did is unjust. That is a well-known principle.However, there is an exception in the case of tax avoidance, and I think it is an appropriate one. Where people manage to evade tax in such a way that their fellow taxpayers have to bear the burden of that evasion, and they do it in a way that was never intended—they find a loophole, contort the technicalities, manipulate the act to artificially find a way through that you could say was legal but which was never intended and which is against what the popular understanding of appropriate behaviour was—in those circumstances governments should always be ready to legislate retrospectively and to wipe out those gains. That would kill off the tax avoidance industry. If they knew a government was prepared to wipe out the ill-gotten gains of tax avoidance, then there would be no profit in being a tax avoider. In those circumstances, there is a case for retrospective legislation.20:15:001104Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—I ought to correct some of the statements that have just been made by Senator Cook. I clearly stated that the Greens (WA) did not have a problem with retrospectively looking at those people, and we know there have been people—and for some reason the Australian Taxation Office has avoided prosecuting them for trading in tax losses—who have been advised by government departments and entities to structure their businesses as trusts over time, and had done it not as a means of rorting the system but as a means of legitimate carryover of losses for the benefit of utilising at some stage when they do gain an income. I do not think they are the people that Senator Cook was describing.We have never stood up here on the principle that those people who have rorted the system should be able to get away with it. What we have said all along about this legislation is that it is not designed to particularly target those people who have rorted the system. It seems to be getting at the wrong people. This retrospectivity is likely to cast a wide net and it seems to be a fairly blatant revenue grab. That is what I am saying. It is not about those people who have misused the system; it is about those people who have legitimate reasons. I would think the majority of the people who will be losing money in this particular revenue grab will have done so for legitimate reasons.20:16:001104Conroy, Sen StephenSenator CONROY3L6VICALP00—Senator Kemp has not had a chance yet to confirm the question that Senator Cook asked. I ask whether Senator Murray has any estimate of the revenue that this amendment would forgo. Senator Margetts, I think you have been sold a pup. If there is no change—and this came out in the committee hearings—in the underlying ownership of the trust they can still carry the losses forward. That is the key test. If they incurred the economic loss, they can still carry it forward. The only trick to this is if they try to sell it off or change their structure and be something else, or owned partially or differently, then they cannot carry it forward because the new body in actual fact did not incur the economic loss. So I put it very strongly: you have been sold a pup on the way this legislation will impact upon these arrangements.I am also concerned about the distress that Senator Murray seemed to find at the committee hearings, the distress from the battlers of Brighton—all those multicultural people that Senator Murray is so concerned about who live in Brighton and put in submissions to the committee. Those same people told us they had never seen anybody or knew of anybody trafficking in trust losses or even noticed any trafficking in trust losses. They had failed to notice the ads in the newspapers that became so blatant that they said, `Here we have some trust losses to sell. Come and buy a trust loss off us.'Nobody who appeared before the committee had noticed or knew anybody who noticed or participated in trafficking in trust losses. So those same people want to come forward and talk about the distress, which Senator Murray claims he detected. I have to say that I had some trouble believing that they were suffering significant distress. I understand that they are upset about the possibility of losing $300 million worth of revenue over the last three years that the government will pick up.But I want to come back to a couple of points I made earlier. I refer to Senator Murray's minority report where he talks about trusts and launches into quite a lengthy defence of the poor, innocent, much maligned family trust. He quotes from the eminent economist Professor John Quiggin, who says:There are almost no trusts in Australia established for legitimate purposes . . . The vast majority of trusts are set up with the primary purpose of avoiding tax that should be paid by high-income earners, thereby transferring the burden onto the rest of us. It is these trusts that are typically referred to as `legitimate family trusts'.It worries me that you have this perception of legitimate family trusts. A quote I read earlier and contained in Senator Murray's report is from Robert Gottliebsen where he basically describes `income-splitting trusts' as `the cornerstone of the structure of a large number of the country's very small businesses'. That is what they are for. They are designed to exploit the tax-free threshold. What I mean by `exploit' is that you share around the $5,400 among your two, three, four, five, six, seven, eight, nine, 10 people, and if Senator Murray had his way earlier we would have about 20 people sharing $5,400.The way it works is that you are able to pass the income through the different people, lowering everybody's individual rate. I am not sure if you were in the chamber when I spoke earlier, Senator Margetts, but some examples have been in newspapers, freely available, in articles by George Megalogenis and Phillip Hudson.For example, a PAYE person who earns $50,000 would pay $14,000 in tax but a two-beneficiary trust would pay $9,000. A $100,000 with four beneficiaries—these are not big amounts of money; these are what you would possibly perceive as legitimate family trusts—would pay only $18,000 in tax compared to a PAYE of $37,000. That is half the legitimate amount of tax. The income that the entity has generated is just split up. I have not heard Senator Murray address this issue at all. If he wants to defend legitimate family trusts then the Democrats' position is to stand up and explain that the cornerstone of a family trust is about effectively tax planning the $5,400 tax-free threshold. That is it.It is nothing more exciting than that. It is just the ability to play around with as many tax free thresholds as you can lump into your trust. George Megalogenis says that for a breadwinner and a PAYE taxpayer who earns $200,000, the effective tax rate, with the Medicare levy, is 44 per cent. If he or she is lucky enough to have a legitimate family trust of four—that is, a breadwinner, a spouse of either sex and children—they are able to minimise their effective tax rate to just under 30 per cent.That is what it is about. It is not about retrospectivity. It is not about whether or not there was distress at the committee. The cornerstone of this debate is whether the public revenue loss that has been going on and growing is due to more and more people taking advantage of effective tax planning, effective tax minimisation—all of which is completely legal. Senator Murray and the Democrats talk about this in their minority report. At page 20 of the report, the first page of Senator Murray's minority report, it states:. . . trusts may be used to maximise tax effectiveness and tax planning in ways which are not available to incorporated bodies.Senator Murray states it in black and white. `Maximise tax effectiveness' is accountants' code for tax avoidance. It is perfectly legal but that is what it means.I am worried that Senator Margetts has been sold a pup, as I have said a couple of times, and she has the perception that we are bashing legitimate family trusts and that the government is attacking legitimate family trusts. The key point is that if there is no change in the underlying ownership, if the same people are continuing to trade in the same way under this legislation, they can carry forward their loss. It is only if they try to sell off their loss and change their structure that they are going to be caught by this legislation.20:25:001105Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—Senator Conroy may remember that during my speech in the second reading debate, or perhaps he was not listening to my speech, I said that we thought it was odd that the family trust should have been picked out by the government as being exempt from this legislation. I would be very happy to hear whether or not the Labor Party is suggesting that, should they get back into power, they would deal with family trusts and remove what is now an anomaly to the situation.20:25:001105Murray, Sen AndrewSenator MURRAY3M6WAAD00—Senator Cook put his argument with his normal lucidity, but we disagree this time. As you know, we have worked on a number of committees together and we have been pursuing this matter of trusts for some time. I may have missed it, because I did not read all the Hansard from the House of Representatives, but I think it would be helpful for you to say whether you are in fact changing Labor policy to outlaw trusts altogether. Alternatively, which is a legitimate construction put upon the remarks you made earlier, I would have been surprised if you did not move an amendment to excise government exemptions for family trusts. I do not know whether what I am hearing is a personal message or is Labor Party policy. I would have thought that if that is how Labor felt then that is the amendment they should have moved and which we would have considered.I now turn to the question on which we disagree, Senator Cook. You would be aware that I do the best I can in committee to understand the proceedings and to arrive at a considered conclusion. Quite often we have had the same conclusion and a number of times we have not—it depends on the committee. The problem that the coalition, the Labor Party and the Democrats face is that neither the ATO nor the various professionals who deal with these things or any other person at the hearing could fully outline the consequences of the legislation that is before us.If there is one thing we are all in agreement on in this chamber it is that the legislation before us is different to that which was put up by Labor. The point that they made quite clearly and which we have taken up and with which we disagree, concerns the consequence that people who legitimately lay off losses against profits, as is normal in any business activity, are going to be prejudiced. Amongst those people prejudiced are quite a range of people who do not number amongst the so-called very wealthy.Neither I nor, I suspect, anyone else can tell you the extent of that problem because none of the expert witnesses could—and they are more expert in these matters than probably anyone here, possibly with the exception of someone like Senator Watson who is pretty cluey on this stuff.DX5MARGETTSSenator Margetts—He's not here.3M6Murray, Sen AndrewSenator MURRAY—No, he is not here. That was the problem we faced. We were informed in our opinion by Labor's Senator Cooney who chairs the Scrutiny of Bills Committee and brought down a report saying, `This thing has a retrospective problem.'We felt this was the correct principle to deal with that. In our report we deliberately drew attention to the problems that exist with trusts. Most fundamentally, under neither the Labor government nor the coalition government has there been a proper analysis of trusts. The very questions I asked elicited for the first time some understanding of their profile.Frankly, none of us, Democrats included, know the detail of how trusts look. It is far too easy, far too simple and far too prejudicial to automatically wipe them off. It is the same kind of language if you say that all unions are bad or all trusts are bad. Yes, some are bad, but some others are not. We have to be careful of that. I deliberately quoted Professor John Quiggin because he is very hard on trusts. I did not put that in my report by accident. He said that there are almost no trusts in Australia established for legitimate purposes. What I want to know is what informed him to that opinion. What research has been done? There is none available in a broad, analytical, credible sense. I said in the second reading debate that we are more than happy for the government to change direction—but they should change direction not retrospectively but prospectively because that is how you change policy.We then go beyond the question of numbers of trusts to the instances of trafficking in trusts. The report states:Senator Murray —If there were 360,000 trusts, how many advertisements would have appeared in the year in Melbourne and Sydney? One per cent would be 3,600. Would there have been 3,600 advertisements?Mr Warnock, legal counsel for the National Tax and Accountants Association—I would classify him as an expert witness; I have no reason not to—said:Certainly not. At the time there would have been very few advertisements— Senator Murray —Three hundred and thirty six advertisements? Thirty six?Mr Warnock —No, I would say the advertisements for trust losses would have been under 10 . . . In my experience, when it was around, it was more that everybody heard about it, not many people had an actual involvement in it.Either somebody in this Senate is calling this person a liar or is saying that he is mistaken, but that to me means that advertisements were not a major way in which trafficking in trust losses occurred.I am quite happy to concede that it may have been done by word of mouth. There may have been other ways of doing it. I am quite happy to concede that the numbers are not known to me and, I suggest, are not known to anyone, including the ATO. But the fact is that the expert witness said that the total number of advertisements was under 10. But every expert witness also said that trafficking in trust losses—and the ATO agreed—ended on 9 May 1995 when Treasurer Willis quite rightly took the steps he did. The Australian Democrats have absolutely no problem with the government seeking to change the direction and nature of tax policy as to how it deals with trusts. That is its prerogative as a government. We have no problem with the ALP wishing to wipe out trusts. That is its prerogative in terms of policy, but we should not confuse it with this issue.The issue that we put simply was that, firstly, as Labor has agreed, the law that the government intended is quite different to the law that has arrived. Secondly, the trafficking in trust losses, and I do not know if you agree, ended on 9 May 1995. Thirdly, the Scrutiny of Bills Committee said that there was a retrospective problem. Fourthly, the profession as a whole maintained that they were not aware of the full impact of how the trust loss legislation was to run until 17 October 1997.That is what informs our position. I am content, Senator Cook, that you disagree with it. I do not resent that, but I do not wish to have my or my party's motives impugned. As you know, we have pursued retrospectivity as an issue countless times on different matters. Sometimes you agreed with us and sometimes you did not. This is another one of those occasions. I should also indicate that, because this is a sensitive area, in terms of my own declaration, the trust of which I am a trustee has no trust losses. My own personal pocket is not benefited from this. I know that I do not have the numbers here, but I appreciate the opportunity to put my case.20:34:001107Conroy, Sen StephenSenator CONROY3L6VICALP00—I am concerned that the Democrats position appears to be to try to muddy the waters as much as they can on this issue. Continuing to talk about what trusts look like is not addressing how they operate. The driving mechanism behind a family trust or most of the other trusts is purely and simply the capacity to minimise tax. One commentator recently suggested that the simplest way to fix family trusts is not to ban them or outlaw them but to take away the tax-free threshold and see how attractive the family tax structure is after you take away the tax-free threshold.I am not advocating that. I am just reporting that that is what one commentator has suggested. That commentator said that he believed that it would quickly dry up. People would lose interest in the family trust. Let us see if all those other wonderful things that Senator Murray talks about in the minority report—the beneficial and ultimate control of a trust is shielded from public disclosure; the distribution of income in a trust is generally discretionary and can vary between the beneficiaries year by year; and the beneficiaries of trusts are shielded from the public eye—survive if the tax-free threshold of $5,400 is removed as an option across the board. Let us see where the economic incentive to set up a family trust comes. Senator Margetts, these are just these legitimate family trusts that Senator Murray is so fond of describing.I do not have the confidence that Senator Murray has in the evidence that was given to the committee about how trust losses ended in 1995. No-one who came before the committee had ever been party to one of them. Given they knew nothing about them before they came before the committee and had not noticed them, how the hell would they know if they had stopped? How on earth could they sit there and say, `It's all stopped. We didn't know it was happening before but it's definitely stopped now'? How on earth can you take that evidence on face value?But the really worrying part of your amendment, Senator Murray, is that, even if it did stop in 1995, you are proposing to open it up again for 2½ to three years. Let them go off and sell $400 million worth of trust losses because that is the forgone revenue. Let them go and do it. It was wrong. Everybody who came before the committee was wrong.No-one wants to defend trafficking trust losses, but you want those people who are unscrupulous enough to do it to have a window of opportunity to take $400 million out of the public purse, to allow the government to pretend how unfair the tax system is, how we have to have a GST to fix it, and to see all these people avoiding tax. You want to open up that window for them, and that really concerns me on traditional Democrat philosophy. Why on earth would you want to open up that window? I would be interested if Senator Murray wanted to contribute further.20:38:001108Murray, Sen AndrewSenator MURRAY3M6WAAD00—Simply put, it is not our view that it would open up to $400 million worth of loss. As I clearly outlined at length in the second reading debate, we dispute these figures put before us by the ATO. I do not know how valid or not valid they are from Senator Conroy. To me, quite frankly, it is not that relevant. We are going to go down with this.The second point made was that this opens up a window for trafficking in trust losses. It does not. It deals only with trust losses which, as with company losses, personal losses or partnership losses, are legitimate ways of dealing with expenditure. I do not believe we should prolong this anymore. We are not going to agree. I have answered you as best I can.20:39:001108Conroy, Sen StephenSenator CONROY3L6VICALP00—Through you, Madam Temporary Chairman, I would still be interested in your contribution, Senator Murray, notwithstanding the fact that neither of us really wants to spend all night here arguing about this. If there is no change in the underlying ownership, the losses can still be carried forward. There was no disagreement about that at the committee. I know you have many committees to attend.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Patterson)—Senator Conroy, if you are directing your comments through me, you do not actually then direct them to Senator Murray.3L6Conroy, Sen StephenSenator CONROY—Thank you, Madam Temporary Chairman. No-one at the committee disagreed that you could carry forward the tax losses if there was no change in the underlying ownership. So any legitimate activity on your definition of legitimate—and I have clearly raised concerns—10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—Through me.3L6Conroy, Sen StephenSenator CONROY—Can I just clarify with the chair, does that mean I have to face you at all time?10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—No, but you do not then refer to Senator Murray.3L6Conroy, Sen StephenSenator CONROY—I did not think I did. I will check the Hansard .10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—Yes, you did.3L6Conroy, Sen StephenSenator CONROY—I apologise if I did. Nobody disputed that issue. No-one disputed that you could carry forward the tax losses under this existing regime. As long as you incur that economic loss, you can still use that economic loss. As I said, Senator Murray may not want to further join the debate, but I invite other senators, if they want to respond, to respond.20:41:001108Murray, Sen AndrewSenator MURRAY3M6WAAD00—Just briefly, I have deliberately not indulged in the larger discussion or philosophy at stake here because I want to deal solely with retrospectivity. But the point has been made that losses incurred legitimately where ownership does not change will still be intact. In that case, how on earth do you arrive at $400 million? We can throw hundreds of millions around as we see fit, but I just do not accept that the consequence of the amendment is as you have suggested. But, frankly, there is no way here that either you or I can prove it. We will end up saying, through the chair, `I said and she said,' `You said and he said,' and we will not get anywhere. So I will end my remarks there.20:42:001109Conroy, Sen StephenSenator CONROY3L6VICALP00—The difference in the concern of the other senators was the start-up date. The projections are $90 million in 1995-96, $185 million in 1996-97 and somewhere in the $160 million region for some of this year, depending on the start-up date and implementation. You are giving that away if you accept the Democrat amendment.While there is no question that you can always argue about an exact figure on these sorts of estimates, to turn around and take a position where you say, `We're not sure what the exact amount is, so we'll give the lot away,' is a brave leap. It is a brave leap by the Democrats that the Labor Party and, I believe, the government do not want to share. But to say that just because it may be only $85 million, instead of the $90 million or $95 million that the tax office has said, is no substantive reason to say, `Let's give it away by changing the start-up date by the best part of two to three years.20:43:001109Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I am pleased to be able to join this debate. I have listened with great interest to Senator Murray and Senator Conroy on this issue, and I would like to make a number of comments and observations. There were a couple of questions which were asked of me to which I will respond. I might say, however, Senator Conroy, there were a couple of questions asked of you by Senator Murray and Senator Margetts to which you did not respond.Senator Cook interjecting—WW4Kemp, Sen RodSenator KEMP—No, it was very interesting because we were listening with great interest to see what the Labor Party attitude was to family trusts, whether the Labor Party policy was to in some way remove concessions to family trusts or whether the Labor Party was proposing some other measures. We shall read your comments in the Hansard with great interest.3L6CONROYSenator Conroy—I am a humble backbencher. WW4Kemp, Sen RodSenator KEMP—The old backdown. Can't you pick it? You are not a humble backbencher; you are one of the Labor Party warlords in Victoria. We all know that.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—Senator Kemp, direct your comments through the chair.WW4Kemp, Sen RodSenator KEMP—Thank you, Madam Temporary Chairman. I was being provoked. I think Senator Conroy undervalues himself. He is one of the Labor Party warlords in Victoria and what he says counts, certainly in Labor Party circles in my state. Senator Conroy, I think people will read what you said with a great deal of interest.We did note that Senator Murray and Senator Margetts asked good questions. Senator Murray, you said all these things. You said that you do not like family trusts. You explained about the threshold, and then you asked what the Labor Party policy is. Did you note, Senator Murray—through you, Madam Temporary Chairman—how it all suddenly went dead? I thought it was a good question, Senator Murray. I do not always praise you in this chamber, it has to be said, but I thought it was a good question. We will look very closely at what Senator Cook said because people will want to know what the taxation policy of the Labor Party is and we are having some difficulties ascertaining what directions the Labor Party are heading in.The second point I make in relation to the comments that Labor senators made is that you have to come to these debates on tax avoidance with clean hands. It is no good suddenly getting up in this chamber and lecturing the government of the day when we can look back over 13 years of Labor government. It is simply not good enough to come in and pretend suddenly that the Labor Party is determined to crack down on tax avoidance with very aggressive tax planning arrangements. The truth of the matter is that every time a bill comes before this chamber—with few exceptions—the Labor Party goes missing in action. When we talk in this chamber of Senator R&D syndicates, we all know who we are talking about.DX5MARGETTSSenator Margetts—That was Ron Boswell, wasn't it?WW4Kemp, Sen RodSenator KEMP—No, it was not. In that case, with the exception of Senator Margetts, we all know who we are talking about. Peter Cook unashamedly led a major defence of a major loophole in R&D syndicates. Equally, when we tried to do something in relation to improving the equity of superannuation, Senator Sherry and Senator Cook led a major attack on that measure. So I have to tell you that the Labor Party do not come with clean hands to this debate. If they were so worried about trust losses and trafficking in trust losses, they sure took a long time to bring in the legislation. They had been in government for well over a decade.As I said, I think we are entitled to judge the Labor Party not only by their words but by their history and it is a history which in my view is very grubby in this area, so I would appreciate it if Labor senators did not get up and pretend to lecture the government. The government moves with great vigour in areas of tax avoidance. Every time you get up and raise these issues, we will respond and we will remind the public of exactly what your miserable record is.In response to the question by Senator Cook about the cost of acceding to Senator Murray's amendment, we have not got precise figures, as you would expect, but it could be expected to cost hundreds of millions of dollars. The issue was raised about whether trafficking in trust losses occurred after the announcement on 9 May 1995. The Australian Taxation Office, for example, is aware of one case involving the sale in 1996 of trust losses with millions upon millions of dollars of losses. So trafficking has occurred after the announcement of the commencement date. That is the advice we have received.I think Senator Margetts became very confused between grandfathering and retrospectivity. I think the Hansard will show when we read your remarks that you slid very easily between grandfathering and retrospectivity. The government simply does not accept that this is a retrospective bill. It does not accept that argument. The measures were announced by the former government on 9 May 1995 and this government has consistently advised taxpayers that the measures will apply from 9 May 1995. There is a clear record that the coalition made that commitment after the Labor Party brought in the original bill. It has been well known that we do not accept the argument that Senator Margetts was running that this is retrospectivity. The taxpayers have had the benefit of the draft legislation since September 1995. You raise your eyebrows, Senator Margetts, but they have. Changing the commencement date in our view would allow those involved in tax avoidance to benefit at the expense of those who have heeded the government's announcements about trust losses. I would point out that any changes that have been made to the measures announced in the original bill that are detrimental to taxpayers have a prospective commencement date. I do not think that point has been made in the debate and it is worth recording.In relation to the grandfathering of the pre 9 May 1995 losses, I make the following points. The trust loss measures are designed to prevent the transfer of the tax benefit of trust losses to those who did not economically suffer them, and Senator Conroy made that point at least 40 times I think. It was a good point and, if you had avoided repeating it tirelessly, we would have appreciated it even more, but it was a good point. A major purpose of the measures was to stop the transfers of the tax benefit of trust losses that were occurring prior to 9 May 1995.I make this point, Madam Temporary Chair, that if the legislation does not apply to losses incurred prior to 9 May 1995, a taxpayer deriving assessable income after 9 May 1995 that should be exposed to tax could shelter that income from tax using a trust loss, even though they did not suffer it. This would be unfair to ordinary taxpayers who do not derive the kind of income that can be sheltered from tax using trust losses. Most of the revenue estimates are based on stopping transfers of the tax benefit of these losses. However, a trust—and I think Senator Conroy made this point many times, not quite 40 but it was a good point and Senator Conroy does like to repeat himself—will only be prevented from deducting losses if something happens after the commencement date that demon strates that the tax benefit of those losses has been transferred. I think that was a point that was well made. I do not use Senator Conroy's exact words; I use the more technical words that have been given to me by my tax advisers, but that is the case and it is essentially the same thing.The advice I have received, Senator Murray, is that the amendment is technically deficient for the following reasons: the amendment directly conflicts with other provisions in the bill; it may allow the use of deductions by a trust that would otherwise be disallowed under the existing provisions of the law; it is unclear how the portion of the loss for the 1994-95 income tax year incurred before 9 May 1995 would be calculated given that tax losses are normally worked out on a whole of income year basis; the amendment refers to losses being declared in a trust's taxation return for the 1994-95 income year—until recently trust returns did not provide for losses to be separately listed and losses for income years before 1994-95 would not be declared in the 1994-95 tax return; and, finally, it is unclear whether the amendment would apply to debt deductions and quarantined foreign losses, which were also dealt with by the bill. I conclude my remarks by indicating that the government will not be supporting the amendments which have been moved by Senator Murray.20:55:001111Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—I am fascinated by the example given by the minister in relation to millions and millions of dollars rorted through trafficking of trust losses. If there was an example—or was it more than one—of millions and millions of dollars being trafficked or rorted through the tax system, can I please ask: has this ever been legal in the last few years, to rort the tax system through trafficking in tax losses? If it has not, what has happened? In that particular example, or those particular examples, were those people prosecuted and, if not, why not?20:56:001111Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator, have you been around? We are trying to change the law. Don't you understand that what we are trying to do, with this bill, is to prevent these things happening? You, with your amendment, are trying to allow them to happen. What we are trying to do is to prevent those losses being used as deductions. We can speed the journey, and if you are prepared to vote for this bill we can clear this matter up very quickly.I was quoting an example because I think the point was made about whether there had been any trafficking in trust losses since the original bill was brought in in May 1995. I looked to my advisers and they gave me an example, one which was a particularly extensive example, which I quoted for the information of the chamber. I was responding to a question and I thought that that was an appropriate thing to do. But, Senator, the point that is we are trying to make a law to prevent trafficking in trust losses and that is what this whole debate is about.20:57:001111Conroy, Sen StephenSenator CONROY3L6VICALP00—Quite a number of the distressed battlers from Brighton who came before the committee made the point, through you, Madam Temporary Chairman—10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Patterson)—It is through me, but you then speak about other senators in the third person. You will get yourself into a lot less trouble if you do that.3L6Conroy, Sen StephenSenator CONROY—Through you, the evidence that came before us was that part 4A could be applied now, and why wasn't it being applied? I would not want for a moment to be wanting to be defending Senator Kemp but we, as did the previous Labor government, lost confidence that part 4A could deal with this, which is why we introduced the original bill. I think it is a question of part 4A being very general, and this is very specific. It was possible that we would have spent a number of years in the courts and in the end been unsuccessful and had to come back to this anyway. The short answer, to assist the minister, is that part 4A, on reasonable advice, may not have been successful.20:59:001111Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—If I may say so, Senator Margetts, you seemed to be bowling along at a great rate and, of course, it could only be done on a case by case basis, which is an important point to make. No one was treating you, Senator, as a fool. No-one would do that in this chamber. But you did ask a question: why don't we prosecute? The advice is we had to have appropriate legislation to deal with the problem, and that is what we are doing.20:59:001112Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—I just want to point out something for the record. I do know the difference between grandfathering and retrospectivity, but I do not think the minister does, and I think a lot of his front and backbenchers do know the difference, and that is why they are not in the chamber tonight.20:59:001112Cook, Sen PeterSenator COOKRF4WAALP00—I want to make two relatively brief points to clear up any misunderstandings in the Senate. In a number of the contributions under this amendment there have been questions about what is Labor Party policy and the minister has made—shall I say, to be fair to him—some snide observations about Labor Party policy.Labor Party policy on tax, at least on trusts, was last enunciated by Treasurer Ralph Willis when he brought down the changes in this area. That is Labor Party policy. That is where we stand. There is no ambiguity about that and there should be no mystery about that. I can tell you something else for nothing. Labor Party policy on tax is no GST, and we would not support a GST either.As far as the rest of our tax package is concerned, we are engaged in a process of actually conducting a reform of the tax system and we will announce quite far reaching tax reform at an appropriate time. I might say, it would help the debate in Australia if the government, which has access to the Treasury and which, at taxpayers' expense, has set up a secret inquiry to examine tax options, at least gave the public the benefit of the work of that inquiry so that Australian citizens could decide for themselves, based on impartial Treasury knowledge, what the best options were. It is a pity as well that the government has directed the affairs of that inquiry so as to require it to study only options which involve a GST.What we have as far as so-called tax reform is concerned—and `reform' is the most abused word I have recently heard in English—is a secret process being conducted by the government, none of which will be made available to the community. At the end of the day, the electors of this country will be ambushed at the eleventh hour with a package, on a take it or leave it basis, which will be a marketing package. The implications of it—the details, the hidden nasties—will not be available for public scrutiny until it is too late. That is not a process of government that at all commends itself to the Labor Party.What did we do when we were in office? First of all, we inherited a ramshackle tax system. Tonight we have had from Senator Kemp what he regards as some of the `imperfections' of the Labor Party on tax. Let me tell the Senate that, when we came to office in 1983, leading tax academics in this country were saying that with the bottom of the harbour schemes and with the ramshackle tax system that Australia had, for the wealthy the payment of tax was optional. You could drive a coach-and-four through clauses in the tax act. That was what the now Prime Minister, the then Treasurer John Howard, bequeathed to Australia in 1983. That is what we addressed with a national tax summit in 1985. On the question of tax purity, let us get the record clear again. Who opposed the reform measures then?WW4KEMPSenator Kemp—Bill Kelty.RF4Cook, Sen PeterSenator COOK—No. The reform measures then were opposed by the then opposition. I am not sure whether, through you Madam Temporary Chairman, Senator Kemp was a member of this chamber at that stage.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Patterson)—Thank you, Senator Cook.RF4Cook, Sen PeterSenator COOK—Certainly his party—the Liberal Party, the coalition—opposed us every inch of the way on capital gains tax, most of the way on fringe benefits tax and on all those things that brought a degree of equity and fairness to the tax system. That is what you opposed us on. So when you say `lecture us', do not come in here and lecture the Labor Party on tax fairness. The principles that we tried to enshrine in the tax act in 1985 were the principles of efficiency, simplicity and equity.WW4KEMPSenator Kemp—Why did you so comprehensively fail?RF4Cook, Sen PeterSenator COOK—I take the interjection, `Why did we so comprehensively fail?' The last major reform of the tax system in Australia was conducted by us. As I said in my speech in the second reading debate, from time to time the tax system needs efficient repair and sometimes renovation. It needs it because every time you divide the law, those in the tax avoidance industry, which is a major industry in this country, spend their best efforts to find a way around the law and occasionally they succeed. Governments should always be adept at blocking off those loopholes. Therefore, you should repair the system and after a while you are required to renovate the system.I also remind the Senate that a GST is a regressive tax. It applies the same amount of tax irrespective of your income. A pensioner and a millionaire pay the same amount of tax. That is a regressive tax. That is not what the Labor Party supports; that is what the government supports. That is what they call tax reform; that is not what we call tax reform. If you are going to fight an election, as you keep saying to us you will, let us do it fairly.In 1985, we published a series of papers—option A, option B and option C. Option C had a GST in it; the other options did not. We engaged in a national debate about tax reform. The country had reference to authoritative Treasury documents, impartially calculated tables and the opinions of leading tax officers in this country. It was all out there in the public for debate. We had a proper debate about it. We won the election, we had a summit, we made a decision at that summit and we reformed the tax act.What do we have now? We have a secret committee with no records, no minutes and no outcomes, as far as we know, at this stage. We have a promise that on trusts there would have been a paper presented for the public to look out. That is now a broken promise. We are not going to see that paper. We are going to see the final recommendations that the government makes.Are we going to see the options from this committee? No. Are we going to see the calculations of Treasury produced for this committee? No. Are we going to see how it impacts on the lower paid and what the level of the tax is, what the exemptions might be? No we are not. We have a tax debate in secret, and a tax debate by PR—by manipulating headlines. That is not democracy. There is a name for that sort of behaviour. We have seen it in other countries before. It certainly ain't democracy.I just say this for the record, Minister, since you are so fond of raising this matter. It may be that you will put your proposals to the people of Australia at a time to suit your convenience—more like at a time to ambush them. It may be that you are able to put a momentary gloss on those proposals to make them interesting and attractive. It may be that you will use the tax system to buy votes by giving tax cuts at particular strategic levels of the tax system to attract votes at that level irrespective of the impact at other levels of income. It may be that you will do all those things.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Patterson)—You are backsliding, Senator. You are still referring to Senator Kemp directly. Could you try to direct your comments through the chair.RF4Cook, Sen PeterSenator COOK—I was under the impression I was, Madam Chairman, but if you say I wasn't then clearly I wasn't, and I now shall.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—You were doing well earlier but you have slipped.RF4Cook, Sen PeterSenator COOK—Thank you for bringing my attention to it. I do appreciate your assistance, Madam Chairman.I conclude on this point. You will not win this debate. You might win it for a small time but you will not win it overall, because Australians in 1985 rejected the idea of a GST and at the election in 1993 they rejected it again. All of the surveys of popular opinion show disapproval for it now in the majority.There is no way in which you can compromise between your objectives of a GST and proper and fair remuneration for those at the lower income levels, and there is no way you can bring in a GST which will not increase over time. Every other one has; there is no reason to expect yours will not. And there is no reason to believe that in the end there will be anything like an attack on the black economy, because in the countries of the world where there is a GST the black economy thrives—but only in a different form, not in the form we know it. So when we talk about tax reform let us bear those things in mind.My concluding remark on this point is that one of the things you criticise us for is our supporting a process of tax breaks for research and development. Well, all those Australian scientists who stand on the dock and watch their ideas go overseas and be commercialised by someone else thank you. They thank you. And those people who would have had jobs in Australia making sophisticated scientific and technological equipment based on those scientific ideas but are now unemployed also thank you. So let us not have any of this cant about that.I do not mind participating in a debate in this chamber in a robust way and I like to deal with people fairly. And I am troubled by Senator Murray in the sense that he seemed to think that I was trying to impute motive to him—3M6MURRAYSenator Murray—Not true, Senator.RF4Cook, Sen PeterSenator COOK—No, well, I wasn't. I do disagree with you, Senator, and vigorously so. And I will vote against your proposition—not in the sense of imputing ill-conceived or bad motives to you; simply because I disagree with you. And I think that is the view on our side entirely. In that sense I do disagree but I do not question motive.21:12:001114Conroy, Sen StephenSenator CONROY3L6VICALP00—I want to make one final contribution to this debate. I am still concerned at some of the issues that have been raised in the debate so far this evening. I am disappointed in the Democrats' position that they just want to talk on retrospectivity, because I think the Democrats in their minority report mounted quite a strong case about the legitimate family trust. Particularly for the Greens, I want to refer to a recently released tax office report on the compliance costs and legitimate family tax trusts.DX5MARGETTSSenator Margetts—Is this about the same pup?3L6Conroy, Sen StephenSenator CONROY—Yes, I think it is that pup again. I am quoting again from an article by George Megalogenis:The second headache for Howard arising from the ATO report was the evidence that a huge slice of the present tax compliance costs suffered by small business was self-inflicted.The report revealed that small businesses run through a trust structure faced double the tax compliance costs of those run as a sole trader, partnership or company.The results shocked the ATO, which thought the red tape costs of a trust and company would be similar. The only conclusion that can be drawn is that small businesses using trusts are spending a lot of extra money on lawyers and accountants to get around the tax laws.That comes back to the point I made earlier: take away the tax threshold—they are paying more money. They are complaining about red tape and how much it costs to comply, and yet they are willing to spend more money of their own hard-earned income to set up these trusts. I know this is going to be an ongoing debate in the chamber and in the country over the next six months with the tax reform debate, so I say, particularly to the Greens, that it is very important that we analyse what the economic benefit of the legitimate family trust is. The Democrats do not seem to want to enter into that debate today, and that is their position. I look forward to ongoing debate with the Democrats on that issue—and I am sure there will be. But, particularly for the Greens, we are back to that pup, that question of what is legitimate. If you examine the economic benefit received, the fact that they are prepared to pay more to be in them, you have to begin to start worrying about why they are so determined to protect their position at the expense of the ordinary taxpayer who does not have the capacity to get into a family trust.I make a final point. Trusts have exploded in the last few years. Trafficking exploded in the last few years in the trust losses. The government wants to make a big thing of asking, `Why didn't you do anything for 13 years?' The answer is that in the last few years it became a major drain and it will become an enormous future drain. That was why we moved in 1995 and the government has continued to support those moves through to now, albeit with the reservations I have already expressed.21:16:001115Murray, Sen AndrewSenator MURRAY3M6WAAD00—I said it in the second reading debate, I have certainly said it over a number of months, the Democrats have said it consistently over a number of years, and I will put it on the record yet again. Firstly, the Democrats support the ending of trafficking in trust losses; secondly, the Democrats believe that any individual, partnership, trust or company that engages in business activity should be taxed equivalently, that is, on exactly the same basis. I know some people need to hear that more and more to really understand it. Mr Temporary Chairman, I am sure that you fully understand what I have just said. It is on the record.21:16:001115Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—I would like to finish this debate, but I am rather annoyed with Senator Conroy who said that somehow or other I have been sold a pup in relation to family trusts. I repeat that I am on record as saying that if the Labor Party were concerned about family trusts, they would have put up an amendment to get rid of them. I invited them to say what their policy will be on family trusts if they are in government, because that is what Senator Conroy has been talking about—income splitting within a family trust. If the family trusts are the problem, let us hear the amendments. Let us see what will happen in the future. Let us deal with income splitting and those things which can avoid the family trust being used as a mechanism for tax minimisation in the future.Amendment not agreed to.21:17:001115Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—by leave—I move:(11) Schedule 1, item 13, page 128 (lines 15 to 17), omit ", required to be taken into account as mentioned in paragraph (a) of this subitem,", substitute "(whether taking place before or after 1995 Budget time), required to be taken into account in determining whether the trust meets the condition in subsection 267-30(2),".(12) Schedule 1, item 13, page 128 (lines 20 to 22), omit ", required to be taken into account as mentioned in paragraph (a) of this subitem,", substitute "(whether taking place before or after 1995 Budget time), required to be taken into account in determining whether the trust meets the condition in subsection 267-30(2),".(13) Schedule 1, item 14, page 130 (lines 30 to 32), omit ", required to be taken into account as mentioned in paragraph (a) of this subitem,", substitute "(whether taking place before or after 1996 Budget time), required to be taken into account in determining whether the trust meets the condition in subsection 267-30(2),".(14) Schedule 1, item 14, page 131 (lines 2 to 4), omit ", required to be taken into account as mentioned in paragraph (a) of this subitem,", substitute "(whether taking place before or after 1996 Budget time), required to be taken into account in determining whether the trust meets the condition in subsection 267-30(2),".(15) Schedule 1, item 18, page 133 (lines 2 to 4), omit ", required to be taken into account as mentioned in paragraph (a) of this subitem,", substitute "(whether taking place before, on or after 1 October 1997), required to be taken into account in determining whether the trust meets the condition in subsection 267-30(2),".(16) Schedule 1, item 18, page 133 (lines 7 to 9), omit ", required to be taken into account as mentioned in paragraph (a) of this subitem,", substitute "(whether taking place before, on or after 1 October 1997), required to be taken into account in determining whether the trust meets the condition in subsection 267-30(2),".Amendments 11 to 16 will ensure, as intended, that the transitional provision dealing with the pattern of distributions test applies to all relevant distributions that need to be taken into account. This transitional rule is designed to soften the impact of the measures in the transitional stages by treating all of the members of a family who receive the distribution from a trust as a single individual. To work properly, this rule needs to apply to all distributions made in the transitional stage. These amendments will ensure that.Amendments agreed to.21:18:001116Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—by leave—I move:(17) Schedule 1, item 21, page 134 (lines 12 to 14), omit paragraph (2)(a), substitute: (a) a family trust election can, in accordance with subitem (1), be made specifying the 1997-98 year of income; and(18) Schedule 1, item 21, page 134 (after line 21), after subitem (2), insert: (2A) If a family trust election can, in accordance with this item, specify the 1997-98 year of income or an earlier year of income: (a) subsection 272-80(2) of the trust loss etc. Schedule does not apply to the making of the election; and (b) the election must be in writing in a form approved by the Commissioner; and (c) the election must be made: (i) if the trustee is required to furnish a return for the 1997-98 year of income—by the time when the trustee furnishes the return; or (ii) if the trustee is not required to furnish a return for that year of income—before the end of 2 months after the end of that year of income or before the end of such later day as the Commissioner allows. (2B) If a family trust election is made in accordance with subitem (2A) specifying the 1997-98 year of income or an earlier year of income: (a) if the trustee is required to furnish a return for the 1998-99 year of income—such information about the election as is required by the return must be included in the return; and (b) if the trustee is not required to furnish a return for that year of income—the trustee must, before the end of 2 months after the end of the 1998-99 year of income or before the end of such later day as the Commissioner allows, give the Commissioner such information about the election as the Commissioner, by notice in the Gazette , requires.(20) Schedule 1, item 22, page 135 (lines 6 to 8), omit paragraph (2)(a), substitute: (a) an interposed entity election can, in accordance with subitem (1), be made specifying a day in the 1997-98 year of income; and (21) Schedule 1, item 22, page 135 (after line 20), at the end of the item, add: (3) If an interposed entity election can, in accordance with this item, specify a day in the 1997-98 year of income or a day in an earlier year of income: (a) subsection 272-85(2) of the trust loss etc. Schedule does not apply to the making of the election; and (b) the election must be in writing in a form approved by the Commissioner; and (c) the election must be made: (i) if the company, the partners or the trustee is required to furnish a return for the 1997-98 year of income—by the time when the company, partners or trustee furnishes the return; or (ii) if not—before the end of 2 months after the end of the 1997-98 year of income or before the end of such later day as the Commissioner allows. (4) If an interposed entity election is made in accordance with subitem (3) specifying a day in the 1997-98 year of income or a day in an earlier year of income: (a) if the company, the partners or the trustee is required to furnish a return for the 1998-99 year of income—such information about the election as is required by the return must be included in the return; and (b) if the company, the partners or the trustee is not required to furnish a return for that year of income—the company, the partners or the trustee must, before the end of 2 months after the end of the 1998-99 year of income or before the end of such later day as the Commissioner allows, give the Commissioner such information about the election as the Commissioner, by notice in the Gazette , requires.Amendments 17, 18, 20 and 21 will implement the new transitional arrangements for making a family trust under interposed entity elections. In broad terms, the arrangements are as follows: taxpayers wishing to make the election for the 1997-98 or earlier years will be required to do so by the time of lodging their 1997-98 tax returns. The election will need to be in a form approved by the commissioner but will not need to be lodged with the commissioner; rather the taxpayer will be required to keep the election. A taxpayer who made the election by the time of lodging their 1997-98 return will be required to lodge details of the election as part of their 1998-99 tax return.Amendments agreed to.21:19:001117Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I move:(19) Schedule 1, item 21, page 134 (after line 34), at the end of the item, add: (4) If the revocation of a family trust election is proposed to specify a time under subsection 272-80(8) that is before the beginning of the 1998-99 year of income, then: (a) subsection 272-80(7) of the trust loss etc. Schedule does not apply to the revocation; and (b) if the trustee is required to furnish a return for the 1998-99 year of income—the revocation must be made in the trust's return of income for that year of income; and (c) if the trustee is not required to furnish a return for that year of income—the revocation must: (i) be in writing in a form approved by the Commissioner; and (ii) be given to the Commissioner by the end of 2 months after the end of that year of income or before the end of such later day as the Commissioner allows.Amendment 19 will implement the new transitional arrangements for the revocation of family trust elections by fixed trusts. In broad terms, this arrangement provides for the revocations in respect of the 1994-95, 1995-96, 1996-97 and 1997-98 income years to be made in tax returns for the 1998-99 income year.Amendment agreed to.21:20:001117Murray, Sen AndrewSenator MURRAY3M6WAAD00—I move:(3) Schedule 1, page 137 (after line 25), after item 24, insert:24A Transitional—unit trusts and schemes to take advantage of deductions(1) This item modifies the effect of Division 270 of the trust loss etc. Schedule where the trust mentioned in paragraph 270-10(1)(a) of that Schedule is a unit trust (regardless of whether the unit trust is a fixed trust or a non-fixed trust) and the units are held by 2 or more unrelated persons.(2) If a scheme in respect of a unit trust meets the following conditions, it is deemed to be a scheme which is exempt from the consequences set out in section 270-15: (a) a unit trust has incurred losses before 1995 Budget time which have been declared in the trust's taxation return for the 1994-95 year of income; and (b) a unit holder's family trust has made a distribution of income in favour of the unit trust (the nominated distribution); and (c) the unit holder makes an election to seek exemption from the income injection test in Division 270 in respect of the nominated distribution; and (d) the unit-holder making the election is a family member or is included in the family group of the family trust which makes the nominated distribution; and (e) the total of all nominated distributions specified in elections made by a unit-holder does not exceed a proportion of all losses available for carry forward by the unit trust at 1995 Budget time, which have not otherwise been recouped, the proportion being equal to the proportion of the units in the unit trust owned by the unit-holder; and (f) an election mentioned in paragraph (c) is made by the unit-holder with the consent of all unit-holders; and (g) the unit-holder making the election was a unit-holder at the time the unit trust incurred the loss; and (h) the unit trust meets all other relevant tests prescribed in this Act.Minister, as you clearly picked up in your earlier remarks, this is a horrendously complex bill and it is difficult to amend. I appreciate your forbearance as we have gone through the debate. This amendment relates to joint venture unit trusts and schemes and refers to transitional arrangements. It extends the transitional provisions to ensure that unrelated unit holders and unit trusts, currently denied the family amendment concessions, are not denied the tax benefits resulting from legitimate carried forward losses at 9 May 1995. Such provisions will restrict the benefit allowed to no greater than the proportion of all losses available for carry forward by the trust as at 9 May 1995, which is equal to the proportion of the units in the unit trust owned by the unit holder. Secondly, it will ensure that only those who are unit holders at the time the loss was incurred are allowed this proportionate benefit.A transitional measure relating to unit trusts with trust losses is necessary because the facility for placing trusts within family groups for the purposes of the income injection test, as announced by the Treasurer on budget night, will not cover cases where business activities are conducted by a unit trust which has incurred losses; where the units are held by two or more unrelated parties except in very limited circumstances; and where all those parties and the unit trust can be constituted as one family group for the purposes of the income injection test.The proposed transitional measure is designed to overcome this unfair and inequitable state of affairs as follows: each unit holder will be entitled to elect that the unit trust with carry forward losses be exempted from the income injection test to the extent that it would otherwise apply by reason only that if distribution of income is made by the unit holders' family trust in favour of the unit trust, which is the nominated distribution, and the nominated distribution must be specified in the election; the unit holder making the election must be a family member or be included in the family group of the family trust which makes the nominated distribution; the unit-holder may continue to make elections during different years of income, provided that the total of all nominated distributions specified in elections made by a unit-holder shall not exceed a proportion of all losses available for carry forward by the unit trust as at 9 May 1995 and not otherwise recouped, which is equal to the proportion of the units and the unit trust owned by the unit holder.No elections described in paragraph (a) will be made by any unit holder except with the consent of all unit holders, and the unit holder making the election must have been the unit holder at the time the unit trust originally incurred the losses. If senators are still following me, they are better men than I!The application of the proposed transitional measure will be restricted to losses incurred as at 9 May 1995. The measure is intended to apply with effect from 9 May 1995 only to unit trusts, irrespective of whether they are technically fixed trusts or non-fixed trusts. The proposed transitional measure will only apply where the unit trust meets all the relevant tests prescribed by the trust losses legislation, other than an income injection test, irrespective of whether unit holders are individuals, fixed trusts, non-fixed trusts, family trust companies, or any combination of the above.A transitional measure along the lines described above will effectively cure a clear inequity in the design of the proposed trust losses legislation. It is consistent with the concession made by the Treasurer on budget night and should not be capable of being manipulated or abused for tax avoidance purposes.I must apologise to Senator Cook for his having had access to these amendments only as they have been circulated. Knowing the views of his senators on the committee, I presume his attitude will be mostly negative to what we have put up.RF4COOKSenator Cook—I will not be supporting them.3M6Murray, Sen AndrewSenator MURRAY—I am sure you will not. I did take the precaution of sending these in advance to the minister as a courtesy and also because of their complexity. I apologise: they have probably had more chance to respond to them formally, if you like. However, I thought that if they did not support the amendment the game was lost anyway. My apologies to you, Senator Cook.Amendment not agreed to.21:24:001118Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I move:(22) Schedule 1, item 32, page 142 (lines 4 to 8), omit the item, substitute:32 Section 43 (after paragraph (a) of the definition of adjusted taxable income ) Insert: (aa) the amount (if any) by which the amount worked out under paragraph (a) would be increased if it were instead worked out ignoring subsection 271-105(1) of Schedule 2F to the Income Tax Assessment Act; and This amendment will correct a minor drafting error. An additional paragraph in the definition of adjusted taxable income is to be inserted.Amendment agreed to.Bill, as amended, agreed to.FAMILY TRUST DISTRIBUTION TAX (PRIMARY LIABILITY) BILL 1997FAMILY TRUST DISTRIBUTION TAX (SECONDARY LIABILITY) BILL 1997MEDICARE LEVY CONSEQUENTIAL AMENDMENT (TRUST LOSS) BILL 1997Bills agreed to. Taxation Laws Amendment (Trust Loss and Other Deductions) Bill 1997 reported with amendments; Family Trust Distribution Tax (Primary Liability) Bill 1997, Family Trust Distribution Tax (Secondary Liability) Bill 1997 and Medicare Levy Consequential Amendment (Trust Loss) Bill 1997 reported without amendment or request.1119Motion (by Senator Kemp) proposed:That the report from the committee be adopted.Amendment (by Senator Murray) proposed:At the end of the motion, add: ", but the Senate calls on the Government to release prior to the 1998 Budget the policy discussion paper on taxation of trusts which was being developed by the Treasury, in order to broaden the public debate about the best means of dealing with tax minimisation through trust structures".In division—YW4MACDONALDSenator Ian Macdonald—Madam President, as we are voting on a tax trust bill again, I want to draw to the attention of the Senate my involvement in—6H4HARRADINESenator Harradine—This is only to say let the Treasury tell us what they are doing; that is all.YH4MacGIBBONSenator MacGibbon—What is the motion?10000PRESIDENTThe PRESIDENT—It is a division on a bill of that nature and I would think that, if it were appropriate earlier, it would be the same now. YW4MACDONALDSenator Ian Macdonald—It does illustrate the absolute ridiculousness of this, but that is not the matter before us now. I draw to the attention of the Senate my interest in a trust as disclosed in the register of interests.C16HEFFERNANSenator Heffernan—I draw attention to my family trust. The offer is still open to others on the other side if they want a share in a farm.FX5MURPHYSenator Murphy—I draw the Senate's attention to the register of senators' interests, as I did earlier.9X5ELLISONSenator Ellison—I reiterate my declaration as previously made.GX5TROETHSenator Troeth—I reiterate my declaration, Madam President.6E4TAMBLINGSenator Tambling—I draw attention to the declaration made earlier this day.H15CAMPBELLSenator Ian Campbell—Ditto.RD4BROWNHILLSenator Brownhill—Madam President, I draw the Senate's attention to my pecuniary interests as given in the Senate register.FF4CHAPMANSenator Chapman—Likewise, Madam President.EU4O'CHEESenator O'Chee—Likewise, Madam President.BX5GIBSONSenator Gibson—Likewise, Madam President.6H4HARRADINESenator Harradine—Madam President, I rise on a point of order. This motion states:"but the Senate calls on the Government to release prior to the 1998 Budget the policy discussion paper on taxation of trusts which was being developed by the Treasury, in order to broaden the public debate about the best means of dealing with tax minimisation through trust structures".I do not see how declaration is needed in these particular circumstances. This debate has been going on for some considerable time. It has been an interesting debate, but it seems to me a waste of the time of the Senate. We have got an enormous amount of work to do between now and Easter and it is about time we got on to that legislation. I do not deny that this piece of legislation is an important piece of legislation—of course, it is—but I think is just an absolute waste of time.UNKNOWNHonourable senatorsHonourable senators—Hear, hear!10000PRESIDENTThe PRESIDENT—Senator, I agree that it may be a waste of time. There is some doubt about it. It is an amendment to a primary motion and there are some senators who will raise against other senators if they have not declared an interest at the time. While there is some doubt about that, perhaps we should do it. I will refer the matter to the senators' interests committee for a ruling.5F4CALVERTSenator Calvert—Madam President, nevertheless, I ask the Senate to take note of my comments.10000PRESIDENTThe PRESIDENT—You need not make the statement, just stand up and identify yourself and we will all know why you are doing it.5F4CALVERTSenator Calvert—I am Senator Calvert actually, and I come from Tasmania.10000PRESIDENTThe PRESIDENT—Thank you. Senator McGauran, Senator Lightfoot, Senator Parer, Senator Abetz, Senator Herron, Senator Coonan, Senator Patterson and Senator Murray.Question put:21:31:00The Senate divided. (The President—Senator the Hon. Margaret Reid)31Allison, L. Bartlett, A. J. J.Bishop, M. Bourne, V.Brown, B. Carr, K.Collins, J. M. A. Conroy, S.Cook, P. F. S. Cooney, B.Crowley, R. A. Evans, C. V.*Gibbs, B. Harradine, B.Hogg, J. Lees, M. H.Lundy, K. Mackay, S.Margetts, D. McKiernan, J. P.Murphy, S. M. Murray, A.Neal, B. J. O'Brien, K. W. K.Ray, R. F. Reynolds, M.Schacht, C. C. Sherry, N.Stott Despoja, N. West, S. M.Woodley, J.30Abetz, E. Brownhill, D. G. C.Calvert, P. H. Campbell, I. G.Chapman, H. G. P. Coonan, H.Eggleston, A. Ellison, C.Ferguson, A. B. Ferris, J.Gibson, B. F. Heffernan, W.*Herron, J. Kemp, R.Knowles, S. C. Macdonald, I.MacGibbon, D. J. McGauran, J. J. J.Minchin, N. H. Newman, J. M.O'Chee, W. G. Parer, W. R.Patterson, K. C. L. Payne, M. A.Reid, M. E. Synon, K. M.Tambling, G. E. J. Tierney, J.Troeth, J. Watson, J. O. W.Bolkus, N. Boswell, R. L. D.Campbell, G. Macdonald, S.Collins, R. L. Hill, R. M.Denman, K. J. Vanstone, A. E.Faulkner, J. P. Alston, R. K. R.Quirke, J. A. Crane, W.* denotes tellerQuestion so resolved in the affirmative.Original question, as amended, resolved in the affirmative.Report adopted.Original question, as amended, resolved in the affirmative.Report adopted.1120Bills (on motion by Senator Kemp) read a third time.Bills1120r4011120Debate resumed from 5 March, on motion by Senator Ian Campbell:That this bill be now read a second time.21:39:001120Mackay, Sen SueSenator MACKAY9L6TASALP00—We are debating the Workplace Relations Amendment Bill 1997 [No. 2] . This bill represents attempt No. 2 by this government to try to break yet another election promise. It represents attempt No. 2 by the Minister for Workplace Relations and Small Business, Peter Reith, to deny a section of the Australian work force a fundamental right: the right to appeal against unfair, harsh or unreasonable dismissal.The government's current unfair dismissal provisions apply to all employers, irrespective of size, but the government now wants to give some employers the power to sack some workers unfairly. Once again in this chamber we have an ideologically conceived piece of government legislation which has no empirical, quantitative or qualitative evidence to support it, nor has it any moral or justifiable grounds for its enactment. As I said in the previous debate on this measure, it is nothing more than a con. It is a con on the small business sector and a con on the broader Australian community.The government's propaganda machine has been working overtime to try to convince the Senate that this legislation is required to secure jobs. That is not right; it is a con. This legislation will add to what is already a concern amongst Australian workers—the issue of growing job insecurity. This legislation will create a two-tier industrial relations system; a system under which employees will be separated into two groups: one with the right to appeal against unfair dismissal and one without the right. The right to appeal against unfair dismissal is a right which, in a world of increasing job insecurity, is crucial for the protection of workers from the behaviour of unscrupulous employers.The question needs to be asked: why are we revisiting this legislation? The Senate has already made a determination on this matter. Is it because the government truly and honestly believes that this legislation is important? No, it is not. This government is not, nor will it ever be, altruistic or genuinely concerned about the conditions and rights of average Australian workers. This legislation is here for one purpose and one purpose only: as a trigger for a double dissolution. That is the only reason why it is back here.The government has carefully crafted a strategy whereby a number of pieces of legislation will be used as double dissolution triggers, and this is one of them. This legislation is being used to divert attention from the real trigger—the Wik legislation. The government hopes that this bill will camouflage its actual objective, which is to implement its Wik legislation unamended, via double dissolution, a plan which has been hatched despite the fact that 90 per cent of the Wik legislation has been returned unamended by the Senate.We have before us a piece of legislation that is part of that strategy. In itself, this legislation is unfair and unjust—important points which have been ignored by this government in what is a cynical attempt to ensure that its election plans are not derailed. In order to ensure that this election strategy works, the government is happy in the course of it to subvert and sabotage the rights of average Australian workers. More recently, the government has revealed another part of the election strategy: the complete sale of Telstra, with more jobs lost and more job insecurity. Another double dissolution trigger is looming.Let me say from the outset that the Australian Labor Party opposes this bill. We have opposed it before and we continue to oppose it. I reiterate the view that we stated in the Senate minority report that inquired into this government's first attempt to abrogate responsibility to ensure that workers are protected from unfair dismissal. I will quote from what I believe was an excellent minority report. It says:We have come to the very firm conclusion the proposal in the Workplace Relations Amendment Bill to exempt small business from the unfair dismissal laws is seriously flawed and cannot be supported.In our view, there are numerous convincing arguments against the proposal, but in essence they can be grouped into 3 core concerns:1. The exemption is an explicit breach of the government's pre-election commitments.2. The exemption is unnecessary.3. The exemption is unfair.We held that view then and we continue to adhere strongly to it now.I would like to remind the Senate of a number of undertakings given by both the Minister for Workplace Relations and Small Business and the Prime Minister concerning the rights of workers—undertakings that obviously we now know are in fact non-core undertakings or non-core promises. I do so to put on record the utter hypocrisy of this government. First of all, let us hear what the now Minister for Workplace Relations and Small Business had to say before the last federal election on ABC Daybreak on 28 February 1996. He said:Look, our position's very clear. If you've been unfairly dealt with at work, then you should have a right of appeal. An ambiguity there I would not have thought. That is pretty clear to me. It was certainly clear to him. The Prime Minister stated on the John Laws show on 23 January 1996:I'm not going to have a law where an unreasonable employer can capriciously sack a decent, hard-working employee.2L6BISHOPSenator Bishop—Who said that?9L6Mackay, Sen SueSenator MACKAY—The Prime Minister, Mr Howard, said that. Again, the Prime Minister on the ABC on 25 January 1996 said:I'm not going to make it open slather. I'm going to replace it—that is unfair dismissal provisions—with a law that's fair to both sides so that if you are doing your job properly you can't be capriciously dismissed.That is what they said before the election. Perhaps the government could save everybody some angst if they indicated from the outset what is in fact a core or non-core promise. I am sure that the Australian people who have suffered from this government's decisions and policy backflips would probably appreciate it. To make this backflip even more questionable, when the unfair dismissal laws were changed over a year ago the government triumphantly heralded what they regarded as a new era with respect to unfair dismissal provisions. The Prime Minister in his 1996 progress report to the people stated:I am proud to say that the previous government's anti-job unfair dismissal laws have gone. They have been replaced with a simpler, more balanced system that provides a fair go all round.What is the Prime Minister talking about here? He is talking about the government's own legislation which they are now attempting to amend. I am not sure that those comments were worth making at that point. I go on to Mr Reith, the Minister for Workplace Relations and Small Business, in his speech on the return of the bill from the Senate. He said on 21 November 1996:We have delivered a workable system for dealing with unfair dismissal . . . and, in doing so, we have expressed an overwhelming community consensus that the previous Brereton system did nothing more than stifle employment growth and create division in the workplace. This was Labor's legacy, and the government has buried it. That is from the minister himself. I have restated government undertakings to highlight to the chamber that the government clearly did not see an exemption for small business as being necessary. Indeed, it is crystal clear, as I have pointed out, from the statements made by the Prime Minister and the minister that the purported anti-job effect of the previous law had been, as far as this government was concerned, dealt with and fixed. These undertakings show, I believe, the government's duplicity in introducing this measure not once but twice and shows the utter contempt that this government holds for Australian workers and for its own election commitments and core and non-core promises.What this government is asking us to do by agreeing to amend its own unfair dismissal legislation—I would like to emphasise that point because I think it is a point that has been lost on the government—is to add to what is already a growing problem of job insecurity in the Australian economy. We are being asked to say to workers in the small business sector that we do not believe that they warrant the same level of protection as workers in other areas. So here we have the two-tier industrial relations system.We are being asked to say to these workers, `If you are harshly, unreasonably or unfairly dismissed, we don't want to know. It is okay to be discriminated against. It is okay to be sacked capriciously. We just don't want to know about it. We are not going to give you recourse to justice in relation to appealing against what may well be harsh and capricious unfair dismissal.' We are being asked to take away the right of appeal against being unfairly dismissed from one huge section of the Australian work force, a highly significant section of the Australian work force. There will be no protection for those workers, no protection whatsoever.My colleague in the other place Bob McMullan has highlighted a number of cases which show the importance of unfair dismissal legislation, which I will restate for the record in order so that it is reinforced in terms of our opposition here in the Senate again. I seek leave to continue my remarks later.Leave granted; debate adjourned.Adjournment112310000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator Murphy)—Order! It being 9.50 p.m., I propose the question:That the Senate do now adjourn.112321:50:001123O'Brien, Sen KerrySenator O'BRIEN8O6TASALP00—Last week the government announced the winning bids for the Hobart and Launceston airports. The successful bidder in Launceston was Australian Pacific Airports Corporation—a consortium comprising the British airport operator BAA, Axiom, AMP and Utilities Trust of Australia with the Launceston City Council holding an option to acquire 10 per cent. There has been a very strong campaign, as you would know, Mr Acting Deputy President, run by the group called Save Our Airport, a group of local businesses aimed at maximising the level of local ownership in the airport in order that northern Tasmania does not lose out from the sale.As with a number of federal issues like the Howard government's outrageous plan for aged care, child care cuts, cuts to other government services and a very high level of unemployment, the member for Bass, Mr Warwick Smith, found himself under attack again from his constituents. His response to this pressure appeared in today's Launceston Examiner. It is up to his usual standard, I am afraid to say.Mr Smith has announced a plan to develop what he described as a Hong Kong style special economic development zone around the Launceston airport. He suggested the zone could contain special bond stores to encourage trade. He said that a committee could be set up to run the zone. Its members would include the Launceston and Northern Midlands municipalities, the new airport owner and the Commonwealth. Not surprisingly, there was a negative reaction from both councils to the Smith plan.This is clearly another off the top of the head reaction by a politician who is under siege. For a start, there are no free trade zones in Hong Kong. The whole island has no barriers to trade and does not levy any tariff. If he is referring to the Shenzen free trade zone, which is located near Hong Kong, then he had better find another example upon which to draw. That zone has been successful because factory owners who have set up there have been guaranteed minimal supervision of wages, working conditions and safety.Mr Smith would have also been wise to look at the history of the economic development zone established in the Northern Territory before he launched his plan for the Launceston airport. The Smith type plan was implemented in Darwin with terrible results. There were many breaches of the basic rights and entitlements of the workers in that zone largely by companies from Hong Kong—the very place upon which Mr Smith has based his plan. Those Hong Kong based clothing and textile companies forced their employees to live in very difficult conditions, underpaid them and failed to pay them on time. It was a disaster in every respect.There was also a plan for the establishment of special Queensland zones floated in the early 1990s. That was quickly replaced with a state wide strategy which, from memory, was called the state wide manufacturing industry scheme. The Queensland government obviously took the view at the time that all manufacturing industries in that state were worthy of government support, not just a select few behind a barb wire fence.Mr Smith also failed to consult the Australian constitution which prohibits discrimination against states or parts of states and provides for free interstate trade. If Mr Smith was to give Launceston airport a free trade zone he would be required to ensure that anyone else who wanted one could have one. It also appears that Mr Smith has a fair way to go if he is going to convince the key members of the Howard government to support his plan.The views of the Treasurer, Mr Costello, were spelt out very clearly in an article in the Australian Financial Review in July last year. Mr Costello is quoted as saying:If I had my way I would not choose a small area here . . . to enjoy those benefits and a small area there. I would choose as much of the country as possible. Mr Costello said that the government would not be diverted into `quick fixes' in its management of the economy. For once I agree with Mr Costello.This idea also received a negative response from Minister for Industry, Science and Tourism, Mr Moore. Mr Moore said in relation to a proposal for such a zone in the Newcastle region:Whether the special free trade zones are the answer or not I am not too sure. I think that is a bit difficult myself.This is yet another example of Mr Smith not only failing the electors of Bass as their local member but also damaging his already badly damaged reputation amongst his colleagues in the cabinet room. I plan to pursue Mr Smith's free trade zone plan with the relevant ministers to ensure that all Launceston businesses and workers an not disadvantaged. I think that after the next election the electorate of Bass will be a Smith free zone.112421:55:001124Stott Despoja, Sen NatashaSenator STOTT DESPOJA3I6SAAD00—I rise tonight to discuss the issue of juvenile justice. I note from the Australian Institute of Criminology's, the AIC's, proceedings of the juvenile crime and juvenile justice conference that it can cost up to $1,000 per week to incarcerate a young offender. Imagine what we could spend that $1,000 on if we were to dedicate it to community services. I would ask that those who argue for cutting income support and welfare and social services for young people seriously consider that figure of $1,000 per week.As the federal campaign looms, I suspect we are going to hear a lot more about the mythical crime wave and calls to get tough on crime—get young people off the streets, presumably with youth curfews or sweep laws. We have heard from one political party that this is one of their policies. We have also heard that we should lock young people up with mandatory sentencing, get them out of town and toughen them up with boot camps, scare them straight with day trips to gaols or shame them with the public wearing of signs. These are all quick fix solutions that soak up public funds and generate headlines, but they have little, if any, impact on crime levels in this country.We do not need to get tough on youth crime we need to get smart and respond to real research and not the rhetoric of talkback radio. There is no youth crime wave either nationally or within the states or territories. In fact the reality is that young people commit fewer crimes than adults, most youth crime is not violent but is against property and most young people offend only once.A small number of repeat juvenile offenders commit most crime. The sweeping operations and regulations against all young people do little to address the problems of that small group yet governments continue to enact laws or consider laws which target all young Australians. Efforts to clean up the streets may include criminalising anti-social behaviour such as: being in a public place at night—we saw evidence of laws to tackle this in Western Australia where we had in 1994 operation sweep; being in a shopping mall where private security guards are actually granted the power to exclude particular individuals from the use of certain city sites; wearing of baseball caps backwards, which was mooted by the Premier of New South Wales a few years ago as being anti-social behaviour; or gathering in groups of more than two, evidenced by the proposals relating to anti-gang legislation.If cleaning up the streets means getting young people off the streets we have to ask: who is public space for? Are not young people members of the public and entitled to use this space? We are in danger of criminalising the young. I know that one set of researchers have coined the term `spatial apartheid' to describe the treatment of young people when it comes to public space.Originally, the word `juvenile' meant a young person without any negative connotations. Today, juvenile is used either as an insult or interchangeably with young criminal. In practice, the words `juvenile delinquent' are now practically considered a tautology and `juvenile justice' is in danger of becoming an oxymoron. The AIC report says that `we are going dangerously astray in both our overall youth policy in this country', and, particularly, in regard to juvenile justice reform. We are excluding rather than reconnecting young people to society.Young people who are excluded from their family, employment and education are most likely to be enmeshed in the juvenile justice system. Males are by far the more prominent offenders than females. There are few female offenders which means that there are very few appropriate services to deal with them if they are offending. Homelessness is another factor for many juvenile offenders. Indigenous young people are vastly over represented in both incarceration and unemployment figures. The unemployment rate for indigenous young people is more than twice that of the total number for Australian youth.The high rates of incarceration of indigenous young people is in effect creating another stolen generation. At the South Australian youth detention centres, the Magill Training Centre and the Cavan Training Centre, Aboriginal young people account for more than one in five of those entering the centres despite the fact that they only represent 1.7 per cent of the total state population. Nationally, 36 per cent of young people in juvenile correction institutions in 1996 were indigenous.Indigenous young people who accumulate a criminal record on average do so at a younger age than non-Aboriginal children. They generally receive harsher outcomes in the children's court than non-Aboriginal young people, particularly in being sentenced to detention. We need alternatives to incarceration for non-violent offences by those children because those who do end up in custody are more likely to come back again and again unless we can set up a diversion from a well-worn track of poverty, unemployment, despair and crime.There has been much public condemnation of the Canberra incident where a 12-year-old was forced to wear a T-shirt saying `I am a thief' in the shopping mall from where he stole. Many would not agree with the notion of humiliation punishment, a decision of those concerned. Shaming and labelling works in a small number of first offences when the youth is ashamed of the label `criminal'. Chronic offenders may accept this label however and might even aspire to it. The AIC report said on this matter:The Brady Bunch kids are a good example of when shaming would work.We should not judge all alternative disciplining systems for young people on the basis of the Canberra case. Particularly, we should not dismiss the idea of family conferencing. In many cases, it does have great merit. It is based on the principle of restoration and reconciliation.For the less serious offences, those best placed to decide an appropriate punishment may well be the victim, the offender and their families. They with facilitators meet and attempt to agree on a punishment that makes some recompense, restitution and reparation. This model allows victims the opportunity to participate in the process of dealing with the offender, whereas the usual practice is for crimes to be against the state and the victim to be included merely as a witness. It is hoped that the offender will feel directly accountable for their actions by having their family present and by requiring them to confront the victim.My home state of South Australia has gone some way down this path with some positive results. The South Australian Young Offenders Act 1993 included the introduction of an up-front police cautioning system which may include community work or compensation, a new diversionary option of family conference and a toughening of outcomes at the court level. Formal prosecution before the youth court is reserved for those repeat offenders who have already been through other options.Family conferencing can be a very effective option for indigenous young Australians because it involves relevant family members in its justice proceedings. It is the police who are in a position of deciding which is the appropriate option in South Australia. Indigenous communities and their organisations and not just police should have some say as to whether their children would be best served by family conferencing. It is a consultative process. In all states the police hold a great deal of power in dealing with young people, although we often hear reports to the contrary. They act within the laws governments pass but they can also bring to the job their own prejudices.We do need to improve relations between police and young people, for example, through the police and community youth clubs, youth liaison officers and training which is youth and culturally specific. We do not need `street-sweep' laws which are a recipe for conflict between police and the great majority of young people who stay within the law. A very small group of young people are responsible for multiple offences. There needs to be provision of specialist psychologically based programs for serious repeat offenders, notably sexual and violent offenders. I do not think anyone would disagree with that notion.The juvenile justice system usually hangs on the myth of punishment and deterrents. Deterrents only work when a person feels that they have something to lose, and many juvenile repeat offenders feel they have nothing to lose. Early intervention by justice and welfare agencies into the troubled lives of young offenders and their families is a better way to address the juvenile crime problem. The peak age for a first offence is 15 to 18 years.Has the government considered the impact of the CYA legislation, particularly on those young people who do not meet the new obligations to be in training and education? I think there may be some social consequences here that we should consider in the context of the justice debate. The government may save a whole $160 a week in income support to an unemployed teenager, but what will be the cost in pushing young people away from their family and community and, in some cases, into incarceration with its $1,000 a week price tag?112622:05:001126Lundy, Sen KateSenator LUNDY7G6ACTALP00—I rise this evening to make comment on a recent event in Australia's political history that will forever remain engraved on my mind. I speak of the Constitutional Convention for which I was fortunate enough to represent my party, the Labor Party, as an appointee. I do not want to turn my comments to the actual issues debated at that Constitutional Convention. As a devoted republican, I am obviously welcoming of the outcome. But I turn to a phenomenon that occurred in conjunction with the Constitutional Convention which I think points to a very interesting development in Australian politics and also points to a great opportunity that exists in this country with respect to greater democratic participation by our citizens.The website that was created to promote and convey the information, the words, the substance and even some of the atmosphere of the Constitutional Convention provided an insight for many Australians as to what went on at the Constitutional Convention. The website itself was created by a local company, Safetyweb, for the department. It had a number of remarkable features. First of all, it actually posted the Hansard each day of the convention, which potentially allowed millions of Australians—but I know it was several thousand at least—daily access to the spoken words of the convention. The website featured a whole range of different sites that one could visit, including the biographies of all the participating delegates. It also carried that day's Notice Paper, what was on the agenda, which motions were carried, and the minutes of the meetings as they occurred.This site had over 70,000 hits during the convention, and we know from the experience of the people managing the site that those visits were not mere scannings—that people actually took the time to have a look at what was being said. While the convention made great radio and attracted a lot of attention through the mainstream media, including the electronic and print media, I believe the website assisted in the capturing of the spirit of the convention for the broader Australian public.The convention itself, as I said at the time, was perhaps the greatest exercise in civics education that we have seen in recent times in this country. To be able to convey that experience in this new medium that we know is particularly accessible to young people can teach us many lessons about the operation of this place. Here in Parliament House the information services are doing an amazing job in taking the parliament to the people on-line. Recent developments have meant an even more upgraded on-line service with the transfer of committee reports and Hansard to the Internet for general reference for, particularly, students conducting their own research but, more recently, greater involvement and participation by people who are interested in a specific area of policy or legislation being discussed, or who are just curious about how our democracy works.The design of a site is particularly important. It needs to be easy to use. It needs to be easily followed. It is too easy for technology to become intimidating for those unfamiliar with it. So more time, thought and resource being placed into designing effective websites so that people can easily access information is, I believe, a great investment in the enhancement of participation by people generally in our political processes.Political parties too have not been slack in seeing what an opportunity the Internet presents. I can speak for my own party, who have taken great pride in establishing a comprehensive information-based website that is available as a resource for people curious about our party and our policies. The growth of Internet usage is something that is continually on my mind, both in terms of the potential it holds to enhance participation in our democracy generally and as a general tool of empowerment for those in our community.One of the most critical policy aspects of this phenomenon that is occurring is, of course, this question of access to the Internet and the equity that is a must if we are to prevent the growing gap between the information haves and have-nots in our country. We know from the Australian Bureau of Statistics that the richer you are in Australia, the more likely you are to have Internet access. Does this mean that perhaps your opportunity to participate in an on-line democratic forum or exercise must be contingent upon your wealth? There is no more pressing policy issue in the area of information technology than addressing this one of equity of access to the Internet. It must take priority if we are to utilise developments in information technology to the benefit of the whole of Australian society. Unless we do this, the success of the Constitutional Convention and its on-line presentation can be measured only in terms of a particular grouping within our society, defined by its advantageous economic status. Would it not be a great indictment upon an Australian government if it did not specifically address these equity issues when they were able to?Statistically, the number of young people using the Internet is growing exponentially every year. The most comprehensive statistics on the growth of Internet usage predictably come from the US, and the most remarkable feature of these indicators is still the phenomenal growth of usage.In closing, I would like to draw the Senate's attention to the site for the Constitutional Convention. Now that senators and members have Internet access in their parliamentary offices, I only hope those who have not taken the opportunity to access it will do so, just to experience the Constitutional Convention experience of 70,000-odd Australians. The convention's home page can be found at www.dpmc.gov.au/convention/hansard. There are other buttons available on that home page that can take you to reports and resolutions, notice papers and speakers lists. And to help facilitate the reportage of the spoken word, there is even a button entitled `press releases' that everyone's public statements were placed on.The Constitutional Convention site is just one example of a remarkable phenomenon that is taking place. The phenomenon has the potential to involve all Australians or it has the potential to marginalise most and benefit only a few. This policy challenge, I believe, is one of the most dramatic that is facing governments in today's age.112722:15:001127Crowley, Sen RosemarySenator CROWLEYZF4SAALP00—I was very interested to listen to my colleague Senator Lundy talking about information technology and the Constitutional Convention. If I had a request for Senator Lundy—particularly after listening to that address—it would relate to the fact that the last piece of user friendliness that still has to be developed is easy to reproduce addresses for the e-mail and Internet. Fix that for me, Senator Lundy, and I will thank you forever.What I wanted to talk about tonight was a visit I made last week to Cobar. The week before that we had the opportunity in our caucus economics and living standards committee to hear from a delegation of miners from Cobar. We heard from them the consequences of the closure of the CIA mine in Cobar and the devastating effect that has had on that community.Cobar is a town of between 5,000 and 7,000 people—it depends on how people present it—and it is a pretty proud, close-knit and supportive community. The community is reeling from the closure of that mine and, in particular, so are the miners, the workers and the staff who have all had the rug pulled from under them. At the moment, by conservative estimates, the mine and its owners—particularly Ashanti—have got away with some $9 million of workers' money. That is money that is owed to them for their annual leave, their holiday leave and their retrenchment packages. Any decent contract between staff and an employer means that that money is not something workers suddenly thought of at the last minute; it is a contractual obligation that the employers have to pay those workers.I believe this is a very devastating and significant disaster for Cobar, but it is not without precedent in other parts of Australia. We have heard of the closure of the Woodlawn mine in Goulburn, with again something like $6 million outstanding to the workers there—though Woodlawn, I have to say, have approached their responsibilities in quite a different way to Ashanti. Nevertheless, they have dudded the workers in their mine of $6 million, which they say they will try to pay, unlike the case with Ashanti and the CIA mine in Cobar. We have heard of the meatworkers at Grafton. That firm went insolvent and, once again, the workers have been dudded of the many millions of dollars owing to them. A nursing home in Queensland equally has closed its business and got away with millions of dollars of money owing to workers.We are beginning to see a pattern of behaviour here—a pattern of behaviour that is a deliberate flouting of the rights and contractual obligations of the people in employ. It is a behaviour that most reminds me of the robber barons of the 19th century—that is, `It's my money. I'll take it and go.' This is illustrated in a particularly devastating way in Cobar.We had two meetings in the town. The first was with a significant group of women, mainly the wives of the workers on the mine, but not all. The women were either in small business or partners or wives of small business people who provided all sorts of provisions to the mine—from equipment, to bricks, to food, to whatever. All of those small businesses of course are completely without contracts, and they have just fallen over completely.The impact on the community is that those families now have workers who are pretty broken and lacking in confidence. The husbands in those families are very depressed and despondent, and they are concerned most immediately about tomorrow's money—where is it coming from so they can pay for the food, the mortgage and the clothing for their families, and where on earth are they going to get more work?Some of those families who have been able to access social security—and many have not, and I will come to that—are now finding that they are trying to live on social security payments when the husband has had to go interstate looking for work. If you think it is difficult managing on unemployment benefits when husband, wife and children are living in the one home, try managing on that same amount of money when the husband has actually gone to Perth or Queensland looking for work. There are the accommodation costs, the travel costs and the family at home still trying to hang together on the smell of an oil rag with what is left of those payments. Those families are doing it very hard.Some of the families have had a higher income, and they have used some of their spare money to set up some kind of investment—whether it is superannuation or other investments in property—for their retirement. They now find themselves, as has often been the case when we have considered social security, asset rich but income poor and not eligible for social security benefits.Many hundreds of the people at the women's meeting and then later at the very large public meeting at the bowling club—mainly the miners and many of the women again—pointed out that, if the town had been flooded or if they had had a drought, either of those situations would have enabled them to be described as in a disaster situation and eligible for disaster relief. This is a disaster for that town and those families, but they are eligible for nothing special.Sometimes, particularly in drought situations, farmers have been eligible for special disaster assistance when they have found themselves asset rich but income poor, and I am certainly going to be writing to the Minister for Social Security, Senator Newman, to ask if some consideration can be given to families in this disaster. It is nothing to do with the miners, but many livelihoods and families have been affected and now that town is reeling from that blow.656FORSHAWSenator Forshaw—Bet you they don't have family trusts!ZF4Crowley, Sen RosemarySenator CROWLEY—I do not know about that, Senator, but I do know that many of those families are in terrible straits. We also know that in that town unemployment has gone from three per cent to 30 per cent more or less overnight. None of these people are trying to be out of work. All of these people were decent hard-working people. They were committed to trying to manage, as well as they could, for their families. They now find themselves on the unemployment list and they find that they are getting no assistance wherever they turn.A delegation met with Prime Minister Howard and he promised to respond to them to see if there was any way in which a loan could be taken out to assist the families or some other arrangement could be made. So far, I am advised, Mr Howard has made no contact back to that group and it is over two weeks later. He promised to respond within two weeks; he has not done so. Those families are the battlers that Mr Howard promised to support. They are the families that Mr Howard says he barracks for, and yet he is able to do nothing—to this point—that could assist them.Today, in the other place, my colleague Janice Crosio introduced a private member's bill to ensure that in the future workers' moneys of this sort would never be able to be abused in this way; denied to the workers. Unfortunately, that bill is not able to be retrospective. But, so far, the advice I have is that the government is not minded to support it. If they are serious about helping this group of families, this group of struggling, genuine decent contributors to our society and to that township, then they should seriously look—and I appeal to Mr Howard to look again—at ways in which he might help these families. Let us see our Prime Minister put his money—or the taxpayers' support and money—where his mouth has been to this point.Those families are dealing with a number of other blows in that community too. People said with cynicism, `Well, I suppose as well as everything else we'll have the banks closing.' The day after we were there, the state bank in Cobar closed and is now leaving the town. The school has gone from 460 pupils to 410 and under New South Wales classification it has now been classified down. None of these things are due to any behaviour on behalf of the staff, the employees, the workers in that town, but all the devastation that has come their way is due to a high-handed, very illegal and I think morally reprehensible act on behalf of the employers. The owners of the mine, particularly Ashanti, have made devastation in their lives and I do believe it is a challenge to Mr Howard to deliver on some of that support. He has not so far.The miners are waiting and they are not going to forget if he fails to support them immediately or even, importantly, to support Janice Crosio's bill to make sure that this kind of devastation never happens to the miners in Cobar, to the workers in nursing homes, to meat workers in other businesses, to workers in this country who up until now expected their contractual obligations would be fulfilled by the employers. It is time we put paid to this kind of robbery.113022:25:001130Sherry, Sen NickSenator SHERRYZW4TASALP00—In the few minutes remaining I want to bring to the attention of the Senate a matter that was referred to me last week concerning the non-payment of superannuation contributions to a number of employees of a company called Sunland Security Services in Queensland. Apparently, the employees concerned have not been paid in respect of their superannuation entitlements under the superannuation guarantee for at least the 1996-97 financial year. This obviously concerns not just the employee who has contacted me but all of the employees, both current and former, of this particular company.Why does it concern the employees? Firstly, superannuation will be a major component of the retirement income of Australians in future. Secondly, whilst the moneys are not paid, and if the company is experiencing some financial difficulty, there is certainly a fear in the employees' minds that they may never see their money. Thirdly, it is certainly arguable, and I think highly likely, that, given the non-payment of the superannuation moneys, the death and disability insurance coverage of the employees has lapsed.It was also brought to my attention that the tax office has been made aware of this situation on a number of occasions by a number of employees, both former and current, certainly over the last nine or 10 months. Unfortunately, the employees, according to the information provided to me, have not received any response of substance about when they are likely to receive their money from the tax office.I did write to the Assistant Treasurer, Senator Kemp, about this matter last week. I was also able to discuss it, at lunchtime today, with the owner of the company, Sunland Security Services. She explained to me that there were some financial difficulties—that the company had been disadvantaged by the bankruptcy of a subcontractor that occurred at least 18 months ago, and that that had created some financial difficulties. The owner of Sunland Security Services has assured me today that she believes the superannuation entitlements of current and former employees will be paid by the end of April, and that correspondence has been entered into with the tax office and the payments will be made.I am sure that the employees, both current and former, of the security firm, will be pleased to hear this and certainly pleased to receive their moneys. I can appreciate and understand the financial difficulties that the particular company has experienced. I certainly accept the assurances of the owner that the moneys will be paid. I think it is regrettable that the moneys for the period of at least the financial year have been outstanding for some time. This has obviously caused some considerable worry and concern to both current and former employees and this is an unfortunate example. I accept there are some difficulties that the company has been experiencing, and I also accept that there are other cases likely to be of a more serious nature that exist elsewhere in the community.22:30:001130Senate adjourned at 10.30 p.m.Documents11301130The following documents were tabled by the Clerk:Aged Care Act— Allocation Principles Amendment (No. 1) 1997. Approved Provider Principles Amendment (No. 1) 1997. Flexible Care Subsidy Principles Amendment (No. 1) 1997. Residential Care Subsidy Amendment Principles (No. 1) 1998. User Rights Principles Amendment (No. 6) 1997. User Rights Principles Amendment (No. 7) 1997.Airports Act—Regulations—Statutory Rules 1998 No. 51.Broadcasting Services Act—Broadcasting Services (Events) Notice No. 1 of 1994 (Amendment No. 1 of 1997).Civil Aviation Act—Civil Aviation Regulations—Civil Aviation Orders—Directive—Part— 105, dated 12 [2], 16 [2], 19, 25 [2] and 27 [2] February; and 2 [2], 3 [2], 4 [8], 5 [3], 6 [5] and 13 March 1998 (in substitution for document dated 27 February 1998 and previously tabled on 2 March 1998 ). 106, dated 26 February [2] and 5 March 1998. 107, dated 26 February and 5 March 1998.Commonwealth Authorities and Companies Act—Notice pursuant to paragraph 45(1)(a)—Establishment of the Australian Rail Track Corporation.Customs Act—Regulations—Statutory Rules 1998 No. 38.Defence Act—Determination under section 58B—Defence Determination 1998/10.Endangered Species Protection Act—Declaration under section— 18 amending Schedule 1, dated 24 February 1998. 170, dated 19 February 1998.Export Control Act—Export Control (Orders) Regulations— Export Meat Orders (Amendment)—Export Meat Orders No. 1 of 1998. Prescribed Goods (General) Orders (Amendment)—Prescribed Goods (General) Orders No. 1 of 1998.Fisheries Management Act— Northern Prawn Fishery Management Plan 1995—Directions Nos NPFD 13-NPFD 19. Southern Bluefin Tuna Fishery Management Plan 1995—1997/98 SBT Provisional TAC Determination.Higher Education Funding Act—Determinations under section 15—T7-98 and T8-98.Migration Act—Regulations—Statutory Rules 1998 Nos 36 and 37.Migration Agents Registration Application Charge Act—Regulations—Statutory Rules 1998 No. 34.Migration Agents Registration Renewal Charge Act—Regulations—Statutory Rules 1998 No. 35.Navigation Act—Marine Orders—Orders Nos 3 and 4 of 1998.Navigation Act and Protection of the Sea (Prevention of Pollution from Ships) Act—Marine Orders—Orders Nos 5 and 6 of 1998.Public Service Act— Locally Engaged Staff Determinations 1998/7 and 1998/8. Public Service Determinations 1998/5 and 1998/6.Protection of the Sea (Prevention of Pollution from Ships) Act—Marine Orders—Order No. 7 of 1998.Safety, Rehabilitation and Compensation Act—Notice of Declaration—Notice No.— 8 and 12 of 1997. 1 of 1998.Student and Youth Assistance Act—Regulations—Statutory Rules 1998 No. 33.Taxation Determination TD 98/4.Taxation Rulings TR 98/2-TR 98/4.1131The following documents were tabled pursuant to the order of the Senate of 30 May 1996:Indexed lists of departmental and agency files for the period 1 July to 31 December 1997—Comcare Australia.Department of Foreign Affairs and Trade.Department of Health and Family Services.Department of Immigration and Multicultural Affairs: Central Office.Department of Transport and Regional Development: Central Office.Public Service and Merit Protection Commission.Answers to Questions on Notice1132The following answers to questions were circulated:1132(Question No. 862)8621132Murray, Sen AndrewSenator Murray3M6WAAD00 asked the Minister representing the Treasurer, upon notice, on 8 September 1997:(1) Does the Minister agree with tables on p.83 of the Economist magazine of 23 August 1997 that indicate that Australian business faces the highest real interest rates of any Organisation for Economic Co-operationand Development (OECD) country; if not, why not.(2) Why has the Government refused to endorse the Wallis inquiry recommendation that small business be given access to the Banking Ombudsman scheme.1132Kemp, Sen RodSenator KempWW4VICLPAssistant Treasurer10—The Treasurer has provided the following answer to the honourable senator's question:(1) The tables in the Economist magazine refer to nominal interest rates.Real interest rates are a theoretical construct which cannot be observed directly. Conceptually, real interest rates are calculated by discounting nominal interest rates by the average expected inflation rate over the duration of the term of the loan. There is, however, no precise method for estimating such inflation expectations. While for short term rates the current inflation rate is sometimes used as an approximation, considerable caution should be exercised in drawing any conclusions based on this approach.International comparisons of nominal interest rates are also subject to several limitations. Rates may not be comparable if they relate to different segments of the market, or if they fail to take account of different levels of risk or different terms. In addition, different structures for fees and charges are also relevant in considering the significance of such comparisons. These considerations are particularly relevant when comparing interest rates charged to business borrowers.(2) On 11 October 1997, the Prime Minister wrote to the banking industry expressing the Government's view that the Banking Code of Practice and the industry-operated Australian Banking Industry Ombudsman scheme and alternative dispute resolution mechanisms should be extended to small business. 1132(Question No. 881)8811132Brown, Sen BobSenator BrownQD4TASAG00 asked the Minister representing the Treasurer, upon notice, on 25 September 1997:(1) Is it a role of the Australian Securities Commission (ASC) to ensure that equity investors in projects such as the M2 Motorway and the Eastern Distributor (Sydney) and City Link (Melbourne) are properly protected against concocted, biased or misleading information, particularly when institutions such as superannuation funds invest in such projects.(2) (a) How does the ASC carry out this role; and (b) is every prospectus reviewed or only those about which complaints are made.(3) What tests or criteria is a prospectus required to meet to demonstrate that information such as traffic projections, which is critical to the financial performance of road projects, is accurate and reliable.(4) What surveillance was carried out in the case of the three projects referred to in (1), to ensure that superannuation funds and other investors were property protected.(5) Did the ASC receive any advice that something was seriously wrong with the M2 Motorway prospectus; if so: (a) from whom; and (b) when.(6) What investigation or reaction did the ASC make to the float of the Infrastructure Trust of Australia (ITA) Group, set up by the Macquarie Bank, which involves the Eastern Distributor, Transurban City Link, and the M2 and M5 motorways.(7) Has Mr Moore-Wilton or any other officer of the Government made contact with the ASC regarding: (a) the M2 Motorway prospectus; (b) the ITA Group prospectus; or (c) related matters.1132Kemp, Sen RodSenator KempWW4VICLPAssistant Treasurer10—The Treasurer has provided the following answer to the honourable senator's question:(1) Yes.(2) (a) The role of the ASC in prospectus review is to ensure that adequate information is disclosed to allow investors and their advisers to make an informed assessment of the merits of an investment. The measures available to the ASC in carrying out this role include: (i) refusing to register a prospectus if, at the time the document is reviewed for registration, the ASC is of the opinion that the prospectus contravenes the prospectus provisions of the Corporations Law ('the Law') (principally Division 2 of Part 7.12 of the Law); contains a false or misleading statement or that there is an omission from the prospectus;(ii) issuing a stop order on a prospectus where it appears to the ASC that the prospectus contravenes, in a substantial respect, the prospectus provisions of the Law or where it contains false, misleading or deceptive statements or material misrepresentations; and(iii) investigating suspected breaches of the Law in relation to the issue of prospectuses. In cases where there have been material breaches in the rules of prospectus disclosure, particularly where investors have suffered losses, the ASC has at its disposal civil and criminal powers of enforcement.Under the Law, investors also have rights of action to recover any loss or damages against persons involved in the preparation of a defective prospectus.(2) (b) The Law places primary responsibility on the issuer to prepare a prospectus which complies with the legislation. Registrable prospectuses are subject to examination by ASC staff to determine whether there are obvious false or misleading statements or omissions which would warrant refusal of registration. I am advised that, at that stage, ASC does not generally request further information to verify statements made in the prospectus.In carrying out its role in ensuring prospectuses comply with the Law, I am advised that the ASC places emphasis on its post-vetting program, which involves a more detailed review of selected prospectuses after registration. In a post-vet, underlying documents are examined to ensure information in the prospectus can be substantiated. Selection for post-vetting is based on an assessment of risks and other intelligence information including complaints. The ASC regularly post-vets prospectuses whether or not specific complaints have been received.(3) Traffic forecasts are complex and require specialised expertise in their preparation. Their reliability is usually subject to various factors and assumptions. Promoters often rely on the traffic expert's reports or advice in making the forecasts. I am advised by the ASC that it is concerned to ensure that the basis of the forecasts and the associated risks are disclosed in the prospectus so that investors can assess the reliability of the forecasts.Although the Law provides for civil and criminal liabilities for promoters in relation to false or misleading prospectuses, there are various defences available to promoters, including reasonable reliance on experts. Thus in any enforcement action, it is not sufficient to show (in some cases, with the benefit of hindsight) that a forecast is incorrect. It is necessary to prove that the forecast could not have been made on a reasonable basis at the time it was made.In August 1997, the ASC issued Practice Note 67 `Financial Forecasts in Prospectuses' to give guidance about the standards it expects of disclosures with a director's or expert's financial forecast.(4) I am advised that the ASC carried out the following surveillance in relation to the three projects to which the question refers:(a) M2 Motorway—The prospectus for the M2 Motorway was subject to detailed post-vetting by the ASC shortly after its registration in late 1994. The ASC subsequently reviewed a number of complaints received in relation to the prospectus.(b) Eastern Distributor—A post-vet was carried out in August 1997 following the receipt by the ASC of complaints about the forecast traffic volume and financial viability of the Eastern Distributor contained in the prospectus of the Infrastructure Trust of Australia Group ('ITA').(c) Transurban City Link—A limited post-vet of the Transurban City Link prospectus was undertaken after its registration in February 1996. One complaint was received by the ASC regarding non-disclosure of pending litigation.Based on assessment of information available at the time, the ASC decided not to take enforcement action on the complaints in relation to each of the three projects.(5) (a) I am advised that the ASC received a number of complaints in relation to the M2 Motorway prospectus in the period November 1994 to September 1997. The source of those complaints is confidential.(b) I am advised that a search of the ASC's records reveals that written complaints were received between November 1994 and September 1997. In addition, discussions were held with complainants in November 1994 and February 1997.(6) I am advised that a general post-vet of the ITA prospectus was carried out in November 1996 and further post-vetting was carried out in August 1997 on the traffic forecast of the Eastern Distributor as outlined in the answer to question 4(b) above.(7) I am advised that a search of the ASC's files in relation to the M2 Motorway prospectus, the ITA prospectus and related complaints files has not revealed any approaches from any officer of the Government. 1134(Question No. 991)9911134Murray, Sen AndrewSenator Murray3M6WAAD00 asked the Minister representing the Attorney-General, upon notice, on 20 November 1997:With reference to the Legislative Instruments Bill 1996 which passed the Senate on 25 September 1997:(1) Has the department commenced arrangements in anticipation of the enactment of this legislation; if so, what have been those arrangements.(2) Has any office equipment or computer hardware or software been purchased in anticipation of the enactment of the bill; if so, how much money has been spent, and on what.(3) After the Act comes into force, how long is it anticipated before administrative arrangements will be in place to give efficacy to the Act.1134Vanstone, Sen AmandaSenator Vanstone7E4SALPMinister for Justice10—The Attorney-General has provided the following answer to the honourable senator's question:First, let me apologise to Senator Murray for not replying to his question soonex. Unfortunately, this results from an administrative oversight in my Department. In relation to the questions asked, I am advised as follows:(1) The Department has commenced arrangements in anticipation of the enactment of this legislation. Those arrangements include recruiting some core staff in the Office of Legislative Drafting to develop computer and administrative systems associated with the Federal Register of Legislative Instruments.The backcapturing of existing instruments commenced in September 1996 and is well advanced in respect of the Statutory Rules series, in accordance with the early backcapturing provisions in the Bill. The material backcaptured to date is onthe Legislative Instruments Database (a precursor to the Federal Register) and is accessible on the Window on the Law site on the Internet (URL: http://law.gov.au).(2) The Department bought, under contract, an integrated, computerised system specially designed for the Federal Register for approximately $1.1 million.(3) Before the Act could commence regulations need to be made and the drafting of these cannot be completed until the final content of the Act is known. It is expected that final administrative arrangements will be in place within 3 months of enactment of the Bill.1134(Question No. 1022)10221134Ray, Sen RobertSenator Robert RayUI4VICALP00 asked the Minister for Social Security, upon notice, on 5 December 1997:(1) (a) What training or seminars for Canberra-based public servants employed by the department have occurred outside Canberra since March 1996; and (b) where has the training taken place.1134Newman, Sen JocelynSenator NewmanBE4TASLPSocial Security10—The answer to the honourable senator's question is as follows:(a) and (b) In relation to training, some Canberra-based staff may have participated in training courses held interstate and organised by the Department/Centrelink or offered by external agencies. However, given the complexities and scope of this aspect of the question, to provide a complete answer would require the Department and Centrelink to allocate considerable resources to the task. I am not prepared to allocate these resources at this time. Other workshops, seminars and conferences arranged by the Department since March 1996 and Centrelink since 1 July 1997 are listed below:Type of FunctionVenueCall Centre Conference (2 days)Centrelink premises SydneyAudit and Evaluation Workshop (2 days)BungendoreBusiness Planning Seminar (2 days)JindabyneResources & Property Planning Conference (2 days)Bateman's BayIT Leaders Workshop (3 days)SydneyInnovations Team Planning Workshop (3 days)Bateman's BayTeam/Planning Seminar (2 days)BungendoreStrategic Planning Day (1 day)BinalongStrategic Planning Seminar Series (4 x 2 days)MurramurangDisability and Carer Branch Planning Day (1 day)BungendoreLeadership Development Program (5 days)Bungendore1135(Question No. 1023)10231135Ray, Sen RobertSenator Robert RayUI4VICALP00 asked the Minister representing the Minister for Foreign Affairs and Trade, upon notice, on 5 December 1997:(a) What training or seminars for Canberra-based public servants employed by the department haveoccurred outside Canberra since March 1996; and (b) where has the training taken place.1135Hill, Sen RobertSenator HillBH4SALPEnvironment10—The Minister for Foreign Affairs and Trade has provided the following answer to the honourable senator's question:The details sought by the honourable Senator are provided in the attached list.Training Course, Conference or SeminarLocationDateStaff AttendingSenior Executive Service ConferenceGoolabri Park, NSWNov, 199674Departmental Executive and Division Heads RetreatGoolabri Park, NSWJuly, 199722Senior Executive Service Leadership & Management Workshop (4 programs in all)Bungendore, NSWMay, July & Oct, 1996 and Sept, 199762Strategic Planning and Management Workshop (5 programs in all)Berida Manor, BowralJuly, 199714Eaglehawk Conf. Centre, SuttonSept, 1996; Dec, 199738Lincoln Downs, Batemans BayNov, 199616Country Comfort Inn, Batemans BaySept, 199714Middle Management WorkshopEaglehawk Conf. Centre, SuttonMar, 199718GAA TrainingSilver Wattle Training Facility, BungendoreJuly, 199735Consular Branch WorkshopBungendore, NSWNov, 199720South East Asia Divisional Management and Policy Coordination SeminarBungendore, NSWMar, 1997381135(Question No. 1065)10651135Murray, Sen AndrewSenator Murray3M6WAAD00 asked the Minister representing the Minister for Workplace Relations and Small Business, upon notice, on 5 February 1998(1) For the calendar year 1997, what financial and other savings, and what benefits, have accrued to Victoria as a result of unifying its industrial relations system with that of the federal system.(2) With this as a guide, is it possible to extrapolate, on an annual basis, equivalent savings by State, if this action were followed by every State.1135Alston, Sen RichardSenator AlstonLD4VICLPCommunications, the Information Economy and the Arts10—The answers to the honourable senator's questions are as follows:(1) The precise savings to the Victorian Government for the calendar year 1997 are not known. However, based on discussions between officials prior to the referral of Victoria's industrial relations powers to the Commonwealth, it was estimated that it was costing the Victorian Government in excess of $8.7m per annum to provide the functions that were the subject of the referral.The benefits of a unified industrial relations system in Victoria are:. a single more efficient and less costly system with one set of rules to replace the legalism and complications that arise from systems running side-by-side and overlapping. easier access to the agreement-making choices provided by the federal system through certified agreements and Australian workplace agreements. an effective and fair transition process from the dual system to the single system—employment agreements under the former Victorian State law are given continuing effect and the safety net protections are maintained and these functions are now not being performed by the StateIt is also worthy to note that the Victorian Government has formally advised the Labour Ministers' Council at its meeting on 21 November 1997 of its continued support for the referral and of the benefits which have accrued to the State. The Joint Communique issued by the Labour Ministers' Council following that meeting included, inter alia the following:"Victorian Minister Hallam confirmed the Victorian Government's continuing support for the historic decision, taken 12 months ago, to refer Victoria's industrial relations powers to the Commonwealth. Minister Hallam said the referral had benefited employers and employees alike and had successfully introduced a seamless and user friendly State and Federal industrial relations system in Victoria."The savings which accrue from these benefits are not restricted to savings to Government or taxpayers. Private sector employers and employees are nett beneficiaries given that the industrial relations systems have been established for their common benefit. It is not possible to quantify the direct and indirect savings to the private sector given the wide variety of potential and actual users of the system. Savings to the private sector can, however, be grouped into categories which include:. speed of establishing rights and obligations—by having one point of reference for administrative services such as enquiries and advice on wages and conditions. accuracy of establishing rights and obligations—by eliminating uncertainty or confusion created by dual systems of award regulation or agreement making. simplicity in investigation, compliance and enforcement measures. expedition in agreement making and dispute resolution—by having one point of reference for access to services of the Industrial Relations Commission (including in dismissal matters and disputes) and one jurisdiction for agreement making. less technicality in dispute resolution and agreement making—by eliminating preliminary jurisdictional points of law based on cross jurisdictional issues. less cost in dispute resolution—by eliminating costly litigation relating to jurisdictional overlap. less potential for disputes over wages and conditions—by a single jurisdictional regulation within individual businesses and the elimination of dual coverage of single workplacesIn addition, the standing of the workplace relations system in the eyes of employers (particularly small business), employees and the community at large is enhanced by a single point of service delivery, rather than stakeholders being referred from one jurisdiction to the other for information or assistance in dispute resolution or agreement making.(2) The Commonwealth does not have access to more detailed information from all of the other States to extrapolate estimated cost savings from a unitary industrial relations system. The quantification of savings would be likely to vary in each State as each State system provides a service to differing numbers of employers and employees. There would however be common features in many of the categories of savings, including the features identified in answer to question (1) above.