1999-04-283912SENATE440101999-04-28The PRESIDENT(Senator the Hon. Margaret Reid) took the chair at 9.30 a.m., and read prayers.Notices440144014401Calvert, Sen PaulSenator CALVERT5F4TASLP10—Madam President, at the request of Senator Ellison, I withdraw government business notice of motion No. 1.4401Motion (by Senator Calvert, at the request of Senator Ellison) agreed to:That government business notice of motion no. 2 standing in the name of Senator Ellison for today, relating to the consideration of legislation, be postponed till a later hour.Bills4401r703Billsr667Billsr666Billsr702Billsr699Billsr698Billsr664Billsr660Billsr658Billsr657Billsr701Billsr663Billsr659Billsr700Billsr6614401A NEW TAX SYSTEM (GOODS AND SERVICES TAX) BILL 1998Consideration resumed from 27 April.The bill.09:31:004401Conroy, Sen StephenSenator CONROY3L6VICALP00—Minister, are you aware whether the Treasury used the HES data for any other applications?WW4KEMPSenator Kemp—Any other applications to what?3L6Conroy, Sen StephenSenator CONROY—Macro-economic modelling, micro-economic modelling—any sort of modelling whatsoever. Does Treasury use the HES data to produce anything?09:32:004401Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator, I don't want to canvass what was extensively covered, I believe, by the select committee. I understand that question was asked in the select committee and I understand Treasury gave a full answer to it. If you like, I will get a copy of what the Treasury said.3L6CONROYSenator Conroy—I've got the Hansard here.WW4Kemp, Sen RodSenator KEMP—Okay. Apparently the answer was given then.09:33:004401Conroy, Sen StephenSenator CONROY3L6VICALP00—Perhaps to assist you, Minister: Treasury accepted that they use the HES data for retirement income modelling, or RIM as it is colloquially known.WW4KEMPSenator Kemp—Why did you ask me the question, then?3L6Conroy, Sen StephenSenator CONROY—Perhaps to see if you had any idea about what you had been talking about for the last four hours, but obviously not.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Knowles)—Maybe this could be formalised in some way.3L6Conroy, Sen StephenSenator CONROY—The reason I asked this question, Senator Kemp, was to ascertain whether you were aware of the discussion and disagreement within Treasury about the position adopted by it. I take you to page 383 of the Senate Hansard for the select committee on Thursday the 28th and a Mr Gallagher, who is in charge of the retirement income modelling section of Treasury. He refers to the now infamous Dr Carnahan's paper. This is Mr Gallagher's comment on Dr Carnahan's paper:The main problem with this paper is that Dr Carnahan wants to throw the baby out with the bathwater . . . The HES expenditure data does allow us to estimate price effects which are statistically reliable and which show clearly that the retired and pensioners have compensation needs beyond the average of all households.This, as I was saying and as we were discussing yesterday, is the nub of the argument inside Treasury—whether it is justified to just toss out traditional uses for HES because it is inconvenient to the government. Are you aware of this debate inside Treasury? You are the Assistant Treasurer, so I am hoping that you are familiar with this debate and that you have a contribution to make. In particular, is Treasury's decision to throw out the use of HES for calculating the compensation package, and just using an average, appropriate? Do you consider, given the comments of Mr Gallagher about the HES data and about Dr Carnahan's paper, that it is appropriate to make that decision?4402Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—(9.36 a.m.)—Senator, as with all vibrant bodies like the Treasury, there will be some debate on issues, as we would expect. There is nothing surprising about that. You are obviously well aware of the debate. Part of the problem is that we have already had this debate before a Senate committee. The select committee was established to look at this issue. We have now had this debate before a Senate select committee. Senator Conroy is asking me to go back over the debate that we have already had. I think that is a pity. It is another example of time being consumed when the Senate is probably ready to move on to debate the substance of the bills.3L6CONROYSenator Conroy—This is the substance of the bill. This is the core of your bill.WW4Kemp, Sen RodSenator KEMP—That is why we have committees—so that we can look closely. A select committee has examined this. I understand that there was an extensive debate by the select committee. After this debate the Treasury came to the view that the HES data is not reliable for this purpose. Dr Carnahan, who I think is a good friend of yours and someone whose views you admire, also came to that view. So, Senator, yes, there was a debate. That debate was extensively covered before the select committee, of which you were a part. Treasury came to a view, and that view was put to the Senate select committee.09:37:004402Conroy, Sen StephenSenator CONROY3L6VICALP00—Thank you for that, Minister. I accept that there was a debate inside Treasury, as you now acknowledge, about the appropriateness of this assumption, because this is the key assumption, Minister. There is no clause in the bills about this, so this is the appropriate place to debate, discuss and seek information from you about the government's thinking. What I have drawn to your attention is the debate inside Treasury, because yesterday, in one of your responses to some of my questions, you pointed out that Treasury—10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Knowles)—Senator Conroy, could I ask you to address your comments through the chair. This is not a conversation across the chamber.3L6Conroy, Sen StephenSenator CONROY—Certainly. Thank you for drawing my attention to that, Madam Temporary Chairman. The minister, in his comments yesterday about the Treasury position, stated that Treasury had, in the past, gone down the path of amending and using the HES data. The minister said that Treasury seem to have always objected; that they have always had a longstanding objection to this, which they raised. But Senator Kemp went on to say that Treasury were directed to do that modelling. And yes, that is correct.So the question that I want Senator Kemp to answer is: why did the government not direct Treasury to do it again? This is the key to the compensation argument. Why did the government not direct Treasury to do what they had done previously? Why did the government just accept the position put by Treasury that an average is okay when you are doing the compensation package? That is the question that I direct to Senator Kemp: why did the government accept Treasury's argument this time? What was different this time that was not known in 1985, 1991 and 1993, so that the government did not say to Treasury, `Go and do this; the government does not accept this average CPI figure'? That is the issue that I would like Senator Kemp to address.09:40:004403Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I will put a couple of facts on the table. Treasury, I am advised, was directed to prepare HES based estimates. Treasury, as has been well known, does not support this approach. However, the results were released, of which you are probably aware, and the analysis indicated that the range of price effects was very small—perhaps half a per cent higher for pensioners. The government has provided a 1½ per cent buffer, which ensures that no-one will be worse off. However, I restate that Treasury and the government do not endorse the use of HES data. This is not only the position of government and Treasury, but also of people like Professor Warren and Dr Carnahan. We have had this debate before the Senate select committee. Apparently, we are about to revisit the debate now.09:41:004403Conroy, Sen StephenSenator CONROY3L6VICALP00—The facts are on the table—thank you, Minister. What you possibly are unaware of is that, yes, Treasury did a calculation of the second year effect using HES data. But they have never produced what the first year effect of the HES data was. They admitted that. I asked them whether they could produce the first year effect using the HES data. We were told that it would not be useful for the debate. That is what the committee was told. We asked: could you table the first year HES data effects?We have three figures, but the fourth is missing. We have the first year effect using the Treasury model; we have the second year effect using the Treasury model; we have the second year effect using the HES data; we have the first year effect, finally coughed up through the Senate processes—3.1. But when we asked what was the first year effect using the HES data, we were told that it would not be useful for the debate; that we should ask the minister whether that could be produced and tabled. And we are still waiting. So I am asking the minister today: is the government willing to put on the table what the HES data showed in the first year?Before you start quoting Professor Warren about Dr Carnahan, you should look at the Hansard, because I asked Professor Warren the following question:While criticising HES—as the Treasury document I am criticising has—it is not exactly a huge rap for where they went. It argues—this is Dr Carnahan's paper—that more study was needed . . . I repeat: more study was needed. This was in Dr Carnahan's paper. My question continued:and that more information was needed before you had a reliable figure; it did not say the CPI is the absolute rolled gold way to do this. Is that a fair statement?I asked him whether that was a fair summary of Dr Carnahan's paper. At page 88 of the Hansard transcript, Professor Warren replied:Yes. Like others, I was looking for the supporting literature, and why there was a significant change in position from 1992 and 1985. It was not forthcoming from that, other than inferred by the title. I did not feel convinced at the end of it. I read the literature—this is Professor Warren on Dr Carnahan—and it seemed to me that the precedent was not in the direction where it was leading . . . So he said he agreed with Dr Carnahan's paper about the limitations of HES. There is no argument about Dr Carnahan's dissection of the problem with HES. Where every eminent economist in this country and Treasury and Dr Carnahan part company is on the decision as to what they did next. He said:I read the literature and it seemed to me that the precedent was not in the direction where it was leading—so I had some difficulty with that document.We have missing figures, which hopefully the government will table for us today in order to further inform the debate. We have every eminent economist saying that Treasury got it wrong.The question to Senator Kemp and the government is: does the government believe that every individual in this community and every individual in the gallery today has the same expenditure pattern? It is the question I asked yesterday. Do you really believe that James Packer has the same expenditure pattern as somebody in that gallery? That is the question, because that is the assumption that the government has made. They have said that Jamie Packer has the same expenditure pattern as a member in the public gallery today.NB5CAMPBELLSenator George Campbell—He doesn't eat in the restaurants I eat in.3L6Conroy, Sen StephenSenator CONROY—He does not eat in any restaurants I eat in either, Senator Campbell. That is the question that I am asking Senator Kemp to justify. I am asking him to justify the government's position on that issue. Does the government believe that everybody has the same expenditure pattern in this country?09:45:004404Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I have to point out that this debate was very extensively canvassed before the Senate select committee. I am advised by the Treasury that the first year has not been done, but I would expect that the dispersion would not be dissimilar to the second-year effect. Of course, we have an up-front payment of four per cent which has been widely welcomed. Dr Henry provided extensive evidence to the committee and I would urge the good senator to read carefully the evidence that Dr Henry gave.As I pointed out to you, these matters were very extensively canvassed before the Senate select committee. This debate has been run. People have come to a view on it. I have stated the government's position. There will be people of goodwill who will differ. I do not doubt that people will differ, but in the end governments have to make decisions. Governments make decisions based on advice that they receive from a variety of sources and the decision has been made.We had a debate yesterday about the HES data. You may not accept that position and it is a pity if you do not. But, nonetheless, the government's view is quite clear on this. I am not sure why we are constantly revisiting this particular issue.09:47:004404Murray, Sen AndrewSenator MURRAY3M6WAAD00—The minister may have unwittingly misled the Senate or perhaps the way in which he expressed himself did not cover the full gamut. As I understood it, you said that the government did not endorse HES. That is so for this package; it is not so generally. As you know, it is the HES with fairly rigorous adjustments which forms the basis of the CPI. Secondly, HES is used in the social security arena for the establishment and understanding of government policy and particular benefits that are paid out. It is not true as a general rule that either the Treasury or the government reject HES.I should take you back to the central position put by Senator Conroy, and that is that the Treasury has changed its approach under different governments. In 1985 for the draft white paper and in 1993 for the analysis of Fightback, price effects based on differing expenditure patterns for households were based on HES. In ANTS the Treasury rejected this approach, arguing that HES contains known bias in reporting of tobacco, alcohol and gambling; is affected by lumpy, large household expenditures; and there were problems with HES savings data and, finally, disaggregated data.Those arguments were expanded in detail in the paper by Carnahan, which was tabled by the Treasury and Treasury officers in the committee. But the important point that should be made to you is that Treasury's approach was not only rejected by six university professors who are experts in this area in evidence to the committee, but it was also rejected by the Australian Bureau of Statistics. Those professors included Professor Ann Harding, Professor John Quiggin, Associate Professor Neil Warren, Professor Peter Saunders, Professor Peter McDonald and Associate Professor David Johnson.It is important to recognise for the purpose of this debate that this is a critical issue and deserves to be fleshed out, because it has not really been debated in the committees. What happens in the committee, as you know, is a question and answer session and then senators arrive at their conclusions and write their reports appropriately.The problem is that the government's view and the Treasury's view is opposed by considered academic and professional opinion and is opposed by the Australian Bureau of Statistics. I will quote the Government Statistician, Mr McLennan. He said:The ABS consider statistical data from the households expenditure survey can be used at a suitably disaggregated level after appropriate adjustments are made to reported expenditure information to describe the expenditure patterns of population subgroups. The ABS itself uses the information this way in its own fiscal incidence studies, in the calculation of the weights in the CPI and in the compilation of the national accounts. Also, HES data has been used over the years by many analysts for distribution analysis by population subgroups.So the government does heavily use HES and has heavily used HES. This is picked upon because the government's whole case for the imposition of a GST rests on its claim that it is able to compensate and appropriately compensate significant population subgroups, such that the Prime Minister claimed that no person would be worse off. That has now moved to no group would be worse off.3L6CONROYSenator Conroy—No average in a group.3L6Murray, Sen AndrewSenator MURRAY—No average in a group, yes. That assumption is now being severely tested because the evidence that was developed through the Senate committee process is that significant numbers of Australians, running into the millions, are losers or are potential losers in this package. It therefore will require the government, if it is to hold to its belief that it will compensate for the imposition of a GST, to significantly raise that compensation. This is important because the government has made a commitment to compensate for the GST based on erroneous assumptions and erroneous data. This is right at the core of the examination of this package, but if it was fair you would not have to compensate. Senator Conroy is pursuing this issue because it is very much at the heart and at the core of the debate.In summary, Minister—and I think it was unintentional because you would know that HES is used for CPI, you would know that HES is used in the compilation of national accounts which the government relies on, you would know that it is used in social security—I do not think you should propagate the view that HES is a discredited statistical tool. We all know its inadequacies when it is very finely disaggregated—of course we do—but suitably qualified and suitably modified by the appropriate professional people it is an exceptionally useful means of evaluating the majority of Australians. I think therefore you should take note of what is being driven at in this debate.09:54:004405Conroy, Sen StephenSenator CONROY3L6VICALP00—I was hoping that the minister may have responded to Senator Murray or to my earlier views because this is, as Senator Murray has said, the absolute core. As has been said many times in this chamber, there is no debate that the GST is regressive. It is not possible to debate it. The very notion of a compensation package absolutely gives the lie to the suggestion that the GST is not regressive. The GST is regressive. You need a compensation package to try and bring people back to the point where they are no worse off. That is the whole thrust of the compensation package. So it is an absolutely legitimate debate here today for you to have to argue out your case. It is not possible just to say, `Treasury have said that this is okay.' Treasury have been challenged absolutely legitimately not only by reputable economists like Dr Johnson, Professor Warren and Professor Harding but by St Vincent de Paul and by pensioner groups. They have all come and said, `The government cannot be serious that this is the approach they intend to take. They cannot be allowed to go unchallenged.' So you are now challenged to debate the position here, Minister. The government has to state its case, and saying, `Treasury have decided to do this,' is not stating its case. This is the government of which the Treasurer said, `We make the decisions, not Treasury. Treasury's advice is irrelevant.' A letter was sent by the Treasurer, Mr Costello, to the Senate Select Committee on a New Tax System—and I am sure Senator Murray would remember it, and possibly Senator Harradine—in which he said: `Treasury's views are not relevant.' The Treasurer sent a letter to the select committee saying: `Treasury's views are irrelevant. It is the government's views that matter.' It may surprise you, Madam Temporary Chairman Knowles, that the Treasurer would be so strong in dismissing Treasury's views. It certainly surprised many of us on the committee.We want to hear from the Assistant Treasurer why the government believes that every Australian has the same expenditure pattern. St Vincent de Paul proved in their submission, and I will go through it again for you, Minister, that people with a weekly income of between zero and $324—that is, the people in the bottom income group—spend 30 per cent of their income on food. The question is: does Jamie Packer spend 30 per cent of his income on food? Not a chance. They spend three per cent of their income on clothing. Does Jamie Packer spend three per cent of his income on clothing? Not a chance. Utilities: does Jamie Packer spend nine per cent of his income on utilities? Transport, nine per cent. Housing, 28 per cent. This is the key question. The government have said that the people St Vincent de Paul deal with every day, the people they went to to do this survey in the limited time available, have the same expenditure pattern for the purposes of this tax and compensation package as Jamie Packer.That is what is at stake, Minister. That is why we want the government to give us a response. The government told us not to take any notice of what Treasury had to say. That is the government's view. The Treasurer's letter is on record, Minister. You may smile, but that is what we were told. When another organisation started a similar survey, they got the same sorts of figures: 30 per of those people's expenditure is on food, 16 per cent on utilities and 25 per cent on miscellaneous services. Those are real Australians, with real expenditure patterns, that you dismiss. Dr Johnson made it quite clear about Dr Carnahan's paper. He said, `No, I think he ducks the issue. He states the problems very cogently and very well, but they are problems that we all knew about.' Then he said, `We cannot use this because of these problems. We will use some of that much stronger assumption, namely, that everybody has the same expenditure pattern.' This is a farce. The government's compensation package is based on a farce. As Dr Johnson said, `That seems crazy to me.' Earlier, he stressed the CPI figure:The first is that we think that the estimate of the CPI itself is wrong. Two things in particular which are stated quite blandly in the tax package documentation itself are that tobacco—and they take a moral view—should not be compensated for. I have no argument with the moral view, but I do not think that should be confused with calculating the price effect.That is absolutely right. You can have the moral view. You can take the Pigouvian tax approach. But, if you are going to do that, you have to come into the chamber and say, `We commissioned some studies which found, coincidentally with the tax package, that the Pigouvian optimal level of taxation for tobacco is too low at the moment. Therefore, we believe we are moving to the new optimal position.'What we are asking you, Minister, is where is that information? Where is the intellectual defence that Jamie Packer has the same expenditure pattern as the people interviewed by the ARPA's over-50s, the combined pensioners of St Vincent de Paul? Where is your intellectual defence that Jamie Packer has the same expenditure pattern?10:01:004406Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—If I quoted former Treasurer Mr John Dawkins, would that be an intellectual defence? There was a debate on this whole issue; it was an extensive debate. Let me refer to the Hansard . In the other place in relation to the modelling done under the household expenditure survey, this is what the Treasurer said.ZF4CROWLEYSenator Crowley—What date, Minister?WW4Kemp, Sen RodSenator KEMP—This is 11 November 1998. This is what the Treasurer said in relation to a question from Mr Crean:This treatment of the household expenditure survey data is wrong. It is nothing more than a statistical nonsense. The HES is based on a sample survey. As the data are divided into smaller and smaller subsets, the accuracy of any derived estimates declines rapidly. Some cells used in the opposition analysis contain as few as seven households and are clearly useless as a guide to the impact of the package. Word for word, that was a statement by Mr John Dawkins, Labor Treasurer . . . In response to a freedom of information request from the member for Flinders, John Dawkins, Labor Treasurer, released in the House on 3 March 1992 Treasury modelling of a household expenditure survey. The Treasury advised the Labor Party that the household expenditure survey was not reliable. In fact, this was the document that the Labor Treasurer tabled in the parliament on March 1992 which included a Treasury minute, and the Treasury advice has not changed from 1992 to 1998 that the HES sample did not accurately reflect the Australian population in respect of the household characteristics. This was the argument that the Labor Party used when they were in government. This government has not announced some brand new view of it. As I have said, this was the position, as I understand it, and correct me if I am wrong, that Mr Dawkins put to the parliament on 3 March 1992.3L6CONROYSenator Conroy—Do you actually understand what you are debating?WW4Kemp, Sen RodSenator KEMP—I wonder whether you understand what you are debating. You have asked me about the use of the household expenditure survey. You have asked me why the government has adopted this new position. I have referred to a position that former Labor Treasurer Mr Dawkins took. I think this goes to the very nub of what you were saying, Senator.Before I continue, I have been reminded by the Clerk that I need to table the supplementary explanatory memorandum. I table the supplementary explanatory memorandum relating to the government amendments to be moved to the A New Tax System (Goods and Services Tax) Bill 1998, the A New Tax System (Goods and Services Tax Transition) Bill 1998 and the A New Tax System (Goods and Services Tax Administration) Bill 1998. Apparently that has not been tabled.Let me return to what I said in light of the comments by Senator Conroy. Treasury was directed to prepare HES based estimates. As I have indicated, the Treasury does not support this position. However, the results were released. I do not think you seem to have recorded that comment in your own remarks. The results were released, and the analysis indicated that the range of price effects was very small, perhaps half a per cent higher for pensioners. That is what I said: `The government has provided a 1½ per cent buffer which ensures that no-one is worse off.' Then I restated the position.The Treasury has not changed its position. I quoted a 1992 example which I understand was tabled by Mr Dawkins. The Treasury has not changed its position. It has always objected to its use. However, HES based estimates have been provided. When they have been provided, they are typically heavily qualified by caveats. Sometimes these caveats are ignored in the discussion and the subsequent debate. The government has accepted the Treasury's position on this. My understanding was, in quoting comments made by Mr John Dawkins, that was a similar position adopted by the former government.Senator Murray raised an issue about the ABS. My advice is that the ABS does not trust the HES data. That is why they massaged the data—I am using the words from my adviser—for a range of uses. A professional judgment needs to be made as to when the level of massaging that is necessary becomes too large. The Treasury believe that the level of massaging required to do highly disaggregated analysis is too high, and the government has accepted that advice.The Jamie Packer issue was raised by Senator Conroy. The Treasury does not assume that everyone has the same expenditure pattern. The Treasury believes that the CPI is the best measure of changes in the cost of living. The CPI estimate will be a reasonable measure unless there is a statistical bias in the distribution of goods and services and the CPI and the tax treatment of those goods and services. Senator, this a longstanding debate. It is a debate in which we have tabled some information. The information showed that the differences were simply not large.The argument then extended into the compensation area. This was a major focal point of the Senate select committee—to look at whether some groups were worse off than other groups. Let me just quote what the Treasurer recently wrote in an article in the Financial Review:Recently Professor Neil Warren, while supporting GST including the GST on food, criticised some elements of the compensation provided by the ANTS tax reform package. But his research did not identify any groups worse off. Professor Warren notes that his study for the Senate committee "found that on average there appeared to be no groups who were losers from ANTS".That is the evidence that, as I understand it, was given to the Senate committee. The CPI, Senator, is an average measure. It is the best available measure of changes in the cost of living. Governments of both persuasions have accepted this for a whole range of government benefits. The former government accepted the use of the CPI for a range of government benefits and this government does. Unless Senator Conroy is arguing we should change our whole position in relation to the indexation of benefits—that the CPI is not an appropriate measure—I wonder whether, when put to the test, he would be prepared to sustain that position.10:09:004408Conroy, Sen StephenSenator CONROY3L6VICALP00—Minister, you have agreed that no first year HES calculations have been done. The Treasury chose not to produce them. That is the HES data in the first year. Okay? What the Treasury officials were forced to admit, after some dragging kicking and screaming, is that the actual real world first year effect is 3.1 per cent. That is when you put back in the housing question and the tobacco question. Let us make the brave assumption that the disbursion, as you called it, in the first year is roughly the same as the second year so there is an extra half a per cent to be added on when you use the HES data, so what you are really looking at is a real world first year effect of close to four per cent. Then you say, `Oh well, it is okay because the four per cent will cover that.' But that is only based on the same assumptions that the government has made.Surprise, surprise: Professors Warren and Harding did their study and their option which you and the Treasurer have continued to refer to. What you have said is that if you model the government's package using the same assumptions—guess what?—you get the same statistical results as the government. That is not a great shock because the models are very similar. But for the Treasurer to continue to try and run the line that Professors Warren and Harding did not find losers is doing the parliament a disservice. It is doing the Senate committee a disservice. Senator Harradine and Senator Murray were there with me and I think possibly Senator Campbell.What their studies showed was that, depending on the assumptions and options that you chose, it was possible to find losers. But even for what the government is touting as the `no losers' option, Professor Harding was quite explicit in rebutting the Treasurer's claim of no losers. She made quite clear the consequences of averaging—that it was an average pensioner who was going to be 37c better off, and that that 37c average figure would be surrounded by some people who benefited from this whole package by more than 37c but that there would be some pensioners who were below the 37c figure. In other words, under all of the government's favourable assumptions under the modelling that they were using, real people, not an average, would be worse off. She even coined a phrase for it, Minister. She coined the phrase `disguised losers' because an average disguises those below the average.When, on all the government's most favourable assumptions, the best off you are going to be is 37c, then it is perfectly obvious to Warren and Harding—and they said this in the committee and they have said it afterwards—that 37c is an average figure and it is possible that in that particular grouping more than half of the pensioners could be worse off than the 37c. That is the way an average works. It is spread like this. I apologise to Hansard: it is hard to incorporate hand gestures.That is the key. Minister, you are playing with figures if you are trying to say, `We did not really just make the assumption about expenditure patterns.' It is true that you did produce some HES data that showed people do have different expenditure patterns, but you then said, `We are going to compensate them on an average.' So you are just playing with words when you try and pretend you have not just assumed that assumption away. It is embarrassing for you to have to stand there, on a parliamentary broadcast day, and say that when you compensated people you treated Jamie Packer the same as a pensioner.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—Senator Conroy, could I ask you to address your comments through the chair and not across the chamber.3L6Conroy, Sen StephenSenator CONROY—Thank you for drawing that to my attention, Madam Temporary Chairman. That is what the minister has to do today. He has to stand up here and say that Jamie Packer gets the same compensation as the average pensioner.ZF4CROWLEYSenator Crowley—He gets more.3L6Conroy, Sen StephenSenator CONROY—He gets more, because he gets all the tax cuts as well. But if Jamie Packer were in that situation, with all his assets, he would be lumped into this pensioner category, and that is why the government don't want to admit that the whole nub of their argument is flawed from the beginning. There is no clause that can be debated through the Senate. This has to be debated now.I would like to move on to the Fightback package, which the minister—and probably even you, Madam Temporary Chairman— voted for. Even John Hewson has gone public and said, `Stop with the Goebbels chant about there being no losers.' Nobody believes that there will be no losers. Senator Harradine does not believe it, Senator Murray does not believe it, the Greens do not believe it, and we certainly don't believe it. Stop with the Goebbels chant; John Hewson has blown the whistle.ZF4CROWLEYSenator Crowley—Neither does Senator Tierney.3L6Conroy, Sen StephenSenator CONROY—Even Senator Tierney.H15CAMPBELLSenator Ian Campbell—Even the pixies don't believe it.3L6Conroy, Sen StephenSenator CONROY—No, I won't go that far. But John Hewson said that one of the things he was proud of in the Fightback package was on this question of compensation: `We did not pick an average. We calculated what the bands were, where the average was in the middle of, but what we actually did was compensate for the worst of the potential outcomes, not for the average.' So if the government wants to come in here today and be hairy chested and talk about John Dawkins, I say to you that the tax package of your former leader, which you supported, was very different in structure from that which you are putting to this parliament and the Australian people today. He compensated for the worst of the potential impacts. That is what you voted for last time in 1993. Madam Temporary Chairman, you voted for that strategy last time. You thought that that was the way to go. You don't calculate for an average and compensate for an average; you compensate for the worst of the outcomes. This approach is using all the government's favourable assumptions.When you start looking at some of the other assumptions that are possible, you see that Warren and Harding find millions of potential losers. That is what Senator Murray and his party have looked at. That is possibly what Senator Harradine is referring to when he talks about the compensation not being enough. So, Minister, you have to justify—through you, Madam Temporary Chairman—10000Conroy, Sen StephenThe TEMPORARY CHAIRMAN—Senator Conroy, could you please address your comments through the chair and not across the chamber.3L6Conroy, Sen StephenSenator CONROY—Thank you for drawing that to my attention. I will endeavour to comply as best I can. But I am sure you will draw it to my attention again if I stray. So it is the expenditure pattern question and the compensation mechanism that the government fought for and supported previously in Fightback that is where you are falling down. That is why you don't want to talk about it today. That is why you want to complain that the debate is blowing out. Why don't you quote the Fightback package when you stand up, Minister?10:18:004410Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—The Fightback package was an entirely different package. For a start, it had a 15 per cent GST. It was a different package and there were different issues. I understand that in 1992 the then Treasurer asked Treasury to cost Fightback on the same assumptions used by the then Liberal opposition so that no questions could be raised about the different methodologies. Treasury advised at that time that the HES based distribution was not valid in 1992, and it has that view today. Senator, I think you are missing the point of the debate.10000Kemp, Sen RodThe TEMPORARY CHAIRMAN (Senator Knowles)—Minister, I ask you to address your comments through the chair.WW4Kemp, Sen RodSenator KEMP—Thank you, Madam Temporary Chairman, for drawing my attention to that. To constantly asserting something does not prove it. The honourable senator constantly asserts that the Jamie Packer issue somehow has not been responded to. The Treasury does not assume—I have answered this question—that everyone has the same expenditure pattern. That is the point you were making as your big point.The Treasury believes that the CPI is the best measure of the changes in the cost of living. That is the issue that we are looking at. The former Labor government also believed that the CPI is the best measure of changes in the cost of living. The CPI estimate will be a reasonable measure unless, as I said, there is a statistical bias in the distribution of the goods and services in the CPI. The issue that has been raised by Senator Conroy is an attempt to bring in a total furphy. I do not know what Jamie Packer would think of that or of Senator Conroy's contribution, but it is a furphy.The next point I want to come to is the use of the HES data. Senator Conroy seems to have come to the conclusion that the government position is essentially a new position that this government has developed. As I understand it, certainly as this quotation in the Hansard of 11 November 1998 shows, it was also the position of the former Labor government. Mr Costello said:As I said, Mr Speaker, what I propose to release is the Treasury advice to the government and the modelling in relation to the effect of the government's tax package done under costing of the household expenditure survey.Then there was the quotation which I read out earlier. My understanding is that the former government, in response to a question from the member for Flinders, pointed out all the problems in the HES data which this government has pointed out. So any idea that somehow this government has developed a new position does not appear to be correct, as it was a position which, I understand, the former government was happy to table in the parliament.Senator Conroy went on to talk about what the HES data showed. As I quoted to him, Treasury was in fact directed to provide HES based estimates. What did the HES based estimates show? The results were released—nothing was hidden—and the analysis indicated that the range of price effects were very small. Senator Conroy has attempted to construct this argument which I do not believe is sustainable. Senator Conroy fails to acknowledge—and I quoted the Treasurer—that in the modelling that was done for the Senate select committee, under any reasonable assumptions, Professor Warren found that on average there appeared to be no groups who were losers from the ANTS package. You might feel upset about that result because it does not fit the preconceptions that you have.3L6CONROYSenator Conroy—John Hewson does not believe you.WW4Kemp, Sen RodSenator KEMP—Senator, we can quote a whole range of people. Let me quote the modelling that the Senate select committee established. They modelled over 500 households. I can provide that data to you. That was the evidence that was given to the Senate select committee. So your construct on the use of the HES data—3L6CONROYSenator Conroy—It is not mine; it is Dr Johnson, Warren and Harding—everyone but you.WW4Kemp, Sen RodSenator KEMP—Senator, we have quoted Dr Warren on the HES data. We have quoted Treasury on the HES data. I have quoted a statement that apparently was tabled by Mr John Dawkins on the use of the HES data. I have quoted what the HES data showed when it was used. Senator, it does not sustain the case that you have put.10:24:004411Murray, Sen AndrewSenator MURRAY3M6WAAD00—I want to take issue with a number of remarks that the minister has made. Minister, I think your advisers need to be a little judicious in the language they put on the notes to you to read from because earlier you said that the Australian Bureau of Statistics does not trust the HES data. I listened very carefully throughout that hearing, and there is the Hansard record of that hearing, and in no sense ever did they say that they did not `trust' the HES data. I quoted to you from the ABS submission No. 731, page 1, what Mr W. McLellan, the Government Statistician, said. I will quote him again. He said:The ABS consider statistical data from the households expenditure survey can be used at a suitably disaggregated level after appropriate adjustments are made to reported expenditure information to describe the expenditure patterns of population subgroups.That means that they use the information carefully and adjust it appropriately on good statistical and professional grounds. That does not mean they do not trust it. If they did not trust it, they would not use it. We then move on to a number of things you have been saying about what the views of Professors Harding and Warren were. I will quote Professor Warren's words to the committee in the evidence on 8 April at page 2405. He said:. . . an average goes both ways. There are people above it and people below it. In a sense, what you are looking for is how important is that variation within those groups for those people, where that group on average is sailing close to the wind, and that type of issue. If they are quite close to the 3.4, even though we indicate on an average basis that they are still the beneficiary, on average there could be some groups within that who are the losers.That is a very clear statement about losers. You must then go on to the nub of the Warren and Harding argument—that is, that the compensation is not adequate. That is the point that Dr Hewson is making. He is not quarrelling with you that you should not give compensation; he is quarrelling with you that it is not adequate. Senator Conroy has been quoting the figure of 37c as some of the compensation available to a particular population subgroup. I remind the Senate that 37c works out to about $20 a year as compensation for the imposition of a GST. By any measure, $20 a year is miserable and mean. If that is the best you can do for the average, imagine what it is like for people below the average who Professor Warren says will be losers.The firm consensus of Warren and Harding in the NATSEM report and by other commentators who addressed the committee, including Geoff Carmody from Access Economics, is that the compensation clearly is not adequate. If it were adequate, why would Warren and Harding have put up option 7, as they did, where they argued for an increase in pensions from 3.4 per cent to six per cent in 2001-02? Why have they argued, and other people consistently argue, that the male ordinary time earnings benchmark—an area first highlighted by Geoff Carmody of Access Economics—required there to be a different form of compensation certainty introduced? Why have Warren and Harding also proposed that the age pension savings rebate needs to be doubled?Minister, you are going to be put in a position of trying to defend the indefensible. Throughout the Senate select committee process what has been established is that the ANTS package of compensation is irredeemably flawed and requires it to be significantly boosted if the government is to meet its claim that it will make individuals and groups properly compensated in this matter.You can argue endlessly about who said what as we went through the process. The conclusion that all the professionals, all the academics and leading supporters of the Liberal Party of Australia have come to is that the compensation is inadequate. So all that your government has to come to terms with is how much you are going to up the ante by. That is your problem. We are told you have $2 billion to $3 billion that you are looking at, but the first step is for you to admit that it needs to be increased.10:30:004412Crowley, Sen RosemarySenator CROWLEYZF4SAALP00—Minister, are you saying that there will be no change in compensation?10:30:004412Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator, we have stated our position very clearly in relation to compensation. We think it is a fair package. We have stated that position. The Prime Minister has stated that position. I have stated that position. It is the government's position that the compensation package is a fair package. We draw contrast to the changes that we have made in providing compensation to the changes you made as part of your government in 1993 when no compensation was offered.10:31:004412Crowley, Sen RosemarySenator CROWLEYZF4SAALP00—Again, I ask the minister, and would he try to address the question: are you saying, Minister, there will be no change in the compensation?10:31:004412Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator, I am stating that it is the government's position—let me make this very clear—that the compensation which is offered in the package is a fair package. It is fair compensation.10:32:004412Campbell, Sen GeorgeSenator GEORGE CAMPBELLNB5NSWALP00—I want to come back to the question of compensation, but I want to make a few comments leading into it. I want to start by making the point that this government has consistently said that this package will be good for the economy. Yet you have to ask against what objective criteria it makes that statement. The modelling done by the government's preferred modeller, Chris Murphy, found that the economic benefit or economic welfare to the community of this package was 0.2 per cent or $607 million, which is relatively negligible. In terms of the indirect tax base, Professor Dixon in his modelling found that the wholesale sales tax was growing at the same rate of GDP, if not slightly better. So the argument about the current tax system being broken is a nonsense. It is true that there has been a decline in the indirect tax base, but that has been because of specific decisions of governments, particularly in reference to tariffs, which could have been, I believe, reasonably easily fixed in terms of our current tax system.Perhaps the most critical measurement that could have been used to determine whether or not this tax package would have been good for the economy would have been the impact upon employment. If this government had been able to demonstrate that there would be significant employment growth as a result of the introduction of this package, then it certainly would have merited considerable attention. But it has not been able to do that. In fact, it was only through the process of the Senate inquiry that we were finally able to extract the fact that Treasury had not even done any substantial modelling on the jobs impact of the package. They had not even attempted to assess in real terms whether there would be a significant benefit to employment in this economy as a result of the introduction of this tax package—nothing at all.What came out of the modelling done by the government's preferred modeller, Mr Murphy, was that, if anything, the impact on jobs would be neutral. There would be no net benefit or no net loss. He did demonstrate however that there would be a significant loss to some sections of the community such as Queensland and Tasmania, particularly Tasmania where the effects will probably hit home the hardest in terms of employment in that state. What was also demonstrated by the Murphy modelling, looking at the breakdown across industries, was that the negative impact on jobs was going to be greatest felt in regional and rural Australia. If you look at the industries in which the job losses will be, you will see that they are in those industries that tend to employ in the regional and rural parts of the country. That is borne out if you look at the survey of where jobs growth is taking place which appears in the Financial Review this morning. There has been 25 per cent growth in the CBD or inner area of Sydney over recent years with a loss of population in regional and rural Australia. This package will do nothing to redress that issue.I want to deal with the analysis done by Professor Dixon in relation to the impact on jobs and to bring that back to the issue of compensation. Professor Dixon in his analysis did a number of sensitivity analyses. He said in part in evidence given in Melbourne at the beginning of February:Remembering that in the central simulation there is an increase in employment in the short run . . .That increase in employment is 30,000 jobs—not related to the introduction of the GST but specifically generated out of the tax cuts. His analysis was that the tax cuts would generate some 30,000 jobs. He goes on:. . . the key assumption is that wages are bargained in after-tax terms. That means that workers are very concerned with how much their wages will buy after they have paid their income tax. In the package, wages—wage demands—are dampened by the cuts in income tax being offered by the government. On the other hand, they are stimulated by the increases in indirect taxes.He goes on to say:For the contract that we did at the Centre of Policy Studies, we were asked to look at six types of sensitivity to our central simulation. In sensitivity 1, something goes wrong with the wage process. What goes wrong is that people do not recognise the role of income taxes—the cut in income taxes—so they continue to look at wages as being geared to the CPI, so the cuts in income taxes no longer have a dampening effect on wage demands. Wage earners are not prepared to allow wages to fall relative to the CPI.Under that analysis, his assessment is that there will be 100,000 jobs lost in the short term, in the short run. He did a number of other sensitivity analyses relating to tourism, education and so forth, but this was a specific analysis on jobs. You have to take that in the context of the submission made by the ACTU to the com mittee hearing in Sydney which raised the issue of bracket creep—I think the first and only time it has been raised—and the impact that bracket creep has had on wages and the purchasing power of their members. I will mention a number of the main points that were made in the ACTU's submission. First, workers on $30,000 per annum will be worse off even if you take an inflation impact of three per cent. However, they believe that the inflationary impact of the package has been understated and that it is more likely to be about five per cent. But certainly an increase in inflation greater than three per cent is almost certain.They also said that no allowance has been made for the disparity in spending patterns between low and high income earning households and that, in that context, the compensation is inadequate. I do not want to go over the detail of that, because it has been raised by both Senator Conroy and Senator Murray this morning in terms of the HES data and so forth.The ACTU also said that, in their view, the compensation package must be assessed after allowing for bracket creep and taking into consideration what had happened when the last tax schedules were adjusted back in 1993. In that context, they said that full-time workers earning more than $55,000 per annum are more than compensated for protection against bracket creep and GST price effects. Under their assessment, the biggest winners are families with single incomes of $75,000 plus, while full-time workers earning less than $28,000 per annum are insufficiently compensated for GST price increases and those earning between $30,000 and $50,000 fall into a grey zone. The submission went on to state:. . . real tax on workers earning less than $45,000 rises under the package, but falls for workers earning more than this.. . . . . . . . .Full-time workers earning between $20,000 and $30,000 per year receive the smallest tax cuts.. . . . . . . . .The methodology used to calculate changes in the cost of living from the GST package, understates the price increase for low income families and exaggerates it for high income families. This is because it ignores:. savings behaviour differences, and. consumption pattern differencesacross family income levels.They then went on to say, and I think this was probably the most telling point in their submission:Once adjustment is made for bracket creep, single income earners without dependants and earning less than $40,000 per year are worse off under the GST package . . . The greatest losses occur in the $20,000-$30,000 income bracket.Given that that is the assessment of the ACTU on how this package will impact on workers, particularly low income workers, given the sensitivity analysis that has been done by Professor Dixon in particular on what the likely outcome on jobs would be if workers seek to maintain their wage levels relative to movements in the CPI and they do not take into account any compensation that might be provided through the tax cuts, and, more importantly, given that under the ACTU's analysis the workers most affected will be those in the $40,000 a year and under bracket creep—and that range of workers covers metal workers, transport workers, storemen and packers, and building and construction workers who are amongst the most militant groups of workers in the economy—one would have to draw—EU4O'CHEESenator O'Chee—But you have left them; you are here. They are no longer as militant.NB5Campbell, Sen GeorgeSenator GEORGE CAMPBELL—I said `metal workers'. I do not put myself down as one these days.ZS6QUIRKESenator Quirke—Could you get a job for Senator O'Chee?NB5Campbell, Sen GeorgeSenator GEORGE CAMPBELL—It is also true that you will not be a senator come 1 July. You will be unemployed and you will have to work for the dole the same as everyone else, I hope.EU4O'CHEESenator O'Chee—I doubt it.NB5Campbell, Sen GeorgeSenator GEORGE CAMPBELL—I look forward to seeing whether the social security minister, Senator Newman, actually insists on you working for the dole on 1 July in the same way the government have insisted on some other workers in this country having to work for the dole.ZS6QUIRKESenator Quirke—There must be some shop you can put him in.NB5Campbell, Sen GeorgeSenator GEORGE CAMPBELL—I am sure there are a few metal shops that would love to take him. Whether he would last very long is another matter.EU4O'CHEESenator O'Chee—You have never worked for a wage.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Sherry)—Order! Senator Campbell, will you address your remarks to the chair, please.10000Campbell, Sen GeorgeSenator GEORGE CAMPBELL—Thank you, Mr Temporary Chairman, for drawing my attention to that. I come back to the point I was making. Given that that range of income covers the most militant groups of workers in our community, one would have to assume that at least a percentage of those workers will seek compensation directly from their employers for the impact of this package. Given that that is the case, one would also have to assume that the impact on jobs in the short term is going to be a negative one. I think it would be unrealistic to assess it as having a total across-the-board impact, but it certainly will be substantially greater than this government has taken into account.There are some questions that arise in relation to that issue that I would like to put to the Assistant Treasurer. The first question is: why did the government not insist, with Treasury, when the ANTS package was being put together that extensive modelling be done in relation to the impact it would have on employment in our economy? The second question I would like to put to the Assistant Treasurer is: did the tax committee or did the government at any time ask Treasury to look at the issue of bracket creep, either (a) in respect of the initial putting together of the ANTS package or (b) in response to the detailed submissions that were made by the ACTU? Has the government had the Treasury examine the ACTU submission in terms of their claims as to what the impact will be on low income earners? And surely the question that is posed by the ACTU submission is not who is not worse off under this package, but who is substantially better off?10:47:004415Gibbs, Sen BrendaSenator GIBBS6L6QLDALP00—I would like to ask the minister: why didn't Treasury use a wider modelling base to arrive at the compensation level of four per cent; and how and why did they actually arrive at four per cent, bearing in mind that a range of academics and a range of social security and church groups have all said that the use of the CPI is not a good modelling system and totally inadequate? Surely Treasury could have used not only the CPI but also the household expenditure survey. Maybe Treasury could have spoken to people, because so many people have said that this compensation is not adequate.I want to point out the burden this will place on country people who are, on average, less well off than their metropolitan counterparts. Australians in regional and remote areas are already using a larger proportion of their incomes to buy food than people in the city. In North Queensland, a basket of healthy foods has been found to cost 175 per cent more than Brisbane prices. So why, in your view, is the four per cent adequate for people in these areas, as opposed to the four per cent being adequate in metropolitan areas, when these people are already paying more for their food and everything else? With the impact of the GST, they are going to be paying even more—so how can you say that this is adequate?In remote Aboriginal communities, families spend an even larger proportion of their income purchasing essentials. An ATSIC survey of expenditure patterns for indigenous households in rural and remote communities in Queensland, Western Australia and the Northern Territory was considered by the Senate community affairs committee. The survey revealed that these households spend on average 39.3 per cent of their income on food. That is an extraordinarily large percentage of your total income to spend on food. Larger sized households were spending up to 54 per cent of their income on food.I know that the minister will say, `In Aboriginal communities and remote areas the diesel fuel rebate is going to compensate for this.' I would like to know exactly how much lower the cost of items will be because of this diesel fuel rebate. Can you actually give me a percentage or a figure of how much less people in these areas are going to pay for this? You need to bear in mind that aircraft are the only means by which food can be transported to a lot of these remote Aboriginal communities, so the diesel fuel rebate is really not going to make any difference to them. In many parts of Western Australia, the Northern Territory and Queensland the only reasonable way of transporting food is to fly it in—unless you want to take a picnic basket and a three-day car trek. So I would really like to know how this is going to affect these people.A number of church and social security groups have pointed out to us time and again that the four per cent is not enough compensation. This is because Treasury has lumped everybody into one mass of an average. People are not average. Nobody is average. You, Minister, might spend more on food than I do, or maybe vice versa—I might like my food more than you do. We are of opposite gender, and I would imagine that I would have a lot more expenditure than you do. After all, you do not have to buy make-up, you do not have to buy stockings—ZS6QUIRKESenator Quirke—I don't know about that.GB6COLLINSSenator Jacinta Collins—Alexander does.6L6Gibbs, Sen BrendaSenator GIBBS—Exactly, the fish-nets. I am trying to say, Minister, that people are not average, and people—Opposition senators interjecting—6L6Gibbs, Sen BrendaSenator GIBBS—Did I miss something here?7L6HOGGSenator Hogg—It is all right, Brian. It is not that other committee.6L6Gibbs, Sen BrendaSenator GIBBS—It is all right, Senator Harradine, I will be very well behaved. People are not average, Minister, and people on lower incomes are not average. They have certain expenditures. Most of these people barely have enough to live on now. I would really like people in the Treasury to actually try to live on an old age pension and to see how far they get. Living on an old age pension is very hard. People barely have enough to live on.My parents are pensioners and they say, `We can live, and we can live adequately, but we cannot buy the big things in life.' If the television breaks down, if they need a new refrigerator or if they need a new washing machine, it is a struggle because the pension simply covers the other things that they need in life. A four per cent increase for them is not going to be much at all. I know the government will say that we are getting the tax rebates, but people like my parents do not pay tax. They do not pay tax at all. They are simply going to have to pay more and more for what they are getting.I would like to know, also, whether the government realises that down the track the four per cent compensation is not going to be adequate for people on lower incomes—people on pensions, people living in Aboriginal communities, people living in rural and remote areas where products and goods cost a lot more than they do in the metropolitan areas. Is there going to be a mechanism here for this compensation to be increased? Has the government thought that out, or is the compensation simply going to stay and people will struggle? We have also heard from other countries where the compensation fizzled out because the GST went higher and that compensation was never advanced at all in any way.GB6COLLINSSenator Jacinta Collins—Or removed.6L6Gibbs, Sen BrendaSenator GIBBS—Exactly. So is there going to be a mechanism for these people? Is there going to be a mechanism for people living in the remoter areas where their expenses are far higher? Are they going to be compensated in any other way?10:55:004416Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—A number of questions have been put. Perhaps I can deal with a few of those quickly now before the debate moves on. I think Senator Murray raised in his comments the issue of trust and disputed my use of the word `trust' in relation to some comments I made on the ABS. I think that the ABS feels that the use of the HES data does have limitations and that it cannot be used without adjustment. We can argue what it all means. My understanding is and my advice is that they never use the raw data.3M6MURRAYSenator Murray—Never say never. You know that.WW4Kemp, Sen RodSenator KEMP—You will notice that I said `my advice is'. My advice is that they never use the raw data. I think that puts that comment into perspective. I do not think there is much difference between what we are really arguing there. Of course, they use their professional judgment as to just how much adjustment has to be made and how much is reasonable.Senator George Campbell made a contribution, and I think he, in fact, made some remarks in his comments that were very similar to a question, if I remember rightly, he asked me in the Senate some time ago about the use of modelling and what modelling showed in relation to the growth in employment. I thought I gave a pretty good answer at that time. I think it was to you, Senator George Campbell. I know I received widespread praise from people who were listening to the Senate at that time.But, Senator, there is a range of models that have been prepared, which show, in fact, that tax reform of the type that we are bringing in is good for the economy. Salomon Smith Barne predicted that tax reform would lift GDP by 2.3 per cent, which I thought was not too bad. Econtech, using the MM330, indicated a long run GDP gain, with the replacement of the WST with a VAT, of around two per cent. The Melbourne Institute, using the ORANI model, indicated that indirect tax reform could lift GDP by 3.8 per cent.3L6CONROYSenator Conroy—Two per cent over 10 years.WW4Kemp, Sen RodSenator KEMP—Access said that the tax package would lift—3L6CONROYSenator Conroy—You are quoting 10-year figures.WW4Kemp, Sen RodSenator KEMP—Senator, you have been out for a long time, and the debate was actually proceeding quite nicely without you in here, so could you keep quiet while I try to respond to Senator Campbell's question? Mr Temporary Chairman, you might like to take some strong action on this front, particularly in the light of the comment that Senator Conroy made about you and the superannuation surcharge.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Sherry)—I request that you address the chair and the issues, Senator Kemp.WW4Kemp, Sen RodSenator KEMP—An exceedingly impartial ruling, I might say. The Melbourne Institute, using the ORANI model, indicated that indirect tax reform could lift GDP by 3.8 per cent. Access said that the tax package would lift GDP by 2.5 per cent and create some 190,000 jobs. So there is quite a range of models that have been produced which show GDP growth which either imply or indicate growth in employment. So I think that should deal with the matter you raised.I was intrigued, given your former occupation, that you felt that wage rises would cost jobs. I took that to be one of the comments that you made. Senator, you said that in relation to the Dixon model. Wage earners are more than fully compensated, and I think actually a reading of your remarks would show that you believe that wage earners are compensated. You wish to increase compensation, I understand, but wage earners are more than fully compensated for consumption price increases by the income tax cuts and by increases in government benefits. So the real take-home pay will actually rise.Your argument was that there would be unintended wage rises because some people would not accept that their take-home pay had increased as a result of the package. I think you were very careful to say that it was unreasonable to assume that across the whole range people would seek wage rises to compensate, but you felt there may be particular groups in more militant sections of industry who would ignore the compensation package and seek wage rises. I think the implication was that you felt this may cost jobs. In the compensation package we more than fully compensate people for the taxation changes. We think it is unreasonable to argue that there will be wage rises.I was interested in your comments on the ACTU. Although the ACTU have made some threatening noises about a wages blow-out under the tax reform, I think Jennie George was quoted in the Age of 5 February as saying that they would not make claims that economists say would cost jobs. Jennie George said: `We will keep in mind the employment effect.' That puts a slightly different perspective on the comments you made about the attitude of the ACTU. I hope that the ACTU will act in a responsible fashion. There is no reason for wages to blow out. Even your remarks indicated that a wages blow-out would cost jobs. Coming from Senator George Campbell, I think that is a big statement and I am happy to have that recorded in the Hansard. It is all very well to hypothesise a whole range of adverse effects but a reasonable person would ask why people would seek wage rises to obtain further gains when the compensation, through the tax cuts and other increases in pensions and benefits, is there and is on the table.Senator Campbell raised the fiscal drag issue. The personal income tax cuts of over $13 billion each year more than offset the fiscal drag that has occurred recently. The government is providing a low inflation environment. I note that the CPI comes out at 11.30 a.m. We will be interested to see what that figure is. But it cannot be argued that the government has not provided a low inflation environment and that the impact of fiscal drag has not been subdued in recent times.Let me put the fiscal drag issue into perspective, because your remarks gave some emphasis to it. The personal income tax cuts in 2001 are almost five times as large as the cuts required to compensate taxpayers for the fiscal drag that has occurred since the government came to office. In fact, the personal income tax cuts will compensate taxpayers for more than twice the value of fiscal drag since the last round of personal income tax cuts in 1993.Senator Gibbs raised a number of issues. Senator Gibbs decided that she would also get back into the HES debate. We have had a pretty extensive debate on that issue this morning. I am not sure that I can add anything further to the debate which occurred probably over an hour and a half ago between Senator Conroy and me on that. Senator Gibbs, not unnaturally, was concerned about the impact that tax reform may have on rural areas. Senator Gibbs drew our attention to the fact that some prices are higher in rural areas. One of the reasons they are higher is the substantial cost of transport. The compensation is for the change in prices which is likely to occur as a result of the tax reform package. There is no particular reason to believe that the change in prices would be higher in rural areas.I was trying to get a bit of a feeling yesterday as to whether rural senators in the Labor Party supported cuts in diesel fuel prices. I had a debate last evening on that issue. I was unclear from Senator Crossin's response as to whether she supported a cut in diesel fuel prices. I assume I am correct in assuming that you support a cut in diesel fuel prices, Senator Conroy.3L6CONROYSenator Conroy—Stop verballing my questions.WW4Kemp, Sen RodSenator KEMP—He always says that. When an interesting topic comes up, you can always tell when Senator Conroy has made a useful point—Senator Conroy has to butt in. It is a useful point. I think your constituents would be interested to know whether you support a cut in diesel fuel prices. A measure in this package which will have very significant and important effects in rural and regional Australia is the cut in diesel fuel prices. Senator, knowing your interest in looking after rural Australia, we will look forward to your support for that measure. There were a number of issues in relation to Aboriginal communities. There is a useful brief that I am getting on that, and I may respond after some other comments.11:06:004418Campbell, Sen GeorgeSenator GEORGE CAMPBELLNB5NSWALP00—It is always dangerous posing any questions to Senator Kemp because the answers never have any relationship to the questions asked. I did not ask him about the issue of whether I supported the view that one man's wage increase was another man's job, but I will come back to that in a minute.I asked Senator Kemp what objective criteria were used to measure whether or not this package was good for the economy. He trotted out some growth rates by various groups in terms of what they say GDP growth will be under this tax package. I ask the minister: are those annual growth rates or are they projected rates of growth over a period of time? I also asked Senator Kemp a question in relation to why the government had not insisted on Treasury doing more extensive modelling on the impact of this package on jobs, given that unemployment is one of the critical issues we are facing every day in this community and which has so many spin-offs in terms of our economy, most of which are negative when we have substantial rates of unemployment. He totally ignored the question; he did not even attempt to answer it.The third question I raised was in respect of the submission made by the ACTU. I related that to the modelling carried out by Professor Dixon, who said that if compensation were sought for the impacts of the package outside the tax cuts, that would have a jobs impact. I am not debating whether that is right or wrong; that was his assumption from the modelling. The ACTU made a submission which stated that the compensation for ordinary wage and salary earners would be totally inadequate. In that context, I said that if that were the case, you had to draw the conclusion that those groups would seek compensation outside of just the tax cuts, and that could have an impact on jobs. I asked whether Treasury had been asked to look at the submission made by the ACTU in terms of that argument about bracket creep.I agree that in certain circumstances one man's wage increase is another man's job. You have only to look at what has happened to major corporations in this country and in the United States when they have put in top executives and given them a big salary increase and a huge swag of shares in the company. What have they done? They have wielded the axe and ordinary workers have hit the deck all over the place. Look at job shedding across all the major companies in this country, the United States and elsewhere—all built upon huge salary packages for executives. That is certainly a clear example of one man's wage increase being another person's job. We do not deny that that happens, and that it has happened consistently. I ask the minister to try to answer the specific questions that I have asked him and not ramble on with some waffle about a topic that he might be interested in but which the rest of us regard as an irrelevancy.11:11:004419Gibbs, Sen BrendaSenator GIBBS6L6QLDALP00—Minister, thank you for your answers, but you did not answer my question. Does the government have mechanisms in place to redress the hardship which people will suffer if the four per cent compensation is not enough? I am talking about people on pensions, people on very low incomes, and particularly people in remote and regional Australia. If the compensation is not enough, and the government realises it is not enough, are there mechanisms in place which will address the situation?11:11:004419Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—We have the 1.5 per cent guaranteed real rise in pensions. So whatever the price rise is, there will be a guaranteed 1.5 per cent real increase.6L6GIBBSSenator Gibbs—What if it isn't enough?WW4Kemp, Sen RodSenator KEMP—The 1.5 per cent is above the price rise, so if you tell me that the price rise is not 1.9 per cent, that you think it is 4.5 per cent—even though we would not accept that—the 1.5 per cent guarantee represents a real rise above the prices. That is the mechanism; that is the guarantee.6L6GIBBSSenator Gibbs—Can you guarantee that in rural and remote areas of Australia?WW4Kemp, Sen RodSenator KEMP—This applies to all Australians. This is the guarantee. I am surprised, because of your interest in this package, that you do not seem to be aware of that guarantee. I say to Senator Campbell that I regret that my remarks must have stung. He went off on his usual frolic. The growth rates in GDP which I quoted are over time.NB5CAMPBELLSenator George Campbell—Over what time?WW4Kemp, Sen RodSenator KEMP—I can give you a breakdown of each model over the period of time, if that is required. My advisers will take that on notice and it will be provided to you. Senator, you and I will have to differ. Essentially, I have indicated—NB5CAMPBELLSenator George Campbell—That is not unusual.WW4Kemp, Sen RodSenator KEMP—No, it is not unusual and it is probably a healthy thing that we differ. It is a good thing that there is a vigorous debate. Senator, you and I will just have to differ. I noted your efforts to get out of the comments about one man's wage rise being another man's job. I noted that you attempted to correct the record there. I am pleased to record that.NB5CAMPBELLSenator George Campbell—Why didn't you push Treasury to do modelling on the jobs impact?WW4Kemp, Sen RodSenator KEMP—The government is entirely comfortable with the fact that a range of models show that tax reform is very good for the economy. I promised Senator Gibbs that I would return to another matter that she raised with me. Senator, one of your issues concerned—and I think I answered it—claims that consumer prices would rise by more in rural and remote communities than in the cities. As I pointed out, that failed to take into account the benefit which remote areas will receive from the new fuel excise arrangements to be introduced in conjunction with a GST. As a rural senator, we hope that because of your concern for rural issues you will be supporting that move.Together with other measures in the package, they will reduce road transport industry costs by an estimated 6.7 per cent and rail transport costs by nearly four per cent. Clearly, these cost reductions translate into lower costs of providing goods and services. Commonwealth income support payments such as the newstart allowance, remote area allowance, assistance for isolated children and the Community Development Employment Program—all programs in which you have taken a particular interest—will receive an up-front four per cent increase, and you noted that, and will remain 1.5 per cent above the increase in the cost of living as measured by the CPI.11:15:004419Hogg, Sen JohnSenator HOGG7L6QLDALP00—On the issue of compensation, I want to take the minister to something I said in my second reading debate speech about the accommodation provided by supported ac commodation providers and also people in the boarding house industry. I am aware that there is an amendment, but I do not think that the amendment the government is proposing fully addresses the issue.There are a couple of questions which the minister may well need to take on notice, and I am quite prepared to get the answers later on. We are looking at a very special sector of accommodation in our community, because invariably that sector—whilst they are for-profit providers—deals with a significant number of people who are disadvantaged and on low incomes, many of whom were residents in previously state run institutions.As I said in my second reading debate speech, most of the people in these facilities are on government benefits or pensions of some sort, and there are some who do have access to low paid casual and part-time positions. But invariably these are people who are at the lower end of the socioeconomic scale. These are people who are severely disadvantaged; people with psychiatric and intellectual disabilities or alcohol and drug dependencies, the long-term unemployed and so on. We are not dealing with the people at the top end of town who can comfortably deal with the effects and impacts that the GST may have. In my second reading debate speech I referred to a 1990 survey in Queensland which showed that 1,000 facilities catered for 23,000 clients. That is not a small market at all; that is reasonably substantial. I am told that there are no reliable statistics for the rest of Australia, and one of the reasons for this is that this part of the market is very much unregulated. If the GST has the impacts that we say it will have, then these are the people who will be the most disadvantaged as a result.I have received a submission from a group looking into the impact of the GST on this sector. They say that the supported accommodation industry has estimated that, for a resident in supported accommodation, the GST could be as much as $10 per week higher than the four per cent compensation proposed in the GST. That is the impact. There have been models which have looked at the averages, but has any modelling been done in this particular area, the area of most disadvantage? In other words, whilst I understand where your compensation package is aimed, have you looked specifically at the needs of these people who are in supported accommodation premises and boarding houses throughout Australia?I am led to believe by the people who have approached me that this is a growth area because of the economic and social problems faced by people in our society today. We are dealing with the people who are almost the most severely disadvantaged in our community. I have a grave concern that these people, who have no discretionary spending at all, will suffer the most from the impact of the GST. It seems to me that, whilst the models looked at the average, we need to compensate for the worst of the outcomes.The question Senator Gibbs asked was very relevant indeed: what happens if compensation is not enough? In an area such as this which is unregulated, how does the government intend to address that in particular? If there are 23,000 people in this situation in the state of Queensland, based on a 1990 survey, can you give me the Australia-wide statistics? Was any modelling done based on the impact on these people, and what happens to these people if the compensation offered in the government package is insufficient?As has also been pointed out to me, whilst the government is seeking to make some changes in division 87, those changes will not eliminate the cost impact of at least a minimum of three per cent on the supported accommodation providers and the boarding houses. There will be an impact from the GST, and every indication I have is that the other things that are currently GST free in these establishments—because there is no GST and they have no wholesale sales tax applied to them—will now attract a GST. If this is the case, we will have a substantial pool of people in the Australian community who will be very much worse off as a result of the GST.It also happens to be, I am told, an industry which, whilst unregulated, is very price sensitive, so I am looking for some clear answers. I can only refer back to my very first speech in this place, in which I said we should look after the dignity of those people who are least able to defend themselves and that we should have a preferential option for the poor rather than just treating them in an offhand manner, as this compensation package seems to be doing. I look forward to your response.11:22:004421Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Although Senator Hogg has suggested that we are treating this group of people in an offhand fashion, the government is particularly conscious of the needs of disabled people and people with other special needs who need support. There is a vast range of programs which the government supports to assist these people, so let me get the political rhetoric out of the way. Nonetheless, I think Senator Hogg raised some issues, so let me deal with them. Senator Hogg, I think you put some questions on notice, and I will see whether we can provide some of those statistics which you were seeking. I will go through the issues you raised.If the accommodation is provided by the charity and the supply is non-commercial, then it is GST free. But of course people in those cases will benefit from the four per cent up-front rise and the 1.5 per cent real guarantee. As far as long-term accommodation price rises are concerned, the estimates that I have been given by my advisers indicate that they will rise by approximately two per cent. Senator, you also looked at the treatment of people who may well be in boarding house type accommodation. It has never been the government's intention that residents of boarding houses and hostels should suffer any disadvantage. The government is providing concessionary treatment of long-term commercial accommodation—I think you referred to that in your remarks—and some optional ways are provided in relation to the way the GST will be applied. The operators of commercial residential premises will have the option of choosing the tax treatment that serves them and their residents best. To reiterate: by increasing pensions, benefits and allowances by four per cent, the government will be more than compensating low income people for any price increases, including of course movements in rent. Another area is when disabled residents of boarding houses or hotels require nursing or daily living assistance care of the type covered by schedule 1 in relation to the quality of care principles under section 96-1 of the Aged Care Act 1997. The legislation provides for these services, as well as the accommodation, to be GST free. I think you were seeking a response on how they would be treated, and I think the statement I made should provide a high degree of comfort in regard to what you were concerned about. GST-free treatment will apply if the Minister for Aged Care has determined the services are of a type covered by schedule 1 of the quality of care principles and these services include daily living assistance or nursing care. Thus, people with disabilities requiring this level of care can have access to the same services GST free whether they are living in boarding houses or other accommodation. I think that should give a high degree of comfort in these areas about which you have expressed some special concern. I recall some reference to this, now you have reminded me of your remarks, in your first speech in this parliament.11:26:004421Hogg, Sen JohnSenator HOGG7L6QLDALP00—Minister, I do not think you have addressed a couple of issues, and I do not necessarily accept your last remark. Was there any modelling done—I am not asking for the specific detail now—in this particular area to show the impact? We are not dealing with charitable organisations; we are dealing quite specifically with places which provide accommodation on a full profit basis.11:27:004421Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator, my advisers will take that on notice and I will provide you with the information. The general accommodation sector was, I think, modelled. But in terms of the specifics about which you have asked, I will check with my advisers.11:28:004421Hogg, Sen JohnSenator HOGG7L6QLDALP00—Thank you, Minister. These are people with specific needs. As I said, they are people who are invariably in a severely disadvantaged area. They are not in charitable accom modation; they are in for-profit accommodation and, therefore, the impact will be different in that area. Whilst you mentioned the option of the provider to choose how they charge, nonetheless the GST still will have an impact on accommodation in general which will, I am reliably told, be of the order of three per cent. So there will be an impact in this area. Has that been taken into account in looking at the problems that are faced in general by the people in this type of accommodation?11:29:004422Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator, I think you may not have heard the comment I made about the issue of disabled people who live in a boarding house or hostel and who require nursing or daily living assistance. You are speaking of the kind of care that is delivered under schedule 1 of the quality of care principles, I assume. The legislation provides for these services, as well as the accommodation, to be GST free. The GST-free treatment will apply if, as I said, the Minister for Aged Care has determined the services are of a kind covered by schedule 1 of the quality of care principles. Thus, people with disabilities who require a level of care can have access to the same services GST free whether they are living in boarding houses or whether they are living in other accommodation. I think that picks up the point on which you were seeking clarification.11:30:004422Hogg, Sen JohnSenator HOGG7L6QLDALP00—Minister, as I said in my preamble, this is an unregulated area. There are a lot of backyard operators out there. What have you done to make sure that those people who are in this situation are protected under the legislation by the compensation package?11:30:004422Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator, I just quoted the way the legislation deals with people who require assistance of the kind covered by schedule 1 quality of care. That is what we have provided. I understand that this is the group of people you are speaking about, and this is what the legislation provides. I would have thought you would have taken great comfort from that. There are a number of other issues that you have raised, including more detailed questions on some of the modelling and some questions in relation to the numbers. I will seek to provide that information to you.11:31:004422O'Brien, Sen KerrySenator O'BRIEN8O6TASALP00—At this point in the debate, I want to raise some issues which are the subject of questions on notice about the impact of the GST on the racing industry. My office has been in contact with the minister's office today. The questions were lodged 57 days ago and, therefore, they are outside the 30-day response limit. My office faxed the minister's office on 12 April to remind the minister of the questions and seek answers, and it followed up on 20 April seeking further advice. Because apparently that fax was lost, we faxed through another copy of the request on that day. The minister's office called at the end of last week seeking more information, and we provided that information. As I said, my office has contacted the minister's office again this morning, trying to find out what was happening. We were advised that the answers are now in the Treasurer's office.WW4KEMPSenator Kemp—Which minister are you talking about?8O6O'Brien, Sen KerrySenator O'BRIEN—You, Minister.WW4KEMPSenator Kemp—You contacted my office?8O6O'Brien, Sen KerrySenator O'BRIEN—Yes. The information contained in those answers is directly relevant to this debate. I asked the questions when I did to ensure that I had the answers prior to the commencement of the debate. That may have somewhat foreshortened my presence in the chamber in relation to the eliciting of that information. I take it that the minister has been acquainted with those matters. One would have assumed his staff would have acquainted him with those formal requests.I want to go back to the debate of this issue during the election campaign, because it appears not to have received any attention in the committee stage of this bill. I have had a look at the relevant reports of both the select committee and the Environment, Communications, Information Technology and the Arts References Committee, and it is not in there. There was a degree of debate. We had the curious situation during the election campaign where the proponent of the government's view in the community was Mr Wilson Tuckey, the member for O'Connor. He was representing the government's view to the industry participants.I attended a public meeting in Victoria attended by Mr Tuckey where there was a debate about the issue. One of the matters which concerned me during that debate was that there were assurances given to the industry by the then relevant minister, Mr Andrew Thomson, or by his staff. There was a letter circulated to the industry which was not signed by Mr Thomson but by his chief of staff which said that Treasury gave certain assurances in relation to the effect of the GST on the industry, particularly on the owners of animals racing for prize money and the issue of input costs in that industry. I noted that Carruzzo Consulting Certified Practising Accountants circulated a document during the campaign to industry participants talking about the issue of prize money. The publication reads:Unfortunately, there has been little direction from the Tax Office in this area, other than what was quoted in their official publications, where they stated:"Prize money is a payment to an owner for providing a horse to race. Prize money will be subject to GST. However, racing clubs will claim an input tax credit for the GST paid on prize money to a registered owner. This means that prize money is effectively GST-free."At the time of writing, I am aware of various submissions, from breeding and racehorse owners associations, trying to clarify this issue. The initial indication is that hobby owners will receive the same amount of prize money, however registered business owners will have a GST component in their winnings. It follows that any GST component in their prize money will have to be "netted off" against input credits to determine if they remit or claim back GST from the Tax Office.This is undoubtedly a complex area and, if the Coalition retains office, I will update you as to what the final Tax Office treatment is in this area.Given that the statement which Mr Thomson's office was making and which Mr Tuckey was repeating was that any owner of a racing animal, if they had a reasonable expectation of earning prize money, would be able to be registered under the GST to claim back their input costs, and given the way that that information was conveyed—that is, not by the Treasurer or his office but by the chief of staff, and not by the minister or the minister for sport's office but by Mr Wilson Tuckey, the member for O'Connor and a backbencher at the time, who was representing the government—I think it is time that we had absolute clarity on this issue.I say that because, looking at the legislation, it seems to me that these individual operations or what might generally be described as racing partnerships would have to fall within the definition of an enterprise or perhaps even the definition of a business under the legislation. It seems to me that in terms of registering there is a discretion by the Commissioner of Taxation as to whether those individual ownership or collective arrangements—syndicates, for example—are going to be dealt with in some more specific way than is set out in the legislation.The issue—as was the experience in New Zealand—is that, if the cost of participation in this area rises, then the likelihood is that there will be a reduction in the number of participants and that will have an impact on employment. One of the reasons I have a significant interest—and only one of them, I might say—is that in my state the industry is undergoing some significant difficulty at the moment and, were additional costs to be imposed in the way of input costs that could not be recovered, that would in many respects have a disastrous effect on the industry.I suspect I would be talking not just about the state of Tasmania, but also regions of New South Wales, Victoria, Queensland, South Australia and Western Australia where there are significant businesses operating which generate employment in those regions—employment being a scarce commodity in those regions. This is an industry which tends to employ a lot of people who are not academically qualified and who have skills which are applicable possibly to this and a few other rural industries but would have difficulty finding alternative employment were this industry to fall over.It is important that there be clarity on this issue because the legislation does not specifi cally deal with it—and possibly that is as it should be. But given that, the nature of the assurances given are somewhat vague and the official publication of the government which was issued during the election is, at least in the words of the certified practising accountants that I quoted, such that it provides little direction in this area. There are other implications which arise if the status of a business is attributed to these operations or racing partnerships.The other area of concern which intermingles with this issue is the treatment of what Carruzzo Consulting described as hobby owners, saying that they could not register for the GST and that they would wear the full cost of the GST levied on their racing costs—and they have nominated some of those. That is in contradiction in some respects to the statements by Minister Thomson's office and Mr Tuckey's statement during the campaign.I raise this now because I suspect it is not the subject of specific amendments during the debate, so far as I am aware. I have not seen them. Perhaps the government has some amendments that it is entertaining in this regard. It seems to me that if it is not raised here there may be a difficulty later in the debate in dealing with the matter. So, Minister, perhaps you could assist me in relation to this matter now.11:42:004424Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator, I do not know if you refer to the difficulty down the track. My understanding is that the Labor Party will not be moving any amendments. I am not quite sure what you had in mind there. But that is the position that the Labor Party has adopted, as I understand, in relation to this bill. Senator, if the racehorse owners pass the enterprise test then they can register.8O6O'BRIENSenator O'Brien—That is in the legislation?WW4Kemp, Sen RodSenator KEMP—That is right. That is in the legislation. If they register then, as is well known, they remit one-eleventh of prize money. But the racing club will be able to gross up the prize money so that the net prize money does not fall. The advice I have received is that unregistered owners will receive the same net prizes. I hope that gives you some comfort.8O6O'BRIENSenator O'Brien—It does not.WW4Kemp, Sen RodSenator KEMP—I think it should.11:43:004424O'Brien, Sen KerrySenator O'BRIEN8O6TASALP00—It does not, because, as I said, there are assurances given that any owner who races an animal with a reasonable expectation of obtaining prize money would be able to register. That is not clear from the legislation and my reading of the definitions of either `business' or `enterprise' in the legislation. To say that it is clear from the legislation is to beg the question. The question is: to the extent that they are not clear from the legislation, are you able to assure the industry that the assurances give by Mr Tuckey and by Mr Thomson's office during the campaign will be fully met by this legislation? The last thing that the industry wants is find that they have been dudded—that they have been told something in relation to how this tax system will apply to their industry only to find that when it is implemented by the parliament it applies in a different way. What I tried to impress upon you is that there are significant consequences of the application of the GST to input costs for the industry where there is not the ability to get those costs back either as a registered enterprise or in some other way.I am not sure whether you appreciate the point that I am making, as you are in animated conversation with your adviser. It seems to me that, if there is an intention to keep those assurances, you should be able to simply say to the Senate that the assurances given by Mr Tuckey and Mr Thomson's office in the campaign will be honoured in full; that is, an owner who races an animal with a reasonable expectation of earning prize money will be able to register, whether or not they reach the $50,000 threshold.11:45:004424Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—This is the first time you have made those comments to me, but my understanding is that what I have said is quite consistent with those comments. The bill has been drafted: what we say is that if the racing owner passes the enterprise test, they can register. It seems to me that that is con sistent with what you have said. The bill has now been out for four months.8O6O'BRIENSenator O'Brien—I have had questions on notice for 57 days; you have not answered them.WW4Kemp, Sen RodSenator KEMP—I am glad that you have drawn that again to my attention. Quite obviously, if you put questions on notice you are entitled to an answer. I will find out what has happened. I hear what you say. Fifty-seven days is outside the limit, and I understand that. I will see what can be done to get the matter expedited for you.11:47:004425O'Brien, Sen KerrySenator O'BRIEN8O6TASALP00—I appreciate that assurance and I look forward to the answers to those questions. I use the words carefully because they were the words which were being used during the campaign and they are important words in the view of the industry, I am sure. The other issue that was raised verbally by Mr Tuckey was that, if a racehorse owner or partnership were registered as an enterprise, it would become a business for the purpose of general taxation law. Can you confirm that?11:48:004425Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I am getting some more formal advice from my tax adviser. We can proceed with your next comments, then I will come back to that.8O6O'BRIENSenator O'Brien—If we can come back at some point in the debate, if need be, without it being taken as formally out of place, I am happy with that.WW4Kemp, Sen RodSenator KEMP—Just so there is no misunderstanding, can you repeat your question? We have got the substance of it; I want to make sure that we deal with the issue you have raised.11:48:004425O'Brien, Sen KerrySenator O'BRIEN8O6TASALP00—Where, for example, an individual or a syndicate registers as an enterprise and they are racing for the purpose of racing a thoroughbred, a pacer or a greyhound, will that registration indicate that they are a business for the purposes of general taxation law?11:49:004425Cook, Sen PeterSenator COOKRF4WAALP00—When I made my speech in the debate on the second reading on behalf of the Labor opposition in this chamber, one of the commitments I gave in terms of the Labor Party's approach to this legislation was that we would want to complete the consideration of this legislation by 30 June. A number of backbenchers have pursued—exhaustively, I think—a lot of questions up to this point in the committee stage which are very important issues. One does not in any sense undercut the importance of them.The government has billed this legislation as the biggest tax change in Australian history. It therefore cannot expect that it would go through unquestioned or without the type of scrutiny and review that the Senate is appointed to undertake.I wonder whether it might be appropriate at this juncture to invite Senator Murray to move the first amendment on our list. Then we will start to debate some of the amendments to the legislation. I think there are 128 government amendments. We have put to you, Minister, direct questions as to whether there are to be any further government amendments. Without trying to misrepresent your view, my understanding of what you have said is that you are in a position of neither confirming nor denying that there would be, or—to use another phrase that you have often expressed—you do not know whether there will be further amendments.We have sought to ask you: is the government considering other changes? That is a reasonable question in view of the clear fact that the government at this point would appear not to have, on the views expressed in the speeches at the second reading stage, a majority in this chamber to carry its legislation in the form in which it is presenting it with its own amendments. The question as to whether the government therefore contemplates softening some of its harsh provisions in this legislation to meet the needs of this chamber or whether it intends to try to crash through or crash is a reasonable question.For the record, again I note that you have not been lured into providing any sort of indication as to what is in the government's mind. I would maintain that it is reasonable that you should, but it is a fact that you have not. Perhaps you might want to express a few more words on that subject so that we can be given some guidance. If we now move into considering the amendments and the government, because of negotiations that may occur offstage with senators or with other parties other than the Australian Labor Party, changes its position and brings forward new amendments, we may have to backtrack and go over ground we have already covered and extend, as a consequence, the period of this debate beyond the time which at least we in the Labor Party want to bring it to a conclusion—that is, 30 June.I think it is reasonable for us to say that, since this is a house of review and since the GST legislation is a moveable feast, the bills that the House of Representatives voted on are not the bills you want us to vote on. You want to change those in 128 different places. Therefore, the complexion of the legislation alters when it is before us. It is reasonable in those circumstances to say: why don't you trot out all of the changes you want to make so that this chamber of review can see the full enchilada? Let us have a look at the lot. Let us see what your true position really is and then we can engage in constructive debate.Having said that, it appears that it is not the government's wish to do that. At some point we have to acknowledge that the government is militant in its determination not to do that. So, in a practical sense, let us move to some of the amendments and risk having to come back and cook our cabbages twice, having to come back and go over ground we have already gone over at the risk of perhaps extending the sitting unduly. With those remarks, it seems to me that it might be appropriate, subject to the views of the chamber of course, that Senator Murray, who is the author of the first amendment, be invited—WW4KEMPSenator Kemp—A famous phrase.RF4Cook, Sen PeterSenator COOK—This is not the American Constitution; this is the dreaded GST legislation. Of course any softening of that would be welcome, but the only way to deal with this legislation is to throw the lot out. Let us tend to the practical concerns of meeting our deadline. Subject to the view of the chamber, it might be an appropriate juncture at which to hear from Senator Murray, who is now, I notice, ducking under his desk and now returning to his place. If he is in a position to move his amendment, perhaps we should move on to that.11:55:004426Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator Cook has made some observations and has summarised some of the remarks I made earlier.RF4COOKSenator Cook—I hope accurately.WW4Kemp, Sen RodSenator KEMP—I am a bit loath to give a big tick, Senator Cook. I will look closely at what you said, but the general thrust is broadly in line with what I have stated before. These are the amendments of which I am aware. We think the package is a fair package. We hope we can convince the chamber of that particular issue. The government is ready to move its amendments. I understand, as you said, that the first amendment falls to Senator Murray. If he is ready to move his amendment, the government is very happy for him to take that step.11:55:004426Murray, Sen AndrewSenator MURRAY3M6WAAD00—It is seldom I have had such fanfare before commencing a debate on the detailed amendments before us. But we should be aware as we now enter debate on the actual amendments that there are nearly 300 amendments to `Peter's perfect package', of which the government have the most; and that will take some lengthy and passionate debate. But the purpose of amendments is always to improve bills. That I think is the prime role of the Senate after review—to improve legislation. The amendment I will move is on sheet 1369. On page 2 of the first bill, which is entitled A New Tax System (Goods and Services Tax) Bill 1998 —I say the first bill because, as you know, there are around 30 of them—I will move that the following be added:It is the intention of the Parliament that this Act and associated laws for A New Tax System: (a) be fairer than the Wholesales Sales Tax system they replace; and (b) promote redistribution of the load of the tax system from the poor to the rich.You will note that this is the first of nearly 300 amendments because it appears on what is just about the first page. The government have entitled their bill `A bill for an act about a goods and services tax to implement a new tax system and for related purposes'. There is absolutely no preamble and there is no object. I think the chamber should begin the detailed amendment stage of this committee stage of the bill by asking ourselves what on earth are we here for? What is this all about?It is said that at least one-third of all the bills dealt with in the parliament are taxation bills. Taxation bills are designed to provide the revenues to provide the services that Australians legitimately require. But they are designed for much more than that. Taxation laws play a vital role in social, community and environmental equity goals. The absence of a preamble or a prologue or an object is notable because we should be addressing these bills with an eye to achieving a better outcome for the people of Australia.I deliberately focused on two areas. The first area was that of wholesale sales tax and the second one concerned redistributional equity. The reason I started by focusing on wholesale sales tax was because it is the fundamental argument of the Labor Party, the official opposition, that we do not need to reform the indirect taxes of this country in this way because the wholesale sales tax system is adequate for its task. It is the fundamental argument of those who say that you need to replace the wholesale sales tax system that it is either in decline or it is broken, depending on the speaker, and that you need to quite radically change the indirect tax system to achieve much better economic outcomes.Essentially, the wholesale sales tax is a narrowly based, regressive, indirect multiple rate tax which falls at a single level in the production and consumption process. The GST is a broadly based, regressive, indirect tax which falls at multiple levels but, because of the input credit system, ultimately has only one outcome at the consumption level. Those who argue against the tax on grounds of its regressivity have good arguments against indirect taxes per se. But we should always be reminded that the wholesale sales tax is in itself a regressive tax. The Australian Democrats for one have never understood why it is appropriate to apply indirect taxes to goods but not to services. On the indirect tax side of things, the indirect revenue base, according to our analysis of the budget papers, is in decline. Indirect tax will have declined from 7.15 per cent of GDP in 1997-98 to 5.5 per cent. Sales tax has actually increased in that same period from 2.56 per cent to 2.59 per cent of GDP. Excise has fallen, principally because of the various changes made by governments to that, from 3.42 per cent to 2.50 per cent. In 1997-98 customs indirect taxes have fallen from 1.21 per cent to 0.67 per cent. Overall, the Australian Democrats have accepted that the wholesale sales tax base and indirect tax generally are in decline. The Labor Party have argued, `Well, that can be fixed quite easily by an adjustment in rates.'We have argued that overall the government is right in its approach. We do not accept that the indirect tax system is broken, but it is certainly in decline. When you add the other economic benefits of a GST with regard to exports and greater economic efficiencies, it seems to us that it is, on balance, a more efficient tax for Australia. But the fact remains that it is a regressive tax. The definition of `regression' means that it falls hardest upon those least able to pay. It falls hardest on the poor and disadvantaged.Whilst the wholesale sales tax is in itself regressive, so is the goods and services tax. It is because of that that the government feels obliged to provide income tax cuts and compensation to adjust for the impact of that regressivity on the poor and the disadvantaged and those groups who are potentially at risk because of the GST. We therefore need to look at what the bill is trying to achieve in terms of dealing with those at the lower end of our society, and here I move on to item (b) of my amendment.From the 1950s to about 1973 the middle classes of Australia were built up. Their standard of living improved. With the advent of economic rationalism, a massive redistribution of wealth and of family income occurred in this society, and it has been to the detriment of the poorer in our society. The shift to the rich 10 per cent, to the elite in our soci ety, has been very significant over the last 20 to 25 years under both governments. Economic rationalism is currently under assault, but in this package it is alive and well. The compensation for poor and disadvantaged people is mean, inadequate and will not last. The income tax cuts benefit the rich. The adjustments to tax scales merely claw back some of the losses that have occurred in this country as a result of bracket creep.The Australia Institute has developed a measure called the genuine progress indicator, which mirrors work done internationally to measure the total sustainability and the total quality of life of nations, and the Australia Institute's measure of course is of Australians. It shows that since the advent of the economic rationalist movement in the early 1970s the quality of life and the actual wealth and the actual advancement of the poor and disadvantaged and lower middle classes in this society have deteriorated.So you have your economic measures showing Australia growing and advancing economically and you have your social and wealth measures showing that there is a decline. Other writers such as John Ralston Saul have picked up this particular theme. In fact, I think he was brought here by the Evatt Foundation and, hopefully, as a result he will have some influence on that large body of economic rationalists that still live in the Labor Party.The Australian Democrats believe that this package of bills has to be savagely amended to readjust the system back to a redistributional approach. In other words, that the load of the tax system, the load of the PAYE system, the load of bracket creep, the load of the tax cuts and advantages, and the load of the tax avoidance mechanisms should shift off the backs of the poor, off the backs of the disadvantaged, onto the rich. That is what a progressive tax system will deliver.When you look at the combination of all these bills and the package they represent, the income tax cuts, in our view, are regressive because they reinforce the advantages which accrue to the wealthy in our society—the top 10 per cent. Incidentally, it is that top 10 per cent who dominate the boards of the com panies that make all the political donations and who influence so much the political life of this country. The Australian Democrats believe that we need to enshrine in our tax system a redistributional ethos and that we need to restore ourselves to some of the equity which prevailed in Australia in the early 1970s. Unless we significantly alter this package on the income tax side, on the compensation side, on the GST side and on the Commonwealth-state relations side, then this package will remain fundamentally unfair and fundamentally disadvantageous to the poor, to the disadvantaged and to those who fall between the cracks of the income tax system and the social security system. And it will also damage the middle class which is so vital to the health and future of this nation. That is why I am putting this amendment on sheet 1369 before you. I move:(1) Page 2 (after line 18), at the end of Division 1, add:1-4 Intention of ParliamentIt is the intention of the Parliament that this Act and associated laws for A New Tax System: (a) be fairer than the Wholesales Sales Tax system they replace; and (b) promote redistribution of the load of the tax system from the poor to the rich.(Time expired)12:10:004428Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—I move:At the end of clause 1-4, add:; and (c) promote ecologically sustainable development.This freshly circulated amendment on sheet 1385 in my name is an amendment to Senator Murray's amendment in relation to what this tax package ought to be aiming for. It is a simple amendment. It simply adds an item (c) to clause 1-4 to `promote ecologically sustainable development'. I will quickly explain why I am doing this.I will first of all take a selection of quotes from the Greens (WA) additional statement to the First report of the Senate Select Committee on A New Tax System. In that statement I talked about the modelling that was not done in relation to environmental impacts. We have not yet heard any response from Senator Kemp today as to whether or not we have any response at all from Senator Hill on whether or not this package has been considered for environmental assessment. The additional statement reads:When questioned as to whether any kind of environmental impact analysis has been undertaken by Treasury—So we are not even talking about getting to the environment minister; we are talking in this case about whether action ministers even looked at it as to whether it should be referred—Mr Greg Smith, Executive Director of the Budget Group, claimed that it was up to another Department to do that kind of analysis.It is interesting because, as I said, the action minister is the Treasury in this particular case and not the environment minister. So he said another department should do it. Mr Smith said in evidence:I think essentially those are matters that are the portfolio responsibility of others. I think I have heard Senator Hill give answers along those lines, where he says that he and his portfolio are responsible for that type of work. Certainly, the Treasury cannot do all of those things.Also contained in this additional statement is a quote from a statement that Senator Hill made on 30 September 1996:. . . it is four years since the "World Scientists Warning to Humanity" was released. You will recall that this warning was signed by 1700 of the worlds leading scientists, including the majority of Nobel laureates in the sciences. The warning stated that: ". . . many of our current practices put at serious risk the future that we wish for human society, . . . and may so alter the living world that it will be unable to sustain life in the manner that we know".The message that I would leave with you today, is that we are well past the warnings, and we are well past the theoretical arguments. We are now into the most critical phase of all—action and implementation.Well said, Senator Hill, I would have to say. But the point is that when push comes to shove and we are dealing with an issue that we cannot separate from its environmental impacts—that is, the way the tax system operates, the types of activities that are rewarded, encouraged or discouraged—this government is failing in a major way with this particular package. I would also like to refer the committee to the statement made by my colleague from the Australian Greens, Senator Bob Brown, and I to the report of the Senate Environment, Communications, Information Technology and the Arts References Committee inquiry into the GST and A New Tax System. In that conclusion we said:Taxation can help move Australia's economy from old dirty and wasteful industries, which employ relatively few people, to new clean green job-rich industries. Instead of relying on coal, especially brown coal for electricity generation, we can invest in energy efficiency, wind and solar energy. Instead of woodchipping native forests, we can invest in processing existing plantations to meet our needs for building materials and wood fibre.The Greens (WA) and the Australian Greens believe the Australian Government is missing a rare window of opportunity during this tax reform process. The Australian Government should follow the example provided by Britain and other European countries as illustrated by the following quote:We said in our manifesto that what governments choose to tax sends clear signals about the economic activities they believe should be encouraged and those that should be discouraged. Just as work should be encouraged through the tax system, environmental pollution should be discouraged.To that end, the Government will reform the tax system, so that we encourage growth that is environmentally sustainable. It will encourage the delivery of a more dynamic economy and cleaner environment, to the benefit of all.The statement of intent establishes our position on the use of environmental taxes. It is backed, today, by a range of other announcements. Taken together, these measures demonstrate the Government's determination to place the environment at the centre of policy making.This was not made by a radical speaker. It was made by the British Financial Secretary in July 1997.Mature governments in the 1990s—at the end of this century—are saying that the signals to producers must reflect some of the costs to the community that result from the production of goods and services. For those people who believe that the market is all that matters, this means that the consumer has the opportunity of making wise choices with some of those costs built in, so that we are not operating in a flawed market. But that is what this government seems to be saying is suitable—a flawed market which is giving the wrong signals. In fact, this package very much illustrates that point by making diesel cheaper and sending bankrupt the people who are producing refined oil from waste oil, who are actually cleaning up on our behalf. What a great message this is sending!I urge honourable senators not simply to regard ecological sustainability as a side issue but to put it up front and realise that, unless we do so, we are going to be in deep trouble now and in the years ahead. I know that in his time as minister for the environment, Senator Faulkner suggested that in his opinion economic instruments had to be built into the way we dealt with the environment. Of course, from the point of view of the Greens (WA), it is a totally natural thing to keep those issues connected. If you separate justice, equity and environment issues from the economy, you will be left with a meaningless process where somehow the environment is seen to be something different and is ruled at all times by the economy. We will have no economy if we destroy our environment. We will have no quality of life. But what is more, we will not have jobs or an economy if we destroy our water and air systems. We must realise that everyone on earth has a responsibility to move towards repairing the damage that is impacting on our climate and our atmosphere.I would like to think the amendment I have moved is self-explanatory. It is simply putting up a little message which says, `and sustainable development should be included in the way we produce, design and operate our tax system.' I would urge support for it from all senators in this place.12:19:004430Murray, Sen AndrewSenator MURRAY3M6WAAD00—The Australian Democrats will support the Greens (WA) amendment.12:19:004430Cook, Sen PeterSenator COOKRF4WAALP00—The Australian Labor Party—the opposition here—will not support the amendment and we will not support the amendment to the amendment. We will not support it for two basic and quite fundamental reasons. None of those reasons goes to the good intent of the movers, but they go to the nature of what they are trying to do. The good intentions of the movers are beyond question, in my view. But the nature of what they are trying to do is to amend a goods and services tax in the belief that you can make a GST fair.We do not believe you can make a GST fair. A GST is a regressive tax. A GST taxes all Australians at the same rate irrespective of income, which means to say that poor Australians, proportionately, pay a higher percentage of their income in tax than do wealthy Australians. We do not think that is fair. That is a fundamental proposition for us. It is a proposition that the government recognises. The government has recognised that this is an unfair tax by introducing a package for compensation—a compensation package of tax cuts and compensation to people on welfare and pensions; by changes to offset the unfair nature of this tax.Here lies the basic crux of the problem. The government says it will lock in a GST at 10 per cent. It has got a fancy mechanism for doing so with the states. Everyone in Australia knows that mechanism does not work because, while it looks good, when you examine it, all it will take is an act of this parliament to change it. Therefore, since it is not embedded in the Constitution, it can be changed by the will of parliament. It only lasts as a lock-in mechanism as long as a parliament allows it to. If a government gets a majority in the House of Representatives and in this chamber, it can change it. It is not locked in or safeguarded by any state legislation.But let us leave that whole argument aside for the moment and say that the government recognises the unfairness of this package by saying that the 10 per cent GST will not increase and that they have locked it in—forget for the moment that is not true that it is locked in. But how do you lock in the compensation? You can lock in the tax, according to the government argument, but how do you lock in the compensation? How do you make the compensation last forever? You cannot. Governments that come and go in this place will change the amount of tax cuts. They always do. Governments that come and go in this place will change the amount of pension entitlement and of benefit to welfare recipients. They always do.So if you buy a GST and you even accept and believe the argument that the government has locked it in and it will never rise, that it will always just be 10 per cent into the next century and the century beyond, then you also have to have a gigantic leap of faith that the compensation to offset the regressive nature of this GST will equally go the distance. It will not. And, because it will not, I do not believe we would be doing this parliament a justice or doing the community of Australia a service by saying that this bill is meant to be fair. The intention of this amendment—and I do not question, as I have said, the honesty of the movers or the supporters of it in the Democrats and the Greens—is to insert in the introductory chapter of the GST legislation a provision which says:It is the intention of the Parliament that this Act and associated laws for A New Tax System: (a) be fairer than the Wholesales Sales Tax system they replace; and (b) promote redistribution of the load of the tax system from the poor to the rich.In logic, one could argue that if you believed when we have completed the debate on the whole bill that the package as amended at the end of the process reflects these sentiments and, therefore, these sentiments stand as true sentiments, perhaps you then should insert this provision. We do not believe you can arrive at that position, but if you believe that, that would be the time to move this amendment. I do not think it is right to say that the GST is fairer than the current wholesale sales tax system—albeit that we in the Labor Party want to amend that as well. But I do not think that you can say, either, as an intention of this parliament that the content of these bills, if carried—and we will oppose their carriage—shifts the load of the taxation burden from the poor to the rich, because I do not think that is true.3M6MURRAYSenator Murray—Not unless it is amended, it doesn't.3M6Cook, Sen PeterSenator COOK—I accept your interjection, Senator Murray. `Not if it is amended, it isn't,' I think is your interjection. I accept that is your view, but I began my remarks by saying that we in the Labor Party do not believe you can make this fair. Because, even if it were true—an illusory fact—that you could lock in the rate, you cannot guarantee that the compensation to offset the regressive nature of this package will last indefinitely. And, as a consequence, I do not think you can say in the bill that the intention of this parliament is to shift the burden of taxation to the rich away from the poor—which is an intention we would subscribe to as a principle, an ideal—when the act, as it is finally carried, if it is, does not in practical terms reflect that ideal. If the practical application does not deliver the ideal, then the view taken of this legislation will be that we got it wrong, and badly. I will be in that camp of argument, but if you are advocating this, I would be mindful of that view.I come back to the fundamental point on which this debate turns, as far as the Labor Party is concerned. This is a GST. You have to believe you can make a GST fair to support this amendment. We do not believe you can. We have form on this. We looked at the GST in 1985. We looked at the whole tax system in 1985. Unlike this government, we brought down a report for public debate which canvassed a range of tax options and we came to the conclusion at the end of that public debate, culminating in a tax summit, that you could not make the GST fair, and we dropped the option. We have thoroughly examined this proposition. We did not—and I contrast this with what the government has done—ambush the electorate before the election with tax cuts and a goods and services tax. We did not distract attention from the devil in the detail that was not revealed until the Senate inquiry got stuck into examining exactly what the package contained. We did not rush this through and claim a mandate to legislate. We did not do that. We gave time for proper public debate.Let me say a couple of other words as to why this package, in our view, is not fair. It arises from what we now know as a conse quence of being able to examine this—within a relatively short space of time, but in considerable detail, nonetheless—by the Senate committee process. I remind the chamber that in that process we commissioned independent modellers. One would have thought—and it has been said many times here, but it is probably not widely understood in the broader community—that in bringing this tax package to the parliament the government would have done some modelling of its own. On the substantive question of what is the macro-economic effect of this tax package, the government did not do any modelling of its own. The modelling that was done was the modelling commissioned by the Senate through its Senate select committee. While the government might want to borrow selectively from modelling done by private sector modellers to justify its case, the only modelling that has been comprehensively done is by the Senate select committee.What do we know from that modelling? Take one macro-economic indicator which the community of Australia is concerned about; take the indicator of employment. We are all worried about where our sons and daughters, brothers and sisters, will get jobs in the future in this country. What does the modelling show on that subject? It shows that up to 120,000 jobs will be lost because of this package. It shows that a GST favours capital intensive, low employment industries over labour intensive industries. It shows that to those industry sectors in the mining area with very few people employed, with high-tech knowledge involved and with exports there may be some favouritism in terms of employment.But it shows that jobs will be lost in those industry sectors that employ Australians, such as the tourism sector and the education export sector. Where have the jobs in the past come from and where do we expect them to come from in the future? We expect them to come from those sectors. The services sector will be hit to leg, to use a cricketing term, by the GST, and that is where the jobs growth is. About 81 per cent of Australians work in that sector. This bill, if it were law, would on that macro-economic indicator militate against jobs growth there.There is another element to the government's claim. It is important to expose this furphy because they only tell half the truth on this subject. They say, `At the end of the day you've got to believe it's in the national interest. It may mean pain for you and you may have to suffer a bit, but overall the country will be better off.' That is the story they run. In the Senate inquiry we went around sector by sector. If you add up all the pain, there is no national interest in this package. The government nonetheless has the view that it is in the national interest, that you have to make a sacrifice for Australia, and that that is what you are doing if you allow the wealthy to be taxed, on a percentage basis, less than the poor. The poor will be taxed more than the wealthy on a percentage basis. According to the government, that is the sacrifice we have to make for Australia. Most Australians don't agree with that.The government's winning argument, so they think, is on export. They say that the GST will reduce input costs to exporters, and therefore the cost of Australian goods in foreign markets will be cheaper. If that was as far as the story went, they would have a case. The trouble with economics is that you can't look at it in such a compartmentalised and neat paradigm because economics has effect, counter-effect and implications beyond the wider view. The impact of what the government is saying—which they never say in public but which the Department of Treasury gave evidence to our inquiry about—is that, if that happens, the exchange rate will increase and Australian goods will be as expensive as they now are in foreign markets. Therefore, the so-called `pain' that the rest of us have to suffer in the national interest will be countermanded by the change in the exchange rate as the market does its work.Do we hear that from the government? No, we don't. Why don't they tell us that? It is not convenient and it doesn't suit their case. But my point is that if you are claiming positive employment advantages out of this package, which would be one of the reasons why it would be useful, you have to answer that question. The government has not. What we know from our investigations is the negative impact the package will have on employment.What about growth in the economy? You can have growth in the economy, but jobless growth hardly serves the needs of the community. But is there to be jobless growth in the economy? The economists who did our modelling—one is the Prime Minister's preferred modeller—both concluded similarly, and that is that there is negligible economic impact in terms of economic growth.I am almost out of time, so let me just summarise my position. If there is an opportunity, I will complete my remarks at a later stage. If you believe that you can make the GST fair, then you will vote for this amendment. If you believe, as we do, that you can't because you can't guarantee the compensation but you can guarantee the tax, then you will not vote for this amendment. That is fundamentally the reason why we will not proceed to vote for it.12:34:004433Woodley, Sen JohnSenator WOODLEYHX5QLDAD00—Let me return the compliment to Senator Cook. I think he has made out a very eloquent case for the Labor Party. By and large we would agree with all of the things he said. However, we disagree with the fundamental point he is making. I made this point yesterday: you can disagree with the package because it is unfair, but you can still seek along the way to amend it. That is the point where we have a disagreement with the Labor Party about this tax package. In seeking to amend it, we are not talking only about a GST; we have a whole package with many elements in it and we want to get at each of those elements in turn and move amendments to them.We are doing this at the very beginning—trying to fix some objectives for any tax reform. I know that in a lineal sense it would be better to do this at the end if we achieve what we set out to do and what we set out to proclaim in those objectives. However, we are putting down at the very beginning a basis, a foundation, for what we want to achieve in the other amendments we are moving. That is where we have a fundamental disagreement with you, Senator Cook, although certainly all of the content of your speech I would loudly proclaim as right. At the end of the day, as with the Labor Party and, I presume, the Greens, if we do not achieve that fairness, if the objective is not achieved through our other amendments, which is fundamental as far as the Democrats are concerned, then obviously whatever the title or the objectives might say, we too will be voting against the total package. I just wanted to give those indications at the very beginning. However, I want to point out a couple of things before I get to the substance of what I want to say. It is important to note where we are trying to place this amendment—right at the very beginning. It would be inserted after clause 1-3. You will note that clause 1-1 simply relates to the short title, clause 1-2 relates to the commencement date and 1-3 talks about Commonwealth-state financial relations.One of the things which has plagued this country since Federation and still remains in this tax package is the problem that we only ever think about the division of power and resources between the states and the Commonwealth. This package says nothing about the citizens of Australia. It says nothing about fairness in terms of our obligation to those at the bottom of the heap in this country, just as the Constitution also says nothing very much about the rights and duties of citizens but talks about the relationship between the Commonwealth and the states.Another problem with the whole tax package—and with legislation and the Constitution of this country—is that it only ever talks about the split-up of resources and power between two levels of government: the Commonwealth and the states. There is nothing in the title or in the preliminary introduction about local government. That is a problem. That is something else which the Democrats want to address in our amendment. So you can see that we have deliberately placed this amendment at the very beginning to try to lay a foundation for all the amendments that we want to move, but realising that, if we do not achieve those, we would certainly have to agree with Senator Cook that an unfair package would certainly not be one which the Democrats would vote for.I notice that my time is slipping away. I believe that I will make further comments in this debate, because we are dealing with a very critical issue. Let me pick up a couple of other points which illustrate what I am trying to say here. Senator Cook is right: as it stands, this package is not only unfair but also unjust. One of the issues which is very close to my heart is the effect of the package as it presently stands on rural and remote indigenous communities.I will return to this matter, but I want to lay this further foundation. I believe that many of the changes to the tax system which are currently before the Senate will impact on Australia's indigenous people, many of whom already suffer significant disadvantage. This government likes to talk about `mutual obligation', but what it means by `mutual obligation' is that it will put further hurdles in the way of the poor and those who are the recipients of government pensions, et cetera. This government will make them jump over more hurdles to obtain the grudging charity that it is prepared to allow to trickle down to those at the bottom of the heap. That is what the government means by `mutual obligation'. Mutuality, to me, is always a two-way thing. But in the mind of this government, it is never two-way. It simply means more hurdles that will be placed in the way of those at the bottom of the heap which they will have to jump in order to access that grudging charity which this government will trickle down to them.I want to illustrate this point not only from the tax package but also from other actions of this government. Let me talk for a moment about the loss of the egalitarian ideal which, in the last three years, has been a very significant loss indeed. Recently, Curtin University in Western Australia did research on notions of fairness and equality in Australian society. In its report on the research, the university claimed that the egalitarian Australian ideal of a fair go for all was being undermined by a belief that Aborigines and Asian migrants were getting special benefits and treatment. The main conclusion of the research was that Australians no longer believed in the idea of a fair go.That is a tragedy. That loss of belief in the Australian community is reinforced daily by the actions and rhetoric of this government. This research reinforces my belief that many Australians no longer see themselves as part of a community where all belong but as being in competition with others to determine who belongs and who does not. The loss of this egalitarian ideal has been reinforced not only by the current government but also by the prevailing ideology of market economics. In social, political and economic terms, the market defines society as a collection of competing individuals held together by self-interest. I believe this market definition of society is not merely inadequate; it is destructive of the meaning and essence of community.By definition, a collection of competing individuals is made up of winners and losers. The winners are the true members of the community. Their very success determines their membership as a right. The losers exist at the edges of this kind of community. They have no rights. They belong to the community only in a secondary and inferior sense. They are permitted to exist by the good grace of the winners, who may offer them charity as long as they fulfil certain mutual obligations. They are to blame for the fact that they are losers. In the global market, the largest group of losers is the unemployed. Their plight is made worse by the attitude of the market, which declares them not only to be losers but to be worthless as well. In Australia, the current federal government's attitude to the unemployed reflects this attitude to an appalling degree. When we come back to this debate—because my time is about to expire—I will give you some very significant illustrations of that fact.Progress reported.Matters of Public Interest443410000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—Order! It being 12.45 p.m., we will now proceed to debate matters of public interest.443512:45:004435Knowles, Sen SusanSenator KNOWLESTH4WALP10—My colleagues in the Senate have in recent days raised enormously important questions in the public interest: questions of major tax fraud by Paul Keating, and questions of gifts to his piggery worth millions from the Commonwealth Bank.Today I argue the case for an inquiry into the business dealings of the former Prime Minister, Mr Keating. In particular, I argue for the terms of reference of such an inquiry to be broad enough to encompass other dubious dealings involving Paul Keating and Warren Anderson, as well as the former Prime Minister's alleged use of fronts and options in other business transactions.The 60 Minutes program, `The Keating millions', revealed how two Keating associates, property developer Warren Anderson and `Mr Fixit business broker', John Benson, were instrumental in putting together the deal to sell Keating's share of the piggery to the Indonesians. 60 Minutes disclosed that Anderson and Benson were both in Indonesia in October 1993 at the same time as Mr Keating, and that their target was William Soeryadjaya.A book released last week raises extraordinarily important questions about the national interest. In Asian Eclipse—Exposing the Dark Side of Business in Asia, author Michael Backman traces how the Soeryadjaya family business fortunes improved markedly following their purchase of Keating's piggery. Backman claims:The Soeryadjayas possibly hoped that their taking Keating's troublesome piggery investment off his hands would help to improve their standing with Soeharto in the wake of the Astra-Summa debacle. There was no doubt that a link with the Australian Prime Minister wouldn't do the family any harm.Last year the Sydney Morning Herald first told the story of how an Indonesian businessman, William Soeryadjaya, agreed to pay Mr Keating $US6 million for his share of the piggery. In an extraordinary attack on Senator Robert Hill, Keating denied a charge which had never been made and denied any involvement by President Suharto in the piggery deal.The new facts raise the brutally simple proposition that the deal which was put to the Indonesian businessman was, `If you buy Keating, he can sell Suharto on you.' Keating's relationship with Suharto was so close, he had taken to calling him `bapak' or father. Even if Keating never fixed anything with Suharto, under such a deal he would have become appallingly compromised—no longer his own man; no longer Australia's man—and beholden to curry favour with a foreign head of state for $10 million. And not just any head of state: one where crucial issues of Australia's future were involved.Backman tells how a consortium headed by a Soeryadjaya company was subsequently awarded a fixed telephone line concession on part of Java, noting:. . . for the Soeryadjayas, it marked a return to big business.The unmistakable implication is that the Soeryadjayas bought out Keating's piggery share in return for influence peddling by the former Prime Minister with President Suharto on their behalf. On the 7.30 Report in July 1998, Keating himself said:. . . Mr Soeryadjaya, was definitely not part of any crony structure with President Suharto. He'd been on the outer, as anyone who knows about Indonesia knows.But he was not on the outer after he bought Keating's piggery interests. It was Benson and Anderson who set up the deal with the Soeryadjayas on Keating's behalf, while Keating lied to parliament by saying that he had disposed of his piggery interests to his partner, Al Constantinidis. This was not the first time that Warren Anderson and John Benson had been involved in business moves involving Keating and Indonesian interests.In 1992 Anderson and Benson hatched a scheme to get Australian foreign aid for a group of retired Indonesian generals to buy cattle from Anderson's cattle stations in northern Australia. Anderson and his partners, the Bakrie brothers, planned to build small feedlots for the resultant steers, while the small farmers would retain heifers for breeding. Anderson's property, Tipperary, was to provide Australian breeding cattle and farming expertise. The scheme needed about $130 million in funding to provide 30,000 Brahmans a year for five years. But the request for Australian foreign aid came not from Anderson or Benson but from an Indonesian charitable foundation, the Yayasan Serangan Umum 1 Maret 1949.On 22 August 1992 the foundation's chairman wrote a letter titled `Aid to Indonesia' to the Hon. Laurie Brereton, then Parliamentary Secretary to the Prime Minister. The letter introduced the foundation, saying it aimed to:. . . contribute to the living standard of the Indonesian people, especially the rural population.It said that the foundation wished to fulfil President Suharto's recent diktat to `try various ways to improve the welfare of our farmers' by increasing `the quality and quantity of breeding cattle in Indonesia'. A copy of this letter clearly shows two fax markings: one is of John Benson and is dated 25 August 1992, three days after the date of the actual letter; the other is Warren Anderson's Tipperary station. I seek leave to table this document.Leave not granted.TH4Knowles, Sen SusanSenator KNOWLES—Not surprisingly, leave is not granted—shock, horror! Brereton replied to the Yayasan in October 1992, saying the cattle breeding plan was `of merit' and suggesting that it would get `greater impetus' if raised at the inaugural Indonesia-Australia ministerial forum being held in Jakarta in November 1992. But how could Mr Brereton know the proposal was of merit? Indeed, the Yayasan Serangan Umum 1 Maret 1949 is far from being a benevolent foundation. In fact, it was recently exposed as one of those tax exempt foundations with hidden wealth, run by Suharto's military cronies, with Suharto himself as a patron.Most significantly, a copy of Brereton's reply to this foundation shows at least two fax markings. One is from Brereton's electorate office on 30 October 1992 and the other shows that, after Benson received the letter from Brereton, he on-faxed it the same day. Is this what one would expect? Would it be normal for such a reply—to applicants for Australian foreign aid funding—to be faxed the same day to an Anderson associate? Quite frankly, it smacks of a conspiracy and, once again, the intended beneficiary was Warren Anderson. I seek leave to table this document.Leave not granted.TH4Knowles, Sen SusanSenator KNOWLES—So leave has been denied yet again because of the sensitivity.Then there was Keating's involvement. The proposal was raised at a meeting between Keating and Suharto in Jakarta in 1992. According to the Indonesian Department of Agriculture, Keating and the head of the Bakrie Group also discussed it in Canberra in August 1992. It was raised again at a meeting between Suharto and Keating in 1994. The energy which was put into pushing this cattle breeding proposal was quite extraordinary. But in all that has emerged about the `cattle-aid' deal, there is no record that Keating or, for that matter, Brereton, ever disclosed that Warren Anderson would be the beneficiary. Once again, the taxpayer, who was expected to foot the bill for this $130-million project, was treated with contempt.After three discussions involving Keating's office, the cattle-aid proposal was rejected by AusAID, but by this stage Anderson had sold his interest in the cattle stations and feedlots associated with them. AusAID concluded that the project would not make money, would not survive and would not lead to other sustainable development. `The proposal and any variant of it should be rejected,' AusAID recommended. The documentary evidence shows that for three years Keating and Brereton tried to secure Australian aid funding for an uneconomic project which would have benefited Anderson. In an AusAID study, Benson is identified as a consultant to Yayasan. He has now resurfaced as an associate of Paul Keating. In my view, the terms of reference of any inquiry into Paul Keating's business dealings should be broad enough to include `cattle-aid'. That the project never finally got off the ground is totally and utterly immaterial; there was corrupt intent and corrupt manipulation of the bureaucratic and ministerial processes.Of course, this was not Keating's first dealing with Anderson. Consider the Northern Territory Parliament House and the State Square precinct. In 1988, when then Treasurer Keating was telling the states and territories to slash borrowings, the Northern Territory was given a 26 per cent boost to its global borrowing limit so that State Square could go ahead. What is scandalous about this affair is that Keating pushed the proposal through cabinet and the Loan Council, Anderson benefited to the tune of $8 million in project management fees and Keating concealed the benefit to Anderson and publicly lied about the Loan Council decision. The decision to raise the Northern Territory's borrowing limit to allow for construction of State Square was agreed first by cabinet, on Mr Keating's submission, and then by the Loan Council, chaired by Mr Keating. In other words, Keating shepherded the proposal through all the official forums. He was pivotal to its success.Anderson received $8 million in project management fees, but Keating failed to disclose that Anderson would benefit, either at cabinet or at the Loan Council—or, for that matter, at the meeting of the Expenditure Review Committee which also considered the issue. This was despite the fact that his friendship with Warren Anderson had been a matter of public notoriety for years and despite the fact that he had often been a recipient of Anderson's hospitality. Anderson gave Keating two free trips to the Northern Territory in corporate jets, which Keating did not declare, in contravention of the Hawke government guidelines.But not only did Keating conceal the benefit to Anderson, he lied publicly about the Loan Council decision. Keating's press release announcing the Loan Council outcome categorically stated that five states and the Northern Territory had agreed to `significant reductions' in their authorities' global borrowing limits. However, appended to the statement were figures which, if one read the fine print, showed that the Northern Territory got a 26 per cent increase. This was utterly misleading. In October 1995, the then Leader of the Opposition, John Howard, called for an inquiry into this affair. He said Mr Keating should explain why he failed to disclose that Warren Anderson brought the possibility of developments in the Northern Territory to Keating's attention, conceived the State Square project, advocated that development and stood to benefit from the project. The fact is that Anderson had most to gain from Keating's intervention and could not have built this project without this intervention. Not only did Keating secure this benefit for his mate but also he once again treated both the parliament's and ministerial disclosure requirements—not to mention the public—with contempt.I believe that the terms of reference of any inquiry into former Prime Minister Keating's business dealings should also be wide enough to include this sordid episode. Both `cattle-aid' and State Square involved attempts by Mr Keating and his government to enrich Warren Anderson who, by 1991, had fallen on hard times. Their association goes back a long way. Their relationship, their shared interest in antiques, particularly clocks, goes back at least 15 years. In the landmark article `The Keating-Anderson Connection', in 1986, the National Times reported how Keating and Anderson traded antiques with one another, particularly antique clocks. The article contrasted statements by Mr Keating that the sorts of clocks he owned could be worth up to $200,000 with estimates by independent dealers suggesting values ranging from $1,650 to $50,000. The short take-out was that Keating was selling antiques to Anderson at inflated prices to launder money from Anderson. Significantly, Keating neither denied nor sued over this story.Another aspect of Paul Keating's financial affairs which should be examined is his use of front companies and other devices to conceal assets. The second 60 Minutes program on `The Keating Millions' detailed how Keating had Maria Constantinidis front for him in a property purchase on the Hawkesbury in 1990. That, according to Maria Constantinidis, was because he did not want the public to be aware that he was a half-owner. Maria Constantinidis said that Keating initially put in $175,000 of his share of the deposit, stamp duty and legal fees, but soon welshed on the deal. Now Mr Keating says the money was a loan, but this beggars belief. Needless to say, he did not disclose this on the pecuniary interest register at the time either. Keating also used an option agreement to hide his continuing interest in the piggery affair after he disposed of his half share to his partner Al Constantinidis.In the time that I have left, I think it is important that I go through some of the things that I suggest should be included in the terms of reference. I believe a judicial inquiry with the powers of a royal commission should inquire into whether there was any impropriety or illegality involved in the purchase, conduct, sale and taxation arrangements of companies in which the former Prime Minister was a shareholder or in which he was involved; whether Paul Keating, either as Prime Minister, Treasurer or backbencher, improperly used either his position or government resources for personal benefit for the improper use of other companies or individuals; and whether the Commonwealth Bank acted improperly in relation to its dealings with Mr Keating and companies or individuals with which he was involved. (Time expired)443813:00:004438Lundy, Sen KateSenator LUNDY7G6ACTALP00—I rise today to once again traverse the issue of the government's IT outsourcing program. It is interesting to note the recent comments of Minister Fahey in his desperate attempt to try to justify what is a very damaging program to the IT industry here in Australia. It is worth while quoting from the minister's address to a breakfast last year in which he speaks of the IT outsourcing program as an initiative that has come a long way since they announced their decision. In particular, the minister identifies three points that he considers worthy of promotion. Those three points were:. Achieving significant savings.That is the principle on which I operate as the Minister for Finance to see if we can find those savings for the taxpayers in a sensible way.. Improving the quality of IT service delivery for Commonwealth agencies.. A commitment to developing the Australian IT&T industry, in particular, in terms of maximising opportunities for small and medium enterprises and the use of Australian value added products and services. History has shown us that the government has failed significantly on every one of those points. The three main claims to fame that Minister Fahey has put forward with respect to the IT outsourcing program can be demonstrably proven to be completely false.I would like to turn to the first point that the minister cites as achieving something that they are committed to, and that is the question of savings. Since this program was first identified by the government, the rhetoric attached to it was that savings were the primary objective. Yet consistently we have seen the government fluctuate on the level of savings they hope to achieve. Indeed, the minister's most recent contribution on this issue no longer talks about $1 billion worth of savings over seven years but a mere $270 million over five years. Why is this the case?Let us have a look at a retrospective analysis. The government have not been able to deliver on the program that they outlined initially for a number of reasons. First and foremost, it is structurally flawed. Out of three tenders that have been let specifically under this program, there has been a trail of mismanagement that involves one tender not even attracting a competitor beyond a significant player in IBM GSA. I am referring to the DETYA tender which, despite being set up supposedly as a flagship of the IT outsourcing program, managed to attract no more than one tender bid in that process. That was subsequently cancelled.Another example is the original contract that was let by the Department of Finance and Administration. After announcing the IT outsourcing program, they decided to flout the whole principle of what they had espoused about using competitive practice to achieve cost savings and awarded the department of finance's IT outsourcing contract directly to a company by the name of IBM GSA, without having embarked upon a competitive process for that tender. For those who have been following this debate, that was the notorious piggyback tender, where the provisions of an IT contract with the Department of Veterans' Affairs were extended across another department, that of Finance.So you can see with just those two examples that the government has tripped its way through what is a structurally flawed process to the point where Minister Fahey has no choice but to continue to espouse empty rhetoric about the virtues of this program. As I said, it is certainly not delivering on the cost savings. Indeed, it will be interesting to see how they expect to justify, in the broader sense, the cost savings.I would now like to refer to a recent publication entitled `Information technology outsourcing—practices, lessons and prospects' by Professors Leslie Willcocks and Mary C. Lacity. This particular report identifies a range of issues that are absolutely pertinent to IT outsourcing and its place in Australian Commonwealth procurement and the development of our IT industry sector. Willcocks and Lacity cite in their studies a particular element of their research. I would like to quote from this particular article, which states:The second source of evidence is provided by our forthcoming book Global Information Technology Outsourcing: Search For Business Advantage . Here we establish the outcomes from 116 IT sourcing case histories in the 1990-98 period. The metrics used were: organisational objectives against results; cost reductions achieved against anticipated; and satisfaction levels established by the organisation by, for example, user satisfaction questionnaires, level of disputes, invoking of penalty clauses.This study has been carried out by Willcocks and Lacity with the view to assessing the relative merits of IT outsourcing as a practice per se and its ability to deliver on the proposed outcomes, which as we have heard relate specifically, as far as this government is concerned, to cost savings.The figure that that paragraph I just quoted refers to shows that, in terms of total outsourcing, 38 per cent rate it as a success, 35 per cent rate it as a failure and 27 per cent identify a mixed response. In terms of selective outsourcing, which is a different approach, a far higher success rate is cited of 77 per cent, with a failure rate of 20 per cent and a mixed response of three per cent.It is worth while extrapolating on this because selective IT outsourcing emerges as a differing model. It is certainly one that I have identified in the progress of this debate as being a far more worthy model for the government to consider, if they are indeed serious about not only the success of applying an outsourcing model but also acting in the interests of Australia's economy and the critical emerging sector of information technology and our innovation in this country. Again I quote from Willcocks and Lacity:Selective IT outsourcing emerges as the most effective practice, closely followed by the in-house route. Underlining the survey results above, we found successful selective outsourcers embracing several distinctive practices. They had more limited and realistic expectations, signed short (two- to four-year) contracts for which the business and technical requirements remained relatively stable, kept in-house resource and knowledge to fall back on (resulting in less power asymmetry developing in favour of the vendor and lower potential switching costs), often leveraged competition through using multiple suppliers, and found ways in the contract to provide incentives for the supplier and build in flexibility.That paragraph really sits in complete opposition to what the current experience is under the government's IT outsourcing program. In their clustered, vertically integrated, laterally grouped or clustered contracts that exist under the IT outsourcing program, they actually define a situation where not only do small Australian IT companies not have the opportunity to participate directly in these contracts but indeed they ensure that only the very large multinational companies have the opportunity to do so.Whereas the selective sourcing model identifies an opportunity for adaption to the rapid technological change that is taking place, it also empowers the client—the person purchasing the services from the IT vendors—to have a degree of flexibility and strategic control over the management of information technology in that particular workplace. In this case what we are seeing is the government following the opposite path to what is espoused within that selective sourcing model, to the detriment of Australian industry and certainly to the detriment of the Commonwealth agencies and departments who are seeking to utilise IT outsourcing as a means of improving services to the citizens of Australia through their department's or agency's goals and indeed serving the political purpose of delivering some cost savings, which I have already addressed and provided some comment on. So I think that clearly, through these studies, the actual justification or the comments that I originally referred to from the minister with respect to savings and improving the quality of service delivery from Commonwealth agencies can be shown to be completely false.The next area I would like to touch on is that of industry development. Right from the beginning I have continually maintained the argument that the government's IT outsourcing program is severely damaging the Australian IT&T sector. Why? Because at this point in time every government in the world who is concerned about the economic growth of their particular economy, who is concerned about the future of jobs and who is concerned about what will constitute value in the information society is looking towards information technology and the new technology industries as a source of quality employment and as a source of financial and living standard security for the citizens of their respective countries.So why is it that this government and Minister Fahey through this IT outsourcing program can almost in one fell swoop undermine Australia's ability? The reason is this: 40 per cent of information technology procurement in Australia can be attributed to government expenditure. That is a far greater proportion than that of many other comparable countries. It is a reflection of our vast geography as much as it is our corporate demographic and not having a huge presence of large companies requiring these types of services.Secondly, we are on the brink of a burgeoning trade deficit in IT&T or, as recently reported in the Financial Review and I read the headline: `IT imports on the increase'. More than anything else there is a profound economic reason why we need to actively grow our IT&T sector and use policy tools like Commonwealth procurement to make it a reality. The `IT imports on the increase' article articulates and makes direct reference to a published report entitled Information Technology Trade Update that shows that, while Australia's exports are in fact growing, our imports in dollar terms are growing almost exponentially. This article, which was published in the Financial Review on Tuesday, 20 April 1999, confirms a trend identified by Ashley Goldsworthy in a government commissioned report of two years ago which said that unless we arrest this growing IT&T trade deficit Australia is going to be in dire economic straits in terms of our trade deficit. People are spending more money on IT&T as each year passes, and the impact of this particular part of the economy and balance of payments figures will become more and more important as time goes on.Finally, I would like to say that in all of the government's efforts to try and justify it, there is one thing that keeps coming home to me, and keeps being told to the government, albeit they block their ears. That is the direct impact on small business in this country. We heard again, over two years ago, evidence to a Senate inquiry on IT outsourcing that the government's IT outsourcing program was denying Australian companies the opportunity to participate directly in these government contracts and in doing so they denied them an export credential. That critical export credential, for so many innovative IT&T companies, is having a Commonwealth contract under your belt, so when you go touting for business in the global environment with other governments or with companies overseas, you do so on the basis of having the government's confidence. This sums it up. This is an email I received from a constituent:Last week I read the article in the Australian detailing your unveiling of the government's practice of hiring contractors from the US to advise the government on its IT outsourcing policies. I would like to support your views that this practice is an absolute disgrace. Further, I am sadly appalled at the government's gross short-sightedness, bull-headedness and ignorance in its IT policies. Spending $A6 million on US experts to advise on where to spend its outsourcing dollars is idiocy, particularly when its own industry is perfectly capable of such expertise, yet struggling badly to meet its IT staffing demands. Local industry needs exactly this kind of work, lest its people seek even more work overseas. I am a 28-year-old Australian, recently returned from abroad, with the greatest of hope and enthusiasm to establish a multi media development firm.(Time expired)444113:15:004441Allison, Sen LynSenator ALLISON1M6VICAD00—I want to speak today about the abolition of bilingual education in the Northern Territory. I do so a day after the Oxfam report Education Now was released. This is the report that charts the international community's failure to seriously tackle a very important goal of providing a formal education for all children of primary school age by the year 2015. Australia was one of those nations to commit itself to this goal.The report notes that Australia spends most of its education aid budget providing tertiary scholarships. The average cost of a scholarship is $60,000, which is in fact enough to finance 10 primary schools in Zimbabwe, excluding salaries.The report also criticised the axing of bilingual education in the Northern Territory. The Territory, it said, displayed `flagrant disregard for local languages'. The move was `a clear breach of the government's obligations set out in the Convention on the Rights of the Child to protect and respect the rights of indigenous people'.Maria Ceresa's excellent piece in the Australian yesterday notes the achievements of the Welsh in retaining their language and the Brazilian government's move to revive hundreds of Indian languages. Their experiences show that it is possible to be proud of minority languages. So I think we ought to ask the question: why is it that Australian governments are so fond of being linguistically backward?As usual, the Northern Territory was quick to defend its decision, without giving any reasons for it, and the federal government has so far said nothing. As is the custom with most attempts to place Australia's treatment of indigenous people in an international context, the isolationist shutters will no doubt go up: `Outsiders shouldn't be telling us what to do.'The benefits of bilingual language education have been numerous. Dr Merridy Malin and Stephen Harris, a former principal education officer in the Northern Territory Department of Education, have both listed some of the less obvious but no less tangible benefits: Aboriginal people gain teaching roles and status that would otherwise go to white people; real jobs are created in otherwise job starved Aboriginal communities; many more Aboriginal adults are enrolled in teacher training courses; and there is an important role for schools in recording and teaching Aboriginal culture. However, none of these advantages was addressed by the Territory's education minister in his response yesterday to the Oxfam report. Peter Adamson simply claimed that bilingual education had not achieved `required literacy results in the 17 remote communities in which it existed'.The minister is quite correct in saying that indigenous children, on average, fall well behind non-indigenous children in English literacy. But it is disingenuous and plainly incorrect to blame this on bilingual education. By phasing out bilingual education, Mr Adamson is essentially throwing the baby out with the bath water. Bilingual education as it now stands has its flaws; I do not think anyone would challenge that. But this does not change the fundamental principle that children have a right to be proficient, both orally and in writing, in their own language.Evaluating bilingual programs is not easy. What is the catch-up period you allow for students to jump the gap between their first language and English? Who does that evaluation? Is it English teachers or indigenous teachers? Who is in a position to judge how students' first language has helped them to learn English? These are very difficult questions which do not appear to have even been addressed before the Northern Territory government proceeded down this course. What about those schools that have changed models midstream to introduce English earlier, in spite of any lack of evaluation again by the Territory department?The work of Anne Lowell and Jane Garrutju reveals a host of impediments to the success of bilingual education. They say that the high incidence of middle ear infections means that hearing loss is a serious barrier to oral proficiency in English. Very few teachers in bilingual schools have ESL qualifications. Compulsory ESL qualifications for all non-indigenous teachers working in Aboriginal schools would be an astute move to improving English literacy, one would have thought.Another barrier is the teacher-student ratios in remote communities, which are as high as one to 55, even though the Territory government recommends a ratio of 1 to 22. I recall that when the education committee visited the Northern Territory and went to Djmada and another remote area school, which was in fact bilingual, we heard that the Northern Territory government funds schools on the basis of average attendances. At the beginning of a term there may be 80 children in a classroom and towards the end of the term that figure comes down towards eight or 10, and the funding is on the basis of the average.There is only a one-week training course in Darwin for teachers who go out to Aboriginal schools. English is a second language for most children in remote communities. I think we need to recognise that we do not expect newly arrived immigrant children in capital cities in Australia to attain English without receiving targeted help. Why would we expect this of Australian children who are born speaking an Australian language that happens not to be English? For some of these kids English it not just their second language but their third, and sometimes more.In many communities, English is not used much. It is reserved for teasing, for church and basically for talking with white people. One teacher commented that her students learned far more in a two-week excursion to Melbourne than in the previous two years of classes. This emphasises that in many communities there is little or no need for English in everyday life. I think this is genuinely difficult for us to comprehend if we live in a large capital city or in Canberra or somewhere where there are few Aboriginal people.Indigenous Australians using their own language should be something to celebrate, I would argue, rather than to condemn because this situation is in fact becoming rarer every year. According to Language Australia, Australian languages are disappearing at the rate of 1½ on average per year. Only about 20 indigenous languages are still passed on to children as the primary language of a community. Only 10 per cent of Aboriginal people speak a traditional language.Given this backdrop of linguistic loss, Dr Kemp's literacy obsession is intolerable. In parliament and elsewhere, the minister has evaded questions about the federal government's agenda. He has refused to explain why he is not out there defending the teaching of Aboriginal languages. He has refused to explain why he has not uttered a single word of criticism about the abolition of the bilingual education program, and he did not once refer to bilingual education in a recent speech of his about federal indigenous education initiatives—not once. Dr Kemp will not even use the term `bilingual education'. He is not prepared to admit of its existence. He prefers to use the term `literacy', and by that he means English literacy. Dr Kemp has never actually expressed support for the Northern Territory government's move, but his silence, I think, speaks volumes.Christine Nicholls is a former principal of a bilingual school. She recently wrote that, while Aboriginal children are no longer being separated from their mothers, they are now being separated from their mother tongues—from terra nullius to lingua nullius. Ms Nicholls mentions the experience of the Laja-Manu community. Immediately prior to bilingual education being provided, children were frequently beaten or caned for speaking in Warlpiri. Right now, Aboriginal communities are resisting the Northern Territory government, and I thank Christine Nicholls and Merridy Malin for the following information. The Tiwi staff and community of a Catholic school on Bathurst Island paid for a full-page advertisement in the Northern Territory News, an open letter to the minister. The Warlpiri people at Yuendumu are threatening to keep their children at home. Other communities have issued media releases and complained to the department. Protest banners at Yirrkala claimed, `We won't let you cut off our tongues. Our language is our life.'They know the stakes are high. Professor Joe Lo Bianco of Language Australia recently explained why the Territory's decision goes to the heart of Aboriginal cultural survival. He said:Australian language and literacy policy—that does not support the efforts of Aboriginal people to preserve those domains that remain vibrant for indigenous languages—is a limited, assimilationist and defective policy.He went on:Such a policy is complicit with cultural damage and dislocation, and with a perverse notion of equality that is premised on schooling making children:forget what they knowbecome alienated from their families and backgroundsand to achieve less than they might.It was the Whitlam government that originally introduced bilingual education. That was to circumvent fierce ideological opposition from Northern Territory politicians. That same implacable opposition is at work again now in 1999. I do not think we should be letting the federal government off the hook. Dr Kemp, this is a very serious matter, and I think it is time for you to speak up on the question.444313:25:004443Tierney, Sen JohnSenator TIERNEYO15NSWLP10—Today's speech is the fifth in a series of addresses to this chamber I have made on the matter of illicit drug addiction. Some weeks ago I spoke with pride of our government's Tough on Drugs strategy and the significant progress that has already been made in what is the biggest anti-drug program in this country. You may be aware that this undertaking involves essentially a four-pronged strategy over a period of four years: the protection of Australia's borders, fighting drug dealers, educating our children to the dangers of drug use and the zero tolerance of illicit drugs within our school environment, and a renewed commitment to rehabilitation, including custodial rehabilitation for convicted criminals.In a subsequent speech, I also spoke of the community meeting held in my own area of Newcastle where, having anticipated about 80 people turning up, we had 520 people come to a public meeting with their own concerns, being prepared to share with the gathering their own experiences and taking the opportunity to garner advice to help solve their own problems in their own families and to restore some normalcy to their life. There are many instances of what is now becoming a community based approach across the country.Towards the end of last year, over 600 people gathered at Port Macquarie in a similar way, seeking answers. Within the next week at the University of Newcastle there will be another such community gathering. Just in my own immediate area, the community is coming out and trying to find solutions to this terrible problem that faces our nation. This welling up of community concern at this time is fortunately meeting a proactive government response on a wide front of prevention and rehabilitation.In another address, I noted that both the Australian Institute of Criminology and the Australian Bureau of Criminal Intelligence confirm that my own state of New South Wales statistically has the highest incidence of criminal activity related to drugs and, indeed, Sydney is the drug capital of Australia. I drew attention to the alarming rate of increase of criminal activity within New South Wales related to drugs and the link between the increased crime rate and drug abuse in New South Wales. I also noted the economic and social commonsense of attacking the drug menace at the supply level and also discussed overseas experience, in particular the successful Swedish model, which essentially employs the principle of a drug free society as a means of showing distinctly and unambiguously that all non-medical use of drugs is unacceptable.Today I intend to speak about the expansion of the Howard government's Tough on Drugs strategy following the commitment of new moneys totalling almost half a billion dollars to be spent by this government over the next four years to fight the drug menace in our country. A particular focus of the new funding that was announced several weeks ago will be on rehabilitation. Funding benefits have already been received by nearly 150 community organisations. Funding will be directed at these existing services to enhance what they are doing, as well as a number of new initiatives.People are well aware of the tremendous work being done by voluntary organisations such as the Salvation Army and the Ted Noffs Foundation. What they are probably not as aware of is the enormous amount of work that goes on in community organisations in country towns around Australia that are little known. These groups will be getting a new lifeline of funding to help us undertake a comprehensive program of fighting drugs across Australia.What is most important is that, no matter what their size, these organisations, often working in a voluntary way, are now part of a total national strategy. Assistance and services will be targeted at particular groups in this approach that the government is now expanding. Children of women in drug treatment, Aboriginals and homeless youth will be a particular focus of this strategy. For example, at my local level in Newcastle in the Hunter there has been approval of funding in the Cessnock area to expand an existing residential rehabilitation service by an additional 20 beds. At Chittaway Bay on the Central Coast a drug rehabilitation program for severe dependence issues amongst Aboriginal people has received funding to help their rehabilitation program.The expansion of the government's Tough on Drugs strategy has very recently been clarified and been given special impetus by the Australian Council of Governments, which met here in Canberra a short while ago and discussed a national illicit drug strategy. What transpired was the generation of a number of agreed outcomes. Those agreed outcomes between the Commonwealth, the states and the territories may change forever the level of drug abuse in this country. We hope and pray that this united and very powerful initiative by all levels of government will tip the scales in this country in favour of endeavours to reduce the incidence of illicit drugs.All told, there were six agreed outcomes between the states, territories and the federal government. The heads of government communique spoke of adding a new dimension to the national drug strategy based on a partner ship between governments and the broader community, including voluntary and community organisations. Agreements were made to work together to make a new investment in prevention, early intervention, education and the diversion of drug users to counselling and treatment, along with a major shift in the practice of law enforcement. Most importantly and of major significance, they agreed to work together.The measures agreed to by the heads of government relate to drugs in schools, drugs in the community, drugs in prison, alternative treatments, drug supply and next steps, in particular partnership agreements which link efforts to combat drug abuse at all the various levels of society. The heads of government clearly stated their opinion that illicit drugs have no place in our schools—a message to be emphatically sent to those who push drugs to school students and students who are drug users. Agreement was given for the Commonwealth provision of resources so that schools will be better able to respond to illicit drug use, to develop a national basis as a means to aid schools and their environment, and the provision of educational and resource materials.A new nationally consistent approach is to be brought to drug problems faced by the community as governments work together to enable police to divert drug offenders to compulsory assessment. This consistent approach will complement and expand existing state and territory approaches based on such elements as the provision of appropriate law enforcement; the provision of Commonwealth funding for early intervention treatment and ensuring rehabilitation places; shared Commonwealth, state and territory funding for assessment services; and community based services that will provide support for individuals at the conclusion of their treatment.In relation to prisons, states and territories will develop and fund programs which aim to intercept the supply of drugs to prisons and to develop trial diversionary treatment programs. People should note that the prison population in Australia at the moment is growing and that between 70 per cent and 80 per cent of people who are now in prison are there because of drug related reasons. Support was also given by the heads of government to alternative treatments for drug addiction. The Commonwealth is committed already to the availability of alternative treatments.This government has indicated its intention to fast-track consideration of the inclusion of naltrexone on the list of prescribed medications available on the pharmaceutical benefits table. Legislative changes at the federal level will be aimed at reducing the supply of illicit drugs within Australia. The Commonwealth will also increase its capacity to intercept drugs coming into the country from overseas supply sources. Lastly, the heads of government agreed to the immediate commencement of joint planning arrangements to combat illicit drug use within Australia via linked partnership agreements at all levels of government in the community.Areas to be linked will include education, law enforcement and treatment efforts, particularly the development of early intervention programs. In combination, the initiatives agreed to by the heads of government have the potential to deliver enormous benefits to the entire Australian nation by diminishing the extent and the scale of the drug menace that threatens our children. These benefits will come about because of the momentum of a plan which focuses on the key to the whole drug strategy—that is, a plan that focuses on partnerships and involvement at all levels: family, community and government; partnerships between the Commonwealth, states and territories; partnerships between voluntary bodies; partnerships between professional associations; partnerships between government bodies; and the involvement of parents and schools and all levels of the community in general.I would like to re-emphasise that a response at this level and of this magnitude has never been initiated before in Australia. It is a response which reflects increased government involvement and community concern. It is a response which reflects the determination of our society to work together to move from a reactive to a proactive position in a quest to bring under control the quiet, insidious toll of illicit drug abuse in our Australian community.Sitting suspended from 1.38 p.m. to 2.00 p.m.Questions Without Notice444544454445Campbell, Sen GeorgeSenator GEORGE CAMPBELLNB5NSWALP00—My question is to Senator Kemp, the Assistant Treasurer. Is the minister aware that for the past year European Union leaders have been considering the reduction of the VAT on certain labour intensive services in order to help boost employment? Does the minister agree that this is recognition that a GST is a tax on jobs? If the European Union recognises that a GST on services such as house painting and renovating, domestic help and aged care and environmental services is a job destroyer, doesn't this argument also apply to the proposed new 10 per cent GST on Australian labour intensive services? If not, why not?4445Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—What an amazing question to get from Senator George Campbell. Senator George Campbell is most famous for a comment that the former leader of the Labor Party, Mr Keating, made about him.NB5CAMPBELLSenator George Campbell—Boring!WW4Senator KEMP—It is not boring to the people who were affected, Senator. What Mr Keating pointed out was that George Campbell—he was not a senator at that time—wore around his neck 100,000 dead men from the metal trades industry as a result of the policies that he, George Campbell, followed at that time. Now Senator Campbell is in the Senate.RF4COOKSenator Cook—Madam President, I raise a point of order—WW4Senator KEMP—Oh!RF4COOKSenator Cook—Why don't you attack the question, not the man? My point of order is on relevance, Madam President. Senator Campbell has asked a perfectly reasonable question of the minister, and he is entitled to a reasonable reply. Attacking the personality of the questioner is inappropriate, particularly from this minister. I ask you to draw his attention to the relevance of his answer.10000PRESIDENTThe PRESIDENT—I do draw the minister's attention to the question.WW4Senator KEMP—I think my remarks threw into context the person who was posing the question and probably questioned to a degree how committed he was to issues of employment, in view of his past record. What an irony for Senator Cook to say, `Don't play the man.' What is Senator Cook's most famous quote in this parliament? It is true that when Senator Cook leaves the parliament and people ask, `What is Senator Cook remembered for?' they will go to the Hansard of 11 November 1997, I think it was, and they will recall exactly whether Senator Cook plays the man or not.Senator Campbell asked about unemployment. This government has an excellent record in this area. The peak level of unemployment under the Labor Party was about 11.5 per cent. That is the level that unemployment rose to under the Labor Party. So one would question the sincerity of the Labor Party in asking about issues of unemployment. We of course have brought the level down to around 7.4 per cent, and we have an excellent record in job creation. But we wish to go further. One of the reasons that we want to carry out major tax reform is to increase the efficiency of the Australian economy, and there has been a range of models, a number of which were quoted in this parliament this morning in relation to a question from Senator Campbell about the likely effects of tax reform on growth in the economy. We went through four or five models and it is predicted that the tax reform measures this government is proposing will have a very healthy effect on unemployment.Senator Campbell, I think it is very hard to compare our tax reform measures with the tax system in Europe. They have a large range of taxes. They have various rates and some rates are substantially higher; some in particular areas may be lower. It is very hard to compare. The unemployment levels in this country, from memory, are below the average in Europe already, but this government is determined to go further.RF4COOKSenator Cook—It should have been taken up with the European Union.WW4Senator KEMP—Senator Cook has decided to chip in again. I thought that after my earlier remarks you might keep quiet for a few seconds, Senator Cook. This government gives a very high priority to tackling the unemployment problem in this country, and that is one of the reasons that this government is determined to proceed with tax reform.4446Campbell, Sen GeorgeSenator GEORGE CAMPBELLNB5NSWALP00—Madam President, I ask a supplementary question. Is the minister also aware that these same European leaders are suggesting that the reduced rate of VAT apply from 1 January 2000 to 31 December 2002? Does the minister support the view that a lower rate of VAT or no VAT at all would be beneficial for labour intensive services and would therefore boost employment?4446Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—One of the means this government uses to reduce the rate of unemployment is to pursue more flexible labour markets, which you and the Labor Party are completely opposed to. One of the issues we have brought before this Senate time and time again is to deal with the unfair dismissals issue in relation to small business. Each time it has been brought forward it has been rejected by the Labor Party. We have a comprehensive program to tackle unemployment, and for Senator Campbell to suggest that the EU is going to remove all VAT is fantasy stuff.44464446Parer, Sen WarwickSenator PARERKI4QLDLP10—My question is directed to the Leader of the Government in the Senate, Senator Hill. Australia has been hailed as a miracle economy under the responsible economic management of the Howard government. I ask the minister: will he inform the Senate of new information confirming the underlying strength of the economy? What further measures should be introduced to sustain Australia's strong economic performance?4446Hill, Sen RobertSenator HILLBH4SALPEnvironment and Heritage10—I thank Senator Parer for his important question. Yes, it is true that the Australian economy continues to do well under the Howard government. It is not by chance; it is not a miracle. It is because this government took tough but fair decisions— decisions that the previous Labor administration was not prepared to tackle. In particular, the economy is growing at a rate of 4.7 per cent at a time when other economies in the region are experiencing a severe downturn; unemployment is at its lowest level since 1990; home owners are paying the lowest home interest rates in more than 30 years; the share market continues to surge; and business and consumer confidence is up.There has been further confirmation today that the fundamentals of the Australian economy remain strong. Today's consumer price index figures for the March quarter show a headline inflation rate of 1.2 per cent through the year. Whilst this result mainly reflects the impact of the government's 30 per cent tax rebate for private health insurance, the underlying rate of 1.7 per cent confirms continuing low inflation. Underlying inflation has now run at under two per cent for eight consecutive quarters. This government has delivered a low inflation, low interest rate environment which will ensure industry and business continue to grow and to provide job opportunities for unemployed Australians.The IMF has provided further independent confirmation of the remarkable performance of the Australian economy. The latest IMF World Economic Outlook shows that, despite the impact of the Asian crisis, Australia's growth prospects compare favourably with those of other industrialised economies. In fact, the IMF expects that growth in Australia over 1999-2000 will be higher than the average growth across other advanced economies. The IMF also forecasts that Australia will grow faster than all G7 economies except the US in 1999 and faster than all G7 economies in the year 2000. This conforms with the latest forecast from Westpac which confirms that there is `convincing evidence that the economy has maintained its growth momentum into 1999'. This government has laid the foundations for that growth by bringing the budget back into surplus, by reforming our outdated industrial relations system and by giving our industry and business a low inflation, low interest rate environment.The next great reform that faces our country, that faces our economy, is of course to reform our outdated taxation system. Australia cannot go into the next century with a tax system that was designed in the 1930s and is now well past its use-by date. I remind you that our new tax package includes $13 billion of personal income tax cuts, the abolition of nine state taxes, major benefits to regional and rural Australia through cheaper transport costs, and guarantees that all Australian exports will be GST free. The ALP wishes to deny the Australian people these benefits—the same ALP that left the economy $10 billion in the red when it went out of government. Labor has it all wrong in relation to economic management. Australia has now the foundations for prosperity in the future. This government should be given the opportunity to go on with the job and give us an up-to-date, properly contemporary, reformed taxation package.44474447Quirke, Sen JohnSenator QUIRKEZS6SAALP00—My question is to Senator Kemp, the Assistant Treasurer. Is the minister aware that the ACCC has, in its judgment finding the Howard government's private health insurance ads misleading, also expressed the view that `the Trade Practices Act is unlikely to formally apply to government advertisements of this kind'? If the ACCC can act on deceptive ads from shonky used car dealers, why will the government not protect the public from ads run by the Howard government which are just as misleading?4447Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—It seems to me that there was a false premise in the question. I am aware that the ACCC has examined the government's information campaign on the 30 per cent rebate on private health insurance. That was the matter you referred to. I am aware that there was some confusion in the market. For example, the rebate scheme replaced the private health insurance incentive scheme. Some private health insurance policy holders did not receive as great a reduction in premiums as anticipated. But it is very important to point out that, despite the fact that the ACCC did not find that the government's advertising in relation to the rebate breached the Trade Practices Act—it is very important to note that—5K4FAULKNER Senator Faulkner—The ads were lies.WW4Senator KEMP—Madam President, Senator Faulkner continues to launch forth with abusive comments. I am providing a detailed answer to the question that Senator Quirke raised. Despite the fact that the ACCC did not find the government's advertising in relation to the rebate breached the Trade Practices Act, this government has moved quickly to avoid confusion about the impact of the rebate scheme. The Department of Health and Aged Care has issued a circular alerting all health funds to the ACCC's concerns and providing advice on ways of minimising the risks of misleading consumers when advertising the new rebate scheme.4448Quirke, Sen JohnSenator QUIRKEZS6SAALP00—Madam President, I ask a supplementary question. Given the Howard government's reliance on advertising campaigns in place of sound public policy, and its clear inability to accurately put its case in these ads, should not the Howard government's ads carry a warning for the gullible and naive? When will the government actually tell the Australian people the truth about important matters such as private health insurance?4448Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I should ignore the abusive preamble to that question. If there is any group that has been shonky in this parliament it is the Labor Party. We can quote numerous examples, but one which involves virtually all the former ministers of the Keating government was the cover-up of the $10 billion black hole in the budget when we came into government. When we came into government, the Labor Party and Senator Cook maintained that the budget was in surplus. There was a $10 billion black hole. There are some shonks in this parliament and they are over there.44484448Lightfoot, Sen PhillipSenator LIGHTFOOTWP6WALP10—My question is also addressed to the Assistant Treasurer, Senator Kemp. The hallmark of the Howard government's commendable—Opposition senators interjecting—10000PRESIDENTThe PRESIDENT—Order! Senator Lightfoot, just a moment. Order!WP6Senator LIGHTFOOT—Thank you, Madam President. I will start again and try to talk over Senator Forshaw's voice. The hallmark of the Howard government's commendable taxation reform plan is to create a fairer tax system for Australia, part of which includes creating a system that catches tax cheats. Would the Assistant Treasurer inform the Senate as to what measures are being taken by the government to reduce tax avoidance?4448Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—The government does have a plan to reduce taxation avoidance and tackle the so-called black economy. This plan will involve a range of measures and, of course, tax reform is one of the ways that we are tackling the black economy. People who deal in the black economy and flout taxation laws place an unfair and large burden on the rest of the community. The government continues to address this particular problem and we want to make sure that honest, law-abiding Australians are not shouldering the burdens of the black economy.There are strong grounds for arguing that a broad, multistaged indirect tax would increase revenue collected from the proceeds of the black economy. It would mean that income generated through the cash economy had been taxed because the goods and services tax would help catch this money at the point of sale. By totally opposing the government's new tax system, which as we all know features a goods and services tax, the Labor Party are turning a blind eye to the black economy, as they did in the 13 years they were in government in this country. They are turning a blind eye to people who do not participate in the taxation system and who create a greater burden for the average law-abiding Australian.Under a goods and services tax, people who avoid the current tax system will be forced to participate in the new tax system, typically through the point of sale. This is one of the many advantages of a broad-based indirect tax.Senator Sherry interjecting—WW4Senator KEMP—I am indebted to Senator Sherry for calling out. Senator Sherry said in the chamber last week, `The sales tax we have in this country is sustainable and efficient.' That is Senator Sherry's view. Virtually the overwhelming weight of people who would classify themselves as tax experts would not agree with Senator Sherry. Senator Sherry's comments are a huge reflection upon the Labor Party and, frankly, just show how out of touch they are in this debate.The government also plans to introduce one number for each Australian business which will identify them for all government purposes. This is to be known as the Australian business number. The so-called ABN will facilitate the introduction of a single tax compliance statement as well as, amongst other things, streamlining business interaction with the Commonwealth. It will ensure that all bona fide businesses are registered, and that withholding arrangements cover all payments by businesses to people who are not in an identified business. The system will enable the tax office to make significant inroads into the cash economy and therefore create a fairer tax system for all Australians. In fact, the Commissioner of Taxation has estimated that some $3.5 billion over three years in additional income tax revenue will be generated as a result of these collective impacts.44494449Evans, Sen ChrisSenator CHRIS EVANSAX5WAALP00—My question is directed to Senator Herron as Minister representing the Minister for Aged Care. Will the minister give a guarantee that all those residents who were in nursing homes before October 1997 and who have been forced to transfer to another nursing home—on, say, type of care grounds or because the home was closed—will be fully refunded for any accommodation charge they may have been wrongly charged?4449Herron, Sen JohnSenator HERRONVW4QLDLPAboriginal and Torres Strait Islander Affairs10—Senator Evans asked this question previously and an answer was provided to him on this. If there is any further information I can get, I would be happy to do that. In the answer provided previously, the minister said there would be protection where that occurred and, as I have said, if there is anything further that can be added to that answer I will be happy to seek it. I will have to get back to Senator Evans with that.4449Evans, Sen ChrisSenator CHRIS EVANSAX5WAALP00—Madam President, I ask a supplementary question. The issue is whether or not the government is going to honour its commitment, made 19 months ago, that these people would not pay the accommodation charge. Some of these people have now paid over $6,000 that this government said they would not be charged. Some, of course, have died and that charge has been taken from their estates. What we want to know is: will the government guarantee to meet its commitment to these people and ensure that they are refunded the accommodation charge they have paid and that they will no longer have to pay the accommodation charge, as Mr Howard promised these older Australians at the time of the changes?4449Herron, Sen JohnSenator HERRONVW4QLDLPAboriginal and Torres Strait Islander Affairs10—As I said previously, Senator Evans has asked this question before. The government will be honouring—and the answer was given to Senator Evans on that—its commitment in full as part of the budget. Where providers have been charging pre 1 October 1997 residents the accommodation charge, these residents will be fully compensated. Senator Evans was told that. Senator Evans was informed in the material that was provided to him. Furthermore, the government will pay providers additional supplements—AX5EVANSSenator Chris Evans—Madam President, I raise a point of order. Senator Herron is misleading the Senate. I have in front of me the Hansard of what he said, and he did not say that at all. He is misleading the Senate and he ought to consider carefully what he is saying.10000PRESIDENTThe PRESIDENT—There is no point of order.VW4Senator HERRON—I am not attacking what Senator Evans has said. I said that there was supplementary material provided to him, which I understood answered the question that he asked the other day. If he is disputing that, I am providing further material; that is, the government will pay providers additional supplements to ensure that they are not financially disadvantaged. This will also guarantee the access of pre 1 October 1997 residents, should they move to another nursing home. (Time expired)44504450Bourne, Sen VickiSenator BOURNETW4NSWAD00—My question is addressed to Senator Hill, the Minister representing the Prime Minister. I ask: what representations were made by our Prime Minister, and what undertakings were given by President Habibie, at the Bali talks about disarming the pro-integration militia on East Timor and the removal of the Indonesian defence force from that territory? Given that it is now accepted that ABRI is involved in the arming of the militias, did General Wiranto provide any guarantees that ABRI soldiers in East Timor can now be trusted to fully disarm the militias?4450Hill, Sen RobertSenator HILLBH4SALPEnvironment and Heritage10—I think it can be presumed that these matters were discussed and built upon the agreements that were reached in New York at the end of last week. I understand that the agreement in New York includes the absolute neutrality of the Indonesian armed forces during the UN consultation and a role for the Peace and Stability Commission in ensuring the laying down of arms and disarmament efforts. But, yes, ensuring peace and stability during the consultation and autonomy vote process remains the primary responsibility of the Indonesian government. There is no doubt that the Indonesian government, through its President, understands that responsibility and intends to act upon it.4450Bourne, Sen VickiSenator BOURNETW4NSWAD00—Madam President, I ask a supplementary question. I thank the minister for that answer, but he did not answer the question about the disarming of the militias. Were any representations made that he knows of, and were any plans made to do that? We would be very interested in that answer.4450Hill, Sen RobertSenator HILLBH4SALPEnvironment and Heritage10—I think all that has been said, and that I should therefore confirm, is that Indonesia accepts its responsibility to ensure that there is a peaceful vote and that people can vote in an environment in which they are not intimidated. That does raise the question of armaments and, as I said, the government of Indonesia has accepted that that matter needs to be resolved in order to ensure that such a peaceful vote can take place.44504450Bolkus, Sen NickSenator BOLKUSXE4SAALP00—My question is addressed to Senator Vanstone, the Minister for Justice. I ask her: is it a fact that the federal government is withholding gun buyback money earmarked for the state of Victoria and accusing that state of watering down national gun laws? Can the minister confirm that the Victorian police minister, Mr Bill McGrath, has stated that he will be referring gun owners to the Commonwealth when Victoria's compensation funds run out? Is it a fact that Mr McGrath informed the minister of this intention and did so some months ago? Given that the Victorian government will not do so, will the federal government compensate firearm owners and dealers who have handed in their weapons?4450Vanstone, Sen AmandaSenator VANSTONE7E4SALPJustice and Customs10—I thank Senator Bolkus for that question. The answer to the first question is yes. The answer to the second question is yes. The answer to the third question is: I cannot recall whether Mr McGrath has personally advised me of this, but I have certainly read that view expressed in the paper and attributed to him, and I have not seen it denied. Lastly, as you would well know, Senator Bolkus, as you do read the papers, we have written to state governments that have not complied with the national firearms policy—a policy your party endorses, a policy that all parties in this chamber endorse, to make Australia a safer place. We have written to the states that have more serious compliance problems and have indicated that their failure to comply with the agreement will be taken into account in considering any compensation. The agreement included compensation to be paid through the states, but the prerequisite for that is that the agreement be adhered to. Where there are states that have chosen not to adhere to it, the Commonwealth is entitled to say, `We will take your failure to keep the agreement into account.' We have done that; we have sent them those letters.4450Bolkus, Sen NickSenator BOLKUSXE4SAALP00—Madam President, I ask a supplementary question. I ask the minister further: is the Commonwealth satisfied that the Victorian government has met its obligations under the agreement struck between state and territory governments post Port Arthur? I take into account that you have written to them, but I do ask: what further action will the Commonwealth take to ensure that Victoria does comply with the agreement on national gun laws? Minister, why didn't the Prime Minister raise this issue at the recent Premiers Conference, as he promised the Australian public on A Current Affair just a few weeks before that conference?4451Vanstone, Sen AmandaSenator VANSTONE7E4SALPJustice and Customs10—Senator Bolkus, as I understood your question, it was: has Victoria met its commitments under the national firearms policy? The answer to that I thought was—and this was in the answer to the question you first asked—clearly, no, they have not met their commitments. As to why the Prime Minister does not raise something at a premiers meeting, I will refer that matter to the Prime Minister. I recall that the first time the Prime Minister wanted to discuss this matter the premiers walked out in a huff, which is what has occasioned us to resort to saying to the premiers, or to their states at least, that if they do not comply we will have to take into account their failure to comply in considering whether we will then comply with the agreement and forward the compensation.Senator Bolkus, it cannot be underlined strongly enough that the Prime Minister and this government are 100 per cent behind the national firearms policy. The Prime Minister has said on a number of occasions—and I will repeat it for your benefit now—we will do anything in our power to ensure that agreement is adhered to. (Time expired)44514451Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—My question is directed to the Minister representing the Minister for Immigration and Multicultural Affairs, Senator Vanstone. Given the deteriorating human rights situation in East Timor and given the government's current policy of not accepting people fleeing from East Timor as eligible for refugee status in Australia, what intentions does the government have in relation to East Timorese people arriving at Australia's borders seeking refugee status in this country?4451Vanstone, Sen AmandaSenator VANSTONE7E4SALPJustice and Customs10—I thank the senator for her question. She was kind enough to give my office some notice of this question, and I have contacted the minister for immigration to see whether I can get the latest possible update on the situation—because, as you would understand, Madam President, the senator's question is premised on the basis that there will be some change. She identifies the current situation, and asks whether there is to be a change. The advice I have from the minister's office is that he would prefer that question to be taken on notice. He has not yet had the opportunity to discuss the situation in Timor with the Prime Minister, with Alexander Downer and with Defence Minister Moore as a consequence of their recent trip.I am obviously not privy to the full range of discussions that have been had on that trip. The minister's office has asked me to indicate that they will reply to you as promptly as they possibly can but do not want to do that without the benefit of a briefing on the recent trip of the Prime Minister.4451Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—Madam President, I ask a supplementary question, and I thank the minister for that answer. Can the minister guarantee that East Timorese fleeing the territory will not automatically be detained or deported on arrival in Australia if they have inappropriate documentation? What plans does the Australian government have to facilitate the processing of visa applications in East Timor for those seeking protection in Australia, given the need for an expedited process? I realise that, similar to your first answer, a portion of that question at least will be on notice.4451Vanstone, Sen AmandaSenator VANSTONE7E4SALPJustice and Customs10—Madam President, as the senator realises, this is a somewhat fluid situation. I will accept the undertaking of the office of the Minister for Immigration and Multicultural Affairs that they will give you a reply as quickly as they can on any changes, including those that follow on from your supplementary question.44524452Faulkner, Sen JohnSenator FAULKNER5K4NSWALP00—My question is also directed to the Minister for Justice and Customs, Senator Vanstone. Can the minister confirm that two international experts have recently described Victoria's heroin problem as the worst in the world? Is it a fact that Dr Franz Trautmann stated, `I have never seen a heroin death rate like this anywhere in the world,' and `Nothing compares to the heroin epidemic in Victoria'? Can the minister confirm that the research by Dr Trautmann and Dr Robert Haemmig reveals that, `Victoria probably has the worst heroin death rate in the world per head of population'? Can the minister inform the Senate as to whether this epidemic in heroin use in Victoria is the result of poor gateway interdiction procedures or a consequence of inadequate local policing procedures?4452Vanstone, Sen AmandaSenator VANSTONE7E4SALPJustice and Customs10—I thank the senator for his question. Senator, if I have seen that research, the names of the researchers do not come to mind. I will check that out and come back to you with some detail on that. As to the general question of heroin use, it is recognised that there is a serious problem in Victoria. There is a serious problem in New South Wales, as you well know. What I was pleased to note vis-a-vis Victoria is the high rate of arrest of heroin dealers compared with the rate of arrest of heroin dealers in New South Wales. If you want to ask about what I know about local policing matters, I know only that which I can glean from reports that are prepared. The figures that I provided to the Senate last time this matter was raised—in fact, by me—clearly indicated that Victoria was putting a significant effort into policing this matter.Victoria has some innovative approaches. In one area of Victoria they are trialling a new response by police which basically gives police at the local level the capacity to say to first-time offenders in relation to serious drugs that they have a choice of either going into a program to assist them with their drug problem or facing prosecution. I am very interested in trials such as that because anything that can be done to save any individual from a conviction of any sort of criminal matter, particularly one relating to drugs, in my view is a program that is likely to lead to that person having a greater chance of not, at a later stage in their life, having what would then be their first conviction. So the earlier the intervention the better.New South Wales is also trialling some innovative approaches. One in particular is the question of drug courts. You may know that there is a conference in relation to drug use in Adelaide this week, covering some four days. Marilyn Roberts from the US Department of Justice will be speaking at that conference about drug courts. One matter that might be borne in mind by everybody who presumes to have an interest in this matter is that drug courts, as I am advised by Ms Roberts, started in the US not at some Commonwealth or state level initiative of policy makers but by judges realising the power they have when they can make orders. Judges have quite extensive power. It is a matter of interest the degree to which a number of courts in Australia could behave as drug courts were the treatment facilities available at the state level, which is a matter largely for the states.In summary, I do not think you can pick one state over the other. They both have a serious problem. They both are trying their levels of local policing. I have quoted figures that indicate Victoria is arresting more dealers, trying to get at the dealer rather than the user. The last part of your question was: is this some problem with interdiction at the gateway? Senator, I am embarrassed for you that you are silly enough to ask that question when you know that, under this government, interdiction at the airport has far exceeded, in some cases by four and five times, the annual average that was ever achieved under your government.4452Faulkner, Sen JohnSenator FAULKNER5K4NSWALP00—Madam President, I ask a supplementary question. Will the government be reconsidering its opposition to heroin trials in the light of the member for Bradfield's plea to do so yesterday?4452Vanstone, Sen AmandaSenator VANSTONE7E4SALPJustice and Customs10—I have not heard the comments yesterday by the member for Bradfield, described by the senator as a `plea', but I would be extremely surprised if this government was prepared to reconsider that. It is about time that people who want to dabble in this debate to get themselves a bit of publicity did a bit of reading up first. Premier Carr, a Labor Premier, acknowledged that heroin trials are not the way to go. The maximum number you could put through a heroin trial is nothing like the number of heroin addicts he has. Let us not pretend that this one-off solution that we can raise every now and then—toss it in, give Senator Faulkner a bit of limelight—is a good idea, because it is not.44534453MacGibbon, Sen DavidSenator MacGIBBONYH4QLDLP10—My question without notice is to Senator Newman, the Minister representing the Minister for Defence. What plans does the government have to address the longstanding and well-known deficiency with regard to fast sea lift logistics support for elements of the ADF?4453Newman, Sen JocelynSenator NEWMANBE4TASLPFamily and Community Services; Minister Assisting the Prime Minister for the Status of Women10—I thank senator MacGibbon. We all know of his long-standing involvement in defence matters. It is a pity that this matter of national importance is not given more airing in this chamber by other parties. The Minister for Defence announced on Sunday that Australia's Defence Force capability will be boosted by the introduction of a Tasmanian built, high speed catamaran to provide additional sea transport support for ADF activities in northern Australia.I am advised that Defence has commenced negotiations with International Catamarans, Incat, the Tasmanian builder and supplier of the vessel, to charter the catamaran for a two-year period. This kind of vessel has significant advantages in terms of its capabilities and its flexibility. With a top speed of around 40 knots, the catamaran can carry up to 500 fully equipped troops plus stores and vehicles. Its introduction will complement Australia's ability to move troops and equipment in the most effective matter, and it will support the recently announced increased levels of preparedness for our troops.The new vessel will participate in a range of ADF exercises including Crocodile 99 later this year. I am advised that there is also scope to use it in the provision of support for disaster relief operations within Australia. I understand that it will be based in Darwin from the end of June this year and commissioned into naval service with two crews—Opposition senators interjecting—10000PRESIDENTThe PRESIDENT—Order! Senators on my left will cease interjecting.BE4Senator NEWMAN—I presume they are not Tasmanian senators, Madam President. It is important to Tasmanians. The catamaran will be commissioned into naval service with two crews of 20 Navy and Army personnel. Training of the crews will be conducted at the Australian Maritime College in Launceston. This charter represents a further investment by Defence in Australian industry and technology—something which the previous government said was important to the future of our defence capability. It increases the operational effectiveness of the ADF and it boosts linkages between the Defence Force and local industry. This support for Tasmanian industry will mean more money and more jobs for my state. I know that my colleague Senator Abetz, who is the Parliamentary Secretary to the Minister for Defence, is particularly pleased by his department's plans, as are all my Tasmanian colleagues on this side of the chamber.Australia is internationally renowned for advances in the development of this type of vessel and it offers an innovative solution to current defence requirements. This is the first time that the ADF has diverged from conventional hull forms for its major fleet units. Both the United States and the British navy are also considering the multihull concept for sea transport operations. This contract with the Australian Defence Force could provide an opportunity for some collaboration with our allies which may possibly lead to more orders for Incat—and surely all Australians would be glad to see that growth in an innovative and technologically advanced area of Australian industry.44534453McKiernan, Sen JamesSenator McKIERNAN1I4WAALP00—My question without notice is directed to the Minister representing the Attorney-General, Senator Vanstone. Is the Minister aware of comments by Chief Justice Alistair Nicholson of the Family Court last week when he blamed federal government cuts to legal aid for a legal aid drought? Is it a fact that the Chief Justice said that, as a result of the cuts to legal aid, `those to whom aid is denied must either abandon a course of action or remain unrepresented and that in this equation no account is given to the children.' Can the Minister confirm that, based on a survey quoted by the Chief Justice, 35 per cent of family law cases will now run with at least one party unrepresented by a lawyer and that this figure will increase due to the ongoing impact of cuts to legal aid? Can the Minister advise the Senate what the rate of unrepresented actions were prior to the government slashing the legal aid budget?4454Vanstone, Sen AmandaSenator VANSTONE7E4SALPJustice and Customs10—I thank the senator for his question. Nothing Justice Nicholson said would be a surprise to me. I do not know why you bother to phrase a question asking me what the Chief Justice of the Family Court said when you apparently have a direct quote of what he said. It seems to be a non-sequitur question. I take your general interest and long-standing interest in legal aid funding and will respond to that question in that general sense. I will go back and look at the comments that Justice Nicholson has made and see whether there is anything specific to your question. If the Attorney thinks there is anything to add, he no doubt will. But understand this: the funding provided by the Commonwealth for legal aid this financial year is based on the level of funding for Commonwealth matters for 1995-96. This was agreed with all states and territories prior to the implementation of the new agreements. Funding for Commonwealth matters has been preserved and the subsidy for state and territory matters of $33.158 million per year has been removed.That is the rub with the argument here. The government has said that it will fund Commonwealth legal aid matters and that it is up to the states to fund state matters. What the commissions are doing with the allocation of their funding after that may be a matter of dispute, but that is what this government has decided to do. Let me repeat that the funding provided by the Commonwealth for legal aid this financial year is based on the level for Commonwealth matters for 1995-96. Under the current legal aid funding arrangements, the government is of the view that there is sufficient funding available for family law matters. The focus has shifted away from funding costly criminal law matters—which tend to arise under state law—at the expense of family law matters. Consequently, the quarantining of Commonwealth legal aid dollars means that family law is no longer subsidising criminal law.Family law matters, and especially matters relating to children, are a key priority area for this government. Protecting the safety of a child or spouse who is at risk is to be accorded the highest priority in making grants of aid in family law. Each agreement between a legal aid commission and the Commonwealth states that protecting the safety of a child or spouse who is at risk is to be accorded the highest priority in making grants of aid in family law. The latest data we have from legal aid commissions indicates that nationally there has been no significant change in approval rates for legal aid in family law in the four-year period 1994-95 to 1997-98. As I said, if you want answers to any more detailed questions, and I think there were one or two, they may require us to seek statistics from the Family Court.4454McKiernan, Sen JamesSenator McKIERNAN1I4WAALP00—Madam President, I ask a supplementary question. Thank you, Minister. You have indicated that you will come back to me with the rate of unrepresented actions prior to the government's slashing of the legal aid budget. Further, I ask you: will you finally concede the obvious point that cuts to legal aid of up to $232 million are the cause of the legal aid drought, or will you continue to persist with the fatuous spin that people just do not want to have legal representation when they present to the Family Court on matters of life changing significance to them?4454Vanstone, Sen AmandaSenator VANSTONE7E4SALPJustice and Customs10—Senator, let me see if I can go back to what I have indicated to you and repeat the words. What was properly described as `the subsidy to the states' has now ended. Here we are:Funding for Commonwealth matters has been preserved—that is, the Commonwealth is providing funding for Commonwealth matters—and—as I said to you before—the subsidy for State and Territory matters of $33.158 million has been removed.If you want to argue the case that, in the far distant future—if you people ever manage to scramble back into government with the pathetic record that you had—you will reinstate funding to the states and pay for all their legal aid, I look forward to Mr Beazley making that commitment.10000PRESIDENTThe PRESIDENT—Senator, your remarks should be addressed to the chair.44554455Allison, Sen LynSenator ALLISON1M6VICAD00—My question is to the Minister representing the Minister for Education, Training and Youth Affairs. What is the minister's response to the Oxfam report released yesterday which strongly criticised the government and the Northern Territory government for its decision to abolish bilingual education in Aboriginal languages? Do you agree with Oxfam that this shows `a flagrant disregard for local languages'? How does the minister reconcile the federal government's silence on the issue with Australia's commitment to the United Nations Convention on the Rights of the Child? Is the minister aware that Aboriginal languages are disappearing at the rate of 1½ every year? And if English literacy is of such concern to this government, why is it that the Northern Territory can provide no qualified ESL teachers to most of the schools in remote communities that once had bilingual education?4455Ellison, Sen ChrisSenator ELLISON9X5WALPSpecial Minister of State10—Can I say at the outset that this government has a good record in relation to indigenous education. I further say that in relation to matters of indigenous education and the Northern Territory government I suggest that Senator Allison direct her question to the Northern Territory government. On the part of the federal government, the coalition has made a big commitment to improving the educational achievements of indigenous students. It has done this by increasing funding by more than $50 million across the education portfolio over the levels of Labor's last year in government—an estimated $333.8 million in 1998-99. That funding takes into account higher education support, the VET sector, the Indigenous Education Direct Assistance Program and the Indigenous Education Strategy Initiatives Program. This government has tied spending to outcomes in our education programs by establishing performance targets and reporting to measure educational progress and achievement. Gone are the days of just throwing money at a problem and hoping it will go away; we are looking at outcomes and funding—those outcomes which will practical benefits to indigenous students and indigenous people in this country.The government is also seeking to identify best practice education in order to lift indigenous educational achievements. We have a range of strategic results projects—SRPs—which focus on student retention, literacy, numeracy, vocational education and training, and also some capital projects. This funding involves a total of $35 million and really addresses some of those areas of concern in relation to indigenous education. It also has introduced intensive English as a second language assistance for indigenous language speaking students from the NESB communities commencing in primary school for the first time. In 1998-99 that will total $7.4 million per annum. This government is totally committed to improving the educational outcomes for indigenous students. QD4BROWNSenator Brown—What about Aboriginal languages? That is the question.9X5Senator ELLISON—It has addressed this across the board. And I might say to Senator Brown that instead of interjecting he might want to go to visit some of the communities, visit places I have been to like Notre Dame and Batchelor College in the Northern Territory, and see the practical benefits that are being delivered on the ground to indigenous Australia. Whilst we are doing much to help indigenous Australia, much still has to be done, and the government acknowledges that. But at least we are on the job and we are addressing the problem.4456Allison, Sen LynSenator ALLISON1M6VICAD00—Madam President, I ask a supplementary question. I thank the minister for his answer and ask: since he is measuring educational outcomes, will they be in Aboriginal languages, and does the government condone the fact that the Territory took this decision without consultation and without educational justification? Did the minister discuss the matter with the Territory? Was the abolition of bilingual education mentioned in the Territory's literacy plan? And why did the minister not use literacy funding to stop the Territory pursuing its assimilationist and destructive policies?4456Ellison, Sen ChrisSenator ELLISON9X5WALPSpecial Minister of State10—As I stated at the outset, the Northern Territory government is one which governs its own affairs and those sorts of questions should be addressed to the Northern Territory government. The Commonwealth government works in cooperation with the governments of the states and territories but it is not the policy of the government to be telling other governments what to do in relation to educational policies. What we are doing is addressing policies that are directly under Commonwealth control to benefit indigenous students in this country.44564456Mackay, Sen SueSenator MACKAY9L6TASALP00—My question is directed to the minister representing the Minister for Transport and Regional Services, Senator Macdonald. Can the minister advise if the Department of Transport and Regional Services has undertaken any modelling on the effects of the proposed open skies policy on regional Australia? Is the minister aware of the comments made by Qantas chief executive James Strong that allowing foreign carriers to carry domestic passengers within Australia will lead to a rationalisation of regional air services—meaning cuts? Can the minister advise which other comparable countries around the world allow foreign carriers to carry domestic passengers on any route they choose? For example, does the United States allow Qantas unfettered access to domestic routes? 4456Macdonald, Sen IanSenator IAN MACDONALDYW4QLDLPRegional Services, Territories and Local Government10—I thank Senator Mackay for at last recognising me and asking me a question. I was feeling rather lonely here. I do appreciate the question. I suspect there are few countries that allow international airlines internal rights to carry. I think Senator Mackay mentioned particularly the United States, and I think she knows that the answer to that is no, they do not allow Qantas to fly internally. I am not personally aware of what modelling the department has done, but I shall refer that to Mr Anderson to see whether he has anything to add.I do appreciate Senator Mackay raising the question about the impact on regional services should an open skies policy allow commercial airlines from other countries into Australia. Both Qantas and Ansett have used regional air services as a threat to run a commercial argument on the open skies policy. I think it is quite legitimate for Qantas and Ansett to run whatever commercial arguments they want to to support their argument opposing an open skies policy for internal flights within Australia. What I do object to with those two airlines, and I have made my concerns known to both of them, is that they use services to regional Australians as a threat to support their wider commercial arguments. I am quite annoyed at regional Australians being used as pawns in a commercial argument by two multinational companies which do provide other domestic services in Australia.I do concede that both airlines and their subsidiaries, associates and affiliates do currently provide a reasonably good service to those of us in regional Australia, although I must say they must think those of us in regional Australia do not eat much. Senator Ray, you are lucky you do not come from regional Australia, because those of us from regional Australia seem to have to be able to squeeze into much smaller seats than the lucky people who happen to live in the capital cities. But they do provide a reasonable service to regional Australia. I understand also from my research that the services that they provide to regional Australia are profitable. In fact, I cannot understand why Qantas would continue to run Southern, Eastern, Sunstate and Airlink if they were not profitable. They are in fact feeder services more than regional services and Qantas does benefit from those. I think they run them profitably. To use those airlines as a threat for a more major commercial argument is poor, and I have told the companies that myself. In relation to Ansett's affiliate Flight West, up my way, I must say that they do conduct a very good operation. They obviously do it profitably because they are still in business.656FORSHAWSenator Forshaw—This is a fully paid commercial, is it?YW4Senator IAN MACDONALD—I have been given the opportunity and I do want to give credit to those smaller airlines for providing for those of us in regional areas. Very often we are the forgotten Australians. We were particularly under your government, Senator. But under our government, of course, regional Australians are getting services equal to other Australians. I do thank Senator Mackay for allowing me to raise that. We are appreciative of the commercial services that are available, but I do not really like and I do not think it is appropriate for the major domestic carriers to use the regional airlines as a threat. (Time expired)4457Mackay, Sen SueSenator MACKAY9L6TASALP00—Madam President, I ask a supplementary question. Does the minister therefore reject the assertion that the open skies policy will result in a diminution of service to regional Australia?4457Macdonald, Sen IanSenator IAN MACDONALDYW4QLDLPRegional Services, Territories and Local Government10—You obviously did not listen, Senator. You had written out your supplementary before you had heard the answer. I simply say again that there is a service that is provided. Apparently those services are profitable. Apparently they would continue no matter what happens to Qantas and Ansett on the major domestic routes. If you have information that is to the contrary, I would be pleased to see it. But both of them are private companies and I do not have access to their internal documents. They are not government run any more—BH4HILLSenator Hill—Thanks to Labor.YW4Senator IAN MACDONALD—Thanks to Labor, yes. Labor privatised Qantas, and good luck to them for doing it.EP5FERGUSONSenator Ferguson—With the support of the Left in Tasmania.YW4Senator IAN MACDONALD—With the support of the Left in Tasmania. We do not have immediate access to their documents, but I assume they are operating profitably. (Time expired)44574457Eggleston, Sen AlanSenator EGGLESTON4L6WALP10—My question is to the Minister for Communications, Information Technology and the Arts. Is the minister aware of concerns within the arts community over the issue of authenticity in the $150 million a year Aboriginal art industry? Will the minister inform the Senate of what steps have been taken to address the serious allegations made by artists and dealers concerning the faking of Aboriginal art?4457Alston, Sen RichardSenator ALSTONLD4VICLPCommunications, Information Technology and the Arts10—There might be some on the other side of the chamber who do not have a particular interest in this matter, but I do. I have been to a number of these communities and I have a modest collection of Aboriginal art, so I have followed the debate very closely. The concerns that I think are being aired at the moment are ones that are very serious indeed, and it would be a great shame if people were intimidated into silence because of fear that somehow they might adversely affect the interests of some of the most disadvantaged people in Australian society.There are a number of absolutely first-class and indeed sometimes world-class Aboriginal artists, some recently passed away and some still living. In the last 25 years Western Desert dot art has become something of which Australia has been very proud and has also been a source of a great level of income for many remote Aboriginal communities. So it is particularly important in those circumstances that the integrity of the industry is upheld and that the spotlight is shone on any shonky practices. I do commend Susan McCulloch in particular for injecting some fresh air into some fairly dirty linen that has been evident in recent times.Many people travel to the outback. Many people purchase indigenous art both in the cities and in the rural areas. Again, it is particularly important that they know what they buy and that people are not guilty of misrepresentation. What is particularly of concern is a recent practice that has been described as `reworking' whereby a very well known artist might have relatives who do the first so-called draft and then the artist himself comes in, basically signs off on the work and then it is passed off as a work of that artist.FX5MURPHYSenator Murphy—How do you know that?LD4Senator ALSTON—It is not new, as I am sure everyone will acknowledge, that you can have community contribution into works of art and throughout the century we have had collaboration on works. What is critically important, however, is that they not be passed off as something that they are not. So, where you have a very senior artist—a very well recognised artist—if that artist simply signs his name to a work of someone else, then it is not his work. Those who purchase it in good faith have been misled and that sort of passing off action should not be tolerated. I have no doubt that all responsible dealers and people involved in the industry will want to ensure that these sorts of practices do not continue.So it is, I think, a very big step forward that Art.Trade—in association with 43 Aboriginal art galleries, art centres and consultants—has been set up and I commend in particular Adrian Newstead for his drive and commitment to the cause in founding such an organisation. It is also very important that ATSIC and the Australia Council have provided funding to the National Indigenous Arts Advocacy Group towards the establishment of a national authenticity label. There will be a very important conference in Cairns later this year to address these issues.I hope that what will emerge from these very constructive efforts within the industry is a practice that will ensure that people do feel confident when they go and buy works of art, that they do know what they are buying, that they are not misled or find that works have been misrepresented and that they do have the sense of pride that I think all Australians derive from seeing the success of people like Emily Kame Kngwarreye and many other leading Australian Aboriginal ar tists. I simply say to the Senate that it is appropriate that we are having this debate and that we should welcome it as, I think, a very important step forward in ensuring that this industry goes from strength to strength.BH4HILLSenator Hill—Madam President, I ask that further questions be placed on the Notice Paper .Miscellaneous4458445815:02:004458Herron, Sen JohnSenator HERRONVW4QLDLPAboriginal and Torres Strait Islander Affairs10—Yesterday Senator Stott Despoja asked me a question about genetically engineered foods and I told her that if there was any further information available I would get back to her. I would like to incorporate that answer in Hansard . I have already given her a copy.Leave granted.The answer read as follows—QUESTION WITHOUT NOTICESENATOR STOTT DESPOJA- 27 APRIL 1999GENETICALLY MODIFIED FOODSSENATOR STOTT DESPOJA—Madam President, I ask a supplementary question. I thank the minister for his answer. I am glad to hear that he is concerned that unsafe genetically modified products would not be available for sale in Australia. But I reiterate my question in relation to international standards. I would like the minister to confirm for us whether or not acceptance or approval of a genetically modified food overseas will be accepted as the sole basis for approval for sale of that product in Australia. Could you clarify if that will be specifically one of the criteria that will be allowed under the A18 standards that will be put forward by ANZFA?SENATOR HERRON—I can confirm that all foods produced using gene technology must undergo ANZFA's own safety assessment before they can be approved for sale in Australia. This will be required by the new standard for genetically modified foods (Standard A18).ANZFA's own safety assessment is rigorous and takes into account not only the dietary intake, the nutritional composition, and the potential toxicity and allergenicity of the food, but also considers the nature of the genes introduced and their function and effect in the modified organism. Clearly, ANZFA would be in breach of good practice if it did not take into account the approval status overseas of a food but such information is not of ultimate significance to ANZFA's own safety assessment.In order to fully outline the criteria which ANZFA employs in assessing the safety of genetically modified foods, I am arranging for a copy of the Guidelines for the safety assessment of foods to be included in Standard A18 to be sent to the Senator's office.445915:02:004459Hill, Sen RobertSenator HILLBH4SALPEnvironment and Heritage10—Madam President, I have some further responses to a question asked of me by Senator Bourne in my capacity as Minister representing the Minister for Foreign Affairs, the question having been asked on 30 March. I seek leave to have those incorporated.Leave granted.The answer read as follows—Senate QuestionAustralian representations to the Indonesian government and military on the arming of East Timorese residentsSenator Bourne asked the Minister representing the Minister for Foreign Affairs, Senator Hill, on 30 March 1999: 1. Does the Minister agree that for Australia to have a peaceful neighbour in East Timor it is essential that the so-called resistance groups on East Timor be disarmed and that ABRI be discouraged from arming any more East Timorese residents?2. What action is the government taking to encourage Indonesia to disarm these groups, both at a diplomatic level with the Indonesian government and at high military level with the Indonesian defence force?3. (supplementary question) Could the Minister find out for the Senate the answer to part two of my question about whether the ADF has had any discussions with the Indonesian defence force, with ABRI, about this, and what sort of response we have had? Also could the Minister find out what sort of response the Australian Government has had from the Indonesian government?Senator Hill—The answer to the Senator's question is as follows:1. Senator Hill answered the first question.2. Senator Hill answered the second question, with the exception of specifically addressing high level representations by the Australian Defence Force to the Indonesian defence force (see response at question 3).3. The Australian Defence Force has registered the Australian Government's concerns over the presence of armed civil militias in East Timor consistently and at the highest levels with Indonesian military leaders both in Jakarta and East Timor. Commander of the Defence Forces Admiral Barrie discussed this issue with his Indonesian counterpart General Wiranto on 11 March. The Army Attache also raised this issue during his visit to East Timor 14-18 March.The Indonesian authorities have said they have not provided weapons to civil militia groups in East Timor but have provided weapons to ABRI-trained auxiliary forces (wanra), as elsewhere in Indonesia.Miscellaneous4459445915:03:004459Ray, Sen RobertSenator ROBERT RAYUI4VICALP00—Madam President, I ask Senator Hill, the Minister representing the Minister for Trade, in accordance with the provisions of standing order 74(5) for an explanation for his failure to answer question on notice No. 306, placed on notice on 30 November 1998, to do with the entertainment expenses of the Deputy Prime Minister, Minister for Trade and honoured guest in the chamber here today. Welcome.15:03:004459Hill, Sen RobertSenator HILLBH4SALPEnvironment and Heritage10—I am sure that my answer, when it is tabled, will indicate that they are modest in the extreme. Why they have not been tabled is possibly because they are so modest. I have now been told that they have been tabled.UI4RAYSenator Robert Ray—No, they haven't. I haven't received them.445915:04:004459Ray, Sen RobertSenator ROBERT RAYUI4VICALP00—Madam President, I ask Senator Alston, the Minister representing the Minister for Agriculture, Fisheries and Forestry, in accordance with the provisions of standing order 74(5) for an explanation of his failure to answer question on notice No. 310, placed on notice on 30 November 1998.15:04:004459Alston, Sen RichardSenator ALSTONLD4VICLPCommunications, Information Technology and the Arts10—Madam President, I am advised that Senator Robert Ray did in fact contact my office, presumably this morning, but because I did not get back to the office until fairly close to starting time I was not made aware of that and I therefore have not had the opportunity to pursue the matter. But I do understand that the answers are likely to be forthcoming tomorrow.446015:04:004460Ray, Sen RobertSenator ROBERT RAYUI4VICALP00—Under standing order No. 74(5)(b), I move:That the Senate take note of the Ministers' responses.Could I start by thanking Senator Newman, who was able to get me this answer today. I point out it is 146 days since the question was asked and I did receive an answer from the Department of Veterans' Affairs just today. Then, coincidentally, I received two answers from Senator Ian Macdonald—not complete answers but at least an attempt to answer those questions today. I appreciate Senator Macdonald's efforts. But I have to say that the Department of Transport and Regional Services has given a disgraceful answer. It has omitted certain material, a theme I will return to in a moment. That leaves us with two unanswered questions. I have a feeling that the one concerning the Deputy Prime Minister is floating around, and I will probably have it by the end of the day—and Senator Hill tells us it is modest. But I have to say, Deputy Prime Minister—I am not addressing you directly—you should at least have a good look at some of the other answers that have been provided. They ain't modest.10000PRESIDENTThe PRESIDENT—Senator Ray, you should be addressing your remarks to the chair, not the gallery.UI4Ray, Sen RobertSenator ROBERT RAY—I did say I was doing that, but I was probably trying to save on a stamp, Madam President, and just send a message through very directly. We have had an explanation from Senator Hill and Senator Alston today. Senator Alston has not had time to chase it up. He will, and Senator Hill thinks the question will be answered today. But let me tell Senator Hill why these questions have not been answered after 146 days. Let me tell Senator Hill that these answers were deliberately held up, not by the representative ministers here today but by the political apparatus in the Prime Minister's office. Let me tell Senator Hill that there was a meeting of the chiefs of staff in late March to consider these five questions on notice. They were discussed at length at that meeting. Then a direction was sent out to each of the department secretaries via the chief of staff in each of the offices as to how these questions were to be answered. That direction said, `You will not answer the question asked. You will withhold certain information as to the individuals concerned that were subject to entertainment by ministers.'You cannot have it both ways. If it is official entertainment, the public has a right to know who is being officially entertained. If it is private entertainment, the public has a right to know that the ministers have paid for it themselves and are not relying on the taxpayer to pay for those particular ones. You might wonder why we asked only the National Party ministers. Because previous experience has told us that they are the ones who get their snouts in the trough, first up and biggest. If anyone in the chamber does not believe me, just have a look at the Department of Transport and Regional Services over a 2½-year period: their total expenditure on ministerial entertainment was $27,613—just for that one department.One has to acknowledge, though, that there is legitimate entertainment. If there is a visiting minister—even a visiting state minister—or officials on a particular board, the minister should be able to say, `I should be able to go out and entertain those people and charge the department.' But look at the answers as they come in: for instance, Minister Scott goes off with a journalist to the Ottoman Restaurant and sticks the taxpayer with a bill of $120. Time and time again that is there. Minister Vaile goes off to X restaurant. These answers are the Australian good food guide. That is what they are. Two of them wander over to the Commonwealth Club and the taxpayer gets hit with $314.The point is that there are probably three areas of entertainment here. First, official, of which there is no doubt, run by SERHOS or approved by the secretary to the department—that is the normal thing. Then there is the twilight zone, where you as a minister might say, `These people have come to visit me and I need to entertain them.' And then there is the rort zone, where basically you are organising to take ministerial staff out to dinner and stick the taxpayer with it. That is what has been happening.WP6LIGHTFOOTSenator Lightfoot—You never did it?UI4Ray, Sen RobertSenator ROBERT RAY—Never. Never, ever, ever did I take out ministerial or departmental staff and stick the taxpayer.LD4ALSTONSenator Alston—Richo never did it.UI4Ray, Sen RobertSenator ROBERT RAY—Senator Alston interjects out of his seat.10000PRESIDENTThe PRESIDENT—Order! Senator Alston, you are out of your seat and it is disorderly to be behaving as you are.Senator Faulkner interjecting—10000PRESIDENTThe PRESIDENT—Senator Faulkner, you are also out of order by shouting.UI4Ray, Sen RobertSenator ROBERT RAY—Senator Alston has the cheek to criticise Senator Richardson, when he was deputy leader, whose travel allowance claims always came in $10,000 below Senator Alston's. So, unless you have some evidence, Senator Alston, do not go on about this. I wonder whether there are two rules in this coalition government—Liberal ministers expected to behave with propriety and modesty and their National Party colleagues with no controls at all. We have already seen in terms of aircraft charter that they average about $60,000 a year compared with the Liberals' $6,000 a year. I just cannot believe some of these entertainment expenses that have been approved. They will be in Hansard , so I will not bore you by reading all the detail. So far Mr Sharp, departed, Mr Vaile and Mr Scott have a lot to answer for, in my view.But what this government are really going to have to answer for is the cover-up. I want them to respond at some stage and deny that the chiefs of staff got together and colluded to delete the names. When the first question was asked of the department of transport all the names of the guests were listed out. A lot of people in the list, of course, have the bottom out of their pants—Richard Pratt, Dick Smith, all the crew are here being paid for by the taxpayer. But, in fairness, I think they qualify because these functions were either official or semi-official and are fairly kosher. But, in going through all these examples, let us just take lunch of 3 July 1997. That involved three persons including John Sharp and media representatives. Eduardo's Restaurant, Noosa—do you recognise that one, Senator Alston? I bet you do. That was $276.80. I bet you have been up there a few times to open art shows. And on it goes. The Hyatt Hotel, the Well Club, the Japanese Garden, Cowra, the Poseidon Cafe, Park Royal Hotel. They have breakfast for staff.You have to draw a distinction somewhere between what is official and what is not official. Once you do that there is no reason whatsoever that the names of the people attending these functions could not be published. I would not have been ashamed to have any of my official guests who attended official dinners named as individuals. But if in fact it is a sort of conspiracy meeting and you are embarrassed, that is fine, but do not get the taxpayers to pay for it. We are anxious to see the final figures for Mr Anderson and Mr Fischer. They may show a pattern that is completely different from that of the other National Party ministers. The oversight of not asking about Mr McGauran's past will be quickly overcome this afternoon by yet another question on notice.In conclusion, Senator Hill and Senator Alston, through inadvertence and lack of information, have not given an accurate answer to the Senate as to why these questions have been delayed. They do not know. I accept that. I accept that they probably did not know that there was some sort of conspiracy amongst the chiefs of staff and ministers' offices to delay the production of these answers until stimulated today. I accept that they did not know. But I do not think it is good enough for chiefs of staff to direct departmental secretaries as to what they will allow to be published and what they will not allow to be published.The warning I put out now is that that instruction cannot go to freedom of information. If someone goes to FOI these documents, they are going to have to provide the names of individuals because they cannot direct the FOI officer. It has been past practice to publish those names. But do not ask us to go that route. The departments hate FOI. Because of the expense of third party checking, they are encouraging us to put questions on notice—and we are entitled to answers.I do not insist on the 30-day rule. For heaven's sake, it was 146 days before I got up on this. I have another 80 questions overdue by more than 30 days. I will not get up and whinge about it. I know how hard it is to answer some of these questions, and it is not really that exciting whether you get the answer after 30 days or 60 days or 90 days. But in this case the answers were deliberately held up because they were politically embarrassing. The answers have been doctored by political interference in directing departmental secretaries on which way to react.The answers themselves show an absolutely unmitigated degree of greed by National Party ministers, who have their snouts in the trough well and truly. The results of their departmental secretaries paying for some of these entertainments I find unbelievable and of enormous value to the ministers concerned.I will finish on this point: it should be remembered that within the ministerial payroll there is a component for entertainment—from memory, it is about $10,000 a year. It used to be separately listed but because it became fully taxable after 1985 it was rolled into salary in the late 1980s. Nevertheless, it is there for that purpose. I do not know the payroll consequences of it with this coalition government because of the distinction between junior ministers and cabinet ministers—there are differential pay rates—but the entertainment component is there, and it is there to be used.I am certain Senator Ian Macdonald would never think of taking his staff out to lunch and sticking it with the taxpayer. I am sure he would not. I am sure he has thought about it but thought, `That's just not on,' and I am sure a majority of his colleagues have thought that. But not so the good old boys from the National Party. They have snouts bigger than aardvarks—if it moves, they will snort it up. If there is a chance to maximise, they will maximise, and they will do it all at the taxpayers' expense and, in the end, they bring all of us into disregard. I do hope that, having got these answers, someone in government—maybe even these famous chiefs of staff—will go back and, instead of writing guidelines for departmental secretaries on the way they answer questions, they will write guidelines for behaviour of ministers, especially National Party ministers, so they will behave themselves in future.Question resolved in the affirmative.446215:17:004462Bolkus, Sen NickSenator BOLKUSXE4SAALP00—I move:That the Senate take note of the answers given by the Minister for Justice and Customs (Senator Vanstone) to questions without notice asked today.I say at the start that this is a very hard act to follow. In question time today I think we had for the first time the official acknowledgment by this government that the national gun laws are no longer national. For the first time, we found out that one particular state, Victoria, is not meeting its obligations, and for the first time we have discovered that the national gun buyback scheme has collapsed because of what is happening in Victoria.Basically, the Victorian state government is not prepared to buy back guns—it is not prepared to meet the bill. It seems, from the answers given today by the Minister for Justice and Customs, Senator Vanstone, that the federal government does not have a contingency plan to pick up the ball. We are concerned because the national gun laws were implemented in response to the events at Port Arthur which took place three years ago this week.For some time now, the opposition has been concerned that the government, especially ministers Vanstone and Williams, have basically dropped the ball by not ensuring that across the country there is national uniformity in the implementation of the gun buyback scheme. Victoria is now a real problem for the national gun buyback scheme, but there has been concern for some time that the scheme was not operating in full consistency across the country.The submission today comes after more than just some months of inaction by federal government ministers. We have been concerned that ministers Vanstone and Williams have not been pursuing this matter in a way that they should have been. The implementation problems are not just today's. In a sense they stretch back to April 1997 when the government first received a secret report, which the opposition parties ensured was tabled in this place in May 1998. The report made it very clear that there were major discrepancies in the implementation of the national gun buyback scheme, particularly in Victoria and also in Queensland under the previous National Party government. It took us one year to get that report out. We found out this time last year that the scheme was basically in danger, but the government had known for a year beforehand. We now know that the problems that were identified in April 1997—problems that were exposed this time last year—are now real problems that affect the effectiveness of the scheme.We have concerns also at the way that the Prime Minister has handled this particular issue over the last few weeks. On A Current Affair on 24 February, the Prime Minister said to Mike Munro that he was committed and that the whole issue of the national gun buyback scheme would be the number one priority on the agenda at the Premiers Conference in April. With all the earnesty that he trumps up for A Current Affair, he said:I make it very clear on your program that we will use any power at our disposal to prevent any serious watering down of those laws and we have in fact withheld compensation payments to at least one of the states because they have diverged slightly from the rules that were agreed to . . . He went on to say that this would be the number one priority on the agenda at the Premiers Conference in April. What has happened since then is quite obvious. The Prime Minister was obviously intimidated by Premier Kennett, to the extent that that issue that he promised to raise on the Premiers Conference agenda as the number one priority issue was not raised. In fact, the Prime Minister ran dead—intimidated by the Premier of Victoria, who has always got his measure on these sorts of issues.The other concern that we have is that the scheme is falling apart in a very substantial manner. If you have not got a buyback operation in Victoria, then you have a real problem. But you have this real problem because Victoria has consistently refused to adopt a 28-day cooling off period on second purchases. They also want access to category C weapons for the Victorian Field and Game Association.Those issues in themselves are grave enough, but for the Prime Minister to basically tell the Australian public—on the highest rating afternoon news and current affairs program—that he would raise this as the number one issue, and then to drop the ball and to wimp it against Premier Kennett, is to let down his obligations and his responsibilities to the Australian people. We on this side of parliament are concerned. The national gun law scheme was developed by Duncan Kerr, a former Minister for Justice in the Keating government, but it was augmented because of the events at Port Arthur to pick up the particular problems at Port Arthur. So in a sense we all have a joint interest in it, and we will maintain that interest. (Time expired)15:22:004463Calvert, Sen PaulSenator CALVERT5F4TASLP10—I note the comments of Senator Bolkus, and I think everybody in this chamber at some time or other has had concerns about gun laws and the buyback scheme. It has been a very complicated issue. Of course, we must remember that today is the third anniversary of the tragedy at Port Arthur and that the ramifications are still being felt in that community. I note that there will be a memorial service today. I note also that it has been suggested that, since that tragedy, there have been one or two suicides of people who were involved. The opposition have come in here today trying to point the finger at the government and saying that we have not been taking enough action. The fact is that the guns buyback scheme ended on 30 September 1997. The number of guns surrendered was 643,726 guns and $397 million has been paid in compensation to gun owners as at 9 April this year. Sixty-three million dollars was allocated for payment to states and territories for administration and $400,000 was set aside for a national firearms register. A total of $458,000 had been paid as at 9 April this year.I understand that compensation to dealers for loss of business has not yet been finalised, but this is a long, drawn out and complicated arrangement. It is something that has virtually never happened anywhere else in the world. Perhaps if some of the states in America had taken this action, when this government and the Prime Minister took strong action after the Port Arthur tragedy, we would not have seen the sorts of disasters and horrific occurrences recently in America. You have only to hark back to earlier in the week to see what happened at that school in Littleton, Colorado. We live in a violent society. This government, through our Prime Minister, has taken very strong, positive action with the support of all parties in this chamber, and I really think it is a bit below the belt for Senator Bolkus to come in here today to try to nitpick at what the government has been doing.As I said, over 600,000 guns have been surrendered and nearly $400 million has been paid out in compensation to the gun owners. It was a very sore point with a lot of farmers around the areas. They did not like having to register their guns and having the complications that go with that but, all in all, people accepted that. The only problem is that, every time someone like Senator Bolkus or some other party raises the issue, it does bring back memories to some people who had strong views about handing in their guns and it creates a fair amount of angst in some areas of the community.So I think the action taken, and that is continuing to be taken, by the minister, Senator Vanstone, is appropriate. I understand that all the states and territories agreed in 1996 to national uniform gun laws to restrict ownership of high-powered semiautomatic weapons. That process has been successful. As I said, we have had a huge number of guns handed back and a huge amount of compensation has been paid. While some people still feel very sorely about having to hand in guns of high or antique value, it has been a successful exercise. There are still violent crimes relating to firearms in our communities, but I think we would all have to agree that the strong action taken by Prime Minister Howard and this government, receiving bipartisan support from other parties, has worked and has helped to reduce the number of violent gun-related crimes in Australia.15:27:004464Forshaw, Sen MichaelSenator FORSHAW656NSWALP00—I rise to support the comments of my colleague Senator Bolkus and also to contribute to this motion to take note of answers given by Senator Vanstone during question time today. The issues involved in the questions put to Senator Vanstone today were of course of great importance—firstly, the issue of the gun buyback and the control of firearms in this country; secondly, the issue of how to deal with that terrible scourge of drug abuse and deaths, particularly through the use of narcotic drugs such as heroin; and, thirdly, the issue of legal aid—that is, the provision of support and assistance to people who need it to obtain a fair hearing in the justice system.Senator Calvert, struggling as he was to deal with the issues raised by Senator Bolkus, referred to the need for bipartisan support. We on this side gave bipartisan support to the Prime Minister's initiatives in respect of the gun buyback scheme. That of course was very much a response brought about by that terrible tragedy at Port Arthur. It is one thing to talk about bipartisan support, Senator Calvert, but it is another thing entirely to deliver it. Frankly, I really get upset with those sorts of comments because I can recall what happened in 1988 in New South Wales when the then Premier, Barry Unsworth, endeavoured to do something about this issue following the Hoddle Street and Strathfield massacres and other instances where a number of people had been killed through the use of firearms. What did the coalition in New South Wales do then? They attacked Premier Unsworth and his gun laws. As a result, the Labor Party suffered electorally. It took a long time, and it had to take another massacre—at Port Arthur—to finally get some bipartisan approach on this, so the coalition's record on that issue is not such a good one.I will turn quickly to the issue of drugs. What did we see just prior to the last state election in New South Wales? In a pathetic attempt to try to help Mrs Chikarovski and her other coalition colleagues in New South Wales to win the election, Senator Vanstone got up in this parliament on at least seven occasions in question time and answered dorothy dix questions from Liberal-National Party senators on the issue of drugs. On each occasion, she attacked the performance and the policies of the Carr Labor government. That was on seven occasions in five question times, including two supplementary questions. It was nothing more than a political attack to try to support her coalition colleagues in that state election.Senator Vanstone also issued five press releases—on 29 January, 16 February, 19 February, 3 March and 23 March. On each occasion except one she attacked the New South Wales Labor government. In the 29 January press release she actually said that she warmly welcomed the New South Wales opposition antidrugs policy and further said, `We look forward to the election of the Chikarovski government in New South Wales on 27 March.' What happened on 27 March? The New South Wales coalition were absolutely slaughtered at that election.The policies of the Carr Labor government on such important issues as education, health, employment, economic management and particularly law enforcement were endorsed overwhelmingly by the people of New South Wales. They did not buy this cheap, disgraceful, sleazy attack from Senator Vanstone in that last desperate attempt to try to prop up her coalition colleagues. They saw through that political attack. They also recognise, as do the New South Wales Labor government and, I believe, decent members of parliament across all political sides, that the issues of drug abuse and crime associated with drugs require bipartisan solutions.Beginning on 17 May, the New South Wales Premier is convening a five-day conference to be held at the New South Wales parliament. It will involve all state members of parliament from all political perspectives. It will involve experts, it will involve organisations. That is the way to approach this issue—not with the cheap tricks of Senator Vanstone. (Time expired)15:32:004465Lightfoot, Sen PhillipSenator LIGHTFOOTWP6WALP10—I think it is alarming that, on an issue such as the very successful gun buyback scheme initiated by the coalition government, senior senators on the other side say that it is not working. It is clearly working, and I want to put to rest any fears that have been spread or will be spread to the Australian community. I have been involved through most of my life with guns. I handed in several guns. One was an automatic shotgun which I had not used for years. It was really only a showpiece, but I handed it in. I did not like having to, but the rules were the rules.Let me tell you how much the scheme is working. There were 643,726 rifles or guns surrendered. As of 9 April this year, over $397 million—nearly $400 million—had been paid out in compensation to gun owners. Together with $400,000 for the national firearms register, a total of over $400 million was paid out. The levy was intended to raise $500 million. It is true to say that compensation to dealers for loss of business has not yet been finalised—that is still ongoing. But for Senator Bolkus to say that the scheme is falling apart in a very significant manner is nothing more than scare tactics, coming on top of the Columbine High School tragedy in the United States of America. I think it is pretty low politics to use those sorts of tactics when emotions are running high over the deaths of schoolchildren in the United States. It is also low politics because of the tragedy at Port Arthur. It is not good politics.I want to assure the people of Australia that the scheme is working. The Prime Minister introduced the scheme against a lot of opposition, and I did not agree with it at the time, because of my background in the bush, but I agree with it now. There was one area which I did—and still do—disagree with, and that was the trashing of the 643,000 rifles and guns that were brought in. Some of those could have been set up in a museum. Perhaps it would not have held people's attention during these immediate years, but in later years I think we could have had one of the great museums of the world with these guns on display. It would not have been a matter of inspecting the guns out of morbidity but more a matter of seeing the ingenuity of mankind in being able to produce machinery of this nature. Some of them, depending on your view, are indisputably works of art. Some of the handmade guns I can think of which were handed in were worth over $100,000. One that I surrendered was worth something like $1,500. That was a rather attractive piece which showed the manufacturing ability of homo sapiens.Having been involved with guns and rifles for most of my life—in fact since I was 12 years old—and having been opposed to what initially happened with respect to the gun buyback scheme, I have nothing but congratulations to offer to the government for making the scheme work, particularly in light of what has happened in America. America has the largest gun culture in the world. There are something like 200 million guns in households in America. There are many fewer than that in Australia, although not on a per capita basis. I am surprised—not shocked but surprised—at Senator Bolkus's attack, given that it comes on the back of the tragedy in the United States at Columbine High School and given that that event has been recalled so painfully by Australians who lost loved ones at Port Arthur. I think it is a very sordid way to use this House, and politics of that nature bring this House into disrepute.15:37:004466McKiernan, Sen JamesSenator McKIERNAN1I4WAALP00—It had been my intention to direct my remarks to the third element of Senator Bolkus's motion—that is, the matter dealing with legal aid and the response by the Minister for Justice and Customs to my question on legal aid—but I am provoked by the comments by Senator Lightfoot, my Western Australian colleague, who stands here and contradicts the Minister for Justice and Customs, the Prime Minister of Australia and the Premier of Victoria.Senator Lightfoot said that the gun buyback scheme is working and there are no problems with it. Senator Lightfoot was not listening to the comments by the Minister for Justice and Customs, Senator Vanstone, who clearly indicated that there are huge problems with the gun buyback scheme—so much so that compensation is being withheld to the state of Victoria because they have not cooperated with the Commonwealth and the gun buyback scheme. There are huge problems with the scheme. It is not working in Victoria, and that is something about which we on this side of the chamber are appalled.The Prime Minister, and indeed the minister for justice earlier this year at the Senate estimates committee hearings, gave an assurance to the chamber that Victoria would be brought to heel. The Prime Minister followed up what Senator Vanstone said by saying, `Yes, indeed; Victoria will be brought to heel. We will bring this matter as the number one priority item to the Premiers Conference.' Senator Lightfoot would be as aware as anybody else in this chamber that the Premiers Conference has been and gone. What was the priority item at that? What number on the agenda did the gun buyback scheme rate at that Premiers Conference? It did not rate at all. Mr Howard has reneged on the commitment to the parliament of Australia and to the people of Australia. The fact that this issue has been raised at a time of tragedy in the United States is merely coincidence.WP6LIGHTFOOTSenator Lightfoot—Rubbish!1I4McKiernan, Sen JamesSenator McKIERNAN—It is merely coincidence, Senator Lightfoot. The Senate estimates committees sit next week, and you can be assured, Senator Lightfoot, as indeed Senator—10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—Senator McKiernan, please address the chair.1I4McKiernan, Sen JamesSenator McKIERNAN—Senator Lightfoot can be assured—as indeed Senator Vanstone can be assured—that this matter will be pursued in that forum.Senator Calvert also addressed this matter. Senator Calvert made great weight of the number of weapons that have been handed in from all over Australia, including some from Victoria, and the amount of compensation that has been paid. We are very pleased with that. There has been the utmost cooperation from this side of the chamber, from this side of the parliament, in the gun buyback scheme. When we get figures like that we are pleased, but when there is a breakdown in the system we are prepared to point the finger. We will do everything we possibly can to assist the Prime Minister to assist the Attorney-General and the Minister for Justice and Customs to ensure that the Victorian government plays its part in this scheme as well.As I indicated, the matter that I really wanted to address my remarks to was the third element of Senator Bolkus's motion—the matter dealing with legal aid and the question I addressed to the Minister for Justice and Customs. The minister in her response to me went to great lengths to point out how the legal aid system is now funded—that the money is delivered for Commonwealth law matters and that the states are obliged to fund the legal aid commissions to fund what are known as state law matters.The Minister for Justice and Customs overlooked the criticisms of the Chief Justice of the Family Court of Australia, Chief Justice Alistair Nicholson, who alluded to a survey which found that 35 per cent of family law cases were now run with at least one party unrepresented by a lawyer. He attributed that non-representation to the legal aid cuts. Senator Vanstone overlooked the fact that family law is a Commonwealth law matter. Thirty-five per cent of the cases now going before the court are not able to be represented in the Family Court because of the cuts to the tune of $232 million by the Commonwealth government. (Time expired)15:42:004467O'Brien, Sen KerrySenator O'BRIEN8O6TASALP00—I rise in this debate firstly to say that I think that my colleague Senator Forshaw was very harsh on Senator Vanstone with his criticism. I think Labor Party members throughout the state of New South Wales and indeed in this federal parliament—the Senate and the House of Representatives—congratulate Senator Vanstone for assisting the re-election of the Carr Labor government by her unbelievable attacks—5K4FAULKNER Senator Faulkner—Can you thank her formally on our behalf?10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—Senator Faulkner, can I have some order please.8O6O'Brien, Sen KerrySenator O'BRIEN—I will do that, Senator Faulkner; indeed, I am doing that now. There is no doubt that there was no credibility at all in the answers given by Senator Vanstone to the dorothy dix questions on this matter. You only have to listen to the answer given today to know that. The material that was put in the question to Senator Vanstone today showed that there is an appalling problem in Victoria, yet Senator Vanstone said, `I've seen that there is a satisfactory, if not more than adequate, policing system in Victoria.' That was the effect of the words of Senator Vanstone.It was also mentioned in the question that perhaps the problem was interdiction. Senator Vanstone would not entertain that, but if you believe Senator Vanstone's answer then the only way you can interpret the problem in Victoria and the magnitude of the deaths due to heroin overdose is a problem with interdiction, and that is the problem that Senator Vanstone has to address. That is why no-one has any confidence in the answers from this minister on this question. Because there is so much heroin getting into this country and the price of heroin is so cheap we have seen a massive problem. The minister for justice has to address this problem and not try to blame the Premier of New South Wales and not try to protect the Premier of Victoria because it suits her politically.With respect to the question of the gun buyback scheme, Senator Lightfoot attempted to castigate Labor for raising the issue of the recent deaths in the United States—the appalling situation of yet another massacre in a high school there. One only has to look at the United States and their system of control on guns to know that the policy that this government has adopted, with the total support of Labor—after the present government when in opposition opposed every move of the previous Labor government to do something about guns—on gun control is infinitely better than the policy which applies in the United States which permits these awful weapons to be available to children to take into their schools to kill their school mates and their teachers. Frankly, there is something not quite right with those particular people.It is appalling what is taking place, but more appalling is the United States' system of gun control. They do not have a system of gun control. We have even seen the situation where there are some people in the United States who are prepared to fund political parties in this country that are opposed to our gun control system, because they want to avoid a system where the availability of weapons is severely controlled that compares favourably to their own.I agree with Senator Calvert that there are people who are opposed to gun control and to the idea that they had to surrender their weapons, but I think everyone agreed—this government agreed and the opposition agreed—that there are things in the greater good that need to occur and gun control was one of them. It is great to see that, at least on issues such as this, there is bipartisan support.For the minister to admit, as Senator McKiernan has said, that there is a significant problem with the system in Victoria is evidence that this government now has to take action—further action, indeed, to that which it has taken—to ensure that the national gun control policy is properly implemented. If there is a problem with Mr Kennett's government in that regard, they need to take further action to ensure that we do have an adequate, uniform gun control system throughout this country.I suspect, given the information from the Victorian minister Mr McGrath that they are simply going to pass on the bills to the federal government, that this is an indication that the government's current policies are not working, are not adequate, and that this government will need to do more. I can say that the Australian Labor Party is committed to the implementation of a proper national gun control system throughout Australia.Question resolved in the affirmative.446810001CLERK ASSISTANTThe Clerk—A petition has been lodged for presentation as follows:446887BE4Newman Sen JocelynTo the Honourable the President and Members of the Senate in Parliament assembled:The petition of the undersigned shows that citizens of Tasmania think that the government's taxation package, including the goods and services tax, does not provide sufficient information nor detail and hence is open to inequitable application during its implementation.Your petitioners ask/request that the Senate should not pass the legislation until the following questions are resolved fairly and equitable for the citizens of Tasmania:1. How will the government ensure Tasmania is treated fairly in comparison to the more affluent and larger States? Tasmania, on a per capita basis, has the highest unemployment, lowest average weekly wage, the oldest population, the greatest number of people dependent on government income support and the most decentralised population of any state of Australia. The government's model for estimating the cost of the GST does not allow for the different economic and social patterns between states.2. How will the government ensure families can afford good food which will be relatively more expensive in respect to `junk' foods whose price will decrease after the removal of sales tax? Tasmanians pay the highest costs for food in Australia and are among the worst health status population in Australia.3. How will the government ensure that organisations and charities can continue to provide the necessary community services and support to disadvantaged citizens? Community organisations and charities in Tasmania will face a double jeopardy from the implementation of the Tax Package. It is predicted that poverty in Tasmania will increase and more people will be seeking extra assistance. At the same time organisations will have a reduced capacity to meet those needs because of increased administrative costs associated with compliance and in many instances reduced revenue because of the application of the tax to such things as membership fees and fund raising.4. How will government ensure that service quality and scope of education, child care and health services can be maintained without increasing the costs of these services? The government proposes that essential services such as education, child care and health will be GST free. However, community based organisations offering these services will have increased costs arising from the extra administration and accounting requirements of the tax package.Senator NewmanBE4Senator Newman(from 87 citizens)Petition received.Notices44694469Senator Boswell to move (contingent on a minister at question time on any day asking that further questions be placed on notice):That so much of the standing orders be suspended as would prevent the senator moving a motion that, at question time on any day, questions may be put to ministers until 28 questions, including supplementary questions, have been asked and answered.Senator Boswell to move (contingent on any senator being refused leave to table a document in the Senate):That so much of the standing orders be suspended as would prevent the senator moving that the document be tabled.Senator Watson to move, on the next day of sitting:That the Senate notes that:(a) trend estimates from the Australian Bureau of Statistics (ABS) reported a decline in mineral exploration in the Northern Territory and all states except New South Wales during the December 1998 quarter, and that this drop was the sixth successive drop recorded by the ABS;(b) the Australian Bureau of Agricultural and Resource Economics predicted an overall fall in minerals exploration expenditure throughout Australia of 30 per cent in the 1998-99 financial year, which is consistent with the minerals industry survey results released in December 1998; and(c) the full economic impact will not be seen for three or four years, when the economy will witness reduced capital expenditure on new mining activities and reduced earnings from mineral exports.Senator Carr to move, on the next day of sitting:That the Senate notes the inconsistency in the view of the Prime Minister (Mr Howard) that it would be inappropriate for a non-Australian to open the Olympic Games, yet appropriate for a non-Australian to remain as Head of State. Senator Allison to move, on the next day of sitting:That the Senate—(a) notes: (i) the publication of a report by Community Aid Abroad (a member of Oxfam International) entitled `Education Now', evaluating progress on the international community's goal of having every child in primary school by the year 2015, (ii) that 125 million children internationally will not attend a class in 1999 and that 150 million will leave school without basic literacy skills, (iii) that girls comprise two-thirds of those children deprived of any formal education whatsoever, (iv) that, by the year 2015, children from sub-Saharan Africa will comprise three-quarters of those deprived of schooling, and (v) criticisms contained in the report of the Federal Government's failure to take any steps to discourage the Northern Territory Government in its moves to abolish Aboriginal bilingual education;(b) congratulates: (i) Community Aid Abroad/Oxfam for this important report, (ii) the prominent Australians, including Noni Hazelhurst, Phillip Adams, Alex Dimitriades, Mary Kostakidis, Alison Whyte and Mark Mitchell, who are campaigning to put pressure on the international community, including Australia, to keep its promises on education spending, and (iii) the schools, teachers, students and families who are fighting to retain bilingual Aboriginal education in the Northern Territory and preserve community languages; and(c) urges the Federal Government: (i) to affirm a commitment to bilingual Aboriginal education and to recognise the social and cultural importance of fostering the preservation and use of Aboriginal languages, and (ii) to increase foreign aid allocations to education projects, in particular those involving delivery of primary education.Senator Heffernan to move, on the next day of sitting:That the Senate— (a) notes that: (i) 26 April 1999 marked the 13th anniversary of the Chernobyl nuclear disaster in the Ukraine, (ii) the effects of the disaster continue to affect the lives of many Ukrainians and that in the past decade, there has been a real, significant increase in childhood and, to a certain extent, adult carcinoma of the thyroid, and (iii) the Australian Chernobyl Children Relief Foundation (Inc) works diligently in seeking moral and financial support in assisting sufferers and manages a number of projects based in the Ukraine that provide direct assistance to children and other sufferers;(b) supports the Australian Federation of Ukrainian Organisations in assisting the work of the foundation;(c) urges all governments to plan and act responsibly to ensure we leave an environment that is clean, healthy and balanced for generations to come; and(d) urges the Parliament to ensure that Australia, through medical research and direct aid, continues to maintain its record as a nation sensitive to the needs of sufferers, wherever they may be, and a nation that understands the importance of being at the forefront of international relations.Senator Brown to move, on the next day of sitting:That the Senate calls on the Government to ensure the right of Australia's indigenous peoples to be educated in their own languages, at least where such languages remain live.Committees4470447044704470Calvert, Sen PaulSenator CALVERT5F4TASLP10—Pursuant to notice given at the last day of sitting, on behalf of Senator O'Chee and the Regulations and Ordinances Committee, I now withdraw business of the Senate notice of motion No. 1 standing in his name for five sitting days after today for the disallowance of the Accountability Principles 1998 and the Accreditation Grant Principles 1998, made under section 96-1 (1) of the Aged Care Act 1997.Notices44704470Senator Brown to move, on the next day of sitting:That the impending ban on internet gambling in the United States of America and the urgent need for a similar ban in Australia be referred to the Select Committee on Information Technologies for inquiry and report by 27 August 1999.Senator Woodley to move, on the next day of sitting:That the Senate—(a) notes: (i) criticisms by the Oxfam International network of the Northern Territory Government's decision to phase out bilingual education programs in Aboriginal communities, (ii) calls by the executive director of Community Aid Abroad, a member of the Oxfam network, for the Minister for Education, Training and Youth Affairs (Dr Kemp) to intervene by forcing the reinstatement of bilingual education programs in Aboriginal communities in the Northern Territory, and (iii) that the phasing out of bilingual education programs may be in breach of Australia's international obligations under the United Nations Convention on the Rights of the Child;(b) condemns: (i) the Northern Territory Government for failing to recognise the unique educational needs of indigenous children who do not speak English as their first language, and (ii) the Commonwealth Government for failing to intervene on behalf of those indigenous children who are currently benefiting from attending schools which teach them in their own languages; and(c) calls on the Minister to take steps to force the Northern Territory Government to reinstate bilingual education programs for Aboriginal communities in the Northern Territory. Committees44714471447115:54:004471Calvert, Sen PaulSenator CALVERT5F4TASLP10—I present the seventh report of 1999 of the Selection of Bills Committee.Ordered that the report be adopted.5F4Calvert, Sen PaulSenator CALVERT—I seek leave to have the report incorporated in Hansard .Leave granted.The report read as follows—SELECTION OF BILLS COMMITTEEREPORT NO. 7 OF 19991. The Committee met on 27 April 1999.2. The Committee resolved to recommend—(a) That the following bill be referred to a committee:Bill titleStage at which referredLegislation committeeReporting dateEnvironment and Heritage Legislation Amendment Bill 1999 (see appendix 1 for a statement of reasons for referral)immediatelyEnvironment, Communications, Information Technology and the Arts10 August 1999(b) That the provisions of the following bill be referred to a committee:Bill titleStage at which referredLegislation committeeReporting dateTradesmen's Rights Regulation Repeal Bill 1999 (see appendix 2 for a statement of reasons for referral)immediatelyEmployment, Workplace Relations, Small Business and Education10 August 1999(c) That the following bills not be referred to committees: Migration Legislation Amendment Bill (No. 2) 1999 Migration Legislation Amendment (Temporary Safe Haven Visas) Bill 1999.The Committee recommends accordingly.3. The Committee deferred consideration of the following bills to the next meeting:(deferred from meeting of 23 March 1999). Taxation Laws Amendment Bill (No. 4) 1999. Taxation Laws Amendment Bill (No. 5) 1999. Taxation Laws Amendment (Demutualisation of Non-insurance Mutual Entities) Bill 1999(deferred from meeting of 30 March 1999). Customs Amendment Bill (No. 2) 1999. Import Processing Charges Amendment Bill 1999(deferred from meeting of 20 April 1999). A New Tax System (Family Assistance) Bill 1999 . A New Tax System (Family Assistance) (Consequential and Related Measures) Bill (No. 1) 1999. Commonwealth Grants Commission Amendment Bill 1999. Customs Amendment Bill (No. 1) 1999. Customs Amendment (Temporary Importation) Bill 1999. Employment, Education and Training Amendment Bill 1999. Superannuation Legislation Amendment Bill (No. 3) 1999. Taxation Laws Amendment Bill (No. 6) 1999(deferred from meeting of 27 April 1999). Copyright Amendment (Computer Programs) Bill 1999.(Paul Calvert)Chair28 April 1999 Appendix 1Proposal to refer a bill to a committeeName of bill:Environment and Heritage Legislation Amendment Bill 1999 .Reasons for referral/principal issues for considerationNeeds amendment as to definitions, artificial reefs, dumping provisions, incorporation of conventions, liability.Possible submission or evidence from:GreenpeaceACFCommittee to which bill is to be referred:Senate Environment Legislation CommitteePossible hearing date(s) :Possible reporting date : 9/8/99signedK O'brienWhip/Selection of Bills Committee memberAppendix 2Proposal to refer a bill to a committeeName of bill : Tradesmen's Rights Regulation Repeal Bill 1999Reasons for referral/principal issues for consideration: Seek clarification on:* The detail of pre-migration assessment, in particular whether paper based assessment is sufficient in the case of nations with competency systems; difficult to benchmark against Australian standard.* Whether an integrity issue might arise if the assessor is receiving a direct fee-for-service payment; impact on cost.* Whether a RTO is equipped to complete an assessment which requires an on-the-job/experience component, given that this is beyond the scope of their existing recognition activities.Possible submission or evidence from: Committee to which bill is to be referred: Employment, Workplace Relations, Small Business and Education Legislation Committee.Possible hearing date(s):Possible reporting date: August(signed)K O'BrienWhip/Selection of Bills Committee member Notices44724472Motion (by Senator Ian Campbell) agreed to:That government business notice of motion no. 2 standing in the name of the Special Minister of State (Senator Ellison) for today, relating to the consideration of legislation, be postponed till the next day of sitting.Motion (by Senator Allison) agreed to:That general business notice of motion no. 202 standing in her name for today, relating to the 13th anniversary of the Chernobyl nuclear disaster, be postponed till the next day of sitting.Motion (by Senator Carr) agreed to:That general business notice of motion no. 201 standing in his name for today, relating to outstanding responses to questions placed on notice during estimates, be postponed till the next day of sitting.Motion (by Senator Crossin) agreed to:That general business notice of motion no. 187 standing in the names of Senators Woodley and Crossin for today, relating to the Northern Territory's mandatory sentencing laws, be postponed till the next day of sitting.Motion (by Senator Brown) agreed to:That general business notice of motion no. 150 standing in his name for today, proposing an order for the production of a document by the Minister representing the Minister for Defence (Senator Newman), be postponed till the next day of sitting.Motion (by Senator Allison, at the request of Senator Stott Despoja) agreed to:That general business notice of motion no. 182 standing in the name of Senator Stott Despoja for today, relating to the preamble to the Australian Constitution, be postponed till the next day of sitting.Motion (by Senator O'Brien, at the request of Senator Bolkus) agreed to:That business of the Senate notice of motion no. 1 standing in the name of Senator Bolkus for today, relating to the reference of matters to the Legal and Constitutional References Committee, be postponed till the next day of sitting. Committees447344734473Motion (by Senator Calvert, at the request of Senator Ferguson)—by leave—agreed to:That the Economics Legislation Committee be authorised to hold a public meeting during the sitting of the Senate on 29 April 1999, from 10 a.m. to 1 p.m., to take evidence for the committee's inquiry into the Financial Sector Reform (Amendments and Transitional Provisions) Bill (No. 1) 1999 and 2 related bills.44734473Motion (by Senator Hogg) agreed to:That the time for the presentation of the report of the Foreign Affairs, Defence and Trade References Committee on nuclear weapon and ballistic missile proliferation in south Asia be extended to 30 June 1999.4473447315:58:004473Calvert, Sen PaulSenator CALVERT5F4TASLP10—On behalf of Senator Eggleston, I ask that general business notice of motion No. 198 be taken as formal.DX5MARGETTSSenator Margetts—Madam Deputy President—10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—Senator Margetts, you are seeking the call?DX5MARGETTSSenator Margetts—Yes, I was.10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—To do what? I have given the call.DX5MARGETTSSenator Margetts—You had, but you were not looking in this direction.10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—I was giving Senator Calvert the call because he has some business.DX5MARGETTSSenator Margetts—No, this was before Senator Calvert. It was while you were calling on motion No. 199.10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—No. 199 was Senator Hogg's motion, and it was declared formal.DX5MARGETTSSenator Margetts—I was standing while you were taking that vote, while you were not looking in this direction.10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—What are you wanting to do with it?DX5MARGETTSSenator Margetts—I am seeking the call.10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—You cannot speak to it because it is a formal motion. Nobody objected to it being declared formal. If you want to speak, you may be able to do so by leave, but I certainly did not hear anybody object to it being declared a formal motion.DX5MARGETTSSenator Margetts—I wonder whether I might seek leave to make a very brief comment before we vote—I know we have taken the vote but, as I say, you were not looking in this direction, so you did not see me seeking the call.10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—Nobody indicated that there was opposition to it being taken as formal. Is leave granted for Senator Margetts to make a short statement? There being no objection, I call Senator Margetts.4473447316:00:004473Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—Madam Deputy President, I know I did not not declare Senator Hogg's motion formal. I was simply seeking the call to make a very brief statement, as anyone else has the right to do in this chamber.10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—By leave.DX5Margetts, Sen DeeSenator MARGETTS—By leave, thank you. Briefly, I have expressed concern to Senator Hogg that 30 June will be the very last day of the Senate sitting. There will be a lot of pressure on that day. It will also be my last day in the Senate, but that is by the bye. It is an issue that has been dealt with for some time in the committee. I think there is a chance that it will be lost or buried on the last day. I am not saying that this is the intent of the committee, but I have expressed my concern to Senator Hogg that, even though they have potentially until the end of June, it might be better if this report was not buried on the last day of sitting. It is an issue that certainly I have been involved with and it has been of interest within the wider community. I would like to think that they will not wait until the very last day of sitting to table the document.10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—This motion has already been put and carried.Miscellaneous4474Motion (by Senator Calvert, at the request of Senator Eggleston) agreed to:That the Senate notes that:(a) the death of Arthur Boyd, AC, OBE takes from us one of Australia's finest artists and leading philanthropists;(b) Arthur Boyd was recognised as the Australian of the Year in 1995 for his contribution to art in Australia, his generous donations of his work to Australian galleries and his gift to the nation in 1993 of his two properties, Bundanon and Riversdale, now known as the Bundanon trust; and(c) Arthur Boyd was a major contributor to the evolving culture of the Australian people and his generous spirit will live on through his work and his beloved properties.Committees447444744474Motion (by Senator Calvert, at the request of Senator Ferguson) agreed to:That the time for the presentation of the report of the Economics Legislation Committee on the provisions of the Taxation Laws Amendment Bill (No. 4) 1998 be extended to 13 May 1999.Miscellaneous4474Motion (by Senator Allison, at the request of Senator Stott Despoja) agreed to:That the Senate—(a) notes: (i) the pronouncement of the Ethical Committee of the Human Genome Organisation at the annual human genome meeting in Brisbane on 29 March 1999 that reproductive cloning should not be attempted, and (ii) that some forms of cloning of human cells may be appropriate for the development of medical treatments to reduce human suffering; and(b) calls on the Government to: (i) recognise that community understanding of the issues raised by cloning is an essential prerequisite to an informed expression of community wishes and, to this end, lead a wide public education campaign on the issue, stimulating public debate, (ii) review the current lack of regulation of cloning in Australia, (iii) undertake a thorough investigation of the ethical, social and legal issues concerning the use of human embryos in experiments, research or applications with possible therapeutic functions, and (iv) ban human reproductive cloning.Matters of Public Importance4474447410000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—The President has received a letter from the Leader of the Opposition in the Senate, Senator Faulkner, proposing that a definite matter of public importance be submitted to the Senate for discussion, namely:The failure of the Government Communications Unit to provide the Government with adequate advice in relation to the legality of its advertising campaigns, as evidenced by the ACCC's findings that the Government's advertising of its Private Health Insurance measures had the potential to mislead the public.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—10000DEPUTY PRESIDENTThe 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.16:03:004474Faulkner, Sen JohnSenator FAULKNER5K4NSWALP00—Madam Deputy President, this is a very important issue. Let me give some history to outline why it is such a matter of public importance that it is worthy of debate in the Senate today. The ACCC was asked by the Labor opposition to consider the Howard government's advertising campaign on the private health insurance rebate, in the light of the ACCC's responsibility to protect consumers from misleading or deceptive advertising. In this particular campaign the government has spent some $7 million on TV, radio and press advertisements, and on poster and billboard advertising with the headline `Private health cover will now be 30 per cent cheaper for all Australians.' It has done that to promote a $1.7 billion rebate policy.The ACCC has found that the government's advertisements were likely to mislead the public because the claim that health insurance will be 30 per cent cheaper for all Australians was not based on fact. It is not true that private health cover will now be 30 per cent cheaper for all Australians, as the headline in the government advertisements said. It is not a fact because there are significant numbers of Australians who will not get a cut of 30 per cent in their health insurance premiums; for instance, those already eligible for the earlier failure of a policy, those who are insured with an organisation which is not a registered health benefits organisation, or those who are not eligible to receive Medicare benefits. So this was false, deceptive and misleading advertising and has been found to be such by the ACCC.The Howard government just ignored these simple facts in developing this advertising program and it has been exposed; it has been found out by the ACCC to be airing advertisements deliberately designed to mislead the Australian public. In simple terms, what has happened here is that the independent watchdog, the Australian Competition and Consumer Commission, has found the government guilty of misleading and deceiving the Australian people. This really puts the Howard government in the same league as shonky used-car dealers who consciously put to air misleading advertisements which are aimed at deceiving consumers.The ACCC has the legislative responsibility to protect the Australian community from shonks and, clearly, there is an immediate and real need for Australians to be protected from the Howard government advertisements. It is a point that has been made consistently by the opposition. Let me be clear about the opposition's position on this. We believe the ACCC should be given the power to scrutinise, decide upon and, where necessary, remove federal government advertisements which mislead and deceive the Australian public, who of course are the consumers of federal government services. We say that the Australian public deserve to be protected from deceptive advertisements like the ones that were run here in relation to private health insurance.The Australian public also deserve to know why the checks and balances supposedly in place at present did not operate to protect Australians from the deceptive private health insurance advertisements. Why, for instance, didn't the Ministerial Committee on Government Communications twig to the fact that these advertisements were peddling mistruths and distortions? I suppose, being a Howard government ministerial committee, you would not expect accuracy to be their forte. Why didn't Senator Ellison, who chairs the committee, twig?Why didn't the communications unit in the Department of Prime Minister and Cabinet wake up to this fact and advise the government that these advertisements were misleading and therefore a breach of the Trade Practices Act? Or did someone wake up? Did the government just ignore the advice of its bureaucrats? We do not really know. Why didn't the health department, which was paying for the advertisements, advise that these ads did not conform to the real effect of the policy on the community? Again, perhaps it did and the government ignored the advice.At least we heard from Senator Herron in question time yesterday that the government is not blaming the health department or its secretary for this breach of the Trade Practices Act. We can only assume that he was not misleading the Senate in question time yesterday, but the question remains an important one. Who is to blame for these deceptive advertisements going to air? Who is stepping up and taking responsibility for these shonky ads going to air?We wonder if the responsibility does not, at the end of the day, lie with the minister who actually authorised the advertisements and who is named in every single advertisement that is published. Will that minister take responsibility for these misleading advertisements? Did he check the advertisements out? If he did, how did he do it and who did he do it with? I think, on all of the historical evidence of the nonacceptance of ministerial responsibility in the Howard government, you would expect the minister—Senator Ellison—and other ministers to welsh on their responsibility. Proper ministerial responsibility in the Howard government has, I think, gone the way of the tradition of federal governments telling the truth in advertising. Of course, this government has an awful lot of form when it comes to shonky advertising. It has got bucket loads of form.Who can forget the notorious abuse and misuse of $20 million of taxpayers' money, on the eve of the last federal election, to flog the GST tax proposal and the tax policy that the government was taking to the election—not an operating program of government but just an election policy where the advertising was funded by Commonwealth taxpayers? Who can forget that the Howard government spent at least $37.3 million on advertising from June 1998 to the October election? That was an unprecedented level of advertising in the Commonwealth of Australia in the lead-up to an election. Who can forget that it was only focus groups that killed off the divisive Wik ads which the Prime Minister wanted to publish in all daily newspapers on Australia Day last year?It does not surprise me that Dr Wooldridge and Senator Ellison have been caught red-handed by the ACCC writing porkies on billboards and producing shonky ads. The Howard government stands condemned again for its improper approach to government advertising.16:13:004476Tambling, Sen GrantSenator TAMBLING6E4NTCLP10—I note that the issue now before us is a matter of public importance proposed by Senator Faulkner and which he has obviously scribed. I am concerned about the points that Senator Faulkner has just made in support of his proposal. By way of introduction, my initial comment is that this debate is more about sour grapes on the part of the Australian Labor Party than any real attempt to improve the lot of average Australian families or the country as a whole.This is where Labor stand in total contrast to the government. At the basest level, Labor have nothing of any worth to offer—no vision, no plan, and the voters of Australia told them as much at the polls last year. Very obviously, the Labor Party are out of touch with what the electorate is saying, particularly on issues of health. In the motion that is before us today, you can only go to those base motives of greed and envy which underpin so much of Labor Party debate when it comes to effective economic changes. Nothing highlights this better than their complete opposition to the 30 per cent private health insurance rebate initiative in the Senate late last year—we should remember those debates and what was going on at that time—and now their total opposition to the government's new tax system legislation which is currently before the Senate.Senator Faulkner's motion is based on an exchange of letters between the ALP member, Kelvin Thomson, and Professor Alan Fels of the Australian Competition and Consumer Commission. Mr Thomson wrote to Professor Fels on 2 February this year, with Professor Fels replying on 6 April. Seventeen days later on 23 April, the opposition leader, Mr Beazley, fax-streamed both letters out to the media. Yesterday Senator Faulkner asked a question of Senator Ellison about this, to which Senator Ellison gave a clear and comprehensive answer. And now here we are today rehashing the rehashed.Labor has been trying for the past week to get this issue up, and every effort has failed. This is old news and the bottom line is that there is nothing to it. Very obviously, the Labor Party is in a mood of distraction. The principal debate that is before us at the moment that is in the eyes, the ears, and the consideration of all Australians is the tax reform debate, where the Labor Party is obviously out of step and totally embarrassed. For that reason, it is trying any tactic to get away from concentrating on the real issue of the day.Yesterday Senator Ellison rejected Senator Faulkner's allegation that the government's advertising of the 30 per cent private health insurance rebate was misleading and noted that the ACCC took no action in relation to the advertising. It is important to note that the ACCC, whilst it expressed concern about parts of the advertising campaign, did not find it necessary to take action over these concerns. No-one who was receiving the PHIS will be worse off under the new scheme. The majority of PHIIS recipients will be better off, because they will now receive a full 30 per cent rebate, whereas under the previous scheme it was much smaller. And mass advertising does not contain the level of detail that some people would wish. The claims that $7 million worth of taxpayers' money has been wasted on halted rebate advertising are totally false. The entire budget for the promotion of the rebate is around $7 million, which is less than one half of a per cent of the total private health insurance rebate program.Of course the Labor Party's bantering does not focus on the reason for this advertising—and that is to advise people of their entitlement to a 30 per cent rebate, should they have private health insurance or be looking to take it out. This government is committed to maintaining a balance between the public and private health sector so that Australians have a choice when it comes to health care. We are committed to ensuring that the public health sector is complemented by a private sector that is fair, affordable, customer friendly and good value for money. To this end, we introduced the 30 per cent rebate initiative. The rebate is available to all Australians with Medicare eligibility who have an appropriate public health insurance policy provided by a registered health fund. It can be received as a premium reduction through a private health fund.The rebate reduces the cost of health insurance premiums by 30 per cent, regardless of a person's income, the type of membership—whether it is hospital, ancillary or combined cover—or the level of cover. For example, a family with private health insurance contribu tions of $2,000 will be entitled to a rebate of $600. This is what the Labor Party is fundamentally opposed to: cash in the pockets of Australian families who go to the trouble of taking out private health insurance.But we probably should not be surprised at their attitude. They ran government for 13 years with exactly the same attitude and baseless bias against private health insurance and a balanced health care sector. Labor's time in government was characterised by a series of cost shifting policies aimed squarely at private funds. Between 1984 and 1988 Labor phased out a $220 million program for health fund members spending long periods of time in hospital. In 1986 Labor removed a private bed day subsidy paid when patients were in private hospitals—today worth $235 million. And in 1987 Labor cut the Medicare benefit for medical services provided to private patients from 85 per cent to 75 per cent, forcing funds to pay the extra 10 per cent gap.The compounding effect of these policies was of course to force premiums up and force members out—ultimately placing more pressure on the public health sector and giving us a system very much like the one this government inherited in 1996.Of course, the great irony we are now faced with is the Labor Party's efforts to block government policies designed to reverse the damage Labor caused while in government. And we should not forget the 13 years of Labor Party administration and the fact that when this government came to office it inherited a dreadful economic legacy. Labor had mauled and abused the economy and undermined the security of all Australians. Labor is now expressing nothing more than what it has in its guilt file, and we have to constantly cover Labor's legacy. Labor accepted no blame or responsibility for any of the issues that were covered. The whole issue goes very fundamentally to the principles of the Commonwealth-state health agreements and the need for capital that must flow properly through the system and must be available, whether it is in the private or public sector. We have increased the range of aged care and health services to people living in rural and remote Australia.It is important that we dwell on a broader picture than Labor would want us to focus on in this particular debate. On a broader level, the government is just as committed to improving health outcomes for all Australians, particularly those living in rural and remote areas and indigenous Australians. At the last election we made a series of commitments to maintain and strengthen the public hospital system and the private health sector. The government is also committed to ensuring that health resources are used effectively. In doing this, we are taking action to improve links across acute health care, primary health care, residential care and community care. The coordinated care trials are a great example of how this could be done, and you will, of course, have noted the Prime Minister's recent commitment to setting aside an additional $25 million in this area. We are also addressing major conditions such as asthma and diabetes and are building on our achievements in population health in areas such as immunisation, HIV-AIDS and tobacco—areas that need attention. These initiatives will ensure that Australia remains one of the healthiest nations in the world.Labor's record on advertising spending is not much better than its health care record, and I am sure that Senator Knowles will concentrate on this in her contribution to the debate. I challenge everyone to look at the areas where there are very important new challenges. (Time expired)16:23:004478Evans, Sen ChrisSenator CHRIS EVANSAX5WAALP00—Unlike Senator Tambling, I do think this is an important public policy debate, and I think a lot of Australians agree with me, because a lot of Australians have found that the information they have been provided with, at great cost to themselves, through the government's advertising campaign is not accurate. The ACCC, after complaints from Australian citizens, has found that the government's campaign has been misleading.What we heard from Senator Tambling today was a load of waffle about the Labor government's record on this, that and any thing, but the one thing that people listening to the debate will notice is that he never actually addressed the issue. This government spent $7 million of taxpayers' money promoting this claim: `Private health cover will now be 30 per cent cheaper for all Australians.' They spent $7 million of your and my money saying that through all sorts of TV, radio, newspaper and billboard advertisements. What the ACCC has found is that that is not true. Private health cover will not be 30 per cent cheaper for all Australians. It is clearly and demonstrably not true, and what is interesting is that in Senator Tambling's response today he never once claimed that it was. He never once stood up and said, `These ads we put in the paper were true. We stand by them.' Did he say that? No, he did not, because the government will not.Senator Herron and Senator Kemp, to their credit, have refused to stand by that claim in the Senate because they know that it is not true. They knew it was not true long before the ACCC told them it was not true. One of the key issues here is that the government knew it was not true the day they lodged the first ad. It was not when the ACCC brought it to their attention that they knew; they knew from the start that they were misleading the Australian public. They were telling a giant porky. They were misleading the Australian public deliberately and knowingly. That is the important issue. It is interesting to note that Senator Herron and Senator Kemp tried to find some soft words in expressing this, but they basically pleaded guilty. They admitted that, yes, the ads were misleading and people were confused and they got the wrong information from them.But Senator Ellison gave a quite different response yesterday. He had two lines of defence. I will come to why I think this is critical in a minute. Senator Tambling used his first line again today. Senator Ellison said, `There was no action by the ACCC, therefore it is not a problem, it is okay. They didn't say we had to do anything about it.' There are two reasons why that is the case. One is that the government assured the ACCC that the campaign had ceased, that it was over and it was too late to do anything about it. The second is that the ACCC have no jurisdiction over the government's advertising campaign. They had no ability to take action. So Senator Ellison's first line of defence—to say, `They did not prosecute us and therefore we are not guilty'—is a nonsense. It is a typical lawyer's argument. He knows the ACCC did not have any jurisdiction and were not able to take any action. So that is no defence. The other interesting line Senator Ellison used—I quote him from yesterday's Hansard—was:I authorised those advertisements and, when I authorised them, they were certainly not misleading.If they are misleading now, they must have been misleading then, because nothing has changed. So I do not know what he is trying to say. But it is interesting to note that Senator Ellison has a different line from the other ministers in this chamber. The only reason I can find to justify that is that he is the one who authorised them. Every advertisement that went into the newspapers and every ad that appeared on TV was authorised by C. Ellison for the Commonwealth government. He is the one with ministerial responsibility, it seems, for placing these ads. He is responsible for the accuracy and veracity of these ads. He said, using your money, that private health cover will now be 30 per cent cheaper for all Australians.Neither he nor Senator Tambling will defend that position now because it was not true when the ads were placed and it is not true now. What is more, they knew from the start that it was not true. They deliberately misled the public to try and gain political advantage. You expect a bit of that in political advertising. Parties stress things that best suit them. That is part of the game. But this is Commonwealth advertising with Commonwealth funds. The taxpayers of Australia have funded a misleading political argument that those opposite cannot defend, and it is interesting to note will not now defend, because it was clearly misleading and false.There are two parts of the claim that were central to the government's advertising campaign that are clearly false. The first was that private health cover will be 30 per cent cheaper when for over 2.4 million Australians with private health insurance it was not going to be 30 per cent cheaper and for many it was not cheaper at all. The second was that it was for all Australians when clearly it only affected those on higher incomes as claimed. We have a situation where the government had a previous private health insurance scheme called PHIS, which already subsidised families and couples up to a maximum of $450 per annum. That had been largely a failure. In using it the government had been unable to stop the decline in private health insurance numbers, so they replaced it with this rebate. But the effect of that was that only those not currently eligible for PHIIS benefited to the tune of 30 per cent. Anybody who was currently eligible for PHIIS got a lot less than 30 per cent, because they were already receiving some form of subsidy.It is not like we are arguing about a few people on the margin here. It is not like we are arguing about a couple of hundred people who might have been misled. These were 2.4 million Australians—on the government's own figures—who were eligible for the PHIS subsidy. People who were single on less than $35,000 a year or families on less than $70,000 were not going to get 30 per cent cheaper health cover. The government knew that.The Secretary to the Department of Health and Aged Care admitted that in the inquiry into the bill in December last year. In giving evidence to Senator Harradine and me, he conceded that those already eligible for PHIS would not get 30 per cent cheaper health cover. So the government, the ministers in this place, have got that advice from the department—it was quite clear—and Senator Ellison knew because he was the one who took the PHIIS legislation through this parliament. Senator Ellison was well aware that that legislation already provided subsidised cover, so he knew when he authorised these ads.TH4KNOWLESSenator Knowles—Senator Tambling did the legislation.AX5Evans, Sen ChrisSenator CHRIS EVANS—The PHIIS legislation, not the rebate, Senator Knowles.TH4KNOWLESSenator Knowles—Oh, sorry.AX5Evans, Sen ChrisSenator CHRIS EVANS—The PHIIS legislation in the last parliament was taken through the committee stage by Senator Ellison, so he had personal knowledge that what he was signing off was not true. The department advised the government, the ministers had personal knowledge that the claims they made in the ads—paid for by you, me and the other taxpayers of Australia—were wrong.Do we get an apology? No. Do we get any sign that they are going to retract these claims or that they are going to clarify the information? No. Government ministers are very keen to rush into the courts to clear their names when there is any suggestion that the public might have been misled about them. We know Senator Alston and Ministers Abbott and Costello have all been to the courts seeking to correct the record. But when the government are found out wasting $7 million of taxpayers' money and misleading their own constituents, we do not get any apology or campaign advising of the mistake. We do not get any apology. We do not get the treatment that the used-car dealer or anyone else gets—having to put an ad in the next day saying, `Sorry, we misled you. Our claims were not correct. This is the correction.' The standards the government insist that we apply to everybody else are not applied to themselves. The government are above the law and they are above the normal courtesies that should be applied. They have one standard for themselves and one standard for the rest of us.The other issue I want to touch on is that the department assured me the other day when I questioned them on this matter at an inquiry into the Health Legislation Amendment Bill (No. 3) 1999 that they had, as a result of the ACCC's advice to the government, not only ceased to run their advertising campaign but advised private health insurance companies in a circular that they should desist from making the claims that the government had made. Of course all the health insurance funds had copied the very claim that the health department and the government had made and had used in their advertising, claiming that the insurance was now 30 per cent cheaper.The department told me that they were monitoring advertising to make sure that people were not continuing to be misled by advertisements. But in our local paper, the West Australian, of Wednesday, 21 April we had an advert from SGIO Health claiming, `SGIO Health premiums are now 30 per cent lower.' So as late as 21 April private health insurance companies were still misleading the Australian public about the price of health insurance, still responding to the government's lead in misleading the Australian public, and advertising quite misleadingly that health insurance premiums are going to be 30 per cent lower for all Australians. The government have to account for this. It is an important public policy matter. They have misused public funds and they have misused them knowingly. (Time expired)16:33:004480Knowles, Sen SusanSenator KNOWLESTH4WALP10—I rise today to talk on this matter of alleged false advertising. It is just breathtaking, isn't it? This is coming from a bunch of people over the other side who were the spendthrifts of the Australian people when they were in government. Over 13 years they spent a whopping $675 million of taxpayers' money on advertising. Here they are today quibbling about $7 million, and Senator Chris Evans is walking out of this chamber without even listening to a response to the wild and stupid allegations that he has just made.Let me just go through some of those things and I will then come to the substantive matter that is before the chamber today, and that is whether or not the ACCC said that the advertisement that is being referred to today was actually false. But I just want to give some background. As I say, over a 13-year period the Hawke and Keating governments spent more than $675 million of taxpayers' money on communications. In the last six years of their office they had 350 advertising campaigns. This expenditure included $9 million promoting Working Nation and that campaign just happened to run right up to the point where the 1996 election campaign was called. So anyone who tries to say that was not a politically motivated campaign really does have to look at the modus operandi of the Labor Party.But the most interesting one of course—one of the most interesting ones; I should not categorise them in such a way—was the $7 million spent in 1992 and 1993 on the superannuation guarantee campaign. That was a real corker and those opposite would clearly remember the ads that were run at that time. But the most interesting facet of those ads was that the Auditor-General, on page 36 of audit report No. 30 1994-95, when referring to one of the ads, said `in the second breach of the Advertising Code of Ethics, the Advertising Standards Council ruled that another superannuation guarantee print advertisement was misleading and deceptive'. Did we hear the Labor Party talking about any of that? No, we did not. But this is the Auditor-General's report and it found that there were two breaches. Yet the righteous mob over there are alleging that the ACCC has actually ruled on an advertisement in a way in which it has not ruled.So we go to the substance of exactly what they are saying, that the advertisement was wrong. Senator Evans has just said that no-one will stand up for the advertisements as being accurate. I am here to tell him that I will stand up for those advertisements and say that they were accurate. But what they cannot understand over there is that the advertisements were advertising a scheme which replaced another scheme. I might add also that the people who have instigated this debate have voted against every single initiative to increase the membership of private health insurance schemes. Both PHIS and the 30 per cent rebate scheme have been voted against by the Labor opposition. So it is not in their interest to recall the details accurately. But it is worth remembering that PHIS—known as the Private Health Insurance Scheme—ceased being in existence on 31 December 1998 and the new scheme took over on 1 January 1999. So there was no scheme come 1 January 1999. The previous scheme had finished. Therefore, premiums went back to where they were prior to PHIS. So to advertise that the premiums would be 30 per cent cheaper is accurate, and I will stand by those advertisements to the end.It is absolutely and utterly improper yet again of the Labor Party to try to suggest that this is one scheme on top of another. One scheme lapsed, the other scheme took over. There was no overlap whatsoever. But it needs to be stated in crystal clear terms what the ACCC has actually said, because clearly they have not bothered to address that side of this debate while asserting that the ACCC has said and done various things. The ACCC has expressed concern that some individuals may not realise that the private health insurance 30 per cent rebate was not a further reduction on premiums of members who have already been in receipt of PHIS. The ACCC has expressed concern that members of non-registered health funds may believe that they are entitled to the rebate whereas only members of registered health funds are eligible.The question I have for the opposition is: why has the ACCC found it not necessary to take action over these concerns—unlike what the Auditor-General did to the Labor Party? The reason is that if people have a confusion about it then it is the right, the responsibility and the role of government, combined with the funds, to let people know the accuracy of it. To that extent, a component of this $7 million that has been spent has been $1.6 million on print material and the television commercials. Surely the Labor Party, which are the big spender of all time of taxpayers' money on advertising campaigns, should not say that that money should be spent in order to inform people. The fact that they want to preside over an ever declining membership of private health insurance schemes and that they want to see a lengthening of hospital waiting queues is altogether another story. But at least come in here and tell the truth about what the ACCC has said and what the ACCC has done or, more importantly in this case, not done.Besides the television and radio advertising campaign, the government has supplied to health funds and Medicare offices comprehensive information in the form of an information kit, brochures and fact sheets. To try to avoid any confusion whatsoever for members, the government established a federal government 30 per cent rebate information line available for anyone to call. In light of the ACCC concerns that there might be some misunderstanding about the way in which the legislation would operate, the government has written to all health funds outlining the position of the ACCC and advising that health funds must make it clear that the rebate replaces PHIS and therefore the 30 per cent rebate is based on listed premiums and not the premiums that were being charged to individuals who were benefiting from PHIS.But, no, we have this ongoing misrepresentation. Why have Senator Evans and Senator Faulkner come in here today to try to suggest—or state, to be more accurate—that this policy is in addition to the other policy? One replaces the other. Clearly, they are simply exaggerating the case for their own means. And they are the mob who spent $10 million in 1995 on the superannuation community education campaign and who paid $2.8 million between 1983 and 1996 to their mate Rod Cameron, the ALP official pollster, for research projects. The estimated total cost of all research projects known to OGIA and conducted between 1983 and 1996 was a mere $22 million of taxpayers' hard earned cash. Yet they are coming in here complaining about the use of $7 million to inform people of their rights in this regard. It is an appalling misrepresentation of the facts and of the way in which one piece of legislation replaced another, but it needs to be understood very clearly that the Labor Party voted against both initiatives. They stand against both initiatives and will continue to do so. (Time expired)16:43:004482Ray, Sen RobertSenator ROBERT RAYUI4VICALP00—The matter of public importance today is very serious because it goes to the veracity of governments. There is an increasing tendency for governments to use taxpayers' funds to advertise their programs. This has probably been more blatant at a state government level than it has ever been at a federal level—indeed, there are fewer checks and balances at a state level than there are at a federal level. But it is true to say that since the 1970s governments of all political persuasions have found it necessary to advertise government programs, which fall into two areas. Firstly, there is the classic information one. Let me give you an example: defence force recruiting—it is always at a very high figure, it is straightforward and it has continuity between governments of all political persuasions. Secondly, there is advertising that goes to the merits of a particular government policy in order to explain it to the public so that they understand it.This again falls into two categories: advertising for a decision of government, parliament or the cabinet, and a new form of use of advertising to explain the future actions of a government. The most notable use of advertising to explain the future actions of a government was the tax campaign. No legislation had been introduced for tax reform, but $19 million to $20 million was allocated to advertise that particular program immediately before a federal election.Who controls all this advertising? Essentially it is the Ministerial Committee on Government Communications, which is backed up by a group of staffers who concentrate on this area full-time. I have to say, though, that the ultimate decision making is for government, not for those staffers. The ultimate responsibility lies with the ministerial committee, and it has been the practice of the Howard government to put on that ministerial committee people who are probably experienced in media management and advertising from their previous careers as parts of political machines—inevitably those people have the most expertise.So in the last three or four years we have seen a range of people on that ministerial committee—Senator Minchin; Mr Georgiou; Mr Graham Morris, more latterly; and Mr Tony Nutt. These are all people who have a long history in the Liberal Party apparatus. They have been chosen for two reasons: firstly, they are experienced, which I acknowledge; but, secondly, because it is believed that these ministerial committees are political bodies—and political bodies they are. They operate in such a way that they can blatantly ignore advice from the staff of the Government Communications Unit, and they constantly do.The first time this was brought to light was in the first six months of the Howard government when it was decided to advertise the guns buyback scheme. And what happened? The preferred firm was not even on the register of 1,000 firms, so Mr Graham Morris wrote to the unit and got the Adelaide firm, DDB Needham, put on the register. When it came to short-listing the potential firms, guess what? DDB Needham did not appear on the list. Again, there was intervention at a staff and ministerial level and they were put on the list. Five firms went up to pitch, and the staff then ranked them from one to five. Guess who won it? No.5. It was not Nos 1, 2, 3 or 4; the fifth one won it. Who were involved as principals of that firm? The advertising gurus that assisted the Howard government's election in 1996 were all rewarded by getting the first major prestige contract out of the government.On the public relations side, who should be rewarded but a company with links to Jonathan Gaul, long-term Liberal lobbyist, and Mr Mark Textor, one of the scummiest political opinion pollsters this country has ever seen. They were all rewarded through ministerial intervention time and time again. The ministerial committee therefore cannot be regarded as an objective body, and they must be open to scrutiny and held responsible for decisions they make. There is no possibility that they can devolve any mistakes down to the bureaucratic level because the actual choices are theirs.The most recent example is that the ministerial committee approved health ads that were blatantly wrong. The health ads claimed that all Australians with private health insurance would be 30 per cent better off. Of course, that was not the case because it did not take into account the abolition of the previous scheme or those that were outside the registered area. It was all about selling the political points of government, and it was not about informing the public. This was a political campaign; it was not about putting factual details on the record—and it was not the first time.The government's advertising for the tax package was an absolute disgrace. It was the use of taxpayers' money for blatant political purposes, timed—with the knowledge within a small circle of government of when the election was to be held—with an intensive advertising campaign and the launch straight into the federal election on the back of it. I have to say that it was an effective tactic. Even worse than that, hundreds of thousands of dollars of taxpayers' money went into public opinion research on tax issues. That information was not protected; it was sent to the Treasurer's office so the Treasurer could pass it on to his colleagues in the Liberal Party machine up at Robert Menzies House, and suddenly the money from the research became a massive donation to the Liberal Party. But, just in case the message was missed, that same research was sent on to the ministerial committee for its various occupants, such as Senator Minchin and Mr Georgiou, to look at. Did they look at it? Did they use that research? It was initially supposed to be a bit of qualitative research but the contract ballooned into quantitative research. The contract ballooned into tracking research so that they could track night by night to find out how their taxpayer funded political ads were going. In such a way, we saw a massive rip-off of taxpayers' funds.So what can we do about this, Mr Acting Deputy President? I think the Auditor-General was right when he said that there should be some guidelines here, and the Joint Committee of Public Accounts and Audit is currently examining these issues. No-one comes to this debate with clean hands. The real question now is starting to go to quantum. The quantum is so much more massive under the Howard government, and the abuse of process in which the old favourites are rewarded is something that is nothing short of sickening. All the old names turn up time and time again, not out of recommendations by bureaucrats and evaluation by the experts but by a very political ministerial council that picks out the Liberal Party favourites, like Mark Textor, and rewards them with work even though their competency levels, one would have to say, are highly questionable.These health ads are the classic example—all the short cuts were taken. Poor old Senator Ellison was induced to have his name authorising these ads that were patently wrong. So his reputation has been diminished because of that. Really, some consideration should be given to this—and I hope out of the public accounts committee we will see a decent set of guidelines come forward that will apply not only to federal government but also, one would hope, to the areas of greatest abuse in the state field and that they may give some consideration to adopting those sorts of guidelines for their own purposes.16:53:004484Patterson, Sen KaySenator PATTERSONLI4VICLP10—This debate this afternoon has been nothing short of pompous, unfounded self-righteousness. To have Senator Robert Ray get up here and talk about the fact that old favourites are getting jobs under the Liberals is just outrageous. His memory must be very short when he fails to remember the way in which the publicity campaign for the disability reform package was carried out under Labor, when somebody got a bright idea in the ministerial committee that they would use a different form of advertising, that they would use a networking form of advertising which had never been used before—an old Labor Party hack from way back had some concept that she was going to run this networking form of advertising. A $5 million contract was let to that company—and I am still suspicious about how it was let—and the company was balance sheet insolvent at the time.So do not let Senator Robert Ray come in here and talk to us about people known to the party getting jobs. That was a job that was let to a company, to an old Labor Party hack, and the company was balance sheet insolvent. The contract was never completed, and I do not whether the Taxation Office is still trying to recover money owed to it. The people left floundering were those with disabilities who in many cases did not get paid. So to come in here and criticise the current government is just pure hypocrisy.Labor's response to the issue of private health insurance has been characterised by a devious and cynical campaign of misinformation and misrepresentation. Health and misinformation seem to go hand in hand with the Labor Party. Time and time again the Labor Party has recognised the need to boost private health insurance but has simply lacked the courage to do anything about it. As Senator Knowles said today, it has had many opportunities in this place since we have been in government to support people who take up private health insurance, but it has done nothing about it.Maybe they have lacked the courage because top leaders like former Prime Minister Mr Keating and former Minister for Human Services and Health Ms Lawrence bragged that they did not take out private health cover but relied on taxpayers through Medicare to pay their health costs. So when you have that sort of leadership, no wonder you do not get them supporting private health insurance. But our government has not suffered from Labor's terminal reluctance to address the hard health facts. We are not prepared to sit by and watch our public system grind to a halt. Labor was, but we are not.As recently as 1993 Graham Richardson, the then ALP Minister for Health, at least recognised the urgent need to bring back people to private health insurance. Despite the fact that he was the numbers man in the Labor Party, he could not do anything about it. He said:We've got to look seriously at how to get the numbers in private health cover up. It was 70 per cent when we came to office and it's 40 per cent now. The drop last year was dramatic.He said this in 1993, so he is talking about 1992. He went on:If the drop continues at any rate like it has been over the next few years, it won't be long before there will be enormous pressure on the public health system.We used to have Senator Crowley come in here when she represented the minister for health in this place saying, `If private health insurance drops, only young people go out and it won't put increased pressure on the public health system.' That was just nonsense, and it was demonstrated as nonsense. I am just very sorry that former Senator Richardson was never able to convince them that they needed to do something about private health insurance. Nearly all of his colleagues lacked the courage to do something. They saw the writing on the wall, they knew what was going to happen, but they did nothing about it. They did nothing and they let the health system become a terminal case that only a coalition government could resuscitate, and we have set about doing that. We have resuscitated the health system, through the incentive scheme that Labor has had the gall to distort and misrepresent today.Misinformation by Labor is a habit; it is rife and it is repeated, pompous self-righteousness. Comments such as those by the ALP shadow minister for health, Jenny Macklin, reinforce the total lack of reality to this Labor Party policy. We ought to hear what Ms Macklin said in relation to private health insurance in the 1991 report entitled Hospital Services in Australia, published by the National Health Strategy chaired by Ms Macklin. She said:If increased funding to public hospitals reduces the perceived pressure on public hospitals . . . it is likely private health insurance will drop. This could result in increased demand for public hospitals and reduced revenue from private patients.That is another example of what Labor really knew but did nothing about. But Ms Macklin's comments do not surprise me or any of my colleagues on this side of the house or in the House of Representatives because, from issues such as the Job Network to the pharmaceuticals industry and from the Clever Country Education Policy to disability funding, Ms Macklin has consistently misrepresented our policies. In fact she caused me to write a booklet called Macklin's Myths . She is the arch mythmaker. These are examples of where Labor's imagination and storytelling has got the better of them and where intelligent comment has been replaced by bold-faced lies and furphies.Surely anyone conversant with the proposed tax reform system of the Howard government would have a ready example of Labor misrepresentation. I am nearing the end of my tether: I am fed up with the way in which the Labor Party have misconstrued and misrepresented issues surrounding the tax package and especially the GST. It is typical of the ALP. They know we needed a new tax system, a new employment network and a new health incentive system, and they are not shy in pointing this out. But they lack the wit or the will to fix the problem, and they still have no decent policies. The Australian Labor Party just cannot and will not make the hard decisions for the benefit of all Australians.I note the irony of the bleating by Senator Crowley in the Senate yesterday regarding the precious $7 million spent on this advertising campaign. But I did not hear Senator Crowley—and I wonder what the Labor Party was feeling—talking about the $10 million they spent on the 1994-95 superannuation campaign. Was that just as precious? There is, however, a big difference between these two campaigns. Senator Knowles pointed out, but it is worth reiterating, the findings of the ACCC about the government's health insurance campaign and the Auditor-General's comments on the Labor Party's superannuation campaign. The difference is that, in the case of the government's health insurance incentive, the ACCC expressed concern for the `potential to mislead' while the Auditor-General's report says of the Labor Party's superannuation campaign that the print advertisements were misleading and deceptive. It was a substantiated and proven breach of the advertising code of ethics.Senator Evans came in here earlier and said that the government's health insurance campaign had breached the advertising code of ethics. That is not true. That is not what the ACCC said. But he came in here and said it, willy-nilly, with no regard for the truth. The Auditor-General's report, as I said, found that the Labor government's print advertisements were in breach of the advertising code of ethics—$10 million of taxpayers' money was found to have been used in breach of the advertising code of ethics.Senator Faulkner had the gall to ask why the government communications unit did not wake up, and he said that this was a breach of the Trade Practices Act. This is another way that the Labor Party tries to perpetuate its myths. This is another half-truth on the part of Senator Faulkner. I want to reiterate what the ACCC wrote. It said:It should be noted that the commission is of the preliminary view that the Trade Practices Act is unlikely to apply to government advertisements of this kind. The Labor Party come in here and skate on the circumference of the truth in implying that the government's advertising campaign is in breach of the Trade Practices Act when in fact their superannuation advertising campaign was found to be in breach of the Trade Practices Act. It is also misleading for Senator Evans to have picked over the letter from Professor Fels of the ACCC and selectively quote passages that he hoped would prop up his shaky accusations. He did not quote the whole of that letter. If he had, the fact that he was misrepresenting the situation would have been clearer to the public. The Labor Party have indicated that they do not have any policies. They will pick over and try to misrepresent the government's position. (Time expired)10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator Knowles)—Order! The time for the matter of public importance has expired.Committees44864486448617:04:004486O'Brien, Sen KerrySenator O'BRIEN8O6TASALP00—On behalf of Senator Cooney, I present the 7th report of 1999 of the Senate Standing Committee for the Scrutiny of Bills. I also lay on the table Scrutiny Bills Alert Digest No. 7 of 1999, dated 28 April 1999.Ordered that the report be printed.Miscellaneous44864486448617:05:004486Brownhill, Sen DavidSenator BROWNHILLRD4NSWNP10—On behalf of Senator Payne, I present additional information received by the Legal and Constitutional Legislation Committee in response to the 1998-99 additional estimates hearings.Documents44864486448610000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator Knowles)—In accordance with the provisions of the Auditor-General Act 1997, I present the Auditor-General's report No. 36 of 1998-99: Performance Audit—Pay-As-You-Earn taxation: Administration of employer responsibilities: Australian Taxation Office.17:06:004486Hogg, Sen JohnSenator HOGG7L6QLDALP00—by leave—I move:That the Senate take note of the document.I happen to be a member of the Joint Committee of Public Accounts and Audit and I think that, if one goes along to any estimates hearings that I am involved in, one will see that I have a fairly keen interest in audit reports. In particular, I thought it was well worth taking a few minutes of the Senate's time to take note of this report. It refers specifically to pay-as-you-earn taxation—administration of employer responsibilities. The report points out something which many people would not be aware of. In the 1997-98 period, pay-as-you-earn taxation accounted for $66 billion, or some 60 per cent of the total tax take. So it is a fairly important source of taxation for any government.The report went on to point out that 85 per cent of the Australian work force is covered by the PAYE system, although the report makes reference to the fact that there is slippage in that area with a greater number of people now being identified as contractors. The report points out that there is a real need for work to be done in this particular area.The ANAO's audit sought to achieve a number of objectives. As it says in the report, the audit focused primarily on the following four areas of the PAYE adminstration: remittance monitoring, especially managing late remittances; follow-up action for end of year reconciliation, including discrepancies; handling compliance intelligence gained from the public; and the ATO compliance projects. On the matter of the monitoring of PAYE remittances, the report noted that the lack of timely action on overdue remittances represents a risk to tax revenue. That is obviously an important thing in terms of the cash flow of government. The audit also found that `client risk profiling would better target debt requiring timely action' and that `better analysis of available system based information' could improve remittance monitoring. It also stated:. . . the majority of system generated indicators of late remittance are invalid. Where such items represent a debt owed, the estimates of debt are often inaccurate.On the monitoring of PAYE remittances, the report, whilst not being severely critical, draws it to the attention of the Australian Taxation Office and it does make some recommendations further on in the summary. But that was not the area that I primarily wish to focus on. There were specific discussions in the report about the ATO compliance projects. At point 16 in the report, the ANAO found:. . . ATO analysis and field work on its PAYE Erosion Project suggest that the majority of employing organisations are complying with PAYE provisions.The report goes on to say:Although ATO research indicated the movement of employees to contractor status is increasing, there was no indication of when this or other identified factors would have a significant impact on revenue.It seems to me, from reading the report in the short time that I have had available to me, that this is an important area. We are debating a new tax system in this chamber—I do not want to introduce that issue here—and there needs to be some definite information as to what is happening in this area.As I pointed out, the report at the outset identified that in the order of 60 per cent of the tax take in 1997-98 was through the pay-as-you-earn system. Of course, if there is this movement, then it needs to be identified and it needs to be known how that is going to impact on the revenue of government. At recommendation 10, the ANAO made a specific recommendation on this point, and it is worthwhile just canvassing this recommendation for a few moments. The ANAO recommended that, in relation to its analysis of PAYE erosion, the ATO should, firstly:. analyse the downward trend in the proportion of revenue from PAYE to establish causes and project likely outcomes for the medium to longer term.I am surprised that this has not happened. I would have thought—anyone with a reasonable management approach to this sort of issue would have thought—that the ATO would have had some analysis in place to look at this downward trend, because it is not something that has just happened overnight. In that sense, that part of the recommendation is well received.The second point in the recommendation on the analysis of the PAYE erosion is that the ATO:. analyse the trend by large employers towards outsourcing of complete business units or functions to determine its impact on PAYE and overall revenue.Again, that is something that has not been done. There has been a significant move, both by the private sector and, as we have seen, by government, to outsource various aspects of business and, in some cases, quite significant parts of those businesses. There has been no analysis done on this trend by large employers, in particular, to look at the impact on the PAYE system. Last, but not least, the third point in the report's recommendation 10 is that the ATO:. conduct a suitable sensitivity analysis to determine when identified effects on PAYE revenue will become significant so that timely action can be taken.It is important that this take place. Again, we are looking at the significant base of tax revenue in this nation. Even with the change—should it go through this chamber—to a GST, that recommendation undoubtedly is well warranted and well justified.This particular report is not the sort of reading that most people would do at bedtime, but it does draw to the attention of the ATO and the government the need to respond to the changing environment. There were 11 recommendations in the report and all 11 recommendations were agreed to by the ATO. One of the things about these ANAO reports—these Audit Office reports—is that, whilst one finds that the recommendations are invariably agreed to, it is the implementation of the agreed recommendations that is really the interesting part of the report because, in many instances, one finds that the implementation can be very long in coming.I hope that the ATO is swift to respond to the recommendations. As I said, I have not canvassed and I did not intend to canvass everything, but I wanted to focus on the PAYE erosion that is taking place and the need for the government to do a proper analysis through the ATO. (Time expired)17:16:004488Quirke, Sen JohnSenator QUIRKEZS6SAALP00—I want to remonstrate with my colleague Senator Hogg very quickly. He said this is not bedtime reading. In fact, I suspect it probably is good bedtime reading, particularly for a lot of people who have trouble going to sleep at night, but the issues are actually very serious ones.Senator Hogg alluded, towards the end of his speech, to the erosion of PAYE tax receipts. One of the issues that has concerned me very much in the tax debate, and there has not been much airplay on this so far, is the very question of the erosion of PAYE receipts. Because of the restructuring that has taken place in the Australian economy, particularly in the last decade, large numbers of people in Australia are able to incorporate incomes in the sense that they get a payout, usually from a state or federal government, they set up some sort of business of their own, and then they seek to take a tax advantage of those sorts of arrangements. That is starting, obviously, to show through and it is one of the reasons why, on this side, we agree with the need to look at tax.We do agree that it is necessary to have tax reform. Of course, we do not accept the GST as the centrepiece of that tax reform and more will be said about that later today and presumably over the next few sitting days. The case to be made here is that the Audit Office has come down with a fairly timely report on compliance and other issues associated with tax in Australia. Looking through this particular report and the pamphlet attached to it, I think there are a number of key issues that senators need to be aware of. The background to the National Audit Office having a look at this particular question is well laid out in the pamphlet. It is a good summary and it says:During 1997-98, the Australian Taxation Office (ATO) collected revenue through the Pay-As-You-Earn (PAYE) system totalling $66 billion. This represented almost 60 per cent of a total of $110.3 billion in ATO revenue collections for the year.PAYE, introduced in 1941, is the ATO's most extensive collection system covering 85 per cent of the Australian work force. International research has shown that a withholding tax arrangement such as PAYE is the most effective means of encouraging compliance.The publication goes on, under the heading of `Audit objective and approach', to say:The objective of the performance audit was to assess key aspects of the ATO's administration of the PAYE system in relation to employers' remittances and to identify opportunities for improvement. To achieve this objective, the audit focused primarily on the following four areas of PAYE administration:. remittance monitoring, especially managing late remittances;. follow-up action for end of year reconciliation, including discrepancies;. handling compliance intelligence gained from the public; and. ATO compliance projects.I want to make a couple of remarks about this. I think these are very important issues. I suspect most people in this chamber believe that taxation, as administered by the ATO, is a socially necessary goal. It is a vehicle that achieves a number of goods for our society including, primarily, the redistribution of wealth—and that is where we currently have argument with some key elements of the new tax package that has been proposed. But, in essence, I think everybody agrees that the integrity of the system is absolutely essential.The overall conclusion the Audit Office has reached in respect of this is a fairly good one. It gives a good mark to the ATO. Given that the ATO has been the subject over the last few years of a lot of criticism over cases of mismanagement, particularly from some of the magazine-type television programs, in general, when we look at the system, the mark that is given by the Audit Office is a fairly good one. In fact, the report states:The ATO's administration of the PAYE system in relation to employers' remittances is generally sound. It ensures most employers comply with their responsibilities for remitting tax withheld from employees' salaries.The ANAO found that there is scope for improvement in the ATO's administration of PAYE. The audit revealed a risk to revenue arising from the ATO's lack of timeliness in actioning late PAYE remittances and reconciliation discrepancies. Improvements in data integrity of support systems, coupled with implementation of client risk profiling, would lead to better targeting and timeliness of compliance activity and therefore better outcomes.WW4KEMPSenator Kemp—We are able to read the report ourselves.ZS6Quirke, Sen JohnSenator QUIRKE—I wonder about that. From time to time I wonder whether you can actually read. I see you over there with your question time briefs, and I just thought I would help you out a bit here. I know that really deep down you probably can read, but you have not shown a lot of evidence of that in question time. So, if you want to carry on, I am quite happy do so. On page 44 of the report we have recommendation No. 5.WW4KEMPSenator Kemp—Oh no!ZS6Quirke, Sen JohnSenator QUIRKE—Minister, if you carry on like this, I will give you recommendations 6, 7, 8, 9 and 10. Recommendation No. 5, for the minister's interest, is the longest recommendation in the book and probably, arguably, one of the most important. I will quote from that recommendation just for you, Minister, in case you need some light reading when you are going to sleep tonight. Recommendation No. 5 states:The ANAO recommends that:. the ATO improves the timeliness of actioning self assessed reconciliation discrepancies to clear the backlog, within the constraints of cost and risk;. reconciliation data entry keying errors be corrected at the bulk processing centre as part of the data capture process . . .WW4KEMPSenator Kemp—Can't you just give us the reference, Quirky?ZS6Quirke, Sen JohnSenator QUIRKE—I did. It is page 44, in case you want more of it. The third dot point states:. the ATO improves its system to prioritise discrepancy items on the basis of risk profiling . . . There are three other parts to this recommendation but, in the interests of brevity, I will slip over to recommendation No. 6. This, I think, is a suitable point on which to end my contribution here today on this very important report. On page 49 the report states:The ANAO recommends that the ATO implements a nationally based tip-off information management system with consistent procedures for collecting, recording, and reporting tip-off information. I really would emphasise the importance of this particular recommendation. At present we have the PAYE system. If the minister and his friends over there have their way, that is soon to become the PAYG system. I believe the integrity of that particular system, when it comes in, will be dependent on honest, loyal, law abiding taxpayers out in the community making sure that everybody who has a proper obligation for tax purposes meets that obligation. That recommendation No. 6 is absolutely fundamental to this report. With those remarks, I commend the report to the Senate.17:26:004489Bishop, Sen MarkSenator MARK BISHOP2L6WAALP00—I also wish to take note of the report entitled Pay-As-You-Earn taxation: Administration of employer responsibilities and pass a few pertinent comments. I must say at the outset that on occasions these publications we receive from the Australian National Audit Office are a useful and valuable tool for senators and members of parliament. They give great exposure to the many programs and differing methods of implementation of various policies of the current government and prior governments. I regularly keep all of these reports in my office; in fact, they are some of the few documents that are regularly delivered that I think are of interest.What is of great value with these reports is the little pamphlet in the front, a sort of executive summary. It saves you from wading through 80 to 90 pages of often difficult legalese and introduces you to what are the important findings of the particular report. The pamphlet, the executive summary, in this one identifies that something like 60 per cent of taxation paid in this country is paid by PAYE taxpayers—$66 billion out of a total tax collection take of $110 billion. So that 60 per cent is an important figure.To some extent, it is not surprising that the ANAO has taken the time to inquire into the implementation, the procedure and the activities of the Australian Taxation Office. If you could improve the ATO's efficiency by one or two per cent in terms of the revenue that it gathers—and that is its purpose, to gather revenue for government according to law—if you could increase that take from something in the order of $66 billion to $68 billion, a one to two per cent increase, a lot of the problems that it is suggested this country faces in funding of necessary government programs may not be as critical as is sometimes suggested by the government in debate.It is useful for the ANAO to be taking an active overview, if you like, of the activities of the Australian Taxation Office because, if revenue flow can be improved, if PAYE taxpayers and corporate entities in due course, one hopes, are examined properly, and the revenue flow legitimately obtained by government can be improved, that will help in the carrying out of many necessary government programs and policies. Indeed, if it had been done some two or three years ago, it may well have obviated the need to have the wholesale change that is suggested by the current government in moving to a consumption tax, the GST.In the executive summary of the report, 10 recommendations are to be found that essentially can be conceptualised under three headings. The first goes to intelligence/ assessment/improvement. The ANAO has made some comments that are pertinent and somewhat critical of the role of the ATO in this area.The second heading concerns systems implementation improvement, that some of the practices of the ATO in terms of carrying out its charter are not as efficient as government, or indeed opposition, might like. The final two recommendations are probably properly categorised as trend analysis to determine impact—that is, individual workers, corporate entities and other mechanisms established under law do undergo change. They are currently undergoing significant change and, as people in organisations structure themselves in different modes, the results of that restructuring can have an impact on the revenue flow to government.The last two recommendations go to the issue of trend analysis to determine whether the structural changes that we think are occurring in the economy are having an impact on the nature of business and the way it organises itself and the way individuals within the system organise themselves. Structural change does, of course, impact upon the revenue gain or the revenue take by government. The ANAO, in recommendations Nos 10 and 11, recommends that there should be serious trend analysis done to establish the risk to the Commonwealth government if these changes do occur and there is an impact on the revenue flow to government.The major recommendations, as I said, can be conceptualised under those three headings: intelligence assessment improvement, system implementation improvement, and trend analysis to determine impact. The key recommendations in numerical order, if nothing else, go to the accuracy and reliability of the information system. It is somewhat surprising to me, as a disinterested observer, that a lot of the work that has been done by the ANAO in addressing apparent deficiencies in the ability to obtain and properly process intelligence and information as to the activities of taxpayers and business is not occurring on a routine and ongoing basis within the ATO.We all know from the representatives of the ATO who come to estimates and other public inquiries that a lot of resources are addressed to maintaining the viability, the soundness and the integrity of the taxation system and the consequent revenue flow to the Commonwealth. I find it surprising that there is not established within the Australian Taxation Office a permanent unit, staffed obviously by economists and financial people, which automatically and on an ongoing basis reviews the activities of the ATO to determine that its systems, practices and policies are maximising revenue to the Commonwealth and are adjusting, as is necessary, to structural changes within the economy, so that the taxpayer revenue flow to the Commonwealth is not unnecessarily damaged, or damaged on a more permanent basis, simply because the necessary ongoing review procedures have not been established and maintained.Recommendations 2, 3, 4 and 5 target particular issues that taxpayers face or, more properly said, that the ATO faces in terms of debt incurred, debt to be paid by particular classes of taxpayers, whether they be small or medium sized PAYE payers who owe debt to the Commonwealth. Again the ANAO recommends that a profile be identified of the liability of particular types or classes of taxpayers and then that a risk analysis be done to determine whether the revenue flow from that subclass of taxpayers can be maximised to the Commonwealth.Recommendation 4 follows on in the same way and addresses the issue of timeliness of debt establishment and indicates to the ATO how it should establish and refine its performance indicators to assist the ongoing management of PAYE debt and establishment performance—again, a useful recommendation. It is pleasing to see that the ATO has adopted that recommendation without demur and—I repeat my earlier comment—it is somewhat surprising that that has not been established for many years as normal management practice within the ATO.One can speculate or postulate as to why that may be the case. I suspect it goes to the nature of the Australian Taxation Office. Indeed, like many other organisations, it is a large monopoly, bureaucratic in nature and answerable only to the government of the day. (Time expired)Question resolved in the affirmative.Committees4491449110000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator Knowles)—The President has received letters from party leaders nominating senators to be members of various committees.Motion (by Senator Kemp)—by leave—agreed to:That senators be appointed to committees as follows:Environment, Communications, Information Technology and the Arts Legislation Committee— Substitute member: Senator Coonan to replace Senator Tierney for the 1998-99 supplementary additional estimates hearings on on 5 and 6 May 1999.Environment, Communications, Information Technology and the Arts References Committee— Substitute member: Senator Crossin to replace Senator Bishop for the committee's inquiry into the Jabiluka uranium mine proposal.Finance and Public Administration Legislation Committee— Substitute members: Senators Bolkus and Crossin to replace Senators Conroy and Ray for the consideration of the provisions of the Aboriginal Land Rights (Northern Territory) Amendment Bill (No. 2) 1999.Rural and Regional Affairs and Transport Legislation Committee— Substitute member: Senator O'Brien to replace Senator Mackay for the consideration of the provisions of the Wool International Privatisation Bill 1999.Bills4492r703Billsr667Billsr666Billsr702Billsr699Billsr698Billsr664Billsr660Billsr658Billsr657Billsr701Bills4492r663Billsr659Billsr700Billsr6614492A NEW TAX SYSTEM (GOODS AND SERVICES TAX) BILL 1998Consideration resumed.The bill.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Knowles)—The committee is considering A New Tax System (Goods and Services Tax) Bill to which the Democrats have moved amendment No. 1 on sheet 1369. Senator Margetts has moved an amendment, on sheet 1385, to the Democrats amendment No. 1.(Quorum formed)17:39:004492Cook, Sen PeterSenator COOKRF4WAALP00—The question before the committee is an amendment moved by the Australian Democrats and further amended by the Greens (WA) on the GST legislation. I am hampered in this debate in that neither the mover of the substantive amendment nor the mover of the amendment to the substantive amendment are present. The amendment is to chapter 1 of the first of the 27 GST bills—A New Tax System (Goods and Services Tax) Bill 1998 . The bill is probably the most important because, if it were carried, by and large, the other bills are consequential. The bill sets out the tax to be imposed.The Democrats have moved an amendment to chapter 1, Introduction, to insert a new clause 1-4, Intention of Parliament. They then set out two notions which go to a fairer system than the wholesale sales tax system, in their view, and the promotion of the `redistribution of the load of the tax system from the poor to the rich'. On behalf of the Labor opposition, I have indicated that we will not support that amendment, and we will not support it for the good and extraordinarily valid reason that you cannot make a GST fair. A GST is a regressive tax. `Regressive' in this context is not a political word; it is a technical description. A progressive tax is a tax that imposes percentage taxation so that, irrespective of income, you pay on a graduated scale a percentage of your income in tax. It is therefore regarded as progressive so that the actual burden borne by taxpayers is roughly or acceptably equivalent. A regressive tax imposes the same level of tax on everyone, irrespective of capacity to pay or income. So, as a percentage of income, it is a larger percentage for poorer Australians and a smaller percentage for wealthier Australians. Therefore, the technical description is regressive. So this is a regressive tax.For the reasons that I stated before lunch, we will not be supporting the amendment, although I do not question the integrity of those who moved it. It is also for the reason that you cannot make a GST fair that we would not be supporting the amendment moved by the Greens (WA). I am not sure whether Senator Murray or Senator Margetts, who are now in the chamber, want to respond to the arguments that we have put. I am mindful of the fact that the government have not yet responded to the amendment moved by Senator Murray and amended further by Senator Margetts. Certainly we should hear from the government as to whether they accept the proposal. Senator Woodley has provided some explanation but, as cogent and as persuasive as that was, it does not change us from our conviction. This is a regressive tax that has to be compensated for. Even if you believe that the level of tax, the 10 per cent, will not increase—in our view that is a fiction and a fantasy that is proven in the broader community—you cannot accept that the compensation will eternally remain in order to offset the regressive nature of this tax.Even if you believe that the 10 per cent will not go up, as it has done everywhere else in the world, compensation is dependent on the government of the day and governments of the day will vary it, as we have seen in every other country of the world. Therefore, the compensation cannot be guaranteed to last. People will suffer. We cannot support the GST. Perhaps that is sufficient for me at this stage, but I am interested in knowing the government's position and I suspect that there will be some further interventions from our side once we have heard what that is.17:44:004493Murray, Sen AndrewSenator MURRAY3M6WAAD00—I just thought I should add some clarification to what we are about and go back to the very essence of the policy debate which is under way here. It is not just a question of the government's package but in fact the official opposition's alternative view and the alternative view of the crossbenches. The government has, in my view, rightly said that this is the largest package of tax changes probably since the war. To my mind, if you are going to do that, you must address the fundamental principles of what you are trying to achieve. It is not just a revenue raising exercise, it is not just an exercise of economic efficiency; it has to be about what forms of critical distribution you are providing in your society to balance out the way it might otherwise be.I have already indicated that the Democrats will accept Senator Margetts's amendment, because she adds, quite properly, another dimension. My attitude and the attitude of my party is that if this package went down and later on another government—either yours, Senator Cook, or Senator Kemp's—came back up, we would expect them to commence the package with a determination of the principles, the objects, which should be set out for us. Although the government did that in its ANTS package to some extent, it did not do so in the bills.What we are trying to do is to say at the beginning, `Look, there are certain things which should guide us and should guide the bills in what emerges.' Of course the bills do not meet, at this point in time, the prescript we have laid out in our suggested amendment. We do not think the GST as it is currently constructed is fairer than the wholesale sales tax system it replaces. We do not think—in fact, we very much think the opposite—that it promotes a redistribution of the load of the tax system from the poor to the rich. And we have to get the language right. The language of the Prime Minister and Treasurer was, first, that no person would be worse off, and then that no group would be worse off, and then later on, `Well, the average in the group wouldn't be worse off.'But I believe fervently—as do my party—that the purpose of major changes to the tax system should be to make substantial numbers of the poor and disadvantaged and of the middle class better off. This is a package which actually makes it harder for battlers. It just goes against the very essence of what we should be trying to achieve. We all know that statistically the consequence of the last 25 years of government action has been, through the tax system, to increase the wealth and the advantages of the rich and of the elite. It has been a redistribution exercise in a negative sense. Having learned those lessons, having learned the downsides of the extreme forms of economic rationalism, we are arguing that we should start to redress this issue by an intention to redistribution in the old social democrat sense, in the sense of, `Let us give back some equity and some advantage to the poor, the disadvantaged and the middle class.' That is an honourable objective. It is not the province of socialists or of small `l' liberals; it is an honourable objective about making our society more just and more equitable.HX5WOODLEYSenator Woodley—It's about a civilised society.3M6Murray, Sen AndrewSenator MURRAY—It is indeed about making a civilised society. It is not about right and left and factions and ideologies; it is about trying to achieve those things which we should value as an advanced society. I do not want to use the words `advanced economy', because that immediately limits it. I think that was also the thrust of Senator Margetts's remarks—that we have to look more widely and look in a more open fashion at what we are trying to achieve for our society. That is why we have set this as the first amendment coming up—because we need to address what on earth we are here for, why we believe the tax system needs to be changed.I fully understand the views put for the Labor Party by Senator Cook. I think they are very understandable. Their view is obviously that some elements of the package can be worked out but that the core element of the indirect tax, the GST, cannot be made fairer. The Australian Democrats, as you know, take a contrary view, but we do require some pretty savage amendments in many directions to make this package fair. I enumerate them again for you: income tax cuts; the poverty trap—we are very interested in the tax credits idea, which is not in this package; the GST—making food GST free; sorting out the Commonwealth, state and local government issues; sorting out the compensation issues; the pension levels; and the levels at which the social security system and the income tax system interact.Unfortunately, for want of ability to do otherwise, I guess, in terms of their directions, the media have tended to focus on single issues—about compensation or about food being GST free. But for us it is much more than that. For us, this is a philosophical and ideological divide whereby we want to say, `Put back the equity into our system. Put back the redistributional motive in our system.' That is something, frankly, that the major parties did live by in the 1950s, the 1960s and the early 1970s. It is something we have lost since. That is a message that I want to get over to the parliament, and that is what our motive is behind putting this amendment. Really, even if you end up not supporting it—Senator Cook, on behalf of the Labor Party, or, Senator Kemp, on behalf of the coalition—I would urge you to start to adopt this kind of language and thinking in our approach to our society, because I think it is motivated by the sorts of aims and ambitions that a civilised society should adopt.It is not just about economics and making money and selfishness and markets and all that. It really is much more about the things which stand behind the great institutions of our society, which stand behind the churches with their views about faith, hope, peace and charity, about caring for each other. It is difficult for a government to do because of the impersonality of government, but at least we should try and do what we can through this great device which is available to us of tax and of the redistribution mechanism. I hope you now understand a little more clearly our intent behind moving this amendment.17:53:004494Margetts, Sen DeeSenator MARGETTSDX5WAG(WA)00—I think what we are probably going to get to in relation to this particular amendment and the amendment to the amendment is issues of fairness. I was writing down a few notes while this was going on. First of all, I would like to say that I agree with the Labor Party that there is no way that you can take this model of a flat tax and suddenly make it fair. I absolutely agree. I also agree that there is no way that the bits and pieces that we may or may not be able to achieve in the Senate in relation to this bill, this model and this process will suddenly make it okay, because they will not. I guess I was looking at the words about the intention of the parliament in relation to tax and saying, `This is what we think taxes should be.' I suppose that was the reason for our moving the amendment and being prepared to agree to the Democrats' amendment—that it is the intention of parliament that this act and associated laws should be fairer than wholesale sales tax.I am certainly not saying that we believe that the government's intention is that it be fairer. Some people from the government side might think that it is fairer, but we are not suggesting that it is fairer or perhaps will be made fairer. It should, in our opinion, promote redistribution of the load of the tax system from the poor to the rich, and it is a principle of the Greens that the taxation system should promote ecologically sustainable development. So it is a matter of what is the intention of parliament to do with tax systems. If at some stage by magic we got rid of every word after the words `An act to', maybe we could achieve this. So, yes, it is a hope and an intention. I would like to think that if there were ever a legal challenge they might look at the intention and say, `Well, they did mean for it to be fairer, they did mean for it to be more distributive and they did mean for it to be ecologically sustainable if there was going to be a change to the tax system.' We are not naive enough to think that is what we are going to get at the end of this debate, no matter how many of these amendments get up.Now we get down to the issue of fairness. Is the bill for a tax package that we have been given fair? No. Could it be made fairer? Possibly. But then the question is: fairer than it is or fairer than what exists now? There are very few analysts who would say that Australia has one of the most progressive taxation systems. So I could interpret what Senator Murray is saying as that the bill could be made fairer than it is. Yes. There is very little doubt that a bill that is as rotten as this can be made fairer. There is no doubt at all. But whether that equals a system that is fairer than we have now is the question. Should we as a parliament or as a Senate endorse something that is less fair still than we have now? I have to say that it is a bit like the 1996 industrial relations bill in making changes to an industrial relations bill that made the bill fairer than it was but made the system less fair than the existing one. Is that the way to go? From the point of view of the Greens (WA), it is not going to make the taxation system fairer than it is now. We will still be taking a step back, no matter how many of these amendments we get up.That is my explanation to Senator Cook. This is a vain hope and wildly enthusiastic assumption that this is what parliament should do. This is what a taxation system should be, and perhaps at some stage we might magically get rid of all the other words in this consumption tax bill. I suppose it would not be surprising to you that Greens generally do not have a problem with consumption taxes. I have mentioned before that we like the idea of being able to use the tax system to link in some of the real costs of consumption choices and to be able as governments to have some influence in progressing in a really positive way to the future: green jobs, green futures and a healthy environment. Wouldn't it be nice? So consumption taxes are not a problem for the Greens. Flat rate, unfair consumption taxes are definitely a problem, because they give no signal at all—in fact, in many cases they give exactly the wrong signals—in relation to consumption choices. They suggest that the market will solve everything, and you would have to be naive to suggest that that is the case.That is my explanation. It is a vague, ideological hope for the future that I thought we might put into the tax system bill so that someone at some stage will say, `This is what the parliament would like,' even if we have got no hope whatsoever in this debate of achieving it.17:58:004495Woodley, Sen JohnSenator WOODLEYHX5QLDAD00—I have been following this debate with great interest, and I think we are actually advancing our understanding of what is fair and what is not fair. In response to Senator Margetts, let me say that the Democrats really are aiming not just to improve this tax package but to set a vision for the future in terms of the present tax regime. As many speakers have said, that regime is not fair at the present time, whether you take the way that the tax burden is shifted onto PAYE taxpayers, whether you take the ability of people on high incomes to avoid tax to a very large degree or whether you address the issue of bracket creep. All of those things ensure that the current system is unfair. So our amendments, such as those proposing different tax scales, such as those addressing the diesel fuel issue and the effect that has on the environment, such as those making it fairer for local government, such as those addressing poverty traps, all really go beyond simply the package as it is presented and address the present tax system, which in itself is quite unfair.I want to pick up something that my colleague Senator Murray said about the whole issue of language. Language is a very important issue. Language is very important when we are addressing the way in which this government uses language. I have been interested to watch the debates over the last three years and to see that often this government turns language on its head. It makes language mean something quite the opposite to its normal meaning or to the way in which we have used words in the past. A thing like `mutual obligation' has a very positive ring about it, but in the mouth of this government has really meant imposing impossibly high hurdles for those at the bottom of the heap to have to climb or jump over. So language is very important, and I will address that issue in a moment to give an illustration of exactly what I mean.The whole issue of compensation is also important, as Senator Cook has been pointing out. Not only is it that obviously this package must be unfair if you need to compensate people, not only is it that perhaps at a future time some government will reduce the compensation package—and that is not only possible but likely, I must say—but also it is the attitude which says to people, `Because you are losers, exist on the edge of society and are at the bottom of the heap, the only way that you can be included is if we compensate you with a kind of grudging charity. We do not treat you fairly. We do not see that you are part of the community and therefore to be valued for your own sake. You are a loser and because you are a loser then we will trickle down to you something, some grudging charity, which may serve to keep you alive, but we will impose on you mutual obligations. We will make sure that your life will be as miserable as possible.' That is really what the kind of language that this government uses means.I said before that in the global market the largest group of losers is the unemployed. I also said in the previous debate that the plight of the unemployed is made worse by the attitude of the market which declares them not only to be losers but to be worthless as well. Let me illustrate this point about the attitude of this government by simply taking account of the history of the last three years. It is instructive to read a recent defence of Mr Peter Reith by the Prime Minister as an illustration of the attitude. The following is an unedited version taken directly from Australian Associated Press:(The Prime Minister) backed Employment Minister Peter Reith after the release of his radical employment proposals, saying he was lucky to have a Minister who cared. Mr Howard welcomed the letter sent to him from Mr Reith last December outlining a raft of potentially drastic changes to wages, awards, benefits and tax."Can I again take the opportunity of congratulating the Minister," Mr Howard told parliament. "Less than a month after he's got the responsibility, he's in there with 20 pages of ideas. I could be so lucky to have a Minister who is so determined to do something about unemployment.Talk about turning language on its head! It continues:You want Ministers who care, you want Ministers who are dedicated and I am lucky that I have got a whole frontbench of Ministers who care."The article goes on:Mr Reith was forced last night to release secret government papers outlining his proposals for a major shakeup of jobs and workplace relations after the opposition distributed leaked copies of a draft. Mr Howard asked Mr Reith to prepare a detailed paper on the proposals by this month.Mr Reith wants to force all adults unemployed to take part in work for the dole, job training or literacy courses, or have their dole cut, and for work for the dole numbers to be counted as jobs in data. Other proposals include a discounted wage for the long-term unemployed, a single simplified benchmark award for the no disadvantage test for agreements, sidelining the Australian Industrial Relations Commission and exempting companies hiring unemployed people from unfair dismissal laws.These are all examples of a minister who cares! That is not even turning language on its head; it is abandoning language altogether. I believe the most telling part of this report is the comment by the Prime Minister that the proposals put forward by Peter Reith show that the government cares. It is worth repeating part of his comment:. . . I am lucky that I have got a whole frontbench of Ministers who care.To me it is frightening that this Prime Minister and his government have so subverted the language of compassion that they can describe bashing unemployed people as caring for them.Let me press a little further—in particular the decision to force unemployed people who fail to meet literacy and numeracy standards into remedial courses. No-one disputes the need for remedial courses. I know people who are illiterate. That they cannot read or write is a terrible burden for them, one they try to live with every day. Most of them desperately want to overcome this handicap, but to tell them that they will lose their unemployment benefits because they have refused to learn is to push that desperation beyond breaking point. There is one thing that this government does not understand or perhaps it is so determined to blame the unemployed for their situation that it refuses to admit it, but the fundamental reason why people do not have jobs is that there are not enough jobs. It is not that people do not want to work. It is not that they are illiterate, although no-one discounts what a handicap that is. The fundamental reason why people are out of work is that there is not enough work to go round.So when the Democrats want to address the language of this government it is for very good reasons. And those reasons are not simply plucked out of the air. They are there for everyone to see in the history and attitude of this government to unemployed people, to people whom they regard as losers, to people who live on the edge. For those reasons the Democrats believe that this package must be addressed. It has to be radically altered and, in the end, if it cannot be made fairer then we will also vote against it.18:08:004497Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator, I heard your remarks and it will not surprise you that I profoundly disagree with the interpretations you put on the government's motives. We think that just one of the ways you can help the disadvantaged in our society is to tackle the fundamental issue of unemployment. The record of this government shows that we have been able to get the unemployment rate down to 7.4 per cent, which is the lowest in a decade. So, Senator, we do not give any ground to anyone on the need to tackle fairness and the areas of disadvantage in our community, and we believe we have the policy program to achieve that.In your remarks you entered into a wider debate. We think that some of the measures you have proposed, which have been vigorously debated in this chamber, do not tackle the issue of unemployment in this community and in fact work against making sure that issue is appropriately tackled. I do not propose to canvass those debates at this stage, but this government give the highest priority to making sure we tackle issues like unemployment. You are opposed to schemes like Work for the Dole; we are not. This chamber is not. This chamber passed the government's bills on this issue because, presumably, at least the majority in this chamber thought that those measures were important and fair.The government's major paper put out prior to the election, Tax reform: not a new tax, a new tax system, contains the objectives the government laid down for a new tax system. We set out in some detail what the government's objectives were. They cover a number of pages in the so-called ANTS document. For example, the heading `Incentive: a fairer tax system with greater reward for effort' is one of the summary objectives we put down. In that document we argue:The new tax system will be fairer. It provides stronger incentives to work and save.. . . . . . . . .The new system will also give much greater recognition to the costs of raising a family.Family benefits, as we know, will be significantly increased in real terms. We went on in some detail to outline what we see as a fairer tax system, including a greater reward for effort. Another objective is `Security: sounder finances for government services'. We argue:The new tax system will deliver higher economic growth through more competitive Australian exports and import competing products, as well as through higher investment driven by lower industry costs.We went through how we could put government finances on a sounder basis. All of us would think that is another important objective. I suspect it is one of the arguments Senator Murray has used from time to time. Of course, this is one of the reasons we have been able to achieve, with the state governments, a major reform in Commonwealth-state financial relations which provides state governments with a more robust source of revenue to finance their important responsibilities: health, education and welfare.The next objective we put forward in the ANTS package was `Consistency: a tax system which boosts business and investment, and promotes Australian exports'. One of the ways to tackle unemployment is to make sure we have a vibrant, healthy and expanding business sector. In this very comprehensive tax package we put a range of measures to assist business so that business by growing can create jobs. But there is not a given set of jobs—which is what some people may have taken from your remarks. What we need to do is create the circumstances in which jobs can be created. Hence we have given a particular focus in this tax package to a tax system which boosts business and investment and promotes Australian exports. Another objective that we outlined was `Simplicity: making the tax system easier to deal with'. We note:The structure and administration of family assistance will be revamped and consolidated to simplify arrangements and reduce confusion and inconsistencies . . . Businesses will be able to deal with the whole of government through one business number.I made some remarks on that particular issue in question time today. The Treasurer, in presenting these bills in the other place, drew our attention in his remarks to what he saw as important aspects of the bill, including increased fairness. He said:Some high earners are avoiding obligations and taking advantage of government assistance given to low income earners by converting income into fringe benefits.He highlighted this particular issue:This way they get their monetary income down to qualify for income support even though their actual remuneration, including benefits, is much higher.In his remarks in the other place, the Treasurer drew our attention to the importance of fairness. This leads to my attitude to the amendments which have been moved. As I said, the government supports a fairer tax system. We clearly support the removal of the outdated and inequitable wholesale sales tax. Our political opponent, the Labor Party, supports the wholesale sales tax. We do not support that system. What Senator Woodley has outlined does not go near what the government said in its very comprehensive statement where it outlined its objectives very clearly. It touches on some aspects of the government's objectives, but it does not touch on all of them.In developing our tax package, we took particular care to ensure, as I said, that the new system would be fairer for families and those on low and fixed incomes. The new system has been designed so that any increase in the cost of living, for example, is more than offset by income tax cuts, increases in pensions and benefits and other measures for lower income earners. The amendments, in our view, are not necessary. It is not appropriate to include them in a bill that deals largely with technical material and definitional issues. As I said, the government's objectives and aspirations are clearly set out in the document that I was reading from earlier.To conclude, the amendment proposed by the Democrats, including the amendment proposed by Senator Margetts to the amendment, does not reflect the full range of objectives that the government is pursuing through this package of legislation. For this reason, as well as the others I have indicated, the government does not support this amendment.18:16:004498Conroy, Sen StephenSenator CONROY3L6VICALP00—I rise to speak against the amendment. I would like to read it briefly, even though it has been talked about a lot. It states:It is the intention of the Parliament that this Act and associated laws for a new tax system:(a) be fairer than the wholesale sales tax system they replace; and(b) promote redistribution of the load of the tax system from the poor to the rich.I would like to start by speaking briefly about (b) before I come back to (a). Probably the most interesting of the submissions on the question of the totality of the redistribution of the package came from Dr Johnson during his presentation. Dr Johnson, like almost all the academic economists that appeared before us, is a supporter of the GST.ZS6QUIRKESenator Quirke—It's not Samuel Johnson.3L6Conroy, Sen StephenSenator CONROY—No, it is not Samuel Johnson. He was commenting on the impact in general and the notion of equity and fairness and what that meant. He said:That means that, if you accept that being worse off is just related to their cash situation, you might conclude from that, `Oh well, everybody is better off, end of story—the package is fine.'That was working on all the government's favourable assumptions. He went on to say:But I would claim that it is not just the absolute cash effect but it is also the relative effect that is important. When people think about whether they are worse off or not, they have got in mind not just some sort of absolute concept but a relative concept as well. It seems to me that a more appropriate target would be to have constructed a package that maintains exactly the same sort of distributional pattern that we have got before the change.Senator O'Chee then made this telling interjection:That assumes that you want to achieve that effect. It assumes that you want to have high effective rates of taxation on people who are earning, say, $40,000 or $50,000 a year.Dr Johnson replied:You are quite right, it does assume you want to have that effect, but the alternative is that you are saying that higher inequality is better because the incentive effect on higher income people will increase efficiency to a greater extent.DX5MARGETTSSenator Margetts—Reward effort is what they call it.3L6Conroy, Sen StephenSenator CONROY—That is what they call it, exactly. Dr Johnson then said:I think both of those things are debatable. First of all, it is not immediately clear that the highest tax rates are amongst the high income people. We have had a lot of discussion about what we call effective marginal tax rates.That is a possible test for this package. It is not one that I would necessarily sign up to, but it is at least a starting point for the discussion on whether this package promotes the redistribution of the load in the tax system from the poor to the rich, which it clearly does. There is no better illustration than this government's desire to spend $13 billion worth of taxpayers' money handing out, in the form of tax cuts, 52 per cent—over half of that $13 billion—to the richest 20 per cent in this country.3M6MURRAYSenator Murray—That's redistribution.3L6Conroy, Sen StephenSenator CONROY—Thank you, Senator Murray; I will take that. Senator Woodley is gesturing `up'. That is absolutely redistributing upwards from the poor to the rich. That is the reason St Vincent de Paul said that this was un-Australian.RF4COOKSenator Cook—Un-Australian.3L6Conroy, Sen StephenSenator CONROY—That is exactly right. It is un-Australian. That is what St Vincent de Paul said. Almost every individual part of this package fails the fairness test, which is why we reject the amendment from the Democrats and, necessarily through that, the amendment from the Greens. It is a brave and optimistic assumption that believes that this package was ever designed to be fair in any way, shape or form. It is a brave and optimistic assumption that by making some changes—I think Senator Murray used the word `savage'—you can make this package fair.At the end of the day, even after you have made some changes—despite any haggling that goes on in these situations, you will not get all that you want—this cannot fundamentally fix the tax cuts and the income tax evasion that is still going on and which has not changed. They are proposing changes to the PPS system; they are going to weaken it and make it easier to slip out of the PAYE tax system. There is also the regressive nature of the GST itself and its impact on small business.That is one of the ironies of this. For the party that for years has championed itself to small business, I will come to some of the effects on small business and what exactly they are as opposed to what is claimed. But before I do that, I would like to come back to the first part, where it says:(a) be fairer than the wholesale sales tax system they replace;I have always been perplexed by the argument that you can make a consumption tax, a GST, fair. The wholesale sales tax was designed to exempt food. It was designed to be multiple rated. As Senator Margetts suggested, she is not opposed per se to consumption taxes; she is just opposed to one flat rate.The wholesale sales tax is designed in quite an equitable way. What has happened is that we have seen all the accountants and lawyers in the country who have spent their lives trying to find ways to exploit the English language in court—656FORSHAWSenator Forshaw—Not all of them.3L6Conroy, Sen StephenSenator CONROY—Almost all of them, Senator Forshaw. What we have seen is a concerted campaign from the business sector to try to portray that it is a ramshackle wholesale sales tax system, that it is complicated, that it is difficult and that the compliance costs are extreme. But even the tax office in a recent study found that the compliance administration costs for the wholesale sales tax were actually the cheapest of all the tax systems proposed. In comparison with the GST, on which a whole range of studies has now been done, it pales into insignificance.So I say to you: putting in place a GST instead of a wholesale sales tax is in fact your first fundamentally flawed belief in trying to make this package fair, because the wholesale sales tax allows you to tax luxury items. It allows you to make a choice and say, `I think this good deserves to be taxed at a greater rate than that good.' It is not some simplistic accountant's version of efficiency which, unfortunately, Treasury seems to have been captured by, and has been for years. I would have to say, particularly to any Treasury officials listening, to Dr Carnahan or anybody out there who is listening right now—WW4KEMPSenator Kemp—I think they are far too smart for that.3L6Conroy, Sen StephenSenator CONROY—They probably are, Senator Kemp—that you have been captured by the accountants. Treasury are meant to be the economic brains of this country; they have been hoodwinked by accountants. There is no economic theory that says you have to have a single rate tax. It is actually not there. If you study Ramsay and his readings—and those of you involved in the tax debate would know whom I am referring to—optimal tax theory does not say `single rate'. Accountants have captured Treasury. That is quite unusual because it is normally the other way around—Treasury captures everybody. But in this particular instance we have seen, for 10, 15 or 20 years, Treasury of the belief that it is more efficient to have a single rate tax, ignoring all economic theory and all economic taxation policy theory.It surprises me that Treasury has allowed itself to be hoodwinked in such a way over so many years. Yes, it is very difficult to have the Ramsay optimal tax theory in real practice—that is true. But when we are talking about the concept of economic efficiency do not confuse it with accounting efficiency. Of course accountants want just one single rate. It is simpler, easier, the best way to do it and less paperwork for an accountant—wonderful. Yes, that is accounting efficiency for you.DX5MARGETTSSenator Margetts—My accountant doesn't like the GST.3L6Conroy, Sen StephenSenator CONROY—Most accountants have been pretty much hoodwinked so far by the organisations that they represent, and a lot of them are going to be in for a very rude shock, Senator Margetts; that is absolutely right. My accountant, at a global level, is rubbing his hands at the extra money he is going to be able to charge everybody but certainly, from the perspective of the amount of work involved, he is in for a lot more work. Turning to the Irish option, which was recently adopted and which is the core of your amendment—ZS6QUIRKESenator Quirke—Is that Northern Ireland or Southern Ireland?3L6Conroy, Sen StephenSenator CONROY—Senator Quirke, I am not sure on that. Again, you have made a deliberate decision to leave out processed food—I am amazed. You have left out processed food, which means it is in the GST rate. What we have is an argument that fresh food can be GST free but that food bought in packets cannot be. I am confused by this because I am sure that if you did a study—like St Vinnies and a couple of the other associations that I have mentioned have—and went through it you would find that, despite the fact that studies over the years have always shown that fresh food is better for you, someone keeps buying processed food. Someone keeps going out there into those supermarkets and putting it into their trolleys and taking it home. I am willing to bet that if St Vinnies, Treasury or anybody else wanted to go and have a look they would actually find that it is people at the lower end of the market.3M6MURRAYSenator Murray—It's the devil among the group.3L6Conroy, Sen StephenSenator CONROY—It probably is, Senator Murray, but your proposed amendments, not just this one but also the ones that carry through, are inequitable in their own right. Where you intend to leave the line on food means that if you are able to have enough storage, have a big enough car, make enough trips, wander down to the supermarket every couple of days and do not have a big family, you are able to stock up on fresh foods. But if you do shift work and you do not have time—you do the one big shop a week or one big shop every two weeks—you are left in a position where you are buying the processed food and you are going to be taxed more. I said that I am willing to bet a lot that the people in the lower income brackets are the major consumers of the processed foods. So in saying that the system that has to be introduced has to be fairer than the wholesale sales tax system I think you are failing the fairness test yourselves.3M6MURRAYSenator Murray—The model is very close to the wholesale sales tax system.3L6Conroy, Sen StephenSenator CONROY—No. I accept that it is very close, but it is not the same. You do not have to just adopt the Irish option. It could be the northern Irish, the southern Irish or the modified Irish—it could be anything you wanted; it is your amendment.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator McKiernan)—Order! Senator Conroy, please address your remarks through the chair.3L6Conroy, Sen StephenSenator CONROY—In the couple of minutes remaining to me, I would like to mention one article in particular in today's press that needs to be read into the record. I wish Senator Harradine were here—I hope he is listening, and I particularly hope ACOSS enjoyed their meeting today. This is an article by Paul Cleary in today's Financial Review , and it is headed `30pc company tax "wipes $500m a year"'. It states:The Government's Ralph review cannot achieve the goal of a 30 per cent corporate tax rate without running down the Budget surplus by at least $500 million a year, according to confidential Treasury estimates that extend for 10 years.I am just pleased Treasury found some time in their busy schedule to do a bit of long-term modelling on revenue—I am very pleased. It is just a pity they could not find the time during the tax debate or our inquiry to do some on the ANTS package. But the killer here for the government, which blows the whistle on fairness, is the following statement:Sources from the Business Coalition for Tax Reform admit RBT cannot achieve revenue neutrality, but hope the Government will deliver a 30 per cent tax rate and deal with the revenue consequences later. One source said business groups hoped the hidden cost of the agenda remained a sleeper in the tax debate.Is it any wonder that the Senate stands here today and says, `Fair dinkum, this package is a crock'? The government have always been about looking after their mates. They could not help themselves—they have blown the whistle themselves. The revenue projections are shockers! Don't mention the war! No wonder they would not produce any ANTS package modelling.18:31:004501Cooney, Sen BarneySenator COONEYSF4VICALP00—This amendment is very difficult to comprehend as to how it fits into the legislation, because it really expresses the aspirations of a couple of great senators, and this is one of the reasons why I rise tonight. Senator Murray, who moved the amendment, has done great work in this. And, Senator Margetts, I take this occasion to pay tribute to your work in this chamber. You leave here all too soon, and it is good to see that you have raised in your amendment to the amendment an issue that you have spent much of your time—but not all of your time—in promoting, and that is ecologically sustainable development. You have certainly done great work in other places too, and it is good to see that this amendment has come forward in the names of Senator Murray and Senator Margetts.On the other hand, it is very difficult to see just what purpose this amendment serves in this legislation. If this legislation were to be brought before the High Court for judgment as to its meaning, I think the High Court would say, `The intention of this new system is that it be fairer.' Do we expect the court to legislate to make the system fairer? No, of course it cannot do that. It is for the parliament to make it fairer, and I would have thought it is the intention of everybody in the chamber, no matter what side they come from, to make it fairer. The big question is: does this make it fairer? And we have heard the various arguments that go backwards and forwards.3M6MURRAYSenator Murray—It is a mission statement, Senator Cooney.SF4Cooney, Sen BarneySenator COONEY—It is a mission statement, but should a mission statement be put at the head of the policies that a party pursues or at the head of a piece of legislation which is really a technical prescription as to how the goods and services tax is to work? If it is at the head of a piece of legislation, then it is probably not well placed. Perhaps we could move a motion that this is what we propose—that we propose good things.The other thing is this: as I understand it, the new tax system contemplates a whole range of measures, and this amendment does not attend to those. It really says that the only thing we are interested in is the wholesale sales tax system. It leaves floating the views the Democrats have about the other parts of the system. The amendment goes on to say that we want to `promote redistribution of the load of the tax system from the poor to the rich'. If I were putting it forward I would probably say `promote redistribution of the load of the tax system so that those more capable of paying do the paying'.I do not think it is a bad thing to be rich. I think it is a good thing for everybody to have sufficient assets. Everybody in any society, and particularly in Australian society, ought to have proper clothing, proper food, proper housing and a comfortable style of living. If that is attended to, I do not think there is any great problem about having rich people in society. We should not dislike the rich simply because they are rich.I think the motion put forward by Senator Margetts that we as a parliament should `promote ecologically sustainable development' is correct, but again it is very difficult for a piece of legislation to have this at the front of it and then to go out and do its job. It really comes down to what function this amendment would perform, and it is hard to see that it performs any function except to indicate that there are true spirit and great aspirations in the hearts of Senator Murray and Senator Margetts. As I finally sit down, Senator Margetts: we are going to miss you.18:37:004502Cook, Sen PeterSenator COOKRF4WAALP00—I now move to the conclusion of my remarks in this debate. As I have said, fundamentally the reason we are rejecting this amendment is that, however you fiddle with this package, the realities are that the GST is a regressive tax and the 10 per cent GST will rise. We know that whatever fancy arrangement the government puts in place will be a fraud and it will not prevent the tax from increasing in the future. We also know the harsher reality is that the compensation will erode or future governments will override the compensation package. Finally, we know the reality is that the tax cuts offered up as a bait—a cynical money bait for what some people perceive to be a short-term dollar advantage but at their long-term cost—to buy their way into a new tax system will be regressive over time and damage ordinary Australians in the future.Whichever way you cut it, the arguments all fetch up on the shores of those realities. That is the reason it is inappropriate, in our view, to enshrine in the legislation arguments which, on the first branch, I disagree with as a matter of fact and which, on the second branch, are a worthy aspiration in their own right but not true of this legislation and not true of the amendments that we have now seen that would, if all were successful, amend this legislation. I remain firm on that point.It has been said in this debate that language is important, that we should pay attention to language because language expresses an idea, contains an aspiration and sometimes encompasses a view or a culture and that it is important that we use language in this way to express the aspirations of Australians about taxes. I do not disagree with what is being said in relation to the aspirations that we should express—indeed, they are fundamental to the philosophy of the Australian Labor Party—but I think it is improper or it does not fit, if you want to take a softer interpretation, to put those aspirations in GST legislation because they are not true of that legislation. It might be truer of some other legislation; it is certainly not true of this legislation.While we are talking about the importance of language, let us just spend a second considering what the government has said about this. The government persists in saying—and many pundits write is as if it were a fact—that this package is tax reform. They keep calling it the `reform agenda'. Reform is a matter of opinion; it is not a matter of fact. Reform is a subjective judgment. The word `reform' is a word that suggests change with improvement. To use the word `reform' here is to use language wrongly and misleadingly. This is not a package of change with improvement; this is a package of change with regression. Nonetheless, to give it the public relations glimmer that the government seeks, it uses the word `reform' and many people in the media slavishly refer to it as tax reform as if this were an objective fact of life—it is not. I was distressed last week to hear an ABC newsreader refer to this as tax reform as if it were a fact. It is an opinion. If we are going to use language correctly, we ought to be very careful not to describe this as tax reform but as a package of tax changes which in their sum total are regressive.But those are not the reasons that I rise at this stage of the debate, because the debate has moved on from some of those points. One of the points that it moved on to was the point that Senator Woodley spent some moments talking about in what I thought was a very useful contribution to the discussion in this chamber. He referred to issues of employment. What we know from the independent work done by the Senate in economic modelling is that this tax package is a jobs killer. In his evidence, Professor Dixon used those words: `This is a jobs killer. This kills jobs.' That is what he said, and he is the independent commissioned expert. In fact, his modelling showed that 120,000 jobs would be lost because this tax would be imposed on services which were, in the main, tax free and which were in the most rapidly increasing areas of employment in Australia. If you impose extra costs on those services—tourism, in particular, but education, exports and a whole range of other services—it will reduce jobs because it will make those services more costly.It is in that context that a question was asked in question time today of the minister at the table. Let me just go back to the background of that question. The European Union News is not a trade union journal; it is the news-sheet of the European Union Commission's delegation to Australia, accredited to this nation, representing the members of the European Union. It is authorised by the ambassador accredited to this nation as the Ambassador of the European Union—and a very good ambassador he is. This is a regular publication that is published by that delegation accredited to Australia and its objective is to keep Australians briefed on developments in Europe—a laudable objective.What did this year's April/March publication of the European Union News say? A page in that magazine headed `In Brief' deals with a whole range of things under the headings, `EU aid to education in PNG', `An end to pesticides in baby foods', `Delegation on the Internet', `Former Yugoslavia: EU aid worth Euros69mn'. There is a whole series of snippets of information, but among them was the headline `Could a reduced VAT help create jobs?' For the Hansard record, the article said:For the past year, EU leaders have been considering the proposition that reducing the Value Added Tax (VAT) on certain labour-intensive services could help boost employment. Such services would include housepainting, house renovations, domestic help and aged care, housekeeping services, and some environmental services. They now suggest that a reduced VAT apply in Member States from 1 January 2000 to 31 December 2002 to test the truth of the proposition. Obviously, the impact is expected to be greatest in those EU countries having a higher VAT. The current minimum VAT rate in the EU is 15% with several countries applying rates of 20% or more.The VAT is a GST type tax. What the European governments that have experienced this tax are saying is, `If we reduce it in services areas, more jobs might be created. Let's give it a fly, let's try it out. Let's run an experiment across the whole of the European Union—one of the biggest populations of advanced developed countries in the world—and test that proposition because we think jobs are more important than a flat regressive tax.' This is all governments, of all political stripes: conservatives, social democrat, whatever—a fairly comprehensive coverage of a developed country's political spectrum. It is not just the social democrats, the brother or sister parties of the Labor party, saying this; conservative governments are saying this as well. We should heed this in Australia. The message is in Europe: `We think a VAT or a GST destroys jobs. Unemployment is a big problem for us; let's try to address the unemployment problem by reducing VAT levels.' If the experiment proves to be right, obviously what follows is a more considered view, across the issue, of removing it. In view of that experience—in view of the laboratory of Europe for a GST—why should Australia move into that zone of following the leader and committing the mistake they made with a GST? This speaks to the findings of the Monash report on a GST, that it is a job destroying tax.I have taken some time to put these views because they are important to the debate about fairness. It is not fair that Australians ought to be unemployed and not have an ability to obtain a job when they are seeking a job. This parliament should not put obstacles in their way to make it harder for them to get one. This parliament should not put obstacles in their way in the economic system or tax system.WW4KEMPSenator Kemp—Unfair dismissals, that's what you did.RF4Cook, Sen PeterSenator COOK—Let's have another debate about unfair dismissals because this parliament should not penalise workers in the workplace by removing their rights to fairness in treatment as employees, and pretending that it is doing something about employment simply by rotating those in the workplace with those out of the workplace through the jobs that are available—and not creating new jobs and infringing the rights of individuals. It should not do that. That is why we took the view we did on unfair dismissals.But the parliament should not put economic obstacles in the way of the unemployed. The message out of Europe, loud and clear, reported here, is that a goods and services tax will do that. It was interesting, Minister, to hear your answer in question time which, in essence, was that unemployment levels in Europe are higher than in Australia. Is that because they have got a GST and we have not? Is that the reason? Is the reason why unemployment is higher on average in Europe than in Australia that they are reversing their VAT or reducing their level of VAT? These are messages that are fundamental to the debate about fairness and underline the reluctance with which the Labor Party approaches this issue.I want to go to another matter of fairness because my time is rapidly eroding. We moved, in the second reading stage of this legislation, a number of motions attached to particular bills. This is a question for the Australian Democrats, because we are talking about a question of fairness, and in talking about fairness, we assume we are talking about the same thing. One of the motions we moved that the Democrats abstained from voting on, and therefore it was lost, was a motion in relation to the personal income tax cuts bill to add the following:the Senate condemns the government for:(a) unfair tax cuts, with more than 50% of the benefits going to the top 20% of income earners;(b) tax cuts for higher income earners which far outweigh the increases in social security payments for lower income earners; and(c) creating a situation where a couple with no children earning $100,000 gets 5 times the benefit of a low single income family with three children.I would like to direct a question through you, Mr Chairman, to the Democrats which they may wish to take on notice and answer when we resume this debate. Would they explain the fairness of not voting for that type of proposition?Progress reported.Adjournment450410000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—Order! There being no discussion of government documents, I propose the question:That the Senate do now adjourn.450418:50:004504Watson, Sen JohnSenator WATSONVJ4TASLP10—This week is Quarantine Week and we should all reflect on how quarantine protects our primary industries, our lifestyles and our environment. Australia benefits substantially from being an island, geologically isolated from its neighbours. This isolation has ensured we maintain a relatively clean and pure status, free from most of the diseases, pests and weeds that are so prevalent in other resourceful countries. Our agricultural industries are world-renowned for their quality, disease free status and low chemical usage. The agriculture from my own state of Tasmania is particularly sought after, being free from fruit fly and other pests which do inhabit mainland Australia.In 1997 the Commonwealth government committed $76 million to overhauling and upgrading government quarantine resources. It is essential that Australians become aware of and practise good quarantine policy. In Tasmania, the Tasmanian Agricultural Productivity Group and Tasmanian Development and Resources have developed Tasmania's Agricultural Trail. This initiative was funded by industry sponsors and the federal Department of Industry, Science and Resources. Launched in February, the Agricultural Trail features stylised water tanks with storyboards explaining local crops and produce ranging from alpacas and tiger snakes to wine grapes and onions.This agricultural tourism initiative is highlighting Tasmania's rich primary products to the state's constant stream of visitors. Tourists arriving in Tasmania see the water tank storyboards at major points of entry and, driving around Tasmania's scenic rural roads, they are alert for the water tank storyboards that tell them more about agriculture in action. They witness vegetables growing and being harvested and lean, clean, grass fed beef grazing on lush pastures. Dairy cattle feed on perennial pastures without grain supplements, giving sought after local cheeses their distinctive flavour and guaranteeing shelf space in gourmet delicatessens around the world. Mainland Tasmanian sheep are free from all major chronic sheep diseases, and Quarantine work very hard to maintain this.Visitors are able to visit museums showcasing Tasmania's agricultural past and the rising industries of Tasmania's future. Cheese factories, vineyards, wool centres, honey factories, fruit orchards, aquiculture centres, a deer farm, a lavender farm, a spirit distillery and the historic `Woolnorth' property are all featured on the Tasmanian Agricultural Trail.A calendar of special events guides visitors to agricultural shows and other activities. On 6, 7 and 8 May, Tasmania's biggest agricultural fair is to be held. Agfest at Carrick in the north of the state is the Agricultural Trail's main tourist attraction in May. Agfest is a celebration of Tasmania's prowess in farming, food and crafts. More than 50,000 visitors are expected to attend over the three days, and many of these people will come from interstate. Farmgate tourism is a growing industry in Tasmania, but it can prosper only because of the excellent quarantine efforts, the Tasmanian Quality Assured Program and other quality initiatives.Tasmania's disease-free status and a significant quarantine push has led to the trial shipment of Tasmanian grown capsicums to Japan. This disease-free status must be maintained at all cost, and our quarantine endeavours must help us to achieve this. Tasmania is free from tobacco blue mould and fruit fly, and the rest of Australia is not. This is the only reason that the trial to Japan could proceed. Such is the significance of quarantine.The capsicum shipment was part of a three-year industry partnership project led by Tasmania's Department of Primary Industries, Water and Environment. Many people combined to make this shipment a reality and are to be congratulated on their initiative and enthusiasm. The capsicum trial is part of a wider program investigating the viability of greenhouse crops such as tomatoes and egg plants for Japan. Funding from the Horticultural Research and Development Corporation has been significant in making all this happen.Tasmanians are indeed proud of their agricultural achievements, and they are proud of their reputation for clean, high quality food products in world markets. This is giving the state an edge in the development of new products and also with entering new markets.The oceans around our shores provide a natural barrier against the spread of pests and diseases that endanger animals and plants. Tasmania is the only state in Australia free from fruit fly, potato cyst, nematode, tobacco blue mould, the diseases of brucellosis and blue tongue in cattle and Newcastle disease in poultry, to name but a few. Their absence means that Tasmanian farmers are able to use fewer chemicals to protect their crops and animals.Stringent quarantine requirements are in place to protect Tasmania's primary industries. All points of entry into the state are controlled by quarantine officers, and all imported plants, fruit, vegetables and animals are subject to examination upon arrival. Additionally, the gentle beagle quarantine dogs, much loved by older and younger visitors, assist significantly at passenger arrival points, whether by air or sea.The quarantine threat is real and, in the words of our Minister for Agriculture, Fisheries and Forestry, the Hon. Mark Vaile, unless Australians lose their apathy towards quarantine the effort of providing $76 million in 1996 to overhaul and upgrade government quarantine resources will have been to no avail. Therefore, I use this opportunity to urge every Australian to become aware of what can and cannot be brought into Australia and, in turn, Tasmania to ensure our excellent quarantine status is maintained.450618:57:004506Ray, Sen RobertSenator ROBERT RAYUI4VICALP00—Earlier today I made some remarks on information provided to questions on notice to a variety of ministers. I made the point then, and I still make the point now: I am extremely annoyed at the action this government has taken through its political staffers in censoring material that should be available to this parliament.A question was asked of the Minister for Transport and Regional Services some months ago—many months ago—about entertainment of guests at government expense. An answer was provided, as it should be, that nominated all the individuals concerned at official functions. But then I was prompted to put five questions on notice. They took a long while to answer. In late March, the chief of staff of each of the ministers' offices, probably at their normal meeting, determined that the names of individuals are no longer to be released; each one individually gave instruction to a department secretary that that was to be the approach in future. We are now left in the position of not knowing who the guests were who were paid for at taxpayers' expense by ministers. That to me seems to be a political decision and one that is not sustainable in terms of transparency of government.I did say earlier today—and I want to repeat this so it is not misunderstood by anyone—that I believe these entertainment expenses fall into three broad areas: (1) official expenses; (2) the grey areas; and (3) expenses that have been paid that are simply not on. For instance, Mr Fischer's figures were published today, and I have been through every one of them. On those figures published, I have not found one that I would challenge. It seems to me that all Mr Fischer's expenditure on entertainment, as listed in the answer, is legitimate. It seems to me that some of Mr Sharp's expenditure, some of Mr Vaile's expenditure and some of Mr Scott's expenditure is totally legitimate, being the normal things you would expect a government, and a department in particular, to authorise and pay.Then in the grey area, you have people like Mr Dick Smith—I am not picking on him in particular; he was head of a statutory authority—who is taken out for dinner by the minister and that is paid for. I regard that as unusual. It is certainly something which I never did as a minister. Nevertheless, it may have some connotations of being an official function.Then there is this third area that I am highly critical of; that is, a minister taking out either his staff, departmental officials or journalists, and sticking the taxpayer with the bill. This may have happened in the past under a Labor government, but I have never heard of it. There is certainly a consistent pattern, with, so far, three out of four of the National Party ministers scrutinised. I believe it is simply not within the spirit of official entertainment.Let me go through some examples so that people understand it. Let us deal with Minister Sharp first of all. He takes some media representatives and ministerial staff to the Hyatt Hotel, Canberra, and the cost is $313.50. What did they do there that could not have been done in his own office? He then takes media representatives and ministerial staff to the Ruen Thai Restaurant, Canberra, for $110. Then he takes one union representative and ministerial staff to the Parkroyal Hotel, Melbourne, for $370. He then takes media representatives and ministerial staff to D'arcy's Restaurant in Sydney for $413. That particular soiree comes to $103 per head.He then takes—and this is the best of all—media representatives to Eduardo's Restaurant, Noosa, for lunch and it comes to a total of $276.80—$92 a head for lunch at Eduardo's with its white plastic chairs, sitting right on the beach, where most people have breakfast for $8. It must have been wonderful sitting back, watching the waves roll in and thinking, `I'm going to stick the taxpayers with this particular bill,' to talk to two journalists. That is what it comes down to. I bet he got a good run from them next day.Then we go to another one: media representatives and ministerial staff, Catalina Restaurant, Sydney, for lunch, $212. Another one: media representatives and ministerial staff, Chesser Cellar Restaurant, Adelaide, for lunch, $120. Then: a media representative at the Chianti Restaurant, $115. He has dinner with two journalists, Geoff Kitney and Adam Connolly, which cost the taxpayer $115; or with Allan Hawke and Dick Smith, $87; or with Jack Forsyth and Allan Hawke, $155. These are meetings which should be held in the ministerial office. Then you go out for dinner afterwards and you pay yourself.Let us move on and have a look at Mr Vaile. He has breakfast for his ministerial staff and departmental officers at the Fairmont Resort, $297. Then Mr Vaile has a meal with media representatives and ministerial staff at the Plantation Estate Restaurant—I think that is in Western Australia—at $488. Then Mr Vaile eats at the Atlantic Restaurant in your electorate, Madam President, for $189.50, with just government representatives and ministerial staff.Moving on to Mr Bruce Scott, he takes journalists to dinner at Parliament House. We have all done that, but we pay for it. Not him. He sticks the taxpayers for $121.95. He then takes a journalist to The Lobby for $120, $60 per head—nice living, if you can get it. He then takes a journalist to the Ottoman for $120, $60 per head. He then takes a journalist to the Fig for $100, $50 per head. He then goes back to the Ottoman but by this time either they have drunk more or the prices have gone up because this one is worth $145 for two of them, Mr Scott and a journalist. Can you tell me one journalist who is worth $72.50 for lunch?YW4MACDONALDSenator Ian Macdonald—They have never bothered with me.UI4Ray, Sen RobertSenator ROBERT RAY—Senator Ian Macdonald knows that, if a journalist wants to talk to him over dinner, of course the journalist pays. Their media organisation pays for the journalist to have an erudite conversation with Minister Macdonald. Why stick the taxpayer with the bill?The fact is this will not be the end of it. There will be one or two other National Party ministers who will probably follow the same pattern. They should not be allowed to do it by their departmental secretaries. They should be stronger, but they are being cowed by the politicisation of their position so that when they are told to jump they say, `How high?' There are just no proper procedures.I find this last one very curious—again, we return to Mr Sharp. He takes business people and provides them with a meal. Where? At his home. The cost was $790.50. It might be generous opening up your home but we would like a bit more information please. All of the others are referred to as industry representatives but these ones are only referred to as business representatives. I hope this is not a National Party fundraiser where the poor old department is picking up the meal tab under the guise that this is for business people.I repeat, so that no-one misunderstands me: there are legitimate entertainment expenses for ministers, but miscellaneous stuff, when you take your staff out or departmental officials or journalists, is covered within your salary package. It was rolled over in the late 1980s. Because it was fully taxable after the substantiation changes in 1985, it was just as easy to put it in salary, but there was always $10,000 there for this minor entertainment. No-one would expect a minister, when an overseas minister comes to this country, to pay for food and entertainment out of his or her pocket. Of course they are entitled to reimbursement for a proper meal and entertainment for these visitors.It might even be argued that some members from industry are entitled to a meal after a long series of contributions. But you cannot tell me that taxpayer's money should be used for journalists when you are trying to get a good profile of yourself or for your staff. They are being paid travel allowance and that has a meal component in it. They can look after their own interests.There are two problems here. The first is not a rort but rather a problem with the way that expenses are being looked at. The second problem is that there is a political conspiracy to cover up information, to not be transparent and to hide away the true facts. I call on departmental secretaries to ignore the political orders and answer questions that this parliament has referred to them and be responsibleto this parliament with their answers and not to some political apparatchik in a minister's office.19:08:004508Senate adjourned at 7.08 p.m.Documents45084508The following government documents were tabled:Council of Financial Regulators—Report for 1998.Department of Communications, Information Technology and the Arts—Year 2000—Reports—Agency-based public disclosure, April 1999.Public disclosure by portfolio, March 1999.The following documents were tabled by the Clerk:Military Superannuation and Benefits Act—Declaration—Statutory Rules 1999 No. 65.Public Service Act—Department of the Prime Minister and Cabinet Determination 1999/1.Senior Executive Service Retirement on Benefit Determinations 1999/21-1999/28.Superannuation Act 1976—Regulations—Statutory Rules 1999 No. 63.Answers to Questions on Notice4509The following answers to questions were circulated:4509(Question No. 421)4214509O'Brien, Sen KerrySenator O'Brien8O6TASALP00 asked the Minister representing the Minister for Health and Aged Care, upon notice, on 25 February 1999:(1) What role does the department play in the determination or variation of the acceptable daily intake (ADI) of chemicals used in the production of food.(2) Who does the department consult as part of the process of determining or varying an ADI.(3) Are international standards for ADIs set by the Food and Agriculture Organisation/World Health Organisation (FAO/WHO).(4) Does Australia comply with those FAO/WHO standards; if not (a) how do Australian standards vary from international standards; and (b) what is the basis for these variations.(5) What is the relationship between ADIs and maximum residue limits for primary industry commodities.4509Herron, Sen JohnSenator HerronVW4QLDLPAboriginal and Torres Strait Islander Affairs10—The Minister for Health and Aged Care has provided the following answer to the honourable senator's question:(1) The Acceptable Daily Intake (ADI) for agricultural and veterinary chemicals used in food production is based on an evaluation of available toxicological data by scientific officers in the Chemicals & Non-Prescription Drug Branch of the Therapeutic Goods Administration (TGA). The ADIs are officially published by the Department in the "ADI List—Acceptable daily intakes for agricultural and veterinary chemicals".(2) The consultation process for new ADIs (and reviews of existing ADIs where applicable) is conducted through the formal consultative processes of the National Registration Authority for Agricultural & Veterinary Chemicals (NRA), which has the relevant legislative responsibility. The process for establishing the ADI for a chemical takes into account relevant international assessments and standards.(3) ADIs are recommended by the WHO/FAO Joint Meeting on Pesticide Residues (JMPR) and the WHO/FAO Joint Expert Committee on Food Additives—Veterinary Chemicals (JECFA) for adoption within the Codex Alimentarius (CODEX) system of establishing international standards for regulating international trade in primary food commodities. TGA officers regularly attend the annual meetings of the JMPR and JECFA as invited experts. While the JMPR and JECFA make an independent assessment of toxicological data which underpin the recommended ADIs, the JMPR has begun to use national review documents (including some from recent Australian reviews) as source documents for the preparation of JMPR Monographs.(4) A large majority of Australian ADIs are consistent with those established by the JMPR and JECFA. Where differences occur, the main reason is that that they may have been established at a different time when different data sets were made available for review. There are some ADIs (particularly those relating to organophosphonate and carbamate pesticides) where a different interpretation of the key toxicological endpoint may have resulted in JMPR/JECFA and Australian ADIs being different. Since Australia takes a more conservative position on the use of cholinesterase inhibition as a toxicological endpoint, the Australian ADIs may be significantly lower in such cases.(5) The ADI is an estimate of the level of intake of a chemical that can be ingested over an entire lifetime without any appreciable risk to health. It is calculated by dividing the overall No-Observable-Effect-Level (NOEL) from animal studies by a safety factor. The magnitude of the safety factor is selected to account for uncertainties in extrapolating from animal data to humans, the completeness of the toxicological database, and the nature of the potential adverse effects.Maximum Residue Limits (MRLs) are established on the basis of residues found in supervised trials. MRLs are established at the lowest level consistent with Good Agricultural Practice (GAP). However, estimates of overall human dietary intake are always made to establish that the ADI should not be exceeded. In some cases, MRLs could be established at a higher level than that required by GAP without risk of intake exceeding the ADI, but in conformity with best regulatory practice, which aims to minimise exposure to pesticide residues in the diet, MRLs are deliberately kept to the lowest level consistent with GAP.4509(Question No. 422)4224509O'Brien, Sen KerrySenator O'Brien8O6TASALP00 asked the Minister representing the Minister for Health and Aged Care, upon notice, on 25 February 1999:(1) What role does the Australian New Zealand Food Authority (ANZFA) play in the determination or variation of maximum residue levels (MRLs) for pesticides.(2) Who does ANZFA consult as part of the process of determining or varying MRLs.(3) What role does the department play in the determination or variation of MRLs for pesticides.(4) Who does the department consult as part of the process of determining or varying MRLs.4510Herron, Sen JohnSenator HerronVW4QLDLPAboriginal and Torres Strait Islander Affairs10—The Minister for Health and Aged Care has provided the following answer to the honourable senator's question:(1) In order to establish Maximum Residue Limits (MRLs) for a pesticide in food an application must be made to ANZFA to amend Standard A14-Maximum Residue limits of the Food Standards Code. ANZFA then undertakes an assessment process on the proposed MRL and must fulfil its statutory obligations for risk assessment and public consultation. The principal scientific task undertaken by ANZFA is to ensure that the dietary consumption of residues of a chemical, from all potential uses, will not exceed the acceptable daily intake (ADI) over an extended period.If ANZFA is satisfied that the residues in food do not pose any risk to public health and safety, the MRL is then recommended to the Australia New Zealand Food Standards Council to be included in the Food Standards Code. This ultimately provides a single uniform set of national MRLs.(2) ANZFA has an open and consultative process (with generally two rounds of consultation) for considering changes to food standards under ANZFA's statutory requirements. This includes consultation with the State and Territory Health Departments, the New Zealand Ministry of Health, consumers, relevant industry organisations and interested professional bodies. All proposed changes are published and any interested individual or group is welcome to express opinions or put forward relevant information.(3) The Department does not have a role in the establishment of MRLs, apart from the provision of advice to ANZFA and the National Registration Authority for Agricultural & Veterinary Chemicals (NRA) on the ADI.(4) The Department does not carry out any separate consultative process outside those conducted under legislative provisions by ANZFA and the NRA. 4510(Question No. 444)4444510Brown, Sen BobSenator BrownQD4TASAG00 asked the Minister for the Environment and Heritage, upon notice, on 8 March 1999:(1) What licences for the export of wallaby or possum meat or products from these or other indigenous species have been granted or are under consideration.(2) In each case: (a) who sought and/or was granted the licence; and (b) what is the location of their premises.(3) In each case: (a) what is the determination for the export; and (b) what are the conditions applying, including volumes.(4) What is the total volume and value of exports from Tasmania, of each of the following in the past 5 years: (a) possums; (b) wallabies; and (c) other native species.(5) What is the maximum annual limit of possums and wallabies permitted for killing for commerce in Tasmania.(6) Has the Minister visited facilities for killing native species for export in Tasmania; if so, which and when.4510Hill, Sen RobertSenator HillBH4SALPEnvironment and Heritage10—The answer to the honourable senator's question is as follows:(1) Between 11 March 1996, when the Coalition took Government, and 16 March 1999, a total of 82,723 permits were granted under the Wildlife Protection (Regulation of Exports and Imports) Act 1982 (the Act) for the commercial export from Australia of meat or other products of indigenous species. Of these permits, 2550 have been for the export of meat from marsupials and 5140 have been for the export of other products from marsupials.(2) The details sought by the honourable senator on who sought and/or was granted each permit, and the location of their premises, are not readily available and would require considerable resources to extract and collate. I am therefore not prepared to direct that this work be undertaken.(3) The commercial export of specimens subject to the Act may only occur where: (a) those specimens have originated from a captive breeding or artificial propagation operation approved under the Act, or (b) the wild harvest of the specimens has been approved by me under Subsection 10(1) of the Act or has been approved by the Director of National Parks and Wildlife or by me under Subsection 10A(2) of the Act. Where a wild harvest has been approved, this approval may be: limited to a particular period; while certain circumstances exist; or, subject to certain conditions, as specified in the approval.(4) My Department does not keep records of the value of exports. The best available information is Australian Bureau of Statistics data which is publicly available. The volume of exports as recorded by my Department is:19941995199619971998possum5350kg meat 64 bodies 65 skins1904kg meat 841 bodies 25 skins9051kg meat 16 bodies 3 skins11134kg meat 16 skins12749kg meatwallabyZero exports25 skins 70kg meatZero exportsZero exports41kg meatmuttonbird 72480 bodies27000 bodies52720 bodies26500 bodies48000 bodies(5) My approval is only required where it is proposed to export the harvest. The annual limit for Tasmania of Brush tail possums (Trichosurus vulpecula) that may be shot or trapped for damage mitigation purposes, including through commercial use, is 250,000 animals. A trial harvest from mainland Tasmania of 500 animals of each the two wallaby species Macropus rufogriseus and Thylogale billardierii was approved under Section 10A of the Act for 1995. On 15 January 1998 I approved a management program under Section 10 of the Act for those two species of wallaby for Flinders Island, Tasmania. The commercial quota for Macropus rufogriseus for each of 1998 and 1999 is 14,000 animals and the commercial quota for Thylogale billardierii for each of 1998 and 1999 is 7,000 animals. As there is no approved export of wallaby meat or skins from mainland Tasmania, I am not aware of the commercial quota for those species from that location.(6) No4511(Question No. 447)4474511Ray, Sen RobertSenator Robert RayUI4VICALP00 asked the Special Minister of State, upon notice, on 8 March 1999:(1) How many staff employed in the Ministerial and Parliamentary Services Division of the department are not based in Canberra.(2) (a) In which state or territory are these employees based; and (b) at what classification are they employed.4511Ellison, Sen ChrisSenator Ellison9X5WALPSpecial Minister of State10—The answer to the honourable senator's question is as follows:(1) The number of staff employed in the Ministerial and Parliamentary Services Group of the department not based in Canberra is 119.(2) (a) & (b) see table belowCLASSIFICATION (b)State (a)Finance & Administration Level DFinance & Administration Level CFull-timeCasualFull-timeCasualNSW241310VIC241020SA8110WA8310QLD10310TAS3410NT1000TOTAL7834704512(Question No. 524)5244512Ray, Sen RobertSenator Robert RayUI4VICALP00 asked the Minister representing the Minister for Foreign Affairs, upon notice, on 9 March 1999:What was the total cost during the 1997/98 financial year of the provision of newspapers, magazines and other periodicals to the minister's:(a) Parliament House office; (b) Home/State office; and (c) private home4512Hill, Sen RobertSenator HillBH4SALPEnvironment and Heritage10—The Minister for Foreign Affairs has provided the following answer to the honourable senator's question:Expenditure by the Department of Foreign Affairs and Trade for the provision of newspapers, magazines and other periodicals to the Minister for Foreign Affairs during the 1997/98 financial year was as follows:(a) Parliament House office: $6220.17; (b) Home/State office: $1,083.40; (c) Private Home: Nil4512(Question No. 529)5294512Ray, Sen RobertSenator Robert RayUI4VICALP00 asked the Minister representing the Minister for Education, Training and Youth Affairs, upon notice, on 10 March 1999:What was the total cost during the 1997-98 financial year of the provision of newspapers, magazines and other periodicals to the minister's: (a) Parliament House office; (b) home/state ministerial office; and (c) private home.4512Ellison, Sen ChrisSenator Ellison9X5WALPSpecial Minister of State10—The Minister for Education, Training and Youth Affairs has provided the following answer to the honourable senator's question:The total cost during the 1997-98 financial year of the provision of newspapers, magazines and other periodicals to the Minister's and Parliamentary Secretary's parliament house office, home/state ministerial office and private home was $14,852.24.The above figure includes costs for Dr Kemp, Senator Vanstone, Senator Ellison, Mr Abbott and ministerial advisers as detailed below. (a) Minister's Parliament House office: Dr Kemp—$4,047.20; Senator Vanstone—$1,257.50; Senator Ellison—$3,819.95; Mr Abbott—$2,751.35; TOTAL—$11,876.00.(b) Home/state ministerial office: Dr Kemp—$921.60; Senator Vanstone—$1,256.20; Senator Ellison—$798.44; Mr Abbott—$0.00; Total—$2,976.24(c) Minister's Private home: Dr Kemp Private Home—$0.00; Senator Vanstone Private Home—$0.00; Senator Ellison Private Home—$0.00; Mr Abbott Private Home—$0.00; Total—$0.00.4512(Question No. 558)5584512Ray, Sen RobertSenator Robert RayUI4VICALP00 asked the Minister representing the Minister for Education, Training and Youth Affairs, upon notice, on 10 March 1999:(1) What was the total expenditure on preparing the department for the move to accrual accounting for the 1997-98 financial year.(2) What was the department's forecast for expenditure in this area.(3) (a) In which instances were firms or individuals engaged to provide consultancy services associated with the shift to accrual accounting by the department; and (b) which firms or individuals were engaged.(4) (a) What was the total number of days that consultants were engaged to provide this advice or services; (b) at what cost per day in each instance; and (c) what was the total cost of each consultancy in each instance.(5) (a) What is the estimated expenditure on outside consultants to advise on accrual accounting for the 1998-99 financial year; and (b) how much has been spent to date.(6) What is the estimated total departmental expenditure on preparing for accrual accounting for the 1998-99 financial year.4512Ellison, Sen ChrisSenator Ellison9X5WALPSpecial Minister of State10—The Minister for Education, Training and Youth Affairs has provided the following answer to the honourable senator's question:(1) The cost of preparing the Department for the move to accrual accounting has largely been absorbed within the normal operations and activities of the Department. There has however, been limited use made of consultants and contractors to assist the Department in implementing some aspects of the new arrangements.For 1997-98 a total of $50,676 was spent in providing some 600 staff with Financial Awareness and Accountability courses as an introduction to accrual accounting and general financial management concepts. A further $4,900 was spent in providing similar courses to the SES but with an increased focus on the development on an outcome framework.(2) The Department's forecast expenditure for 1997-98 was $57,000.(3) (a) The Department did not engage consultants to assist with the move to accrual accounting in 1997-98. General contracts for service were issued to KPMG and BRW Financial Services to provide Financial Awareness and Accountability courses and SES Awareness sessions. (b) KPMG were engaged for all but one of the Financial Awareness and Accountability courses. BRW Financial Training conducted one Financial Awareness and Accountability course and the SES Awareness sessions.(4) (a) KPMG provided Financial Awareness and Accountability courses over 30 days and BRW Financial Training conducted one session. BRW Financial Training conducted 3 SES Awareness sessions over 3 days. (b) KPMG costs per day were $1,200. BRW Financial Training cost $1,950 per day. (c) The total cost of the KPMG consultancy was $48,476. The total cost of BRW Financial Training sessions was $7,100.(5) (a) The estimated expenditure on outside consultants to advise on accrual accounting for 1998-99 is $170,000. This figure is associated with a consultancy with Pricewaterhouse Coopers who have been engaged to provide assistance in costing the Department's Outcomes and Outputs framework, to analysis the Department's corporate business processes and to benchmark these against best practice.(b) Total expenditure and commitment to date on the above mentioned consultancy in 1998-99 is $84,450. Other expenditure has also been incurred and this includes a contract for $5,040 paid to Darren Hooper and Associates for training, $28,000 paid to Catalyst for a Computer Assisted Learning package and $3,775 for a series of newsletters.(6) The estimated total departmental expenditure to consultants and contractors and for other communication and training strategies to prepare for accrual accounting for 1998-99 is $260,000.4513(Question No. 589)5894513Brown, Sen BobSenator BrownQD4TASAG00 asked the Assistant Treasurer, upon notice, on 11 March 1999:(1) With reference to that statement made by the Assistant Treasurer, on the Special Broadcasting Services program Insight, 4 March 1999, that modelling shows that the non- profit sector will achieve very substantial cost-savings under the Government's proposed goods and services tax (GST) package: can details of the modelling and the results which support this statement be provided.(2) Will all grants to non-profit organisations from the federal government, state governments and local governments be GST-free.(3) How much money will the Government commit specifically to the non-profit sector to help implement the GST.(4) What benefits will the non-profit sector receive to offset the additional costs to them of the new taxes and compliance requirements under the Government's GST package.4514Kemp, Sen RodSenator KempWW4VICLPAssistant Treasurer10—The Treasurer has provided the following answer to the honourable senator's question:(1) Treasury has estimated cost savings to various industry sectors using its input-out model PRISMOD. Details of PRISMOD are contained in chapter five of Tax Reform not a new tax a new tax system. It is estimated that the cost reduction accruing to the Community Services sector (ABS Input-Output Commodity Group level 87.01) is 2.7 per cent, or $280m.(2) Grants that are not payments in return for goods or services will not fall within the GST system. Where grants are actually payments by governments for providing specified services, they will be subject to GST where the recipient is a GST registered entity. In this case, the transaction will be one between two GST registered entities and so will have no net GST effect on either the recipient or the provider of the grant, although it will provide a cash-flow benefit to the recipient of the grant (ie the non-profit organisation). If the recipient of the grant is not registered, they are not required to charge GST.(3) The Government will spend up to $500 million to defray the start-up costs of small and medium enterprises, charities and education bodies, implementing the GST. The Government will consult with small business (through the Small Business Consultative Committee), and with charity and education peak groups, on the most effective options for delivery of these incentives.(4) The GST has been designed and will be implemented such that compliance costs are kept to a minimum, and all sectors of the economy will benefit from a reduction in the cost to them of undertaking their activities. In addition, where non-profit organisations make taxable sales to consumers, they will receive a cash flow benefit from their customers, like other registered entities.