1999-11-293914SENATE1088301999-11-29The PRESIDENT(Senator the Hon. Margaret Reid) took the chair at 12.30 p.m., and read prayers.Bills10883r945Billsr943Billsr946Billsr944Billsr964Billsr96310883Debate resumed from 26 November, on motion by Senator Hill:That these bills be now read a second time.12:31:0010883Conroy, Sen StephenSenator CONROY3L6VICALP00—I rise today to speak to the new business tax system legislation, the first tranche of legislation for the government's business tax proposals.Labor has supported the concept of business tax reform since the debate commenced. We have also sought a bipartisan outcome. We said we would have a review process before the election if we won. In that spirit, we supported the Ralph process that the government set in motion. The final report was issued at the end of July, and then the government took over the process.We did not get a full response. We got a stage one announcement on 21 September. This left a $3.8 billion funding hole. Then, on 11 November, we got the stage two announcements which could only be regarded as in-principle announcements at that stage.Now, Labor has forced the government to commit to fully implementing these proposals. There can be no backsliding, no welching, no giving in to the vested interests. The anti-avoidance measures have to be implemented, lock, stock and barrel. In addition, an important new anti-avoidance measure is being brought forward by the government. That is one dealing with income conversion schemes. I will return to this at a later part of the debate.Labor supports the small business measures in the package before us today. These will ensure that small business is not adversely impacted on by the capital allowance changes. In effect, small business is insulated from many of the measures that ensure that the package will be revenue neutral. Of course, they will not be exempt from the integrity measures in this legislation. These are necessary to secure the future revenue base and rightly apply to all taxpayers, whether large or small.Labor supports a lower company rate as long as it is fully funded. We especially support CGT reform in the area of venture capital. We welcome the government coming on board in this area. Labor went to the last election with a similar initiative to attract venture capital into Australia. The government rubbished it, but now they have picked it up. All parties to the debate agree that the package has to be revenue neutral. Revenue neutrality means that the package has to pay for itself. It means that any dollars forgone through a lower company rate have to be made up through increases in collections from other areas—by increasing the base, for example, through clamping down on tax avoidance and through removing other legitimate concessions such as capital allowances.The reason that the package has to pay for itself is simple—the GST. Labor said that if the GST did not pass, business did not have to meet the revenue neutrality test. Since the GST is now a reality, this package has to meet that test. This is something that all parties have signed up to. Labor will not be compromising on this issue, nor can the government. The Timor commitment further reinforces the necessity for the package to pay for itself. Labor has secured this commitment from the Treasurer. We had much evidence before the Senate committee from Treasury and from John Ralph saying that the figures used in the Ralph committee report and the government's official announcements were conservative—that is, they believed that the package would actually generate net revenue when implemented. Nobody can be precise about such things, but there is much opinion by practitioners and others that the savings generated by some of the anti-avoidance measures will dramatically understate the actual receipts.I would now like to contrast this approach with that of the Democrats and the GST. The reason the GST has become such a dog's breakfast for Australian business is the way the government went about it: a dirty deal with the Democrats built on the foundations of overblown rhetoric.ZW4SHERRYSenator Sherry—One thousand amendments.3L6Conroy, Sen StephenSenator CONROY—That is right, Senator Sherry, 1,000 amendments. That dud deal has now come home to roost with the budget forecast to slip into deficit, built on the back of a $20 billion cost to the budget bottom line over three to four years. That is right: the GST will cost this country $20 billion in forgone revenue. This compares with the business tax package which will be, on balance, over time, revenue neutral. Unlike the Democrats, the Labor Party was not willing to support tax reform at any cost—$20 billion cost versus revenue neutrality. That is the great difference between our support for business tax reform and the Democrats' support for the GST.Former senator Peter Walsh described the Democrats as the fairies at the bottom of the garden, and we know that they proved themselves to be that in their negotiations with the government over the GST. Despite holding in effect four aces to the government's pair, the Democrats folded and settled for the tea party and a tax package that did not pay for itself. I still remember Senator Lees's famous words: `We got more from this government in 13 hours of negotiations than we got from Labor in 13 years.' What exactly did Senator Lees and the Democrats get? She has got over 1,000 amendments to a package that has not even started yet. She has got a predicted inflation rate of 5.25 per cent when the government told her it would be 1.9 per cent. And she has quite happily allowed the million dollar tax rate for casino high rollers to be passed by doing the chicken run out the Senate doors. What about the GST-free books? She lost that. What about assistance for charities? She lost that as well. What about a tough GST anti-avoidance regime? She gave in to the government on that as well.We are also now starting to see the real impact of the GST. Insurance premiums are going up by more than the government told us they would, but what is Senator Lees doing about it? Nothing of course. The airlines have told us that prices are going up by 7.5 per cent when the government told us they should rise by no more than 0.8 per cent. And what was the government's response? Mr Fahey, the Acting Treasurer at the time, stated that at least they were not going up by the full 10 per cent. That is okay then. And what have Senator Lees and the Democrats done about that? Nothing of course, because as long as those casino high rollers get their tax breaks, that is where the Democrats' priorities now lie.The Prime Minister announced last week a new tax to partially fill the hole that has been created through this GST deal with the Democrats. After not coming clean in the parliament last week, the Prime Minister admitted on the 7.30 Report that the GST caused the budget black hole and hence forced the imposition of the new tax. The dirty deal with the Democrats has led to this situation—nothing else. Not only is the GST unfair but Labor's criticism that the package was highly fiscally irresponsible has also been borne out. Australian businesses now will not face the same problems with the business tax reform as long as the government keeps its side of the bargain. Labor has repeatedly, for many months, called for bipartisanship on business tax reform. The government has finally conceded the importance of such an approach. Business needs the certainty in its tax arrangements that goes beyond one electoral cycle—and that can only be achieved through support by the only two parties that can form a government.I will now turn to some of the myths about the capital gains tax arguments. The effective rate of capital gains tax has not, as has been claimed, been halved by this package. It has been altered but it certainly has not been halved. As the Ralph report and the government have said, there will be some circumstances where the rate of tax on gains made in the future will actually increase, not decrease. There will be circumstances where the rate of tax decreases. The reason for this is that we are moving to a nominal system of assessing capital gains. Previously it was possible to make a capital gain but to pay no tax on it. This arose because of the indexation provisions, which kept that amount relating to inflation out of the capital gains tax base, or because of the design of the averaging provisions.As the interim Ralph report, called A platform for consultation, noted at page 308, there has been significant abuse of the averaging provisions. This occurred through taxpayers effectively obtaining multiple tax-free thresholds by ensuring that they only earned capital gains. This meant that wealthy taxpayers could earn more than $25,000 per family member and pay no tax—a very unfair situation compared with a family earning the same amount of income through the PAYE system. That huge anomaly is being addressed. These taxpayers, these avoiders, will now face significantly higher taxation on these capital gains.There are also a variety of important integrity measures concerning capital gains tax in these bills. The provisions concerning value shifting and multiple loss creation are also important initiatives which improve the integrity of the capital gains tax base. They attack avoidance and abuse and will contribute to a stronger, surer revenue base into the future.The other area of capital gains tax avoidance which needs comment is the incentive for schemes to convert income into capital. There was excitement in the tax planning industry when the government made its initial announcements. There were lots of people going public about the schemes they were already starting to devise to avoid the new tax. This was a genuine threat to the revenue neutrality of the package. If this behaviour was allowed to flourish there was a genuine threat to the revenue base into the future. What we would have seen would have been a return to the pre-1985 system where, if you were wealthy and smart, you were able to design your tax structures so that you paid almost no income tax so, as usual, the better off would have had an opportunity to benefit at the expense of the hard working battlers who pay their tax and contribute to our society.That is why Labor fought for, and won, the strong new general anti-avoidance provisions which will be inserted into the legislation during the committee stage of this debate. This new measure will ensure that the Australian Commissioner of Taxation has the undoubted power to attack schemes which seek to convert income to capital gains—no return to the pre-1985 system, no return to taxation being optional for the rich. This is an important victory in Labor's war against tax avoidance. This is a necessary tool in the armoury of the tax commissioner to fight all those smarties and spivs out there who always seek to abuse our tax laws.People should remember that if it is argued that the new structure will lead to planning opportunities, that is exactly what Senators Murray and Lees were planning to support. They were engaged in negotiations with the Treasurer to support the measures before us today with some slight variations. We expect now to hear them say that they do not support the arrangements, but people should remember that they accepted the principle of moving to a nominal capital gains tax system. They were reported as arguing for a 45 per cent cut in the nominal rate as opposed to a 50 per cent cut. What a great deal! Then they could argue that the principle is now wrong, but if the cut was 90 per cent of what is in this bill, the Democrats would be supporting it. We can see this hypocrisy for what it is.Let us be clear about the revenue neutrality of this package. It has to be revenue neutral, not only in the medium term but in the long term. We have ensured that appropriate anti-avoidance measures will be enacted to stamp out the conversion schemes. This will stymie the new schemes but, of course, we need eternal vigilance in this area. We know from history that all it takes is one adverse court judgment and a hole may emerge. That is why the government have to ensure ongoing revenue neutrality. If they do not, Labor will be up the government like a rat up a drainpipe.This task will be never ending. The Treasurer has to live up to his responsibility and to his word on these issues. This government has given a commitment that it will empower the tax commissioner to give no quarter to the spivs in this country who design tax avoidance schemes to get around these laws. That is the challenge for this government. That is what we have signed up to with this government. This government has promised us that it will not stand back and allow the tax base to be eroded by the spivs, the smart-money accountants and the wealthies. Hopefully, through the amendments we are moving, we will find a way to shut down this area but, as has happened in the past, when a government moves to block one hole the spivs and the smarties find a way to unblock another.This government has given us a commitment that it will block every hole at every turn. What we want is a fair share paid by everybody. It should not matter how much you earn or whether or not you can afford a smart accountant—people should pay their fair share. That is what we have negotiated in this package. I look forward to the contributions from other senators. I hope we can ensure that this legislation goes through, as the Democrats promised, by Christmas.12:47:0010886McGauran, Sen JulianSenator McGAURANWH4VICNP10—The government welcomes the support of Senator Conroy and the Labor opposition. I can put Senator Conroy's mind at ease. He can rest assured that this government has a commitment to closing tax evasion schemes and our record shows that. We believe that the new business tax system legislation contains the appropriate measures to prevent any holes being opened up by unscrupulous tax advisers. The new business tax system legislation is significant as it follows on from the government's new tax system legislation, which was introduced in June, if my memory serves me well. It completes the story of this government's major tax reform. It will add to underpinning the very strong economy that Australia has.To paraphrase the Treasurer's speech made in Boston in October this year to an American business group, he claimed that we are the 13th largest world economy. The Treasurer made good and very proud comparisons between Australia and the United States economy. To state the obvious, the United States economy is the largest world economy. It is widely recognised that Australia and the United States had the strongest performing economies in the world in the last decade. Australia has high growth and low inflation locked in, and a rate of economic growth matched by no other economy in the world. Over the past decade, Australia's economic growth has outstripped the United States and, on average, our inflation has been lower than the US. Also, like the US, Australia's economy has very low interest rates.This government has tackled the debt problem which we inherited when we first came to power in 1996 and it is worth restating that legacy. In 1996, we were left with a legacy of some $100 billion debt and an interest bill of $10 billion per year, which was the budget deficit—$10 billion a year. To put that into perspective, in the last four years of the previous government that debt jumped from a very manageable $32 billion under the Hawke Prime Ministership, from $32 billion at the beginning of the Keating Prime Ministership to $100 billion. Quite frankly, if we had come into government with a $32 billion debt, it would have been quite manageable. But we were left with a $100 billion debt and had to go about the business of introducing tough budgets and a regime of privatisation to bring that debt down.Since 1996, the official interest rates have fallen and the net public debt has fallen well below the 11 per cent of GDP, as against the 25 per cent of GDP when we first came to office. So you can see we have halved the debt. Productivity has jumped and is now higher than that of the United States. Both the United States and Australian markets are performing at record employment growth rates.That economy has sustained us during the Asian crisis. The news of late is that the Asian countries are starting to recover, that they are on the mend. If we think back to a year or two ago, or more, when those countries collapsed, we remember the economic dread throughout Asia. The fact that the Australian economy has been able to survive and to maintain its growth throughout that economic crisis is a testament to the government's good fiscal and monetary management, to its underpinning of the economy with the fundamentals—to returning to the fundamentals. The tax system we have before us is part of that reform.We have introduced flexibility into our economy, with the key ingredient being a budget surplus. That was tough to do. We were hindered every step of the way. The 1996 budget and every budget since has been prevented from being passed, at least in whole, by the opposition. They may well have changed their tune on this legislation, but it has taken them some three or four years to see the light. But we welcome it. We welcome the opposition's support of the government's tax bill.With the surplus, we have been able to put downward pressure on interest rates. We have introduced the structural reforms necessary to underpin the economy, to secure it against boom and bust. We have introduced labour market reforms, comprehensive corporate law reforms and financial sector reforms. We have privatised many of our utilities, including half of Telstra. The previous government introduced a national competition policy, which we have built on. The benefits of introducing more competition into the economy are stark. You need only look at the telecommunications sector. Prices are coming down in that area.We have introduced the goods and services tax, something we have stuck by. In 1993 under a previous leadership we flagged this new tax system, but it was not palatable. But we so believed in it that we stuck to it and reintroduced it in the 1998 election. We went to the election on this very difficult policy and won. Subsequently, with the Democrats' help, we got it through the Senate. It was necessary. That new tax system is a more simplified tax system. We have abolished wholesale sales tax, so the weight of this tax has been lifted off our exporters. We have brought down personal income tax. Now we are pushing for more reform. This government will continue, so long as it stays in government, to push the boundaries of reform. We can see the benefits of the reform we have introduced—not just in the area of tax but in the labour market and in the area of asset sales.That brings me to this new business tax system. Before I speak on the most significant reform, the capital gains tax reform—I think that is going to have the most significant effect on business—I would like to outline how we reached this point: the amount of consultation the government went through, the amount of listening, to put it simply in political terms, this government undertook. We appointed a three-man committee to introduce broad guidelines, to reduce the complexity of the system and to explore the scope to reduce company tax and capital gains tax.Importantly, the review was also requested to look at the business tax system in a revenue neutral context. We believe we have achieved this. Those opposite support us in regard to that revenue neutral context. The objective was not simply to give concessions by reducing taxes but to improve the inherent structure of the system, to introduce structural change, recognising that the basic purpose of taxes is to raise revenue to fund essential public services.We do not believe there is much more the government can prune from its existing budget. We are not looking to reduce the services any further. We did the tough budget in 1996, for the good reasons I outlined. The government does not believe there is any more pruning to do of future budgets, other than to seek internal efficiencies, which are always possible. Therefore, we are not seek ing to have the new business tax system anything less or more than neutral. That was one of our main criteria. We believe we have achieved that. The review consulted extensively with businesses and produced a draft report before going on to produce its final report.As with the reform of direct personal income taxes, the new business tax system announced on 21 September will achieve a broadening of the tax base. So both systems, the GST and the system we are introducing now, the new business tax system, broaden the tax base. That is our philosophy: to broaden the tax base so we can lower the rate of CGT and therefore reduce tax induced investment distortions away from the most profitable uses, permitting higher economic growth. This will also achieve considerable reductions in compliance costs.The Treasurer's icon—and definitely one of the main features of the new tax system—is the reduction of the company tax rate from 36 cents in the dollar to 30 cents in the dollar. That will make businesses far more competitive on the international stage. It brings us more in line with other countries' tax rates. In Asia they are even lower than that, but on balance 30 cents in the dollar is a very competitive company tax rate.Another feature of the tax system is that the reduction in company tax rates will be funded in part by moving to effective life depreciation, rather than the current system of accelerated depreciation for plant and equipment. That is important in so much as it is part of maintaining the neutrality of the new tax system.The capital gains tax will be reduced. At present individuals are taxed on real capital gains at their marginal income tax rates. That can range, of course, from 20 cents in the dollar to the highest rate of 48 cents in the dollar—a crippling and uncompetitive tax rate and, without question, the highest in the world. The reforms will tax 50 per cent of nominal gains. So, effectively, the capital gains tax for individuals will be 24 cents in the dollar. They can be lower, but the top rate will be about 24.25 cents in the dollar and as low as 10 cents in the dollar.Companies will also get the benefit of a reduced capital gains tax of 30 cents in the dollar and there will also be capital gains tax rollover relief on scrip for scrip takeovers. In addition, there will be substantial capital gains tax concessions for small business, as well as a dramatic reduction in compliance for such businesses with the introduction of a simplified tax system. Because of the $1 million threshold some 97 per cent of farmers—or perhaps even as high as 99 per cent—will be able to use the simplified tax system. This is a great benefit for my constituency, the primary producers of Australia, because most of them will be under the $1 million threshold and will be able to use the simplified tax system.The combination of the indirect tax and income tax reforms, along with the business tax reforms, have been estimated by independent economic modellers to increase production across Australia. We do not need economic modellers to know that that statement is true. It is just common sense. We know that by simplifying and broadening the tax system we will have a much healthier economy and sustain our economic growth. The modelling does suggest that the mining industry will be a major net beneficiary of the overall tax reforms, as will the manufacturing, agricultural and finance and insurance sectors.In other words, if you take the tax system as a whole every sector will benefit. If you start nitpicking at certain elements of our tax reform, you may find fault, but if you look at the whole system—not only at the benefits to a sector but to the economy—then this really is the most major reform this government has brought to the parliament yet and will have lasting effects. This is the sort of thing that a government's history will be written around when we look back. In addition, we will have the support of the opposition. This is one part of our history they will never be able to pull down because they actually agree with us on this. When the books are written and history is told, the fact that the Labor Party supported the government on this makes me quite confident that history will not be distorted.This is one of the most major reforms for business. It will maintain our business growth and put business on an internationally competitive footing. The bottom line of all this is growth in jobs: employment. We are already seeing how some of those reforms introduced by the government have maintained strong employment growth and reduced our unemployment levels to what will be less than seven per cent by the year's end—the best we have had in a decade. We can do better than that. We want to get around the five per cent mark, and perhaps even reach full employment of around three to four per cent as the years go on.That can only be done if the economy is underpinned by the fundamentals, and that is what we are doing. Jobs really are the prime end responsibility of any government. It begins and ends there. The government does everything around that to get full-time jobs and flexibility in the workplace. That will probably be the most pleasing aspect of all our reforms, as hard and as tough as they have been. We will be able to look back as a government and say that we locked in low unemployment rates in this country. We do not have that cruel economic and social legacy of high unemployment. With these sorts of reforms we will be able to lock in an unemployment rate of around five to six per cent for decades to come. That is a reward for being in public life that very few governments will have. I am sure that this new tax system will make business competitive and maintain the profits of business, which will lead to greater employment throughout the economy as a whole.13:06:0010889Sherry, Sen NickSenator SHERRYZW4TASALP00—We are dealing with a package of six bills which represent part of what is known as the Ralph committee business tax reforms as introduced by this government in response to that Ralph committee report. We just had a contribution from Senator McGauran and I want to make a couple of comments in respect of his contribution. Senator McGauran outlined a number of economic statistics in relation to economic growth, which has been running at between four and five per cent in recent years. He also referred to our current lower inflation environment and to the fall in unemployment. The government certainly can take some credit for those economic statistics, but it should also be pointed out that the reason for the improvement in those economic statistics he referred to was in significant part the sound basis on which the economy was left by the Labor government.N26ABETZSenator Abetz—Oh!ZW4Sherry, Sen NickSenator SHERRY—I hear Senator Abetz scoff. It was in fact his leader, the Prime Minister, Mr Howard, who shortly after coming to office in 1996 referred to the economy as being basically sound. So there were important contributions from the previous Labor government. What Senator McGauran did not highlight is that, at the present time, total national debt is increasing, the current account deficit is increasing, our current savings levels—total savings, not government savings but total national savings—are in very significant decline. It is not my purpose to go into the detail of that today. I just sound a warning that there are some clouds on the economic horizon. It is all very well to talk about reductions in government debt, but the critical issue relating to government debt is that it is sustainable. The level of government debt when Labor was defeated and left office was sustainable. It was not high by international comparisons. We should not just focus on government debt; we should focus on total national debt.I was pleased that a representative of the National Party has spoken in this debate. But I was disappointed that Senator McGauran did not refer to the comprehensive drubbing that the National Party has had, yet again, with respect to its lobbying efforts to try and minimise the impact of some of the measures in this package we are considering. As we know, the National Party and the National Farmers Federation represent the top end of town with respect to rural producers in this country. From the public utterances of Senator McGauran's colleagues, such as the Deputy Prime Minister, Mr Anderson, who promised that he would go in hard for the top end of town farmers in this country, there is no doubt— WH4McGAURANSenator McGauran—Mr Acting Deputy President, I raise a point of order. It goes to the matter of relevance. Senator Sherry has strayed because he fails to make the point that the 16 House of Representatives seats that the National Party represent are the lowest socioeconomic—10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator Lightfoot)—What is your point of order, Senator McGauran?WH4McGAURANSenator McGauran—He should be making that point, that the 16 National Party seats are the lowest socioeconomic seats throughout Australia. Therefore we do not represent the big end of town and he should come back to the fact.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—That is not a point of order.Senator Conroy interjecting—10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—I do not need your advice, Senator Conroy. You are out of order.ZW4Sherry, Sen NickSenator SHERRY—I obviously touched a raw nerve there, to prompt that spurious, irrelevant point of order from the National Party's Senator McGauran, who has participated in this debate. I believe it is relevant to the debate to yet again touch on the fact that the National Party and its extraparliamentary organisation, the NFF, have once again been comprehensively rolled. It is nothing more than the doormat for this government. I am pleased to see that more and more people in rural and regional Australia are coming to realise the fact that the National Party is nothing more than the doormat of this government.We are considering a package of reforms with respect to business tax reform. The legislation will touch on a range of tax measures in this country in a substantial way. The first matter I want to refer to is the company tax rate. At the present time, the company tax rate payable by companies in Australia is 36 per cent. In 1996-97, revenue from company tax was $19.173 billion, which represented about 18 per cent of total revenue collection. I have to come back to Senator McGauran at this point. He made reference to our company tax rate, which he claimed was internationally uncompetitive. There may be some substance in this. Some of the comparative rates are: Hong Kong 16 per cent, Singapore 26 per cent, Germany 30 per cent, Indonesia 30 per cent, Thailand 30 per cent, United Kingdom 30 per cent, Korea 31 per cent, New Zealand 33 per cent and the United States 35 per cent. It is interesting that there are at least two Asian countries there—Indonesia and Thailand—with income tax rates of 30 per cent. I have referred to Hong Kong and Singapore. These low company tax rates did not stop the recent Asian crisis. I think we have to be a little bit more circumspect, Senator McGauran, when we make claims about low company tax rates. There certainly is some substance to the issue of having competitive company tax rates, but I do not think we should overstate the situation.Competition between nations for investment is affected by other factors. It is not just the company tax rate alone that determines investment levels. We have other issues such as the education, training and skills bases of a nation, the political stability, the size of the domestic economy and its relationship with larger economies around it, and also capital infrastructure. We have to examine our competitiveness in the context of those other factors. The government is proposing that the existing company tax rate will be phased down to 34 per cent in 2000-01 and to 30 per cent for 2001-02. This comes at a substantial cost to government revenue. In the year 2004-05, this will have a negative effect on government revenue of approximately $3.4 billion, and that is substantial.To some extent, this loss in revenue is offset by changes to depreciation measures. This forms a large part of the savings in lost revenue from the reduction in company tax. These savings in depreciation measures—the removal of accelerated depreciation—were recommended in the Ralph report. If we look at the savings to be obtained in this area, again by the year 2004-05 there will be savings of approximately $2.5 billion by the removal of accelerated depreciation.Of course, we should pose the question `What will be the long-term impact of a reduction in company tax—and obviously the flow-on increase in income to the shareholders of those companies and, as argued, some stimulation in investment—vis-a-vis the possible reduction in investment from the removal of accelerated depreciation?' To what extent is this a short-term income gain vis-a-vis a long-term investment loss. That particular credit-debit scenario will be interesting to examine in the coming years.Another large part of the reforms being considered is capital gains tax measures. The government's proposal—the Liberal-National Party proposal—is to halve the capital gains tax rate for individuals, meaning that they will pay no more than 24.25 per cent on nominal capital gains held for at least one year. This, of course, sounds superficially very impressive—halving the capital gains tax rate. But what we have to remember is that the base on which that capital gains tax is being paid is being changed, and being changed quite radically. It is proposed to freeze the indexation of the cost base for calculating capital gains at 30 September 1999, and averaging of capital gains will be discontinued effective from 21 September 1999. There is no doubt that in respect of these capital gains tax measures there will be some winners, but there will be some losers as a result of the change to the base for the calculation of capital gains tax.In the reasons outlined by the government for these proposed changes the assertion is made that this will invigorate asset management, stimulate greater participation by individuals in investment, and achieve a better allocation of capital resources and again make Australia more internationally competitive as an investment location. I have touched on this issue of international competitiveness, but it will again be interesting in relation to the other assertions—this unleashing of the lockup of asset and capital that is involved in the capital gains tax—to see whether this unleashing of investment does in fact occur. It certainly will occur to some extent, but again I think it is certainly a matter of reasoned argument as to what the level of unleashing will be.Very important to the Labor opposition is that we have a significant improvement in integrity measures as part of this package. The government has proposed its stage 1 response to the Ralph report. The Treasurer, Mr Costello, made a second announcement in a press release, No. 74, on 11 November this year relating to business tax reform, and this concentrated largely on a number of integrity measures to contribute to the fairness and equity of the business tax system. They include limiting the extent to which non-commercial losses can be used to reduce the tax paid on other income, restricting the ability of individuals to reduce tax by diverting the income they earn from their personal services to an entity, requiring prepayments in respect of the tax shelter arrangements to be deductible over the period during which the services are provided, improving the general anti-avoidance rule—part IVA of the income tax legislation—and streamlining its operation, and the denial of losses on certain interposed companies for tax purposes. In addition, it is proposed that the holding period for dividend streaming and franking credit trading rules will be reduced and the exemption for small transactions raised from $2,000 to $5,000.These integrity measures, it is estimated, by the year 2004-05 should save approximately $1.6 billion in revenue. There are a number of other measures that time does not allow me to touch on today. This was very important to the Labor opposition in agreeing to support the business tax package that we have before us. They certainly add weight to the argument that the proposals we are considering will be revenue neutral. But of course Labor has given two very clear warnings to the Liberal and National parties with respect to this package. Firstly, we expect the range of integrity measures to be implemented in full, as outlined by the Treasurer in response to Labor's insistence that there should be a significant crackdown in this area. We expect those to be implemented in full. The word of the Treasurer and the word of the government are on the line in this area, and, if that is not done in full in further legislation to be considered, to quote the words of our shadow Treasurer, Mr Crean, we will be chasing this government like a rat up a drainpipe. But there is also the declared intention of Labor to ensure that, if these measures are not implemented in full and if this package is not revenue neutral, a future Labor government will pursue these particular measures with renewed vigour.I would like briefly to refer to the work of the inquiry into business tax reform by the Senate Standing Committee on Finance and Public Administration. This illustrates the very positive contribution the committees of this chamber make. I notice the deputy chair, Senator Gibson, is to speak shortly. I would also like to refer to the positive work carried out by the chair, my colleague Senator George Campbell, and my other colleague Senator Conroy, who has spoken in this debate.If we look at this report, very appropriately the Senate committee has attempted, as they did with the GST proposals, to examine as thoroughly as they could, through modelling, the impact of the business tax reform package that we are considering. On page 17 of the report there are some very pertinent and impressive observations made by Professor Dixon, who examined the government's business tax changes in some detail.Before concluding my remarks I would like to touch on the assertions made by the government senators in their report on page 61. They make claims that have been made many times before in the context of tax debate in this country. Senator McGauran referred earlier to the claim that is often made that this economy is doing well. We can accept that in view of at least a number of the economic indicators, with the strong reservation of our current account, investment and particularly saving. This Liberal-National Party government have drawn the line and said, `The economy is doing well but it will do even better under this proposed tax reform and under the GST.' That is an interesting argument to put. We will look with interest at the evidence over the coming years to see whether this economy does grow more than it has in the last few years and whether government debt does decline with the advent of a GST and with business tax reform. That will be interesting to observe.The government senators make the claim that the objective is to simplify and to improve Australia's tax system. I suppose it depends on your definition of simplification. The result of all of the legislation we are considering does mean lower tax rates in some areas. It does mean a new 10 per cent GST. It does mean adding thousands more pages to the tax acts that we have in this country. It does mean that we will be considering, prior to the Christmas recess, another 1,000 amendments to the GST. So with regard to whether or not it is simplification, again the evidence and the long-term outcomes will be interesting to examine. We have a reference to a sustainable revenue base so that the government can deliver social services and provide public goods. This government's benchmark has been to significantly cut education and health expenditure, so that is somewhat cynical. (Time expired)13:26:0010892Gibson, Sen BrianSenator GIBSONBX5TASLP10—I rise to talk on these new business tax system bills. I believe they are probably the most important bills to go through this place for a very long time because they affect the very heart of how the economy works in Australia—not how the government works but how the economy works. I remind the Senate and listeners that government accounts for about one-third of the Australian economy. The Commonwealth collects about 25 per cent of GDP, the states about 7½ and local government about 1½, so about 33 per cent of the economy is run by government. The other two-thirds is run by private enterprise and by business. It is the health of business on which the government third depends, so we have to encourage the growth of business enterprises in Australia.We have known for a very long time that the taxation system in Australia has been a mess. There have been many attempts to have thorough taxation reform. The Asprey committee reported back in the 1970s that the Australian tax system was a mess. Why? Because it was designed in the 1930s and then just patched and built on, bit by bit. It ended up being extremely complicated. Today, there are 4,000 pages of tax act. The Asprey committee led to no political action. The Hawke government tried to reform tax in the mid-1980s with the famous option C, but that was shot down by combined work be tween the former Prime Minister Mr Hawke and the ACTU. In 1992-93 we had the coalition attempt with Fightback, which failed with the electorate.Just over two years ago, in August 1997, the Prime Minister, Mr Howard, announced that this government was going to have the guts and the determination to see through taxation reform for Australia. Shortly thereafter I had the honour of being made chairman of a coalition committee which sought input from the Australian community as to what was actually wrong with the Australian tax system and, secondly, suggestions for change. We started our investigations in September 1997 and reported to the government in March-April 1998.Without going over personal income tax and consumption tax, with regard to business tax what were the main findings of the input into the committee that I had the honour of chairing? The recommendation from business and anyone to do with business was, first of all, that our tax system was too long and far too complicated. Its administration was not as efficient as it might be. Its structure was wrong and not based on principles. It had very high compliance costs. Avoidance was fairly common, even though this government in particular had tackled avoidance very strongly indeed. The amount of avoidance was directly related to the amount of complexity. We had to do something about the very complex act.The final recommendation resulting from those inputs nearly a year and a half ago was that we had to make our business tax rates competitive relative to the rest of the world, because we wanted investment, jobs and growth in income. Australia has a very long history of being reliant on foreigners to provide capital into Australia so that the Australian economy can continue to grow. We in Australia for a very long time have spent more each year than we have actually earned. We rely on the savings of foreigners to make up the difference.The government took the inputs from the committee I chaired and came up with its recommendations in August last year with the big report, Tax reform, not a new tax system. That report went out into the community well before the election last year. The system put forward by the government with regard to business tax—leaving the other bits and pieces aside—was to lower both company tax and capital gains tax to make them internationally competitive with rates in the rest of the world and to simplify the business tax system. We won the election; we were voted back in to go ahead with tax reform. The government has already achieved great milestones by getting the income tax reforms, the diesel tax reforms and the GST through the parliament.Shortly after the election last year, the Treasurer appointed the Ralph committee, and I want to pay tribute to three great Australians, in particular the chairman John Ralph, Mr Rick Allert and Mr Robert Joss, who were the committee that formed the group that produced the Ralph report. They have done an enormous amount of work. I must also pay tribute to the public servants and consultants who worked with that group, night and day since late last year right through until August this year, doing magnificent work for Australia.They produced three interim reports. Firstly, there was one on process, criticising the process of tax reform in the past and recommending a process of structure based on principles and not ad hocery. They commissioned a second report making international comparisons of our tax system with those of all our main trading partners around the world. That was done in December last year. Then they produced a draft report earlier this year with their draft recommendations and sought input from the community, particularly the business community, and then produced their final report in August this year. It is a very large, comprehensive report, an absolutely excellent job well done by everyone involved with it.Again I stress what Mr Ralph recommended: a return to simplicity, to a tax system based on principles. If you do that and get rid of complexity you get rid of the opportunities for avoidance, because people who are smart and who can afford to engage the appropriate lawyers and accountants can make use of the complexity that is in the system to avoid tax. Mr Ralph recommended that we retreat and base our tax system on a much simpler structure.One of the key items that had a lot of discussion, particularly during the hearings of our Senate Finance and Public Administration Committee, chaired by Senator Campbell, was the capital gains tax regime. Again, what have the government put forward—thankfully, supported by the Labor Party? We have put forward a structure which is internationally competitive. Let me go back through the history of the main capital trading nations of the world over the last few years to see what has happened. First of all, in the USA the Clinton administration reduced capital gains tax from 28 per cent to 20 per cent about 2½ years ago. In response, the UK Blair administration about two years ago announced that it was reducing its capital gains tax regime. Essentially, for high income people and for passive investment—in other words, arms-length investments in commercial buildings or shares, for example—the capital gains tax regime in the UK reduced from 40 per cent to 24 per cent over a 10-year period. It came down substantially. But more importantly for small business, it reduced the capital gains tax regime from 20 per cent to 10 per cent over a 10-year period—in other words, a stepped regime.Australia, with about 1½ per cent of the equity capital of the world market, cannot stand outside this system—we have to be competitive. We had to respond. I note that, following the UK example, Ireland reduced capital gains tax from 40 per cent to 20 per cent. A recent report from Ireland showed that, with that reduction in capital gains tax, the tax collections by the revenue office from capital gains tax actually went up the following year by 75 per cent. I note that only three weeks ago the Blair government announced that it was further reducing its capital gains tax regime, and instead of having a 10-year stepped regime—from 40 down to 24 or 20 down to 10—they are going to reduce that to a five-year stepped rate, again to make it competitive with regard to the rest of the capital world. We are talking about a world where capital is very mobile. The USA market accounts for about half the equities market in the world, Britain about 15 per cent and Australia about 1½ per cent. We are tiny and we really have to fit in if we want capital to continue to flow into the Australian economy—and we do.So the government has put forward an internationally competitive capital gains tax regime and company tax regime. More importantly, it has recommended simplifying the tax act, and one of the recommendations to do that is to tax trusts as companies. This is called entity taxation. That will greatly simplify the tax structure.The government has also taken up the Ralph committee's recommendations in following anti-avoidance procedures. The government has announced several anti-avoidance procedures to basically strengthen the hand of the tax office and to make sure that people do pay their fair share of taxation. These measures will have a very big impact on the structure of the Australian economy, though not tomorrow. I note the comment my colleague Senator Sherry from the opposition made that he was looking forward to seeing whether or not these changes in structure might have any impact on the Australian economy. You cannot expect changes in tax structure to have an immediate impact. What we are trying to do is set the structure that will have an impact in five to 20 years from now so that Australia does grow and we do provide investments, jobs and incomes for our children and our grandchildren into the future.This is an extremely important change in the legal structure in Australia that is proposed in these bills. I give one quote from evidence that was given to the Senate Finance and Public Administration References Committee recently. It is from Mr Reynolds, who is an expert on capital gains tax and did a review of capital gains tax changes in the USA where, in the recent past, in the last 20 years, they had had increases in capital gains tax followed by decreases in capital gains tax. When the capital gains tax was increased, revenue went down; when capital gains tax was decreased, revenue went up. In his evidence to this committee Mr Reynolds said:I think that what you are proposing to do on capital gains tax is the single most important tax change in Australian history.One of the reasons is the reason you are speaking of: that it brings you out of the mining business, which I greatly respect, into the age of the knowledge industry. Rather than sending your people to Silicon Valley, you will be bringing some of Silicon Valley to Australia.That is what this is all about, and that is why, when these bills go through the Senate—and I am pleased that the Labor Party has decided to support the government's initiatives in this regard and the Democrats have also in large measure agreed with the government's proposals—they are going to have a very fundamental effect on the structure for Australian business, the two-thirds of the Australian economy which we want to keep growing: growing jobs, growing investment and growing income for everybody. This means that governments can take their third of the economy out of those incomes and do those things for health, education and welfare in looking after those who need looking after.As I said earlier, these are probably the most important bills with regard to the structure of the economy of Australia that this parliament has seen for many a long day, and I applaud the government for its work with those bills.13:41:0010895Ludwig, Sen JoeSenator LUDWIG84NQldALP00—On 21 September 1999 this government, through the Treasurer, released a report on the review of business taxation called the Ralph report. Before proceeding to the comments I wish to make today in respect of the package of legislation before the Senate, the New Business Tax System (Income Tax Rates) Bill (No. 1) 1999 and related bills, I wish to highlight the work of the Senate Finance and Public Administration References Committee inquiry into business taxation reform, which reported in November 1999. I think it is a comprehensive report, given the short time frame that was made available to the committee. Indeed, therein lies one of the positive outcomes of the process that was entered into. In a very short time frame committee members were able to turn their minds to the necessary elements that made up the terms of reference and to report in a comprehensive and factual manner. I think it highlights that the committee has certainly met that challenge and has provided a comprehensive document through which to highlight the bills before the Senate and for the Senate to be able to make informed, considered views about that.Turning to the issues in respect of the bill itself, following from that Ralph report the Treasurer announced the government's proposal to introduce a phased reduction in the company tax rate to 34 per cent for the 2000-01 income year and 30 per cent for the 2001-02 income year and thereafter. The rationale was that the low company tax rate should strengthen Australia's prospects for investment, economic growth and—my emphasis—jobs. In addition, there will be removal of accelerated appreciation. This is where the tax deduction allowed for the decline in value of an asset is brought forward. This will provide revenue savings to partly offset the lower company tax revenues mentioned earlier. Depreciation measures will now be based on the effective lifetime of the business asset. The government also has proposed that small businesses, defined, as I understand it, as having three years average turnover of less than $1 million per annum, will be able to have simplified depreciation provisions, a cash accounting regime and other measures which will assist them in their business opportunities.Other significant measures were those that touch upon capital gains tax. The government's proposal, amongst other measures, is to halve the capital gains tax rate for individuals. Thus these individuals will pay no more than 24.25 per cent on nominal capital gains. The reasons underpinning this, as stated by the government, are to integrate asset management, to stimulate greater participation by individuals in investment and to achieve a better allocation of capital resources. This should improve our overall international competitiveness. However, Labor has steadfastly maintained that the tax package should pay for itself—that is, be revenue neutral. Labor wants to ensure that other areas of government expenditure are not deprived of revenue in order to pay for the business tax package. Labor set out to make sure there are good integrity measures which are designed to instil fairness and equity into the tax package. At their core are anti-avoidance measures designed to make sure that individuals and businesses would not seek to avoid paying their fair share of taxes. The Treasurer has now locked the government into implementing measures to ensure that tax avoiders do not cheat the system. Consequently, Labor will be supporting the proposals.The debate that I wish to add to today is necessarily short: much of the bill has been explained succinctly and well by the shadow minister and Senator Sherry and I do not wish to recap on much of the submissions that were already put before the Senate today. I thank particularly the chair of the committee for providing documents to the inquiry into business taxation reform in a short time frame and for providing the ability for people to be able to then go to those issues and read the committee's conclusions on chapter 8, so that I can participate in the debate today.The summary of the committee's proceedings and their conclusions have now been provided through the committee, as well as those matters that they have gone to in part. One matter which, I suspect, kept us focused was that it would be—and we would continue to ensure that it would be—a revenue neutral package. The Senate inquiry highlighted that and we find now that the Treasurer has similarly taken that on board. I think that highlights again the worth of the committee's inquiry into the tax reform package and I commend the proposals and the legislation.13:46:0010896Woodley, Sen JohnSenator WOODLEYHX5QLDAD00—I want to speak about the New Business Tax System (Income Tax Rates) Bill (No. 1) 1999 and the five related bills, and I want to begin with a reflection on Senator Conroy's contribution to this debate, because I thought it was really quite astonishing. I would like to remind Senator Conroy and all other senators of the bills that we are debating. We are debating business tax reform—not the GST or indirect tax but business tax.Labor have said that the business tax should be revenue neutral. If it is, they will pass it. Unfortunately, it simply is not revenue neu tral. Let me read some of the recent conclusions of very eminent people on the business tax reform package. This is what they said:. . . Labor believes revenue neutrality can be achieved, but from the evidence provided to the Committee this has not been achieved.. . . The final package can achieve revenue neutrality if:* there is no further watering down of measures already announced in ANTS and the other stage 1 proposals;* the revenue hole from the overestimation of asset realisations is filled;* there are effective anti-avoidance measures to prevent the large scale conversion of income into capital gains; and* the stage 2 in-principle announcements are not watered down when the final detail is settled, and therefore achieve their revenue targets.. . . Until the above conditions are met it is not possible to conclude that the package meets the test of revenue neutrality.Who wrote these pearls of wisdom? Senators Conroy, Cook and George Campbell. This was the conclusion of these Labor luminaries tabled in the Senate only a week ago. But what has happened since then? Senator Conroy has been rolled; his leadership team rolled him. Simon Crean says, `No, I don't care about the budget. The worse the budget next year, the better off Labor will be. The worse the budget cuts if this package is revenue negative, the better the chance of being re-elected.'Senator Conroy accuses the Democrats of being poor negotiators. Well, before Simon Crean undercut us last week, we had an in-principle agreement to reduce the size of the capital gains tax cut by 20 per cent, to lock in all of the anti-avoidance measures by making the company tax cuts conditions of their package, to have a full inquiry into the whole area of charities—which is also Labor policy—and to improve the anti-avoidance rules on capital gains. And what did Labor get? Nothing. Senator Conroy's committee report last week found the figures do not stack up and still Labor, so desperate to look relevant, ignored its own senators and all the evidence to the Senate inquiry and voted into law a package that will cost around $1.5 billion in revenue over the next four years.Dud negotiators? No, Senator Conroy, the Democrats were in the process of negotiating the pants off Simon Crean. It was Simon Crean who rolled over. The Democrats wanted a business tax package that was revenue neutral and that did not replace one set of tax loopholes with another set of tax loopholes in the capital gains tax area. Unfortunately, it looks as though Labor MPs, although we may be able to convince them in the debate to do otherwise, are going soft on tax avoidance. That worries me. I wonder if they really care about policy. They are in a policy free zone, it appears. I will be looking for amendments on business tax because they really do need to be made, as came out in the report that was written, but I have not seen any Labor amendments yet.We need a policy on tax avoidance. They do not have a policy on tax avoidance through a capital gains tax anymore. Even though 80 per cent of capital gains tax is paid by high income earners and this tax is not revenue neutral, Labor do not seem to care and are prepared to pass these measures, which in their current form are little more than a signal to high wealth individuals to avoid tax. What about trusts? If the current regime goes through, then you can convert your income to capital gains and avoid tax to your heart's content.I feel genuinely sorry for Senator Conroy. He, Senator Cook and Senator Campbell diligently went through the business tax inquiry. As usual, they did a very thorough job. They found the package did not add up, duly reported that and then were rolled. I feel sorry for Mark Latham, who tried to move in caucus to change the CGT rules. He knows that the Labor heartland supporters out in Campbelltown do not want to give unfunded tax cuts to the wealthy, but he was rolled too. The last thing that new Labor want is backbenchers discussing policy. There is only one policy—none at all.In an incredible twist, Labor are trying to blame the Democrats for the lack of revenue neutrality in the package. They say the next budget is being run down to pay for the GST. That is untrue. The income tax cuts will cost $5 billion in revenue next year, but that is because bracket creep has added $8 billion to income tax revenues since 1993. Inevitably, part of that had to be refunded. Base broadening measures will fund around $7 billion of the $12 billion of tax cuts. High income earners on over $100,000 a year, after looking at the base broadening, would be paying more tax under the new system than the old. But, overall, the cost of the tax cuts was considerably less than the gain from bracket creep over the last seven years.I acknowledge that the Democrats amendments to the GST package will cost more to the budget bottom line. But let me make a few points. The budget surplus is not raided to fund the extra concessions on the GST that we won on food, health and education. These measures, worth $3.2 billion in 2000-01 and $3.8 billion in 2001-02, are fully funded over the two years by lower income tax cuts, higher taxes on diesel and deferral of state business tax. No, the sundown of the surplus of $1.5 billion in 2000-01 and $500 million in 2001-02 comes because of the extra spending measures we won: real-term social security increases for pensioners, self-funded retirees and the unemployed worth $760 million per year; environment measures worth $220 million per year; and educational assistance worth $60 million per year. I am proud of these spending measures. They deliver real-term increases in living standards for pensioners, the disabled, the unemployed, sole parents, low income families and all other social security recipients. Research by Professor Ann Harding confirms this. The environment measures deliver a huge reduction in diesel particulate emissions and a modest reduction in greenhouse gas emissions—an outcome confirmed by modelling from the Bureau of Transport Economics and the Australian Greenhouse Office.So let us be clear about this: the surplus is not run down to fund the Democrats GST deal. No, the surplus is run down to increase funding on social and environmental programs. That is entirely appropriate, because the surplus was created on the back of the aged, the sick and the unemployed by $1.7 billion dollars of budget cuts to the social safety net in the first two Costello budgets. We succeeded in getting much of that put back into the budget with the GST negotiations, and for that the Labor Party, which delivered no real increases in employment assistance in a decade of government, are criticising us. Now they are ticking off a package which will cost the budget bottom line at least $1.5 billion over four years and will probably cost more once high income earners work out the tax avoidance opportunities this capital gains tax system entails.We do not really need to be lectured on social or economic responsibility by Senator Conroy. He is not even listened to in his own caucus, as evidenced by the failure to accept the Senate committee conclusions. So he does not have credibility on policy at this point—although, of course, I did express my sympathy for the fact that he probably had been rolled. Labor have no policies on social responsibility and improving the social safety net, no policies on environmental responsibility, no policies on—WH4McGAURANSenator McGauran—Who rolled him?HX5Woodley, Sen JohnSenator WOODLEY—It was Mr Crean. I thought you would have known that, Senator McGauran. Labor have no policies on tax reform and now no policies on fiscal responsibility either. A policy free zone, dud negotiators, political opportunists—if this is the new, liberated Labor that Kim Beazley and Simon Crean intend to take to the next election, then the Liberals and the National Party must be laughing all the way to the ballot box.13:57:0010898Brown, Sen BobSenator BROWNQD4TASAG00—The Greens oppose this package. We believe that the Labor Party and the Democrats have been involved in a process of bargaining to the bottom, to the lowest common denominator. The government has had its way with a tax package which is regressive in that it gives nothing to the disadvantaged in this country and everything to the already rich. It is going to increase the gap between the haves and the have-nots, between the rich and the poor. I cannot accept Labor's assurances that it will be revenue neutral because it simply will not be. When it is discovered how far short of being revenue neutral it is, how many billions of dollars are essentially redirected to the rich in this package, we will then have to look at where that shortfall will be made up—and, of course, it is going to be made up by the average punter. It is going to be made up by the people who are not the increasingly select mega-rich in this country. It will most likely be made up by a reduction in health and education services and essential government services to the people of this nation who believe in a fair go.10000PRESIDENTThe PRESIDENT—Order! The time for this debate has temporarily expired.Questions Without Notice108981089810898Bolkus, Sen NickSenator BOLKUSXE4SAALP00—My question is directed to Senator Herron, representing the minister for reconciliation. Minister Herron, do you recall your answer last Thursday which excused the Prime Minister from apologising on behalf of the Australian government to the stolen generation? Have you now changed your mind, given the statement of the Nobel Peace Prize Laureate and Chairman of the South African Truth and Reconciliation Commission, Archbishop Desmond Tutu, when he said last Friday, `There is no way you can move on without an acknowledgment of the past'?10898Herron, Sen JohnSenator HERRONVW4QLDLPAboriginal and Torres Strait Islander Affairs10—I thank Senator Bolkus for the question, and I am happy to answer it. I do not resile from what I said last week because, if you look at the full context of what Archbishop Tutu said, Senator Bolkus has gone on with a bit of selective quoting this afternoon. Archbishop Tutu did not call on the Australian government to apologise in relation to the separated children issue, as has been suggested—and I suggest that Senator Bolkus go back and read the full transcript—nor did he criticise the government for failing to apologise. He was commenting on the importance of the reconciliation process, which the government supports, and he is fully aware of the appropriateness of a foreign dignitary commenting in prescriptive ways on the handling of important domestic issues in another country. Again, I would refer Senator Bolkus to read that part of Archbishop Tutu's statement. The Commonwealth government does not support a formal apology to indigenous Australians for past wrongs. As I have said previously, and I now repeat, such an apology could imply that present generations of Australians are in some way responsible and accountable for the actions of earlier generations, actions that were sanctioned by the laws of the time. However, both the Prime Minister and I have expressed our personal feelings of deep sorrow in relation to the injustices suffered by indigenous peoples as a result of the practices of past generations. On 26 August this year, both houses of federal parliament endorsed the government's historic motion of reconciliation, which expressed deep and sincere regret that indigenous Australians suffered injustices under the practices of past generations and for the hurt and trauma that many indigenous people continue to feel as a consequence of these practices. The motion also reaffirmed a wholehearted commitment to the cause of reconciliation between indigenous and non-indigenous Australians as an important national priority for all Australians. The Commonwealth response to the legacy of past practices, such as indigenous child separation as outlined in the Human Rights and Equal Opportunity Commission's Bringing them home report, focused on practical and realistic initiatives to address the fundamental issues that need to be addressed as a matter of urgency—family separation and its consequences. This approach is supported by the report itself, which says on page 347: `Assisting family reunions is the most significant and urgent need of separated families.' Accordingly, the Commonwealth announced on 17 December 1997 a comprehensive package of initiatives, totalling $63 million over four years, which will facilitate family reunion and assist indigenous people to cope with the stress and trauma of family separation. These initiatives are already being implemented. In fact, this morning I was over at the National Library checking on the state of affairs in relation to the oral history project that will be part of that National Library material, and that will be available to everybody when it is completed.10899Bolkus, Sen NickSenator BOLKUSXE4SAALP00—Madam President, I ask a supplementary question. Unfortunately, all the minister has shown is that he can read but cannot understand the issue. Minister, didn't Archbishop Tutu state firmly that the three words:I am sorry . . . have an incredible potency . . . a kind of alchemy . . . a power that is almost magical.Minister, why can't the Prime Minister understand this and, consequently, commit an act of true reconciliation?10899Herron, Sen JohnSenator HERRONVW4QLDLPAboriginal and Torres Strait Islander Affairs10—It is a pity that Senator Bolkus does not have the erudition of Archbishop Tutu—then we would not get this vocabulary that he usually uses in a condescending, slurring, slamming sort of way that really does not do justice to this Senate. I think it is trying to score points. As I said the other day in relation to Senator Crossin's question, it is trying to bring up the race card. He is trying to play the race card and he ought to wake up to himself and get back into his little phone box where he came from, instead of coming in here and trying to drag the race card into this issue.1089910899Eggleston, Sen AlanSenator EGGLESTON4L6WALP10—My question is to the Minister for Regional Services, Territories and Local Government, Senator Macdonald. The minister would be aware of the meeting in Canberra this week of 748 local councils from around Australia, attending the National Assembly of Local Government. Will the minister inform the Senate of how the government is assisting these councils and assisting regions around the nation? 10899Macdonald, Sen IanSenator IAN MACDONALDYW4QLDLPRegional Services, Territories and Local Government10—I appreciate Senator Eggleston raising this issue. Of course, coming from local government and being a distinguished former mayor of Port Hedland, he knows all about local government. Certainly, local government is the main show in town this week, with over 900 delegates—and almost 2,000 people—attending the national capital for the annual Australian Local Government Association meeting. I had the very great honour to open that conference this morning and to speak to the delegates. I also had the honour just before lunch of presenting the awards for innovation in local government—the national awards that the Commonwealth sponsors—and they highlight the great work that local authorities around Australia are doing in finding innovative ways of providing services. Senator Eggleston asked me about the assistance that the federal government gives to these councils. We provide over $1.3 billion annually to councils to allow them to improve services and to keep rates at a moderate level. In addition to that we have the Local Government Incentive Program, which provides money to councils for a number of projects in their communities which will improve their service delivery.Of course, a major part of our program is the GST reforms, which will impact very beneficially on local authorities. They will save quite considerably from the fact that embedded taxes will be removed. Councils will not pay the GST at all—well, they will pay it but they will get it straight back, fully and immediately—and for the customers of councils, that is, the ratepayers and people who deal with them, about 90 per cent to 95 per cent of the services that councils provide will be GST free. So there will be no GST on rates. Councils will save a lot from the removal of Labor's wholesale sales tax and also from the removal of the excise on fuel, a quite substantial impost that Labor put on to those councils over the years they were in government.A report dealt with yesterday by local government in a regional seminar in fact supported this by indicating that the GST had been beneficial for all local governments, although it did say some local government areas had benefited more greatly than others. Even a cursory reading of that will show you that they have praised that. In addition, reports done for the Victorian government by Arthur Andersen, the respected accountants for the Victorian government, show that indeed councils will have significant annual savings ranging from over $200,000 for smaller councils to almost $2 million a year for the larger city councils. So those benefits will flow from the GST, and it is good news for local government.I also mention to Senator Eggleston that, as he will no doubt be aware, Senator Alston and the federal government have provided some $45 million to local government for a local government program which uses the very latest capacity that will allow local governments to get up to date and provide the services for their constituents online.One of the untold benefits that have come to local government from our government's careful management of the economy is the fact that the interest rate that councils pay—and they have an average debt of about $10 million per council—have fallen from 14.76 per cent in the Labor years to a little over six per cent now. So that is an eight per cent reduction in the interest rates and the interest councils pay. For most councils, on average, that is a saving of some $800,000 a year, a real benefit to local government.1090010900Forshaw, Sen MichaelSenator FORSHAW 656NSWALP00—My question is directed to Senator Newman, the Minister for Family and Community Services. I ask the minister: why did the New South Wales office of the minister's department cancel a face-to-face meeting with disability employment providers originally scheduled for this Thursday to explain the drastic changes to the supported wages program and the cuts to the employer incentive wage subsidy program? Did the minister's office pull the plug on the meeting and order the department to tell the providers to instead send their questions in by fax for written answers?10900Newman, Sen JocelynSenator NEWMANBE4TASLPFamily and Community Services; Minister Assisting the Prime Minister for the Status of Women10—Madam President, this is a follow-up question to two questions that were asked by opposition senators last week, and I undertook to get additional information for them. I will be seeking leave to incorporate that at the end of question time. But it is quite untrue to say that there have been cuts in those programs. In fact, one of the programs has been increased by $1 million. I have not given any instructions to not meet with service providers at all. Can I make it absolutely clear that there are two programs. Opposition senators last week got those confused. One of them came from the reorganisation of portfolios after the last election, a year ago, from DETYA. So there was one in my portfolio, and this is an additional one. We have been taking the opportunity to have a look at how best we can provide good outcomes for people with disabilities in that we now have the funding from the two programs.The way the programs have been administered in the past has meant that outcomes for individuals have not always been able to be focused on; essentially they were operating as an additional subsidy for disability employment services—and they have not been spending all their money, either. What has happened is that we have looked to see how better we can focus on outcomes for people with disabilities. I must say it is important to recognise that people with disabilities are very supportive of the process. Some employment services are not doubling up on money for which they are already funded and the rest of the increased pot of money is in fact going to enhance outcomes for people with disabilities. I would have thought that the Senate would find that a very effective way of improving opportunities for people with disabilities, as they see it themselves.10901Forshaw, Sen MichaelSenator FORSHAW656NSWALP00—Madam President, I ask a supplementary question. May I remind the minister that the question I asked was: why did the New South Wales office of her department cancel a face-to-face meeting that was scheduled for this Thursday to explain those changes? I ask the minister again if she could actually direct her answer to that question rather than to giving us a statement with respect to other aspects of her portfolio. Minister, why is it that you continue to refuse to front up to meetings, or allow your officers to front up to meetings, of state and territory ministers and other organisations who can provide valuable input into these issues regarding disability funding?10901Newman, Sen JocelynSenator NEWMANBE4TASLPFamily and Community Services; Minister Assisting the Prime Minister for the Status of Women10—I have already answered that I did not in fact give any instructions to my department. You will know full well, Madam President, that on—656FORSHAWSenator Forshaw—On a point of order, Madam President: that was not the question that I asked the minister. The question I asked was: why did the New South Wales office of her department cancel the meeting? And I am asking if she could answer that question.10000PRESIDENTThe PRESIDENT—That is not a point of order, Senator. There is no point of order.BE4Senator NEWMAN—I was halfway through the sentence to give you the rest of that answer, Senator, and that is that you will have every opportunity on Wednesday in the Senate estimates committee to ask the officials from my department as to why that meeting was cancelled.5K4FAULKNER Senator Faulkner—We are asking you.BE4Senator NEWMAN—I know Senator Faulkner was only ever minister of very small departments, but the fact remains that this department is very large.LD4ALSTONSenator Alston—He started off big but then they took pieces off him.BE4Senator NEWMAN—I suppose that is right. The reality is, Madam President, that I have state offices in each state. I have a national office here. I am also responsible for the rehabilitation commissioner. I am responsible for the Child Support Agency. I am responsible for Centrelink. When you put those together, isn't it surprising I do not know which officers are doing what on any given day? But I can get that information for you. Anyway, you can get it for yourself when you come to ask questions at—(Time expired)1090110901McGauran, Sen JulianSenator McGAURANWH4VICNP10—My question is to the Minister representing the Minister for Education, Training and Youth Affairs. Minister, will you inform the Senate of the latest developments in new apprenticeships and the job prospects of young people?Senator Carr interjecting—10000PRESIDENTThe PRESIDENT—Order! Senator Carr, you are out of order.10901Ellison, Sen ChrisSenator ELLISON9X5WALPSpecial Minister of State10—It was just last week that my good friend and colleague Senator Kemp was outlining to the Senate the great figures that we had on unemployment—that we had reduced that to 7.1 per cent and it was trending down. Equally, on the training front, there is good news in relation to what the Howard government has done. In fact, there are over 100,000 reasons why our policy on new apprenticeships is doing well. Since we came to government, there has been an increase of over 100,000 in new apprenticeships. We have over 244,000 people in training at this moment, which is a record for Australia. Seventy per cent of those are young people, which is fantastic news for young Australians.AW5CARRSenator Carr—Why do we have such a skill shortage, then?9X5Senator ELLISON—Madam President, I hear Senator Carr interjecting. He might want to recall what Neal Blewett said in his book of August this year. He commented on Labor's awful record on the subject of vocational training, saying that young people are simply expelled from school to the unemployment queues. That was from a former Labor minister, talking about his own party when they were in government—and Senator Carr is interjecting in relation to this government's training policies. He has a cheek to do that when you look back at what the situation was when Labor was in power. We have a record number of young people in training today in over 500 occupations in not only the traditional areas but also new areas such as multimedia and information technology, which is good news for this country and good news for the next generation of Australians.There is also good news for regional Australia. We have announced funding of over $50 million for training in regional Australia and increased incentives for employers to take on apprentices in those areas where there is a skill shortage. We have seen an increase in the number of new apprenticeship centres in regional Australia. In fact, the number of new apprenticeship centres in regional Australia has increased by a staggering amount—118 to 200. That spells good news for Australians in regional Australia, and increases training prospects for people in the bush.The employers of Australia have also announced their support for the government's policies. In a recent survey, 82 per cent of employers surveyed said they were satisfied with the services provided by these new apprenticeship centres. That means that the policies of this government are working. We are finding more positions for training for young people. We are also providing an opportunity for employers to take on people for training. This has come about through user choice, which Senator Carr has attacked time and time again. We are making the system more flexible, which makes it more attractive to employers and more attractive to young Australians because they have more choice as to what sort of training they would like to undergo. That has brought about this record number of people in training and has given industry and employers a great opportunity to take on more people for training.Coupled with the reduction in the unemployment figures, this spells good news for the future. We have seen a reduction in youth unemployment. We are the first to realise that there is a lot to be done in the area of youth unemployment, and we are doing it. We want Australia to have the most highly skilled work force in the Western world. With these sorts of figures, we are on track to do that.1090210902O'Brien, Sen KerrySenator O'BRIEN8O6TASALP00—My question is to Senator Newman, the Minister for Family and Community Services. My question refers to the Australian Institute of Health and Welfare state of the nation report Australia's Welfare 1999 , launched by the minister last Thursday and commended by her as `the most up-to-date, comprehensive, and authoritative source of national information on welfare support across Australia'. Is the minister aware that, according to page 107 of this authoritative source, `total Commonwealth expenditure on children's services fell by 10% (in constant prices)' between the 1996-97 and the 1997-98 budgets? Does the minister also recall claiming in the Senate on 21 October that: . . . the expenditure on child care has not been declining.Just who is correct on child-care funding levels—the minister or this authoritative source, the Institute of Health and Welfare?10902Newman, Sen JocelynSenator NEWMANBE4TASLPFamily and Community Services; Minister Assisting the Prime Minister for the Status of Women10—The opposition has continued to muddy the waters about expendi ture on child care while refusing to acknowledge the fact that the figures in the report and the figures put out by my department demonstrate conclusively that the government has been increasing the appropriation for child care throughout the years that we have been in government. The first three years that we were in government saw a substantial increase over the last three years that the opposition were in government.In the coming five years, there will be something like $5 billion appropriated. But that is appropriation; it is not expenditure. It is a demand driven program. As you would know full well, Senator, with declining fertility rates in our home state of Tasmania, there are now 2,000 fewer nought- to four-year-olds than there were in 1996. Either they are leaving the state because their parents are looking for work or people are not having babies. Those things affect the take-up rate of child care—they affect the demand. You know full well that the passenger vehicle rebate scheme across Bass Strait is also demand driven.8O6O'BRIENSenator O'Brien—Does your portfolio—BE4Senator NEWMAN—Yes. Well, as a matter of fact, Centrelink administer it. It is a pity: I would have thought that you, as a Tasmanian, would have known. Nevertheless, demand driven programs have appropriations made in budgets and then the demand determines how much is actually spent. You know that there are very reasonable reasons why there is less take-up of child-care costs: when the opposition was in government, they had a system whereby the taxpayer subsidised hours of child care which were not actually used by the parents—a ridiculous scheme! That was abolished when we came into government. Now, parents are being billed, and so are the taxpayers, for the hours of child care that are actually being used. It is a sensible reform that has made a substantial difference to the expenditure patterns on child care. There are a number of reasons for those things. There has been a drop in demand for the number of hours being used, but not in the appropriation of funds.10903O'Brien, Sen KerrySenator O'BRIEN8O6TASALP00—I have a supplementary question. Well, Minister, a demand driven program indeed! And isn't it true that demand has fallen because the government froze child-care assistance for two years, capped work related care at 50 hours per week and threw away many of the income test concessions available to larger families? Isn't it also true that low income families have been the worst affected by the resulting rise in gap fees? Can the minister confirm that her department's May 1999 census of child care shows that low income families are indeed being driven out of regulated child care? Isn't this the real cost of the Howard government's child-care spending cuts?10903Newman, Sen JocelynSenator NEWMANBE4TASLPFamily and Community Services; Minister Assisting the Prime Minister for the Status of Women10—Madam President, I think we had better get this straight on the record pretty quickly: the rise in gap fees that the senator talks about was substantially at a greater rate during the opposition's years in government than since we have come into government. That rise in fees has dropped substantially.AX5EVANSSenator Chris Evans—That is only on your figures, not on the Health and Welfare Institute's figures.BE4Senator NEWMAN—Senator Evans has the same sort of innovative press releases as Mr Swan does, but I would have thought that he would try to go for greater credibility than Mr Swan's. He is trying to make a good fellow of himself. I have told you about the declining population of nought- to four-year-olds. Families are able to exercise choice as a result of more flexible working practices, and the change in industrial relations means that many parents are able to get permanent part-time work—which women have asked for forever and a day. The lowering of the preschool rate—(Time expired)1090310903Bartlett, Sen AndrewSenator BARTLETTDT6QLDAD00—My question is to be Minister representing the Minister for Immigration and Multicultural Affairs. Can the minister confirm media reports that the government is offering East Timor refugees brought to Australia only two months ago a bag of rice, a blanket and a plastic sheet to return to Timor by next week? Does the minister support the Prime Minister's comment that criticism of these moves is just nitpicking? Are the refugees in question those who were evacuated from the UNAMET compound in Dili during the unrest just a couple months ago? Minister, what will happen to those East Timor refugees who do not leave when their temporary visa expires on 8 December? Will they have to pay their own air fare back to Dili? Will they be forcibly deported from Australia?10904Vanstone, Sen AmandaSenator VANSTONE7E4SALPJustice and Customs10—I thank Senator Bartlett for his question—or questions, I should say: there were so many that, not being able to write shorthand, I could not take them all down. Senator Bartlett, I will give you the information that I have and, after question time, I will go through the list of questions that undoubtedly has been made somewhere in the bureaucracy. I will come back to you as quickly as I can today with any remaining answers that are not in the brief that I have.The information I have is this. Of course, you would appreciate that all Australians should be very proud of the support that we are offering East Timor. Our contribution to establishing security in East Timor through the INTERFET operation is costing $1 billion dollars, and we are also providing emergency and humanitarian assistance at a cost of $70 million. Our acceptance of East Timorese evacuees was a humanitarian gesture in a time of crisis, and it was always intended as a temporary measure until East Timor was safe for the East Timorese to return. The UNHCR has provided assurances that it is safe for the East Timorese to return, and some 85,000 East Timorese have already returned. This includes some 600 who have returned from Australia. UNHCR is providing emergency shelter and assistance packages to those returning to East Timor, and there are several aid agencies in East Timor who will also be helping those who return.The government is not using these packages as an enticement to return. The packages are actually provided by UNHCR. My department's staff are informing the East Timorese of the assistance that they will receive on return. Return is voluntary, and those returning to East Timor are asked to sign a form stating that they are returning voluntarily to ensure that that is the case. The UNHCR has been verifying the voluntary nature of the returns. The government expects the East Timorese who are able to do so to return before their visas expire. In fact, the East Timorese themselves are generally very keen to return. We do not expect those who are not fit to travel, and their immediate families members, to return. We have made arrangements for them to continue to receive safe haven care until they are fit to return, and there is no question of them having to pay their own air fare after 8 December.Furthermore, the department has been actively counselling those East Timorese who have medical conditions which require further treatment not yet available in East Timor not to return at this stage. As I said, Senator, I will have a look at the list of questions that you managed to get out in one minute. If there are any that have not been answered, I will get back to you as soon as I can about them.10904Bartlett, Sen AndrewSenator BARTLETTDT6QLDAD00—I thank the minister for her answers. In her response the minister stated that return of these people is voluntary. Can the minister indicate what will happen to those who do not wish to voluntarily leave? Will the government give a commitment to extend the temporary visa by least three months for those people who still want to remain in Australia—not just restrict it to those who are unwell and unable to travel because of their health but grant it to all of those who do not wish to return at this stage?10904Vanstone, Sen AmandaSenator VANSTONE7E4SALPJustice and Customs10—Senator, I appreciate the interest you have in this matter—unlike Senator Schacht, who seems to think that this is a laughing matter and whose only response to your question about the people who do not want to return voluntarily is to laugh and say, `Oh, they won't get a bag of rice.' Really, Senator, you can do a bit better than that. Look behind you—no-one there is amused by that joke and no-one up in the gallery would be amused by it either. You should be ashamed of yourself. You thought you would get away with that. Senator Bartlett, you on the other hand take this matter seriously, and I will get you an answer as soon as I can.1090510905McLucas, Sen JanSenator McLUCAS84LQldALP00—My question is to Senator Newman, the Minister for Family and Community Services. Can the minister confirm that the report Australia's welfare 1999 shows that Commonwealth direct outlays on disability services fell from $154 million in 1995-96 to $133 million in 1997-98? In the light of these embarrassing figures, just who, this time, will this hopeless minister choose to blame?10000PRESIDENTThe PRESIDENT—Senator, that is not an appropriate way to ask a question. A level of sledging and personal comment is going on in the chamber. It has developed in recent times and it is totally unacceptable. I ask you to rephrase the last part of your question.84LSenator McLUCAS—In the light of these embarrassing figures, just who will this minister choose to blame this time?10905Newman, Sen JocelynSenator NEWMANBE4TASLPFamily and Community Services; Minister Assisting the Prime Minister for the Status of Women10—It is a pity that, if you learn from the boys—Senator Schacht interjecting—10000PRESIDENTThe PRESIDENT—Senator Schacht, you have been interjecting consistently. You should not be and you know that.BE4Senator NEWMAN—I think it is a pity if, because of the leadership of the opposition, some of the female senators start to learn boys' ways because, in this place, it is not too smart.It is very important when looking at that very good report from the Institute of Health and Welfare to understand that the figures have come from all levels of government to the institute. They have been provided across the board from all three levels of government. They have been put together in a very credible way. What I would like to say by way of answer to you is that disability services are the responsibility of two levels of government—state and federal. Some states have been doing not too bad a job with their expenditure; some have been doing a pretty poor job.You will perhaps have heard that last Friday the disability ministers met in Canberra and expected that I would turn up to a meeting that they called—which was not a ministerial council at all—because they wanted to discuss my offer of $150 million over the next two years as an addition to the assistance which the Commonwealth gives to people with disabilities. You will recall that I am responsible for about $6 billion worth of income support for people with disabilities. I also provide all the financial support for disability employment services. But, under the Commonwealth-State Housing Agreement, the states are responsible for the other areas of disability services, namely, accommodation, respite and day care.Over the last 15 years or so—20 years perhaps—there has gradually been a build-up of unmet demand for people with disabilities in this country. A large part of that was during the Labor years, but it was not only during the Labor years of government. Certainly, all of the ministers at a ministerial council much earlier this year agreed that it was a priority and that the Institute of Health and Welfare had identified something like $324 million of unmet need that had to be addressed.I made an offer to the states in August this year of $150 million of taxpayers' money to do something about that substantial level of unmet need. I asked the states for their response. To date, I still do not have any dollar figures of anybody's response from the states. I did not see that there was a great deal of point in meeting with them until they had confirmation from their cabinets that they were able and willing to put up money to match the Commonwealth's offer. The Commonwealth's offer is conditional on significant contributions from the states.You can divide up the report—I do not have the benefit of having it in front of me now—but I can assure you that there is no blame attaching to the Commonwealth. We are very keen to do more for people with disabilities, and it must be done in partnership with the states because the areas which are lacking in funding have been areas that the states have traditionally had responsibility for. Since 1991, under the first Commonwealth-State Disability Agreement, it is very clear that those are the areas for which they are funded by the Commonwealth and for which they fund themselves.10906McLucas, Sen JanSenator McLUCAS84LQldALP00—Madam President, I ask a supplementary question. Didn't the Institute of Health and Welfare also report that an extra $294 million is needed to address urgent unmet demand for services for people with a disability? When will the minister do the decent thing and produce the money that is needed to ensure that people with a disability get access to the services they need?10906Newman, Sen JocelynSenator NEWMANBE4TASLPFamily and Community Services; Minister Assisting the Prime Minister for the Status of Women10—It would be a good idea if the senator actually listened to the answer she was given. You got the answer just now.1090610906Brown, Sen BobSenator BROWNQD4TASAG00—My question is to the Minister for the Environment and Heritage. Minister, what response has the government got to the urgent appeal from the Queensland Beattie government for financial assistance to offset the unprecedented onslaught on Queensland's woodlands by unscrupulous landowners wanting to clear the woodlands before state laws controlling the practice come into being? Having failed to address this problem in his four years as minister, and in particular in the new environment bill, will the minister use Commonwealth laws—including the Corporations Law—to stop this environmental disaster? And will he give assistance to the Queensland government to stop the clearing until state laws come into being to put an end legally to this environmental destruction?10906Hill, Sen RobertSenator HILLBH4SALPEnvironment and Heritage10—The Beattie government can legislate tomorrow. There is nothing stopping the Beattie government except a lack of will. Why should the Commonwealth intervene? We are continually told that the constitutional responsibility for the management of natural resource matters rests with the states. Every mainland state in Australia regulates land clearing, bar Queensland. Mr Beattie came to office saying that he would do so. He made specific promises on that. He made specific promises to the environment movement and he has failed to deliver. Now the heat is on, he comes to the Commonwealth seeking to pass the buck, saying that the Commonwealth has to put up $100 million before he can act.In each of the other instances where responsible state governments acted, they paid for it themselves. In my state of South Australia, legislation occurred 15 years ago and was paid for by the South Australian taxpayers. Why does Mr Beattie require $100 million from the Commonwealth on the table before he can act? It is simply to make it easier for him; to try and cushion a difficult political action. Having made the promise, it is now so hard to deliver because it has within it political pain. Mr Beattie claimed he would do so much better on environmental matters, but just look at the record.What is happening to the management of fresh water in Queensland? The NCC was critical of Queensland's inaction in that regard but what did Mr Beattie do? Did he say that he would perform better? No, he criticised the NCC and said that it should be abolished. Now we have in relation to land clearing the same sort of picture—he said he would act but, as soon as the political pressure was put on, it became somebody else's responsibility. He wrote to me at 10 past 8 on Saturday night in order to call a press conference. What a stunt by a Premier who is unable to deliver on his promises!What about greenhouse? Mr Beattie is critical of the Commonwealth on greenhouse but which state Premier is currently licensing a whole range of new coal-fired power stations to make it difficult for the Commonwealth to deliver on its Kyoto protocols? It is Mr Beattie and his Queensland government—the Mr Beattie who says the Commonwealth has not put a dollar into greenhouse abatement in Queensland. I can give you a whole string of specific monetary payments that the Commonwealth has made to ease the greenhouse burden in Queensland.Similarly, it is Mr Beattie who says that the Commonwealth has put no money into the issue of bush care, revegetating Queensland and paying to maintain remnant vegetation. In fact, the Commonwealth has put in tens of millions of dollars. All of this has been forgotten by Mr Beattie at this moment of political difficulty. I would suggest that Senator Brown, instead of constantly coming in here and suggesting that the Commonwealth pick up a state constitutional responsibility, go out and suggest to Mr Beattie and his Queensland government that they have a responsibility to act in relation to land management in this country within their jurisdiction and that they should so act.10907Brown, Sen BobSenator BROWNQD4TASAG00—I have never heard a better exposition on why the environment law that this government has brought in devolving powers to the state is derelict.10000PRESIDENTThe PRESIDENT—Do you have a supplementary question, Senator?10907Brown, Sen BobSenator BROWNQD4TASAG00—It is the Democrat-government environment law. The supplementary question I ask is: why doesn't the minister use federal powers to intervene now on this national environment calamity? Why is he sitting on his hands while woodlands, including koala habitat and the habitat of rare orchids, are being driven into extinction? Why is he doing nothing and simply blaming a state government to whom he has devolved the powers?10907Hill, Sen RobertSenator HILLBH4SALPEnvironment and Heritage10—I have not devolved the power to Queensland at all. What a load of nonsense! The Commonwealth is not acting in that way because the state should accept its responsibility and act responsibly, like all the other states did. If Senator Brown was seriously interested in the issue he would put a bit of pressure on Queensland, for a change. In fact, despite Mr Beattie's promises to reduce land clearing in Queensland, it is now increasing—the highest levels now under Mr Beattie. I respectfully suggest that Senator Brown should turn his guns on the real target for a change. Or is that just too difficult for Senator Brown, again?1090710907Evans, Sen ChrisSenator CHRIS EVANSAX5WAALP00—My question is directed to Senator Herron representing the Minister for Health and Aged Care. I refer the minister to the information being sought on the MRI issue by a return to order motion passed by the Senate on 20 October. Will the minister act on the advice from the Senate Clerk provided to him earlier today indicating that there is no basis at this stage for the information to be withheld? Will the minister now table these documents or give formal reasons why he refuses to do so?10907Herron, Sen JohnSenator HERRONVW4QLDLPAboriginal and Torres Strait Islander Affairs10—I have a very high regard for the Clerk of the Senate, as he well knows, but he is not a lawyer, and he has not worked—Opposition senators interjecting—VW4Senator HERRON—I mean, my lawyer friends tell me that it is important that they be lawyers. I look around and they all tell me that it is very important to be a lawyer, and I accept that. I think when you are ruling on matters of law it is important to be so. Nor has he had experience as a criminal prosecutor. There are those who believe that, if you are investigating matters that are of a criminal prosecutor nature, you should have some experience in that field. I note that the letter Senator Evans received from Mr Harry Evans, the Clerk of the Senate, says:The Senate has in the past recognised that in some circumstances Senate inquiries should not be pursued where matters are under consideration by law enforcement and prosecuting authorities, but has never conceded that the mere possibility of future proceedings is a ground for withholding information.I have written to Mr Evans, Clerk of the Senate, today on behalf of the minister for health and I will be tabling that response later. Madam President, this may break standing orders—I do not know as I have never been in the circumstances and am not a lawyer or a prosecutor—but is it possible to ask Mr Evans whether he has received the letter?10000PRESIDENTThe PRESIDENT—No, that is not appropriate to ask at this time.Senator Faulkner interjecting—VW4Senator HERRON—The reason I asked that, for Senator Faulkner's benefit, was that—Opposition senators interjecting—VW4Senator HERRON—I am not a lawyer—10000PRESIDENTThe PRESIDENT—Order! There are far too many senators interjecting. Senator Evans has asked a question of Senator Herron and he is answering it, and has more than two minutes left in which to do so, if he needs that time. Other senators ought not to be debating the matter and interjecting.VW4Senator HERRON—I have written to Mr Evans in response to the Senate order and at the end of question time I will seek leave to table that response. Hopefully, by then, he will have received it.10908Evans, Sen ChrisSenator CHRIS EVANSAX5WAALP00—Madam President, I ask a supplementary question. I note that Senator Herron is the only frontbencher in the Senate who is not a lawyer. I concede that fact. Does the minister recall the evidence given by Mr Ralph Watzlaff, the head of the HIC's investigation, to the Senate Community Affairs Estimates Committee that, once persons have been referred to the DPP, he would see no obstacle to the details of the cases, including the dates of the contracts, being disclosed? Doesn't a continuing refusal by the government to comply with this parliamentary order, in the face of the conclusive advice from the Clerk of the Senate and from the investigating agency, highlight Dr Wooldridge's desperation in hiding these documents from proper public scrutiny?10908Herron, Sen JohnSenator HERRONVW4QLDLPAboriginal and Torres Strait Islander Affairs10—The short answer is no. But the long answer is that Dr Wooldridge needs to consider whether these are matters of public interest that may inhibit—AX5EVANSSenator Chris Evans—Public interest?VW4Senator HERRON—That is the clause that is apparently required to cover this particular issue to satisfy the order of the Senate. He needs to further examine these documents to see whether there are grounds of public interest immunity should these documents contain matters that are opinion, advice or recommendations prepared for consideration by the minister and the government, the disclosure of which could prejudice the government's relationship with the profession, for example. That is just one example of what I am referring to. It could also be misleading as to the reasons for the decisions taken, and information about the affairs of radiologists and the college may prejudice the government's relationship. (Time expired)1090810908Lightfoot, Sen PhillipSenator LIGHTFOOTWP6WALP10—My question is addressed to the Minister for Industry, Science and Resources, Senator Minchin. The Howard government is focused on the importance of science and innovation to Australia's future as a can-do country. Could the minister advise the Senate how the government's policies on science and innovation are combining to deliver a stronger economy and smarter jobs?10908Minchin, Sen NickSenator MINCHINJX4SALPIndustry, Science and Resources10—I do appreciate this question from Senator Lightfoot because it does give me an opportunity to correct the extraordinary assertion by the Australian newspaper last week that the level of public funding for research and development in Australia was `a national disgrace'. Of course, there were absolutely no facts or figures in the editorial from the Australian to back up what was a wild and extravagant claim. This is an unfounded and baseless assertion by the Australian newspaper, regrettably in keeping with the Murdoch empire's recent attacks on the government, which is all part of the Murdoch empire's campaign to bully the government into submission in relation to media policy and television policy.The Australian's very silly accusation is completely repudiated by the facts. This government is spending some $3.9 billion a year on science and innovation. In fact, that expenditure has increased every year for the past three years. As a percentage of GDP, OECD figures show that public expenditure on research in Australia is actually one of the highest in the world. Our expenditure on research as a proportion of GDP exceeds that in the US, the UK, Germany, Japan, Canada and Singapore. It is in fact about the third highest in the OECD.Opposition senators interjecting—10000PRESIDENTThe PRESIDENT—Order! Labor senators should stop making so much noise.JX4Senator MINCHIN—One can only ask the Australian how being even greater than all those very significant nations can be a national disgrace. On other indicators of science performance, we are also doing very well. Our share of world scientific publications is actually at its highest level ever, at 2.7 per cent. Given that our population is only 0.3 per cent of the world's population, we are playing way above our weight in terms of scientific publications.Opposition senators interjecting—10000PRESIDENTThe PRESIDENT—Order! Labor senators are continually shouting. It is in breach of the standing orders, and there is an appropriate time to debate issues if you wish to do so.656FORSHAWSenator Forshaw—Madam President, I rise on a point of order. Senator Brown asked both a question and a supplementary question about five or 10 minutes ago. Throughout the entire question and answer and the supplementary question and answer, members of the government and some Democrat senators consistently and continuously abused the standing orders and continued to make raucous and outrageous comments. At no stage were they called to order. I would ask you, Madam President, to take into account the fact that members of the government continuously engaged in that unruly conduct throughout that period.10000PRESIDENTThe PRESIDENT—There is no point of order. I shall have a look at the tape.JX4Senator MINCHIN—I would also like to refute the allegation contained in that Australian editorial that we are suffering some sort of scientific brain drain, which is something of a public myth. The latest figures for the period 1990 to 1996 show that we have actually had a net gain in arrivals in this country of 20,000 scientists and engineers—a net gain of 20,000 between 1990 and 1996.In the course of reporting on this government's significant initiatives and expenditure on science and innovation, I should remind the Senate that about 10 days ago I launched a new program called COMET—commercialising emerging technologies—which is a $30 million scheme over three years designed to give innovators the entrepreneurial skills to turn their ideas into products and jobs. Then, to cap off a great week for science in the parliament last week, hundreds of scientists came here to meet their parliamentarians. We had a meeting of the Prime Minister's Science, Engineering and Innovation Council, which also saw the launch of the government's innovation summit, which we are holding in three months time in Melbourne in conjunction with the Business Council of Australia. That summit, which will put a focus on innovation for Australia, will have three key themes: how to build a better environment for innovation, how we can better invest in ideas and how we can build better links between the key participants in the innovation system.Of course, the greatest thing that we can possibly do for science, research and development and innovation in this country is the magnificent reduction in the capital gains tax which will take place as a result of the agreement with the Labor Party to put through this Senate business tax reform, which has been widely welcomed by the scientific and research community. All of these facts do repudiate entirely the Australian's line—and it is a great pity that the credibility of the Australian newspaper is clearly being compromised by the Murdoch empire's other commercial interests.1090910909Hutchins, Sen SteveSenator HUTCHINS84PNSWALP00—My question is directed to Senator Herron, the Minister representing the Minister for Aged Care. Can the minister confirm that the coalition came to power with a major performance target in aged care to reduce waiting times? Is the minister aware that the annual report of the Department of Health and Aged Care shows a 36 per cent increase in waiting times for residential aged care over the last two years, now rising to an average of 68 days?10909Herron, Sen JohnSenator HERRONVW4QLDLPAboriginal and Torres Strait Islander Affairs10—Madam President—4J4SCHACHTSenator Schacht—You had better stick to your brief on this one.10000PRESIDENTThe PRESIDENT—Senator Schacht, your behaviour throughout question time has been unacceptable and disorderly.4J4SCHACHTSenator Schacht—I was just trying to assist the minister.10000PRESIDENTThe PRESIDENT—You are not required to assist the minister and you should not do so. VW4Senator HERRON—I do not believe that I have the specifics in relation to the question that Senator Hutchins asked.5K4FAULKNER Senator Faulkner—It's a pretty important one.VW4Senator HERRON—All questions are important. It is an important question when you consider the shambles aged care in this country was left in when we came into government after 13 years of Labor rule. I thank Senator Faulkner for the interjection. It is a very important question. We were left with this legacy of deficit which we have tried to clean up in three years. We have injected a significant amount of funds into aged care—far more than was injected in the three years prior to our coming to government. We have injected a massive increase of funds.I accept Senator Hutchins's suggestions that perhaps there is an increase in waiting times. But in a rapidly ageing population, Senator Hutchins, what do you expect? Only seven per cent of the population of this country actually access accommodation; 93 per cent stay in their homes and are looked after by relatives or by—Senator Faulkner interjecting—VW4Senator HERRON—Senator Faulkner asked about the question. I am answering the question by putting it in context, and the context is that we have a strategy that we are putting into place. We are injecting a large sum of money; we have had a much greater increase of funds into aged care than was put in by the Labor Party when they were in power. We inherited an enormous deficit. We have a rapidly ageing population. I do not accept those figures entirely because I do not have the brief here to see where it came from. I will get back to Senator Hutchins with an answer to that question when I go to the minister.10910Hutchins, Sen SteveSenator HUTCHINS84PNSWALP00—Madam President, I ask a supplementary question. If I can assist the minister: on page 226 of the department's report, it quotes clearly that there was an increase in the waiting period from 1997-98 of 50 days to 1998-99 of 68 days. Isn't it a fact that this 36 per cent increase in waiting time for residential aged care over the last two years is undeniable evidence of the failure of this government's aged care reforms? Further, despite all the attempts to explain away this increase, isn't it a fact that older Australians now must somehow struggle to remain in the community longer while they desperately search for, on average, over two months for a nursing home bed?10910Herron, Sen JohnSenator HERRONVW4QLDLPAboriginal and Torres Strait Islander Affairs10—The percentage increase is not valid. There is not 100 in that figure in terms of 50 to 68. I acknowledged in the previous answer that there may be an increase in the demand. I see here that the forecast is a growth rate of 2.7 per cent per annum for the next 15 years as a result of the growth of the ageing population.So what do you expect with the growth in the ageing population? There will be increasing demand. We are trying to correct the mistakes of the previous Labor government by injecting a large sum of money. The forecast is that that growth will increase. Any age group over the age of 65 is outstripping the other age groups in the population. They are the demographics of the population.5K4FAULKNER Senator Faulkner—Can you try and be serious?VW4Senator HERRON—If Senator Faulkner listened to it, he would try to understand it instead of interjecting. (Time expired)1091010910Woodley, Sen JohnSenator WOODLEYHX5QLDAD00—My question is addressed to the Minister representing the Minister for Transport and Regional Services, Senator Macdonald. Minister, how strongly does the government support a third local airline carrier lowering the artificially inflated ticket prices made possible by the duopoly of Qantas and Ansett in Australia? Given the double failure of Compass to establish a third carrier, what steps is the government taking to ensure that the Virgin Australia venture does not go the same way?10910Macdonald, Sen IanSenator IAN MACDONALDYW4QLDLPRegional Services, Territories and Local Government10—This government is totally supportive of competition in all of its fields, and certainly that is the case with airlines. We very much welcome the interest shown by Virgin Airlines. Virgin Airlines is not alone in considering a new service, as opposed to the duopoly as you mentioned. Impulse Airlines, a regional airline based in Newcastle, is looking at it, and there is a Melbourne carrier too which is seriously looking at providing an alternative service. I understand, and Senator Woodley would have no doubt heard, that the Virgin Airlines people are meeting with Mr Howard and Mr Anderson today, but these things become principally matters of commercial viability and commercial activity. Whilst Compass suffered a fate which I think was tragic, Virgin has some solid financial backing, and one would hope it would be in a position to provide the service.I repeat that this is principally a matter for commercial activities and that the government certainly supports competition, but we just have to be careful as we watch this that when the service is running on the major trunk routes—from Sydney and Melbourne, and then perhaps to Brisbane, Adelaide and Perth—other services to regional Australia are not adversely affected. I know when we were talking about open skies some time ago, the two then domestic carriers made some comments suggesting that if we allowed in open skies they would have to withdraw services to rural and regional Australia. I was quite annoyed about that at the time. There were perhaps explanations on why they raised that. This particular issue is one thing I think the government just has to keep an eye on to make sure there is not any diminution of services to the bush.Senator, our encouragement of competition and new players is of course subject, as always, to the caveat that any new entrant must comply absolutely with Australia's very strict safety standards and, if it is a foreign owned airline, it may have to go through the foreign investment and other regulatory requirements. Subject to that, we welcome all comers, and I wish Virgin and all the new players, and Ansett and Qantas, all the best in providing a better service for the Australian travelling public.10911Woodley, Sen JohnSenator WOODLEYHX5QLDAD00—Madam President, I ask a supplementary question. I thank the minister for his answer. I certainly share your concern about regional and rural airlines. In your answer it was the issue of competition that I wanted addressed. Does the government acknowledge that the two major airlines, the existing ones, twice blocked competition from Compass and that this contributed to the failure of the venture? If so, doesn't this demonstrate that competition rules do not always work and may not work for the Virgin Australia venture?10911Macdonald, Sen IanSenator IAN MACDONALDYW4QLDLPRegional Services, Territories and Local Government10—The existing airlines fought to maintain their market share. Within reason, I guess that is a natural commercial reaction to someone trying to take over some of your market share. As far as I am aware, they did nothing illegal. Had they done anything illegal then I would have thought Compass or someone else might have approached the ACCC or other regulatory authority about it. You did mention in your original question about slots and space at airports. That is handled by independent authorities and done fairly. I am aware, as you are, that Brisbane still has facilities available. I mentioned Brisbane only because I know that; I do not know other airports quite as well, although I am aware that at Sydney airport Impulse has its own area, and I assume there are areas available at Tullamarine. With the privatised airports, airport owners would be looking at the maximum usage of their airports. Without knowing, I would be fairly confident that the airport owners of the privatised airports would be bending over backwards to provide space and facilities for any new ventures.BH4HILLSenator Hill—Madam President, I ask that further questions be placed on the Notice Paper . Questions Without Notice109111091115:02:0010911Newman, Sen JocelynSenator NEWMANBE4TASLPFamily and Community Services; Minister Assisting the Prime Minister for the Status of Women10—I seek leave to incorporate in Hansard responses to questions asked by Senators Mackay, West and Evans last week.Leave granted.The answers read as follows—Response to Question asked by Senator Sue Mackay on 24 November 1999As with the Australian economy generally, Tasmania is experiencing an improving economic and employment situation that is paralleled by a reduced number of job seekers requiring support through social security payments.Centrelink is monitoring this improving situation as part of its regular review of resource requirements in line with forecast revenue. Centrelink's internal budgets for 1999-2000 were set in June 1999 based on estimated workload and revenue forecasts.As Centrelink revises its workload and revenue forecasts local managers are provided with information to ensure they are able to manage resources to match local demand. The budget forecasts for Tasmania have recently been revised downwards as a result of the reduced number of job seekers requiring support through social security payments.Area Tasmania use a range of strategies to manage within their revenue forecasts to ensure they meet their service requirements in Tasmania and will continue to do so. In the current situation, such strategies may include reduced numbers of temporary employees, natural attrition or, in some cases, voluntary redundancies. There will be no office closures or reduction in access through current service agents around Tasmania.Centrelink will continue to monitor their revenue and resource management to ensure quality service is maintained around Australia.Response to Questions from Senators West and Evans on 25 November 1999I would like to respond to the questions asked by Senator Evans and Senator West on 25 November 1999 regarding the Supported Wage System and Wage Subsidy programs within the Family and Community Services portfolio.The questions addressed two employer incentive programs delivered by my department for people with a disability and reforms to those programs.No reduction has been made to expenditure for either the Supported Wage System or the Wage Subsidy Scheme. Both programs will continue to provide capacity for new clients.My commitment to ensure people with a disability have opportunities to maximise their participation remains firm. However, I am also concerned that the available employment assistance funding is managed effectively and is directed to clients who most need assistance.Senator West asked the Minister for Family and Community Services, upon notice, on 25 November 1999:(1) Can the Minister for Family and Community Services inform the Senate why staff of her department are contacting disability employment service providers in Victoria, Queensland and New South Wales, informing them that "employer payments have now ceased for any further new applicants to Supported Wage"?(2) Is the Minister aware that this scheme saw 3,188 people with disabilities in 1998-99 reduce their reliance on the disability support pension and enter into employment?(3) How can the minister justify shutting down this obviously successful incentive while, at the same time, maintaining "many people with a capacity to work needlessly stay on disability payments for a long time?Senator Newman—The answer to the honourable senator's question is as follows:(1) The Department of Family and Community Services has advised disability employment service providers of changes to program guidelines for new Supported Wage System entrants to remove overlap between funding programs which support people with disabilities to access employment.Under previous arrangements both "on the job support" and employer incentives were available to support job seekers with disabilities from the Supported Wage System and from annual block grants. Block grant funded employment services have also accessed Supported Wage System funding to assist people with disabilities.In fixture Supported Wage System "on the job support" and the employer incentive payment will be payable for employment placements under the Supported Wage System that have not involved FaCS funded specialist disability employment assistance services.(2) This statement is incorrect. The Annual Report 1998/99 for the Commonwealth Department of Family and Community Services, page 147 indicates that 3,188 employment placements were obtained with wage subsidies paid by the FaCS specialist disability employment services, not the Supported Wage System. In 1998/99 1217 new Supported Wage System placements were achieved.(3) I have no intention of "shutting down" the Supported Wage System. This system is very important to reducing employment barriers for people with disabilities. In fact the Govern ment recently approved an additional $1 million allocation to the Supported Wage System for 1999-2000.Senator West asked the Minister for Family and Community Services, upon notice, on 25 November 1999:(1) In respect of the letters that the department has sent to organisations in the three states, can the minister confirm that, according to department correspondence from New South Wales, the supported wage system approved over 1200 new applications in 1998-99, putting it 20 per cent over the annual target?(2) Is the minister aware that the manager of the department' s New South Wales Economic and Social Participation branch dubbed this increase unsustainable?(3) Can the minister inform the Senate why a scheme that offers an annual average subsidy of just over $1,600 to each worker, thousands of dollars less than what the Commonwealth would be paying out in disability support pensions, is unsustainable?Senator Newman—The answer to the honourable senator's question is as follows:(1) 1217 new Supported Wage System placements were achieved in 1998/99, approximately 20% above the target of 986.(2) Yes. The advice to service providers was simply intended to indicate that a Supported Wage System growth rate of 20% per annum was unsustainable within current budget allocations.(3) See response to question (2). Funding for wage subsidies ($1600) continues to be available under the Wage Subsidy Scheme (not the Supported Wage System) to assist job seekers with disabilities and potentially reduce their need for the Disability Support PensionSenator Evans asked the Minister for Family and Community Services, upon notice, on 25 November 1999: With respect to the Supported Wage System for people with disabilities and the minister's department's decision to cut back the program's growth: (1) Can the Minister inform the Senate why her department considers it fair and equitable to limit the wage subsidy to just 45% of those workers with disabilities who require job placement in 1999-2000?(2) Just what are the other 55% of disabled people supposed to do without that important wage support? Senator Newman—The answer to the honourable senator's question is as follows:(1) The honourable senator refers to recent changes announced for the Wage Subsidy Scheme. This scheme provides a subsidy as an incentive to employers to provide employment, under open employment conditions to an eligible person with a disability. Changes to the wage subsidy scheme for 1999-2000 financial year provided a more equitable distribution of funding to services consistent with their negotiated job seeker outcome targets for the year. In the previous financial year allocations were based on service estimates of requirements with little regard to outcomes being achieved.A total of $7 million is available for wage subsidies in 1999-2000. This is a substantial increase on 1998-1999 wage subsidy expenditure.Wage subsidy funding has been allocated to disability employment services in 1999-2000, on the basis of a formula. Open employment services, have been allocated wage subsidy funding for 45% of work placements during the year, at an average subsidy value of $1600. This subsidy can be spread across all job seekers on an "as required" basis.. Supported employment services have been allocated wage subsidy funding for 45% of new workers at an average subsidy value of $1600.The average subsidy value represents the national average wage subsidy expenditure in 1998-99.Peak bodies were consulted on the funding allocation method. The approach took into account the wage subsidy expenditure trends in 1998-99, but also made allowance for increased demand with 1998-99 being the first full year of the scheme's operation in the portfolio.The new allocations provide Disability Employment Services the flexibility to use the wage subsidy funding with any eligible job seekers and negotiate the wage subsidy amount with employers. Disability employment services can also provide a range of employment assistance to job seekers with disabilities, including employment preparation, job search, placement and post placement support.(2) Not all job seekers with disabilities require a wage subsidy to obtain employment.1091315:02:0010913Herron, Sen JohnSenator HERRONVW4QLDLPAboriginal and Torres Strait Islander Affairs10—On 25 November Senator Gibbs asked me a question regarding aged care and dementia funding. I have received a reply from the Minister for Aged Care. I seek leave to incorporate it in Hansard .Leave granted.The answer read as follows—Senator GIBBS—My question is directed to the Minister representing the Minister for Aged Care. Can the minister confirm that the Coalition government's re-election promises included a commitment to increase funding for in-home respite care for older people suffering from dementia by an additional $82.2 million over four years? Can the minister confirm that these funds are now being directed towards a much broader target group, with the administrative guidelines explicitly excluding consideration of dementia specific services? Who made the decision to broaden the eligibility criteria and when was this decision made.Senator GIBBS—In particular, could the minister take on notice these questions: who made the decision about the eligibility criteria, and when? Under the review guidelines, how many of the estimated 130,000 days of in-home respite care per year will now be allocated to the carers of people suffering dementia? Why has the government failed to meet the Prime Minister's election commitment to people suffering dementia when, according to his press release of 20 September 1998, `the incidence of dementia is increasing as our population ages'? Minister, if you cannot answer, if you do not have a brief, could you please take these questions on notice? I really would like a detailed answer.SENATOR HERRON—The Minister for Aged Care has provided the following answer to the honourable senator's question:The Coalition in its election policy made a commitment to an additional $80 million over four years to boost in-home respite care for carers of people suffering from dementia. Carers of people with dementia and cognitive and behavioural disorders who have difficulty accessing services due to the challenging behaviour of the people they care for are the focus of this initiative. Dementias include a variety of associated conditions and this initiative seeks to include relevant people irrespective of the underlying disease or disability.The focus of the services on that group of people who display challenging behaviour and have dementia and cognitive and behavioural disorders will ensure that those people most in need will get services. The majority of service support will be directed to the support of carers of people with dementias. The commitment has been met. 1091415:02:0010914Herron, Sen JohnSenator HERRONVW4QLDLPAboriginal and Torres Strait Islander Affairs10—I indicated during an answer to questions without notice today that I have written today to the Clerk of the Senate, Mr Evans, in relation to the text of an order agreed by the Senate pursuant to standing order 164 concerning the extension of Medicare funding to magnetic resonance imaging machines. In that letter I explained that the Minister for Health and Aged Care, the Hon. Michael Wooldridge, is considering issues of public interest immunity in relation to the release of particular papers. I table a copy of my letter to Mr Evans. I will also seek the minister's advice on whether there are further issues relevant to his decision and will pass on any relevant advice to the Senate.1091415:03:0010914Evans, Sen ChrisSenator CHRIS EVANSAX5WAALP00—I move:That the Senate take note of the answers given by the Minister for Family and Community Services (Senator Newman) in response to questions without notice asked today, relating to welfare reform.A range of questions asked of Senator Newman today went to issues arising out of the Australian Institute of Health and Welfare state of the nation report released last week. In fact it was officially launched by the minister. The reason the opposition asked those questions is that the Australian Institute of Health and Welfare report provides a very good picture of what is happening with welfare and social programs in Australia today.We constantly get from the government rhetoric about how much money they have spent on each program and how much investment they have made, but the true comparative picture is never really revealed. What the AIHW report shows is that the callous underfunding of social programs by the Howard government, the cutbacks they made, particularly in their first couple of budgets, are just starting to bear fruit in our society. That neglect, that underfunding and those cutbacks mean we are starting to see the services available to families and to people in need in Australian society severely reduced. The squeeze is coming on and the evidence is now very clear in that report. If you look at disability, if you look at child care, if you look at aged care, the impacts of the Howard government's cutbacks are starting to be felt.In the area of disability services we see evidence of the $20 million reduction in services to the disabled at the same time as the minister is talking—in terms of her welfare reform paper—about reducing entitlements to those people. So we are seeing a two-pronged attack now from the government. They cut the direct funding to disability services, they are refusing to cooperate with the states in being proactive and addressing the unmet need problem and now we are going to witness an attack on the disability support pension.In the area of child care we have conclusive evidence that the cutbacks the government have made have resulted in funding for child care in the year 1997-98 being reduced by 10 per cent from the previous year. The minister came in here only a couple of months ago after releasing a report called Child care in Australia and attempted to paint a picture of child care in Australia that showed all was rosy—that funding was up, that the number of centres were up and that the number of children in care was up. It was a complete shonk—they had misused the figures, they had used old figures, they had picked different time lines to try to paint that picture. We argued at the time that it was one of the most dishonest documents ever released by a government, but we had very little success in winning that debate because people said, `They are official government statistics.' Well they were not; they were grossly misused statistics, they were shonky statistics.What you get from the Institute of Health and Welfare, who have an independent charter, is an independent view of what is going on in child care in Australia, an independent assessment of what has happened. What they show is that funding has been dramatically reduced under this government. Despite the minister's talk about the overall expenditure, child-care funding in Australia has fallen—partly because of demand but partly because of the $850 million that this government ripped out of child care, partly because of the child-care assistance freeze that they placed on Australian families for two years and partly because of the other cutbacks they made in child care. Sure, that has helped drive down demand. There is no question of that.There are other things going on in child care, and I am the first to admit that, but the government refuses to acknowledge that its funding cuts and its policy have driven down the demand for child care in Australia. A lot of Australian families now cannot afford good quality child care because the cost has just become too much. The cost has risen because of the government's funding cutbacks. The government has attacked child care. It has reduced the services available to Australian families and has driven up the cost.The Institute of Health and Welfare report also reports on aged care. Senator Hutchins asked a question today about that as well. Despite all the government's claims, waiting times for people to get into nursing homes or hostels are increasing. The number of beds available per thousand people over 70 has been reduced. There are serious pressures in aged care, where people cannot get into a facility and cannot get the sort of care they need. We have further evidence that the level of care in some institutions is falling, as they are unable to cope with the various pressures that apply to aged care.It is very important that we have some concentration in this parliament on the Institute of Health and Welfare's state of the nation report because it starts to paint a picture of what the first couple of hard Howard budgets in particular have done to social infrastructure in this country. The failure to invest and the withdrawal of funds from social infrastructure in this country are starting to have their impact. The services that should be available to Australian families, to those in need and to those relying on government support are not there because of the cutbacks. We are getting an independent assessment now of what those cutbacks have meant. (Time expired)15:08:0010916Payne, Sen MariseSenator PAYNEM56NSWLP10—Senator Evans and I agree on at least one thing, and that is that some of the truth in this area should be on the record, as opposed to the hyperbole and rhetoric that the opposition seems intent upon engaging in. Let me begin with the Australian Institute of Health and Welfare's publication, Australia's Welfare 1999 —a report which was welcomed by the government on its release. But the opposition chose to make a number of claims which are palpably and demonstrably inaccurate. The minister has endeavoured to put that on the record, and I intend to confirm those responses and confirm the inaccuracies of the opposition's claims in that regard.For example, I think the opposition shadow spokesman for family and community services in the other place, Mr Swan, claimed that there was a cut to the Commonwealth contribution to community services. What he failed to mention was that the report made it quite clear that between 1998-99 and 1997-98 Australian expenditure on welfare services as a proportion of GDP increased steadily. That is on page 35 of the report, if the opposition needs an accurate reference.He alleged cuts to services for people with a disability. Total Commonwealth outlays for disability services have in fact increased from $742 million in 1995-96 to $757 million in 1997-98. In relation to the cuts to children's services claim, not only does the opposition spokesman use different years to back up his claim and seem incapable of calculating accurate percentages; he has apparently deliberately chosen to ignore the $123.1 million paid to families under the child-care rebate in 1997-98—a convenient omission but one which does reflect somewhat upon the accuracy of his claims—and the extra $600 million for the new child-care benefit over three years, which starts on 1 July next year.He also claims there are cuts to housing. It is worth noting that housing assistance, in both direct funding and rent assistance, from the Commonwealth to low income Australians has in fact increased. These are important and accurate views which should be placed on the record. In relation to disability services, those who have spent even a modicum of time in this area know that negotiations between the states and the Commonwealth are consistently fraught with difficulties. But let us put a few things on the record in respect of the Commonwealth's position in this regard.In early August this year, the minister announced an additional $150 million over the final two years of the current Commonwealth-state disability agreement. That $150 million is to be used to purchase vital in-home and respite care services for people with disabilities who have ageing carers. This was a priority agreed by state ministers in April this year. But the Commonwealth is not ignoring other areas of unmet need. Those states also agreed in April to make their own significant contributions to the remaining areas of identified unmet need as a matter of priority once that Commonwealth funding was announced.The government is aware that the state and territory disability ministers met to consider details of the Commonwealth's proposal on 26 November this year. The concerns that have been raised in that communique are matters which the minister has already addressed with them. In fact, it is worth noting—but not something you would be holding your breath to hear from the other side—that two states have indicated that they wish to accept the offer and proceed to negotiate bilateral agreements to secure the funding. It is expected that other states will follow. When the states match the Commonwealth's new funding offer, significant funds will become available over the next two years to provide additional services to people with disabilities, and it is this quantum of new funding that has the potential to make a huge difference. Of course, people with disabilities are waiting to hear what funding contribution the states will make. The debate that is continuing over detail is simply delaying the states' responses to the urgent needs of this group and, I might say, playing politics with their urgent needs, which does not become the states who are participating in that process.I return briefly to the question of the AIHW report, Australia's Welfare 1999 , particularly in relation to child care. One thing the report noted which I think it is relevant to record here is the progressive nature of the government's assistance for child care and also the significant contribution the government does make to the cost of child care, especially for low income families. I think it would be very dangerous to pretend that the government's contribution in this area was not a significant monetary contribution. It is, and any senator who was a member of the Community Affairs References Committee inquiry into this area will be more than aware of the extent of that expenditure and its importance. The government's commitment to child care is demonstrated by an allocation of $5.3 billion over the four years from 1999 to 2000. (Time expired)15:14:0010917Forshaw, Sen MichaelSenator FORSHAW656NSWALP00—I am sure anyone watching or listening to question time today would have come to the conclusion that the Minister for Family and Community Services does not really have that much interest in some sections of her own portfolio. Particularly, I refer to the fact that, when asked questions today about why she and her departmental officers have on a number of occasions failed to attend meetings with appropriate groups—including state and territory ministers—to discuss vital issues such as funding for disability services, her response was, `I'm not going to tell you. You should ask those questions at estimates committee hearings,' which of course start in a couple of days.This is typical of this minister's attitude. When you get to estimates, the minister's response is often: `We're not going to tell you that. I'll take it on notice. I might get back to you one of these days.' Further, departmental officers are in a position where they may have to take such questions on notice and refer them back to the minister before they can provide any information. So we get continual obfuscation from this minister.When the pressure is really applied, when she knows she is in the wrong and when she knows the figures that she has been putting out—such as for child-care funding—have really been fudged, she gets into an arrogant stage. She says to this Senate in question time, which is the appropriate time for questions to be asked of ministers and for ministers to provide information in response to those questions, that she does not have to answer those questions, that she is too busy and that she has a big department to look after. The clear message coming through from the groups affected—such as, particularly, those in the area of providing disability support and disability services—is that they have no confidence in this minister whatsoever.In the space of only one month, on three occasions this minister has refused or treated with absolute contempt invitations or opportunities to attend meetings to discuss very important issues. For instance, on 11 November Senator Newman refused to attend a meeting of the National Caucus of Disability Consumer Organisations, and then her representative failed to turn up. On 12 November the minister again refused to attend an inquiry of the Senate community affairs committee into welfare reform. On 26 November the minister again refused to attend a meeting—the meeting that Senator Payne just referred to, which a question to the minister also drew attention to—of state and territory disability ministers to discuss unmet need and disability employment services.I appreciate that ministers cannot always get to every meeting, because they have other responsibilities. We know that. But this minister has a record, going back over the last couple of years, of treating organisations and state and territory governments with contempt when it comes to taking the opportunity to sit down face to face to discuss the real needs and the real problems—for instance, the cuts the government have introduced to successful pilot programs that have been in operation for people with disabilities. The government have taken $10 million out of the Post-school Options program. The More Intensive Flexible Service employment pilot program was a very successful pilot program that should have been given more funding and should have been established on a permanent basis. And what did they do? They abandoned it.When the organisations and the state and territory governments want to discuss these issues with the minister, she runs away. She is too busy. She does not have to attend. She says, `I will put $150 million on the table and you, the state and territory governments, will sort out what you are going to do with it.' And what happened? The state and territory governments the other day said that that offer was insufficient, that unmet need to the value of $240 million is only partially addressed and that they have no confidence in this minister. (Time expired)15:19:0010918Tchen, Sen TsebinSenator TCHEN86YVicLP10—We have just heard Senator Forshaw make some quite remarkable fictitious statements. During question time he asked the Minister for Family and Community Services a number of questions. Throughout the minister's answers—and I sit right opposite Senator Forshaw—I noticed he had his ears firmly closed and his mouth wide open. Perhaps that explains why he could not hear the minister's responses.There is a certain lack of logic in his argument. He complained that the minister appears not to be interested in some part of her portfolio and that she does not respond to people wanting to meet her. He also said that the minister appears to have too big a department and too much responsibility to handle. He listed a number of meetings which the minister is alleged to have snubbed and, at the same time, he acknowledged that the minister has a very large department and that she has to undertake certain responsibilities. Let us look at some of the meetings the minister is alleged to have dodged. On 11 November there was a meeting of some sort of caucus, of some community organisations, presumably. But Senator Forshaw does not throw any light on how important those community groups are or what they actually do. The name of any one group does not really mean anything, because we can all call ourselves anything. We can call ourselves a caucus, and it does not allocate any importance to us.Senator Forshaw also alleged the minister failed to attend a meeting of the Senate Community Affairs References Committee on 12 November. It is not a normal occurrence for a minister to attend Senate committee meetings. It was not a Senate estimates committee. References committee meetings are commonly not attended by ministers. On 26 November the state and territory ministers did meet in Canberra. They came up with the normal ambit claim of state governments that they need more money, but in reality the states have already been advised that the Commonwealth has made an offer to them which represents the largest single commitment to new funding per year by the Commonwealth under existing Commonwealth-state disability service agreements. The target offer is consistent with an agreement with the states to share the response to unmet need.So I am not sure whether Senator Forshaw actually understood what his question was all about. Earlier, we also heard Senator Evans organise his entire motion around the question of the Australian Institute of Health and Welfare report. He said that the report was `a very good one'—I am sure that I am quoting him correctly—and that it showed a `very good picture of the nation's health and welfare'. I think he is right. It is a great pity, however, that he did not show more attention to this type of report when Labor were in government. If Labor, when they were in government, had paid more attention to reports like this, we would not have been left in the mess we were in when this government took over. The second thing that Senator Evans probably should have done is noted that the report highlighted the progressive nature of the government's assistance to child care, amongst other things; the government's significant contribution to lowering the cost of child care, especially for low income families; and the government's achievement in managing the nation's health and welfare in other areas as well. (Time expired)15:24:0010918McLucas, Sen JanSenator McLUCAS84LQldALP00—I am also pleased to take part in taking note of the minister's answers to questions about the report, Australia's Welfare 1999 . I note that Senator Newman has commended the report by saying that it is the most up-to-date, comprehensive and authoritative source of national information on welfare support across Australia. I also note that she said in the Age last week that:It was an invaluable resource for understanding the welfare sector, goes beyond the dollars spent and looks at other ways we support Australians in need. In a sense, it mirrors what we are trying to do in government.The minister is right: the document does mirror the government's effort in welfare services, and the mirror, I am afraid, is not showing a very pretty picture. This report paints a very clear picture of what is happening in the child-care sector. We all know that expenditure in child care over the last four years has diminished by around $850 million and that that is in a number of areas. Senator Newman, in her answers to questions today, spoke much about appropriation figures increasing. Seemingly, just because that money has been made available and the uptake of those funds has not occurred, she believes that she can wash her hands of what happens after that. Unfortunately, that—in my view—is not the role of a minister of the Crown. We should be looking at why that uptake is not occurring and making some changes to the policy so that families are accessing child-care services and so that families, especially women, are accessing employment.Unlike Senator Newman, when she said in her statement to the Senate on 21 October that `expenditure on child care has not been declining', we do know that that is the case. The report notes that expenditure on children's services has in fact declined by 10 per cent, in constant prices, between the 1996-97 budget and the 1997-98 budget. Senator Newman makes much of the reasons why the take-up is not high and says that demand has simply slipped. I would like to explain why the take-up has fallen, and it goes to the issue of affordability. Affordability, as we know, depends on two issues: the level of the fees charged and the capacity of families to pay. Over the past four years, fees, especially in long day care, have had to increase because of the implementation of a range of government policies which—I will enumerate them to remind us of them again—froze child-care assistance over the first two years; capped work related care, especially in long day care centres, to 50 hours per week; and increased the means test threshold and thus limited families' access to assistance.Families cannot afford to access child-care services and that has therefore limited parents', and particularly women's, access to the workplace. We also know that those families worst affected are from low and middle income families. The government has decreased their access to child-care assistance and to child-care services per se. I am very concerned about what Minister Newman is telling those low and middle income families they can do to solve their child-care problems. On the 7.30 Report on Wednesday 25 August, Minister Newman said:If the parents decide this is too expensive and we are not going to do it, they will find other alternatives.The minister is saying that those families can make choices about their child-care services just on the basis of cost—that they are not going to include an assessment of the type of child care that is best suited to that child. That is the first decision that a parent will want to make—that is, to find the right type of child care for their child and not make a decision based just on cost.I am concerned about the message we are sending Australian families—that we can make a decision on simply whether or not we can afford it and not on whether or not that is the right type of care for our children. We know, anecdotally, that there is a huge increase in unregulated care, especially in regional Queensland. I have had reports of that from Townsville and Cairns. We cannot allow children and families to move into unregulated care simply because they cannot afford the quality of care they deserve. Families are also changing their access to employment, and we are hearing stories of parents who are splitting their employment timetables so that they can share the care of their children. We have examples of children who are cared for by one parent during the daytime and the other parent during the evening, and then the parents never get to see each other. (Time expired)15:29:0010919Ferris, Sen JeannieSenator FERRIS5L6SALP10—We have had the usual cacophony which follows question time in here, seeking to frighten the most vulnerable in the community: the young, the old, the handicapped and the disabled. It does not matter who they are, if they cannot speak for themselves for one reason or another, the principle seems to be to come in here and see whether you can put the frights into them—to just bend a few rules. It is a clear and cruel attempt to stir up the members of this community who are least able speak for themselves.We had the run of errors from `Error Evans', and I will not go through them all because they are all well known. But I thought that one of the most interesting things he said today—and it is not often that I find his comments interesting—was his admitting that much of what we have done has resulted from policy changes that we have brought about as a result of budget cutbacks. Nobody knows better than Senator Evans why we had some budget cutbacks. But, if he has had a short-term memory problem, he only need go and have a word with his leader, the Leader of the Opposition, and he will be reminded of the Beazley black hole, the $10 billion that we had to deal with when we came into this parliament. Senator Evans himself has just admitted that that is why there were budget cutbacks. So let us never forget why they occurred. Then we had another series of Forshaw falsehoods and, again, I will not go through those.10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—Would you please refer to honourable senators by their names.5L6Ferris, Sen JeannieSenator FERRIS—Senator Forshaw falsehoods. I am sorry, Madam Deputy President. He was critical of Minister Newman's interest in her portfolio but, at the same time, he himself admitted to the size of that portfolio. Representing Minister Newman, as I do, in my home state of South Australia, nobody knows more than I just how hard she works. In fact, members of the opposition may be interested to know that I will represent Minister Newman this Friday at a function relating to the Year of the Disabled.We then went on to Senator McLucas with her mirrors and a selection of press clippings about this and that from here and there, the Age and others being cited. Talk about mirrors: the whole contribution this afternoon has been a smoke and mirrors job, slip-sliding statistics all over the place.So, in the couple of minutes that I have left, let us just get a few key facts down on child care because we on this side of the chamber are sick and tired of these falsehoods, whoever they are coming from, about child care. The spending of $3 billion on child care in the last three years is 20 per cent more than Labor spent on it in its last three years in office—20 per cent more. We have increased the range of child-care options. Just this past weekend, a member of my extended family was around at my house telling me that for the first time she has had a choice of three child-care centres within walking distance of her home. For the first time ever, she has real choice in child care.We have allocated around $5.3 billion over four years going up into 2002-2003, including $600 million in additional funding over three years from 2001 to 2002 and then on to 2003 with the introduction, Senator McLucas, of the child-care benefit. Our expenditure—and I would like members of the opposition who are left in the chamber to note this down so that we do not have any more nonsense, falsehoods and errors—is expected to reach $1.5 billion annually by 2002-03. If that is not the most obvious example of increased funding to child care, I do not know what is.I was certainly around in the years when it was pretty hard for people going to work to find acceptable, affordable and safe child care for their children. I for one am very pleased to hear members of my extended family talking about the opportunities and choice that now exist in child care for their family.The claims of an increase of 20 per cent in child-care fees since 1995 are, again, a cruel exaggeration which impacts on those members of the community who are not able to speak up for themselves. Members of the opposition know that that is simply based on a very small and much more expensive sector of the community. Labor for some reason continues to highlight changes in the community sector of child care as if they represent the entire child-care sector. (Time expired)Question resolved in the affirmative.Notices1092110921Senator Bartlett to move, on the next day of sitting:That the Senate—(a) notes that: (i) on 28 November 1999 the Tasmanian Young Liberals endorsed equal rights for same-sex couples in the areas of superannuation, property division, wills and hospital visitations, (ii) the President of the Tasmanian Young Liberals, Mr John Kennett, has claimed that the vote on same-sex couples is the first time that a Young Liberal branch has passed such a resolution, (iii) Tasmania only decriminalised consensual homosexual relationships in 1997, and (iv) Western Australia remains the only state which still criminalises consensual same-sex relationships;(b) congratulates Tasmania's Young Liberals for their endeavours in this regard; and(c) calls on the Government to support the Australian Democrats' Sexuality Discrimination Bill 1995 [1998].Senator Ian Campbell to move, on the next day of sitting:(1) That estimates hearings by legislation committees for the year 2000 be scheduled as follows: 1999-2000 additional estimates: Monday, 7 February, Tuesday, 8 February and, if required, Friday, 11 February (initial hearings—Group A ) Wednesday, 9 February, Thursday, 10 February and, if required, Friday, 11 February (initial hearing—Group B ) Tuesday, 2 May and, if required, Thursday, 4 May (supplementary hearings—Group A ) Wednesday, 3 May and, if required, Thursday, 4 May (supplementary hearings—Group B ). 2000-2001 budget estimates: Monday, 22 May to Thursday, 25 May (initial hearings—Group A ) Monday, 29 May to Thursday, 1 June (initial hearings—Group B ) Wednesday, 29 November and, if required, Friday, 1 December (supplementary hearings—Group A ) Thursday, 30 November and, if required, Friday, 1 December (supplementary hearings—Group B ).(2) That the committees meet in accordance with the groupings agreed to on 26 November 1998.(3) That the committees report to the Senate by the following dates: Thursday, 9 March 2000 in respect of the 1999-2000 additional estimates Thursday, 22 June 2000 in respect of the 2000-2001 budget estimates.(4) That the following documents be referred to legislation committees for examination and report in respect of the 1999-2000 additional estimates: Particulars of proposed additional expenditure in relation to the parliamentary departments in respect of the year ending on 30 June 2000 Particulars of proposed additional expenditure for the service of the year ending on 30 June 2000 Particulars of certain proposed additional expenditure in respect of the year ending on 30 June 2000 Advance to the Minister for Finance and Administration—Issues from the Advance to the Minister for Finance and Administration as a final charge for the year ended 30 June 1999 (tabled 21 October 1999 ) Provision for running costs borrowings—Statements and supporting applications of issues for May and June 1999 (tabled 29 September 1999 ) Final budget outcome 1998-99 (tabled 28 September 1999 ).(5) That the committees consider the proposed expenditure, expenditure under the Advance to the Minister for Finance and Administration, the provision for running costs borrowings and the final budget outcome 1998-99 in accordance with the allocation of departments to committees agreed to on 11 November 1998.(6) That consideration of the Advance to the Minister for Finance and Administration for the year ended 30 June 1999 in committee of the whole be an order of the day for the day on which legislation committees report on their examination of the Issues from the Advance.Senator Ian Campbell to move, on the next day of sitting:That the days of meeting of the Senate in the year 2000 be as follows: Autumn sittings: Monday, 14 February to Thursday, 17 February Monday, 6 March to Thursday, 9 March Monday, 13 March to Thursday, 16 March Monday, 3 April to Thursday, 6 April Monday, 10 April to Thursday, 13 April. Winter sittings: Tuesday, 9 May to Thursday, 11 May Monday, 5 June to Thursday, 8 June Monday, 19 June to Thursday, 22 June Monday, 26 June to Thursday, 29 June. Spring sittings: Monday, 14 August to Thursday, 17 August Monday, 4 September to Thursday, 7 September Monday, 11 September to Thursday, 14 September Tuesday, 3 October to Thursday, 5 October Monday, 9 October to Thursday, 12 October Monday, 30 October to Thursday, 2 November Monday, 6 November to Thursday, 9 November Monday, 27 November to Tuesday, 28 November Monday, 4 December to Thursday, 7 December.Senator Hogg to move, on the next day of sitting:That the time for the presentation of the report of the Foreign Affairs, Defence and Trade References Committee on the proposed sale of Australian Defence Industries Ltd to Transfield Thomson-CSF be extended to 17 February 2000.Senator Heffernan to move, on the next day of sitting:That the Senate— (a) notes that: (i) November marks the anniversary of the great famine in the Ukraine in 1932-33, (ii) during that period, 7 to 10 million Ukrainians starved to death, evoking massive resistance on the part of the Ukrainian people, for whom the principles of private property and individual endeavour were deep-rooted in their national identity, and (iii) for Ukrainians, the dark legacy of death and despair will serve as a bitter reminder that their destiny as a people must be measured and guaranteed by the strength of their independence; (b) urges the Australian people to remember those who perished and suffered as a result of this famine, as a reminder that we should always respect the freedoms bestowed upon us; and (c) joins with the World Congress of Ukrainians and the Australian Federation of Ukrainian Organisations in calling on Australians to acknowledge the International Day of Remembrance gazetted by the Ukrainian Government in respect of those who suffered and perished in the great famine of 1932-33.Senator Tierney to move, on the next day of sitting:That the Senate— (a) congratulates the Minister for Education, Training and Youth Affairs (Dr Kemp) for continuing the Government's record of achievement in vocational education and training (VET); (b) commends the impressive findings from the Survey of Employer Views on Vocational Education and Training released by the National Centre for Vocational Education Research in the week beginning 21 November 1999; (c) applauds the survey finding that around 83 per cent of employers of recent VET graduates reported being satisfied or very satisfied with the VET system, and that this is a further improvement on the good result of 78 per cent in the previous survey of 1997; (d) endorses the survey finding that around three-quarters (74 per cent) of employers of VET graduates hold the view that training pays for itself through increased worker productivity; (e) draws attention to the finding that just over two-thirds (69 per cent) of employers of recent VET graduates felt that the VET system provides graduates with skills appropriate to employers' needs, a substantial improvement on the 1995 survey finding, which recorded a result of only 56 per cent; and (f) notes these encouraging changes come at a time when students and employers have a greater choice of training provider.Senator Stott Despoja to move, on the next day of sitting:That the Senate— (a) notes that: (i) the third biennial World Trade Organization (WTO) Ministerial Conference Seattle meeting of the WTO commenced on 28 November 1999, and (ii) European Union members have agreed to require labels for food containing greater than one per cent genetically-modified DNA; and (b) urges the Australian delegation to the meeting to recognise Australian public support for the labelling of genetically-modified foods and support the right of individual countries to pursue labelling regimes.Senator Brown to move, on the next day of sitting:That the Senate— (a) notes that clearing of native vegetation in Queensland is continuing at alarming rates of around 1 000 hectares every day, with disastrous impacts on biodiversity, increased risk of salinity and other land degradation, and adding to Australia's greenhouse gas emissions; and (b) calls on: (i) the Queensland Government to implement stringent controls on clearing native vegetation before Parliament rises for Christmas 1999, and (ii) the Commonwealth Government to give Queensland appropriate financial assistance so that the clearing controls can be implemented effectively and quickly.10923Items of business were postponed as follows:Business of the Senate notice of motion no. 1 standing in the name of Senator Allison for today, relating to the reference of matters to the Environment, Communications, Information Technology and the Arts References Committee, postponed till 30 November 1999.General business notice of motion no. 340 standing in the name of Senator Allison for today, proposing an order for the production of Commonwealth-State agreements, postponed till 30 November 1999.General business notice of motion no. 380 standing in the name of Senator Stott Despoja for today, relating to child labour, postponed till 30 November 1999. Committees109231092310923Motion (by Senator Calvert, at the request of Senator Payne) agreed to:That the time for the presentation of the report of the Legal and Constitutional Legislation Committee on the provisions of the Family Law Amendment Bill 1999 be extended to 6 December 1999.Bills10923r9081092315:36:0010923Calvert, Sen PaulSenator CALVERT5F4TASLP10—On behalf of Senator Gibson, I present the report of the Economics Legislation Committee on the A New Tax System (Tax Administration) Bill 1999 , together with submissions and Hansard record of proceedings.Ordered that the report be printed.Bills10923r8901092315:37:0010923Calvert, Sen PaulSenator CALVERT5F4TASLP10—On behalf of Senator Gibson, I present the report of the Economics Legislation Committee on Taxation Laws Amendment Bill (No. 8) 1999 , together with submissions and Hansard record of proceedings.Ordered that the report be printed.Notices109231092315:37:0010923Calvert, Sen PaulSenator CALVERT5F4TASLP10—by leave—On behalf of Senator Coonan and the Standing Committee on Regulations and Ordinances, I give notice that on the next day of sitting Senator Coonan will withdraw four notices of motion to disallow, the full terms of which have been circulated in the chamber and I now hand to the clerk.The list read as follows—Business of the Senate Notice of Motion No.1 standing in Senator Coonan's name for seven sitting days after today for the disallowance of the Superannuation (PSS) Membership Exclusion Amendment Declaration 1999 (No.1), as contained in Statutory Rules 1999 No.168 and made under the Superannuation Act 1990 .Business of the Senate Notice of Motion No.2 standing in Senator Coonan's name for eight sitting days after today for the disallowance of the Judicial and Statutory Officers (Remuneration and Allowances) Amendment Regulations 1999 (No.1), as contained in Statutory Rules 1999 No.171 and made under the Judicial and Statutory Officers (Remuneration and Allowances) Act 1984 .Business of the Senate Notice of Motion No.3 standing in Senator Coonan's name for eight sitting days after today for the disallowance of the National Health Amendment Regulations 1999 (No.4), as contained in Statutory Rules 1999 No.174 and made under the National Health Act 1953 .Business of the Senate Notice of Motion No.4 standing in Senator Coonan's name for nine sitting days after today for the disallowance of the Workplace Relations Amendment Regulations 1999 (No.5), as contained in Statutory Rules 1999 No.205 and made under the Workplace Relations Act 1996 .5F4Calvert, Sen PaulSenator CALVERT—I seek leave to incorporate in Hansard the committee's correspondence concerning these instruments.Leave granted.The correspondence read as follows—Superannuation (PSS) Membership Exclusion Amendment Declaration 1999 (No.1) Statutory Rules 1999 No.16823 September 1999The Hon John Fahey MPMinister for Finance and AdministrationParliament HouseCANBERRA ACT 2600Dear MinisterI refer to the Superannuation (PSS) Membership Exclusion Amendment Declaration 1999 (No.1), Statutory Rules 1999 No.168, which exclude from the Scheme persons who have transferred to the Australian Government Solicitor.Although, by virtue of regulation 2, these Statutory Rules commence on Gazettal, the terms of item 2 in the Schedule apparently indicate that the amendments made by them apply from 1 August 1998. The Explanatory Statement, however, does not provide any indication of the correct commencement date for this item. The Committee would therefore appreciate your advice as to whether the amendments apply retrospectively and, if so, whether any person other than the Commonwealth will be affected adversely.Yours sincerelyHelen CoonanChairMINISTER FOR FINANCE AND ADMINISTRATION4 NOV 1999Senator Helen CoonanChairStanding Committee on Regulations and OrdinancesParliament HouseCANBERRA ACT 2600Dear HelenThank you for your letter of 23 September 1999 seeking my advice as to whether the amendments contained in Superannuation (PSS) Membership Exclusion Amendment Declaration 1999 (No. 1) (the Amending Exclusion Declaration) have retrospective effect, and if so whether any person other than the Commonwealth will be affected adversely.The amendments contained in the Amending Exclusion Declaration do not have retrospective effect. The amendments replace item 38 of the Schedule to the Superannuation (PSS) Membership Exclusion Declaration (the Exclusion Declaration). Item 38 was inserted in the Exclusion Declaration before it took effect on 1 August 1998. As inserted, item 38 provided that PSS membership would not continue for a person who became on or after 1 August 1998 a person to whom the "mobility provisions" contained in Division 2 or 3 of Part IV of the Public Service Act 1922 applied, other than persons who were to be transferred to the Australian Government Solicitor (AGS) on its commencement.AGS was not established until 1 September 1999 and prior to that date I agreed to extend the classes of persons employed by AGS for whom PSS membership would be available. This was done by means of an amendment to the Superannuation (PSS) Membership Inclusion Declaration (the Inclusion Declaration) which includes as PSS members AGS employees who were transferred under the mobility provisions as well as certain other AGS employees.As a consequence, item 38 in the Exclusion Declaration has been replaced with a provision that excludes persons from membership of the PSS who become subject to the Public Service Act mobility provisions on or after 1 August 1998, other than persons included as PSS members by the Inclusion Declaration. Because the amendment to the Exclusion Declaration was made at the same time as the Inclusion Declaration was amended in relation to AGS employees, the amendment to the Exclusion Declaration had no effect on AGS employees. Nor does it have any retrospective effect on other persons.Yours sincerely,JOHN FAHEYJudicial and Statutory Officers (Remuneration and Allowances) Amendment Regulations 1999 (No.1) Statutory Rules 1999 No.17123 September 1999The Hon John Fahey MPMinister for Finance and AdministrationParliament HouseCANBERRA ACT 2600Dear MinisterI refer to the Judicial and Statutory Officers (Remuneration and Allowances) Amendment Regulations 1999 (No.1), Statutory Rules 1999 No.171, which omit the offices of the Privacy Commissioner and the Director of the Australian Institute of Health and Welfare and set the annual rate of remuneration for the office of the Australian Electoral Commissioner.The Explanatory Statement advises that the amendment made by item 1 in the Schedule removes the reference to the Privacy Commissioner from the Principal Regulations, as from 11 January 1999. However, that Statement does not explain why the Regulations are no longer to provide for the payment of remuneration of the Privacy Commissioner, nor why the removal of that office from the Regulations was done retrospectively.The Committee would be grateful for your advice.Yours sincerelyHelen CoonanChairMINISTER FOR FINANCE AND ADMINISTRATION3 NOV 1999Senator Helen CoonanChairSenate Standing Committee on Regulations and OrdinancesParliament HouseCANBERRA ACT 2600Dear Helen,I refer to two separate letters from you each dated 23 September 1999. One letter sought advice on the retrospective removal of the Privacy Commissioner from the Principal Regulations by the Judicial and Statutory Officers (Remuneration and Allowances) Amendment Regulations 1999 (No. 1). The other sought confirmation that Remuneration Tribunal Determination 1999/11 was not in breach of section 49A of the Acts Interpretation Act 1901 (the A1 Act).The Principal Regulations authorise salary maintenance arrangements for certain offices, as provided by section 8(1) of the Judicial and Statutory Officers (Remuneration and Allowances) Act 1984. Section 8(1) provides that, where an officer of the Australian Public Service or a full-time statutory office holder is appointed to another full-time statutory office that has a lower rate of salary than that previously received, regulations may be made to have the higher level of salary maintained.Regulation 4 of the Principal Regulations provided salary maintenance arrangements for the former Privacy Commissioner. The regulation was no longer required as the person for whose benefit it was made resigned from the position with effect from 11 January 1999. Thus the retrospective application of the regulation does not disadvantage or impose a liability on the person contrary to section 48 of the A1 Act.The second matter raised by you concerned Remuneration Tribunal Determination 1999/11 and its consistency with section 49A of the A1 Act. I am advised that officer level discussions have confirmed that section 49A of the A1 Act is not applicable to determinations made by the Tribunal.Should you require further information in relation to these matters, the Departmental contact officer is Lembit Suur telephone 6275 4368.Yours sincerely,JOHN FAHEYNational Health Amendment Regulations 1999 (No.4) Statutory Rules 1999 No.17423 September 1999The Hon Michael Wooldridge MPMinister for Health and Aged CareParliament HouseCANBERRA ACT 2600Dear MinisterI refer to the National Health Amendment Regulations 1999 (No.4), Statutory Rules 1999 No.174, which extend various arrangements by which patients may be paid health insurance benefits for hospital type treatment rendered in community settings.The amendment made by item 3 of the Schedule changes the benefit arrangements for private health insurance funds participating in the South Australian Psychiatric Patient Trial. The Explanatory Statement advises that there will no longer be a minimum benefit payable, but `participating funds and facilities will be able to agree a benefit level which does not exceed the daily fees and charges incurred'. Thus, it would appear that this item replaces a minimum level of benefit with one that is described in terms of the possible maximum level of benefit. Is this sufficiently precise to ensure that patients may be adequately covered for such treatments?The Committee would be grateful for your advice on how the change to the benefit arrangements will affect both the facilities and patients participating in this Trial.Yours sincerelyHelen CoonanChairSENATOR THE HON GRANT TAMBLINGParliamentary Secretary to the Minister for Health and Aged CareSenator H. CoonanChairStanding Committee on Regulations and OrdinancesParliament HouseCANBERRA ACT 2600Dear Senator CoonanThank you for your letter of 23 September 1999 to the Minister for Health and Aged Care, the Honourable Dr Michael Wooldridge, concerning benefit arrangements for private health insurance funds participating in the South Australian Psychiatric Patient Trial. As Parliamentary Secretary to the Minister, I am responding on behalf of the Government.The purpose of the amendment made by item 3 of the Schedule, which changes the benefit arrangements for private health insurance funds participating in the South Australian Psychiatric Patient Trial, is to allow the participating funds and facilities more flexibility to negotiate an agreed benefit level which does not exceed the daily fees and charges incurred.The benefit paid would be the amount agreed by the particular parties involved (ie the health fund and the hospital). Under this arrangement patients will not incur out-of-pocket expenses associated with their hospital and community accommodation and/or services. The number of days for psychiatric care available to patients participating in the Trial will continue to be unlimited, that is, it will continue to be determined by clinical need.I trust that this explanation clarifies the intent of the Amendment for the Committee. Thank you again for your interest in this matter.Yours sincerelyGRANT TAMBLING21/11/99 Workplace Relations Amendment Regulations 1999 (No.5) Statutory Rules 1999 No.20514 October 1999The Hon Peter Reith MPMinister for Employment, Workplace Relationsand Small BusinessParliament HouseCANBERRA ACT 2600Dear MinisterI refer to the Workplace Relations Amendment Regulations 1999 (No.5), Statutory Rules 1999 No.205 which give effect to the Government's response to aspects of the report of the Joint Standing Committee on Electoral Matters concerning the role of the Electoral Commission in conducting industrial elections.New paragraph 60A(6)(a) of the Principal Regulations, inserted by item 1 of the Schedule to these Statutory Rules, creates a criminal offence of using information about voter rolls for `any purpose other than a purpose in connection with the election'. Since that offence carries a maximum penalty of $1,100, it may be thought that the content of the offence might be more fully spelt out than merely by the reference to `a purpose in connection with the election'. The Committee would appreciate your advice as to whether this offence might be more fully defined.Yours sincerelyHelen CoonanChairMINISTER FOR EMPLOYMENT, WORKPLACE RELATIONS AND SMALL BUSINESSLEADER OF THE HOUSE OF REPRESENTATIVES23 NOV 1999Senator Helen CoonanChairStanding Committee on Regulations and OrdinancesParliament HouseCANBERRA ACT 2600Dear Senator CoonanThank you for your letter of 14 October 1999 concerning the Workplace Relations Amendment Regulations 1999 (No. 5), Statutory Rules 1999 No. 205 which give effect to the Government response to certain of the Joint Standing Committee on Electoral Matters recommendations regarding the role of the Australian Electoral Commission in conducting industrial elections.In your letter you have queried the wording of paragraph 60A(6)(a) of the Workplace Relations Amendment Regulations 1999 (No. 5), (inserted by item 1 of the Schedule to Statutory Rules 1999 No. 205). Paragraph 60A(6)(a) prohibits a person from using a voter roll for any purpose other than `(a) a purpose in connection with the election'. Breach of this provision carries a maximum penalty of 10 penalty units ($1,100).You queried whether the wording of the new offence sufficiently details the type of uses of voter rolls that will contravene the provision.The form of words used in drafting that paragraph is based on section 91A of the Commonwealth Electoral Act 1918. Subsection 91A(1) of the Act prohibits a person from using information obtained from electoral rolls except for a permitted purpose. Breach of this provision carries a maximum penalty of 10 penalty units. Specifically, subsection 91A(2B) defines permitted purposes in relation to people, other than a Member of Parliament or members of political parties, in the same terms as paragraph 60A(6)(a) of the Workplace Relations Amendment Regulations 1999 (No. 5).I trust this information answers your query.Yours sincerelyPETER REITHBills10927r8941092715:38:0010927Ferguson, Sen AlanSenator FERGUSONEP5SALP10—I present the report of the Employment, Workplace Relations, Small Business and Education Legislation Committee on the provisions of the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999 , together with submissions and Hansard record of proceedings.Ordered that the report be printed.EP5Ferguson, Sen AlanSenator FERGUSON—I seek leave to move a motion in relation to the report.Leave granted.EP5Ferguson, Sen AlanSenator FERGUSON—I move:That the Senate take note of the report.H15CAMPBELLSenator Ian Campbell—Madam Deputy President, I raise a point of order. I want to make it very clear to the Senate once again that the taking note of a report—even though it has been done—which has been referred to the Employment, Workplace Relations, Small Business and Education Legislation Commit tee via the selection of bills process is a clear breach of the standing orders. This report is listed for consideration by the Senate within a couple of sitting days. The standing orders have determined that if a bill is referred to a legislation committee then it will be tabled and `received by the Senate without debate'. We are now about to embark on a debate. I understand from talking to the opposition that they are determined to debate this, and clearly Senator Ferguson would want to put the government's view in such a debate.This is a practice that is pursued regularly and a standing order that is defied regularly—a very sound standing order, I might say, for those senators who like to see the Senate get on with its business in a timely manner—to embark upon a debate on a matter that is listed on the Notice Paper within, as I understand it, two sitting days. I will, I indicate, refer the use and misuse of this standing order to the Procedures Committee. Perhaps it may be better to come up with a standing order that has the respect of all senators because this one is continually abused.10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—There is no point of order.8O6O'BRIENSenator O'Brien—Madam Deputy President, on the point of order.10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—There is no point of order because leave was given by the chamber for this process to take place.8O6O'BRIENSenator O'Brien—I ask for leave to respond to that statement.Leave granted.8O6O'BRIENSenator O'Brien—Briefly, the situation is that, having been requested to pursue the noting of this report, I did so at the whips' meeting this morning and understanding was reached. In fact, I was informed at that time that Senator Ferguson intended to seek leave to take note of the report, so I hardly think it is fair to suggest that he was doing so simply because the opposition was proposing to do the same. I remind Senator Ian Campbell that it would be quite in order for a senator to speak to the motion that the report be printed, and that would allow an opportunity to pursue the same course. But perhaps this is a more open and honest way of doing it.H15CAMPBELLSenator Ian Campbell—It is an abuse of the standing orders.8O6O'BRIENSenator O'Brien—I do not think it is an abuse, Senator Campbell. If a motion is moved there is an opportunity to speak on it, as I understand it. That has been exercised here before.In terms of referring the matter to the Procedure Committee, it has, in most cases, been rather orderly when these matters are done by leave. I would have thought that the Procedure Committee would have regard to that. The opposition and others have, from time to time, sought leave to note particular committee reports. Leave has been granted on most but not all occasions, and this is no different.10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—Order! It is the will of the Senate to allow this to be debated by leave.EP5Ferguson, Sen AlanSenator FERGUSON—Before I commence, can I say that I made no request at the whips' meeting. This is something that I found out since then.On 11 August the Senate referred to the Employment, Workplace Relations, Small Business and Education Legislation Committee for inquiry the provisions of the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999 . The committee has looked at over 530 submissions and held eight days of hearings in four states and in Canberra. As all honourable senators will know, inquiries into legislation tend to attract far more submissions from individuals and organisations who oppose the legislation than from those who support it, and this inquiry has been no exception. An orchestrated campaign by the ACTU saw a great many like minded submissions, including pro-forma letters, received by the committee.The committee's terms of reference broadly required it to look at two matters: the objects and impacts of the current Workplace Relations Act, and the provisions of the amendment bill. In regard to the first part of its terms of reference, the majority report concludes that the existing act has successfully implemented a further evolutionary stage in the reform of labour relations and has contri buted significantly to wages, employment and productivity growth over the past three years. In fact, Senator Murray confirms this in his minority report when he talks about five tests for the effectiveness of the 1996 reforms and identifies in each case favourable outcomes. Senator Murray goes on in his minority report to point out that these were the key economic criteria that were set by Labor for the existing act, and the act has clearly delivered. Significantly, the act has contributed to historically low levels of industrial strife.Those who allege that the existing legislation has had undesirable social consequences have failed to make their case. To the contrary, there is evidence that the existing legislation has had very positive social effects. With regard to the second part of the terms of reference, the majority report concludes that the amendments proposed in the 18 schedules of the bill introduce more flexibility into wage fixing agreements, simplify negotiation and dispute resolution processes and advance a culture of change in workplace relations through stronger and more effective freedom of association provisions.Much of the evidence submitted to the committee by unions on both the operation of the Workplace Relations Act and the potential impact of the provisions contained in the amendment was unfavourable. In particular, they claimed that the legislation's consequences would include reduced job security, less equality of income distribution, increased pressure on families and a more adversarial employment relationship. Again, the unions failed to establish a causal link between these alleged consequences and the existing act or the proposed bill. Interestingly, the most frequently complained about provision related to the diminished role of unions in the proposed new workplace agreement negotiations. I will return to this issue in a moment.A number of submissions received by the committee gave both broad support for the legislation as well as support for the legislation in detail. Some individual employers gave evidence, but most were content to allow their national bodies to represent their point of view. There was a general agreement from the business community that both the Work place Relations Act and the current proposals were important steps in the evolutionary process of industrial relations reform, ensuring that Australia would be able to compete more effectively in the global marketplace. This evolution began with the legislation passed by the previous Labor government and has been pursued and developed since 1996.Some witnesses, while generally happy with the broad direction of government reforms, were of the view that they did not go far enough, claiming that further deregulation would be needed if Australia were to substantially reduce its structural unemployment rate. This is consistent with the spirit of the bill, which acknowledges the need for continual and evolutionary reform. Senators who remember the long debate over the 1996 bill, which was subsequently passed by the Senate, will recall the gloomy predictions made then which have proven unfounded, yet the same critics persist in peddling the same myths. To the contrary, the evidence shows that since the implementation of the 1996 act we have enjoyed a greatly improved economic climate, to which this act has contributed.The thrust of the new legislation follows the logic of incremental workplace reform over the past decade. The most important aspect of this policy has been to dismantle a monolithic labour market so that it can more flexibly service a widely diverse economy. Labour market and wages regulations policy over past decades was based on the notion that there was a single Australian economy with some segments subsidising others. The advent of the global economy rendered this policy both inoperable and incompatible with Australia's long-term economic interests.The committee heard evidence of the campaign 2000 strategy planned by the AMWU, a drive by this union to institute a concerted industry-wide negotiation for a wage raise next year. This strategy fails to recognise that profit and productivity performances across the manufacturing sector vary. Market forces, in particular export markets, and shifts in investment and currency values, among other factors, determine the capacity of industry to pay higher wages. Despite massive improvements in productivity and flexibility provided under the current act, it is clear that some unions have failed to recognise that a campaign like this is likely to result in retrenchments and industry closures.The reality of this inquiry is that it has been ideologically driven by the ACTU and their representatives in this place. The Labor senators here owe much to their union masters, so much so that they have included a quote from practically every union and its supporters in what they call their minority report. That should ensure preselection support for many of them for a long time. Jennie George, the President of the ACTU, actually wrote to a committee member and listed the unions and supporters who want to give oral evidence to the inquiry. She said:There are a number of matters I would like to raise with you re the Senate inquiry. Could we please make provision for some time to be set aside each day for individuals to make statements on the impact of the act.She also says:I note that Wollongong has been scheduled on the tentative agenda for October the 27th.This is before the committee had decided on and confirmed any dates regarding where it was going to be. She thought they needed a second hearing day in Sydney, which we acceded to, as we did in Melbourne. Otherwise, she felt that many key presentations would be missed. She then recommends the list of unions that she wanted to attend. There are others, including Professor McCallum, the Young Christian Workers Movement, the Uniting Church, non-English speaking women, Asian women at work and the Fair Wear Campaign. They were all there, and we heard the lot.She also said that she would like the ACTU to have an opportunity to respond on the last hearing date. We did not have hearings in Adelaide, but she said that she wanted Keith Hancock and Barbara Pocock to give evidence. We made sure that they had the opportunity to come to Canberra so that they could be heard. In Perth, she noted the people she wanted there. In reality, it was driven by the ACTU and was continued by the Labor senators in this place. We heard them all ad nauseam say that they support the submission of the ACTU.Another pro forma letter said in general terms:I don't know why you sent me this letter in my mailbox saying I must write a letter to the committee by Friday the 17th to let you know I am not working, which I still want to. I know what I did was wrong, but if I do get my job back again, I won't go to any other things but work. And I want to stop this legislation being passed in the Senate, so this is my letter.If getting people to put in pro forma letters is not some form of coercion, I do not know what is.We need to remember that the union movement represents less than one-third of the work force in Australia. Their `just say no' campaign is really just a Jennie George recruiting drive to try to boost a falling membership, which has now fallen to below one-third of the work force. Many of those who say they are supporting the `just say no' campaign have no idea what is in the bill. They are just blindly following union propaganda, and that was obvious from the committee hearings. The Labor Party report mentioned the Victorian government submission, which was received after the committee had completed its initial report.I firstly thank those members of the secretariat, who worked very hard in a very short time frame to make sure that this report was possible. They worked very hard during the hearings and in writing the report. I also thank senators on this committee for the way that they conducted themselves during this inquiry. There were a number of hearings. I thank them for the way that they conducted themselves. (Time expired)15:52:0010930Collins, Sen JacintaSenator JACINTA COLLINSGB6VICALP00—Senator Ferguson, I am sorry, but that is one of the most sorrowful performances I have ever seen you make. I will highlight a couple of areas, because one of the comments that you have made in relation to one of the individual submissions is actually quite offensive. But let me go back to my more general comments. I was going to commence by reminding the Senate that this inquiry was meant to be a review of the 1996 legislation. As I understand the arrangements reached between the government and the Democrats, they actually were that the government would chair the inquiry and that the government would have the majority membership on the inquiry, as part of the deal that you would review the current act. So let us take a step back when we are making assertions about the ACTU orchestrating or controlling events: how on earth could they have orchestrated or controlled events when the government is chairing the committee and the government has the majority on the committee?But let me go further to my comments on the quality of the government's report. Unfortunately—and it is, again, a cause of my sorrow—the government's report goes nowhere near reviewing the overwhelming evidence we received through our inquiries about the effect of the current act. Chapter 2 of the report purports to do this over somewhere between 12 and 15 pages, and that is all, of the report.EP5FERGUSONSenator Ferguson—Because it is working so well.GB6Collins, Sen JacintaSenator JACINTA COLLINS—Senator Ferguson, not because it is working well—10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—Senator Collins, address the chair, please.GB6Collins, Sen JacintaSenator JACINTA COLLINS—You will note that there is a preface to the minority reports of both Labor and the Democrats, expressing our concern that it was unfortunate that many important issues were not adequately canvassed in the majority report. My sorrow is also that, with Senator Ferguson as chair, other members of the committee have felt the need to do this—because, as you have already foreshadowed, your reputation as a chair of committees is one of relative unbias and of good management of hearings. Unfortunately, this has not been translated into the quality of the report and, from your comments today, the quality of the tabling statement. My sorrow is that you have allowed the reputation of the minister for misrepresentation to be spread to yourself and, unfortunately—10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—Order! Do not reflect upon the minister.GB6Collins, Sen JacintaSenator JACINTA COLLINS—I withdraw that, Madam Deputy President. Unfortunately, the evidence has had the effect, it appears, of causing absolute and complete denial. When I look at the fact that you often refer to how much impact that evidence we have received recently and in the past has had in relation to outworkers, I am absolutely astounded that you could represent the evidence of an outworker in the way that you just did in your statement. The statement you referred to was—10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—Order! Address the chair, please, Senator Collins.GB6Collins, Sen JacintaSenator JACINTA COLLINS—Sorry. The statement referred to was from a witness who obviously responded to a request that problems be highlighted to this committee. This witness obviously had a very poor and limited understanding of English and, for you to misrepresent it in the way you have done—10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—Order! Address the chair.GB6Collins, Sen JacintaSenator JACINTA COLLINS—Through you, Madam Deputy President—10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—`To' me, not `through' me.GB6Collins, Sen JacintaSenator JACINTA COLLINS—The representation of that evidence was offensive. I have already referred to the preface of the minority reports, and we highlight in those all the areas that we believe are important to review the current act. We also refer to the fact that the Labor senators' report, in its nature and length, attempts to address these issues so that the inquiry's terms of reference and the depth of the evidence provided to this inquiry are more fully reflected. We cover many areas and again express concern that those areas were not picked up in the majority report.I now move on to the areas where we have reviewed the process as a whole. Unfortunately, at this stage I need to note something and, so that I do not run out of time before I do this, in the context of noting this I will also make some comments thanking the secretariat and addressing their work in this process. There is a page missing from the printed document. It appears that there has been an error in the printroom as this document was produced. It basically commences our concluding remarks in our overview of the report.In saying this, I want to stress that the work of the secretariat on this matter has, beyond question, been more than any senator could anticipate. Unfortunately, despite the minister suggesting that the government would report early so that we could report early in this process, the chair then took an additional two weeks to complete the chair's draft, and we were left with essentially less than a week to conclude minority reports during a sitting week. As a consequence of that, the reader will probably find a number of grammatical or typographical errors throughout this report and, again, the printing error that one of the pages is missing. I would like to thank, in particular, Bevan Kirk and Penny Shakespeare for the work that they have put in during the past week in that climate, where we have sought to do what the chair should have done and what he in fact had promised Senator Murray and me that he would to—and that was to adequately canvass the evidence that was put to the committee on the impact of the 1996 act. His denial here today is simply not good enough. The evidence is there and it can be seen to some limited extent through the content of our report.Given the chair's earlier comments about the process, I have been provoked to make one additional comment. Given that we received two copies of a particular chapter of his report, one of those copies highlighted that the chair has deliberately sought to minimise employee concerns raised in this process and has withdrawn evidence that the secretariat was putting forward as an unbiased description of the evidence that had been put before us. Here is a clear example of the chair actually seeking deliberately to misrepresent it. Unfortunately, Senator Ferguson, that matter is what leaves you open to the accusation of allowing executive interference—because I do not believe that you would do that of your own motion. Now, going back through the chair—10000DEPUTY PRESIDENTThe DEPUTY PRESIDENT—`To' the chair, please; not `through' the chair.H15CAMPBELLSenator Ian Campbell—Tell her about eight times and she will finally get it.GB6Collins, Sen JacintaSenator JACINTA COLLINS—Madam Deputy Chair, Senator Campbell is obviously irritated that we are taking time on this here today so, at this point, I will move on to the matter which is the other area of misrepresentation. Senator Ferguson assured me, I think it was yesterday or the day before, that he would make a motion to his people that we should have the opportunity to speak on this report. As I understand the situation, despite Senator Ferguson's comments today, his whip did raise that request at the whips meeting. Let us get those facts correct for Senator Campbell so he can take up his problems with his own people.I want to highlight our conclusion, given the fact that some of the printed copies at least will not deal with these issues. The conclusion of our minority report commences:Overall, the Labor senators conclude that the evidence provided to the committee demonstrates that the Workplace Relations Act 1996 is regressive and has had serious and far-reaching negative social impacts, particularly on the most disadvantaged Australian workers. In addition, there is a paucity of evidence to support the need to extend further deregulation on the labour market as proposed in this bill.Labor senators do not claim to come to the above issues without preconceptions, but the evidence that came before the committee was overwhelming; in particular, the opinions of ordinary people who sent in submissions opposing this bill, condemning the changes in 1996 for the damage it had done to their work, their health, their family lives, their friends and the community; also, eminent persons such as Professors Hancock, McCallum and Isaacs; academics like doctors Peats, Pocock, Hall; and community groups, lawyers, unions, public servants and even employers.Some employers made a real effort to leave political allegiances aside and to deal with the issues before us in a dispassionate and thoughtful manner. Notable for their constructive contributions were the Australian Industry Group—but Senator Ferguson would not let them come back at the end of the process in Canberra—the Victorian Automotive Chamber of Commerce and the Australian Catholic Centre for Employment Relations. As I have said, unfortunately the majority report does not reflect much of this evidence. This is unfortunate for those who made an effort to contribute to the committee's inquiry. The inability to deal honestly and constructively with the thoughtful contributions of so many people and organisations does no credit to the majority, to the Senate or to the parliament.I also thank my staff—and I have raised the issue of the extraordinary circumstances—and, in particular, I thank an intern whom I have had working on one component of this report, Helen Nezaritis. I conclude with the comments that, for the record, Minister Reith has got it wrong. (Time expired)16:02:0010932Murray, Sen AndrewSenator MURRAY3M6WAAD00—I rise to comment briefly on the report of the Employment, Workplace Relations, Small Business and Education Legislation Committee on the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999 . When you hear Senator Collins and Senator Ferguson having a go at each other, you need to remind yourself that they actually get on quite well and have a good working relationship. They are the same team that was there in 1996. I want to personally thank the committee chair and Senator Collins for allowing a committee process which has to consider very contentious material to be conducted in a well-mannered, orderly and helpful manner.I recognise that each disagrees with the other's position, but the committee process does allow one to put down whatever report one feels is appropriate. Certainly, the government has put down its report. We have put down a 12-page report and Senator Collins—and maybe it is an all-time record for a minority report—has put down a report of about 260 pages. I regret that I have not yet had the chance to read it, but I am sure that I will have the chance before next week when we have to deal with it. Despite what we have just heard, the attitude of the chair is gratefully recorded by my party. Some chairs of some committees do not handle the management and the process well and so it is very helpful when you have someone from the government side who does.Having said that, I move on to the substance of the report from the Democrat perspective. One thing needs to be said again and again about workplace relations legislation—and, indeed, perhaps about much of the legislation that we deal with: the emphasis is far too much on economic outcomes and far too little on social outcomes. That is one of the government's great weaknesses in proposing the changes—and they are very wide-ranging changes as we are talking about 300 pages of legislation and 18 schedules—because, on the economic side, there is really not much call for the act to be further changed.On any analysis, this country has now got higher productivity, higher employment, higher real wages, significantly reduced industrial disputation and more reasonable national wage case safety-net increases than it used to have. On those grounds, whilst there is always a case to be made for evolutionary or modest reform, there is not that much desire or need for major economic reform. On the social side, there is a much stronger case for reform, but probably not in the way that the government would want; that is, there is a greater need for attention to work and family relationships; to the issues of job insecurity which are still out there in the community; to the issues resulting from a very heavy casualisation of our work force; and to issues of being trained and skilled for a rapidly changing work environment, both in the technological and the organisational sense. However, if you look at the submissions that came through to us, the concentration of criticism of the bill was primarily on the social side rather than the economic side.The Democrats took the view that this bill, overall, should be split into three. I will read from my report which explains exactly what I mean. I said:The inquiry has convinced me that a number of schedules have very little merit overall and should be rejected outright.I rejected eight schedules in my recommendations. Those eight include schedule 1, objects; schedule 4, conciliation; schedule 5, mediation; schedule 6, awards; schedule 8, certified agreements; schedule 9, Australian Workplace Agreements; schedule 12, secret ballots; and schedule 16, independent contractors. Later on in the report I detail my findings.I then went on and said that there was a second set which should be considered. To quote from my report:There are five schedules of relatively low importance (except No 15) which are worthy of due consideration. In its submission, the ACTU, despite its `just say no' campaign, did not even comment on these five schedules. I can only conclude that this is because these schedules either contain good legislation for employees, (Schedule 15 contains clauses which materially and beneficially assist Victorian employees), or are quite modest in effect.The five schedules are schedule 3, Employment Advocate; schedule 10, relevant and designated awards; schedule 15, Victoria; schedule 17, miscellaneous amendments; and schedule 18, amendments of other acts. I remind all those people who in all honesty and commitment write or ring or email my office, without ever having turned a page of the legislation, that the ACTU did not have a single thing to say about five of those schedules. So the `just say no' campaign, on those grounds alone, becomes exposed.I then picked up the third category. I wrote:The remaining schedules have major provisions that should be rejected and other clauses which need amendment. These schedules nevertheless retain substance worth considering further.They are schedule 2, the Industrial Relations Commission; schedule 7, termination of employment; schedule 11, industrial action; schedule 13, right of entry; and schedule 14, freedom of association. However, before the proponents of the bill get too excited, in every single one of those schedules I have rejected the government's major propositions.In the time that is left, I want to pick on a few schedules. The first relates to awards. When you boil the concerns of ordinary employees down, their major concerns are pay and conditions. That is what an employee is concerned about. The unions, their organisers, their officials and their leaders are much more concerned with the mechanics of industrial action, right of entry and all that sort of stuff. But for the ordinary employee it is pay and conditions. Therefore, I want to focus, for the ordinary employee, on the award side. Although unions now represent a little more than a quarter of all workers, awards—even federal awards—affect far more than just a quarter of employees. For me, this was one of the least attractive schedules in the bill.I pulled out some figures which, fortunately, had been issued by the Industrial Relations Commission. I wrote:In 1997, there were 3197 federal awards. As at 31 October 1999 359 awards—or about 10 per cent—had been simplified, a huge number (1245) had been set aside or deemed to have ceased operation—in other words, they were out of date or no longer relevant; that is about 35 per cent of all awards—1172 were undergoing simplification and 363 were still to begin simplification.When you are in the middle of a major process like that you would have to ask yourself why you would want to stir up the workers in the way that they have been stirred up on the awards issue. The minister will mention union picnic days. I do not think union picnic days should be in awards, but that is not a reason to attack the whole process when we are in the middle of award simplification.My problem with much of this bill is that it is too early, too much, too soon. It is unnecessary and it does not address the fundamental problems, which are social and not economic. Furthermore, it includes the usual healthy dose of union bashing which I think is unhelpful in moving us on to a better way, a less adversarial way, of dealing with industrial relations in the future. Lastly, I note in the submission from the Victorian government that they support a unitary industrial relations system and so do I. (Time expired)Question resolved in the affirmative.Committees109341093410000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator Lightfoot)—The President has received letters from party leaders seeking variations to the membership of certain committees.Motion (by Senator Ellison)—by leave—agreed to:That senators be discharged from and appointed to committees as follows:Economics Legislation Committee—Substitute member: Senator McGauran to replace Senator Chapman for the 1999-2000 supplementary budget estimates hearingsEnvironment, Communications, Information Technology and the Arts Legislation Committee—Substitute member: Senator Lightfoot to replace Senator Payne for the 1999-2000 supplementary budget estimates hearingsFinance and Public Administration Legislation Committee—Substitute member: Senator McGauran to replace Senator Brownhill for the 1999-2000 supplementary budget estimates hearings on 1 December 1999 from 4 pm till adjournmentForeign Affairs, Defence and Trade Legislation Committee—Substitute member: Senator Lightfoot to replace Senator Payne for the 1999-2000 supplementary budget estimates hearingsLegal and Constitutional Legislation Committee—Substitute member: Senator Lightfoot to replace Senator Payne for the 1999-2000 supplementary budget estimates hearingsRural and Regional Affairs and Transport Legislation Committee—Substitute member: Senator O'Brien to replace Senator Forshaw for the 1999-2000 supplementary budget estimates hearings.Bills10935r945Billsr943Billsr946Billsr944Bills10935r964Billsr96310935Debate resumed.16:14:0010935Brown, Sen BobSenator BROWNQD4TASAG00—I oppose this legislation on the new business tax system. It is regressive. It ducks the opportunity to do far better by the Australian community as far as tax reform is concerned. It gives the advantages to the rich. It takes from the poor. It leaves the added threat that there will be a squeeze on the ability of government to pay for services to the whole of the community further down the line when the degree to which there is a shortfall in income because of this tax package becomes obvious.The tax package is built upon the ideology that, if you cut the company tax rate from 36 to 30 per cent and balance it in other ways, you will in some way improve things for business. Regardless of that debate about business, what about the community? The reality is that the community will be badly served. This will increasingly lead to a shortfall of tax in the future but, that aside, I can remember a different argument being put by the Keating government when the corporate tax rate was reduced from 39 per cent to 36 per cent.In those days, it was going to be a stimulus for jobs—that is, there was going to be a trickle down and a flow-on to the average Australian. What in effect happened was nothing of the sort. The money went straight across to the profit line and, in the following years, there was an added profit in the corporate sector and to the shareholders in the community who are not, by and large, the workers or, even to this date, average Australians. I do not believe this is going to move towards the fairer society which the big parties ascribe to.The second component of this formula for business tax reform essentially is to halve the rate of the capital gains tax so that those on the top marginal rate will see that drop from 48½ per cent to 24¼ per cent. It effectively means that people who are paying tax on capital gains rather than on labour are going to have a windfall. Mark Latham, an honourable member of the House of Representatives, was speaking on this matter very recently. He said:. . . the proposed changes to the capital gains tax will provide an average gain of $149 a year to people with taxable incomes below $20,700 and a gain of $6,500 a year to people earning between $100,000 and $500,000. These proposals . . . entrench the guiding light and symbol of taxation policy of the Howard government: the more you earn the bigger the tax cut.Mr Mark Latham went on to say:The first law of good tax policy is: do no harm; treat all parts of the economy, all types of investment and all types of revenue the same; don't distort investment decisions; don't open up avoidance techniques; don't tax capital at a lower rate than income; don't give the land speculator on the Gold Coast a lower tax rate than the small IT company trying to trade in products and income; don't give doctors buying in and out of private hospitals a lower rate of tax than the local service franchise trying to build up its business activity; don't give the smarties who milk the market for short-term gain a lower rate of tax than those who use their intelligence and know-how to actually develop products and markets . . . ; don't reward the great Australian disease of property trading and punish the knowledge economy; . . . I wholeheartedly agree with Mr Latham on this matter. He went on to say:Labor—in government—wanted to create an economy in which you could turn a dollar by being creative, not by being a speculator.. . . . . . . . .Unfortunately, these tax changes . . . are going back to the future. They are going back to the old culture, the old ways and all the distortion and corruption that came with it.Yet here today we have Labor spurning that commonsense from one of its more formidable debaters and backing the government in this matter which will help the big end of town against the average Australian. So, on both counts—that is, the reduction in the corporate tax rate and the reduction in the capital gains tax—I am opposed to this because it is regressive, because it does help the big end of town and because commonsense, as expostulated by Mr Latham, would have us going in a different direction.A number of different directions could be taken. I favour to put before the Senate one from the Australian Conservation Foundation which is much more in keeping with modern tax practice in Europe, including more recently the United Kingdom where there is a Labour government, than the Howard philosophy now backed by the Labor Party in this place. The Australian Conservation Foundation recommends, of course, emissions trading as a business energy tax and comments that a major opportunity here would be to introduce a business energy tax or a suitably designed carbon emissions trading scheme. They have those in Scandinavia and have had them in Germany for years. The ACF goes on to say:This would have substantial advantages for both meeting our greenhouse targets—about which the Minister for the Environment and Heritage was tearing his hair out here in the Senate and blaming state governments for the troubles along that road—and also for enhancing the productivity of Australian industry.The ACF says:Importantly, the revenue from the UK business energy tax is recycled back to business to ensure overall competitiveness of industry is not reduced. Most carbon taxes in Europe operate in this manner.The ACF suggests that, in the Australian context, the revenue be used to reduce or eliminate payroll tax, thereby boosting employment uptake. In the context of revenue neutrality for business tax reform, the additional revenue of business energy tax is also a potentially important component. On a second matter, the Australian Conservation Foundation says:Taxation related measures can be used to enhance reduction, reuse and recycling of waste in Australia.This is not a matter that we hear much about in this place—certainly not from the minister for the environment—but it is a matter that is very much in the public domain. There is enormous frustration in Australia about the failure of the so-called voluntary recycling packs that industry has put in the way all around the country, except South Australia, to prevent legislation for compulsory recycling of reusable products. The Australian Conservation Foundation has suggested that the best way to do this is through a waste tax or levy. It went on to point out:Waste minimisation and recycling of used resource materials are immediate ways in which we can reduce total resource consumption while also generating additional jobs. The critical issue for successful recycling programs is the development of markets for the products which emerge. Where insufficient attention has been paid to this aspect—and that is the case with many of the so-called voluntary schemes by industry—the recycling schemes have run rapidly into problems of over production and low demand. Programs for the development of markets for recycled products have been successfully used overseas—for example, in Minnesota and in New York State. Analysis shows that in Minnesota the Recycled Products Market Development Program led to the generation of 1,700 jobs and $39.1 million in additional wages, as well as positive environmental outcomes.In New York State, a similar program is run for $8 million per annum and funded by an oil levy. Its feasibility grants program, with funds in excess of $1 million, has created 380 jobs.I might add that the South Australian experience, where recycling has been in for some decades—the seminal experience in Australia—has resulted in 700 to 1,000 jobs being created, a much cleaner environment and a much less wasteful community. It wins in all directions.A third option for business tax reform that the Australian Conservation Foundation points to is natural resource management. The foundation believes that considerable gains in nature conservation can be achieved by changes and cites the recent paper `Philanthropy, Sustaining the land', which draws on the work of Carl Benny and Mike Young from the CSIRO and which outlines changes, two of which directly relate to the treatment of capital gains. They are:Firstly, to encourage greater private contributions, allowing all donations of property to conservation trusts, which would need to be established by legislation, to be tax deductible over five years and exempt from capital gains tax. Property would include land, physical and financial assets, conservation covenants, bargain sales of land, donations of land with an occupation retained, and donations of assets for which a limited lifetime annuity is paid.Secondly, to facilitate the creation of private conservation reserves, provide the following tax incentives to land covered by a conservation covenant. These should include access to tax donations of the 34 per cent Landcare rebate for costs associated with managing land covered by conservation covenants and allowing private conservation reserves to be negatively geared and giving their owners primary producer status.Good gracious, we have actually come up with an ethical reason for negative gearing! It is one the government should look at.Finally, I will point to the Australian Conservation Foundation's idea of an employer provided tax exempt public transport pass. The ACF states:The business tax reform process provides the opportunity to introduce a public transport initiative that is currently law in the United States.It is not speculative but law there already, and it is likely to become law in Canada. It continues:One change, for example, in the United States is to allow up to $780 a year of an employee's gross income to be used for transit expenses. The money spent on commuting is not taxed so employees can save $300 a year if they use the maximum amount. Employers save on payroll taxes and other costs they are required to pay on money set aside by their employees. Of course you get a transfer of people off the roads into public transport.The ACF says:Based on experience in the United States, a report to the Canadian government estimates transit increases of 30 to 60 per cent—that is people going across to public transport—if tax reforms are implemented to encourage employer provided public transport. There has been a 31 per cent increase in transit use amongst participating employees in the San Fransico Bay area. An estimated 17 million vehicle miles were removed from their roads, 61 million tonnes of pollutants were avoided and $1.6 million of new transit revenue was generated, of course to allow for the improvement of public transport.There are far better answers than this regressive taxation which the Howard government has come up with and so strangely the Labor Party has given the nod to. I cannot understand why there has not been opposition to these taxes in this place. Senator Murray is going to speak shortly and may be able to enlighten us more on the options put to the federal government by the Democrats.It is a very bad pass indeed that a Labor opposition committed to social equity and committed to closing the gap between the rich and poor should be supporting this very regressive gift to the rich, a package for the big end of town coming from the Howard government. I hear that there are political reasons for that, but I do not accept them. What we have is an unfortunate circumstance for the average Australian where the Democrats have supported the goods and services tax proposal, which itself is regressive. Remember, it is a $3 billion per annum gift to the big transport and mining corporations, with some of it going to loggers as well: that is more than it is costing us to have our armed services in East Timor. That $3 billion is going to the big corporations in Australia at a time when the GST is going to hit people right across the country when they go to their local grocery shop.The gift is not to the people really; as a whole, the gift has been to the big end of town. Now the government brings in a tax package which compounds that inequity, and the Labor Party is supporting it. The Greens have consistently opposed regressive taxes. There are better options, as I have outlined. I think it is very unfortunate for this country that it has been so easy for the government to get one opposition party and then the other in a bidding opportunity, which they have taken the bait on, to support bringing in a double whammy of regressive taxes this year. It is going to lead ultimately to a less fair society, a growing of the gap between rich and poor, and that means social problems down the line for this country of ours. Those problems are not just put on the sideboard; they are real problems. As the gap between rich and poor grows in this country, it is a prescription for enmity, it is a prescription for an increased crime rate and it is a prescription for a blighting of the hopes of those people who want their children to inherit a fairer country—not one in which capital is able, through the political system, to get the accelerated advantage all the way down the line. I oppose this legislation.16:31:0010938Murray, Sen AndrewSenator MURRAY3M6WAAD00—In speaking to the new business tax system bills, I have to begin by addressing this question of revenue neutrality, although the issues of equity and good tax policy need to be fully covered in the debate as well. The government asserts that business tax reform will, despite being revenue negative in 2001-02, be revenue positive over its first five years—that is, the years 2000 to 2005—to the tune of around $1.27 billion. For any forecaster, the estimation of revenue up to five years into the future is fraught with difficulty and uncertainty. Treasury witnesses have pointed out that revenue estimates, even a year into the future, have a considerable margin for error. Government revenue figures are of such a magnitude that such errors in forecasting can translate into billions of dollars and the Treasury relies on `overs and unders' to balance the effects.The Democrats do not believe that the business tax package, as it stands, will be revenue neutral. Importantly, neither do Labor, who have clearly said in their report that the package is not revenue neutral by $3.8 billion initially and then by a subsequent unnamed amount later on. In the interests of politics, not policy, and contrary to its committee senators' views, Labor's executive have now accepted a symbolic anti-avoidance amendment coupled with a touching trust in Treasurer Costello, rather than negotiating real safeguards.The Democrats, in contrast, have concluded that the behavioural assumptions on the capital gains tax cuts provide for an overoptimistic estimate of likely revenue gains which knocks more than $2.5 billion out of the forward estimates, leaving the budget in the red by around $1.49 billion over five years. It is my view the Democrats were close to negotiating hundreds of millions of dollars of safeguards in return for our support for what is, in many respects, a very good package. In our report we concluded that the capital gains tax cuts in their current form are likely to lead to considerable tax avoidance, more than that allowed for by Treasury. We concluded too that in the longer term the `growth dividend' may not plug the very considerable hole in the forward estimates beyond five years as the revenue effects of changes to accelerated depreciation wash out. Against that, the Democrats recognise that Treasury has been conservative in its estimates of revenue gains from some measures such as the `growth dividend', the personal services income initiative and the option 2 higher level reform.The OECD has warned that maintaining the budget in surplus is essential, given Australia's large current account deficit, to maintain financial market confidence. An expansionary fiscal policy providing business tax cuts above those of the personal income tax cuts is simply not responsible. Business tax must pay its way and, if possible, contribute additional revenue to the budget. For these reasons, the Democrats believe that conservative assumptions should be used in calculating business tax revenue effects.As outlined in the main committee report, the key weakness in the revenue figuring behind the Ralph report does lie in the capital gains tax proposals, particularly in the treatment of tax realisations. The Democrats conclude that Ralph was overoptimistic in assuming that a cut in capital gains tax will deliver an elasticity of 1.7 in the short term and 0.9 in the long term. Labor senators in the committee had a similar view. The more recent research projects referred to by Dr Gravelle and Professor Auerbach in the evidence show quite clearly that these estimates are far too generous. Dr Gravelle outlined in detail her conclusion that the short-term elasticity is likely to be closer to 0.6 and the longer term to 0.2. Private sector Australian economist Dr John Edwards, in his submission to the inquiry, said:I frankly doubt we would see it on anything like the scale implied by the elasticity estimate.The Democrats believe that, in erring on the side of caution, the elasticity estimates used should be those proposed by Dr Gravelle rather than those adopted in the Ralph report.The generosity of the lower capital gains tax is also likely to lead to an increase in tax avoidance, particularly because of the retention of 100 per cent deduction for negative gearing, despite only a 50 per cent capital gains tax. Professor Rick Krever, economist Dr John Edwards and United States proponent of capital gains tax cuts Alan Reynolds, in evidence, warned that this combination was likely to lead to an increase in tax avoidance. Dr Edwards warned that negative gearing was in fact on the rise in the equities market. He said:Negative gearing is now, even with the current capital gains tax, a hugely popular strategy. In most banking institutions, for example, marginal lending into equities is the most rapidly growing part of their business. You can see it in the housing finance figures. There are huge increases in individual credits lent on the security of houses which are going into the stock market or into other properties.The Ralph report, in dealing with the ability to negatively gear non-commercial losses, originally carved out a continuing exemption for rental properties but not for shares. The government, in its stage 2 response, broadened this to also include shares without any indication of why or any adjustment to the revenue costing.Professor Chris Evans suggested in evidence that even a slight movement in tax planning from earned income to capital gains would reduce the revenue take considerably. He found that a one per cent movement of converting income into capital would cost $359 million in annual revenue, based on the 1996-97 tax stat figures. In 1996-97, negative gearing cost the tax system around $937 million in tax forgone on losses on rental properties alone. Just a 10 per cent increase in negative gearing would cost around $94 million a year. Professor Krever and Dr Edwards also warned that the tax arbitrage effect was likely to be higher than predicted by Treasury.Given these sorts of risks, the Democrats believe that the tax arbitrage effect allowed for in the Ralph estimates of a maximum of $180 million a year in lost tax due to the conversion of income to capital is likely to be an understatement, given the size of this capital gains tax cut. The Democrats conclude that the capital gains tax gains to revenue have been overstated and that the loss to revenue has been understated. By correcting for these effects, we conclude that the package, rather than being revenue positive by $1.267 billion, as claimed by the government, is in fact revenue negative to the tune of $1.49 billion.The Ralph report forecasts a very high growth dividend flowing through from the tax changes. This growth dividend is essential to the package being revenue neutral over the medium and longer term. Any shock to the economy would affect that growth dividend. The report makes a judgment that the reforms would deliver a growth dividend of 0.75 per cent of GDP by 2009, which the report says is `likely to be conservative'. This would deliver a revenue gain by 2004-05 of $650 million, which is rounded down to a conservative $500 million in the Ralph report tables. The government, in its official press releases, halves this figure again to a $250 million growth dividend in 2004-05. However, the importance of the growth dividend is in the medium term to offset the wind down of accelerated depreciation. The Ralph report claims that its 0.75 per cent growth dividend would push the revenue gain to $1.8 billion by 2009-10.Chris Murphy's modelling supported the view that there would be a growth dividend in the long run—that is, 10 years—which would be a boost of 1.5 per cent to GDP. He concludes:There would be a substantial growth dividend out of all of that in terms of government revenue.That is the kind of figuring that the Labor Party and the coalition are relying on. However, Dr Matt Benge and Professor Peter Dixon disagreed with this assessment, coming to the tentative conclusion—on what, it must be admitted, was very limited data—that the overall effect of the package was likely to be negative on new investment and hence on long-term GDP growth. Senator Cook in particular seemed attracted by Professor Dixon's evidence.Long-run modelling is very difficult to make firm conclusions on, particularly given the limited material in front of this inquiry and the limited experience of the modellers in terms of the parameters being addressed. The Democrats would be reluctant to rely on high assumptions of revenue gains from a growth dividend which may or may not arrive. We note that the government are running on a growth dividend of less than 40 per cent of that forecast by Ralph, and we commend their conservatism in this regard. The reliance on the growth dividend to fund the package in the medium to long term highlights the importance of ensuring that the package is robustly revenue neutral or indeed revenue positive in the short to medium term.The Democrats welcome the decision of the government to proceed with the stage 2 tax integrity measures with full effect from 1 July 2000. We also note the current determination of the government to proceed with the entities taxation scheme—that is, taxing trusts as companies—from 1 July 2001. We hope Labor's poor negotiation does not result in this being watered down. These items are very important to the funding of this package and the ANTS package. Any watering down or further deferral of their commencement dates will have serious implications for the revenue neutrality of the package.The amount of revenue involved is quite considerable. The tax integrity measures in stage 1 and stage 2 total $1 billion in 2000-01, rising to $1.49 billion by 2004-05. Similarly, the trusts measure was estimated to raise $900 million in its first year, falling to $430 million by the third year, although these figures did assume a 36 per cent company tax rate. If any of these measures are watered down considerably, the capacity of the budget to fund a $3 billion company tax rate cut is brought into doubt. Any talk about chasing rats up the drainpipe will not change that situation. While we appreciate that the task of drafting the personal service income and trust legislation is daunting, we believe that such legislation should be considered and passed before the company tax rate cut takes effect on 1 July 2000. Indeed, the one should be contingent on the other. That is what we would have negotiated, and we will move amendments to this effect.The cost of negative gearing to revenue is enormous—$937 million in 1996-97 on rental properties alone. This inquiry has heard that cuts to the capital gains tax rate are, when aligned with negative gearing, likely to lead to considerable further revenue erosion. Halving the negative gearing concession in line with the 50 per cent capital gains tax rate would save around $470 million a year. Few other countries in the world, including the United States, Canada and the UK, still allow negative gearing. Negative gearing, in our opinion, promises to be an even greater revenue loss in the future, taken in conjunction with the capital gains tax cuts. The Democrats believe that the option 2 reforms have considerable scope to reduce corporate tax avoidance and tax planning. It is impossible to estimate this amount, but we note that the alternative minimum company tax in the United States, which operated on a similar principle, increased revenue collections by seven per cent in its first year.The cut in company tax has the undesirable and perhaps unintended consequence of cutting the effective tax concession on research and development from 9 cents in the dollar to 7.5 cents in the dollar. Geoffrey Lehmann, a witness to the inquiry, has calculated that to restore the R&D concession to its real incentive rate would require an increase in the concession from its present 125 per cent to 130 per cent at an annual cost to revenue of $97 million. Another issue is the question of maintaining or assisting viability for major projects, such as those outlined in the submission by the Australian Gas Light Company. This whole cost area remains very vague in government announcements today but, with the loss of accelerated depreciation, plainly needs more clarity for such businesses.The last issue I will mention here is the delay until 1 July 2001 in introducing the simplified tax system for small business. Ideally, those small businesses that wish to should be given the option of moving onto that beneficial new system from 1 July 2000. There may be too great a cost to revenue in bringing forward this measure. However, it seems foolish not to allow new small businesses that start up in the year 2000-01 to go straight onto that system rather than start with one system and have to change to a better system less than 12 months later.In the time remaining to me, I want to move to some of the political issues. We are well aware, and the government is well aware, that the Labor Party have agreed to this package not because they do not believe their senators about the weaknesses in the bills and in the revenue calculations but because they wish to clear the decks for an attack on the GST and the ANTS tax package. All that is so obvious and so evident, but the problem for them is that if—as I expect—the income tax cuts, the social welfare improvements, the compensation measures and the implementation of the GST come out in a favourable manner or in a manner which has far fewer effects than otherwise they would expect, the Labor Party are going to be left without much of an election strategy.Given that Senator Conroy gave us some gratuitous advice in his remarks, I thought I should assist you with some measures which might help when you go out and campaign for the next election. You have to prove that you can count on the $10 billion black hole which you left the government. You have to prove to the community that you can count on the l-a-w tax cuts. Remember the l-a-w law tax cuts? Then you have to be able to tell the community that you can count on the Olympics tickets and how you distribute those sorts of things. You have to be able to tell them that you can count on the Collins submarine contract. You have to be able to tell them that you can count on the WA Inc. mess that you left in WA and other disgraceful Labor Victorian and South Australian disasters.You have to prove that you are able to count on the GST numbers. You have to prove that you are able to count on the Ralph numbers. The problem hanging around your neck is this vision of Labor as poor economic managers. If the coalition could add a bit of heart to their money skills, I think Labor would never govern in Australia again. Every time you stand up and talk about money and about numbers, you get a problem. The problem with the Collins class party—as I have described them, noisy and ineffective—is that they are also the party that cannot say sorry. You cannot say sorry for your awful East Timor policy and the way you deserted the Australians' allies. You cannot say sorry for the White Australia policy which you began. You cannot say sorry for making the rich richer and the poor poorer during your time in office. You cannot say sorry for economic rationalism and all its extremes. You cannot say sorry for corrupt party practices. You cannot say sorry for branch stacking, thuggery and mendacity.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator Lightfoot)—Senator Murray, I wonder what this has to do with the bills before us.3M6Murray, Sen AndrewSenator MURRAY—The chair at that time allowed this kind of remark to be entered into during the debate, and I am merely responding to the allegations of how the next election has to be run.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT—Perhaps you could direct your response towards the bills before the chamber.3M6Murray, Sen AndrewSenator MURRAY—The point I make, through the chair, is this: if the Labor Party are going to clear the decks for a campaign against the GST and if they find out that the GST actually settles in very well—the income tax cuts settle in very well, the social security payments settle in very well and the environmental issues settle in well—they are going to have to have a strategy which enables them to face up to that election. I am just suggesting to them there are a few areas which they need to be able to address as well as the GST, because their whole strategy is to clear the decks and just deal with the GST. In view of the kinds of remarks made by Senator Conroy in his second reading debate address, I thought I should give him some gratuitous advice as well. Later on, when I have time, I will read at length from the clippings of the newspapers today as to what they thought of Labor's inability to negotiate a good outcome with the government. To the government, I must congratulate you on playing a very good hand. You got the better deal.16:50:0010942Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Thank you, Senator Murray, for those kind comments at the end of your remarks. The New Business Tax System (Income Tax Rates) Bill (No. 1) 1999 and the five related bills represent the first and second groups of bills introduced into the parliament which will implement a new business tax system for Australia. There are six bills in all which implement many of the government's landmark reforms to business tax. The government's business tax reforms build on the significant reforms that it has already legislated. In relation to indirect and personal income tax, more legislation will follow in the new year.The business tax reforms that the government announced on 21 September and 11 November this year represent the culmination of 12 months of consultation with the Australian business community—an unparalleled degree of consultation. As I have said so often in this chamber before, this government is a consultative government. This consultation was led by three businessmen: Mr John Ralph AO, Mr Rick Allert and Mr Bob Joss. The review of business tax which was chaired by Mr Ralph was given broad terms of reference to consider reforms to the Australian business tax system.I take it from your comments, Senator Conroy, that you approved of their work because my understanding is that you are supporting this package. Over a 12-month period the review consulted extensively with small, medium and large businesses, rural and farming businesses, and other interested organisations. This open and consultative process was welcomed by business and made a significant contribution to the comprehensive recommendations of the review. Indeed, business has been very supportive of the reforms that the government has announced and this is due, in part, to the extensive and inclusive consultative process the government established.By way of example, I will quote from a number of major industry organisations. The Australian Institute of Company Directors stated that it:. . . has welcomed the New Business Tax System, released today by the Federal Government, as a win for Australian businesses large and small and for the taxation reform process.The Government's proposed changes to the capital gains tax regime to offer rollover relief for scrip for scrip takeovers are key elements in removing barriers to growth in the Australian economy and enhancing our international competitiveness.The Tourism Council of Australia remarked:The Tourism Council today welcomed the Federal Government's New Business Tax System as investment friendly and encouraging future growth within the sector.The new business tax system, combined with a new overall taxation system would help Australia's tourism industry compete in a global market place. These changes bring Australia into line with developments overseas and provide tourism businesses with certainty and simplicity—changes which are long overdue.There were further supportive comments from the Australian Society of Certified Practising Accountants. They stated:The Government has listened to the calls of small business to reduce compliance costs they are facing . . . Of particular benefit will be the Simplified Tax System for small business and the rationalisation of the capital gains tax relief benefits available to small business.These capital gains tax reforms will make investment in small business a much more attractive proposition and should assist in the growth and employment generating capacity of the economy as a whole.Dick Warburton, speaking on behalf of the Business Coalition for Tax Reform, also remarked:The agreement secures comprehensive tax reform that will deliver a modern, stable, fairer and more competitive tax system. Business tax reform was the last link. It is now up to everyone involved to get on with the implementation and the detailed consultations necessary to bed down the changes.The new business tax system that the government is implementing will give Australia internationally competitive business tax arrangements, including the lower company tax rates included in this group of bills. The company tax rate will fall from 36 to 34 per cent for the 2000-01 income year, and to 30 per cent thereafter. This will make our company tax rate more competitive than that of many developed nations and amongst the lowest in our region. This, combined with the reforms to indirect and personal income tax, will create the environment for higher economic growth and more investment. In turn, this will mean more jobs and improved saving.Under the government's reforms to the capital gains tax, individuals will pay tax on only 50 per cent of any gain they make on the disposal of assets. This means that the highest rate for individuals will effectively be 24.25 per cent. In addition, superannuation funds will be taxed on only two-thirds of their capital gains. These cuts in capital gains tax, together with scrip for scrip rollover relief, will give Australia an internationally competitive capital gains tax regime and therefore encourage investment. Other government reforms to capital gains tax will particularly encourage investment in venture capital and in Australian small businesses and farms. The government will legislate to make capital gains made by Australian superannuation funds from pooled development funds exempt from capital gains tax.Similarly, investments in venture capital projects in Australia by non-resident tax exempt pension funds, such as UK and US pension funds, will also not be subject to capital gains tax. The government has already legislated to provide small businesses with capital gains tax rollover relief or exemptions where they use funds to purchase other businesses or to retire. These changes were, I think, very much welcomed at the time. Under the reforms contained in these bills, these provisions will be extended and simplified. As a result, individual operators of small businesses will not have to pay capital gains tax on 75 per cent of any gain made on the sale of active business assets. The remaining 25 per cent will be subject to significantly expanded and simplified rollover provisions and retirement exemption provisions. Where taxpayers dispose of an active asset, that asset was held continuously for at least 15 years and the taxpayer is at least 55 years of age and intends to retire or is incapacitated, no capital gains tax will be payable.Small businesses will also benefit substantially from the implementation of a simplified tax system. It will dramatically reduce compliance costs and maintain small business access to existing concessions. Indeed, the government's changes to Australia's taxation system are landmark reforms. They include a number of integrity measures, as well as other measures that I have already discussed. Some of these measures take effect from 22 February 1999, as foreshadowed by the Treasurer in a press release of that date. The Treasurer has written to the Senate Scrutiny of Bills Committee regarding the delay in introducing the legislation.I now turn to some of the issues which have been raised by honourable senators in the debate today. Senator Conroy wants me to wind up at this stage but, Senator Conroy, out of courtesy I might seek to respond to some of those issues. The government's reforms to the tax system contain provisions to address the conversion of income to capital. For example, taxpayers must hold assets for 12 months before they become eligible for the discounted capital gain. In addition, the Australian Taxation Office is of the view that the existing provisions in part IVA of the income tax legislation are effective in curbing anti-avoidance activity.During the Senate committee hearings, Mr Reynolds noted that there is no evidence of such conversion in the United States. He also noted that, if it were easy to convert income to capital `it is kind of surprising that Australia ever collected any income tax prior to 1985—when in fact it collected quite a lot—because people could convert everything into capital gains and not be taxed at all'.The government's reforms, announced in two stages, are also revenue neutral. The government will introduce all the business tax changes announced in full. Despite all your remarks, Senator Conroy, my understanding is that the Labor Party is supporting this. I hope that you are not showing any signs of wavering here, or I will have to draw your remarks to the attention of Mr Crean.The government has already introduced into the parliament a number of integrity measures. These are contained in the integrity and other measures bill, which is currently before the Senate. In addition, the government has announced that it proposes to pass legislation dealing with the alienation of personal service income and non-commercial losses prior to 30 June 1999. The government also proposes to pass legislation on trusts in time for it to apply from 1 July 2001.These commitments will provide all taxpayers with certainty regarding their business affairs. Tying the passage of income tax cuts to the passage of other measures, as Senator Murray was proposing, would create great uncertainty when taxpayers are making decisions which have taxation implications. As the government has indicated, during the committee stage I will be introducing an amendment dealing with part IVA of the Income Tax Assessment Act. In conclusion, the government's reforms will deliver to Australians a more competitive, more effective, more equitable and less complex business tax system to see Australia into the 21st century. I commend the bills to the Senate chamber.10000ACTING DEPUTY PRESIDENTThe ACTING DEPUTY PRESIDENT (Senator Crowley)—The question is that these bills be read a second time.QD4BROWNSenator Brown—Madam Acting Deputy President, would you please have my opposition to this bill registered.Question resolved in the affirmative.Bills read a second time.10944NEW BUSINESS TAX SYSTEM (INCOME TAX RATES) BILL (No.1) 1999The bill.(Quorum formed)17:06:0010944Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I table a supplementary explanatory memorandum relating to the government amendment to be moved to the bill. The supplementary explanatory memorandum was circulated in the chamber on 29 November.17:06:0010944Brown, Sen BobSenator BROWNQD4TASAG00—I take this opportunity to declare an interest, as required by the standing orders, because I have property. I do not have a trust but I do have a property, which is germane to this legislation. I would draw the attention of other senators to the relevant standing order.Senator Kemp interjecting—QD4Brown, Sen BobSenator BROWN—I am coming right to that. During the second reading debate I canvassed a number of alternatives which are being taken up for business taxation measures in the United Kingdom and Europe. I wonder whether the government could give a response both as to the validity of those alternatives and as to how much this legislation will put those alternatives into the never-never—in other words, is it going to put tax reform, including those socially and environmentally positive alternatives that I put forward, out of contention for some years to come?17:08:0010944Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—The amendment that we are proposing to move is before the committee, and I am not proposing to move other amendments. We hear your concern. My only suggestion to you is that, if you want to influence legislation in this chamber, there are ways to do it. You have to do the yards; you have to go around and work with your colleagues and opponents to see whether you can garner support for your amendments. It is a habit of yours to flash into the chamber to move an amendment or to make a big statement and then leave. That is not the way that ground is usually made in this whole process, Senator Brown.In answer to your specific question, you like everybody else have concerns about the environment, but we do not always have an agreed method by which we reach those objectives. We note that you have particular matters that are of concern to you. The government is satisfied with the bill as it stands. I do not think I can add anything further, Senator Brown.In relation to the interest that Senator Brown declared, the fact is that most people in this chamber have some type of property, and I think that is generally assumed when we are debating these matters. Unless there is some other guidance from the chair that everybody has to stand up and declare an interest, I propose that we adopt normal practice on this.17:09:0010945Conroy, Sen StephenSenator CONROY3L6VICALP00—Like Senator Brown, I do not have a trust but I do have a property—I am not sure whether `the bank and I' count as my owning the property because the bank owns most of it. I declare that I have a property in joint ownership with the bank and I am prepared to declare that I definitely do not have a trust. I have a question for Senator Kemp: is the government satisfied that this amendment cannot be defeated by an argument about the particular year of income that the converted income would have been derived?17:10:0010945Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I thank Senator Conroy for giving us notice of the question. This is very efficient, I must say.3L6CONROYSenator Conroy—We have no choice with you.WW4Kemp, Sen RodSenator KEMP—I can see that my remarks on a previous occasion have worked. The opposition has asked whether the amendment applies where an amount of income is converted into a discounted capital gain in a different year of income to the year in which it was derived. I am advised that the question is yes.17:11:0010945Brown, Sen BobSenator BROWNQD4TASAG00—I return to the minister's previous contribution to point out that I am in this chamber for a much bigger component of the time than he is, but I do not think that is the matter we are debating here.WW4KEMPSenator Kemp—That is not what I said.QD4Brown, Sen BobSenator BROWN—The minister wants to go for the personal because he does not want to defend the reasonable propositions that I put during the second reading debate. Maybe that is because he was not here when I was giving those propositions and therefore cannot give an answer. I would ask him to go and look at the Hansard , because they are serious alternative propositions that have been brought in in the United States, Britain and Canada that give great advantage to the environment as well as to business and to job boosts. I think we deserve more than the cavalier riposte that the minister gave a moment ago. That is not a responsible way to treat this committee or the public who want to be able to hear reasonable answers to reasonable propositions brought before the parliament.I might add that we often hear the government saying that the Greens, the Democrats and others in the past have been negative. But when we bring forward a series of positive alternatives into a debate in the parliament, which is the right place for it to be done, what we get is that sort of negative swipe-back from the minister. If we are going to succeed in this committee debate, I would ask him to do better in answering such a reasonable request. I ask the minister to have a look at the alternatives I put forward concerning fringe benefit taxes, the waste recycling situation, anti-pollution measures and so on. I would be happy to supply them to him so that we can get a response.17:13:0010945Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I am always happy to respond to requests but I fear that Senator Brown may have inadvertently misled the chamber with his remarks. What I said was this: if you want to affect legislation going through the parliament, then just everybody else in this chamber has come to the conclusion that you have to sit down and talk. The Labor Party sat down and talked with us; the Democrats talked with us. You are practically the only person I can recall who has never come around and talked with us. If you will excuse me saying this, Senator Brown: if you get up in a speech on the second reading and make some big claims that you expect the government to take on board and immediately respond to, then it seems to me that you fail to understand the process of which you are a part. The mere fact you are in the chamber for a long period of time does not mean that you actually learn the way that legislation is brought forward.If you have genuine issues and concerns, Senator Brown, take some time out of the chamber, come around and talk to the ministers and public servants so that they can hear your views. You have asked me to look very closely at what you have put up. As you know, I am always a very courteous person. I am famous for my courtesy—VW4HERRONSenator Herron—If not for your modesty.WW4Kemp, Sen RodSenator KEMP—if not for my modesty. I will certainly look at them. If I can shed any light and provide any hope or comfort to you, I will contact you. On the other hand, you should take up the advice I have given you and do what everybody else in this chamber does and come around and talk to people.UNKNOWNThe TEMPORARY CHAIRMAN (Senator Crowley)The TEMPORARY CHAIRMAN (Senator Crowley)—Minister, I also suggest that it is particularly courteous to address your remarks through the chair. That is a gentle reminder.WW4Kemp, Sen RodSenator KEMP—I am very sorry.17:15:0010946Brown, Sen BobSenator BROWNQD4TASAG00—Madam Temporary Chairman Crowley, in response, the fact is that my door is open to Senator Kemp, your good self and any other senator at any other time. If he has difficulty getting down there, I can give him a corridor map to show him where it is. The proposals I canvassed in my speech on the second reading have been put before the Treasurer. It is not a case of not communicating with the government. These are cogent, sensible proposals that were put to the Treasurer and which the good senator ought to be able to respond to in here.17:16:0010946Murray, Sen AndrewSenator MURRAY3M6WAAD00—I assume that we are still dealing with the government's amendment EH258, or are we dealing with the bill as a whole?10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—I beg your pardon. I may not have made it clear to you. We are dealing with the New Business Tax System (Income Tax Rates) Bill (No. 1) 1999 , to which I believe you have an amendment. I thought you were ready to move it.3M6Murray, Sen AndrewSenator MURRAY—My apologies. As you were probably aware, I was out of the chamber.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—You are quite right, Senator Murray. I should remind you that the committee agreed to do this bill first, because there were proposed amendments to it, followed by the New Business Tax System (Integrity and Other Measures) Bill 1999 , for which we will also have a running sheet. If you are right to go, you can move your amendment.3M6Murray, Sen AndrewSenator MURRAY—We are dealing with the New Business Tax System (Income Tax Rates) Bill (No. 1) 1999 ?10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—Yes.WW4KEMPSenator Kemp—I raise a point of order. There may have been a bit of confusion. We fully accept the ruling of the Chair. When Senator Conroy asked me a question, he may have been relating it to the amendment the government had moved. I put on the record that, knowing Senator Conroy was thinking of the government's amendment, that is exactly how I responded. We are now going back to Senator Murray's amendment.3M6Murray, Sen AndrewSenator MURRAY—In the spirit of the debate that has gone on so far, I should again notify the chamber that I am a beneficiary of a family trust. That should be on the record numerous times, and I repeat it for the purposes of this debate.For the benefit of the chamber, I am dealing here with amendment No. 1657 to the New Business Tax System (Income Tax Rates) Bill (No. 1) 1999 . It is an amendment to clause 2, page 1, line 10.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—We are in concurrence.3M6Murray, Sen AndrewSenator MURRAY—Thank you. I move:Clause 2, page 1 (line 10), omit subclause (2), substitute: (2) Schedule 1 commences on a day to be fixed by Proclamation. The day must not be earlier than the day on which the Attorney-General gives the Governor-General a written certificate stating that the Parliament has passed, on or before 30 June 2000, a law to: (a) restrict the extent to which a person may offset losses from non-commercial activities against other income for taxation purposes; and (b) limit the ability of a person to avoid taxation by diverting income earned from personal services to an entity. (3) Schedule 2 commences on a day to be fixed by Proclamation. The day must not be earlier than the day on which the Attorney-General gives the Governor-General a written certificate stating that the Parliament has passed, on or before 30 June 2001, a law to provide for the consistent taxation treatment of entities, including trusts and companies.These are two deceptively simple clauses which are absolutely critical to ensuring that the government's stage 2 proposals are locked in.It is not that in discussing these matters with the government the Democrats took the view that the Treasurer did not want to fulfil these outcomes. The Democrats fully understand that, until the legislation is tied in, the Treasurer will be under enormous pressure, as will be his party, over the next few months by all those interest groups, which will find that the integrity measures in the package will bite them very hard. If you have pressure from your back bench and within the cabinet from various constituencies to adjust a package and the consequence of that adjustment would be a significant revenue reduction or a delay in revenue in a circumstance where revenue neutrality and the revenue flow must be assured, it is absolutely vital that you ensure such events cannot occur.We have essentially proposed a quid pro quo. Tax cuts cannot take place unless and until anti-avoidance legislation is passed. In the case of schedule 1, it would, firstly, restrict the extent to which a person may offset losses from non-commercial activities against other income for taxation purposes and, secondly, limit the ability of a person to avoid taxation by diverting income earned from personal services to an entity. In other words, company tax rate cuts would not occur unless a law is passed on or before 30 June 2000, in seven months, to fulfil those two outcomes. Essentially, the Democrats are trying to stiffen the ability of the Treasurer and the cabinet to resist the immense forces that exist to weaken these provisions. It is a deceptively simple but very effective device to ensure that anti-avoidance measures will be delivered in full.The second part of that amendment refers to the consistent taxation treatment of entities, including trusts and companies. The government has quite properly indicated—and it did so some time ago—that it believes it should delay the implementation of those measures for consistent taxation treatment—otherwise known as taxing trusts as companies—until 30 June 2001, because of the whole raft of other tax implementation measures it has to introduce. So we do not have a problem with the timing. What we do have a problem with is if those measures are watered down. Therefore this amendment would prevent the 30 per cent cut in company tax rolling in unless there were a written certificate stating that the parliament has passed, on or before 30 June 2001, that law. In other words, the centrepiece of the corporate tax cut could not be delivered unless these two areas of anti-avoidance were delivered in full.I know that the government, the Treasurer and the cabinet are strongly committed to it, but it is absolutely no secret—because all of us are subject to the lobbying that is going on—that the pressure to water this down is going to be enormous. Frankly, I would hate to see the Treasurer put in the position where such pressure told on him. This amendment would prevent that happening. I therefore commend it to the committee.17:23:0010947Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I listened carefully to the remarks of Senator Murray. Let me say by way of introduction that Senator Murray, in this tax package as in other tax measures before the chamber, has always sought to play a constructive role. It is true that Senator Murray and I do not agree from time to time; and I regret to indicate, Senator Murray, that this is one of those times when I do not agree with you and I will not be supporting you on that matter.As Senator Murray knows, and as I said in my second reading debate remarks, the government's reforms were announced in two stages and are revenue neutral. If you read carefully the Ralph report, in the chairman's remarks Mr Ralph made it very clear that he believed that the figuring was very conservative. The government has already introduced into the parliament a number of integrity measures, and these are contained in the New Business Tax System (Integrity and Other Measures) Bill 1999 , which is currently before this chamber. We have announced that we are proposing to pass legislation dealing with the alienation of personal service income and non-commercial losses prior to June 30 1999. The government also proposes to pass legislation on trusts in time to apply from 1 July.One of the reasons the government is anxious to have these bills through the final sitting of the parliament this year is because the business community is wanting certainty. The business community is entitled to expect certainty; these are very major changes, part of the building blocks of a major new tax system for this country. The commitments we have made will provide all taxpayers with certainty regarding their business affairs. The way that you have sought to do that in this amendment by tying the passage of income tax cuts to the passage of other measures would, I believe, create uncertainty when taxpayers are making decisions which have taxation implications.Senator Murray, you do not have to worry about the strength of the Treasurer. Let me make that very clear. You do not have to worry for one moment about that. The Treasurer has shown enormous strength and capacity to bring forward this massive reform of our tax system. Above all, you should not worry that he will not have the strength to see this through. I can assure you he will.17:27:0010948Conroy, Sen StephenSenator CONROY3L6VICALP00—I appreciate Senator Murray deferring to me. I am shocked and horrified to hear that Senator Murray is worried about the strength of the Treasurer. This is the party that took the Treasurer at his word on the GST and on how we were going to have a simpler tax system. We have had 1,000 GST amendments so far. The GST beat us to the millennium. With 1,000 GST amendments so far, we have got a simpler tax system, thanks to Senator Murray and Senator Allison! We have Senator Allison, who agreed to pass the GST without knowing where a conurbation was. We are still waiting, five months later. Senator Allison, the Treasurer's word was good enough for you, but five months later we do not have a clue from Senator Kemp where the conurbations begin and end. But I have got faith in the Treasurer—like you do, Senator Allison. Those conurbations are very important, and where those lines are going to be drawn on rural and regional Australia are very important. But you have taken Mr Costello's word and Senator Kemp's word, and we are prepared—WW4KEMPSenator Kemp—You are opposed to them.3L6Conroy, Sen StephenSenator CONROY—I do not think we are opposed to them.WW4KEMPSenator Kemp—You are opposed to the diesel tax.3L6Conroy, Sen StephenSenator CONROY—No, we are not. You have misled the chamber there, Senator Kemp. As you well know, we are voting for your conurbations—wherever they may be. I am disappointed to hear that Senator Murray is worried about the strength of the Treasurer in terms of undue lobbying, because he has been prepared to sign up on the Treasurer's word before, as has Senator Allison. I am shocked that they could possibly cast aspersions on the word of the good Treasurer and the good Assistant Treasurer. I am looking forward to Senator Kemp's giving—and I am sure that he has no problems whatsoever with this—the sort of access that he gave to the Democrats' advisers for the drafting of those amendments, in making sure that the legislation which is yet to come will comply with your commitments to us in writing. I am sure that Senator Kemp will be prepared to give us the same sort of access.WW4KEMPSenator Kemp—I am always happy to talk to you, Stephen.3L6Conroy, Sen StephenSenator CONROY—I am just looking for you to put on the public record, as you have with the letter, Senator Kemp, that our advisers, Mr Fry and Mr Fassina—who are well known to you and are people of good spirit—are going to have the same sort of access to the drafting public servants that was given to the Democrats previously. I am hoping that you will be able to guarantee us that sort of access, Senator Kemp—I would not want to be worried, as Senator Murray is, about these amendments. I am looking forward to perhaps Chris Fry being in the A Current Affair chat room to answer questions about helping you with that drafting.I am not worried about Mr Costello's word on this. We have his letter. I know that Senator Murray and Senator Allison always take at face value Mr Costello's word when he gives it. We do not feel there is a need for Senator Murray's amendment because we have the written word of the Treasurer. I know that Senator Murray takes the written word of the Treasurer very seriously, just as we do on this side of the chamber. If he were for a moment to renege and cave in to those trust-holding spivs on his back bench, Senator Murray would be outraged, as we would.For our part, the opposition will not be supporting Senator Murray's amendments. Like the Democrats, we will be watching closely to ensure that both the Treasurer and Senator Kemp live up to their word on this. Just as you are involved with him in those discussions on trust about where a conurbation is, we were told recently, Senator Kemp, that your office was in charge of those negotiations. That is what the public servants informed us. They said that they could answer no questions on this because they were being done in your office. Like Senator Allison and Senator Murray, who have taken you on trust on this, I know that we can take the Treasurer on trust. We have his written statement on it.17:31:0010949Murray, Sen AndrewSenator MURRAY3M6WAAD00—I know that this amendment unashamedly attempts to lock in the government but the Treasurer is aware—as is every senator in this place—that it is numbers that count. If the numbers turn against you, you cannot get your amendments up or you cannot proceed with legislation as you had hoped. If the numbers turn against the Treasurer on the issue of alienation of personal service income, non-commercial losses or taxing trusts as companies, it would help greatly to have a lock-in device such as we have put here. It is no reflection on either the Treasurer's courage or determination, and he has an abundance of both—3L6CONROYSenator Conroy—And Senator Kemp.3M6Murray, Sen AndrewSenator MURRAY—And Senator Kemp—and Senator Conroy, whilst we are at it. The fact is that this lock-in device would help enormously. Today, in the Sydney Morning Herald , under the headline `Beazley: less tucker, more ticker', that very experienced journalist Alan Ramsey had the following to say about these matters.3L6CONROYSenator Conroy—It was in Saturday's.3M6Murray, Sen AndrewSenator MURRAY—My apology. For the Hansard , it was in the Sydney Morning Herald of 27 November 1999 at page 49. Alan Ramsey used language which, if I were the victim, I would find quite strong. He refers to the Labor Party giving in with `barely a whimper' and with `only four Labor MPs actually raising their voices in protest before Simon Crean, the great appeaser and former ACTU leader' went to see the Treasurer. He says:It was no deal at all, just a shameless sell-out of ALP principle, something Labor has been good at in the `90s.Later on he also says:What does the decision say about the roly-poly Beazley's political courage?I must say that I do not agree with those offensive remarks about somebody's physique, but I will go on. Ramsey continues:Well, by Thursday morning, following the Wednesday night exchange of letters between Costello and Crean, which Crean pretends `guarantees' the Howard Government is locked into introducing legislation to close off tax loopholes, particularly in the use of family trusts, one scathing reaction in the parliamentary lobbies was a proposed Beazley T-shirt that would say, simply but brutally, `Less tucker, more ticker.'`Pragmatism has its price,' says the correspondent. He then goes on to say:The government has got the decision it wanted, without any of the haggling the Democrats were demanding. Crean was a ridiculously cheap buy. The Government had to give Labor nothing except some words on paper. We'll see what those words are worth, but not before the bulk of Costello's business tax measures goes through Parliament. That's the real rub. Labor won't know if it's being conned until it's too late.I will not go on with that scathing article, but the fact is that, when the Democrats negotiate a deal, not only is it on paper, not only is it legislated, not only does the government hold up its end of the bargain—3L6CONROYSenator Conroy—What about the conurbations?3M6Murray, Sen AndrewSenator MURRAY—Not only do the Democrats hold to their end of the bargain, but along comes Labor being described as the `great appeasers'. Senator Conroy, I know you would have done better. I know about your skills as the right-wing factional leader in Victoria. You would have done much better than the shadow Treasurer. This is no slur on you, Senator Conroy. I heard your criticisms of the package in the committee. I know what your true feelings are and you are forced to sit here in these circumstances and defend the indefensible. It is only your great sense of humour and your immense character that enable you to put up with what must be a humiliating and embarrassing experience. I am sad that I have to read these things out as I go along.We go now to Margo Kingston in the Sydney Morning Herald of 27 November 1999, at page 39. What does Margo Kingston say? She says:Even some tax lawyers were flummoxed by Labor's cave-in, wondering why the party had locked itself out of exploiting the inevitable distaste of small business and even PAYE taxpayers when the complexity and inequity of the tax changes hit them in practice.In the Age of Monday, 29 November 1999, at page A15, Kenneth Davidson uses that wonderful term used earlier by Senator Conroy when he referred to `spiv capitalism'. This is what Kenneth Davidson says:Once more the ALP leadership has yoked its future to spiv capitalism and betrayed the interests of the people to whom it must look for support if it is to gain office. The big winners from the cut in the capital gains tax rate will be the speculators in the property and share markets who are prepared to finance their activity out of borrowings.I have yards of these kinds of quotes. All I want to say, Senator Conroy, is that I know that in my place you too would have negotiated this lock-in device. I know that secretly, in your right-wing Victorian factional heart, you would support this, but I know that as a matter of honour you cannot and that you must stand by your Labor Party executive. The distractions about conurbations and so on will not get you off the hook, Senator Conroy. This is not good. You have not done a good deal. Fortunately, you did not do it personally.I conclude by once again commending the government on being able to get one over the Labor Party and, at the same time, I recom mend our amendment, which actually does a better job of locking in the government.17:37:0010950Conroy, Sen StephenSenator CONROY3L6VICALP00—I feel the need to put a couple of historical matters on the record. That last contribution comes from the party that was attempting to negotiate on the basis of promising the government they could pass the bill before Christmas. Senator Murray and the Democrats have stated publicly for the last six weeks that they believed these bills could be passed before Christmas. What we are seeing in this chamber this afternoon is Senator Murray attempting to rewrite history. That is okay, and Senator Murray's sense of humour is to the fore when he attempts to tease the Labor Party about the passage of this before Christmas because it is he who gave the commitment for all of the last six weeks that we could vote on and pass these bills before Christmas.Senator Murray well knows that, no matter what deal he was attempting to reach with the government on this, he was prepared to countenance the separation of the top marginal rate from the income derived from capital. He may stand up and try to be holier than thou and say, `We would never have sold out for such a deal.' Senator Murray is willing to argue that he accepted that there was to be such a deal but that he was prepared to haggle about the rate, whereas I say—and I said this in the debate on the second reading—that this debate is about the effective marginal rate and the effective capital gains tax rate. Senator Murray tries to pretend that he would have got a better deal when he gave a commitment to pass this without having seen the legislation.Senator Murray's position was, `I will vote for this if you do the deal with me'—without seeing the legislation himself. In attempting to rewrite history he is exposed on that issue. It is only Senator Murray's sense of humour that makes me be moderate in my response to him attempting to suggest that we have caved in on this. This is not the case and Senator Murray can seek to rewrite history as often as he likes this afternoon, and I am sure he is going to.Hopefully, Senator Allison will tell us where the conurbation is, five months after the legislation is passed, and hopefully we may get to see what a conurbation is some time before 30 June 2000. I am not confident because I, unlike Senator Allison—I know the responsibility for this has now passed on from her—had to sit in front of some public servants who informed me that they could not answer one single question on where the conurbations were because Senator Kemp's office was in charge of it. Even the Democrats' own senators had to sit there and accept that there was no point in asking a question on this.We have received the commitments and the government's amendment on this satisfies us that they are serious and that they will deliver, that they will not cave in to those spivs on their backbench who have engaged in trusts and who are terrified about having to pay a bit of tax, because we are going to be taxing trusts as companies for the first time. That is what we have achieved in this.WW4KEMPSenator Kemp—You did not achieve that: that was our policy.3L6Conroy, Sen StephenSenator CONROY—That is what we have achieved by forcing the government to sign up to this amendment, which they are now moving, to ensure they keep their word. As I said, I am hoping that Senator Kemp will rise in a moment to guarantee that my colleagues Mr Fry and Mr Fassina are able to work on those drafting instructions, just as your colleagues were entitled to sit there in the early stages, before food was in or out, and work through whether bread was or was not in—pumpernickel as opposed to something else. What did happen to that legislative bread recipe? I do not know; the old Tip Top loaf is good enough for me but apparently not good enough for the Democrats. Anyway, I am looking forward to Senator Kemp's contribution on this.17:43:0010951Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—It is very nice for you to look forward to me, but we are, I think, trying to finalise Senator Murray's amendment before we presumably return to our amendments. I am happy to defer my remarks until we deal with the amendment that is before the chamber.Question put:That the amendment (Senator Murray's ) be agreed to.17:47:00The committee divided. (The Chairman—Senator S. M. West)10Allison, L. Bartlett, A. J. J.Bourne, V. *Brown, B.Greig, B. A. Lees, M. H.Murray, A. Ridgeway, A. D.Stott Despoja, N. Woodley, J.40Bishop, T. M. Brownhill, D. G. C.Campbell, G. Carr, K.Collins, J. M. A. Conroy, S.Cooney, B. Crossin, P. M.Crowley, R. A. Denman, K. J.Eggleston, A. Evans, C. V.Ferguson, A. B. Ferris, J.Forshaw, M. G. Gibbs, B.Herron, J. Hogg, J.Hutchins, S. P. Kemp, R.Knowles, S. C. Lightfoot, P. R.Ludwig, J. W. Mackay, S.Mason, B. J. McGauran, J. J. J.McKiernan, J. P. McLucas, J. E.O'Brien, K. W. K. *Parer, W. R.Patterson, K. C. L. Payne, M. A.Reid, M. E. Sherry, N.Tambling, G. E. J. Tchen, T.Tierney, J. Troeth, J.Watson, J. O. W. West, S. M.Question so resolved in the negative.Bill agreed to.NEW BUSINESS TAX SYSTEM (INTEGRITY AND OTHER MEASURES) BILL 1999The bill.17:50:0010951Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I move:(1) Schedule 9, page 105 (after line 3), after item 20, insert:20A At the end of section 177C Add: (4) To avoid doubt, paragraph (1)(a) applies to a scheme if: (a) an amount of income is not included in the assessable income of the taxpayer of a year of income; and (b) an amount would have been included, or might reasonably be expected to have been included, in the assessable income if the scheme had not been entered into or carried out; and (c) instead, the taxpayer or any other taxpayer makes a discount capital gain (within the meaning of the Income Tax Assessment Act 1997 ) for that or any other year of income. (5) Subsection (4) does not limit the generality of any other provision of this Part.The ATO is of the view that the existing anti-avoidance provisions in part IVA of the Income Tax Assessment Act 1936 are effective in curbing anti-avoidance activity. This government has made it quite clear that it will not tolerate tax avoidance. The government is of the view that this amendment will not add to the anti-avoidance provisions and, most importantly, neither will it detract from those provisions. So the government is happy to move this amendment.17:52:0010952Murray, Sen AndrewSenator MURRAY3M6WAAD00—I have two questions for the Assistant Treasurer. This might be a really difficult question, but is this the only amendment that arises from the extensive, lengthy, detailed and difficult negotiations that the shadow Treasurer had with the real Treasurer? That is question one.Question two is: when I read the explanatory memorandum, it seems to me to be saying, `You already had all these elements in anyway, but it doesn't hurt to have a little more reinforcement.' Is that a correct reading of this?17:53:0010952Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator Murray, in relation to your first question, this is an amendment which followed the constructive discussions the government had with the Labor Party. The Labor Party did feel this was very important.3M6MURRAYSenator Murray—Is it the only one?WW4Kemp, Sen RodSenator KEMP—I think this is the only one, Senator.HX5WOODLEYSenator Woodley—Some deal!WW4Kemp, Sen RodSenator KEMP—I shall ask the Labor Party to speak for themselves; I do not purport to speak for the Labor Party. Your second question was answered in my remarks when I moved the amendment: briefly, the ATO is of the view that the existing anti-avoidance provisions in part IVA of the Income Tax Assessment Act are effective in curbing anti-avoidance activity.17:54:0010952Murray, Sen AndrewSenator MURRAY3M6WAAD00—Just following up on that question: are you telling me that the shadow Treasurer having seen the drafting instructions and this legislation and having considered them, just one amendment emerged out of that? I guess the inference is that the bills are perfect. Is that right?17:54:0010952Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—We think the bills are pretty good, actually. That is the truth or else we would not have brought them before this chamber. I do not want to recap the history; I think the history is well known. Following those discussions, the government agreed to move this amendment.17:55:0010952Conroy, Sen StephenSenator CONROY3L6VICALP00—Could I seek clarification through you, Madam Temporary Chairman. How many amendments have the Democrats moved in total to these bills? Has it reached double figures?HX5WOODLEYSenator Woodley—Can't you count?3L6Conroy, Sen StephenSenator CONROY—Senator Woodley, it is a pleasure to see you in the chamber. I unfortunately missed your earlier contribution—3M6MURRAYSenator Murray—12.3L6Conroy, Sen StephenSenator CONROY—12! An entire 12! After all those negotiations you have been having with the government, the best you could manage was 12. You have got a thousand coming and we are told there are maybe another thousand to come on the GST. I know that is a proud record, and I know you would want to see that sort of simplicity added to the business tax reform that you have given to the GST and those small businesses in this country!But, Senator Murray, you have distracted me from Senator Woodley's interjection. I am sorry that I was not here for your earlier contribution, Senator Woodley. I am trying to get a copy of the Hansard so I can peruse your speech.Senator Woodley interjecting—3L6Conroy, Sen StephenSenator CONROY—If you have a copy you can give me, I would appreciate that so that I could respond. Unfortunately, I was not alerted by you in advance that you were going to mention me in your speech, which is the customary practice. I am disappointed that you did not let my office know that you were going to mention me so that I could have come in and responded at the time.I am trying to clarify that there were only 12 amendments. After the hours and hours and hours of negotiations that took place between the Democrats and the government on this matter, Senator Murray has only 12 amendments to the four bills that we are talking about. But we perhaps could have the thousands that you have inflicted upon each other in the cause of tax simplicity in the GST.I rise to support this particular amendment. In amongst our mirth on these issues, I know that you, Senator Murray, are genuinely concerned and do share my concerns about the tax avoiders and the spivs and those who will seek to find a way around this legislation. It is disappointing—as you, Senator Woodley and I know—that there are people out there who are going to sit down and try to work their way through this bill to find ways to confuse some poor judge in the future about the intent of this parliament. This is an amendment that makes it absolutely clear that the intent of this parliament is to make sure that people do not move into converting income to capital for the purposes of avoiding this tax.I know that the Democrats share with us a desire to make sure that that does not happen. I am not sure if you indicated you were going to be voting for or against this, but I would hope you would join us in making sure this amendment goes through unanimously so that any judge in the future who is ruling on an attempt by those tax avoiding spivs to work their way through this legislation is under no illusion that this parliament unanimously set out to stop this form of tax avoidance, to put an end to it.So I am looking forward and hoping that you will see your way to support this, Senator Murray. You may believe that we need to work through a thousand amendments to tighten it up to ensure that it cannot be avoided. But after careful and considered drafting by my colleagues and advisers, Mr Fry and Mr Fassina—ZW4SHERRYSenator Sherry—Esteemed.3L6Conroy, Sen StephenSenator CONROY—Thank you, Senator Sherry. We have outstanding assistance. They are comfortable and confident that this amendment will meet those tests. We look forward to your support for this—to send the message to the broader community that tax avoidance and tax minimisation in this form will not be acceptable. It will not find its way through the courts. It will not find some judge willing to tick off the blatant and outrageous behaviour that some of these spivs have been involved in in the past.Amendment agreed to.18:00:0010953Murray, Sen AndrewSenator MURRAY3M6WAAD00—by leave—I move amendments Nos 2, 3 and 13 on sheet 1656:(2) Schedule 9, item 6, page 87 (table item 3, 2nd column), omit "½", substitute "45%".(3) Schedule 9, item 6, page 87 (lines 8 to 11), omit "50%" (wherever occurring), substitute "45%".(13) Schedule 9, item 13, page 98 (line 32), omit "50%", substitute "45%".The amendments referred to on sheet 1656 relate to capital gains tax changes. I think we should spell out right from the beginning that, regardless of the complex consequences of changing capital gains, the actual mechanisms for doing that are relatively limited. For instance, you can change rates, you can change the holding period, you can introduce a stepped rate, or you can distinguish by either the investor type or the investment. It is a fact that the Labor Party model, which is being amended by the government, and the government model both target investment and investors and both rely on particular levels of rates. The critical difference with the two models is that the government's proposal has taken out averaging and taken out indexation.I think it is true that over the experience of the CGT, the Labor Party have come to the view, as have the Democrats, as have the government, that averaging has in fact proven to be an anti-avoidance device and has not been a healthy tax concession mechanism. Indexation, on the other hand, has had vast numbers of followers. The removal of indexation and averaging will, despite the halving of capital gains tax for individuals, result in some low return, low risk investors—many of them among self-funded retirees—actually paying more tax, and it will force them in many respects to consider higher return and higher risk activities if they want to avoid capital gains tax cuts which are in fact detrimental to them. The consequence of that has been confusion in the marketplace of those affected by individual capital gains tax cuts because in some respects these changes result in a higher real taxation than some people were likely to experience under the old regime.However, the chief criticism of capital gains tax cuts has related to the windfall profits and the windfall opportunities that could be a result for, particularly, high income earners. That has required, from the point of view of those concerned with these policies, a redesign of the proposed cuts. I know that Senator Conroy himself took a great interest in these matters—and I will not disclose our private conversations, because that is not appropriate—but the fact is that the committee were concerned that the actual design of the capital gains tax cuts was not the most appropriate.One of the potential measures which I know the Treasurer was previously on the record as being interested in, which I know the Labor Party were on the record as being interested in and which we ourselves were interested in, was the concept of a threshold—in other words, a dollar amount which is capital gains tax free before you get into those gains which have to be assessed. I am told from witnesses that in England these threshold amounts can be as high as £7,000 to £8,000—I forget the exact figure, but in conversion terms it is about $16,000. So the Labor Party's original recommendation of, say, a $1,000 threshold and the Treasurer's original interest in that area attract our interest as well. Effectively, the consequence of that is that it allows for a progressive capital gains tax rate. So that was one measure we were interested in which was not taken up.The second opportunity that we saw being available which interested us very much is the ability to put a progressive rate in—in other words, to give the full capital gains tax cut, that would be the 50 per cent cut, to individual income tax payers earning below $50,000 a year, and then perhaps move on to a 40 per cent rate, as an example, further up. That idea attracted us very much and that was a further consideration.A further consideration for us, which I will come to later but I will deal with the remarks now, with the permission of the chamber, is the holding period. Essentially it is the view of the Democrats that you want to have a capital gains tax regime which encourages longer term productive investment which is dedicated to the creation of innovative productive businesses or enterprises, creation of wealth and creation of jobs for the nation as a whole. Short-term encouragement for speculative or indulgent purposes should be avoided. We are concerned that the model being offered has those bad designs in it and produces a situation of inequity. I will frankly admit that the reduction of the rate to 45 per cent does not cover all the criticisms you can make of this capital gains tax model. However, you have to try to deal with something which would have a reasonable chance of getting up in this chamber. It does address it far better than the existing proposed model.But I do not make these remarks to create some kind of debating point. If we discover later on or if the government or opposition—if they get into government—discover that the capital gains tax model does not work effectively, that it encourages a slippage from income to capital, that it results in speculative and indulgent investment and that it does not produce the outcomes for the economy which the government would desire, then I think we should return to some of the other model features which have been quite productively exposed in the committee inquiry and in previous debates by both the Labor Party and the coalition. That is the purpose of making those remarks.Allied to the reduction to 45 per cent is, however, a realisations consequence. If you reduce a rate, you have two effects: you cut down the concession given to people who experience the benefit of individual capital gains tax cuts but you also reduce the realisations. Nevertheless, I should point out for those who are concerned with revenue neutrality that cutting this rate to 45 per cent does in fact deliver hundreds of millions of dollars over a five-year period to reduce what we regard as the revenue hole in the proposed package, which I outlined in my second reading debate speech. In that framework, knowing that I do not have the numbers, I introduce the recommendation that the capital gains tax cuts should be reduced from 50 per cent to 45 per cent on equity grounds and on revenue realisation grounds. I commend amendments Nos 2, 3 and 13 to the chamber.18:09:0010955Conroy, Sen StephenSenator CONROY3L6VICALP00—I thank Senator Murray for that last contribution. I think that was a particularly interesting and informative contribution. I am glad Senator Woodley is still in the chamber. In particular, I wanted to make the point that Senator Murray honestly described that all the criticisms he was making of the package and the Labor Party's support for the package were equally valid for all of the points and the alternative packages that he was putting forward. That is a very fair and honest self-assessment of his own package. In particular, Senator Woodley, I draw your attention to Senator Murray's own words. He said that the very package that the Democrats were attempting to put up bears all the criticisms of the package he is now criticising. In fact, there is an argument that says that 90 per cent of the items in this package and the cuts to capital gains tax that he is criticising were being achieved under the package that he was going to be asking you to support. He made a very honest and valid contribution.If I could divert briefly for a moment, I am disappointed in the way Senator Murray said that if the coalition Liberals `had a heart'—I think they were the words you used, Senator Murray—the Labor Party in those circumstances would never achieve government. I am disappointed in the sense that I think that it probably reflects what are your genuine values and beliefs and that you take the view that the coalition appear to be the only parties that can manage government and finances. I guess that has been at the heart of driving your position within the Democrats. It is disappointing to see that you have such a closed-minded view on the capacity of the Labor Party to manage and to administer.Senator Woodley, I urge you to have a read of Senator Murray's speech on that particular debate in Hansard. He said he believed that all the Liberal Party needed to do to stay in government forever was have a bit of heart. I do not know whether you would share that view. I do not know whether the Democrats at large would share that view; maybe you do. I just wanted to put on the record my genuine disappointment, Senator Murray, that you have that view. I will continue to work with you and on you on financial matters to try to convince you that this is not the case and that, far from needing heart, the Liberal Party needs far more than just heart to be fit to govern permanently. I will battle away and work on you in the same way that you promised to battle away and work on me on those matters.We will not be supporting your amendments. I repeat that all of the criticisms you have made of the package we are supporting the government on are valid in every way for your own package. I do not believe that your position is an improvement on the position that we currently have. We have the commitments from the government. We have the commitments from the Treasurer. We have in writing the commitment that he will implement option 2 in its full intent. We believe that a number of amendments which we have already moved and the government is moving in conjunction with us will achieve our stated goal of ensuring revenue neutrality.18:14:0010955Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—A number of amendments have been moved by Senator Murray. Senator Murray at one stage reflected on having a progressive capital gains amendment. Is that right?3M6MURRAYSenator Murray—I was saying that it was one of the options.WW4Kemp, Sen RodSenator KEMP—I make the obvious point that I do not think the amendments which have been moved address the particular issue that Senator Murray raised. In relation to the proposal to reduce the 50 per cent CGT exemption to a 45 per cent exemption, in a sense the amendment—although we will differ over the 50 per cent or the 45 per cent—confirms the validity of the government's approach. Such a minor change, apart from complicating the calculations for taxpayers, is only a small change to an excellent initiative by the government. In some ways, we would take comfort in the fact that it is a practical acknowledgment of the soundness of that initiative. We will not be supporting that amendment. Equally, the amendment relating to the exemption being available only if the assets are held for two years rather than 12 months would increase the lock-in of capital investment, and it would prevent the easy flow of funds to more efficient investments. We do not believe it is an economically sound measure, so we will not be supporting that measure either.18:16:0010956Murray, Sen AndrewSenator MURRAY3M6WAAD00—Every now and again, Minister—through you, Madam Chair—I am reminded you are indeed the Assistant Treasurer. For somebody who deals in billions, hundreds of millions might be minor and small change. But our estimation is that this 45 per cent over five years would have raised $458 million, so I would not count it as minor. Question put: That the amendments (Senator Murray's ) be agreed to.18:21:00The committee divided. (The Chairman—Senator S. M. West)9Allison, L. Bartlett, A. J. J.Bourne, V. *Greig, B. A.Lees, M. H. Murray, A.Ridgeway, A. D. Stott Despoja, N.Woodley, J.39Bishop, T. M. Brownhill, D. G. C.Campbell, G. Carr, K.Collins, J. M. A. Conroy, S.Coonan, H. Cooney, B.Crossin, P. M. Crowley, R. A.Denman, K. J. Eggleston, A.Evans, C. V. Ferguson, A. B.Forshaw, M. G. Gibbs, B.Hogg, J. Hutchins, S. P.Kemp, R. Knowles, S. C.Ludwig, J. W. Mackay, S.Mason, B. J. McGauran, J. J. J.McKiernan, J. P. McLucas, J. E.O'Brien, K. W. K. Parer, W. R.Patterson, K. C. L. Payne, M. A.Quirke, J. A. *Reid, M. E.Schacht, C. C. Tambling, G. E. J.Tchen, T. Tierney, J.Troeth, J. Watson, J. O. W.West, S. M.Question so resolved in the negative.18:24:0010956Murray, Sen AndrewSenator MURRAY3M6WAAD00—by leave—I move Democrat amendments (1) and (4) to (12):(1) Schedule 9, item 2, page 85 (line 5), omit "12 months", substitute "2 years".(4) Schedule 9, item 13, page 91 (line 12), omit "a year", substitute "2 years".(5) Schedule 9, item 13, page 91 (line 26), omit "12 months", substitute "2 years".(6) Schedule 9, item 13, page 91 (line 29), omit "a year", substitute "2 years".(7) Schedule 9, item 13, page 92 (lines 23 and 24), omit "12 months ", substitute "2 years ".(8) Schedule 9, item 13, page 92 (line 27), omit "12 months", substitute "2 years".(9) Schedule 9, item 13, page 92 (lines 29 and 30), omit "a year", substitute "2 years".(10) Schedule 9, item 13, page 93 (line 21), omit "12 months", substitute "2 years".(11) Schedule 9, item 13, page 96 (line 6), omit "12 months", substitute "2 years".(12) Schedule 9, item 13, page 96 (line 18), omit "12 months", substitute "2 years".Amendments (1) and (4) to (12) on sheet 1656 refer to the substitution of `two years' for the period of `12 months'. Essentially, a `holding period', until it expires, is a period in which someone may not sell an asset and achieve a capital gains tax concession. The intention of moving this period out to two years is to address the issue which I outlined in my earlier remarks, and that is the need to encourage medium to longer term activity rather than shorter term speculative and indulgent activity. It is a judgment call because it is difficult to tell at what stage behavioural impacts come in as a result of such changes. The advice from experts in this area, such as Professor Krever, Professor Evans and others who understand this field well, is that the extension of holding periods reduces the opportunities for speculative and indulgent gains. In that respect, it contributes to better and more productive policy outcomes in changing the tax model. I think, in view of my earlier remarks, I do not have to say much more in introduction or explanation. I commend the amendments to the chamber.18:27:0010957Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—You alluded to these amendments in your earlier remarks on the previous amendment and I have already responded to them, so I will not detain the chamber by again going over the arguments. We find on this occasion, Senator Murray, that we are unable to support you.18:27:0010957Conroy, Sen StephenSenator CONROY3L6VICALP00—The opposition will be opposing the amendments. As Senator Murray has indicated, these are matters of judgment and, in our judgment, the amendments that we have achieved through our negotiations satisfy us as to the integrity with which the government is willing to pursue tax avoidance. So we will not be supporting these amendments. We are satisfied that, to the best of our judgment and based on the best advice we have received, the issues that Senator Murray has raised can be dealt with under the existing legislation as amended in consultation with the Labor Party. Question put: That the amendments (Senator Murray's ) be agreed to.18:32:00The committee divided. (The Chairman—Senator S. M. West)9Allison, L. Bartlett, A. J. J.Bourne, V. Greig, B. A.Lees, M. H. Murray, A.Ridgeway, A. D. Stott Despoja, N.Woodley, J.40Bishop, T. M. Brownhill, D. G. C.Calvert, P. H. Campbell, G.Collins, J. M. A. Conroy, S.Coonan, H. Cooney, B.Crossin, P. M. Crowley, R. A.Denman, K. J. Evans, C. V.Ferguson, A. B. Ferris, J.Forshaw, M. G. Gibbs, B.Hill, R. M. Hogg, J.Hutchins, S. P. Kemp, R.Knowles, S. C. Ludwig, J. W.Mackay, S. Mason, B. J.McGauran, J. J. J. McKiernan, J. P.McLucas, J. E. O'Brien, K. W. K.Parer, W. R. Patterson, K. C. L.Payne, M. A.Quirke, J. A. *Reid, M. E. Schacht, C. C.Sherry, N. Tambling, G. E. J.Tchen, T. Troeth, J.Watson, J. O. W. West, S. M.Question so resolved in the negative.Sitting suspended from 6.35 p.m. to 7.30 p.m.19:30:0010957Murray, Sen AndrewSenator MURRAY3M6WAAD00—By leave of the chamber, I wonder whether I could make a remark for a minute or so. No doubt the government and the opposition have been approached about certain drafting difficulties with the legislation. One of those difficulties has been brought to my attention, but I feel it is too complex to deal with in this debate now. I am quite certain that the government may have to reconsider some of the provisions in this legislation as it goes along. Nothing is ever perfect, as we know. I refer to the Investment and Financial Services Association which has what it thinks is an unintended consequence, resulting in a taxation disadvantage being conferred upon some of the participants or unit holders in some of the businesses it is attached to.I raise this matter because I think that IFSA may well have a case. But it is a complex case and, frankly, it would be better off being resolved with government out of the stress of getting a bill through in terms of consideration. So this is just really a question to you, Minister, with the forbearance of the opposition. This matter does form part of this particular bill, the New Business Tax System (Integrity and Other Measures) Bill 1999 , and I would put the question to you: are you aware of IFSA's problem? If not, would it be in order for me to raise those issues with you separately for your consideration?19:32:0010958Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I thank Senator Murray. I had a very brief meeting with IFSA today. I think in the last couple of days it has put out a press release on this matter. IFSA came to see me—3L6CONROYSenator Conroy—To straighten the matter up.WW4Kemp, Sen RodSenator KEMP—Senator Conroy, I think you should contain yourself briefly; this is a serious question. I have sought further advice on the matters that have been raised. But I agree with Senator Murray: I think these matters are probably best dealt with outside the context of what we are trying to achieve here this evening. Undoubtedly, there will be further discussions.19:33:0010958Murray, Sen AndrewSenator MURRAY3M6WAAD00—I thank the minister. I wish to move now to sheet 1667. That amendment is next on the running sheets, in bold, in the middle.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator McKiernan)—Senator Murray, my advice is that the next item is schedule 9, to be opposed.3M6Murray, Sen AndrewSenator MURRAY—Yes. Isn't that what I am dealing with with sheet No. 1667?10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN—I am advised that you are correct.3M6Murray, Sen AndrewSenator MURRAY—I agree with you, the running sheet does not marry properly. This amendment simply says that schedule 9, which is the individual capital gains cuts schedule, should be opposed.19:34:0010958Conroy, Sen StephenSenator CONROY3L6VICALP00—I just seek clarification from the minister. Minister, you have indicated that today you had some discussions about the bill. Are you aware at this point of what the revenue implications of agreeing to IFSA's amendments would be?19:34:0010958Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator, as I have said, IFSA came to see me. We had a very brief discussion and it brought to my attention the concerns that it has. I am not sure whether those concerns are justified or not, to be quite frank. But I believe that they are matters which would have to have further discussion and analysis in which, undoubtedly, Senator Conroy, you would be involved as much as anybody else, thus ensuring your awareness of the issue. If a business group comes to put a view to you, you listen to them, and then you seek some advice on that matter to see whether their concerns are justified or not. Then a decision is made about what action, if any, should be taken. I do not believe that we are close to that decision, or at least I am not aware of it. But any change that is made, Senator, will have to come through this chamber.19:35:0010958Conroy, Sen StephenSenator CONROY3L6VICALP00—Minister, are you suggesting that the government had not considered these issues prior to IFSA's approach? My understanding is that they are issues that have been canvassed and dealt with previously. I am just seeking some guidance.19:36:0010958Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator, in the sense that they probably have been raised before—I am looking at my advice—and that the government at that stage decided to make no change, it is my understanding that IFSA has come back again. I think that is the probable sequence of events. As I have said, from my point of view, I am not sure whether what IFSA is raising has any new aspects or not. My view is that we would have a normal process that would be gone through. So we are certainly not trying to pre-empt any decisions which have been made. However, as I have said, it is a matter of courtesy that IFSA has come to see us. I always send such material on to the department for further analysis.19:37:0010959Conroy, Sen StephenSenator CONROY3L6VICALP00—My concern is fairly obvious: we are jointly agreeing to the bill as it stands at the moment, so we would be concerned that you would be making changes without talking to us.WW4KEMPSenator Kemp—No.3L6Conroy, Sen StephenSenator CONROY—Although I appreciate that you would always, as you describe, give a welcoming ear to any group that wants to knock on your door and raise a concern, we need to be kept fully informed of, and involved in, any discussions along those lines.19:37:0010959Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—I do not want to make this more of a drama than it actually is. I think we now have the sequence correct that some issues which had been raised before have been dealt with in the bill as it stands before us. IFSA have come back today and raised some issues. Not being involved in the original discussions, I do not know whether there are new aspects to it or not. Senator Conroy, nothing can be done in the context of this debate this evening. If there were any further move on it—I do not wish to raise any suggestions that there will be—certainly we would make sure that they are discussed with the other parties.19:38:0010959Murray, Sen AndrewSenator MURRAY3M6WAAD00—It may be helpful for Senator Conroy if I indicate that I will write to the government and copy it to the Treasurer's counterpart.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator McKiernan)—The question is that schedule 9, as amended, be agreed to.Question resolved in the affirmative.3M6MURRAYSenator Murray—I would like it recorded that the Democrats voted no.19:39:0010959Murray, Sen AndrewSenator MURRAY3M6WAAD00—by leave—I move Democrats' amendments Nos 1 and 2 on sheet 1664:(1) Clause 2, page 2 (after line 12), at the end of the clause, add: (6) Schedule 11 commences, or is taken to have commenced, on the same day as Schedule 2 of the New Business Tax System (Income Tax Rates) Act (No. 1) 1999 , immediately after the commencement of that Schedule.(2) Page 108 (after line 28), at the end of the Bill, add:Schedule 11—Deduction for research and development activitiesIncome Tax Assessment Act 19361 Subsection 73B(1) (paragraph (ba) of the definition of aggregate research and development amount Omit "four-fifths", substitute "ten-thirteenths".2 Subsection 73B(4E) Omit "1.25", substitute "1.3".3 Subsection 73B(13) Omit "1.25", substitute "1.3".4 Subsection 73B(14) Omit "1.25", substitute "1.3".5 Paragraph 73B(15)(a) Omit "1.25", substitute "1.3".6 Subsection 73B(15AB) Omit "1.25", substitute "1.3".7 Subparagraph 73B(23)(e)(i) Omit "1.25", substitute "1.3".8 Subsection 73C(8) Omit "1.25", substitute "1.3".9 Subsection 73C(9) Omit "1.25", substitute "1.3".These amendments relate to research and development activities. I can put the case very simply because a witness to the inquiry was particularly succinct in this matter. The witness was a Mr Geoffrey Lehmann, who is a tax lawyer, I discovered, not a tax accountant, which interested me—3L6CONROYSenator Conroy—Or an economist.3M6Murray, Sen AndrewSenator MURRAY—He articulated something we were all aware of; namely, that when you reduce the company tax concession from 36 per cent to 30 per cent, a tax concession which is relative to that actually reduces in real worth or real value. The figure he put was that it reduces from the effective nine cents in the dollar to 7½ cents in the dollar. He indicated that if you lift the research and development tax concession from 125 per cent to 130 per cent then you actually restore it to its current value. These amendments state that, when the company tax rate falls to 30 per cent, the R&D tax concession will lift from 125 per cent to 130 per cent from that date.One might ask: what is the revenue consequence of that, given our concerns about revenue neutrality? Well, according to Mr Lehmann, the revenue consequence is in the order of $97 million per annum. Given that both the government and the opposition now seem to believe that this package is revenue positive, which we do not agree with, we see little danger, frankly, to the revenue in introducing such a provision. Given that there will be a time delay of a couple of years until this occurs, if the government found things were going against it then it could always have an opportunity to come back to the Senate and say, `Look, circumstances have changed. We can't do that.' These amendments restore a vital tax concession mechanism for research and development to its current value, to its real value, and on that basis I think it is worthy of the support of the chamber. I commend Democrats' amendments Nos 1 and 2 to the chamber.19:43:0010960Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—The government will not be accepting these amendments. Many of the government's reforms will promote industry development. As Senator Murray would know, the abolition of the wholesale sales tax will remove embedded taxes. The government is implementing a number of very important reforms which will encourage investment in venture capital and the government's broader CGT reforms will also promote investment.There is a bit of a dilemma that those who wish to move down this route have to face: if you argue that a tax reduction should result in a higher R&D concession, then tax increases presumably should result in a lower R&D concession. I do not think Senator Murray would want to argue that point. In summary, we believe this bill provides many incentives for investment in R&D. Although we always listen carefully to what Senator Murray says, we are not persuaded on this matter. Question put: That the amendments (Senator Murray's ) be agreed to.19:48:00The committee divided. (The Chairman—Senator S. M. West)9Bartlett, A. J. J. Bourne, V. *Brown, B. Greig, B. A.Lees, M. H. Murray, A.Ridgeway, A. D. Stott Despoja, N.Woodley, J.38Bishop, T. M. Brownhill, D. G. C.Campbell, G. Carr, K.Collins, J. M. A. Conroy, S.Coonan, H. *Cooney, B.Crossin, P. M. Crowley, R. A.Denman, K. J. Eggleston, A.Evans, C. V. Ferris, J.Forshaw, M. G. Gibbs, B.Hill, R. M. Hogg, J.Hutchins, S. P. Kemp, R.Knowles, S. C. Lightfoot, P. R.Ludwig, J. W. Mackay, S.Mason, B. J. McKiernan, J. P.McLucas, J. E. O'Brien, K. W. K.Patterson, K. C. L. Payne, M. A.Quirke, J. A. Reid, M. E.Sherry, N. Tchen, T.Tierney, J. Troeth, J.Watson, J. O. W. West, S. M.Question so resolved in the negative.19:52:0010960Murray, Sen AndrewSenator MURRAY3M6WAAD00—I refer to sheet 1665, which is adding further conditions for the income of certain clubs to be tax exempt. Democrat amendment No. 1 is an anti-avoidance amendment and should or could raise anywhere up to $200 million. Division 50 of the Income Tax Assessment Act 1997 provides that a number of different entities are exempt from paying income tax. Those entities include societies, clubs and associations that are established for the encouragement of animal racing and games and sports. That is section 50-45. The effect of this amendment is to exclude clubs from the exemption from income tax and consequently to force them to pay income tax if the club does not satisfy one of three criteria. It is important to recognise these criteria, because we do not want to affect community clubs and ordinary clubs, which do a wonderful job and should operate under the mutuality principle, as they do at present.The three criteria in the amendment are, firstly, that the income of the club does not exceed $1 million—this will ensure that small clubs continue to be absolutely certain that they are exempt from income tax; secondly, that the club derives less than half of its income from the sale of goods and services that are also offered by for-profit businesses; and, thirdly, that the club spends an amount equal to four per cent of its income on goods and services or activities for the benefit of the community in which it is located. This criterion is aimed at encouraging large clubs to spend a relatively minor portion of their significant income on the community in which they are located.The issue which I am addressing is the situation where a club competes directly against hotels and other taxpaying entities, and these clubs include gymnasiums, travel agents, bus operators, hairdressers, butchers, IMAX theatres and hotels in their operations. The fact that large clubs do not have to pay income tax on their gaming operations means that other operations of the club can be subsidised, including food and beverages, entertainment and accommodation. I have addressed this issue at some length in two adjournment speeches. Frankly, what is going on in a small minority of clubs is a tax rort and should be stamped out. That is not at all to malign all the thousands and thousands of other clubs who would not be affected by this amendment.The fact is that we know that, in these days of cash for comment and other strong radio pressure, sometimes pressure is put on in the community for a particular view to be taken. It is a fact that the clubs organisations do encourage strong sponsorship of their views in the media, and that strong sponsorship should not be allowed to support the continuation of a rort which has, to this date, been allowed to go by in our tax system. This is a straightforward tax avoidance measure which would put a few super clubs on a tax par with that on hotels and other businesses which compete with them. In other words, to use that much overworked phrase, in tax terms it would help level the playing field. Frankly, attention to this area of tax avoidance is long overdue, and we are introducing this amendment to assist revenue neutrality. I accordingly move:Page 108 (after line 28), at the end of the Bill, add:Schedule 12—Adding further conditions for the income of certain clubs to be tax exemptIncome Tax Assessment Act 19971 After section 50-70 Insert:50-71 Further special conditions for items 9.1(a) and (c) An entity covered by item 9.1(a) or (c) is not exempt from tax unless the entity: (a) has a total *ordinary income and *statutory income not exceeding $1,000,000; or (b) derives less than half of its total *ordinary income and *statutory income from the sale of goods and services of a kind also offered by entities that are not exempt from tax; or (c) spends an amount equal to or greater than 4% of its total *ordinary income and *statutory income on goods, services or activities for the benefit of the community in which the entity is located.19:56:0010961Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Let me make a couple of remarks on Senator Murray's amendment. It is strange that in fact the issue is raised now, when it seems unrelated to the issues under debate and is something which is, I might say, a bit of a tack-on. I will make some observations on Senator Murray's remarks. I gather that what this amendment is attempting to do is to tax large mutual entities on their mutual income. The first point that I would make is that this would not appear to have the effect that I gather Senator Murray intends. This is because receipts from members of mutuals are not in fact income. That is why they are not taxed and that is why, in our view, this amendment would not work.More importantly, let me address the policy behind this proposal. The simple answer to this proposal is that the Ralph committee considered this issue, I am advised, and recommended no change—and the government has accepted that position. I make one further point that, as the government has stated many times, the government's reforms to business tax are broadly revenue neutral, and so there is no need to introduce measures such as this one proposed by Senator Murray to raise revenue.19:58:0010962Conroy, Sen StephenSenator CONROY3L6VICALP00—I indicate that the opposition will not be supporting Senator Murray's amendments. I know that Senator Murray would be disappointed if I did not point out that we see some conflict between wanting to tax clubs in the way that he is suggesting—given that by large they are the province of working class and working Australians—and how that contrasts with the Democrats position on—3M6MURRAYSenator Murray—Olympic tickets?3L6Conroy, Sen StephenSenator CONROY—No; unfortunately I have not got any Olympic tickets—unlike you, probably—but I do have a vote on the high roller amendment for millionaires in casinos and I find it an absurd proposition that we would want to be taxing clubs but letting off millionaires in casinos. So I would urge you, if you are looking to recoup revenue, to recoup it by taxing high rollers and not ordinary battling punters down at the club having a beer after work.19:59:0010962Murray, Sen AndrewSenator MURRAY3M6WAAD00—I will just make a quick rejoinder. I must point out for all listeners that Senator Conroy is not a drinker so he might not know that patrons of hotels are ordinary people—ordinary working people and ordinary middle-class people—and, of course, the odd millionaire is there as well. I will not detain the chamber for much longer. I am disappointed that we cannot address this issue. For those who are interested in it as a policy matter, I made extensive remarks on it in my adjournment speech on 18 October 1999. It is not really a tack-on because I have spoken about it at length, written to people about it at length and argued it at some length. However, I do not think now is the time to take it any further. Question put: That the amendment (Senator Murray's ) be agreed to.20:04:00The committee divided. (The Chairman—Senator S. M. West)8Bartlett, A. J. J. Bourne, V. *Brown, B. Greig, B. A.Murray, A. Ridgeway, A. D.Stott Despoja, N. Woodley, J.25Bishop, T. M. Bolkus, N.Brownhill, D. G. C. Conroy, S.Coonan, H. Cooney, B.Crossin, P. M. Crowley, R. A.Denman, K. J. *Evans, C. V.Ferris, J. Gibbs, B.Hogg, J. Kemp, R.Knowles, S. C. Mason, B. J.McKiernan, J. P. O'Brien, K. W. K.Patterson, K. C. L. Payne, M. A.Quirke, J. A. Reid, M. E.Troeth, J. Watson, J. O. W.West, S. M.Question so resolved in the negative.20:07:0010962Murray, Sen AndrewSenator MURRAY3M6WAAD00—I now move the last of the Democrats' amendments, which is No. 1 on sheet 1666:Page 108 (after line 28), at the end of the Bill, add:Schedule 13—Negative gearingIncome Tax Assessment Act 19971 At the end of section 8-1Add: (4) If an asset is eligible to be a *discount capital gain and is held by an individual, 50% of the net deductions for that asset are not deductible. (5) In subsection (4), net deductions means all costs associated with the asset that, but for subsection (4) would be deductible, less any assessable income earned from the asset.This amendment refers to the issue of negative gearing. We are suggesting that the negative gearing tax concession be reduced to half of what it is at present. I outlined in my speech on the second reading debate a fairly cogent—at least, I think it was cogent—argument for why negative gearing should be ended. It is a rort in the sense that it comprises the major tax avoidance activity that is legally sanctioned. It is an activity which is outlawed in major countries in the OECD and it is an activity which is the principal means by which income is shifted to capital to take advantage of lower tax rates.I refer now to the Hansard record of the Finance and Public Administration References Committee inquiry into these bills held on Friday, 12 November 1999 in Canberra. On page 214 of that report Senator Peter Cook asked and delivered some very clear instances and quotes which I want to repeat. Senator Cook was interacting with Mr Reynolds, the principal American witness we heard from who strongly supports these capital gains tax cuts and strongly opposes negative gearing. Senator Cook quoted an eminent Australian financial journalist who said:Clearly the new CGT regime is inequitable and unjust and is an invitation to the kind of rorting that the Ralph Review was designed to stamp out.He quoted a tax specialist:Virtually every tax avoidance scheme before 1985, when CGT was introduced, was designed around the obvious incentive to turn income into capital and thereby avoid tax.Senator Cook quoted an associate professor of taxation at the University of New South Wales who said:While the rates of tax on income and capital gains are aligned, the incentives to turn income into capital gains are reduced.In other words, when they are not aligned, you have problems. Senator Cook quoted a tax partner at PricewaterhouseCoopers who said:You only have to do the numbers and they are radically improved: when you negatively gear you get an interest rate deduction at 48.5% when you are generating [capital gains] taxed at only half that rate. He quoted a tax partner of KPMG who said:Providers of the investment products will increasingly try to devise products with prospects of capital gains coupled with some gearing.And he quoted a tax partner in an accounting house in Australia who said:The new [employee share schemes] are likely to revolve around interest free loans. An executive may be given a $1 million loan to buy shares in the company. If after five years he sells the shares for $2 million, he will only pay tax on half the capital gain. That's a $242,500 tax bill compared with $485,000 if he had received $1 million [in salary].Senator Cook then asked:Don't those quotes taken together suggest that there is a real prospect that by mismatching the rates between capital gains and income you will get—as all these people say—tax avoidance in effect?In an interchange with Senator Cook, Mr Reynolds said that it is very difficult to move income into capital except through negative gearing. That was the effect of what he said. But the government have accepted there will be movement from income to capital. They have put in, at its maximum, $180 million worth of arbitrage. So the government accepts there will be a tax avoidance consequence as a result of having disparate rates. Our approach early on was to say that negative gearing has always been difficult to address because of its popularity in Australia, that now is the time to bite the bullet, take the hard decision, the tough decision, and that it can be done with Democrat support, because we are not afraid of attacking this tax avoidance area.The negative gearing case is quite clearly made. Country after country in the OECD says it is bad for a country to have negative gearing because it results in tax avoidance. Witness after witness to the inquiry made the same point and many experts agree with that opinion. Furthermore, Ralph himself did not recommend that these concessions apply to shares as well as property and yet the government have increased them to shares. We are saying to you, `Here is a last chance to limit a tax avoidance mechanism.' Regrettably, we do not believe we have a snowball's chance of getting up the outlawing of this—although it should be outlawed—but we are proposing here to limit negative gearing and on that basis to severely limit the tax avoidance by moving from income to capital.HX5WOODLEYSenator Woodley—Did Senator Conroy say anything interesting in that?3M6Murray, Sen AndrewSenator MURRAY—Senator Conroy fully understands this argument; I know he does. What we did then was to make public our approach and try to create a public climate where our approach might gather some political support. Regrettably, there was a knee-jerk reaction from some of the leaders of the Labor Party—I think the Hon. Kim Beazley and others said that they would not have a bar of it. I think Labor Party senators, in particular, who are interested in policy matters might well have looked at this issue seriously.I have deliberately quoted Senator Cook's set of quotes and questions because it is quite plain he was interested in that. Senator Cook and I have had many policy debates in this chamber, and he is a thoughtful person about policy matters. It is quite clear to me that Labor senators are aware of the dangers attached to negative gearing. So it is our intent to bring on this amendment which limits, does not outlaw, the extent of negative gearing which is available as a tax concession. I, therefore, commend that amendment of ours to the Senate.20:15:0010964Conroy, Sen StephenSenator CONROY3L6VICALP00—I rise to indicate the opposition's opposition to this amendment. We believe that, through the negotiations that we have had with the government, the strengthening of the anti-avoidance provisions will more than satisfy the tests of the parliament and the courts. Unfortunately, this amendment, in its present form, does not make sense. It does not read in the way that we believe is consistent with achieving what the Democrats are purporting to be setting out to want to achieve.It does not quarantine the deductions to be absorbed against the future gain; they are simply lost altogether. It is inconsistent with previous amendments of the Democrats where they have been arguing about the 45 per cent regime. We believe that we have been able to achieve a satisfactory outcome in our discussions with the government in stopping the conversion of income to capital. This amendment does not make technical sense to even achieve what the Democrats believe they are setting out to achieve.20:17:0010964Brown, Sen BobSenator BROWNQD4TASAG00—That is very interesting, and I was just going to encourage the minister to his feet actually to explain what the amendments are that will prevent avoidance in this issue.20:17:0010964Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—Senator, I think you are referring to Senator Conroy's remarks. I have always been careful to avoid speaking for Senator Conroy, but I am sure the interpretation of Senator Conroy's remarks was Senator Conroy's view of part IVA. You probably were not in the chamber, Senator Brown, but there was quite a discussion on that matter.We will not be supporting the amendment that has been moved by Senator Murray—the removal of negative gearing. It was tried in the 1980s and failed. The government's reforms are not directed to changing the use of negative gearing as a means to finance commercial investments. We believe that there is not a sound basis for removing negative gearing. Interest is a legitimate cost of doing business and gearing is used to finance many investments. This position is reflected in the law, and it is not proposed that we change that.20:18:0010964Brown, Sen BobSenator BROWNQD4TASAG00—I have listened to Senator Murray and Senator Conroy and now the good government senator, and I will most definitely be voting with the Democrats on this.10000CHAIRMANThe CHAIRMAN—The question is that Democrat amendment No.1 on sheet 1666 be agreed to.A division having been called and the bells having been rung—ZS6QUIRKESenator Quirke—Madam Chair, I draw the Senate's attention to my statement of pecuniary interests.1I4McKIERNANSenator McKiernan—Madam Chair, I am uncertain, but just in case I draw the Senate's attention to my statement of pecuniary interests as well.LI4PATTERSONSenator Patterson—I draw the Senate's attention to my statement of interests.VJ4WATSONSenator Watson—Madam Chair, I have certain negatively geared property.TH4KNOWLESSenator Knowles—I am the same, Madam Chair.4L6EGGLESTONSenator Eggleston—I am the same.Senators Ferris, Brownhill, Calvert and Coonan also rising in their places— Question put.20:23:00The committee divided. (The Chairman—Senator S. M. West)8Bartlett, A. J. J. Bourne, V. *Brown, B. Greig, B. A.Murray, A. Ridgeway, A. D.Stott Despoja, N. Woodley, J.37Bishop, T. M. Brownhill, D. G. C.Calvert, P. H. Collins, J. M. A.Conroy, S. Coonan, H. *Cooney, B. Crossin, P. M.Crowley, R. A. Denman, K. J.Eggleston, A. Evans, C. V.Faulkner, J. P. Ferguson, A. B.Ferris, J. Gibbs, B.Heffernan, W. Hogg, J.Hutchins, S. P. Kemp, R.Knowles, S. C. Ludwig, J. W.Mackay, S. Mason, B. J.McGauran, J. J. J. McKiernan, J. P.O'Brien, K. W. K. Parer, W. R.Patterson, K. C. L. Payne, M. A.Quirke, J. A. Reid, M. E.Sherry, N. Tierney, J.Troeth, J. Watson, J. O. W.West, S. M.Question so resolved in the negative.Bill, as amended, agreed to.NEW BUSINESS TAX SYSTEM (CAPITAL ALLOWANCES) BILL 1999Bill agreed to.NEW BUSINESS TAX SYSTEM (FORMER SUBSIDIARY TAX IMPOSITION) BILL 1999Bill agreed to.NEW BUSINESS TAX SYSTEM (CAPITAL GAINS TAX) BILL 1999 Bill agreed to.NEW BUSINESS TAX SYSTEM (INCOME TAX RATES) BILL (NO. 2) 1999Bill agreed to.10000CHAIRMANThe CHAIRMAN—The question now is that these bills be reported.20:28:0010965Kemp, Sen RodSenator KEMPWW4VICLPAssistant Treasurer10—There was a matter raised by Senator Murray during the debate regarding some representations that he had from ISFA. I have received some further advice. This advice is that throughout the business tax reform process the government has seen many groups. The government has made, in its view, appropriate provisions for collective investment vehicles. The collective investment vehicle industry has received its largest CGT reductions ever as part of the government's business tax reforms.Question resolved in the affirmative.New Business Tax System (Integrity and Other Measures) Bill 1999 reported with an amendment, New Business Tax System (Former Subsidiary Tax Imposition) Bill 1999 reported without requests for amendments, and New Business Tax System (Income Tax Rates) Bill (No. 1) 1999, New Business Tax System (Capital Allowances) Bill 1999, New Business Tax System (Capital Gains Tax) Bill 1999 and New Business Tax System (Income Tax Rates) Bill (No. 2) 1999 reported without amendments; report adopted.10965Motion (by Senator Kemp) proposed:That the bills be now read a third time.20:29:0010965Brown, Sen BobSenator BROWNQD4TASAG00—On behalf of the Greens, I oppose the bills.Question resolved in the affirmative.Bills10965r89210965Debate resumed from 20 September, on motion by Senator Ian Campbell:That this bill be now read a second time.08:30:0010965Abetz, Sen EricSenator ABETZN26TasLP10—I table a correction to the explanatory memorandum relating to the Veterans' Affairs Legislation Amendment Bill (No. 1) 1999 .20:31:0010966Schacht, Sen ChrisSenator SCHACHT4J4SAALP00—I rise on behalf of the opposition to speak to the Veterans' Affairs Legislation Amendment Bill (No. 1) 1999 . This bill overwhelmingly contains provisions that the government claim meet their promises to the veterans community in the last election. I accept, reading through the bill, the explanatory memorandum and the second reading speech, that it does meet the promises made by the government in a number of areas of benefit to the veterans community, and of course the opposition do not oppose them. We welcome the fact that the government are meeting those promises. They are not earth-shattering or big bang promises; they are refinements in a number of areas, worth while and beneficial to the veterans community.The major issue that developed from this bill is the impact of the changes to the invalidity service pension. That appears to be a minor part of the bill, but it certainly created some interest in the veterans community. As a result of that interest, when the bill was introduced into the House of Representatives I, on behalf of the opposition, recommended that this bill go before the Senate Foreign Affairs, Defence and Trade Legislation Committee to seek the views of the public and, if necessary, hold a public hearing on the bill, particularly on that provision I just mentioned.I was very pleased to see that there was considerable interest from the veterans community and from the public. Some 68 submissions were received. Many of them were received from individual members of the community, veterans in the community and veterans organisations. Most of them dealt with the issue of the invalidity service pension. Of course a number dealt with issues that were not specifically in this bill but raised issues of a wider nature of concern in the veterans community. When we held a hearing some of those views came out, but the issue that held the most interest at the hearing for one evening was the impact of the invalidity service pension change.The government had recommended that those who received the invalidity service pension as veterans could have the way they obtained that pension, that benefit, reviewed. In evidence given to the committee, the department said that something like 17,000 invalidity service pensions are provided in Australia. After questioning it became clear that, of those 17,000, the government were interested in only some 1,700 pensions that had been issued and that they would like the opportunity to review those pensions by having veterans undergo a further medical examination. That means that some 1,700 veterans who had been receiving the pension could be called upon to front up to the Department of Veterans' Affairs or to an appropriate medical officer and have the test redone.That did create a fair amount of apprehension in the veterans community, particularly amongst Vietnam veterans and Gulf War veterans. They lobbied hard, saying that this uncertainty was retrospectively changing an entitlement. We in the opposition had considerable sympathy for their concern about retrospectively taking a pension away from somebody once they had received it through the normal processes. We made it quite clear that, if fraud was involved at any stage in someone obtaining a benefit, we in the opposition would in no way support or allow fraudulent activity or fraudulent behaviour to proceed. What we found at the committee hearing was that the government were not worried so much about the fraud; they wanted to review the actual eligibility test people underwent to receive the benefit of the invalidity service pension and see whether the test had been properly applied. There was no fraud involved; the government wanted a second chance to check the test.I was a bit surprised that the Liberal government would support a retrospective change. As I understand it, it has been an article of faith in the Liberal Party for a long time that they do not support retrospectivity in legislative change. This clearly was a retrospective change, in that people who were receiving the benefit had to undergo a further test and could lose the benefit. I put in a minority report on behalf of the opposition. Our recommendation states:Labor Senators believe that the anxiety and uncertainty created by requiring current recipients of the invalidity service pension to undergo the new eligibility test is unwarranted and unfair to these pensioners. We support an amendment that would exempt current recipients of the invalidity service pension from the proposed test but would require new applicants to be subject to it.That was signed by me and my colleague Senator Hogg on behalf of the opposition. I was therefore pleased to see that the government last week issued a statement accepting the opposition's recommendation in the report that the retrospectivity be withdrawn. That was a considerable relief to the veterans community, and I am pleased that the minister was able to change the bill, change the proposal and accept our recommendation.I understand from the government that, for the government to accept the opposition's recommendation, it does not actually need an amendment to this bill. It is an administrative matter that the government will not give administrative orders to any of the 1,700 to ask them to resubmit to the test. We take it on faith here—and I trust that the parliamentary secretary will reaffirm that in the second reading debate summing up—that this will be clarified. Clearly, the parliamentary secretary would be aware that, if there were any going back on that by administrative action at a later date, he could expect the whole ceiling of the veterans community to fall in on top of him at a very rapid rate. We are pleased to see that the government has accepted that. We take it on the record that the government is not proceeding with that.I also want to put on the record that the veterans community have raised the area of suggested further amendments. They are concerned that the 40-point GARP test for the invalidity service pension will still be too strict in the new arrangement and that having that test apply to the invalidity service pension will mean that some veterans who are presently getting it will not be getting it in the future.The government has said two things to the opposition in briefings and at the hearing. It has said that the test is not going to be a tougher test but a more defined, more easily understood and more easily applied test by having the 40-point GARP test operate. However, in the evidence given to the committee, it was said that in the out years for the next four years the department estimated that some 600 fewer invalidity service pensions would be granted under the 40-point GARP test. This immediately raised the idea in the veterans community that the test must be tougher—if an estimated 600 people in four years are not going to get it when they would have got it if this change had not been made. So far I have not received an absolutely satisfactory explanation of how it is that, if the test is not tougher, 600 fewer people over the next four years will not be getting it. I still think the government owes the veterans community an explanation on the record here in the Senate of how you can say, `The test is not tougher, but 600 fewer people are going to get it according to estimations by the government.'As a result of that evidence, the veterans community raised two further suggestions. I would like the parliamentary secretary at the table to respond to them either in the second reading debate or in the committee stage. One of them was that the 40-point GARP test be reduced to a 30-point GARP test so that it is less stringent than what is proposed. One of the suggestions made was that the invalidity service pension could be the equivalent of TPI. You get it when you are TPI and you are fully incapacitated, but the TPI is still a tougher test. Applying the same test for the invalidity service pension as for the TPI is not consistent. It should be at a lesser level because it is not the same as the benefit you get for the TPI.The further suggestion was made that the number of hours people receiving the invalidity service pension are allowed to work should be increased from the present eight hours to something like 20 hours—the equivalent of what the intermediate pension gets. Again, I can understand why the veterans community has raised that. It does encourage people to work more hours as part of their rehabilitation as an invalid. Even in the veterans community, I think a lot of people understand that it is better to get people off the invalidity service pension and back to work so that they are more productive in themselves psychologically, with their families and in the community. That is a theme running through all occupational health and safety schemes in Australia. I can understand why they raise it.But, if you do accept those suggestions as amendments, you may well undermine the invalidity service pension itself. You are decreasing its importance. It is an invalidity service pension because you are a full invalid and you cannot work. If you reduce it to a level where you have the same point test as for an intermediate pension, which does allow 20 hours of work, you may be undermining the value of that pension. Who knows? In some dark days in the future, some bureaucrat in the finance department may well recommend that, as a savings measure, the value of the pension be reduced to match the points rather than the other way around. I am always nervous when putting anything up that it may allow some bureaucrat in the finance department or in the Treasury to use such changes ultimately to make further savings and disadvantage the veterans community.Therefore, after further discussion with the government, on behalf of the opposition I will not be moving a further amendment to take account of that, though, if it turns out that the veterans community is being disadvantaged because of the new 40-point GARP test, clearly the government is going to have to respond. Otherwise, it will be literally belted around by the veterans community for putting into place a measure that has unintended consequences.On balance, though we are not proceeding with amendments when we have this opportunity at the moment, I will take the word of the government. I still wait for an explanation, Parliamentary Secretary, of how the test can be the same—it is not being made tighter—but still 600 fewer people are estimated to receive the pension. A new explanatory memorandum was tabled tonight by the parliamentary secretary. I notice at the back of it the sentence: `These corrections remove reference to existing pensioners whose eligibility will not be affected by the new provi sions.' I understand that sentence is the commitment that we will remove the retrospectivity.I also ask the parliamentary secretary to respond to the issue that, when you compare the financial impact on page (ii) of the original explanatory memorandum with what was tabled today, they are quite striking in their difference. As I read it, in the original document the total financial impact for the first year, 1999-2000, is an increase in revenue of $394,000. In the new explanatory memorandum, that goes up to $607,000. In the following years, the financial impact is shown as being a substantial reduction of what was in the original memorandum, because Centrelink and health have been put in. I would like the parliamentary secretary to make this clear.As I read this, in the total in the new explanatory memorandum the government has now deducted Centrelink and health. Though there may be a bigger cost to the Department of Veterans' Affairs, when you balance what happens at Centrelink and health, the reduction in the loss of revenue is considerably less. For example, in the original explanatory memorandum, it is minus $5.3 million in 2000-01, minus $12.9 million in the following year and then, finally, minus $16.09 million in 2002-03. The comparison years in the new memorandum are $0.029 million, $1.16 million and $2.6 million loss of revenue. If what I think has happened is right, I trust that can be explained in the parliamentary secretary's summing up of the second reading debate or in the committee stage, which may be very brief.In the time remaining to me, I wish to touch on a couple of other matters that the government has to be aware of in the operation of the invalidity service pension. The concern I have mentioned from the Vietnam veterans is important. Since this bill has been introduced, Gulf War veterans have raised the concern that the new test may affect them adversely. As yet, we have not got a full scope of the impact of Gulf War syndrome, which is still being investigated by the department. We also now have a large number of soldiers—running into several thousand—serving in the East Timor situation, and they will be entitled to full veterans benefits in the future.One can anticipate that in the future Australian soldiers will serve in peacekeeping forces around the world as we, as a good international nation, accept our responsibility. Therefore, the invalidity service pension test that has been talked about here is the main matter of interest and controversy in this bill. These are reasons why sections of the veterans community are very concerned about it. On balance, the opposition are not moving further amendments. We will take the government at its word, but I would expect the government to respond rapidly. If, over the next year to 18 months, the new test for the invalidity service pension has the unintended consequence that large numbers of veterans—Vietnam veterans and new veterans from the Gulf War—start missing out, that will be a public issue that will have to be dealt with by the government.On behalf of the opposition, we support the bill. We recognise it has a number of measures that meet the government's promises from the last election. We are pleased the government has accepted the opposition suggestion to remove the retrospectivity nature of applying the test to 1,700 veterans already granted the pension, but we look forward to monitoring very closely the operation of this new amendment to ensure that veterans, the people who have served this country well and bravely in the national interest, are not disadvantaged.20:50:0010969Abetz, Sen EricSenator ABETZN26TasLP10—I thank Senator Schacht, who is the opposition spokesman in this area, for his constructive approach to the Veterans' Affairs Legislation Amendment Bill (No. 1) 1999 . I indicate that all the matters that the honourable senator has referred to are matters that I will be able to confirm. This bill has a number of provisions in it, all of which we believe will ensure that the veterans of this nation are looked after in an appropriate manner—and, indeed, their children as well, in one particular aspect of the legislation.The government fully agree that it is appropriate that those people who have been found willing to serve their nation in a time of conflict and difficulty and who have been prepared to risk their lives for the freedom that we enjoy today be looked after in their time of need. I will refer to some of the matters Senator Schacht has asked me to refer to and confirm that the amendments that we have proposed do flow from the Senate Foreign Affairs, Defence and Trade Legislation Committee report, where a suggestion was made in relation to making amendments. We as a government have agreed not to review existing payees against the new criteria of 40 points and eight hours capacity to work.The explanatory memorandum was changed accordingly to reflect that. Instead, the current veteran payees will be safe by way of regulation—that is, no current veteran will be reviewed against the new criteria for the invalidity service pension. The government believes that 40 impairment points is a reasonable test. Senator Schacht referred to GARP, which is the acronym for the Guide to the assessment of rates of veterans' pensions. I do not blame him for using that acronym at all. To give an example of this test in the case of the amputation of fingers and thumbs, 30 points would equate to the amputation of a thumb and index finger on one hand, whereas 40 points would equate to the amputation of a thumb and the index, middle and ring fingers on one hand. So there is a substantive difference in the criteria that Senator Schacht floated. I understand that he will not be insisting on or suggesting any amendments on this but is asking the government to monitor the situation to ensure there are no unintended adverse consequences.I can assure Senator Schacht, the veteran community and, indeed, the Australian people that the government will keep this under review to ensure there are no such unintended consequences. We believe that the eight-hour test, as it is called, is an appropriate test as well. Both these criteria apply to the totally and permanently incapacitated pension. I think Senator Schacht suggested at one stage that there might be 17,000 veteran pensioners. I understand the figure to be 13,000 veteran pensioners, but I do not think that changes anything in the substance of what we are talking about this evening.4J4SCHACHTSenator Schacht—We were told at one stage that there were 17,000 to be reviewed.N26Abetz, Sen EricSenator ABETZ—There were 17,050 that were potentially reviewable, but overall I think you mentioned a figure of 17,000.4J4SCHACHTSenator Schacht—I accept that it is 13,000.N26Abetz, Sen EricSenator ABETZ—There will be some savings made as a result of the proposed test. I suppose we can discuss whether or not it is a tougher test. We believe it is a more rigorous test and, ultimately, a fairer test than the one that currently applies, which was subject to certain subjective assessments. We believe that the GARP point test is somewhat more objective and more capable of scrutiny and therefore is more fair. In his comments, Senator Schacht also mentioned the difference in the savings and the figures. He is correct that the variation in those figures is as a result of departmental savings, on the one hand, and the whole of government savings, on the other hand. I have been advised that we will provide a full reconciliation in due course on that. I will conclude—unless there are any other matters that Senator Schacht wants me to raise at this stage.4J4SCHACHTSenator Schacht—I will have some brief questions in the committee stage.N26Abetz, Sen EricSenator ABETZ—In that case, I thank Senator Schacht for his constructive contribution to this debate. I think the people of Australia can be assured that both the government and the opposition are seeking to ensure that the veterans of this country get the best possible deal—and a fair deal.Question resolved in the affirmative.Bill read a second time.10970The bill.20:57:0010970Schacht, Sen ChrisSenator SCHACHT4J4SAALP00—Very briefly, I appreciate the parliamentary secretary answering practically all of the queries that I raised in my speech in the second reading debate. One last query that I wanted to raise, however, is whether he can give me any more specific information on the figure given by the committee—that 600-odd fewer pensions will be granted. Is that because, as you say, the test is now more rigorous, or is it a changed test? That is the issue concerning the veterans community. What is the difference between a more rigorous test and a tougher test? It appears to be, in one form or another, a bit tougher.20:58:0010970Abetz, Sen EricSenator ABETZN26TasLP10—We can debate the semantics of it, but clearly it will be a changed test. We do not shy away from that. We believe that the current system allowed a degree of subjectivity and that the system being proposed will be more objective and therefore fairer to all concerned about whether they ought to be entitled to a particular payment.20:58:0010970Schacht, Sen ChrisSenator SCHACHT4J4SAALP00—With the help of his advisers, could the parliamentary secretary provide information now on how much each year, in terms of outlays over the next four years, will be saved in dollar terms by the new test and by the estimated 600 benefits which would have been paid that will not now be paid?21:00:0010970Bartlett, Sen AndrewSenator BARTLETTDT6QLDAD00—I was intending speaking at length, so I thought I would wait until some of the shorter questions were asked and answered. I apologise to the Senate; I had thought there were about three other people who were to speak before me. I had meant to give a speech during the second reading debate, but it disappeared before I got the chance. So, for your entertainment and intellectual stimulation, I will use this opportunity now to put the views of the Democrats on the record.N26ABETZSenator Abetz—Do you have a typed copy? Unless there is something too controversial about it, I would not mind having it incorporated.10000TEMPORARY CHAIRMANThe TEMPORARY CHAIRMAN (Senator Knowles)—Senator Bartlett, I think what Senator Abetz is offering by way of interjection is that, if you have a printed copy, if the opposition and government could have a look at it, there may be some willingness to have it incorporated.DT6Bartlett, Sen AndrewSenator BARTLETT—I appreciate the offer but, if senators can cope with it, I might verbalise it anyway. That will enable my creative juices to have full rein without being constrained by the written word.As the Democrat spokesperson in this area, I think it is appropriate to indicate some of the concerns the Democrats have about one section of the bill before us, being the section to which most of the comment has been related about tightening or modifying the criteria of eligibility for those receiving the invalidity service pension and the invalidity income support supplement. We do have some concerns that that criteria may be overly severe, the outcome of which could be that those who do not meet the new criteria may be subject to reduced entitlements.There are a number of positive measures in the bill as a whole, and I think it is always worthwhile to note where the government does provide positive measures. In the context of the bill as a whole, whilst having had representations from some veterans groups about the particular measures that deal with the invalidity service pension, my office has also had representations from others in the veteran community who are keen for the legislation to be passed so that some of the other measures in the bill can come into effect at the appropriate time, at the start of next year.As often happens with social security legislation, we get a situation where a number of positive measures are held up by concerns about a measure which some may view as negative. The present situation, where the disability pension is included in the social security income test, has the problem of being a contradiction of the government position in that this pension is paid to veterans as compensation. I think it is appropriate, in the context of veterans' affairs amendment legislation, to highlight an ongoing issue for many veterans: veterans receiving the disability support pension through social security or family community services will face a change in the conditions they would face if they were receiving it through veterans' affairs whereby the special obligation, the compensation owed to veterans, will not be recognised.Most of the peak veterans organisations and a number of the individuals who made submissions to the committee specifically indicated their concern and their opposition to the ongoing practice of veterans disability pensions being regarded as income in regard to social security pensions and benefits. I think it is appropriate to remind the Senate that this is an anomaly which the coalition promised to rectify when it came into power in 1996. Despite having had an internal investigation into it, the report of which, as I understand it, has never been released, there has never been any attempt to rectify that anomaly. I think it is unfortunate that the government, apart from indicating what the cost of such a change might be, has declined to release the results of that review.The fact that the department has not acted to correct this matter prior to introducing this legislation or as part of it, particularly given that this may lead to more veterans in the future being affected by it, I strongly suggest means that it has no intention of ever correcting this unfair anomaly. I think another piece of legislation that is currently in the House of Representatives and which has been there for a while relating to compensation may be an appropriate one to specifically pursue that anomaly in more detail, but I think it is appropriate to highlight it now.The issue of the rate of the impairment points has been at the nub of a number of concerns, along with the potential problem of some of those veterans currently receiving a particular payment being reviewed and transferred onto another payment with different and lesser entitlements. We acknowledge the government's move to grandfather this particular measure so that those who currently have particular entitlements will not be affected by any change and will continue to receive the entitlements that they are accustomed to.It is probably worth mentioning also that, with another piece of social security legislation in this chamber not too long ago, I managed to successfully move an amendment to grandfather another payment and received fairly severe complaint from Senator Newman, the relevant minister, about the inappro priateness of grandfathering and how it is a poor policy measure, leads to complexity and is a bad way of doing things. But I am pleased to see that the government in this case has recognised there can be justification for a grandfathering. Hopefully that is an issue that will be taken on board by ministers in other areas as well. It is often completely appropriate to ensure that, whenever a change is made, the impact of that change is minimised and that it happens in as smooth a way as possible by having a transition mechanism such as a grandfathering clause. In that way, people who are used to particular arrangements and who have tailored their lives around particular entitlements will not be affected negatively; that it will only be new applicants trying to access a particular payment who will come under the new arrangement.There were a number of submissions to the Senate committee inquiry, and I think it is worth acknowledging those specifically. The Senate has a good process of having committee inquiries into pieces of legislation—and not just to enable us as legislators to look in a bit more detail, but obviously to give the community, particularly those who are affected or those who have expertise in the area, the opportunity to have input. When they do that, I think it is appropriate to acknowledge what the concerns are.One of the concerns surrounds the appropriateness of the level of the GARP points or impairment points and whether or not the level of 40 was the appropriate number. I have noted the question asked by Senator Schacht on whether this new mechanism for determining eligibility for invalidity service pension and income support supplements will be harsher than the existing one. Whilst on one level one can say that is a semantic argument, it is nonetheless a real one if you are looking at what the outcome may be. The government has suggested that the possible outcome may be that fewer people will be eligible in the future than there would otherwise have been if the changes had not been made. While the new test may be more objective, the reality will be that it will be harsher in the sense that fewer people will meet the criteria.As I understand it, the new criteria will bring things closer into line with existing determination criteria for social security payments, and there is something to be said for that. I know there is always ongoing and quite legitimate concern amongst the veterans community about their being absorbed into the overall operation of our social security system, and we need to guard against that. I am sure all senators in this chamber would acknowledge that veterans have a special place in the community and have performed a special role above and beyond what others have. Therefore, I think they are entitled to a bit of extra focus on their own specific and special needs.There are some benefits to having objective criteria such as will be put in place by this legislation. The big issue is whether or not the criteria—even though it may be more objective—will be harsher. That is certainly a concern that has been raised by some in the veterans community. However, others in the veterans community have specifically said that they are mighty keen for this bill to be passed because of some of the other measures within it. The fact that the changes in criteria will apply only to new applications and not to those already receiving the pension and income support supplement is definitely a benefit. It is a point that I flagged in my additional comments in the Senate committee report on this matter. It is pleasing that the government has listened to community concerns on that issue.Nonetheless, the Democrats still feel concerned that the level of GARP points that is being put in place may be overly harsh. I would ask the parliamentary secretary to indicate whether there will be some form of review of the operation of the new criteria at some stage after its introduction. Clearly, the measure will be passed through this place. Given that that is the case, I think it would be appropriate to have some form of monitoring of how it operates so that there can be some sort of objective assessment of the new objective measure to see how it is actually impacting on people. With all of these things it is possible only up to a certain degree to assess exactly what impact it will have. The Democrats clearly have concerns, which were indicated to us, that I have flagged in my committee report as well as some of the suggestions that we have put to those in the veterans community.The other question I put to the parliamentary secretary is this: I understand a new explanatory memorandum was circulated today which I do not appear to have seen. I was wondering if there was any change in the financial impacts of this change indicated in that—4J4SCHACHTSenator Schacht—I put that question on the record and it was just explained before you came in. They are going to give us a more detailed breakdown.DT6Bartlett, Sen AndrewSenator BARTLETT—More details to come; is that the go?N26ABETZSenator Abetz—Yes.DT6Bartlett, Sen AndrewSenator BARTLETT—Stay tuned. It would be useful to get that information at some stage. Again, I think the test will be once the measure is in operation given that it will pass through this place.There is one other thing I want to confirm—you may have already done this, Senator Schacht; my apologies for missing your informative contribution. It is my understanding that, as a result of the changing criteria, those affected will end up accessing DSS payments rather than payments through DVA. It was initially proposed that some of the veterans' entitlements, such as gold cards and other fringe benefits, would continue for 12 months. I presume that was a previous measure that now will not apply because of the grandfathering provision. I just want to check whether or not those extra entitlements will be applying for 12 months for new applicants as well, because that may still be the case. I would be appreciative if that could be clarified as well.21:13:0010973Abetz, Sen EricSenator ABETZN26TasLP10—I thank Senator Schacht for his question. Unfortunately, we are unable to provide the full details of that breakdown at this stage, but the department has agreed to get those figures. Whilst we can give you the DVA assessment of it, the whole of government assessment is more difficult to get because we are across health and Centrelink. I understand the department will seek to get that for you.In relation to Senator Bartlett's contribution, yes, there is a bit more rigour and objectivity in the test that is being proposed. While we can play semantics as to whether the test is this or that, clearly, it is a changed test. The purpose of the change is that we as a government believe that welfare and assistance ought to be as targeted as possible. We believe that, with this new test, we will be able to target the assistance that we provide to veterans in a more specific manner.In relation to the GARP criteria—that is, the guide to the assessment rates of veterans' pensions—they and the 40-point test were developed, as I understand it, in consultation with a number of veteran communities and on the basis of specialist medical advice. The only thing you can do with any new test is to try to predict what will occur and indicate, especially with a community such as the veterans' community, that it will be monitored. I assure Senator Bartlett that, in the event anybody in this place fails to monitor its implementation and effect, I am sure the RSL, the Rats of Tobruk and Vietnam Veterans—you name it—will all be monitoring it and will be reporting back to all sides of politics in this country on the impact of the new test.Senator Bartlett asked a question about the extra entitlements and whether that situation will continue. As I understand it, given that it has been grandfathered, those entitlements will continue.21:16:0010973Bartlett, Sen AndrewSenator BARTLETTDT6QLDAD00—I have a couple more quick questions. I want to clarify the last point. The entitlements will continue for those already on the invalid service pension. I am presuming that those fringe benefits will not be available to new applicants if they end up on social security payments. The other question relates to the specific criteria. I understand that that will be a disallowable instrument. I want to clarify where that instrument is at. I presume that it has already been gazetted or tabled. What would we revert to if that instrument were disallowed?21:17:0010974Abetz, Sen EricSenator ABETZN26TasLP10—New applicants will be under the new regime. Therefore, if they are under that new regime, there will not be the certain benefits which Senator Bartlett referred to. In relation to the disallowable instrument, that is correct; it is by way of regulation. It is still being worked on. I understand that it will be presented as soon as possible. There is the possibility that it is disallowed. Given the indications in the Senate this evening, I imagine that that will not occur if the regulations are faithful to what we as a government have indicated. In those circumstances, any debate as to what might happen if it were disallowed is, with respect, hypothetical. I do not think we ought to delay the chamber tonight on that debate.21:18:0010974Bartlett, Sen AndrewSenator BARTLETTDT6QLDAD00—I understand the parliament secretary's reasonable concern about not being engaged in a hypothetical debate. I know that there is some concern in some components of the veterans community about it. It would be quite useful from my point of view if he could indicate what the consequence would be in the unlikely eventuality that the instrument were disallowed. Would we end up with a vacuum or would it revert to something else?N26ABETZSenator Abetz—I dare say that we would have to develop a new set of regulations quick smart.Bill agreed to.Bill reported without amendment; report adopted.10974Motion (by Senator Abetz) proposed:That this bill be now read a third time.21:20:0010974Bartlett, Sen AndrewSenator BARTLETTDT6QLDAD00—I will not hold up the chamber long because I know it is keen to get on to other important pieces of legislation. Given that I missed the second reading debate, I think it appropriate to say a few more words about this piece of legislation now. Whilst the veterans budget and veterans community is small in comparison with the broader social security budget, as I indicated in my previous contribution, it is nonetheless an important area, as I know all senators would agree. It is important to acknowledge the concerns that have been expressed out there and the need for the ongoing monitoring of this.It is also appropriate to flag this in the context of an ongoing debate about the broader issue of welfare reform in its broadest context. The government has indicated that welfare policy change will be its next major area of focus, having done tax and having attempted to have a go at workplace relations. The whole welfare system is another area that it will be focusing on. I know that the veterans system is separate from the social security system to some extent. If we are going to engage in any meaningful debate about welfare policy in this country, we need to look at it in the broadest meaning of the term.One of the concerns that are out in the community and that may or may not be justified is that one of the consequences of welfare reform, if we are not vigilant, may be the targeting of some of the most vulnerable in the community. It is important to ensure that, as part of any measures that relate to that area at all, that is not the outcome. Concerns have been expressed about potential impacts of changes on disability pensioners, for example, and on sole parents. It is important to ensure that we focus not only on those particular categories of people but, just as importantly, on the veterans community themselves, because perhaps they are smaller and more vulnerable to targeting for savings measures.In that context, it is worth signalling the Democrats' belief that we would be examining the issue of welfare policy in its broadest context of ensuring that all members of the community were able adequately to participate in society, had an adequate level of income and were not entrenched in poverty or unable to access appropriate levels of services to meet their needs. The veterans community, as much as any, is one that comes into play in that area. So I wanted to flag the Democrats' view, as we have an ongoing debate about the broader issue of welfare, that that will be an area that we believe should be included in any assessment of the effectiveness or otherwise of our overall social safety net and overall issues of equality in Australian society.It is crucial that we ensure we do not have a concern developing in the community as part of any ongoing political and policy debate that particular parts of it are potentially in the sights—whether of the Treasury Department looking for savings or of other areas. One of the issues that is often talked about in terms of welfare is the inconsistencies and anomalies in the system and the need for simplicity. I outlined before one of the ongoing anomalies that exist and that affect a number of veterans; and it is issues like those that should also be included in any proper assessment of the adequacy of our welfare system in its broader sense.We will be monitoring the operation of this particular measure, along with others, closely. I am sure that, as Senator Abetz indicated, the veterans community as a whole will be making their concerns known in an ongoing way. Certainly, in the parliamentary sphere, the Democrats will be doing the same, as I am sure all parties will be. It is particularly important in this area that we make sure that particular sections of the community, such as the veterans community, do not perceive themselves as being targeted in any form of crackdown. I hope that the government, in their ongoing assessment of the operation of this measure, do assess it in a genuine way and that, if it does appear to be impacting as negatively as some in the veterans community are indicating that it will, they are genuine enough to address that and modify it—even if it may mean some small increase in government expenditure as a consequence.Question resolved in the affirmative.Bill read a third time.Business1097510975Motion (by Senator Abetz) agreed to:That intervening business be postponed till after consideration of government business order of the day No. 5, Workplace Legislation Amendment (More Jobs, Better Pay) Bill 1999. Bills10975r89410975Debate resumed from 14 October, on motion by Senator Ian Campbell:That this bill be now read a second time.21:26:0010975Collins, Sen JacintaSenator JACINTA COLLINSGB6VICALP00—I commence the Labor Party second reading debate contribution on the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999 with the statement that we are in fact pleased that the government has sought to bring on this matter today because, as I think we made quite clear in our report also tabled today on the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999, we thought it should in fact be withdrawn. Essentially that translates into a position where we oppose the second reading of this bill and, given comments by the Democrats today, we would hope that they would join us in that opposition. Mr Reith has indicated in media reports today that he hopes to revisit some of these issues next year, and I am wondering whether, from his statements today, he is actually indicating that he anticipates that the second reading will in fact be opposed and that he will then resubmit some elements of this bill to the Senate in the new year.The other reason that I have no problem with dealing with this bill at short notice is that, during today's tabling of our reports, I had very limited opportunity to deal with several issues and this tonight gives me the opportunity to add to my contributions from earlier in the day. I want to go to a couple of aspects of Senator Murray's report. Apart from highlighting the fact that his overall conclusion is that major provisions of the bill should be rejected as harsh, unfair, unbalanced and unnecessary—and some of his media statements today have actually been quite a bit stronger than that—I want to deal with some other elements in his report which relate to comments that he has made about the Labor Party's position today as well.Senator Murray starts with what he calls the Labor assessment of what we wanted to see come out of the 1996 bill. I encourage Senator Murray, when he has the time—which is, of course, very limited—to look at the chapter in our report which deals specifically with economic conditions. Senator Murray cites various economic criteria set by Labor, through the then shadow minister, Mr Bob McMullan, in relation to how we would look at the success or otherwise of the 1996 bill—which became an act after the Democrat deal with the government. Senator Murray goes through various components of Mr McMullan's criteria.I am pleased to highlight a couple of elements of that because the last time I read these criteria they were presented in a speech by Senator Murray roughly three or four weeks ago which he gave to the eight universities. He set out the criteria on that occasion. It was round about the day on which we held our hearings in Sydney and heard evidence from various women's organisations and the Sex Discrimination Commissioner. When he ran through these criteria on that occasion, he made a statement along the lines that women's pay had improved under the 1996 act.I note from his description of the criteria on this occasion that women's pay has actually been dropped off the list. I am very pleased to see that, and I am sure that the very large number of women's organisations—I think nearly every women's organisation in Australia of any significance was represented—would be pleased to see that they have managed to convince the Australian Democrats that the effect of the 1996 act on women and, in particular, on women's pay has been negative and that it is not selectively being referred to in a list of criteria about how the act has been successful.The next issue that I draw on in relation to Senator Murray's comments is where he refers to the various waves of industrial relations reform. Quite rightly in one sense, he says that the first wave was under the then minister, Mr Laurie Brereton, when various changes were made to our federal industrial relations legislation back in 1993. However, again I would like to refer Senator Murray to a comment in our report. I think this state ment was made on a day when he missed the hearing in Sydney and Senator Allison was there instead. This was a pretty powerful statement made by the various significant women's organisations. It is referred to on page 290 of our report where it says:As highlighted by submissions from a large number of women's organisations:It has been a decade of decentralisation. However, we believe this was intensified greatly by the Workplace Relations Act—that is the 1996 Democrat-coalition act. The statement continues:Protections that were put in place previously in the Industrial Relations Act to counteract some of these tendencies towards dispersion were removed in the 1996 Act and there was also an additional and even more decentralised level added of AWAs.That quote pretty much encapsulates what this whole review has been about. I am pleased the Democrats were able to pressure the government into a position where we reviewed the operations of the current act, because I think that has essentially forced the Democrats to very seriously consider the consequences of the deal that they reached with the government back in 1996. I think, quite genuinely, the Democrats have been very concerned by the outcomes of that deal.When I dealt with the tabling of this report earlier today, I highlighted that, for instance, the government has not dealt with the review of the current act. A number of very concerning elements of the current act raise problems for both the Australian Democrats and the Labor Party. Let me go through those issues because they are a component of the preface that Senator Murray joined with Senator Carr and me in composing to indicate the areas of concern that we think relate to the current act.We are concerned that industrial relations law should include a social justice agenda; that is what the government is trying to remove, particularly with this bill. We are concerned that all workers need to be covered by an industrial instrument and that, therefore, we should not be dealing with a schedule to try and remove independent contractors. We believe that Australia should meet its international obligations. The government senators' report leaves only half a page to discuss this matter. We believe that the industrial relations system should be focused on the prevention and settlement of disputes through negotiation in the first instance.We also believe there should be an ability for workers to balance their work and family lives and that this should be promoted. We believe that the needs of workers vulnerable to discrimination should be adequately protected—and that is what this act does not do. We believe there should be adequate standards for Victorian workers, and we believe there should be a strong and independent Industrial Relations Commission. With respect to all these issues, I say to the Australian Democrats that, through the Senate, we have other potential vehicles to move these matters. We do not need to deal with them within the tainted scope of this bill.That is why the Labor Party has taken a very strong position, which is that we should reject the bill at its second reading and that the other issues that both the Democrats and ourselves highlight in our report that need work in the current act are a matter that we can work with the Democrats on through vehicles other than this tainted piece of legislation. So I conclude, as I did earlier today, that Reith is a wrecker who has got this legislation wrong and we should not join with him in any sense. As the Victorian government has already said, what he is proposing is perverse. Question put: That the bill be now read a second time.21:42:00The Senate divided. (The President—Senator the Hon. Margaret Reid)30Abetz, E. Alston, R. K. R.Brownhill, D. G. C. Calvert, P. H. *Campbell, I. G. Coonan, H.Crane, W. Eggleston, A.Ellison, C. Ferguson, A. B.Ferris, J. Harris, L.Heffernan, W. Herron, J.Hill, R. M. Kemp, R.Knowles, S. C. Lightfoot, P. R.Macdonald, I. Mason, B. J.McGauran, J. J. J. Minchin, N. H.Parer, W. R. Patterson, K. C. L.Payne, M. A.Reid, M. E.Tchen, T. Tierney, J.Troeth, J. Watson, J. O. W.25Bishop, T. M. Brown, B.Campbell, G. Carr, K.Collins, J. M. A. Conroy, S.Cooney, B. Crossin, P. M.Crowley, R. A. Denman, K. J.Evans, C. V. Faulkner, J. P.Forshaw, M. G. Gibbs, B.Harradine, B. Hutchins, S. P.Ludwig, J. W. Mackay, S.McKiernan, J. P. McLucas, J. E.O'Brien, K. W. K. *Quirke, J. A.Schacht, C. C. Sherry, N.West, S. M.Boswell, R. L. D. Murphy, S. M.Chapman, H. G. P. Ray, R. F.Gibson, B. F. Cook, P. F. S.Newman, J. M. Lundy, K.Tambling, G. E. J. Hogg, J.Vanstone, A. E. Bolkus, N.* denotes tellerQuestion so resolved in the affirmative.Bill read a second time.Ordered that consideration of this bill in the committee of the whole be an order of the day for the next day of sitting.Adjournment10977Motion (by Senator Ian Campbell) proposed:That the Senate do now adjourn.1097721:47:0010977Tierney, Sen JohnSenator TIERNEYO15NSWLP10—Last Wednesday, in one of a series of speeches that I have been giving in this chamber on the future of regional and rural Australia, I outlined some of the main findings of the regional summit that was held in this parliament a few weeks ago. What emerged as one of the key findings was the central place of a social coalition. This is about encouraging partnerships between government, business and the community to find realistic solutions to the challenges faced by regional, rural and remote Australia.The Deputy Prime Minister called the regional summit to generate more ideas at the grassroots about what such partnerships could achieve. The Howard coalition government is determined to restore and improve the services in rural and regional Australia. The Prime Minister is committed to that outcome. The government is determined to upgrade the basic services in smaller regional towns in our country. It is doing this through initiatives like the rural transaction centres, which is a $70 million program; Networking the Nation, which is a $250 million program; and extending services like Australia Post's giropost network to include banking services through the Post's bill paying system.On Friday, 29 October, the Prime Minister opened Australia's very first rural transaction centre in the small town of Eugowra, which has a population of 670 people. Described as a `dwindling town' by Mrs Whittle, who is the owner of the Wobble In—Eugowra's second-hand treasure store—there is a double irony here. Firstly, there used to be so much money going through the town of Eugowra that, on 15 June 1862, eight bushrangers, including Frank Gardiner, Johnny Gilbert and Johnny O'Meally, robbed the Cobb and Co. coach. They stole 2,719 ounces of gold and £3,700 in cash, which was a vast fortune in those days and represents Australia's biggest gold robbery ever.The second irony is that the old sandstone building which now houses Eugowra's rural transaction centre used to be a Westpac branch. Like the National Australia Bank, Westpac closed down its branch, both banks deciding it was no longer profitable to stay in this town. This was the straw that nearly broke the camel's back in this town, which was also suffering from a decline in wool prices, ongoing farm losses, the consequential loss of farm worker income and the closure of the railway line in 1988.Before the Prime Minister opened Eugowra's rural transaction centre—which will provide retail banking through the Reliance Credit Union, Centrelink services, Medicare Easyclaim, community Internet access, business support services and jobs for locals who are trained to run the local rural transaction centre—the town folk used to have to make a very long round trip to Forbes or Parkes to do their banking. Of course, while they were there, they tended to do a fair bit of their shopping. This had a crippling effect on many of the local businesses, many of which had to shut down. However, and as the Prime Minister announced at the opening of this centre:The good news is that we have done something to bring services back to the bush.Not only will those basic services that I mentioned return; there will also be the on-flow from that—that is, people in the towns who go in to use those services in rural transaction centres will also be shopping in that area, not going to the bigger centres. No wonder the town is elated and morale is up.Over the next five years, this government plans to continue to roll out these sorts of services across rural and regional communities right around Australia. Any rural community with a population under 3,000 is eligible for assistance under the Rural Transaction Centre Program. Once the criteria are met, funds will be provided for a range of basic transactions, including retail banking, postal services, Medicare services and phone, fax and community Internet services. Even if the population of a regional community is greater than 3,000, if they can make a strong case for assistance, the government will not turn its back on them. The government will actually pitch in.It is important to make the point that those regional communities that meet this criteria are entitled to two types of funds. The first is project assistance for the capital and some operating costs of their rural transaction centres, and the second is business planning assistance to help applicants develop their RTC business plan.The coalition government is adamant in wanting to forge positive partnerships with local communities and with business. We do not want a passive, welfare dependent mind-set in the bush. As Senator Macdonald said on 12 November this year, what we want is for these RTCs to be sustainable. Once they have been set up and assistance is given, we want to see them manage themselves with the transaction fees that they will be generating. That is exactly what rural and regional Australia want. They want to retain the dignity and the tradition of their spirit of self-reliance, and we saw that at the summit. Delegates were unanimous in not wanting a `top down' or `one size fits all' solution delivered to them from the big smoke.The Howard government's rolling out of the rural transaction centres is not only an historic first in the history of this country; it also mirrors in a very tangible manner the collective outcome of the regional Australian summit. We are responding to the core aspirations of regional, rural and remote Australians in wanting to shape their own futures at their own local level, from the bottom up and in a journey of partnership with business and government.1097921:54:0010979Gibbs, Sen BrendaSenator GIBBS6L6QLDALP00—I rise tonight to pay tribute to my friend Patricia Thompson, who was last week elected as an ATSIC commissioner for south-east Queensland. Pat is a well-known and well-respected member of the Ipswich community and will represent indigenous people from the region, which includes Brisbane, as their commissioner on the new national board of ATSIC when it meets for the first time next month.Before becoming a national commissioner, Pat was chair of the South-East Queensland Indigenous Regional Council from 1996 to 1999. She has a long history of being actively involved in the issues affecting Aboriginal and Torres Strait Islander peoples. During that time, she has developed a reputation as a strong advocate and decision maker.Now in her second term as an ATSIC elected representative, Pat has a sound background in administration and management behind her. She has more than 24 years experience working across all levels of government and at the community level. Her particular areas of interest are law and justice, economic development, and housing. She has taken a lead in housing reform in the region with the South-East Queensland Indigenous Regional Council developing a policy initiative entitled `Opportunity or threat?'Pat is currently chairperson of the Ipswich Regional Aboriginal and Torres Strait Islanders Corporation for Legal Services. She is also a member of the Senate of the University of Queensland and the State Reconciliation Committee. She is heavily involved with her local community. In Ipswich Pat has strong links with local government and other mainstream agencies and organisations. She sees those links as playing a vital role in trying to bridge the gap between indigenous and non-indigenous people. This is an approach she is now bringing to the national arena of indigenous affairs. I would also like to congratulate the other Queenslanders elected to ATSIC, but I have a particular interest in Pat's election because, as I said before, we both come from Ipswich and she is a very good friend. More to the point, I can personally vouch for Pat's commitment to indigenous people and social equity in general. I have seen her in action. On the occasions I or my staff have had to contact her for advice, Pat has gone out of her way to be helpful. The indigenous people of Ipswich and Queensland will have a strong advocate on the national board following her election.Most people in this place would be aware that Ipswich has not had the best press in regard to race relations over the past few years. We all know why that has happened, and I will not upset the Senate by talking about that tonight. That trend is reversing and, I am sure, will reverse even more with the work and commitment of our very own commissioner, Pat Thompson. As a percentage of our population, there are more indigenous people in Ipswich than a lot of other cities in Australia. Indeed, the demographics of Ipswich show that it is a very multicultural city overall. Pat is well respected in Ipswich and that respect is well earned. Pat is well respected because of the hard work she puts into all of her community endeavours. She works hard because she has a genuine under standing of most people's needs and empathy for their situation. Pat is also involved with the Kambu Football Club. I spent a delightful afternoon a few weeks ago when Kambu hosted a weekend of football games where teams came from all over Queensland. The final knockout game was played between Inala and Brisbane City. This was delightful for me because Inala won and, as an old Inala kid, I was quite proud that I had the privilege of presenting the trophy to the winning team.I congratulate Pat Thompson on her election. I know her husband, Sonny, and her three sons are very proud of her achievements. I feel that my Murri brothers and sisters of Queensland will not mind if I take the liberty of speaking on their behalf in the Senate tonight to congratulate Commissioner Patricia Thompson and to let her know how proud we are of her. I know the people of Ipswich join me in my sentiments and we all wish her well in her new role. We know she will do an excellent job.1098021:59:0010980Greig, Sen BrianSenator GREIG86XWAAD00—I rise tonight to speak about the very great disappointment, frustration and disbelief within Australia's gay and lesbian communities over the refusal last week of the Labor Party to specifically recognise same sex couples within Senate standing orders. When I came into the Senate and gave my first speech on 1 September, I talked in particular about my desire to move towards a more tolerant and inclusive Australia and, in particular, what that meant for gay and lesbian citizens and same sex relationships. In part, I said in my first speech:As a consequence of this conspiracy of silence, gay and lesbian youth live in an environment of denial and rejection, with no support, counselling, validation, or role models.I also said:Each time a piece of legislation comes before the parliament and touches on human rights and human relationships but excludes gay and lesbian people and denies our relationships—and the key point there is `denies our relationships'— it perpetuates this culture of invisibility.To this end, I forwarded a motion through the Senate in which I asked the Senate to refer to the Procedure Committee the notion that the term `partner' as it relates to partners of senators should be defined as follows:`Partner' means a person who is living with another person as the partner of that other person on a bona fide domestic basis although not legally married to that other person, and includes members of the opposite and same-sex couples.It is very important to me, to the Democrats and to the gay and lesbian communities around Australia that the specific, deliberate reference to same sex couples is in there.When that motion went to the Procedure Committee, the Procedure Committee determined that it would not do that but instead it would come up with a form of wording which was, it argues, `inclusive'. The point I make is that it simply perpetuates the very invisibility of our relationships about which I spoke in my first speech and have spoken many times since.It was a matter of great disappointment that Senator Faulkner said recently in the chamber that that agreement within the Procedure Committee was unanimous. That is not entirely true. When that particular wording was formed, contrary to that which I advocated, Senator Bourne suggested that I would be unlikely to have a problem with it. She was not to know otherwise. But as soon as she did draw that to my attention I explained my particular problems with it. She urged me to write immediately to the members on the Procedure Committee outlining my concerns and urging them not to proceed with what they were advocating, which I did.In a six-page letter to the members of the Procedure Committee I outlined my particular arguments, which were in four specific points. Firstly, I argued that in my view the wording being advocated by the Procedure Committee was legally wrong. I still believe that to be the case in many instances. I argued that it was socially wrong. In particular, I said in my letter to the Procedure Committee that I feared that the proposal—that is, the wording it had come up with—to not specifically recognise same sex relationships within the standing orders may be rooted in this culture of invisibility, which I spoke about in my first speech. In my closing words in my letter to the committee I argued strongly and stated:In closing, I wish to reiterate that the Democrats will not support any `watering down' or `sanitisation' of the original proposed wording to acknowledge same sex couples within Standing Orders.However, that was the wording that was pressed ahead with.When it came to the floor and the debate and the vote I argued strongly against it and I voted strongly against it. I did not call a division because I knew it was clear from the arguments in the house that both the government and the Labor Party were not going to support the Democrats in their preference for specific wording. If any Labor member doubts that, then I challenge them now to support my call to go back to it from the beginning, put the motion again and divide on the vote. Shortly after that vote, journalist Margo Kingston from the Sydney Morning Herald described it as pathetic, and she was right.I would also draw to Labor's attention the fact that, despite its claims that its wording had the support of the gay and lesbian community, it was roundly condemned in the gay press, and I wish to read into Hansard the following from the front page of the Sydney Star Observer in New South Wales from the 29th of this month:The defeat of the republic referendum earlier this month has propelled our federal members of parliament to support "a broader trend toward disregarding the interests of minorities", lesbian and gay rights advocates have claimed.Contrary to their policy supporting the elimination of "discrimination on the grounds of sexuality in Australian society", Labor Senators supported Federal Coalition members in defeating a motion put by Democrats Senator Brian Greig.. . . . . . . . .The Australian Council for Lesbian and Gay Rights—the peak gay and lesbian rights body in this nation—has called the move a defeat for the lesbian and gay human rights movement.They went on to say:"Since the republic referendum both major federal parties have moved to appease rural, outer urban and blue collar voters by dumping minority groups" . . . I concur. I also want to make the point that Senator Faulkner tried to argue that there was no difficulty with Labor supporting same sex couples.In fact the member for Grayndler, Mr Anthony Albanese, is attempting to do just that in the House of Representatives. And how is he attempting to do that? By specifically acknowledging same sex couples within superannuation. His private member's bill specifically acknowledges same sex couples. It does not move towards vague, inclusive, gender neutral terms. It is therefore a nonsense for Mr Albanese to argue, as he did in the pages of the Sydney Star:"What we consider best is, inclusive, not exclusive" . . . I am sorry, but that is an utter and absurd contradiction. He went on to say:"It certainly wasn't a [Labor] backdown. I actually think it was the best possible result."If that is true, let's see him amend his private member's bill to be couched in the same terms.8O6O'BRIENSenator O'Brien—Now he's trying to rewrite history.86XGreig, Sen BrianSenator GREIG—Senator O'Brien interjects and claims that I am trying to rewrite history. I simply reiterate the fact that as from the day of my first speech I made my intentions entirely clear: I said what it was that I wanted to do, I moved that to the Procedure Committee, I wrote to them and argued against what they had advocated, I set out my arguments and said precisely why, I gave it to them in four key points, it came to the chamber, and I was clearly rolled when the Labor Party and the government decided not to support me. Senator Faulkner made that very clear to me when he came and sat by my side, prior to suddenly springing his amendment, and said, `What do you think of this? This is what we're doing.' I said that was not acceptable to me because it did not specifically recognise same sex couples. That is the history. Anything else is not the truth.I will close by yet again quoting from Mr Rodney Croome, the head of the Australian Council for Lesbian and Gay Rights and a prominent person in the Tasmanian gay and lesbian rights movement. He said:What it shows—and he was referring to Labor's position on this—is that there are people in the Labor Party that haven't grasped the real meaning of that policy. And the real meaning is a disenfranchised minority.The policy to which he was referring was the professed policy of the Australian Labor Party, which claims to believe in the rights, equality and same sex partnership recognition of gay and lesbian couples but, when push comes to shove, can never actually do it. It was very clear to me right from the start that the coalition was never going to support me with the specific reference to same sex couples within standing orders or anything else for that matter, but I genuinely believed and hoped that I would have support from the Labor Party, which for some years now has claimed to be standing up for lesbian and gay citizens. But it is not the case.8O6O'BRIENSenator O'Brien—Tell us what is in the Hansard .86XGreig, Sen BrianSenator GREIG—Senator O'Brien calls out about Hansard . I am glad he raised that because I did a search of all the times the Labor Party have voted against the recognition of same sex couples. I can refer to four. I did not have time to go too far back into the Hansard , but I note that on 20 November 1996 on the income tax rates amendment—(Time expired)1098222:09:0010982Coonan, Sen HelenSenator COONAN2M6NSWLP10—One of the most important meetings for the future of international trade is currently taking place in Seattle in the north-west of the United States. Trade ministers from 135 countries, members of the World Trade Organisation, are gathered for what is referred to as the Seattle Round. Their task will be to agree on a road map for negotiations over the next three years to free up global markets and trade in agriculture, services and industrial goods. It is not only to liberalise trade further but to improve trade rules, which is something I want to refer to a little later. On any view, the Seattle ministerial is an ambitious plan to launch a millennium round of trade liberalisation. The real difficulty, however, is what should be on the agenda.In the lead-up to Seattle, the major trading blocs of the United States, the EU and Japan have pushed for the inclusion of their own priorities at the expense of securing a balanced negotiating mix. The United States is keen to link labour standards with trade. This connection is resisted by developing economies fearful of labour conditions being attached to their exports. The EU, Japan and Korea are pushing for the inclusion of investment and competition. France and Germany are still at loggerheads with the United Kingdom over beef exports. There are innumerable lobby and antitrade protest groups agitating for everything from environmental standards to threats to disrupt the proceedings altogether.Where does Australia stand in the fray? Unequivocally, Australia's interests lie in pushing a firm line on agriculture, elimination of export subsidies and substantial reduction in tariffs and other barriers as the most desired outcomes. The potential benefits of further trade liberalisation are enormous. The Department of Foreign Affairs and Trade estimates the global welfare gains from halving trade barriers at around $US400 billion annually, including a gain of $7.5 billion per year to Australia. It must be acknowledged that freeing up trade in agriculture does pose significant and particular problems that were left over from the Uruguay Round. As Fred Brenchley, Canberra correspondent for the Bulletin, observed in a recent article:Agriculture remains the trade Cinderella. Tariffs of more than 300 per cent are not uncommon, and export subsidies flourish.ABARE, the Australian Bureau of Agricultural and Resource Economics, has identified that the most pronounced distortions are to be found in wheat, rice, feedgrains, oilseeds, sugar, milk and beef, and in sheep meat, sugar and milk in the United States. These subsidies and distortions impact upon Australia's more efficient farmers.In an ambitious pitch for agriculture to be treated on the same basis as trade in other goods, Australia's Minister for Trade, Mark Vaile, is also pragmatic. The battle lines are no longer distinct, with new and emerging coalitions of interests taking a cue from the success of the Cairns Group of 15 agriculture and farming export economies, including Australia, all pushing for agricultural trade reform.Developing economies have formed alliances to counter the large trading blocs and to resist changes that will expose inefficient local industries to finely honed foreign competitors. Recently, there have emerged variously named interest groups such as the Like-Minded Group, the Friends of Multi-Functionality and others. Clearly, in a rules based system, improving trade rules, access and transparency are crucial factors for Australia's successful participation in the WTO.Established four years ago, the WTO's binding dispute settlement system has taken no prisoners in opening up markets. Australia has succeeded in its complaint against Hungary over export subsidies and India over other trade restrictions. It has been forced to remove the ban on imports of uncooked salmon and remove subsidies to Victorian leather producer Howe and Co. Australia has lodged complaints with the WTO against the United States over lamb and against Korea over beef. Last Monday, it was announced that the WTO had decided to establish a dispute settlement panel to consider Australia's case against the United States restrictions on imports of Australian lamb. The WTO dispute settlement body is required to make a ruling by next August. Clearly, Australia needs to take a proactive approach to trading partners that do not play by the rules.The government has recently established a Dispute Investigation and Enforcement Unit in the Department of Foreign Affairs and Trade to assist business in dealing with trade problems. This response to the burgeoning power of the WTO is timely. The United States, for example, has a well-resourced pro cess that allows the United States administration to be informed about and target any measures that are adverse to US trade interests and to take pre-emptive action through the WTO.The WTO dispute settlement system is efficient, but it is also legalistic. Since it was launched in 1995, it has dealt with 170 cases, and the real growth is yet to come. The WTO case load has expanded, with the WTO agreement covering services and intellectual property as well as trade in physical goods. There is considerable debate internationally about an extension of the rules to include environmental and health standards. Environmental and health standards are already part of the equation in disputes brought before the WTO.The rules in dispute settlement procedures do not prevent governments from taking actions which are needed to protect the environment. Indeed, the rules contain specific provisions aimed at ensuring that they do not inappropriately restrict the ability of governments to achieve environmental objectives. It is often mistakenly said that the WTO seeks to promote free and open trade at the expense of the environment. In fact, the WTO recognises that the protection of the environment is as important as promoting the benefits of more open trade and that both are essential for achieving sustainable development. However, it is also a fact that environmental concerns can sometimes be used to justify trade protectionist actions. It is the proper business of the WTO to discipline these sorts of inappropriate or unnecessary trade restrictive practices.There is considerable scope for other developments. All of the growth industries—such as the telcos, intellectual property and financial services—can no longer be regulated effectively on a national basis, and there is a compelling argument for a discrete WTO agreement on electronic commerce. In its November publication, the Australian Chamber of Commerce and Industry identifies the natural fit between the WTO system and electronic commerce. It says:From `Put simply . . . market entry'.Put simply, the Internet as the platform for electronic commerce has the potential to create a virtual global marketplace for goods and services and to overcome the tyranny of distance and cost for many traders and consumers, while the WTO system is intended to reduce or make transparent the tangle of different barriers to market entry.With the broad range of WTO agencies having a foothold in aspects of electronic commerce, it will be important for the framework for e-commerce not to become fragmented.Drawing these themes together, the new trade round will be vital for Australia's future. Not only must there be further inroads into remaining tariff barriers, but we must have stronger rules so that commitments to open markets are actually carried out. Difficult areas like agriculture must not be put aside at the end of the round. The results of negotiations in all areas need to be finalised and implemented at the same time by all WTO members as part of a single package. It must be acknowledged that some sections of the community argue that further trade liberalisation exposes countries to the volatility of the global marketplace, with the consequent loss of jobs and a good deal of social and psychological pain and dislocation. This is largely because the benefits of globalisation are not equitably shared, while those who suffer in domestic markets are easily identified and vocal.If the momentum for reform is to be maintained, we must do more to ensure that the benefits are equitably shared and the victims of change receive appropriate adjustment assistance. However, it must also be borne in mind that trade means jobs and economic growth for all Australians. In fact, 1.7 million jobs, one in every five, depend on trade. For these reasons, it is important that all Australians understand and support Australia's efforts in Seattle. Australia has much to gain by accessing hitherto unavailable agriculture markets. We hope that our delegation will not be sleepless in Seattle, but we do hope their grasp of these issues will give us the best chance to secure a very good outcome.1098422:19:0010984Stott Despoja, Sen NatashaSenator STOTT DESPOJA3I6SAAD00—I rise this evening to discuss the need for an Australian parliament to hold an inquiry into the responsible regulation and promotion of biotechnology and its applications. To date, all consideration of biotechnology and related issues has been in the other place, the most recent being the House of Representatives Standing Committee on Primary Industries and Regional Services inquiry into the primary producer access to gene technology. However, I would argue there has not been a comprehensive consideration of such issues since the House of Representatives Standing Committee on Industry, Science and Technology's investigation into the development, use and release of genetically modified organisms into the environment, which was tabled in February 1992.Biotechnology and its regulation have moved a long way since this time, and the public needs a forum to address the issues that have arisen in the intervening period. These issues should be addressed by the Senate. The Senate represents interests which the other place cannot. Sustainable development, the environment and other traditionally non-industry and business interests must be represented and considered in any such debate.It is true that Commonwealth departments and authorities consult regularly with the public on aspects of the regulation and implementation of biotechnology, but many aspects of this multidimensional debate remain relatively unexplored. For example, the biopiracy and biocolonialism issues cannot be ignored in domestic law. The effectiveness of intellectual property rights and other legal instruments to ensure adequate recognition and protection of indigenous knowledge of biological species needs to be addressed. This ties in nicely with some of Senator Coonan's earlier comments on the WTO Seattle Round, because some countries wish to pursue some of these issues during that forum's debate. Australia needs a forum outside that of the department of health and the ANZFA to address these issues before we consider the value of an office of gene technology. Senator Tambling might want to take up some of these issues if he has time in his comments shortly. Only last week in the other place, backbenchers raised the issue of patenting natural genetic material. I am sure a Senate inquiry could address this. It is quite surprising to hear some government backbenchers questioning whether or not we should be able to patent genes and gene sequences. This is something that until now I assumed the government endorsed, but I suspect there were some nervous backbenchers in the recent debate on the ANZFA who were suggesting it may not be appropriate.That is a view to which I subscribe, and a private member's bill of mine from a couple of years ago reflects the idea that we should prohibit the patenting of genes and gene sequences. Senator Nick Minchin, the Minister for Industry, Science and Resources, stated today in question time—in response to a dorothy dixer, mind you—that Australia was well supported in science by this government in comparison with other OECD countries. It is true that we have increased our natural output of scientific papers and patents. However, it remains to be determined if this increase will transfer to the private sector, considering our poor record in developing inventions into marketable products.We must critically consider the domestic policies for promoting research and development in biotechnology which may be, on the one hand, promoted or, on the other hand, restricted by regulation. The Senate should participate in debating the issues involved in the responsible regulation of biotechnology. The issues surrounding this technology are greater than that represented in the two-party play-off in the other place. There is a considerable role for the Senate in this debate and considerable room for the extension of this debate beyond the pro- and anti-GM foods and crops dimension. That being said, there are several issues which gene foods and crops raise which require further attention and investigation. These include the suitability and adequacy of testing of biotechnology products.Currently, there is no independent body which undertakes scientific analysis of genetically modified products in Australia. The ANZFA instead relies on data provided by the company which is applying for approval of its genetically modified product to satisfy safety requirements. This is inadequate. We need to know what we mean by GE free—and what steps are considered adequate to providing consumers with a choice between genetically modified crops and traditional crops or organic crops. We need adequate segregation to ensure the individual's right to choose, just as we need segregation to protect lucrative export markets. We also need to consider the effect of trade initiatives, transfer pricing, and tariffs for biotechnology and Australia's GM and GM-free markets.The global opportunities of non-GMO markets are looking more and more extensive. Take for example the forum held by KPMG a fortnight ago attended by a number of international experts, including the Japanese Consumer Union and the Japanese International Certification Service, which launched the FoodCert Consortium, a GM-free alliance that is anticipated to win Australia and New Zealand tens of millions of dollars in food exports—providing a valuable trade niche with our European and Asian trade partners. It is a case of the government's efforts being so inadequate in regulating this technology that the industry has had to take GM foods testing and segregation into its own hands. They have recognised that there is a valuable export market here, but they require government support.Rodger Hussey, the Associate Director of KPMG, recently stated:Consumers have made their desires plain, the government is moving towards putting labelling into place, and there is now a substantial non-GM market moving towards putting labelling into place, and there is now a substantial non-GM export market.Costing by the Genetic ID & CERT ID behind the FoodCert AUSNZ Consortium for ensuring GM-free foods has estimated a price of 0.2 per cent of product price. This shows that the Prime Minister's intervention in the decision, last month, by Australian and New Zealand health ministers to label genetically modified foods was ill considered—at the very least.The health ministers have committed to labelling, but we must protect against further ill-informed debate or eleventh-hour contributions to the wider biotechnology debate. Technology must be accountable—that is, a technology's benefits must outweigh its collective negatives. Those who implement the technology must be accountable for its claimed benefits. It is not the end of the story, just because it passes a test which is interpreted to mean that it is safe. Nuclear technology, for example, must keep demonstrating that it is safe, as should biotechnology. The accountability of biotechnology is a significant issue, as regulatory approval can be given and a test is made available further down the track which is more effective at assessing the particular approved product or process.The technology should have to meet safety standards—for which the new test allows. For example, Monsanto's Roundup Ready soybeans have approval in some places. If better tests show they are unsafe, this approval will need to be reviewed. There should be accountability to ensure that they keep up with the best tests available and provide the satisfactory data to fulfil the latest requirements of the regulatory authority. The concentration of ownership of biotechnology and its corporatisation must also be addressed. National governments control less than one-third of global investments in biotechnology, whereas private industry therefore controls more than two-thirds of the capital generated. The global bio-industry spans the agricultural and pharmaceutical industries and is eclipsed by an uncontestable tier of multinational corporations.Today, 2,800 biotechnology companies exist worldwide and it is estimated that by 2005 the potential market for bio-commodities will be worth $US278 billion. The implications of this powerful concentration of capital and its compatibility with public and environmental good must be explored. In the past, politicians have wanted to shy away from genetics issues as these issues tend to defy the traditional party lines. Nevertheless, we must grit our teeth and immerse ourselves in the debate beyond the two-party `for and against' mind-set—that is, take it beyond the `expert only' realm of scientific discourse and bring it out into the community. I am hopeful that the universal implications and revolutionary nature of this technology will allow for cross-party support. These are issues that do not fit the traditional ideological right and left divide, and what better place to debate these issues than in a Senate committee.1098622:28:0010986Tambling, Sen GrantSenator TAMBLING6E4NTCLP10—The Prime Minister's visit to East Timor yesterday has highlighted the exceptional job being done by the Australian Defence Force and the earlier Australian police force personnel involved in the East Timor crisis. The praise the Prime Minister has given to the INTERFET troops and their commander, Major-General Peter Cosgrove, is well deserved and not lightly given. Australia's biggest deployment of troops—as part of INTERFET—since Vietnam has been outstanding. The professional manner in which all Australian Defence Force personnel have conducted themselves during the crisis, which has been dangerous and involved sometimes appalling conditions, is a tribute to their training and commitment. Major-General Cosgrove, in particular, has done Australia proud.The courage and restraint under fire that has been shown by those troops unfortunate enough to experience combat is remarkable. To have so few casualties in such a large scale operation is a godsend. I, along with all Australians, thank God that no Australian troops were lost in East Timor and wish those injured all the best in their recovery.Australian troops and police have not only shown professionalism in their attitude to military and policing duties but also outstanding humanitarian and personal commitment to the people of East Timor. That is no less reflected in our assistance now than it was at the height of the tension and violence that followed the intervention of the INTERFET force into East Timor.The ties that link Australia and East Timor have always been strong but they will now be unbreakable. Over the years, the East Timorese have done much for Australians. This was particularly so in the Second World War, and many Australian troops owe their lives to the assistance that was so freely and courageously given by East Timorese men and women during those dark days.Australians have responded to the crisis in East Timor with feeling and a great sense of empathy. It was extremely moving to see in Darwin the great effort that was made to look after the East Timorese evacuees. When I toured the tent city that had been constructed by the Northern Territory government, the Army and various other NT and Commonwealth departments and agencies, I was astounded at the efficiency and effectiveness of this temporary haven. The volunteers who worked so hard at the tent city were extremely generous with not only their time but also their spirit and good humour. Many Territorians donated food, clothing and many other items that the East Timorese desperately needed.The generosity of the Australian people and their government has not stopped with the fantastic examples shown in Darwin. Australia has so far contributed a total of $74 million in foreign aid to the East Timor crisis to assist with humanitarian and reconstruction needs. This is the largest contribution Australia has ever made to an international humanitarian crisis. The most recent announcement of including $60 million in the aid package by the Minister for Foreign Affairs consists of: $34 million to ensure that longer term goals are achieved through reconstruction and development programs, and that an administration is established to oversee preparations for independence under UN authority; $23 million to meet the immediate needs of the East Timorese people in humanitarian areas such as repatriation and resettlement; and $3 million for refugees in West Timor.What I have just described excludes the substantial ADF presence of some 5,500 troops and the costs associated with this sort of effort. These costs are estimated at approximately $1,000 million and have been sustained as part of Australia's contribution to INTERFET security and humanitarian operations in East Timor.To say that Australia has not done and will not continue to do the right thing by the people of East Timor, particularly with regard to humanitarian and refugee assistance, is ludicrous. Yet this is what the opposition immigration spokesman, Con Sciacca, has claimed. Mr Sciacca's comments regarding the return of East Timorese evacuees are ill-timed and extremely mean-spirited. Once again the ALP has irresponsibly stirred up a media feeding frenzy with these inaccurate and ill-informed comments. The result has been coverage that has completely blown all the facts out of proportion and which is irresponsible.The federal government is not sending East Timorese evacuees back to East Timor against their will. In fact, many evacuees are very keen to return to their homeland to be reunited with family and friends. I do not find this surprising. What I do find surprising are the claims that people are being forced to return. They are not being forced. Some 600 East Timorese have already returned to East Timor from Australia. The voluntary nature of the return of these people is being verified by the UNHCR.The UNHCR has also given assurances to the East Timorese people in Australia and West Timor that the security situation has stabilised to such an extent that it is now safe to return. It is not the Australian government giving these assurances but the United Nations. The claims that the East Timorese are being enticed to return with a bag of rice and a tarp is yet another fiction created by Labor and some people with a determination to politicise what should be a bipartisan position. The UNHCR and several aid agencies will help those who return. Emergency shelters and assistance packages will be provided, and the East Timorese who are choosing to return are being informed of this fact by immigration department staff.Comparisons have been made by those who should know better, such as Mr Sciacca, with the situation of the Kosovar refugees, who received $3,000 in assistance upon their return to their homeland. The situations are not comparable. Australia has played a major role in East Timor with extensive military assist ance and humanitarian aid, and will continue to do so for the foreseeable future. Australia did not play a major role in the NATO operation in Kosovo; even though we played a `good neighbour role', it cannot be compared with our `good and near neighbour' policies towards East Timor.What is Mr Sciacca advocating—that Australia give $3,000 to all 2,000 East Timorese returnees? The economic and social impacts of this in East Timor would be tremendous and largely negative. It surprises me that a committed socialist such as Mr Sciacca may even be thinking about such a measure which is clearly nonsense. The ALP's comparative plan to equate the two groups would only create pockets of `advantage' for a few, whereas the Australian government's response to the entire East Timorese population is far more equitable. Our initial response of aid and military assistance was generous by any comparison. Also, our ongoing support to the many refugees now caught in West Timor plus our future commitment to reconstruction and peacekeeping for an emerging nation is beyond question. The ALP is playing opportunistic politics in the extreme.The Australian people, through their government, generously accepted the East Timorese in a time of crisis. This offer of a safe haven was a temporary measure and has always been meant as such. As the Prime Minister has said, it is in the long-term interests of the East Timorese to return, and I feel it is also in the long-term interests of East Timor for them to return.Due to the courageous and timely intervention of Australia and many other nations, we are seeing the will of the East Timorese people being implemented. It is a long process that will not be easy, but it is a democratic process—and that is of vital importance. The Australian government, the Australian people and our defence forces can feel justifiably proud of the role they have played in the emergence of this new nation. We have provided the platform of stability and security necessary, following the deployment of Australian troops in INTERFET at the end of September, to enable the East Timorese people to find freedom.It was interesting to note that Major-General Cosgrove indicated that it might be possible for troops to begin returning home by 15 January next year. As a senator for the Northern Territory, can I be very partisan and state that I hope it is the Territory ADF personnel who are allowed to return home to their loved ones early.From a parochial point of view, let me comment on the advantages and challenges that have been met by the Darwin and Northern Territory communities because of our geographic proximity as Territorians to the Timorese. I have detected a great unity of spirit in the Northern Territory and a determination to be intimately involved for the long haul. It will involve many compromises to Northern Territory social priorities and activities in the next few years. Certainly, there will be some economic opportunities, but that will pale into insignificance alongside the great bonds of friendship and interdependence that will be produced.Senate adjourned at 10.37 p.m.Documents1098810988The following documents were tabled by the Clerk:Aboriginal and Torres Strait Islander Commission Act— Regional Council Election (Casual Vacancies) Amendment Rules 1999 (No. 1). Zone Election Amendment Rules 1999 (No. 1).Civil Aviation Act—Civil Aviation Regulations—Civil Aviation Orders— Amendment of section 20, dated 25 November 1999. Exemption Nos CASA 37/1999, CASA 43/1999 and CASA 44/1999. Instrument No. CASA 1073/99.Corporations Act—Accounting Standard— AASB 1015—Acquisitions of Assets. AASB 1033—Presentation and Disclosure of Financial Instruments.Currency Act—Currency Determination 1999 (No. 6). Family Law Act—Rules of Court—Statutory Rules 1999 No. 279Higher Education Funding Act—Determination under section 15—Determination No. T16 of 1999.Lands Acquisition Act—Statements describing property acquired by agreement under sections 40 and 125 of the Act for specified public purposes [2].Nuclear Non-Proliferation (Safeguards) Act—Regulations—Statutory Rules 1999 No. 278.Product Rulings PR 1999/102 and PR 1999/103.Superannuation Act 1990 —Declaration—Statutory Rules 1999 No. 277.Taxation Rulings TR 1999/16 and TR 1999/17.The following document was tabled pursuant to the order of the Senate of 1 December 1998:Public servants—Accountability, rights and responsibilities—Statements of compliance—Departments—Agriculture, Fisheries and Forestry.Attorney-General's.Attorney-General's portfolio agencies.Finance and Administration.Immigration and Multicultural Affairs.Joint House.Answers to Questions on Notice10990The following answers to questions were circulated:10990(Question No. 1406)140610990Faulkner, Sen JohnSenator Faulkner5K4NSWALP00 asked the Minister for the Environment and Heritage, upon notice, on 2 September 1999:With reference to the effect of the goods and services tax (GST) on the internal operations of the Minister's portfolio (that is, not relating to the services provided to the public), and in relation to each of the agencies within the portfolio:(1) What preparations have been undertaken to date in regard to the introduction of the GST on 1 July 2000.(2) (a) What has been the total cost of those actions already undertaken, and (b) how much of these costs relate to:(i) consultancies, (ii) staff training, (iii) computer software, (iv) extra staff, (v) stationery, and (vi) other (please specify).(3) Was the cost of undertaking this work included in the portfolio's 1999-2000 budget appropriation; if so, how was this funding identified; if not, what other area of funding has been used for this purpose.(4) What future preparations are planned or expected to be required in regard to the introduction of the GST on 1 July 2000.(5) (a) What is the total cost of the actions planned, or the estimated cost of expected actions; and (b) how much of these costs relate to: (i) consultancies; (ii) staff training; (iii) computer software; (iv) extra staff; (v) stationery, and (vi) other (please specify).(6) Was the estimated cost of undertaking this future work included in the portfolio's 1999-2000 budget appropriation; if so, how was this funding identified; if not, what other area of funding has been used for this purpose.(7) Is there expected to be any change in the ongoing running costs of the department/agency after the commencement of the GST; if so, what is the extent of the difference in costs.(8) Are there any other GST-associated costs which the portfolio agencies will incur prior to the commencement of the GST; if so, what is the extent of the difference in those costs.10990Hill, Sen RobertSenator HillBH4SALPEnvironment and Heritage10—The answer to the honourable senator's question is as follows:(1) Preparations are at a very early stage. The department is consulting the Department of Finance and Administration, the Treasury and the Australian Taxation Office to identify possible impacts.(2) This work has not been costed.(3) No. There were no additional funds provided for this work in the 1999-2000 Budget. Expenses have been met from the existing Departmental Expenses appropriation.(4) The department is working closely with the Department of Finance and Administration, the Treasury and the Australian Taxation Office to identify possible impacts and management strategies.(5) These actions have not been costed.(6) No. See above.(7) The department is evaluating possible impacts.(8) See (1) above.10990(Question No. 1427)142710990Brown, Sen BobSenator BrownQD4TASAG00 asked the Minister for the Environment and Heritage, upon notice, on 15 September 1999:How much money did the Commonwealth Government spend on its international lobbying effort against the listing of Kakadu World Heritage Area as endangered.10990Hill, Sen RobertSenator HillBH4SALPEnvironment and Heritage10—The answer to the honourable senator's question is as follows:None. An estimated $337,937 was spent on international travel for meetings and conferences by departments between November 1998 and July 1999 to comply with requests for information from the World Heritage Committee and ensure a proper factual understanding of the situation by Committee members.10990(Question No. 1544)154410990Faulkner, Sen JohnSenator Faulkner5K4NSWALP00 asked the Minister representing the Prime Minister, upon notice, on 20 September 1999:With reference to the inadequate answer to question on notice no. 980 (Senate Hansard, 1 September 1999, p.7826):(1) In the period of either the first or second Howard Governments, has there been an informal or formal instruction within the department that any answer to a parliamentary question regarding expenditure on the Prime Minister's official residences is to include comparative expenditure details regarding the former Prime Minister's period of office; if so: (a) who issued the instruction; (b) when was it issued; (c) under whose authority; (d) who in the Prime Minister's office requested this practice be instituted; and (e) how was the instruction conveyed.(2) Has there been any informal or formal instruction within the department that, wherever possible, answers to all parliamentary questions are to include comparative details with the previous Government; if so: (a) who issued the instruction; (b) when was it issued; (c) under whose authority; (d) who in the Prime Minister's office requested this practice be instituted; and (e) how was the instruction conveyed.10991Hill, Sen RobertSenator HillBH4SALPEnvironment and Heritage10—The Prime Minister has provided the following answer to the honourable senator's question:(1) and (2) As indicated in my answer to question No. 980 (Senate Hansard, 1 September 1999, p.7826), I regard it as both relevant and appropriate to include readily available comparative information in answers where this would provide a balanced perspective.10991(Question No. 1552)155210991O'Brien, Sen KerrySenator O'Brien8O6TASALP00 asked the Minister for Family and Community Services, upon notice, on 21 September 1999:(1) (a) What level of funding was provided through Emergency Relief Grants, by state, in the 1996-97, 1997-98 and 1998-99 financial years; and (b) what funding has been allocated to this scheme for the 1999-2000 financial year.(2) In each state: (a) which organisations applied for funding; (b) which organisations received funding; and (c) what was the level of funding for each organisation through the scheme in the above financial years.(3) (a) How does the department publicise the availability of funding through the scheme; and (b) has the form of this publicity varied since the 1996-97 financial year; if so, how has the public information campaign in support of the scheme varied.(4) (a) What was the cost of promoting the scheme in the 1996-97, 1997-98 and 1998-99 financial years; and (b) what funding has been allocated for this purpose in the 1999-2000.(5) (a) What criteria does the department apply in assessing applications for funding through the scheme; and (b) has the criteria varied since the 1996-97 financial year; if so: (i) how have the criteria varied, and (ii) why.(6) (a) Who assesses applications for assistance through the scheme; and (b) who finally approves or rejects each application.10991Newman, Sen JocelynSenator NewmanBE4TASLPFamily and Community Services; Minister Assisting the Prime Minister for the Status of Women10—The answer to the honourable senator's question is as follows:I do not consider that extracting and compiling this amount of data is a suitable use of public service resources.Information on the Emergency Relief Program is published in the annual reports of the Department of Family and Community Services.10991(Question No. 1560)156010991Cook, Sen PeterSenator CookRF4WAALP00 asked the Minister representing the Treasurer, upon notice, on 23 September 1999:Do individual phone calls, as itemised on a phone bill, each represent a separate taxable supply as defined in division 9 of A New Tax System (Goods and Services Tax) Act 1999; if so, will individual phone calls have the goods and services tax included separately for each phone call or will it just be included in the total figure at the end of the phone bill.10991Kemp, Sen RodSenator KempWW4VICLPAssistant Treasurer10—The Treasurer has provided the following answer to the honourable senator's question:The individual phone calls will be individual supplies. The price shown on the phone bill for each individual call should be GST-inclusive as would the total amount of the bill.10991(Question No. 1562)156210991Cook, Sen PeterSenator CookRF4WAALP00 asked the Minister representing the Treasurer, upon notice, on 23 September 1999: How will businesses be encouraged to display pre- and post-goods and services tax prices.10991Kemp, Sen RodSenator KempWW4VICLPAssistant Treasurer10—The Treasurer has provided the following answer to the honourable senator's question:There is no requirement for businesses to display their pre-GST prices at the same time they are displaying their post-GST prices, nor will businesses be prevented from doing so if they wish.The ACCC's price exploitation guidelines state that "businesses are encouraged, but not required, to explain to their customers the basis of their price adjustments arising from the New Tax System changes".10992(Question No. 1563)156310992Cook, Sen PeterSenator CookRF4WAALP00 asked the Minister representing the Treasurer, upon notice, on 23 September 1999:How will consumers know what the post non-inclusive goods and services tax (GST) price is in order to compare with the pre-GST price as theGovernment has chosen to hide the GST component in the final retail price.10993Kemp, Sen RodSenator KempWW4VICLPAssistant Treasurer10—The Treasurer has provided the following answer to the honourable senator's question:The Government's policy is that businesses should display the GST inclusive price of a good or service. In this way the total price to be paid will be clear to the consumer. Businesses can also choose to display the GST exclusive price and the tax as components of the total price of a good or service.Where the components of the price are not displayed, consumers will be able to calculate the GST on taxable supplies by dividing the tax-inclusive price by 11. For GST-free supplies GST will be zero. For input taxed supplies the GST on the final sale will also be zero.