Mr DONDAS —My question is addressed to the Treasurer. Can the Treasurer inform the House what measures the government has implemented to help re-establish the town of Katherine and its districts following the devastating floods earlier this year?

Mr COSTELLO (Treasurer) —I thank the honourable member for his question. Most people in the House, and indeed in Australia, were dismayed to see the terrible floods in the Katherine region in January 1998. The House will recall that the Prime Minister, together with his wife, visited the Katherine region in response and on 5 February 1998, in a joint press release with the Chief Minister of the Northern Territory, he announced the Katherine regional development program and the establishment of the Katherine and district business re-establishment trust fund.

The Australian Defence Force was active in the alleviation of the situation in Katherine. They had up to 1,000 people involved in the movement of people, rescue, protection and the clean-up of the town, and we all give our thanks to them for that fine work.

The Katherine and district re-establishment trust fund has tax deductibility; that is, donations to that trust fund are tax deductible. From that fund, $10,000 grants are being paid to businesses to re-establish, to primary produces and to other eligible businesses that were devastated by floods.

The member for the Northern Territory raised with me earlier on this week the question of whether or not those grants would be taxable. I sought advice from the Australian Taxation Office in response to his request and the advice which I received was that the $10,000 grants out of the trust would be taxable under existing law. I pay tribute to the hard work of the member for the Northern Territory and to the representations he has made to me on this issue. If it had not been for the representations and the work that the member for the Northern Territory has made, I would not be able to now announce that the government will be amending the legislation to ensure that $10,000 grants from the trust for the re-establishment of businesses in Katherine will not be assessable for taxation.

The government feels, after listening carefully to the representations which were made by the member for the Northern Territory, that it is only right that sums out of that trust fund do go wholly and totally for the re-establishment of businesses in the flood affected area. The government wants to underscore the importance that we attach to it. On behalf of the government, I thank the honourable member for the Northern Territory for his work on this issue.