Mr HAASE —My question is addressed to the Prime Minister. Can the Prime Minister inform the House of the new taxation measures recently announced by the government to encourage greater corporate and personal philanthropy in Australia? What has been the response to this announcement?

Mr HOWARD (Prime Minister) —I thank the member for Kalgoorlie for that question. With the indulgence of your good self, Mr Speaker, before I answer that question, because it was asked by the member for Kalgoorlie, can I say that when I visited his electorate on Thursday, accompanied by the Leader of the Opposition and the Premier of Western Australia, how immensely impressed and moved I was—and I know the Leader of the Opposition would have been likewise—by the tremendous spirit and attitude of the people of Exmouth and the people of his electorate who have suffered very extensively from cyclone damage.

I was able to announce the establishment of a special trust fund of $10 million, contributed equally by the Commonwealth and the Western Australian governments as well as a number of ex-gratia measures similar to what was invoked at the time of the floods in Katherine over and above the normal disaster relief arrangements. I want to compliment the honourable member for Kalgoorlie for the tremendous work that he has done in rallying the locals and making certain that their position was put in a very direct and very effective manner not only to me but also to the Western Australian government. It was a splendid example of people pulling together in a time of great adversity—a wonderful Australian tradition.

It is true that last Friday I had the opportunity at a very large dinner in Melbourne to announce a number of major changes to the taxation law that are going to result in tens of millions of dollars of further contributions to charities in Australia each year. These measures are part of the government's long-term philosophical approach in this area of building a new social coalition, a coalition between the government, business, the welfare sector and individuals. What the government has done by these measures is provide to both corporations and to wealthy individuals in Australia more incentives to give to needy causes and to needy organisations.

It is our calculation that they will generate an additional $75 million a year—and that is putting it conservatively—in donations to eligible bodies. They comprise a series of income tax deductions for the market value of donations of property worth more than $5,000, regardless of when the property was purchased or acquired, and a capital gains tax exemption for testamentary gifts of property to bodies eligible to receive tax deductible donations. Eligible not-for-profit organisations can expect a $15 million boost in donations as a result of that particular measure alone.

There will also be greater incentives for donations of property under the Cultural Gifts Program. Donations will be exempt from capital gains tax, and donors will be able to apportion their tax deductions for donations over a period of up to five years.

We are going to create a new category of private charitable funds. These funds will not be required, in order to get the benefit of existing tax deductions, to seek donations from the public at large. This will provide businesses and more affluent families and individuals greater freedom to set up trusts for philanthropic purposes. It is expected that this measure alone will increase donations by a further $15 million a year.

These taxation measures flow from the recommendations of a taxation working group, chaired by Mr David Gonski of Wentworth Associates. This working group was set up after the round-table meeting with business and community leaders in March 1998, and I am very grateful for the work of Mr Gonski and the members of that working group.

I am pleased to report to the parliament that the announcement I made to the dinner on Friday night has had a very, very positive response. For example, the Salvation Army has welcomed the tax breaks to boost business and personal philanthropy; the army said that the package of measures would make a dramatic difference to its work. They are not my words. They are not the words of a government propagandist. They are the words of one of the most respected bodies in the Australian community, the Salvation Army, when it said that the measures would make a dramatic difference to its work.

The Salvation Army went on to say, `It will encourage asset rich but income poor people to give to us without having to pay capital gains tax on their real estate, shares or other assets.' In other words, this is the social coalition at work: the government provides the tax break, the corporate sector responds and the needy in the community get the benefit of that assistance.

Those words of support were echoed by the Australian Foundation for Culture and the Humanities. Its executive director, Winsome McCaughey, said yesterday, `The Prime Minister's announcement sets new directions for philanthropy and sponsorship that will lead to a significant boost for the cultural sector.' She said:

Mr Howard's announcement is important for two reasons: it sends a powerful message to business that supporting the community and culture sectors can add value to a corporate bottom line when enriching society; and secondly, it removes some big disincentives that inhibit private sector support for community and cultural projects.

Finally, the government's announcement has been very warmly welcomed by ACOSS:

The Australian Council of Social Service has welcomed the Prime Minister's promise to give tax breaks to business for donations to charity. The President, Michael Raper, said that he supported the initiatives, which included capital gains tax exemptions . . .

Also, the Chamber of Commerce and Industry's chief executive, Mark Paterson, said, `The proposals should encourage more philanthropy in the business community.' I have been greatly encouraged by the reaction not only of the welfare sector but of the community generally.

What I announced on Friday night is part of a careful long-term strategy of the government to build a stronger and better social coalition. I made it clear on Friday night, and I make it clear again, that the government does not intend by any of these initiatives to wind back the income support that it provides in the Australian community. The moneys that will come under these initiatives will be over and above what the government provides by way of income support; they will be value adding to what is already there in the community. This will be new money for the charitable sector, new support under the government's long-term concept of an effective social coalition within the Australian community.