Mr GEORGIOU (10:30 AM) —I would like to begin by commenting on the member for Melbourne's astonishing capacity for political amnesia. He seems to have forgotten that the Taxation Laws Amendment (Political Donations) Bill 1999 merely reflects the consensus arrived at by the Joint Standing Committee on Electoral Matters—a consensus participated in by the Labor Party. If he is so scrupulous about wishing to put things on the record, then I really think he ought to address that fact. But I will come back to that.

The Taxation Laws Amendment (Political Donations) Bill 1999 is straightforward—not that you would get that impression from the member for Melbourne's ruminations. The bill flows from the recommendations of the joint standing committee's report on the 1996 election. It raises the level of tax deductibility for contributions to political parties from $100 to $1,500 and extends those entitled to deduction from individuals to companies. Donors will be entitled to deductions for contributions not just to political parties registered under the Commonwealth Electoral Act, as is the present situation, but to all parties and candidates contesting federal elections.

It is the second time that the bill has been introduced. The first time was in 1998, but the bill lapsed with the calling of the election. The bill removes the bias in the present legislation against Independents and it will strengthen Australia's democratic processes by broadening the financial base of candidates for elections and increasing political participation in the political process.

The bill in no way diminishes current disclosure rules. The Joint Standing Commit tee on Electoral Matters justified the measure on the grounds:

An increase in the maximum deduction would encourage small to medium donations, thereby increasing the number of Australians involved in the democratic process and decreasing the parties' reliance on a smaller number of large donations.

It is beyond contention that increasing tax deductibility from $100 to $1,500 will attract more funds from small and medium donors. I believe that this is axiomatic and that any diminution in the dependence on large donors does enhance the democratic process. Equally, I have to say that it has never appeared to me that large financial donations have bought influence on decisions made by governments in Australia. But it is appropriate to enhance the circumstances in which the financial dependence of political parties is minimised and their financial support is as broadly diffused as possible. This bill does contribute to such an outcome.

The bill also strengthens political participation, which is something that the values of our democratic system seek to foster. In Australia, political participation takes many forms that vary in duration, extent, intensity and resources. Participation ranges from the act of voting, which we quite rightly encourage through our system of compulsory voting, to taking an interest in politics, staffing polling booths, becoming a member of a political party and contributing moneys for the support of political candidates and political parties. I believe—and I think most of us believe—that all these forms of participation in the political process should be encouraged by a political system that values an active and informed citizenry.

I say again that the financial support of political candidates is an important mode of involvement in the democratic process. Increasing the magnitude of this financial support through an increase in the amounts attracting tax deductions will undoubtedly increase the intensity of involvement.

It does need to be said, however, that there is some doubt that tax deductibility will increase the number of people making donations to parties and candidates. I think this perspective is well brought out in the Bills Digest on the political donations bill. I would like to commend the work of the people who prepare the digest for what is an invaluable contribution to the parliamentary process. Digests, apart from being accessible summaries and a more than occasional crib to assist harassed politicians, invariably bring to the fore issues of significance that members of parliament might otherwise overlook or not focus on sufficiently. In the case of this bill, the Bills Digest observes:

. . . arguments can be made that the increase in the amount that can be deducted will have little if any effect on the number of Australian individuals involved in the democratic process.

For example, it is difficult to see that there is a significant number of people, if any, who decide not to make any donation to a political party because only $100 is deductible per year rather than a larger amount.

This would amount to a person deciding that if they cannot get a deduction for the higher amount they will not donate the $100 subject to the deduction.

On the face of it, this seems to be a reasonably persuasive argument, but it does have the difficulty that it overlooks the dynamics and economics of the political process and political fundraising. The fact is that people do not just autonomously make donations to political parties and candidates and, equally, political parties are not just passive recipients of contributions. People give money to political parties to some degree because political parties and candidates actively solicit them to do so. The fact is that the more people from whom candidates solicit contributions the greater will be the number of people who will contribute.

Broadening the funding base does, however, involve costs to those raising the funds. The greater the potential return on an investment of time and money by political fundraisers, the greater will be the effort they will put into different fundraising avenues and broadening the fundraising base. If I can put it crudely, as somebody who was involved at the margins in this, at the moment it is more economical to get so-called `big hit contributions' out of major donors than to invest heavily in going broadly into a large number of donations that are comparatively small and comparatively difficult to raise. This is where the bill does impact, because the increased incentive given by tax deductibility for people to give more money will, I believe, mean that political parties will make much more intensive efforts to raise small and medium amounts, because the yields that will be expected from this will exceed the investment in terms of time, effort, data processing and direct mailing.

I believe it can be anticipated that political parties—and I should imagine this will apply no less to the Labor Party, despite their constant bleatings that they will only get a small amount of money—will make intensive efforts to pursue small and medium level donations and that more people will, thereby, be actively involved as financial contributors to politics because the level of tax deductibility will increase. So I would be confident that the passage of the political donations bill would not only lead to a lesser dependence on large donors but also involve more people in the political process through more people making political donations. This will strengthen our democracy and increase the number of people whose participation extends beyond voting.

This is a serious bill, and politics is a serious business. It is rare—and probably properly so—that one gets a really good belly laugh out of the political process. But the opposition's position on the Taxation Laws Amendment (Political Donations) Bill 1999 does tickle one's funny bone. I have to say—and I have gone through all of the debates on this—that I have rarely seen the opposition trying as hard to keep a straight face as they were while making such incoherent, third-rate arguments against the bill. This was exemplified by the member for Melbourne, but I must say he is not as vivacious as the member for Banks. The member for Banks's contribution in the last debate is a case in point. He is—in my view, at least—one of the more witty members of this House. Occasionally, some of us have some difficulty keeping a straight face during his what might be called `spontaneous eruptions' in question time. So there was a certain poetic justice in the fact that he seemed to have difficulty keeping his face straight when he debated this bill last time— or, more accurately, when he failed to debate this bill last time.

If you look at Hansard, you will notice that the member for Banks went on an around the world journey. Firstly, he ruminated on the location of the Hansard reporters—this in a debate on a political donations bill; then he said that he held the member for Reid in exceptionally high regard; that there should be other bills on disclosure; and that caucus would not be bound by the recommendations of the Joint Standing Committee on Electoral Matters. The only problem was that, despite all his fervour and wit, he arrived at not one single destination, made not one substantial argument.

Let me take the point about the difference with the Joint Standing Committee on Electoral Matters. I agree that parties need not be bound by the recommendations committees sometimes produce. Committee reports sometimes include a majority report and a minority report. In any event, I do not believe that anyone on either side of the House could accuse me of falling about in heated agreement with all views of the Standing Committee on Electoral Matters. Despite the very high personal regard in which I hold the members of the committee who did the majority report in 1996, I sometimes, with astonishing reluctance, disagree with them. The case of compulsory voting is one which springs to mind, but there are also a number of other issues on which I have had differences with the committee's perspectives.

The issue of tax deductibility for political donations, however, is just commonsense, and it was a commonsense recommendation on which both Labor and coalition members arrived at a consensus. Let me say that again: on the recommendations that there be an increase in tax deductibility for political donations the coalition members on the standing committee were not alone, they were not partisan, they were not isolated; they were joined in the making of this recommendation by the Labor Party members of the committee—namely, Senator Conroy and the member for Reid.

One's heart has to go out to the member for Reid, even if one's mind does not. On the electoral matters committee he supported the tax deductibility measure. In the parliament, however, he opposed the bill that he, himself, had in part fathered. He did not just oppose it; he argued against it vociferously. The member for Reid said:

I for one . . . am very pleased as a member of the . . . committee—

that recommended the measure—

that the—

Labor—

Party has been persuaded to oppose this legislation. We should have opposed it from the beginning.

In case any member of the government had been obtuse enough to wonder why somebody who had supported the measure on the standing committee would be pleased that his party had rolled him and decided to oppose the legislation, the member for Reid, unlike the member for Melbourne, actually felt—and I have to give him credit for this—that he had to give an explanation. In the member for Reid's mind the agreement on the recommendation to lift the level of tax deductibility to $1,500 was—wait for it—a compromise. I will just outline the member for Reid's attempt to explain his pleasure that he had been rolled. He said:

If the government is losing too much sleep about the fact that some Labor Party members on this committee have got a different point of view . . .

from when—

the matter was discussed—

on the committee—

I put it to you that the $1,500 was a compromise at that stage in regard to a government thrust for a preposterous level of $10,000.

So if I have the honourable member's logic right, the Labor members of the committee were forced into a compromise which, because it was a compromise, they could back away from. There are only two problems with this. The first is that compromises are actually agreements and the second is that no-one forced the Labor Party to compromise.

In fact, the Labor members on the committee demonstrated an astonishing propensity to disagree with the majority, and a remarkable ability to resist the blandishments of compromise. There were 73 recommendations in the report from the Joint Standing Committee on Electoral Matters on the 1996 election. The Labor Party put in a minority report. They opposed recommendations 1, 2, 3, 4, 6, 7 and 12. They also saw fit to oppose recommendations 24, 43, 57, 63 and 64. If opposing almost 20 per cent of the recommendations and putting in a minority report does not show a high propensity to resist an overwhelming urge to compromise then nothing does—so much for the `the devil made me do it' compromise explanation. The Labor members of the Joint Standing Committee on Electoral Matters agreed with recommendations 61 and 62, the recommendations on tax deductibility.

Let us not beat around the bush. They had support in this from the highest quarter. They had the support of the national secretary of the Australian Labor Party. Gary Gray testified at the public hearings of the Joint Standing Committee on Electoral Matters on Friday, 13 September 1996. My very good friend Senator Minchin asked him:

What about the tax deductibility threshold?'

Mr Gray responded as follows, and I quote him in full so that no-one can accuse me of taking him out of context:

Tax deductibility is an interesting issue.

It is one in which the Labor Party, the Liberal Party and the National Party have engaged in lengthy discussions over last couple of years, even to the extent—through joint approach to KPMG Peat Marwick—of putting together a submission on tax deductibility for political parties.

Political parties suffer a significant disadvantage because of the way in which the tax laws apply to political donations.

I will cut to the chase:

There would be elements that will need to be considered by the Treasurer in terms of the implications of the approach of tax deductibility.

I would certainly not want to have unlimited tax deductible donations. I would see the $1,500 mark as being a reasonable line to apply the tax deductible donations to.

Let me repeat that last sentence. Mr Gray said:

I would see the $1,500 mark as being a reasonable line to apply the tax deductible donations to.

So, stripping it all away, the national secretary of the Labor Party, not the Liberal Party, actually nominated the amount that should be tax deductible, $1,500. The members of the committee, Liberal and Labor, agreed with the $1,500 recommendation as being sensible and acceptable. Then, for some unfathomable reason, Labor decided not to support the measure that was reasonable and responsible, which they agreed with and which their national secretary had actually proposed. They had to come up with a rationale for doing this, and they came out with some pretty preposterous ones. The member for Melbourne who, to give him is due, felt sufficiently abashed to speak on this bill for a tiny period, despite the passion and the outrage which he expressed—or which he claimed to be feeling—came up with the same sort of explanation: that it would bring politicians into disrepute.

In fact, according to the Labor Party, the passage of this bill would mean the end of the Australian political system as we have come to know it. The member for Fraser, with unusual passion, because he is usually quite measured, said:

This is a very bad bill. It is the sort of bill that is the root cause of the loss of faith in the party political system and in the two major parties.

The member for Melbourne echoed those words. All I can say is that it will not do anything of the sort and to have to resort to that sort of argument shows that the Labor Party is totally bereft of any substantive grounds to oppose this bill. The member for Melbourne carried on ad boredom about the Labor Party's obsession with the Greenfields Foundation. The fact is that the bill in no way impacts on disclosure. The Labor Party can carry on as much as they like about Greenfields. They can pursue their obsession but, in the context of this bill, it is a total diversion.

I now come to the argument about the impact on the taxpayer advanced by the member for Melbourne. This is just carry-on from the political party that introduced public funding. The last public funding bill was $34 million. For them to say that, somehow, giving people tax deductibility is a drain on the taxpayer when public funding—the funding they introduced—runs at $34 million, and they do not even blink, is, I think, astonishing. This bill will contribute significantly to the Australian political process. It will increase the number of people involved in the process and it will broaden the base and lessen the dependence of political parties.