Mr KERR (10:32 AM) —I have pleasure in telling the government that we are going to support the Customs (Tariff Concession System Validations) Bill 1999 , but I suspect that is the last pleasure the government is going to get from this speech.

Rather than the long speeches we hear when the government thinks it might be in a position of some capacity to advocate what good things it has been doing, this is an exercise of fixing up a problem which was really of this government's making. The only thing that saves me from having to call on the minister to resign is that the minister has in fact resigned. Geoff Prosser, who was the minister in charge of the department at the time these delegations and changes in relation to the administration of the Customs system were put in place, no longer has office.

It is fair to say that, notwithstanding the carping that occasionally happens in politics, his successive ministers have been conscientious in relation to seeking to address this matter in what I believe to be a reasonable manner, given that the difficulty is one which could not be resolved in a way which is perfect. The problem having emerged, we as parliamentarians have to try our best to work through how to respond to it. I take this opportunity to thank the minister and her staff, who have had a series of briefings with me and my office and have always been very open and comprehensive in relation to the advice that they have provided to us.

Essentially what happened was a bungle. Shortly after this government came to office, the tariff concession system was modified. In November 1995, the Chief Executive Officer of Customs generally delegated his powers and functions in relation to the scheme to certain officers of Customs. The act was amended in July 1996 as a result of the practical difficulties involved with matching imported goods with domestically manufactured goods. The amendments necessarily included a power to revoke previous tariff concessions. New delegations were not sought for this power as it was assumed that the existing delegation was sufficient. That assumption was made notwithstanding that the government had legal advice to the contrary effect. The government has now admitted that it was wrong to make such assumptions.

The issue came to light only by chance. On 26 May 1999, a challenge to the revocation of a concession was lodged in the Administrative Appeals Tribunal in relation to matters which were not then the focus of the argument in the case. Attention turned to the question of whether or not these delegations were valid. On the discovery that the new delegations had not been made because it did not cover the new powers, a circumstance arose whereby there were a number of pending matters where similar challenges had been made, but there were a whole raft of previous, now invalid, determinations which would have exposed the Commonwealth to liabilities of hundreds of millions of dollars.

The estimates that we have are that in 1996-97, the figure was $92 million, in 1997-98, $105 million, in 1998-99, $119 million, and in 1999-2000, $131 million. So we are not talking about a small error here; we are talking about something that dwarfs the MRI scam liabilities that the Commonwealth is now subject to. We are talking about something that would have a massive financial impact on the revenue projections of the Commonwealth—in a four-year period, nearly $450-odd million.

The government came to us in those circumstances and said, `We propose to cauterise this by accepting that all those people who have pending litigation in respect of any challenge relating to these issues, irrespective of the fact that they were not challenges in relation to this particular defect, will be able to be protected and isolated from this legislation; but other than that, we intend to reach back and to treat as valid all the invalid determinations that have been made and to rectify the situation retrospectively.'

Flowing from that, not unnaturally, a number of importers came to see the opposition to seek to persuade us to take a different view from the course we are currently adopting. I must say that it is terribly tempting, when you are in opposition, not only to expose the error, the bungle and the maladministration of the government, but also to hold them to the logical consequences of that, which is a shortfall of something like $450 million in revenue over four years. The natural consequences of saying that should then lead to a whole range of administrative dismissals—and, of course, I would say, were the minister still in office, the natural call for that minister to resign. I am not treating this lightly because it is quite a legitimate and proper point and it was put to us that the opposition would be on sound ground to resist the call for retrospective legislation and to allow the matter to fall as it was, as it related to an error within the department, within the government, and a failure of good administration, for which the government would have to wear the costs politically and economically.

I think the opposition could not have been faulted had it taken that position. But there are circumstances in which we, when in government previously, made similar errors—although not of this dimension—and we had to go back to the parliament and to seek from the parliament measures to address defects of administration. They should not happen. We were properly brought to account and made the subject of considerable criticism in relation to those matters. But the then opposition, I think for the same sorts of reasons that we in opposition are now considering ourselves, in the larger public interest, being willing to take a responsible position, did not require the revenue to suffer as a consequence.

That is not to say that that is the end of this story, because those who were disappointed by the government's response and the opposition's support of it will no doubt argue legally in the courts that this legislation is constitutionally invalid. They made it plain to us that, with something like $450 million at issue, there is some prospect, on the authorities, that such an argument might be, at least thinly, presented to the court. If it could be thinly presented, when such large bounty is in prospect of falling in their laps, I would not be surprised if this matter is litigated.

If it is litigated and it is found by the courts that the liability cannot be extinguished by this legislation, then the government will be faced with a budget shortfall in the order of $450 million in relation to these issues. The opposition is not going to be responsible for that. We will do what we can within the limits of the parliamentary process to assist the government to deal with this situation.

The bill is intended to ratify all revocations and grants of concessions which were made prior to the 1999 delegations by deeming that instruments of delegations made after 27 November 1995 and before 31 May 1999, when new delegations were brought in, effectively delegated all relevant powers under the act, as those powers were amended from time to time. It also ensures that decisions made by customs officers in relation to TCS are not invalid only because of any doubt about the ambit of the delegations.

Because the government is trying to fix up an error that it made three years ago, it has been forced to introduce a bill which includes this retrospective element. We concede that there is no other way to fix up this error from the past. The only decisions made under an invalid delegation which will not be ratified retrospectively by the bill are those decisions which have been, or are being, challenged in the AAT on the specific ground that there was in fact no valid instrument of delegation at the time the decision was made. The government must do this as it cannot legislatively pre-empt the outcome of challenges which are currently in front of the AAT.

That much is clear from constitutional law, that when there is a chose in action actually being litigated, constitutionally that cannot be extinguished without offending against the provisions which require that no acquisition of property occur other than on just terms. When I referred earlier to the prospect of future litigation, obviously it will be on the basis that that just terms provision in the constitution also overrides this act of this parliament in seeking to retrospectively extinguish liabilities that could otherwise have been asserted but for this.

We are willing to support this legislation, although we do not do so with any pleasure. We have made it plain in discussions with officers from the department that we do regard this as a serious error, and they concede that it was. They concede that it was made against legal advice. They concede also that steps are now having to be put in place to ensure that proper understandings of the legal circumstances are much better embedded in the system. They are trying to ensure that circumstances like this cannot emerge, where the parliament is called on late in the day to address a problem which would have massive consequences for the budget.

As I say, this is a line ball decision in so far as the opposition is concerned. It is terribly politically tempting to act irresponsibly and sheet home blame to a government that had failed and had bungled. There is no up side from the opposition in relation to this matter. There is not a minister to harass out of office since the relevant minister has paid the price for other failures.

We can only put on the record what we believe, on balance, is in the public interest—an acceptance that errors of an administrative nature do occur and that ministers from time to time will fail. The political accountability mechanism in this case cannot be followed through because the minister has already resigned, so we are unable to pursue that politically. On balance, we believe that it would not be in the public interest, nor in the interest of those thousands of taxpayers, to have measures which, but for the discovery of this error in incidental proceedings before the AAT, would have been treated as valid in relation to a whole series of transactions.

As I indicated at the outset, it gives me no great pleasure to be supporting this legislation and I am certain it gives the government no great pleasure in having to present it. I hope that there are lessons that have been learnt, because if this incident occurs again, the disposition of the opposition may not be quite so generous. Clearly, I suppose it would be right to say that, in the early period of a government, perhaps some latitude can be given to the circumstances in transition to government. None can be given from now on.