Mr STEPHEN SMITH (2:15 PM) —My question is to the Acting Prime Minister. I refer the Acting Prime Minister to the press release issued by the Assistant Treasurer, Senator Coonan, this morning, which claims:

Given that the High Court has held that the states and territories do not have the constitutional power to collect these taxes, how does the government now propose as a matter of policy that the states and territories recover these moneys? In any event, given that the Commonwealth clearly does have the capacity to recover these moneys, why does the government want to leave this $250 million windfall profit in the hands of tobacco wholesalers and retailers rather than use the funds for health measures?

Mr ANDERSON (Acting Prime Minister) —I thank the honourable member for his question. We need to go back to the High Court and its finding in 1997 that state tobacco franchise fees were unconstitutional. At that time, the Commonwealth—which is not always given proper credit for this—entered into a safety net agreement with the states. That allowed the Commonwealth to collect this revenue and to return it to the states, a measure that was strongly supported at the time. As part of that agreement, the states agreed that the recovery of fees before 5 August 1997 but which were not paid would be the responsibility of the states. I am not aware that any states or territories have tried to recover these funds. I do not see why they should now turn around and say that it is the Commonwealth's responsibility. It is up to them.