Mr SLIPPER (Parliamentary Secretary to the Minister for Finance and Administration) (8:20 PM) —in reply—The government would like to take this opportunity to thank all honourable members on both sides who have supported the Taxation Laws Amendment (Earlier Access to Farm Management Deposits) Bill 2002. This is a particularly important bill, and the member for Fraser indicated that the opposition was in support of this government's initiative. We welcome that support.

The member for Pearce, as always, delivered quite a thought-provoking contribution. On behalf of the government, I would like to thank her for reminding us of the importance of rural communities and the impact of drought on rural towns. This is something that the government has been mindful of in designing its relief package, including the six months income support for eligible farmers, the interest rate subsidies to farmers and small businesses in drought affected areas, measures to assist job seekers in drought affected areas, and a range of other measures. The government wants to recognise the contribution made by country Australia to the nation's prosperity, and members on both sides of the House have indicated their support for the important changes contained in this legislation.

I thank the member for Dawson, on behalf of the government, for reminding us all of the further measures announced yesterday by the Prime Minister. Quite rightly, she noted the importance of the assistance extended by this government to those job seekers in drought affected areas. The member for Fraser, although supporting the bill, suggested that income smoothing should be applied to sources of volatile income. The member for Fraser, having been a former parliamentary secretary to the Treasurer in Labor times, would know that it is a basic principle of income tax that all income is taxed the same, regardless of source. This principle ought only to be departed from in exceptional cases, such as primary production, sports people and artists. This is a principle of basic equity and, for reasons of equity, such measures should only be adopted in very special cases. I think there is probably broad support for that particular approach.

The member for Fraser also suggested that there was inadequate costing information. That simply is not accurate. These measures assist farmers in extreme financial difficulty. Farmers who qualify for the exceptional circumstances concession are able to withdraw their deposits within 12 months of making them. However, the amount withdrawn is assessable in the same income year that it would be assessed in if the farmer did not qualify for the exceptional circumstances concession and withdrew the deposit just after the 12-month period had expired. For this reason, apart from a timing effect, there is no cost to revenue. After all, the bill only affects farmers who have had their deposits in the bank for less than 12 months. The members for Fraser and Blaxland referred to Labor's drought plan, but the Minister for Agriculture, Fisheries and Forestry stated the situation very clearly in question time today. It is not just a case of Labor being an apologist for state Labor governments; many farmers would get very little under the Labor package—at least, not yet. The coalition introduced interim assistance and predictive modelling, and the Labor announcement was two months after the government's announcement, so it was a question of too little, too late.

The member for Riverina, in a particularly thought-provoking contribution, mentioned, as she often does, the problems of small business. She is a keen advocate in her electorate for small business operators, and all of us in this place know that small business is the engine room of the Australian economy. The member for Riverina suggested that the provisions should be extended to small businesses. I want to point out to the honourable member that the government does have other ways of compensating the rest of the community. I refer to the Centrelink arrangements which establish Drought Force, a Work for the Dole type program. It also allows job seekers access to job seeker training and allows employees facing retrenchment access to job matching services. The point I want to make is that the government does have a broad range of initiatives to assist those in drought affected Australia and does appreciate the important contribution they have made to Australia's national prosperity. I think there is a broad consensus in Australia that those people in rural Australia who work so hard to make Australia the wonderful country that it is should be assisted by the nation as a whole in these times of adversity.

The current drought is having an immense impact on rural Australia. It is one of the most severe in the last 100 years. In recognition of the particular severity and extent of the drought, the government has decided that, in conjunction with a number of other comprehensive measures, it will amend the taxation laws to allow farmers in exceptional circumstances declared areas to access their farm management deposits without having to wait 12 months. I am therefore hopeful that the government will receive the support of the House, given that the relaxation of the 12-month requirement will benefit farmers in exceptional circumstances declared areas. Members on both sides do appear to be supporting the bill.

The FMD scheme allows eligible primary producers to set aside pre-tax income in profitable years to establish cash reserves to help meet costs in low-income years. FMDs complement other risk management strategies available to primary producers, such as developing fodder and water reserves, financial planning and diversifying their production systems. Furthermore, minor amendments will also be made to the taxation laws to enhance the flexibility and operation of the FMD scheme. This is one of the initiatives announced by the Prime Minister on 27 November this year which are designed to assist rural communities to cope with the current drought. The initiatives provide additional funding to meet a number of concerns, including cash flow for farmers, pest control, environmental protection and community support for struggling farmers. The amendments will help farmers manage the cash flow impact of the drought and build on the significant funding already provided by the Commonwealth in managing the drought. In addition, the government will also streamline consideration of advice on exceptional circumstances applications to ensure that there is no unnecessary delay in the coming weeks. This is a very important initiative of the Howard government. The government appreciates the backing of both sides of the House. I commend this bill to the chamber.

Question agreed to.

Bill read a second time.