Senator WATSON(1.05 p.m.) —I think the formula is described in such words as `to remove the possibility of its being out of kilter with economic reality'. We have to acknowledge the government's wisdom in so rewording this. This default provision will overcome the fear of and the objection to the previous default figure having the capacity to be out of kilter with the economic reality of the time. What does concern me in this debate is that the opposition parties seem to have lost sight of the important issue. Each year the government sets the current year rate—in other words, the uplift factor is set annually—and this government is delivering, and has delivered now, on its election commitment to set the current rate at six per cent. We seem to have conveniently overlooked the fact that prior to today's amendment the default factor has not changed for many years. Suddenly we see a different approach by members opposite, now that they are in opposition, to this default factor.

I have studied and have been involved in numerous hearings on uplift factors over the years. No doubt this new mechanism is an improvement. It will create certainty from parliamentary manipulations. The minister indicated in his second reading speech that he will give expression to this formula in terms of a percentage, which will be useful in comparing the default figure with the figure that will continue to be set on an annual basis.

So I think, all round, the government is indeed to be congratulated on not adopting the tactics of the previous government, a government which indicated its refusal to listen to the Senate and thereby had the potential to place small business and self-funded retirees at the higher penal rate of 10 per cent. It is important that the readers of this debate acknowledge that this coalition approach is from a caring, listening government that is not prepared to adopt the bully-boy tactics of the previous Labor Party government, when it was in power, of threatening to listen to the Senate, to take the uplift factor back to the House of Representatives and then threaten, `The opposition's failure to deliver will result in the penal rate applying to even the current year.'

It is important that we articulate this difference in approach between this government and the Keating government. Because of that, last year the opposition was not prepared to put at risk all those hundreds of thousands of taxpayers who were subject to provisional tax applications.

I congratulate Senator Short and his advisers on coming up with this new formula. It will remove the need for the sort of lengthy debates that have occurred in this place in the past and it will put the uplift factor on a much more certain and rational plane. Over the years I have been a member of a number of committees examining this. In those days we were absolutely appalled, for example, that the Treasury was not able to come up with a formula, such as that which Senator Short put down in his amendment today, to give us some idea of how the rates were fixed. This lack of basic information from the previous government was something that caused a great deal of ire and concern, particularly in the small business community. I think the Liberal Party and National Party coalition is to be applauded for the very constructive way it has tackled this issue, not only for today but for the future.

Senator Calvert —Another promise delivered.

Senator WATSON —As Senator Calvert has said, another promise has been fully delivered.