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Friday, 28 June 1996
Page: 2525


Senator COOK(9.16 a.m.) —The government is insisting upon its amendments to the act, and we have just heard one Labor Party senator express his view about that. I want to say a few things about this issue, because it has now got to major proportions, and stupidly so. The government need not have forced the issue like this. By carrying on the way it has, it has exacerbated an issue that would otherwise have been resolved reasonably smoothly.

I have to say at the beginning that this legislation is our legislation, and we are supporting it. We supported it last year when we introduced it into parliament. We supported it in this place when we granted it exemption from the Hill motion, which would have delayed its consideration until the next session. We then voted for the bill after a brief debate. We also supported this legislation in the House yesterday. So any pretext that the opposition does not support this legislation is completely erroneous, inaccurate and misleading.

Senator Short has made some outrageous claims in question time in the Senate. I have to say that similar claims have been made by the Treasurer (Mr Costello) in the other place. They have claimed that somehow, because the Senate is supporting this legislation, we are threatening $2.5 billion worth of investment. That is a bit rich coming from Senator Short.

It was Senator Short who opposed the passage of the principal act which this bill is proposing to amend. It was Senator Short who, on 17 June 1992, arranged for the motion in the Senate to be split from four bills to two, specifically so the then opposition could vote against the Development Allowance Authority Bill 1992. That bill became the principal act, and it is that act which this bill now seeks to amend.

So this is another example of a breathtaking new turn by the coalition. As usual, they opposed a Labor initiative when they were in opposition for plain, base political reasons. Then, when they came into government, they had another look at it and thought that the Labor government was correct. Without any recognition of their past perfidy or any apology for their past performance, they have turned around and are now claiming that we are holding the process up. We are getting used to this sort of weird behaviour from the government.

I wish to say a few things about the word `sabotage'. Sabotage was a word introduced into this debate by Senator Short. It comes from him. I have to say that this debate is getting nasty and vicious. I have in front of me a report from Mr Sharp, the Minister for Transport, which attacks the Leader of the Australian Democrats (Senator Kernot). He said that a move to block tax breaks for urban road projects would cause `more deaths on Australian roads'. They were his words. If he said that outside this place, I think that would be actionable, because it is untrue and has no other purpose than to attack the reputation of an individual.


Senator Short —How do you know it is untrue?


Senator COOK —It is untrue.


Senator Short —How do you know it is untrue?


Senator COOK —If you are going to persist with it, you ought to be out of this place because you are a disgrace.


Senator Panizza —Madam Chairman, on a point of order: that was an unparliamentary utterance from Senator Cook.


Senator COOK —I withdraw `disgrace'. I am disgusted by you and all of those who stand by this Sharp attitude, because we have had enough of this sort of smearing. It is about time Senator Short learnt to answer a question for once. It is about time you learnt your portfolio and understood the details that you are supposed to represent to this parliament. This debate has got nasty and vicious. First of all, Costello climbed down into the gutter.


The CHAIRMAN —Mr Costello.


Senator COOK —Then Senator Short climbed into the gutter, and now we have Sharp in that gutter.


The CHAIRMAN —Mr Sharp.


Senator COOK —Pretty soon, the way the government is going, we will have all of them in the gutter. If that is the way they want to play things around here—


Senator Panizza —On a point of order: is accusing a member of parliament of climbing into the gutter unparliamentary or not?


Senator COOK —No, it is not.


Senator Panizza —Could the Chairman please rule on my point of order, rather than Senator Cook?


The CHAIRMAN —I think it has been ruled out on previous occasions. I would ask Senator Cook to withdraw that. I also ask you to address members of the other place in the proper manner.


Senator COOK —If you ask me to withdraw, I withdraw.


Senator Panizza —Unconditionally.


Senator COOK —I have withdrawn, but thank you, Senator Panizza, for your advice. Now, would you mind sitting there and behaving yourself. I just want to say this: it is all right apparently for a minister to accuse someone of causing deaths, but it is not all right for someone to come in here and explain that his remark was vicious and nasty. If that is not a double standard, I have never seen one.


The CHAIRMAN —Senator, I think it is matter of how you express yourself.


Senator COOK —I am not quibbling with your ruling, Madam Chairman; I have abided by it. I just want to say that this is a clear double standard. It is all right for someone to say things about another's reputation in the most serious damaging way but, when you actually tell the honest, plain, English language truth about that in this chamber, you are ruled out of order. I think that is the obscenity.

I want to say something about this claim of sabotage, a claim which I have to say is patently absurd. How exactly is the opposition threatening these investment projects? Apparently, this is by supporting—not opposing—the extension of the development allowance retrospectively to those projects.

We in the opposition identified the problem in the first place. We introduced the legislation. The coalition refused to pass it before the election and now we are supporting the consequentially reintroduced legislation. The only way in which any project is being threatened is if the government—or more specifically in this case the Treasurer—refuses to enact its own legislation. Is this what the government is proposing? If so, it should admit that this is the situation and stop raising red herrings against the Senate.

The second point that I want to make is this: does the government really believe that huge investments are going to cease or not proceed on the basis of the qualification for the development allowance? If so, Senator Short should state exactly which projects will be affected and the amount of development allowance that each project will be denied if the government—not the opposition or the Senate—refuses to enact this bill. Let us get the facts out. Do not make allegations. Put them down clearly where we can see which ones would be stopped, Senator Short.

Does the government honestly contend that a taxation concession of less than $10 million per annum spread across the whole economy is going to threaten the viability of $2.5 billion worth of projects? We must also remember that the legislation is retrospective. It applies back to the beginning of 1993, that is, 3½ years ago. In addition, not only will the bill benefit those who have given their applications to the authority but also those who have withdrawn their applications because they thought they were not eligible, that is, those firms that thought they were not eligible and did not apply.

Did they abort their projects or did they simply carry on anyway? We believe that the latter is the truth. That is not to say that we will deny these firms fair treatment under taxation law, but let us not believe the fabrication that this is crucial to the survival of $2.5 billion worth of projects. If that were the case, it would mean that, even if all of the concessions of this bill were granted to these projects, it would amount to an alteration in the rate of return on $2.5 billion capital figure of around 0.4 per cent. If such a small change made the projects non-viable, I doubt that investors and financiers would have risked their capital in investing in them in the first place.

However, having said all that, I repeat that the opposition supports this bill. It had its genesis in our term of government, and it continues to have our full support. Any failure to enact it arises purely because of the lack of judgment of the Treasurer. The main reason that this bill is back here is the attitude of the government to amendments moved by Senator Kernot. These were good amendments because they implemented the policy of the previous government announced by former Ministers Willis and Brereton on 15 December last year.


Senator Kernot —It happened to be our policy, too.


Senator COOK —I acknowledge that. These amendments proposed to implement our policy, and accordingly we support them. We supported them earlier in the week and we continue to support them. The real issue here is that the Treasurer has made a remarkable error of timing. I refer the Senate to the article by Alan Ramsey in the Sydney Morning Herald on 26 June. It was headed `How plain bad timing took its toll'. This an example of the ineptitude of the Treasurer in this matter. It was bad timing by the Treasurer and bad policy by the Treasurer that have got the government into this situation.

There are a number of documents I would like to refer to. The first is the EPAC private infrastructure task force report, which concluded in the bottom paragraph on page xiii:

Contrary to a popular view, infrastructure as a whole is not significantly tax disadvantaged compared to most other investments.

There is therefore no strong `tax efficiency' case for retaining infrastructure bonds which indirectly provide a tax benefit to some private projects. The bonds have provided an incentive to lenders to infrastructure projects and this has served a useful catalytic role. However, the development of the capital markets largely removes the ongoing need for such concessions. Accordingly, the Task Force does not see a compelling case for retaining infrastructure bonds in the longer term.

That is EPAC in its private infrastructure task force report. The government's own Commission of Audit report has criticised taxation concessions as inefficient and generally undesirable relative to specific outlays measures. Page 295 of the `Charter of budget honesty' reads:

The different budgetary processes that apply to tax concessions and expenditure programs in Australia have contributed to the lack of transparency of tax expenditure reporting.

First, spending on tax concessions is not monitored to the same extent as spending on programs. Treasury noted in its submission to the Commission that it can be three years before a tax expenditure is fully costed.

Second, consideration of tax concession proposals is hampered by the general difficulty of accurately costing them. This difficulty stems in part from the lack of resources devoted to monitoring tax concessions compared to those devoted to monitoring programs, and the consequent insufficient level of information about tax expenditures.

Third, unlike tax concessions, control of program expenditure is enhanced by individual Ministers being held responsible for spending by their portfolio.

Finally, established procedures exist for the Department of Finance and the responsible portfolio to examine ways of containing blowouts in program expenditure but not blowouts in tax concessions.

As a result of all these factors, tax concessions are a largely non-transparent form of assistance. This lack of transparency makes less visible the effect of tax concessions on the budget and reduces accountability. It also increases the likelihood that poorly targeted concessions will remain on offer.

And finally:

This lack of transparency is also inconsistent with the Charter of Budget Honesty's objectives to ensure greater transparency for the decisions and operations of government.

They are the government's own words in terms of transparency and the inefficiency and operation of these concessions. In addition, there is the strange situation where the government is claiming that it is important for the tax concession to be retained. Indeed, it is threatening to not proceed with this bill if the amendment is affirmed today as the concessions are purportedly vital to the viability of some prospective projects.   However, in Mr Costello's ill-timed announcement on Monday in the House, he concluded by stating:

On the current forward estimates in the budget for the cost of infrastructure borrowings, the decision to reinstate urban roads projects is expected to have minimal impact—

his words—

for 1996-97 and for future years.

How could it be that the reinstatement will have only minimal impact on the budget yet the concession is vital to the future of urban road development? If there is significant cost to the budget for this concession it should have been disclosed by the Treasurer in his statement.

There is the further question of the concession being misused in financing structures which yield very high returns for investors at least partially at the expense of ordinary taxpayers. We do not consider that this should be a priority for a government which is claiming that there is a budgetary process necessitating enormous program cuts.

There is a further canard from the transport minister. As I said, he is claiming quite outrageously that the failure to reinstate the tax concession would cause more deaths on Australian roads. On that basis, the minister will be guilty himself if the Commonwealth reduces any road funding, which appears likely given the announcement that the Commonwealth will cut tied aid to the states by around three per cent this year.

In addition, the Commonwealth has already welched on the general purpose funding arrangements put in place by us last year. Presumably, that decision will reduce the amount of funding available for state budgets for roads. On this criteria, the Prime Minister Mr Howard and Mr Costello are also guilty of causing more road deaths.

It is this type of ridiculous, over-the-top comment that shows the lack of proper, considered argument against our proposals. They have no rational basis for opposing the policy so they use extreme threats against recipients of the development allowance. The opposition will continue to support the amendment. It is the government which will determine what action they will take.