Senator KEMP (Assistant Treasurer)(9.09 p.m.) —Again, I just stress what a pity it is that we have an election next Saturday, because we have to put up with all this nonsense from the other side of the chamber, especially Senator Schacht and Senator Cook. Now they are pretending to be the farmers' friends. A moment ago Senator Schacht and Senator Cook were the miners' friends; now they are the farmers' friends. If you are the farmers' friends, why do you hold so few seats in rural and regional Australia?

Look at what you have just done in the last day. The Natural Heritage Trust Fund, which will be established as a result of the sale of Telstra, will deliver massive benefits to rural and regional Australia. The old farmers' friends over there—Senator Schacht and Senator Cook—utterly opposed it.

As the revegetation programs get going and as the river care programs get going, the farmers will remember how short lived were the farmers' friends on the other side of the chamber. The reason, Senator Schacht and Senator Cook, that you hold so few seats in rural and regional Australia—

Senator Schacht —We'll be holding a lot more after the next election.

The CHAIRMAN —Order! I remind the chamber that the question before the chair is that part 6 stand as printed.

Senator KEMP —They will remember what miserable friends you were when the crunch came. They will remember your high interest rates and your high taxes. So do not stand up here and pretend to be farmers' friends.

I announced the government's reasons for this initiative in my second reading speech. The effect of paragraph 120(1)(c) is that the marketing cooperative can claim an effective 200 per cent tax deduction for capital expenditure, full depreciation for the cost of the asset and deductions for capital repayments if the asset and the loan came from government.

The paragraph is an anomaly. It allows double deductions for capital expenditures. Double deductions can distort investment decisions by cooperatives as well as providing them with a competitive advantage in the marketplace. However, in recognising the important contribution, this touches on a point that Senator Cook raised. Having recognised the important contribution of cooperatives in the primary production sector, the government has announced transitional arrangements designed to ensure that cooperatives make a smooth transition to the new tax arrangement.

Senator Schacht got up to speak. I have to say that—and this is pretty hard to say, Senator—that was really one of your least effective contributions, even by your standards. Senator, do not tell me now, because we do not want you to take up any more time, but I wonder whether the cooperative that the senator's family sent its milk to could still use this double tax deduction. It would be interesting to see whether that is the case.

Only some tax cooperatives can access the double deduction. Senator Schacht, the advice that I have is that some of the largest area cooperatives in Victoria have not qualified for this double deduction for years. So the one that you got started may well not qualify, but it has not stopped their development, as you reminded us, nor their export drive. So I put it to you that the government believes this is an important measure and urges the chamber to support it.