Senator SHERRY (Deputy Leader of the Opposition in the Senate)(10.06 a.m.) —I will keep my comments very brief. This issue has been exhaustively canvassed. I want to say again for the record that, in terms of what was originally described as a package of legislation relating to a surcharge, Labor would not support the third reading of these matters for a number of very important and critical reasons.

Firstly, in respect of its application supposedly to higher income earners—those earning more than $70,000—the effect of the tax and the way it is being collected, it will still hit a very substantial number of lower and middle income earners, particularly those earning between $35,000 and $70,000 a year. Secondly, it will also hurt workers who incur a redundancy, for example, in the event of an eligible termination payment being made.

Thirdly, there is the very costly administrative nature of collecting this new tax. Every fund member will have to pay additional administrative costs that will be incurred in the collection of this new tax. Fourthly, we do not know yet whether one state is going to collect this new tax. Fifthly, there are still constitutional doubts over the validity of these new tax provisions. Finally and most importantly, for the last nine months since the August budget last year, the Prime Minister (Mr Howard) has very dishonestly continued to describe these measures as a surcharge when it was a tax.

Everyone in Australia knows this new $500 million a year so-called surcharge is a tax. What is at least pleasing at last is that, following the action in this Senate, in the House of Representatives this Liberal government through the Treasurer—and Mr Costello has been a very arrogant Treasurer on this package of measures—has finally admitted and accepted the Senate's amendment that it is a tax.

It is a pity the government was not so honest when it first announced this initiative. It is a very dishonest approach to claim that it was a surcharge and not a tax. It was the government's biggest revenue raising measure in the budget announced last year—half a billion dollars a year. It is a tax, and it breaches that fundamental commitment given by the Liberal-National Party at the last election: no increase in existing taxes and no new taxes.