Senator KEMP (Assistant Treasurer)(6.36 p.m.) —The history of this has been covered extensively by Senator Murray. I am not too sure that our memory is completely the same as your memory on this matter. Nonetheless, the fact of the matter is that there was an amendment which was originally drafted by you and efforts were made to amend that amendment. A version was passed by the Senate and it is clear that there were some problems in making that particular amendment work.

In a sense, we are seeking to attempt to make the amendments of 12 December workable. Senator Cook is seeking to revisit the whole issue, which was very extensively canvassed and debated during that period. The Senate then resolved to defeat the approach of the Labor Party, and the amendment as originally proposed by Senator Murray was passed. But, as I said, for a variety of reasons it was not workable. That was well recognised. Senator Murray, I will pass on your kind remarks to Senator Campbell.

I turn now to Senator Cook's comments. There are, frankly, I think, some general problems with the amendment that Senator Cook has moved. A point which should be made is that the Labor amendments ignore the situation which arose after 1 July 1997. As I said, the government's amendments are essentially about making the Senate's amendment of December 1996 work. Two acts need amendment: the 1936 and the 1997 tax acts. I think Labor's amendments ignore the 1997 act, so there is a technical problem with the way you have drafted your amendments. I am not saying the problem could not be rectified. We are not seeking for you to rectify it; we are seeking to have the amendments defeated. I put that on notice.

Turning to Senator Cook's first amendment, that amendment removes three conditions from the provision: the sunset clause, the limitation on exempt income to the market value of the mining right as at 20 August 1996, and the requirement that the person receiving the exemption is a bona fide prospector when the income is derived. The government opposes this amendment because it broadens the phase-out of the exemption far beyond that which the parliament agreed to on 12 December 1996.

Senator Cook's proposed amendment grandfathers the exemption indefinitely for those rights which were acquired before the government's 1996 budget night announcement. It would exempt from tax any increase in the value of those rights which were acquired before budget night 1996. It only requires the taxpayer to have been a bona fide prospector at a non-defined period in the past. We believe that, apart from the technical problem, Senator Cook's amendment broadens it far beyond the way the parliament sought to agree to last December. Therefore, we will be opposing the first amendment, the second amendment and the third amendment.

I think you asked for the assumptions. The average years for prospecting on a tenement are assumed at four years. The cost of the revenue due to the exemption is $40 million per year. A further assumption is that 10 per cent of bona fide prospectors will not be bona fide when the income is derived.