Senator LEES (5:38 PM) —I seek leave to amend the motion that is before the chamber to the revised version, No. 1156.

Leave granted.

Senator LEES —The amended motion reads:

(1) That a select committee, to be known as the Select Committee on a New Tax System, be established to inquire into and report, on or before 18 February 1999, on the economic theories, assumptions, calculations, projections, estimates and modelling which underpinned the Government's proposals for taxation reform, contained in Tax Reform: not a new tax, a new tax system .

(2) That, in conducting its inquiry, the Committee examine the following matters:

(a) the estimated levels of revenue to be generated or foregone due to the proposed changes, including the estimated level of revenue to be generated by imposing a GST on the basic necessities of life (such as food, clothing, shelter and essential services) and books;

(b) the effects of the proposed changes on:

(i) national Gross Domestic Product

(ii) national export performance and national debt

(iii) the national Consumer Price Index

(iv) the distribution of wealth in the Australian community;

(c) the effects of the package on future federal budget revenues, expenditures and surpluses, including a critical assessment of the economic assumptions underpinning the Treasury's projections in this regard;

(d) the effects of the taxation and compensation package on disposable income and household spending power for a range of `cameo profiles', including but not limited to those presented in the proposals, under the following scenarios:

(i) a GST extended to the necessities of life (such as food, clothing, shelter and essential services); and

(ii) a GST not extended to the necessities of life (such as food, clothing, shelter and essential services);

(e) with the aim of identifying families and groups who may be disadvantaged by the Government's proposals, focusing on lower and fixed income individuals, families with dependent children or adult members, groups and organisations, and those with special needs, such as people with disabilities;

(f) the assumptions made as to consumption and saving patterns and the cost of living for the various "cameo profiles";

(g) whether the stated objectives of the package can be met by using an alternative and fairer approach; and

(h) such other matters as the committee considers fall within the scope of this inquiry.

(3) That the Committee also inquire into and report, on or before 19 April 1999, on the broad economic effects of the Government's taxation reform legislation proposals with regard to the fairness of the tax system, the living standards of Australian households (especially those on low incomes), the effi ciency of the economy, and future public revenues, including:

(a) the effects on equity, efficiency and compliance costs of including, or not including, food or other necessities of life in the GST, together with any related adjustments to the package if food or other necessities of life were GST zero-rated;

(b) the effectiveness of the package in easing the poverty traps facing people on low incomes, and reforming and streamlining tax and income support for families with children, taking into account the static and life-cycle impacts on families with children;

(c) options for amending the income tax schedule to make it more equitable;

(d) the findings of the Tax Consultative Committee chaired by David Vos;

(e) options for improving the effectiveness and fairness of the tax system and reducing inequitable or unreasonable tax avoidance and minimisation, including consideration of alternative areas for tax generation, either where there are current tax concessions or where Australia's taxation system does not address major tax potential, and without limiting the foregoing, the consideration of taxation of foreign companies operating in Australia, including the relative merits of resource rent taxes, royalties or land taxes as compared to company tax in securing a fair compensation to Australia for use of its resources, whether the 150% tax concession for research and development should be restored and whether small companies should be allowed to be taxed as partnerships.

(f) the potential for tax avoidance and evasion, including an examination of the effects on the cash economy, and the potential impact of electronic commerce on the future viability of a GST;

(g) the effects on compliance costs;

(h) the potential for reducing payroll tax, including by providing incentives to create long-term employment and by replacing payroll tax with a carbon tax;

(i) whether there are other means available for rebating or reducing the indirect taxes or excessive user charges embedded in exporters costs;

(j) excises, including those on fuel, tobacco and alcohol—identifying the industries which benefit, and to what extent, from the proposed changes to taxes on fuels;

(k) the effects on interest rates;

(l) the effects on investment, in both physical and human capital formation;

(m) the effects on small business;

(n) the effects on the non-profit sector, including the total amounts of money contributed by the sector, administrative costs, impacts on the viability of the organisations, and the consequent effects on the wellbeing of the community;

(o) the effects of the GST on particular industries, including:

(i) key service industries such as tourism;

(ii) the Australian automobile and related industries, having particular regard to the effects of changes to fuel excises;

(iii) other `invisible' export industries, such as education and financial services; and

(iv) the international competitiveness generally of Australian industries;

(p) the implications of not requiring that the GST component of goods and services be itemised on receipts;

(q) the effects of the taxation reform legislation proposals on rural and regional stakeholders, including:

(i) the effects on particular regions;

(ii) the effects on rural and regional communities of different tax regimes on fuel—especially the cost of transport of goods to rural communities;

(iii) the effects on primary industry of replacing the current sales tax exemption on agricultural machinery with a GST;

(iv) the effects of imposing a GST on food and other necessities of life on remote communities, including Aboriginal and Islander communities;

(r) the effects of the Government's taxation reform legislation proposals on state and local government administration, including:

(i) the effects of the package on future federal-state financial relations and the capacities of state and local governments to adequately finance their respective responsibilities in both the short-term and the long-term, including the effects of the proposed transfer of responsibility for local government financial assistance to the states, and whether it discriminates between states;

(ii) the implications for specific purpose programs;

(iii) mechanisms required to lock in commitments made by federal and state governments with regard to the new arrangements;

(iv) the implications for future federal-state financial relations of not extending the GST to the necessities of life (such as food, clothing, shelter and essential services) and books, and any adjustments to the proposed arrangements which would be required to federal-state financial relations;

(v) the implications of the package for the quality and affordability of public utility services and for the public utility concessions for social security recipients;

(vi) the effect of application of the GST, and of changes to tax status, on local government and its activities, particularly commercial activities;

(vii) the implications for the delivery of Commonwealth Government services, including employment services, welfare and other social and cultural services;

(viii) the extent to which the proposed compensation arrangements are secure from change to below adequate levels;

(s) the adequacy of measures to ensure that consumers fully benefit from the abolition of existing taxes;

(t) the effects of the taxation reform legislation proposals on legal and constitutional matters, including:

(i) the constitutionality of the proposed mechanism for future changes to the GST, including whether such changes would present a significant hurdle to future increases, or reductions if deemed necessary to stimulate the economy;

(ii) the constitutionality of the proposed reorganisation of federal-state tax arrangements and whether the powers and functions of states and territories are materially affected by this reorganisation;

(iii) the effects of the proposals on the cost of access to justice; and

(u) options for amending the proposed legislation to improve its fairness or efficiency.

(4) That, in reporting on the matters referred to in paragraph (3), the committee have regard to the reports of the references committees referred to in paragraph (17) and integrate the findings of those committees into its final report where relevant.

(5) That the Committee consist of 7 senators, 3 nominated by the Leader of the Government in the Senate, 3 nominated by the Leader of the Opposition in the Senate, and 1 nominated by the Leader of the Australian Democrats.

(6) That the Committee may proceed to the dispatch of business notwithstanding that not all members have been duly nominated and appointed and notwithstanding any vacancy.

(7) That:

(a) senators may be appointed to the committee as substitutes for members of the committee in respect of particular matters before the committee.

(b) on the nominations of the Greens or independent senators, participating members may be appointed to the committee.

(c) participating members may participate in hearings of evidence and deliberations of the committee, and have all the rights of members of the committee, but may not vote on any questions before the committee.

(8) That the committee shall elect as its chair a member nominated by the Leader of the Opposition in the Senate.

(9) That the committee shall elect as its deputy chair, immediately after the election of the chair, a member nominated by the Leader of the Government in the Senate.

(10) That the deputy chair act as chair when there is no chair or the chair is not present at a meeting.

(11) That the committee have power to send for and examine persons and documents, to move from place to place, to sit in public or in private, notwithstanding any prorogation of the Parliament or dissolution of the House of Representatives, and have leave to report from time to time its proceedings and the evidence taken and such interim recommendations as it may deem fit.

(12) That the quorum of the committee shall be a majority of the members of the committee.

(13) That the committee set 29 January 1999 as the date for receipt of submissions.

(14) That the committee hold hearings in each state and territory as required.

(15) That the committee be provided with all necessary staff, facilities and resources and be empowered to appoint persons with specialist knowledge for the purposes of the committee with the approval of the President.

(16) That the committee be empowered to print from day to day such documents and evidence as may be ordered by it and a daily Hansard be published of such proceedings as take place in public.

(17) That the following matters be referred to references committees in accordance with the schedule below for inquiry and report by 31 March 1999, and that in undertaking these inquiries the committees have regard

to the report of the Select Committee referred to in paragraph (1) and consult widely, holding hearings in each state and territory, as required. Submissions to these inquiries are to be made by 29 January 1999.

(18) That the provisions of the bills implementing the proposed new tax system stand referred to the previously mentioned committees for inquiry and report in conjunction with the terms of reference authorised by this resolution, as soon as the bills have been introduced in the House of Representatives.

(19) That when the bills referred to in paragraph (18) are first introduced in the Senate and a motion is moved for the second reading of the bills, debate on that motion shall be adjourned at the conclusion of the speech of the senator moving the motion and resumption of the debate shall be made an order of the day for 19 April 1999 without any question being put.

I will only speak briefly to this amendment. It has taken quite some time to get an agreement that is eventually very similar to where we started, with a select committee looking at the overarching issues. This committee will be known as the Select Committee on a New Tax System. It is being established to inquire into the government's tax package and to report on or before 18 February on the modelling and the economic theories that underpin that package.

As well, there will be three references committees, as has been the proposal over the last couple of weeks. I will look briefly at the select committee—which I think, Senator Faulkner, is very similar to the Labor Party's initial proposal for a select committee—and I will run through some of the details of the structure of that committee. It is proposed that there be three Labor Party members—with the Labor Party having the chair—three Liberal Party members and one Democrat member. The difference between this and other select committees is that we will also have participating members, where any of the four other senators in this place—the Greens, Senator Harradine or Senator Colston—may come and participate at any time in the hearings and, of course, in the report writing as far as that committee is concerned.

Looking at the workload that will be involved with this overarching committee to which the other three references committees report, we have included the ability of parties to substitute. For example, if the committee is travelling to Western Australia and you have members there who may prefer to do that hearing, then it will be possible to substitute members off and on that select committee.

We can look at some of the other changes to the original motion that was before this chamber today. One of the other changes is to the final reporting date. That is now 19 April. We have come forward some five or six weeks, and the government has dropped to what is middle ground, shall we say. If we can get this up and running tomorrow and we can get advertisements in the weekend papers, I believe we will still have sufficient time for submissions which are due in by the end of January. Of course, the Labor Party, the government and the Democrats will now have to go away and look at who they want on this committee. The Labor Party will have to look at who they wish to chair this committee. Once that is done, hopefully we will be able to start fairly quickly.

As part of this motion we have the sitting patterns for next year to make sure that the committee has time to work and that the government has time to deal with its legislation. In particular, I refer to the time before Easter where, while we have allowed for four weeks of sitting, we have allowed four weeks for these committees to meet as well as a week for estimates. The compromise there is that, yes, the government has time for its legislation, but we have time for the committees to travel and to do the work that they have to do.

The report is due on the first sitting day after Easter, on 19 April. As you will see at the very back of this motion—I will just take senators through it, as I know some are picking it up for the first time—the tax bills will be made an order of the day for 19 April so that we can do everything we can to facilitate the six weeks of sittings to deal with this legislation. The sitting pattern will be moved as an amendment in a moment by Senator Kemp. I will just explain why the two Fridays are in there. This is part of the agreement to give the government the full six weeks. The Fridays make up for the Anzac Day holiday and also the fact that we actually run out of time at the end of June and lose another day. In fact, the two Fridays are in there to give us the full six weeks of sitting. Senator Kemp, I presume you are going to circulate the actual calendar.

Senator Ian Campbell —It has been circulated.

Senator LEES —As it has been circulated, I will take senators through it.

The ACTING DEPUTY PRESIDENT (Senator Crowley) —Senator Lees, I do not want to interrupt you, but it does seem that a lot of colleagues are not clear about exactly what copy you are addressing.

Senator LEES —It is No. 1156 revised.

Senator Faulkner —Madam Acting Deputy President, can I make this point of order. I appreciate the advice from Senator Lees as to what she is moving. As I understand it, Madam Acting Deputy President—and I seek your guidance on this—Senator Lees's proposed amendment has not been circulated in the chamber. I think that is the weakness that we have. If it could be, it would assist us all.

Senator Ian Campbell —It is not our job.

Senator Faulkner —No, I am just saying that. Madam Acting Deputy President, I think that is the difficulty we have at the moment. We do not have a copy of the amended motion to which Senator Lees is addressing her remarks. If I could urge that Senator Lees facilitate those of us in the Senate who do not have the advantage of being on the inside of any of the arrangements that have been made, we would love to have a look at what is coming up before us. So that is my point of order.

Senator LEES —I am sorry if we have proceeded. We were looking at the time limit we have in which to do this tonight. I think the copies have been circulated now. Could I speak for a few minutes, Madam Chair, once you have dealt with the point of order, until people have had a chance to look at the amended motion?

Senator Ian Campbell —Madam Acting Deputy President, I am suggesting that Senator Vanstone needs to make a short personal explanation. In the time Senator Vanstone does that, which I think will be three minutes or less, people will have time to look at the amendment—we have 10 copies of this document being circulated now—and we can proceed with the debate. I recommend that Senator Vanstone seek leave to make a personal explanation under standing order 190.

The ACTING DEPUTY PRESIDENT —Just for the record, Senator Faulkner raised a point that may not strictly be a point of order, but a very important point: senators cannot really proceed to discuss an issue if it is not circulated. I believe the first copies are now circulating and there is an agreement to interrupt this process to allow further copies to arrive and for Senator Vanstone to make a statement.

Senator LEES —I seek leave to continue my remarks later.

Leave granted; debate adjourned.