Senator MACKAY —I have another question to Senator Macdonald, the Minister for Regional Services, Territories and Local Government. Is the minister aware of a KPMG report commissioned by the Local Government Association of Queensland which shows initial GST compliance costs of up to $200,000, ongoing compliance costs of up to $15,000, plus a cash flow effect of up to $400,000 for councils in Queensland? Is he aware of the independent study carried out by the Municipal Association of Victoria which estimates that compliance costs for some Victorian councils could be up to $1 million per council and some $200,000 per year thereafter? How does this square with the minister's statement that compliance costs for local government will be minimal?

Senator IAN MACDONALD (Regional Services, Territories and Local Government) —I was aware of the MAV—Municipal Association of Victoria—report. I recall that Senator Mackay issued a press release off the back of that saying `$1 million compliance costs for all councils' or something like that—something completely over the top and outrageous. It was a report that lacked any intellectual expertise.

Senator Mackay —What about the LGAQ one?

Senator IAN MACDONALD —I will come to the LGAQ one, but I just want to finish on the MAV one. Unfortunately, the MAV were working off the sorts of stories that you and your colleagues were putting around, so they were working on the wrong premise. They had their facts and information wrong. I do not mind saying this about them because I sat with them at one of their council meetings and told them that to their face. I explained to them where they were wrong. They had the basic facts incorrect. When I explained that to them they said, `Oh, that does make a difference, doesn't it. That does make a difference.'

Senator Mackay —How?

Senator IAN MACDONALD —I could tell the senator the answer to this chapter and verse. This was a question that I was prepared for about four months ago when—it didn't really hit the press too much—Senator Mackay issued her press release. It was wrong in its basic understanding of the facts. From memory, I think one of the things was that they had local government putting in a return every three months. That was completely wrong. Local government can put it in in one month and that makes an enormous difference to their cash flow and to the whole import. There were many examples like that where they were simply wrong in fact so, obviously, they got it wrong in their assessment.

I did not quite hear what you said in the question, but I understand from your interjection that it was about the LGAQ report.

Senator Mackay —The KPMG report.

Senator IAN MACDONALD —The KPMG report done by local government—and that was a better assessment. As KPMG said, a lot of it was still uncertain. They were not quite sure how it would impact. I think they had four or five councils who did the work and KPMG worked with them. They had a range of figures on what it would cost local councils. I think they ranged from around $6,000 for a small rural council, up to about $150,000. Do not hold me to that, Senator—I am just going from memory. As I say, when this first came out I had all the details, but my memory is a little hazy after so many months. Certainly, it was in that range.

I have said to local government that, as the legislation is passed and as we know exactly what the situation is and what the system will be for local government, then I would sit down with them—I would get Treasury and the National Office of Local Government to sit down with the LGAQ and any of the other state associations—and their consultants and go through it to see whether they are correct or not. I have always said to local government that we understand that there will be some impact. We do not want councils to bear the full burden of that. There have been a number of measures announced that will help councils through this period. The tax office will set up a unit that will go around and explain things to them. As the senator will be aware, the local government incentive program, a new program—(Time expired)

Senator MACKAY —Madam President, I ask a supplementary question. The minister may have been prepared for the answer four months ago but, of course, he refused to answer any questions at all in relation to the GST and local government during estimates. If the minister accepts that the LGAQ-KPMG report is in fact a fair assessment, isn't it true that the government's local government incentive program, which will primarily assist councils with GST compliance costs and provide $7 million over two years to 710 councils, will result in less than $10,000 per council? The minister surely would not be surprised to learn that local government regards this program as simply a joke.

Senator IAN MACDONALD (Regional Services, Territories and Local Government) —None of the local government bodies that I have spoken to have thought the local government incentive program was a joke. In fact, they are very much looking forward to its implementation. They understand that there will be costs involved and that the government will go out of its way to assist local government through the implementation period. Senator Mackay mentions that I would not answer questions in estimates. I am glad she did that because, as I said to her then, this was the place to answer those questions. It is an issue that does not come into effect until next year's budget and the Senate estimates committees are of course for the budget 1999-2000. That is why I would not answer them, not because I did not want to. I am very happy to answer them all the time at any time. I am very happy to answer them.

Senator Chris Evans —No-one can pass you notes in estimates.

Senator IAN MACDONALD —Well, if someone is passing me notes, they should do it in a way that I can read what they are saying.