Senator KEMP (Assistant Treasurer) (4:25 PM) —I want to make some brief comments, if I may—

Senator Cook —You just made some comments a minute ago.

Senator KEMP —Senator Cook does not wish me to, but I want to make some comments in relation to the A New Tax System (Commonwealth-State Financial Arrangements) Bill 1999 . I noticed that Senator Sherry ranged far and wide over the WET and I would like to make some comments on that, if it could be permitted at this stage.

Senator Cook —Would you be kind enough to enable me to make some comments before we close?

The TEMPORARY CHAIRMAN (Senator Ferguson) —Order! Senator Cook, the minister has the call.

Senator Cook —I just want to ask a question, if I may, through you, to the minister.

The TEMPORARY CHAIRMAN —You can't ask a question—

Senator Cook —He just spoke and now he has got the call again. I wanted to speak and I am now denied the call. I just ask if you would be kind enough to enable me to speak before we close this debate.

The TEMPORARY CHAIRMAN —You are making a request, not a point of order. The minister has the call.

Senator KEMP —Thank you. My understanding is that the debate ends at 4.30.

Senator Cook —Yes, so can I say a few words?

Senator KEMP —It is going to be difficult, Senator.

Senator Cook —You put the guillotine on and now you are stopping me speaking.

The TEMPORARY CHAIRMAN —Order!

Senator KEMP —You invited me to talk, so I will talk.

Senator Cook —And you could talk under wet cement and say nothing!

The TEMPORARY CHAIRMAN —Order! The call was over there and now the minister has the call.

Senator KEMP —The Commonwealth, states and territories are in agreement that the financial relationship between levels of government must be reformed and that Australia needs a stronger and more productive federal system for the next century. The government is committed to the reform of Commonwealth-state financial relations, and the two bills currently before the chamber will help to deliver this system. These bills represent an important step in improving the financial position of the states and territories.

At the April Premiers Conference, the heads of government endorsed an intergovernmental agreement on the reform of Commonwealth-state financial relations. The Commonwealth, state and territory governments are in the process of revising that agreement to take account of the Prime Minister's 28 May announcement. This agreement retains the core elements of the original agreement and places Commonwealth-state financial arrangements on a more efficient and durable basis. Once agreed by all parties, this revised agreement will be attached to the legislation and the legislation will record the Common wealth's intention to comply with the agreement.

The amendments before us today are required to enact aspects of the reforms to the Commonwealth-state financial arrangements arising from these developments. The arrangements for transitional assistance are also modified to reflect the agreement reached between the Commonwealth and the states. The level of assistance to the states and territories will be increased to reflect the changes in the level of GST revenues that will accrue to the states and territories. Also, as agreed by the heads of government, the distribution of GST revenue grants will be solely on the basis of horizontal fiscal equalisation after two years. Following the 28 May announcement, responsibility for local government funding will be retained at the Commonwealth level. Amendments are now required to ensure that local governments can receive financial assistance grants from the Commonwealth. A number of other additional amendments are required to address some technical matters.

This probably brings to an end the debate to amend the bills for the government's tax reform package. There will be a debate on diesel tomorrow, but a raft of important bills will now be voted on by the Senate. Let me make it clear that this is a great day for Australia. The Senate has, we believe, produced a tax reform package which, with the passage of the legislation, will give Australia a tax system which will set it up for the new century. It is a tax system which reforms, among other things, the indirect tax system, the income tax system and the financial arrangements between the states and the Commonwealth. It provides major real improvements for people on pensions and benefits, and it provides huge assistance to families in particular, which this government has always had a particular focus on.

In my view, the efforts of the Labor Party to defeat tax reform in Australia show how far the Labor Party has fallen. The Labor Party refused to accept the mandate given to the government at the last election. We have been able to work very constructively with the Democrats. We have, I believe, produced a most effective tax reform package. As the weeks, months and years go by, I believe it will be very apparent what a momentous day this is for Australia. This is a day which has at last produced, after all the hard work over many years, major tax reform for this country.

The CHAIRMAN —Order! The time for the debate on the remaining sections of the A New Tax System (Goods and Services Tax) Bill 1998 and 26 related bills has expired. The question before the chair is that the government amendments moved to the A New Tax System (Personal Income Tax Cuts) Bill 1998 be agreed to.

Question resolved in the affirmative.

The CHAIRMAN —I shall now put all of the government amendments and requests on the remaining bills together. The question is that the following government amendments and requests be agreed to:

In respect of the A New Tax System (Goods and Services Tax Administration) Bill 1998—

Schedule 1, item 7, page 8 (lines 12 and 13), omit ", creditable importations and acquisitions and importations of diesel or like fuel", substitute "and creditable importations".

Schedule 1, item 7, page 12 (lines 16 and 17), omit ", an input tax credit or a diesel fuel credit", substitute "or an input tax credit".

Schedule 1, item 7, page 17 (lines 10 to 12), omit ", a creditable importation or an acquisition or importation of diesel or like fuel for creditable diesel fuel consumption", substitute "or a creditable importation".

Schedule 1, item 7, page 35 (lines 27 and 28), omit "or acquire or import diesel or like fuel for creditable diesel fuel consumption,".

Schedule 1, item 7, page 29 (after table item 11), insert:

In respect of A New Tax System (Commonwealth-State Financial Arrangements) Bill 1999—

Requests :

That the House of Representatives be requested to make the following amendment:

Clause 5, page 6 (after line 6), after paragraph (c), insert:

(ca) the amount, determined in a manner agreed by the Commonwealth and all of the States, that represents amounts of voluntary GST payments that should have, but have not, been paid by local government bodies; and

Page 14 (after line 4), at the end of Division 2, add:

14A Revenue replacement payments, 2000-01

(1) Each State is to be paid by way of financial assistance, for the 2000-01 GST year, a revenue replacement payment.

(2) The revenue replacement payment for a State for the 2000-01 GST year is:

where:

alcohol base amount means the sum of:

(a) the amounts determined by the Commissioner of Taxation, before 15 June 2001, to be the additional amount of sales tax on taxable dealings that occurred before 1 July 2000 to which the Sales Tax (Surcharge) Acts relate that was, or is likely to be, collected in the GST year because of a Commonwealth surcharge; and

(b) if the June 2000 alcohol base amount exceeds the June 2000 alcohol base amount estimate,the amount of the excess;

less the sum of:

(c) if the June 2000 alcohol base amount estimate exceeds the June 2000 alcohol base amount,the amount of the excess; and

(d) the amount determined by the Commissioner of Taxation to be the additional administrative costs incurred by the Commonwealth in the GST year because of that surcharge or those surcharges, to the extent that the administrative costs relate to taxable dealings that occurred before 1 July 2000.

alcohol share for a State means:

(a) if paragraph (b) does not apply,the number set out opposite the name of the State in the table at the end of this definition; or

(b) if the regulations prescribe a number as the alcohol share for each State for the purposes of this definition,the number so prescribed for the State.

Revenue replacement payments, alcohol share

petroleum base amount means the sum of:

(a) the amount determined by the Chief Executive Officer of Customs, before 15 June 2001, to be the additional amount of customs duty on goods, imported before 1 July 2000, falling to subheadings of Chapter 27 of Schedule 3 to the Customs Tariff Act 1995 that was, or is likely to be, collected during the GST year because of a Commonwealth surcharge; and

Note: Chapter 27 of Schedule 3 to the Customs Tariff Act 1995 deals with petroleum products.

(b) the amount determined by the Commissioner of Taxation to be the additional amount of excise duty on goods, manufactured or produced before 1 July 2000, falling to items 11 and 12 of the Schedule to the Excise Tariff Act 1921 that was, or is likely to be, collected during the GST year because of a Commonwealth surcharge; and

Note: Items 11 and 12 of the Schedule to the Excise Tariff Act 1921 deal with petroleum products.

(c) if the June 2000 petroleum base amount exceeds the June 2000 petroleum base amount estimate,the amount of the excess; less the sum of:

(d) if the June 2000 petroleum base amount estimate exceeds the June 2000 petroleum base amount,the amount of the excess; and

(e) the amount determined by the Chief Executive Officer of Customs to be the additional administrative costs incurred by the Commonwealth in the GST year because of surcharges mentioned in paragraph (a), to the extent that the administrative costs relate to goods that were imported before 1 July 2000; and

(f) the amount determined by the Commissioner of Taxation to be the additional administrative costs incurred by the Commonwealth in the GST year because of surcharges mentioned in paragraph (b), to the extent that the administrative costs relate to goods that were manufactured or produced before 1 July 2000.

petroleum share for a State means:

(a) if paragraph (b) does not apply,the number set out opposite the name of the State in the table at the end of this definition; or

(b) if the regulations prescribe a number as the petroleum share for each State for the purposes of this definition, the number so prescribed for the State.

Revenue replacement payments, petroleum share

tobacco base amount means the sum of:

(a) the amount determined by the Chief Executive Officer of Customs, before 15 June 2001, to be the additional amount of customs duty on goods, imported before 1 July 2000, falling to subheadings of Chapter 24 of Schedule 3 to the Customs Tariff Act 1995 that was, or is likely to be, collected during the GST year because of a Commonwealth surcharge; and

Note: Chapter 24 of Schedule 3 to the Customs Tariff Act 1995 deals with tobacco and manufactured tobacco substitutes.

(b) the amount determined by the Commissioner of Taxation to be the additional amount of excise duty on goods, manufactured or produced before 1 July 2000, falling to items 6, 7 and 8 of the Schedule to the Excise Tariff Act 1921 that was, or is likely to be, collected during the GST year because of a Commonwealth surcharge; and

Note: Items 6, 7 and 8 of the Schedule to the Excise Tariff Act 1921 deal with tobacco, cigars and cigarettes.

(c) if the June 2000 tobacco base amount exceeds the June 2000 tobacco base amount estimate,the amount of the excess;

less the sum of:

(d) if the June 2000 tobacco base amount estimate exceeds the June 2000 tobacco base amount,the amount of the excess; and

(e) the amount determined by the Chief Executive Officer of Customs to be the additional administrative costs incurred by the Commonwealth in the GST year because of surcharges mentioned in paragraph (a), to the extent that the administrative costs relate to goods that were imported before 1 July 2000; and

(f) the amount determined by the Commissioner of Taxation to be the additional administrative costs incurred by the Commonwealth in the GST year because of surcharges mentioned in paragraph (b), to the extent that the administrative costs relate to goods that were manufactured or produced before 1 July 2000.

tobacco share for a State means:

(a) if paragraph (b) does not apply,the number set out opposite the name of the State in the table at the end of this definition; or

(b) if the regulations prescribe a number as the tobacco share for each State for the purposes of this definition, the number so prescribed for the State.

Revenue replacement payments,tobacco share

(3) In determining, for the purposes of subsection (2), the additional amount of customs duty or excise duty that was collected, or is likely to be collected, during a particular period because of a Commonwealth surcharge:

(a) the Chief Executive Officer of Customs is to take into account the impact of the operation of section 19 of the Customs Tariff Act 1995 ; and

(b) the Commissioner of Taxation is to take into account the impact of the operation of section 6A of the Excise Tariff Act 1921 .

Note: Section 19 of the Customs Tariff Act 1995 and section 6A of the Excise Tariff Act 1921 provide for the automatic indexation of certain rates of duty which include rates payable on tobacco etc. and petroleum products.

(4) If, after the commencement of this Act, the Customs Tariff Act 1995 or the Excise Tariff Act 1921 is amen ded to vary the method of calculating duty on goods falling to:

(a) subheadings of Chapter 24 of Schedule 3 to the Customs Tariff Act 1995 ; or

(b) items 6, 7 and 8 of the Schedule to the Excise Tariff Act 1921 ;

then, for the purposes of subsection (2), the additional amount of customs duty or excise duty that was collected, or is likely to be collected, during a particular period is to be determined on the basis that the amendment had not been made.

(5) For the purpose of subsection (4):

(a) a Customs Tariff or Customs Tariff alteration proposed in the Parliament is taken to be an amendment of the Customs Tariff Act 1995 ; and

(b) an excise tariff alteration proposed in the Parliament is taken to be an amendment of the Excise Tariff Act 1921 .

(6) In this section:

Commonwealth surcharge means the variation effected by a Surcharge Act in the rate of duty of customs or excise payable on specified goods or in the rate of sales tax applicable to specified taxable dealings (as the case may be).

June 2000 alcohol base amount means the amount determined by the Commissioner of Taxation, before 15 June 2001, to be the additional amount of sales tax on taxable dealings to which the Sales Tax (Surcharge) Acts relate that was collected during the month of June 2000 because of a Commonwealth surcharge.

June 2000 alcohol base amount estimate means the amount determined by the Commissioner of Taxation to be the June 2000 alcohol base amount estimate for the purposes of Schedule 6 to the States Grants (General Purposes) Act 1994 (as in force immediately before its repeal).

June 2000 petroleum base amount means the sum of the amounts determined by the Chief Executive Officer of Customs, before 15 June 2001, to be:

(a) the additional amount of customs duty falling to subheadings of Chapter 27 of Schedule 3 to the Customs Tariff Act 1995 that was collected during the month of June 2000 because of a Commonwealth surcharge; and

(b) the additional amount of excise duty falling to items 11 and 12 of the Schedule to the Excise Tariff Act 1921 that was collected during the month of June 2000 because of a Commonwealth surcharge.

June 2000 petroleum base amount estimate has the same meaning as in Schedule 6 to the States Grants (General Purposes) Act 1994 (as in force immediately before its repeal).

June 2000 tobacco base amount means the sum of:

(a) the amount determined by the Chief Executive Officer of Customs, before 15 June 2001, to be the additional amount of customs duty falling to subheadings of Chapter 24 of Schedule 3 to the Customs Tariff Act 1995 that was collected during the month of June 2000 because of a Commonwealth surcharge; and

(b) the amount determined by the Commissioner of Taxation, before 15 June 2001, to be the additional amount of excise duty falling to items 6, 7 and 8 of the Schedule to the Excise Tariff Act 1921 that was collected during the month of June 2000 because of a Commonwealth surcharge.

June 2000 tobacco base amount estimate has the same meaning as in Schedule 6 to the States Grants (General Purposes) Act 1994 (as in force immediately before its repeal).

Sales Tax (Surcharge) Acts means the following Acts:

(a) the Sales Tax (Customs) (Alcoholic Beverages) Act 1997 ;

(b) the Sales Tax (Excise) (Alcoholic Beverages) Act 1997 ;

(c) the Sales Tax (General) (Alcoholic Beverages) Act 1997 .

Note: These Acts increase the rates of tax that apply to taxable dealings with the following goods:

(a) goods covered by Item 1 of Schedule 7 to the Sales Tax (Exemptions and Classifications) Act 1992 ;

(b) beer, spirits, liqueurs or spirituous liquors;

(c) beverages that contain beer, spirits (other than spirits for fortifying wine or other beverages), liqueurs or spirituous liquors.

Surcharge Acts means the following Acts:

(a) the Customs Tariff Amendment Act (No. 3) 1997 ;

(b) the Excise Tariff Amendment Act (No. 3) 1997 ;

(c) the Sales Tax (Surcharge) Acts;

(d) any Act that varies:

(i) the rate of the duty of customs payable on goods falling to subheadings of Chapter 24 or 27 of the Customs Tariff Act 1995 ; or

(ii) the rate of the duty of excise payable on goods falling to item 6, 7, 8 or 11 of the Schedule to the Excise Tariff Act 1921 ; or

(iii) the rate of sales tax applicable to any of the taxable dealings to which the Sales Tax (Surcharge) Acts relate;

and is prescribed for the purposes of this definition.

Note 1: The Customs Tariff Amendment Act (No. 3) 1997 increases the rate of the duty of customs payable on goods falling to certain subheadings of Chapters 24 and 27 of Schedule 3 to the Customs Tariff Act 1995 . The relevant subheadings of Chapter 24 deal with tobacco and manufactured tobacco substitutes. The relevant subheadings of Chapter 27 deal with petroleum products.

Note 2: The Excise Tariff Amendment Act (No. 3) 1997 increases the rate of the duty of excise payable on goods falling to items 6, 7, 8 and 11 in the Schedule to the Excise Tariff Act 1921 . Items 6, 7 and 8 in that Schedule deal with tobacco, cigars and cigarettes. Item 11 deals with petroleum products.

Schedule 1, page 18 (line 25), omit "or 2002-03".

Schedule 1, page 19 (lines 28 and 29), omit ", 2001-02 or 2002-03", substitute "or 2001-02".

Schedule 1, page 20 (lines 27 to 29), omit subclause 6(1), substitute:

(1) This clause applies for:

(a) the 2002-03 GST year; and

(b) any GST year that is prescribed to be a transitional GST year for the purpose of paragraph (b) of the definition of transitional GST year in section 4.

Amendments :

Clause 14, page 12 (line 28), after "1994 ", insert "(as in force immediately before its repeal)".

Schedule 1, heading to clause 4, page 18 (line 23), omit "or third ".

Schedule 1, heading to clause 5, page 19 (line 26), omit "3 ", substitute "2 ".

Schedule 1, heading to clause 6, page 20 (line 26), omit "Prescribed ", substitute "Third or prescribed ".

In respect of the A New Tax System (Commonwealth-State Financial Arrangements—Consequential Provisions) Bill 1999—

Clause 2, page 2 (lines 1 to 3), omit subclause (2), substitute:

(2) Schedule 2 commences at the later of:

(a) the start of 1 July 2000; and

(b) the commencement of the A New Tax System (Commonwealth-State Financial Arrangements) Act 1999 .

In respect of the A New Tax System (Indirect Tax Administration) Bill 1999—

Schedule 1, item 22, page 6 (lines 11 and 12), omit subparagraph (ii).

Schedule 1, item 37, page 8 (line 22), omit "or a diesel fuel credit,".

Schedule 1, item 84, page 17 (line 6), omit "or".

Schedule 1, item 84, page 17 (lines 7 and 8), omit paragraph (d).

Question resolved in the affirmative.

The CHAIRMAN —The question is that the bills, as amended—

Senator Cook —But what about our amendments?

The CHAIRMAN —If you wish to have your amendments put, Senator, you will have to seek leave to have them put.