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Wednesday, 8 June 1994
Page: 1516


Senator COOK (Minister for Industry, Science and Technology and Minister Assisting the Prime Minister for Science) (4.29 p.m.) —When this debate was adjourned before lunch I was answering a question that Senator Watson had put to me. I note that Senator Watson is not in the chamber but I am sure that, given his assiduous attendance during debates of this kind and his avid interest in matters tax, he will be in this chamber in a very short time. While I am waiting for Senator Watson to arrive, perhaps I could address some of the other elements of the debate that do not touch on the issues raised by him. I will pay him the due courtesy, when he is in attendance, of addressing the issues that he has mentioned. As I say, I am sure he will be here shortly.

  This bill deals with several changes to taxation law. It is an omnibus bill—that is to say, it is a series of bills put together under one cover and which therefore amends in a technical way a whole range of taxation bills. The opposition has indicated, as indeed so have the Australian Democrats, support for—or not opposition to—all of those bills save one, and that is a bill related to student HECS payments. It is in that area that there is disagreement and in that area there has been debate. The proposed changes to all of the other bills, I take it, have been therefore supported, and I expect assent will be given to them in this chamber with absolute support from all parties. But it is in the area of HECS that the debate has foundered.

  Senator Watson indicated earlier that he would move an amendment. That was when we were here last week. This morning Senator Watson indicated that he will now not proceed with that amendment. I had acknowledged—as I think I am bound to, given that I do reserve the right from time to time to criticise opposition senators—that I believed an opposition senator had conducted himself in a principled and proper way. Senator Watson said that over the weekend he had further examined the issue, new information had come before him that caused him to change his mind and, as a consequence, he would not proceed.

  The public view of parliament is that we always disagree and that we somehow inflexibly cleave to our points, irrespective of the evidence. But this is a case in which a senator with new evidence has changed his point of view. I acknowledge that as sometimes being an issue that takes moral courage. I think I should therefore recognise that Senator Watson has exhibited that in this debate.

  That action has not prevented, however, a spokesman for the Australian Democrats, Senator Bell, from making political sport at Senator Watson's expense. I gather that that will be something that Senator Bell will continue to do. As I have said to Senator Bell and the Australian Democrats, given there is a majority and support for this measure, it would indeed be instructive if we could have a consensus in this chamber and this legislation passed uncontested. That may not be the case; we may be faced with a dissent from the Australian Democrats.

  Now that I see Senator Watson is in the chamber I say that, while indicating what I have just said was his position and that of the parties that he represents, Senator Watson explicitly asked me a question in his remarks to me earlier. Under the forms of the committee stage, there is an obligation on me to reply to it. That question, as I recollect, arose from his discussions with a student leader at Adelaide University and related to what the taxing arrangements for HECS would be should students undertake work during their holidays. I referred that question to my expert tax advisers. I now have some notes, from which I will quote, which I hope will answer that question quite precisely.

  Students working during holidays will be required to complete an employment declaration and give it to their employer in the normal way. That is the first point. The declaration will indicate whether or not those students have an accumulated HECS debt. The employer will then be required to make PAYE deductions in the usual way. As with all employees, if the rate of PAYE deductions reflects a rate higher than that required to meet those students' end of year tax liability, they are able to request from the Commissioner of Taxation a variation, as I understand it, in PAYE deductions under section 221(D) of the tax act.

  I will give another example. This mechanism is available for a taxpayer earning, say, $50,000 a year and having PAYE deductions based on $50,000 per year. In cases were a student or person works for half a year—say, from 1 January to 30 June—the section 221(D) variation would result in PAYE deductions based on $25,000 income being made—that is, on half the annual figure being made. I do know whether that answers precisely the point that Senator Watson has raised, but I notice a nodding of the head and I take that to be an affirmative. I now notice an uplifting of the hands and I take that as being not necessarily an affirmative.

  While I was listening to the debate earlier, Senator Reid also put to me a question. Senator Reid's question, if I may paraphrase it, was: do the proposed changes to the collection of HECS mean that the calculation of child support payments by a non-custodial parent under the child support formula should be changed? I think that is a fair paraphrasing of the question asked by Senator Reid.

  My advisers have prepared for me an answer, which I will quote from. The changes made under this bill in relation to the collection of HECS through the provisional tax system and the proposed changes to be made by regulation in relation to the collection of HECS through the PAYE system—and there is some emphasis on the following words—do not change the amount of HECS that a person would be liable to pay in respect of a particular year. They simply change the timing of those payments. As such, there is no apparent need simply because of these changed payment arrangements to alter the way in which child support liabilities are calculated under the child support formula. For example, a non-custodial parent at the moment may have a HECS liability and this is not specifically taken into account under the child support formula. No-one pretends that the child support formula gives a perfect result in every case. In recognition of this, a child support review office was set up to enable a low-cost, informal review mechanism for custodian and non-custodian parents who are unhappy with the amount of child support being paid. The existence of a HECS liability would be a factor which could be taken into account in such a review.

  I am aware that Senator Reid is part of a committee currently looking at child support, the report of which, I understand, is due to be released in August this year. The government will be looking with interest to see what recommendations the committee makes. Having made those comments, I think that discharges me at the present time from the obligation of answering questions posed by honourable senators. I notice that there is some competition for the call. I will sit in my place and listen with interest to the contribution to the debate senators will now make.