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Tuesday, 30 August 1994
Page: 613


Senator COULTER (6.55 p.m.) —I wish to speak briefly on another matter. Some years ago I raised in this Senate by way of an amendment to a sales tax bill a proposal to remove the sales tax from paper made from recycled fibre. At the time that amendment was defeated by the combined votes of government and opposition, but shortly thereafter the government introduced its own legislation which removed the 20 per cent sales tax from paper made from recycled fibre. We, of course, supported that and that became the law.

  In the 1992 budget the government, however, chose to put back the 20 per cent sales tax on paper made from recycled paper. That seriously disadvantaged some groups which in the meantime had invested large amounts of money to set up a recycling program. There was one company in Brisbane, and Austissue, a company in Western Australia, which had invested, I believe, some $7 million to set up a factory recycling paper and making toilet tissue and, in the process, employing some 40 people. So this change of government policy, this sudden about-face of government policy, was a severe embarrassment to those investors and to those companies.

  Accordingly, I went into a negotiation with the then Treasurer, John Dawkins, as a result of which in that budget it was agreed that, while the sales tax on recycled paper would be reimposed, a bounty would be payable to those Australian companies making paper from recycled fibre equal to 20 per cent in the first year. In other words, the bounty would exactly pay for the sales tax payable by those companies. In the second year that bounty would be reduced to 15 per cent, in the third year to 10 per cent, and then there would be a program for renegotiation.

  What has transpired since—and this is the reason I am speaking tonight—is that Austissue, the company in Western Australia, sold semi-finished product to a company in Victoria called Felcro. That company believed that it would be eligible for the bounty because it was the company responsible for the sales tax, there being no sales tax payable on the intermediate product, that is, the product which passed between Austissue in Western Australia and Felcro in Victoria.

  What seems to have happened is that the Western Australian company, Austissue, has taken the 20 per cent bounty and Felcro has been landed with the 20 per cent sales tax. This has resulted in legal claims by Austissue for payment from Felcro—which I understand has retained some of the payment owing to Austissue because it believes that it should have received the bounty—and a counterclaim from Felcro against Austissue for the bounty payment.

  As a consequence and because the matter has landed in court—a matter which I thought was absolutely clear in the debates which led to the modification of that budget and the introduction of the bounty scheme—I thought it was appropriate for the Treasurer to indicate that the bounty scheme was introduced to exactly counter the sales tax to assist those companies which had set up as a consequence of that about-face in government policy.

  So I wrote to John Dawkins when he was Treasurer, asking him whether my interpretation was correct. John Dawkins did not answer my letter. I wrote to him again. John Dawkins again did not answer my letter. I have subsequently written to Mr Willis. Honourable senators will realise, from the time Mr Willis has been Treasurer, that this correspondence has been going on over some considerable time; and, again, I have had no response from Mr Willis.

  Here we have two Australian companies involved in the recycling of paper—a very important activity—and involved in very expensive litigation over the payment of sales tax and a bounty scheme. If anyone goes back and looks at the debates and negotiations that went on, they would realise that it should be sorted out very quickly at no expense whatsoever. We have the succeeding federal Treasurer failing in his duty to give a clear indication as to the interpretation of that agreement on bounty and sales tax.

  I make this speech tonight as a further appeal to the present Treasurer to come out of the woodwork, go back and look at that agreement and write a letter indicating the correct interpretation of to whom the bounty should be payable. I believe it is clear that it should be paid to the company responsible for the payment of sales tax. It was quite clear in the negotiations that that was the intention. The Treasurer can save an enormous amount of heartache and costly litigation and sort this matter out once and for all. I appeal to the Treasurer to settle this matter.