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Tuesday, 5 May 1987
Page: 2588

Mr DOWNER(3.53) —In rising to speak on the Sea Installations Levy Bill 1987, the Sea Installations (Miscellaneous Amendments) Bill 1987, the Customs Tariff Amendment (Sea Installations) Bill 1987 and the Excise Tariff Amendment (Sea Installations) Bill 1987, I point out that this is the first occasion on which I have spoken on Bills in my capacity as shadow Minister for Arts, Heritage and Environment, and throughout the time that I remain in this position I shall emphasise that the Liberal Party of Australia-and I know that this is also the view of the National Party-supports the conservation of Australia's very delicate and very dear environment. Anyone who suggests that we would take any other position is not addressing the truth of the matter. The truth is that our policies and our attitudes will always show sensitivity to the environment and a recognition of the importance of conservation.

I am glad to say that the Opposition will not oppose the Bills that we are debating cognately this afternoon. We recognise the values of the Bills and we see them as being the best solution to a fairly difficult and complex legal problem. The Bills are simply an attempt to clarify the legal status of off-shore installations, which are now moving ahead, particularly on the Great Barrier Reef. There is no doubt that these offshore installations can be an important tourist asset to Australia and to the Great Barrier Reef region. It goes without saying that tourism will play an increasingly important part in the Australian economy. This is vastly important if we are to rectify our balance of payments problems. Thus, we must utilise to the best advantage of our economy those features of Australia that are unique. But, of course, we have to do that without in turn destroying those unique features and desecrating our environment.

In relation to installations at the Great Barrier Reef, some installations already exist in the form of pontoons. More recently, a proposal was put forward by a company called Reef Link Resort Pty Ltd to build a very large floating hotel on the John Brewer Reef, some 72 kilometres from Townsville. This $31m floating hotel will be a seven-storey structure, so it will be fairly large, and it will have about 200 beds. That is not the only proposal that has been put forward, but it is the only one that is currently in the process of becoming an actuality. The Opposition does support this proposal, but we support it with perhaps some reservations and some caution. As I said earlier, it will enhance the tourist potential of the Great Barrier Reef. I think that other floating installations-for example, those that might be constructed in Western Australia in the next few years-also have the capacity to enhance the tourist potential of parts of Australia. In saying that the Opposition supports this proposal, I re-emphasise that the Great Barrier Reef is one of our greatest natural assets, and our greatest national asset. It certainly should be used but not abused. We very much want to avoid two basic abuses. I have already referred to the importance of preserving the very delicate environment of the Great Barrier Reef, to its unique beauty and to the importance of recognising its ecological significance, as well as the importance of recognising that unfettered tourism could destroy the Great Barrier Reef, something for which future generations would not thank us. It is important that we find an intelligent, commonsense balance between development and the conservation of the environment.

I think that this proposal is an example of a commonsense approach to the problems that exist. The last thing that we want, of course, is a flotilla of hotels, stretching like some sort of naval review along the Great Barrier Reef from its most northern aspect to its southern limit. It would not only look absurd and be offensive but it would also pose a very real threat and danger to that very delicate environment. So, I emphasise that the Opposition supports this proposal but with that qualification. We do not support blanket development; we do not want to see floating hotels stretching like a naval review from the northernmost aspect of the Great Barrier Reef to the south. That would be a disaster for Australia, for our environment and, in turn, possibly for tourism by being completely counterproductive.

The other very real concern, which I believe the Government has addressed with this legislation, and certainly the Opposition has addressed this matter, is that these sorts of floating installations could be used as some kind of massive avoidance device. They could be used, for example, as a way of avoiding taxation-a new form of `top of the harbour' scheme perhaps, as opposed to `bottom of the harbour'. But certainly they could be used to avoid both Federal and State taxes. They could be used as duty-free zones, where people could go and do duty-free shopping instead of paying the normal duties that they have to pay on the mainland, and there could be a way also in a related sense for people to avoid their excise obligations. If this were the case, we would be allowing a great flotilla to develop off the Australian coast, where people could avoid every single law ever made by the Commonwealth Government or by the States. Every member of this House would agree that that would be completely and utterly absurd. This package of legislation addresses those two concerns that we have. We are concerned that the very delicate environment, particularly in relation to the Great Barrier reef, must be properly preserved and that floating installations should not be used as some kind of extraordinary legal avoidance device.

This legislation puts these sea installations effectively under the same sort of controls as those under which land based installations operate. This legislation is parallel to the Petroleum (Submerged Lands) Act. The legislation extends Commonwealth laws to what are described in the legislation as adjacent areas, that is, areas beyond the territorial sea out as far as the limits of the continental shelf or the Australian fishing zone. That means that the Commonwealth will be able to apply environmental regulations; it will be able to apply its own taxation laws; it will be able to apply customs laws; and it will be able to apply its excise laws and so on. However, the package of legislation does more than that. It also extends the State regulations relating to sea installations in that area out as far as the boundary of the continental shelf as well. That means that issues such as health and public safety, which normally fall under the auspices of State governments will be carefully covered by this legislation. Given that this raises one or two fairly difficult legal issues, I am happy that this package of Bills offers some practical solution to some of the problems to which I referred earlier.

Under the legislation it will be necessary for operators of sea installations to obtain permits from the Minister for Arts, Heritage and Environment who will also have the capacity to refuse the granting of a permit. That is a very important power for the Minister to have. If it is clear that an installation will be unsatisfactory from a variety of points of view-if it will be environmentally damaging, if it will be unsafe or if it will, in some other way, prove to be offensive, perhaps just from an aesthetic point of view-the Minister will have the capacity to refuse to issue a permit. In other words, the issuing of permits will depend admittedly on the discretion of the Minister but also presumably on the project operators ensuring that their installations recognise the demands and the aspirations of the Australian people as a whole and are not just selfish exercises of commercial greed which overlook the concerns of ordinary Australians.

It is a very practical proposition that the Government has put forward in this legislation that the States should administer the regulations on a practical, day to day basis, in spite of the fact that the sea installations will be located in Commonwealth territory. That makes a great deal of sense because, as a member of the Liberal Party, I am naturally concerned that we in Australia should do what we can to try to get rid of duplication between the different levels of government, particularly State and Federal governments. When I first looked at this legislation one of the first things that came to my mind was whether this was yet another example of duplication between State and Federal governments. I am glad to see that in a very practical way this potential problem has been addressed in this legislation and that the States will effectively administer the regulations even though it is still legally Commonwealth territory.

Under the legislation the Commonwealth will raise a levy from the operators of the sea installations. That levy, I understand, is to be set at a level which reflects the market value of the installations. It will be very difficult, of course, to determine the market value of a particular installation. That will be no easy task. I assume the Australian Taxation Office will be given the job of trying to make that assessment. I hope that its record in establishing the market value of these installations will be considerably better than its record in establishing the market value of some of the farms in my electorate which have been valued for the purpose of applying the assets test. In any case, some arbitrary standard will have to be used, and it will be incumbent on the Taxation Office to get as close as it can to a genuine market price on which the Government will then determine the levy. Under the legislation the Government, in turn, will pay an administrative fee to the States which will be administering the regulations. I do not doubt that this will be a matter of some contention between the Commonwealth and the States. I will return to that a little later.

One thing to which I would like to draw the attention of the House is the decision by the Government-I am certainly praising the Government a good deal this afternoon in relation to this legislation-to exempt research facilities from payment of the levy. That is very important. I would like to encourage proper ecological research on the Great Barrier Reef and in other parts of off-shore Australia. I think all of us would agree that it would be unreasonable for those research installations to be subject to the same sort of levy as what is clearly a commercial, money-making tourist installation. The system of having a levy and an administrative fee which is paid to the States makes some practical sense. It ensures that there is no duplication, yet it allows the extension of State jurisdiction to cover these off-shore sea installations. The alternative would be some vastly complicated and perhaps not very practical legal process which could turn out to have very dire consequences if it were to be challenged in the High Court of Australia or in another jurisdiction.

A number of criticisms have been made about this legislation, and I would like to allude to them although, as I have said all along in my speech, I do not have any fundamental objections to it. The first concern that has been raised in relation to this legislation is the definition of the territorial sea. The Commonwealth's understanding is that the definition of the territorial sea is three miles from the high water mark, but I understand that there is also a proviso that if an installation begins within that three-mile limit and extends beyond it State jurisdiction would apply to that installation. In other words, it would be defined as being part of the so-called territorial sea.

An argument has been put from Queensland that floating hotels on the Barrier Reef are de facto extensions of the Queensland territorial sea or the Queensland mainland because these installations have to be serviced from the mainland. The argument goes that there is no way to get food, fresh water or other supplies out to those installations except from the mainland of Australia, and logically, of course, from Queensland. That argument may be one that the Queensland Government is prepared to sustain, but I doubt that it would go to the wall on it. Particularly if the Federal Government were to accept the argument on face value it might find that, by allowing the States to have jurisdiction for sea installations as far out as the edge of the continental shelf, that jurisdiction could be challenged in the High Court and, if it were found to be Commonwealth jurisdiction and if the argument that the Queenslanders have been putting forward were found to be false, the sea installations would revert to the unhappy, in my view, position of being without any regulation whatsoever and being little more than tax avoidance and evasion installations. I would not like that to happen, and I do not think the Government should have accepted the argument that was put forward in relation to the definition of the territorial sea. It has done the right thing by introducing this legislation.

From the point of view of the States, their argument goes a little further. They say that if they can include these sea installations in their territorial sea they will be able to issue certain State licences which are effectively ways of raising taxation revenue, such as liquor licences in hotels which, in the case of the John Brewer Reef proposal, would be a very practical example. This argument has perhaps some value because the levy which the Commonwealth will collect and the administrative payments which the Commonwealth will then make to the States for administering the regulations will not cover the lost revenue from, say, liquor licences or whatever they may be which the States would have otherwise been able to get had the installations been part of the territorial sea. That argument of no compensation for lost revenue again is one that assumes that the installations would have been on land or within the territorial sea had they not been placed further out in the so-called adjacent area-in other words, that the installations would have been built regardless of where they were located. That argument is pretty phoney. I do not think that makes a great deal of sense at all. One would have to say that the floating hotel proposal for John Brewer Reef is one which recognises the intrinsic merit of the Great Barrier Reef. It is not one in relation to which the company took a decision to build either at John Brewer Reef or perhaps in Townsville or elsewhere on the mainland of Australia.

If that is the case-I assume that it is-it is not reasonable for the States to argue that they are effectively losing revenue as a result of this Commonwealth legislation. In fact, quite to the contrary: Because of this legislation sea installations will be able to go ahead where they are properly controlled and properly managed; and where those sea installations go ahead there will be servicing from the mainland, and the State which is adjacent to the sea installation will benefit through the multiplier effect of that servicing. In the case of the John Brewer Reef proposal there is no doubt that the city of Townsville will, to some extent, benefit from that development. It is extremely likely that the development would not have gone ahead at all had it not been permissible to place the floating hotel at John Brewer Reef.

I would like to raise a number of other issues which are not exactly points of criticism but certainly are points of concern that the States have drawn to my attention. A further one is that the Commonwealth Government could, theoretically, grant a permit without the agreement of a State. Clause 17 of this Bill does specifically say that the Commonwealth Government has an obligation to consult with a State on the issuing of a permit. I think that makes good sense. It is a perfectly reasonable and rational thing to do.

Mr Cohen —The Great Barrier Reef Marine Park Authority is a consultative process.

Mr DOWNER —As the Minister for Arts, Heritage and Environment rightly points out, the Great Barrier Reef Marine Park Authority involves a consultative process and, of course, where this legislation applies to the Great Barrier Reef it does not in any case derogate from or add to the Great Barrier Reef Marine Park Act. The simple fact is that under clause 17 of the Bill there is an obligation for the Commonwealth to consult the States before granting a permit. But that does not take away from the argument that the States have put, which is that the Commonwealth could provide a permit without the agreement of the States. So the States do not have a veto over the provision of a permit. It is argued that the case could arise where, using Townsville as an example, a casino in Townsville, whose licence was given under certain financial conditions, suddenly found itself facing competition some 20, 30, or perhaps even 70 kilometres off shore when a sea installation comprising a casino was established. As a member of the Liberal Party, I believe in competition, so if competition were to arise so be it. But, more than that, I think one has to recognise that the so-called adjacent area, as it is defined in this legislation-the area between the territorial sea and the edge of the continental shelf-is constitutionally Commonwealth territory, and it would be unreasonable for the Commonwealth to give the States a veto over the issuing of the permits in Commonwealth territory. But I do suggest that the Government and the Minister for Arts, Heritage and Environment (Mr Cohen) handle this question of the issuing of permits very sensitively and very carefully, always recognising the interests of the States. I am sure that that will be done but I would just like to raise that issue to make certain that the Government and in particular the Minister take it on board.

The fourth concern that has been raised with me relates to the negotiations on the actual level of the levies and the administrative payments. This is something that in the end will work itself out through negotiation between the Federal and State departments and between the Federal Government and its department and the operators of the seas installations. But it is important, as far as the States are concerned, to ensure that the Commonwealth's payments to the States do cover the full administrative costs. There have been some complaints, in relation to other such arrangements, that the States have been shortchanged by the Commonwealth. I have no way of assessing whether or not those complaints are justified. It may be that they are not justified; it may be that they are. But it will be very important that the Commonwealth plays fair with the States and makes certain that the States are not shortchanged through this arrangement.

I think also-I referred to this matter earlier-that it is important that the actual levy itself be set at an intelligent level. The legislation says that it must be set at a level determined by market values, which does not actually tell us very much at all. But, of course, if the levy were too low the operators of the installations would simply have some sort of tax haven. That would be the de facto effect of having a levy that was far too low. So the levy has to be set at an intelligent level. If it is too high I think the operators would be able to argue that it is some sort of rip-off. A situation where not a market but the Government is determining the level of the levy is again one which I suggest would have to be handled very sensibly, and which would require a great deal of common sense on the part of the Government.

The question has been raised of how many permits the Commonwealth would actually issue, particularly in the Great Barrier Reef area. But, of course, this legislation applies to all of Australia, not just the Great Barrier Reef. Would the number of permits be limited? Would the Commonwealth Government have some sort of quota? The legislation does not provide for quotas; it only provides for the discretion of the Minister to issue permits. I would just come back to what I said earlier about my concerns that there could be too many floating hotels up and down the Great Barrier Reef. My fear is that we could end up one day with some sort of naval review of floating hotels from the north Queensland end of the Great Barrier Reef to the south end of the Great Barrier Reef. I would only hope that the Minister will show intelligent discretion in issuing the permits so that that situation will not arise. Of course, the absolute numbers of permits is not the only factor. The other factor is the location itself. Again, this is a matter now for the discretion of the Minister, not for the Parliament itself. We would always be on the lookout to ensure that those permits are not issued in areas which would be environmentally damaged by the moving of a sea installation into that particular area.

In conclusion, as I said at the beginning, the Opposition will not oppose this package of legislation. We regard it as a sensible and practical approach to a fairly difficult sort of arrangement, particularly in respect of Commonwealth-State relations. The underlying assumption of this legislation-I emphasise this point because I think it is an important one-is that the Commonwealth Labor Government does recognise the need for some sort of intelligent balance between conservation and development. But the Government is not, if you like, being absolutist in its approach. I refer specifically to the Great Barrier Reef in that regard. It is not saying that we would never ever have any floating hotels, or sea installations, in that area or in other areas around the coast of Australia. But, at the same time, it recognises the very great responsibility we all have as members of this Parliament in 1987 to future generations of Australians to pass on the natural heritage of this country, the environment which we ourselves inherited, in a way which will do us proud and which recognises the continuity and the beauty of our nation. I hope the Minister will consider some of the concerns that have been raised with me in relation to this legislation. Doubtless they have been raised, in any case, with him and his Department. He may address those matters in his concluding remarks. I reiterate that the Opposition will not oppose this legislation. We regard it as a sensible and practical approach to a difficult problem.