Senator XENOPHON (South Australia) (09:31): It is very timely to debate the Poker Machine Harm Reduction ($1 Bets and Other Measures) Bill 2012 [2013] today, a bill that I and my colleagues Senator Di Natale and Senator Madigan introduced, because the issues at the heart of this bill will not go away, despite the attempts of the former government to sideline this issue and despite the attempts of the current government to bury this issue. They will not go away for reasons that will become apparent. There are literally many hundreds of thousands of Australians in this country today who are suffering because of addiction to poker machines.

Given that the government have begun the process of dismantling the national gambling regulator and repealing the previous government's reforms, this bill is particularly timely. Let me make this quite clear: when the former government's legislation on gambling reform was put up, I did not support the then government's legislation because I did not believe it went far enough. Also, I did not want to be seen to be sanctioning a fundamental broken promise on their part, because the Gillard government actually reneged, in a deeply cynical way, on the written agreement that it had struck with Andrew Wilkie, the member for Denison. I did not want to be party to that very cynical manoeuvring on the part of the former government. I must emphasise that Mr Wilkie, the member for Denison, acted in good faith.

The current government have made it quite clear that there is no chance of a better scheme or any other scheme at all being put in place. They want to dismantle the minimalist gambling reforms. Under those circumstances, I do not want to be party to making a situation much worse but also endorsing what the current government are planning to do and that is to move away from the concept of federal regulation of the gambling industry. The last best hope to deal with this industry, to deal with the damage caused by poker machines, is through a national approach. There is no doubt that, under the Constitution, there is power to deal with these issues in a way that is effective—using the corporations power, taxation power and banking and telecommunications powers. That is the best way of doing it.

The fight for gambling reform has been long and hard and this government's most recent moves indicate that the battle is far from over. The 2010 Productivity Commission report into problem gambling highlighted in harsh detail how much damage it causes to our community and how attempts at state based regulation had failed. I do not understand why this government cannot see that the states, who are happy to milk the pokies cash cow to fill their coffers, simply cannot be left in charge of regulation. It is truly a case of Dracula minding the blood bank and it is ordinary Australians who are getting sucked dry. Gambling losses have gone from over $7 billion to $19 billion over a couple of decades, well outstripping the rate of inflation, with poker machines devouring about $13 billion of that. The No. 1 jackpot junkies in Australia are the state governments, who reap over $5 billion a year in gambling taxes year in, year out.

About 250,000 adults in Australia are estimated to have experienced significant harms from gambling in the last 12 months. Based on the available evidence, the Productivity Commission has found that there are between 80,000 and 160,000 Australian adults suffering significant problems from their gambling, with a further 230,000 to 350,000 experiencing moderate risks that make them vulnerable to a full-blown gambling addiction. In other words, there is a significant cohort of people who, if they have not been hooked on poker machines, are well on the way to going down that path. We are dealing with a dangerous product. Let us put this in perspective. It is not some moralistic argument; it is about people being harmed. It is about consumer protection and the ethics of state governments drawing so much of their money from harm from gambling addiction.

Up to 85 per cent of Australians who have a gambling problem have a problem because of poker machines. For each one of these problem gamblers, on average, another seven people are affected—family, friends and work mates. Problem gamblers account for about a third of overall gambling expenditure in Australia—that is, in the billions of dollars. We are talking about $5 billion coming from problem gamblers, with over 40 per cent of poker machine losses coming from problem gamblers. In other words, about $5 billion a year spent on poker machines comes from people who are hooked on poker machines. Those problem gamblers are more likely to gamble on poker machines than gamble by any other form, although a swing towards online sports betting is emerging.

Last year I was very happy to do a press conference with the then opposition leader Tony Abbott, now Prime Minister, in relation to online gambling. I sincerely welcome Mr Abbott's commitment to tackling online gambling and the impact it can have on individuals, particularly younger people in our community. So the laudable intentions of the coalition in relation to online gambling expressed last year represent a real contrast with what the government is now planning to do on poker machine addiction.

Poker machine addiction leads to higher crime levels and suicide. The access to and intensity of machines makes them more addictive than other forms of gambling and lives are torn apart across the country every day because of gambling addiction. Senators Di Natale and Madigan would well know of the research undertaken out of Victoria, and you have some outstanding researchers there, such as Dr Charles Livingstone, who have pointed to the links between the level of crime and problem gambling. Studies have been done by agencies in Victoria and staggering statistics have emerged, such as that something like one in five people presenting to hospital emergency departments after attempting suicide were there because of gambling addiction. These are staggering figures.

The Productivity Commission conducted two inquiries into gambling: the first in 1999 and the second in 2010. The 1999 report concluded that the states should improve their regulation dramatically to address problem gambling. It was in that 1999 report where we saw for the first time how bad the problem was. It was spelt out in a way that was irrefutable. It was an incredibly thorough report, as was the 2010 report. For the first time we had a body of evidence—the gold standard of research that showed how serious a problem it was. We are the No. 1 problem gamblers in the world for per capita gambling losses. The 2010 report found the states had not followed through and that the problem had continued to rise. It is proof that the states cannot be trusted to regulate these dangerous products. I implore this government to consider the evidence before it and to make the effort to understand the huge impact poker machines have on our community.

This is not an ideological issue. This is not about the left of politics and the right of politics; there is a broad cross-section of individuals who are concerned about this. This defies any ideology. This is about giving a damn about your community and about individuals who are hurt by gambling addiction. The previous government was scared off reform by the vested interests of the poker machine lobby. I fear that this government has fallen prey to the same scare tactics.

Senator Di Natale interjecting—

Senator XENOPHON: Senator Di Natale says they are worse and no doubt he can expand on that. I cannot understand how the government can expect the states to regulate effectively when they have no history of doing so.

The aim of this bill is to implement one of the key findings of the 2010 Productivity Commission report to create meaningful, effective poker machine reform. Currently, gamblers can lose up to $1,200 an hour when poker machines are played at their maximum intensity. The commission recommended that maximum bets be reduced to $1 per spin, which would reduce the maximum hourly losses to something like $120 per hour—still a significant amount but also a significant reduction in what is possible now. This step is in line with the commission's findings that problem gamblers are far more likely to be the ones playing machines at their maximum rates than recreational gamblers. In fact, the research shows that something like 88 per cent of recreational gamblers and 80 per cent of gamblers overall do not bet more than $1 per spin anyway. Where is the inconvenience to the recreational gambler with such a sensible, considered reform as set out by the Productivity Commission? This measure will not impact recreational gamblers but instead will help problem gamblers to reduce their spending and allow for earlier intervention.

At the end of last year, the then outgoing Chairman of the Productivity Commission, Gary Banks, who was involved in both gambling inquiries, reiterated the commission's views on $1 bets as stated at the dangerous consumptions forum at Deakin University on 29 May last year. He made it clear that $1 bets satisfied 'good public policy' because it 'predominantly targeted the problem gamblers without having too much collateral effect on the average recreational gambler'. Further, Mr Banks said it should be implemented without a trial. I repeat that: it should be implemented without a trial. In other words, this is something we need to do now. There should be no more excuses from either the coalition or the opposition in relation to this.

I note that the previous government dismissed the idea of $1 bets due to the cost of implementation. At the time, then Minister Macklin stated it would be in the order of $1.5 billion. I remember quite clearly the work that Senator Di Natale did in questioning that. He can elaborate on this, but the information that Senator Di Natale got was basically back-of-the-envelope stuff—a grotty, torn envelope—because none of the figures seemed to make any sense. The previous government accepted whatever the industry said. How objective or evidence based is it for a piece of important public policy when you just take what the vested interests of the industry tell you?

The then government never admitted where the figures came from. They refused to release their modelling or any further information, although documents I requested under FOI indicated that this figure likely came from the industry. Interestingly, not long after then Minister Macklin made this announcement Victoria reduced its maximum bet limit from $10 to $5, without spending billions of dollars.

I hope he does not mind me saying this, but I spoke with my good friend and fellow campaigner on this issue, the Reverend Tim Costello, just last night. His fear is that states, now emboldened by what this government is doing, are now actually rolling back reforms and, as I understand it, Queensland is looking at a return to $10 maximum bets from $5 maximum bets. That is the consequence of the federal government's measures.

The real cost of implementation would be less than $350 million over a number of years, which pales into insignificance when you consider the Productivity Commission's estimates of the cost of problem gambling. I think that Senators Di Natale and Madigan would agree that it is a pretty minimal figure. This bill also contains provisions to limit the amount of jackpots to $500 and the amount of money that can be loaded onto a machine at any one time to $20. These measures are also in line with Productivity Commission recommendations. The reason poker machines are so addictive is the volatility. It is because of that random reinforcement. If you make the machines less volatile they are less addictive, and having a smaller jackpot is crucial to that. When you consider that the fruit machines in the United Kingdom have much lower jackpots than $500, this is not an unreasonable course to take.

The bill also provides for regulations to be made relating to machine spin rates. This will allow governments to further reduce the intensity of machines by slowing the rate of play. This measure is particularly important, given that Australia has some of the highest intensity machines in the world. The commission also pointed out that intensity is a significant contributor to addiction. I also note that this bill was originally introduced in 2012, and as such the commencement provisions need to be amended if the bill is to progress.

The reforms contained in this bill are a better alternative to the ones that are currently in place. Voluntary precommitment, central to the previous government's reforms, is simply not as effective as the measures in this bill. Problem gambling is an addiction. It is not as simple as a matter of choice or willpower. It is also incredibly offensive to suggest that problem gamblers could stop if they wanted to or that it is about choice. I cannot think of anyone who would choose to lose everything they have or who would not want to stop if they could. Just a few days ago I saw—and I will be very careful not to identify this family—the children of a woman who took her life recently in the most horrible of circumstances because of her gambling addiction. That family deserves answers. That family and every other family who is at risk of problem gambling deserve a real solution—and a real solution is contained in this bill.

People who suffer from poker machine addiction, or those at risk of suffering from it, need to have meaningful and effective measures in place to help them control their gambling. In the most basic sense, the problem with voluntary precommitment is that, no matter how many loss limits a gambler sets or how much the system restricts their activity, there is nothing to stop them pulling their precommitment card out of the machine and continuing to play outside the system. It might, theoretically, help some gamblers—but not the ones who really need the help. However, I believe that having voluntary precommitment in place is at least a sign that more needs to be done and symbolic of the need for federal regulation. But it will not help the majority.

Three years ago a study into precommitment that was prepared for the Nova Scotia Gaming Foundation in Canada reported that voluntary schemes consistently and miserably failed because they relied on the willpower of players—that is, players had to have the willpower not to keep playing outside the system when they reached their limit. Further, the study found that high-risk players were less likely to take up precommitment options and would continue to play unless they were locked out of the system completely when they reached their limit.

I know some people are arguing that we should not be forcing people to set limits and then shutting them out of what is ostensibly meant to be a form of entertainment. So I ask: in what other form of so-called entertainment can you lose $1,200 an hour? Rather, this so-called entertainment has been one of the biggest drivers of crime apart from illicit drug use, a significant cause of suicide, a significant cause of family breakdown and a significant cause of depression and other mental illnesses.

We need to make machines less addictive. We need to implement the provisions of this bill. And that is what this bill intends to do—a bill supported by my colleagues Senator Di Natale and Senator Madigan. We all come from different political perspectives, but we all understand the need for real action on this, because the community has been let down by the major parties in relation to this. We need also to consider the study commissioned by the Victorian Department of Justice in 2009, which found that more than 12,000 Victorians contemplate suicide every year because of their poker machine addiction. The study also found that 6,000 Victorians contemplate breaking the law because of their addiction. Translate that figure across the country and you are talking about tens of thousands of Australians who are either contemplating suicide or contemplating breaking the law.

There is an enormous amount of evidence about the harm these machines cause. This is a dangerous product. Another six-month study at a major Victorian hospital found that one in five suicidal patients was a problem gambler. I will not quote all the evidence; there is too much, both from Australia and from overseas. This issue has been a political football for too long, and the ones who are getting kicked around are the most vulnerable in our society. I note that this is an issue that Senator Di Natale and his party will not give up on and that Senator Madigan and his party will not give up on. We cannot give up, because the cost is too high for too many people. This is the beginning of a new battle, and it is one we cannot afford to lose.

Senator WILLIAMS (New South Wales) (09:48): I rise to speak on the Poker Machine Harm Reduction ($1 Bets and Other Measures) Bill 2012 [2013], and I point out that the purpose of the bill is to reduce the harm caused by problem gambling by regulating the operations of poker machines through limiting the rate of loss of players. The bill aims to put in place machine capability by 1 January 2013; a $20 load-up limit for gaming machines, both in terms of accepting banknotes and in terms of accepting additional credits where the credits are already $20 or more, by 1 January 2017 for larger venues and by 1 January 2019 for smaller venues; and a $1 maximum bet limit per spin on gaming machines and limited linked jackpots and machine jackpots greater than $500.

This bill did go to the Parliamentary Joint Select Committee on Gambling Reform, and the committee recommended that the bill not be passed. With respect to Senators Di Natale, Xenophon and Madigan, I share their concern. In the country town I live in, Inverell, some years back a lady had an addiction to poker machines. She did do the wrong thing, and she ended up going to jail because of that addiction. It is a very serious problem. Coming from a family of bookmakers—my grandfather was a bookmaker and had betting shops back in the early 1900s in South Australia, and my late father, Reg Williams, was a bookmaker—I have seen firsthand the problem of gambling. But I will start by saying that the coalition government do not support this bill. We are committed to supporting problem gamblers, but it is a fact that most people do gamble responsibly. The majority should not be penalised by draconian laws because a minority have a gambling issue.

The Abbott-Truss government is not blind to these problems, and our policy is to assist problem gamblers with counselling, support services and voluntary precommitment. This is vastly different to the approach of the Labor-Greens alliance, which was supported by the Independents. They bludgeoned the clubs and hotels industry into submission, never listening to the stakeholders but instead imposing harsh laws. I know the clubs in the New England electorate were ropeable, and they let the then Independent member for New England, Tony Windsor, know in no uncertain manner what they thought of the proposals. It was one of his more memorable parting gifts—but more about that later.

We are talking about an industry that employs over 150,000 people throughout Australia and provides entertainment, sponsorship and donations for many millions of Australians. That is why we must be aware of the ramifications of this legislation. In addressing this legislation I would like to specifically address a couple of points. To introduce a $1 bet would mean enormous cost to the industry and the clubs. It is important to note that less than one per cent of gaming machines are set up to allow $1 bets. To change all this would be a massive cost, with design, development and approval of software. That could cost as much as $6,000 per machine. I think here of the little clubs that are the heart of their small country communities. They simply cannot afford this. Many are battling now to remain viable.

If we look at the nationwide cost, it will exceed $1 billion. It would probably be closer to $1.5 billion and maybe more. By my estimate, over half the poker machines in Australia are too old to have the new software installed, so they would need to be replaced at an estimated cost of $25,000 a machine. So we are looking at a $1-billion to $1.5-billion cost to our clubs. And, as I said, in many towns the club is the heart of the community.

I will turn now to precommitment versus $1 bets. Precommitment technology can be connected to a gaming machine without it being a costly exercise. The cost of precommitment upgrades is about $2,000 per machine. Compare that to the projected cost of converting machines to implement low-intensity features of about $6,000, to the cost of replacing a machine of $25,000. Voluntary precommitment provides personal choice, and it is left in the hands of the consumer to choose what they want to do.

Registered clubs have been the whipping boys in this whole debate. They were not listened to by those in the previous government, but the coalition listened in opposition and is listening now in government. I have spoken with club boards in many areas, and all are very concerned that they could be forced into a situation that would see them go to the wall. People should not underestimate the borderline viability of the smaller clubs in rural and regional areas—and that is simply a fact. The clubs do it tough, battling to survive, especially in smaller communities.

I will give you another example: Inverell RSM Club—a magnificent club in the town where I live. It does so much good for the community. It estimated, back in 2011, that it would be out of pocket $1 million to bring machines up to scratch. I will quote from their statement: 'This would change the way the club operates and have a big effect on the way we distribute funds back into the community with scholarships, donations and sponsorships.' This is a club that gives over $50,000 in donations and sponsorships plus in-kind support.

Senator Di Natale: To the Liberal Party!

Senator WILLIAMS: As to that interjection by Senator Di Natale, I will check with Jacko Ross, the President of the Inverell RSM Club, and I will ask that very question: how much money has the Inverell RSM Club donated to the Liberal Party?

Senator Di Natale: How much does the industry donate to the Liberal Party?

Senator WILLIAMS: So I will put that question to them, and I will know exactly how much.

Senator Di Natale interjecting—

Senator WILLIAMS: Well, perhaps we should go to Mr Wotif. Let us talk about donations and go to Wotif and the $1.6 billion donation to the Greens. You are holier-than-thou, but the biggest donation to any political party in the history of Australia went to who? To the Greens. 'Thank you, Mr Graeme Wood; just give us the cheque for $1.6 billion.' And now we get an accusation that the Inverell RSM Club is donating to the Liberal Party. I find that very amazing. In Inverell they do not even have a Liberal Party branch. We did not have a Liberal Party candidate last election; we had a National Party candidate by the name of Mr Barnaby Joyce—you may have heard of him, Senator Di Natale. That is outrageous—we are trying to be serious here about a very serious issue, and you are making a fool of yourself.

Senator Di Natale: And the industry donates to the Liberal Party. You know that. You're compromised, mate; you're hopelessly compromised.

Senator Ryan interjecting—

Senator WILLIAMS: So, as I said, the Inverell RSM Club donated more than—

The ACTING DEPUTY PRESIDENT ( Senator Boyce ): Senator Williams, just ignore the interjections—

Senator WILLIAMS: That is why I am going on speaking.

The ACTING DEPUTY PRESIDENT: and can I suggest that the interjections cease—

Senator Di Natale interjecting—

The ACTING DEPUTY PRESIDENT: Senator Di Natale!

Senator WILLIAMS: I met with clubs at Port Macquarie. I had a good meeting with the board members from Port Macquarie Panthers and Club Taree. Back in 2011, the Wauchope RSL estimated that it would cost $1.59 million to change their arrangements with their poker machines. For Port Macquarie Panthers—a magnificent club in Port Macquarie, a beautiful part of Australia—it would cost $3.82 million for mandatory precommitment changes. These clubs do not have a bottomless pit of money, so something has to give. Will it be their sponsorship of the local junior sports teams, their subsidisation of cheap meals for our elderly or their scholarships for our gifted students? It is so easy to just attack the clubs over an issue.

I wonder if we are going to see a bill come to this chamber to put a maximum of $1 on bets at TABs and racecourses. There are plenty of gamblers who have a serious gambling problem who bet on racehorses, dogs, the trots—you name it, I have seen it. So are we going to put a $1 maximum on those bets as well?

What are the measures that the government is taking? We will repeal the functions of the national gambling regulator. All states and territories already have their own. We do not have to duplicate in this place; there is already too much duplication between governments in Australia, at a huge cost. Measures on ATMs, including cash withdrawal limits, are being removed to allow states to regulate. States like Victoria are already doing this at a state level.

I will give you an example: the Gravesend Hotel is in a small community east of Moree. It has the only ATM in town. A station worker, a worker on a property, might go in and say, 'I want to withdraw $300.' Because they have a couple of poker machines in the pub, he cannot. But what is wrong? It is his money. Are we such a big-stick operation here in Canberra that we are just going to say: 'No; you've gone into an ATM'—the only one in the town, by the way—'and you can only take $250 out'? Is that fair? What are we doing here?

The mandatory precommitment trial in the ACT will not commence under the legislation just being passed through the House of Representatives. The government is committed to pursuing venue based voluntary precommitment in the future. It will come in. Under the current laws, passed by the previous government, clubs had to go to all the cost of the precommitment and link the machines up to all the other clubs around the area at a huge cost—and then the patrons did not have to use it! It is just like having a law where every car manufactured in or imported into Australia must have seat belts but you do not have to wear them. That is the case with the previous Labor government's Andrew-Wilkie-style proposal, which would simply have done absolutely nothing except made things more costly.

The government is committed to pursuing venue based voluntary precommitment in the future by allowing the change of machines to do it, which will reduce, enormously, the cost to the clubs. The deadline for venues with greater than 20 machines needing to have voluntary precommitment enabled by 2018 has been removed. I share the concerns of many in this place. I have seen firsthand people with gambling problems. But by putting huge costs onto our clubs and threatening the viability of such clubs whereby they may have to close down, jobs will be gone from the towns. A place for community meetings will be removed. In Port Macquarie many, many elderly people go to the clubs in summertime, not to play poker machines, not to gamble in any way whatsoever, but because it is hot and they cannot afford air conditioning in their houses, and the club is air conditioned and pleasant. We do not want to make it hard for those people.

We want to help those people who have a serious gambling problem. Shutting down the clubs is not on, as I said, especially for the smaller clubs in the rural and regional areas that are the heart of the town. The big stick approach should be given away. People in this country are sick of being told from Canberra what they can do and what they cannot do. People are able to make their own decisions. We need to counsel and assist those with gambling problems. We want to help those people with gambling problems, but threatening the viability of the clubs is not the answer. It is too expensive and too costly. I am glad to be part of the coalition government that will not support this bill.

Senator DI NATALE (Victoria) (10:02): I thought I would be standing up today and giving a speech to argue the case for $1 bet limits, but it seems that, on the back of the legislation introduced by the government to repeal the very modest reforms around poker machines introduced in the last parliament, we are not just fighting for what is the appropriate response to limiting harm from poker machines but fighting a rearguard action against some of the most modest reforms we have seen anywhere in the country. What we need to understand is that this is an issue that affects the lives of Australians from small communities to big cities, but it is mostly the vulnerable, the poorest people, who are most affected.

I am not going to go into great length and recite the stats around problem gambling. Most people know the information. We lose $19 billion a year on gambling and $12 billion of that comes from the pokies. Senator Williams suggested that we put regulations on the TAB. If the TAB were the biggest source of problem gambling, then we might think about that. It is the pokies that are the issue. The vast bulk of people who get into problems with gambling are people who have a problem with the pokies. Of the $12 billion that is lost, $5 billion of it comes from problem gamblers. Forty per cent of the revenue that gets put into those machines comes from the people who can least afford it. That is the reality.

The numbers, in a sense, disguise what the real issues are, which are the stories about the way this affects people's lives. Most people know, or know of, somebody who has been affected by the pokies. I spoke to a colleague recently who had an employee that embezzled money because they got into trouble with the pokies, and then that employee embezzled money from his clients. I have very close working associates whose families have got into huge trouble with the pokies and they have refused, or have been too embarrassed, to come clean about the issue for fear of the shame associated with their addiction. This is an issue that affects the lives of people. It tears families apart and kids go hungry at night. That is the impact that problem gambling with poker machines has on people's lives.

The question is—and it is a legitimate question: what is the role of the state in regulating an activity that is a legitimate source of entertainment for many people but also produces significant harms? I keep hearing the nanny-state argument. It is one of the most fraudulent arguments used, usually by the people on the other side. I have never heard anybody complain about the nanny state when an ambulance comes and picks them up because they have had a heart attack and takes them to hospital to begin treatment. You do not hear too many people complaining about the nanny state then, or when the emergency services do great work in the face of a catastrophe. You very rarely hear people complaining about the nanny state in those circumstances. The question is: what is the role of the state in regulating an activity that is a legitimate entertainment but has the potential to cause serious harm, and in this case does cause serious harm?

We saw leadership from the coalition on an issue just like this in the wake of the Port Arthur massacre. People have a legitimate right to own guns. Guns serve an important purpose for many people in the community, but they also have the potential for real harm. We saw leadership from former Prime Minister John Howard, who introduced some really important reforms around gun control. He got the right balance around the legitimate rights of the individual and also ensured the government stepped in to minimise harm.

We get the balance wrong when it comes to things like alcohol and illicit drugs, and we have absolutely got the balance wrong when it comes to the question of poker machines. The Productivity Commission made it very clear: if you want to reduce harm from pokies you introduce $1 bet limits. It is pretty simple—you put $1 into a machine, maximum, per spin. It still means you can lose hundreds of dollars in an hour, but you do not lose the thousands of dollars that people can lose in a night's entertainment.

We have machines in this country that are not like machines anywhere else in the world. They are the assault weapons of the gambling world. They are the semiautomatic rifles of the gambling world. Our high-intensity machines in Australia are like no other. All this reform seeks to do is to bring our machines in line with the machines in other places. Individuals who do not have a problem and want to gamble legitimately can still do that. This is about the problem gamblers who bet huge amounts of money and lose thousands of dollars in an hour. The ordinary punter will not be affected by this reform. That is the beauty of $1 bet limits: the ordinary punter can continue to gamble; mum and dad can catch the bus down to the local club, get their parma and pot of beer, put some money into the pokies and not be affected. It is the problem gambler that this measure targets. The reason the industry do not like it is that they have a business model that is premised on 40 per cent of their income coming from problem gamblers. That is why the industry fights so very hard against it.

The issue before the parliament at this moment is about $1 bet limits, but the issue before the Senate in the coming weeks will be whether we support some of the most modest reforms that were introduced during the last parliament: limits on ATMs so that people cannot keep going to the ATM and withdrawing large amounts of cash—again, something that problem gamblers do, and the ordinary punter is not affected—and making the machines mandatory precommitment-ready so that every machine that comes out of a factory, at practically no cost to the industry, will have mandatory precommitment technology so that at some point a government with some courage might actually introduce that—again, a simple, modest reform that is very hard to argue against. And yet what did we see in the lower house yesterday? We saw the government introduce legislation that would repeal these modest reforms.

I find it staggering that a minister who wears his Christianity on his sleeve as a badge of honour would introduce legislation that affects some of the poorest and some of the most vulnerable people in our community and still allows ordinary punters to continue to bet on the pokies. This is a purely political act. It is a political act because they recognise that, within the Labor Party, there is division on this issue. I know there are many good people inside the Labor Party who are fighting the good fight. I know that there are many people who want to see the reforms, as modest as they were, that were introduced in the last parliament protected, but I also know the clout of the pokies industry. I know the clout of the clubs who deliberately target individual members of parliament and will use against them their support of a reform that protects vulnerable people but might reduce some of the revenue of some clubs. I know how brutal they can be. I also know that courage is in very short supply in this place.

What we are now seeing is not growing support for $1 bet limits, which the Productivity Commission has recommended is the most sensible way of addressing this issue; what we are now seeing is backsliding on the modest reforms from the last parliament. That backsliding means that, for the first time, where the Commonwealth had entered the space of poker machine regulation, we are going to vacate the space. It is going to make it almost impossible for a future government to decide to tackle this issue down the track.

The idea that this somehow would send the clubs industry broke is a nonsense. There are no poker machines in Western Australian clubs. They have a thriving clubs industry in that state. Their participation in sport is just as good, if not better, as other states. They do not have poker machines; they do not prey on the most vulnerable people in their clubs. So that is a nonsense. It is a furphy and it is what you would expect from the vested interests that make their money at the hands of some of the most vulnerable.

We are here to talk about $1 bet limits, but I do want to raise the issue of the legislation that was introduced into the parliament yesterday. Not only was the legislation introduced to try and unwind some of the modest action that we achieved in the last parliament but it was introduced under the cloak of secrecy. It was rushed through as part of an omnibus bill, cobbled together with all sorts of other pieces of social services legislation, with the hope that it would avoid the scrutiny of both the lower house and the Senate. This is a pattern that is emerging from this government—a government that promised open, honest, accountable government with no surprises in its first few weeks is introducing legislation, hoping to slide it through, that would unwind what was one of the most important issues of the last parliament. That bill deserves scrutiny and members in this place deserve to have the opportunity to debate and interrogate why on earth we would be giving this free kick to the pokies industry and unwinding reforms that ensure that some of the most vulnerable people in our community cannot go to an ATM and keep withdrawing large amounts of cash but can at some point in the future set a bet limit so that when they go into a club they can determine from the very start how much they are prepared to lose. And yet here we are looking at repealing that modest legislation.

We will not let that happen without a fight. We are going to mobilise those voices in the community. People like the InterChurch Gambling Taskforce are representing the various churches and understand that real Christianity is about protecting the most vulnerable people. It is not about ensuring that rent seekers and vested interests get what they want, using their might and their force to intimidate politicians who do not have the courage to stand up to them. That is what this debate is about, and we are ready for the fight. As Senator Xenophon said, we are ready for the fight. We expect that, the Commonwealth government having for the first time entered the space of regulation of poker machines, we will not vacate the space. It is an important precedent that was set last year. Granted, it was modest and the reforms were nowhere near where they needed to be, but at least we have the Australian parliament talking about what we can do to protect our most vulnerable Australians.

We know that the common-sense answer is dollar bet limits. They will not affect ordinary punters, who will continue to gamble in the same way they always have, but problem gamblers will not lose thousands of dollars in an hour. While we would like to see that reform, which was backed by evidence and by the Productivity Commission—who said, 'This does not need a trial; this can go ahead immediately; we know it will work'—I am realistic enough to understand that that is a long way off. But what I do want to see is that those modest reforms, which were introduced through the hard work of many good people in this parliament, are protected and that we stand up against Minister Andrews, who is using this as a wedge issue to try to exploit the division within the Labor Party—and it is true that there is division.

The opposition leader cannot hide from this issue. He will face scrutiny, and he will need to make a stand. Does he stand with the industry and with a business model that makes money off the backs of problem gamblers, or does he stand with the community, who overwhelmingly support reform in this space? It is time for Mr Shorten and Mr Abbott to take a stand, and I hope that they side with the community.

Senator MADIGAN (Victoria) (10:16): I would like to speak briefly about the Poker Machine Harm Reduction ($1 Bets and Other Measures) Bill. I believe this bill will limit the impact poker machines have on our communities and the most vulnerable in them.

Many people may not understand or be aware of the full extent of poker machines across the country. Since the first poker machines were legalised in New South Wales in 1956, Australians have had an unfortunate sick relationship with these money-guzzling machines. In 1999 the Australian Productivity Commission reported that Australia had nearly 180,000 poker machines, with more than half of these in New South Wales. On a per capita basis, Australia has roughly five times as many gaming machines as the United States. In the fiscal year 2002-03, revenue from gaming machines in pubs and clubs accounted for more than half of the $4 billion in gaming revenue collected by states.

Madam Acting Deputy President, you may be thinking that this bill is about finances, but ultimately it is about people. These machines, found in pubs and clubs in all states excluding Western Australia, have a disastrous effect on many people's lives. They affect not only the persons gambling but also their family, friends and extended community. Men and women across the country are tricked into gambling in these machines. These machines offer the false promise of a fair go and the possibility of a jackpot. People are tricked into putting in just a bit more money because the next line will win.

The problem gambling website of Victoria spells out the real mechanics of poker machine gambling under the heading 'The poker machine is the winner'. The facts speak for themselves. I quote:

Pokies are not designed to provide you with extra income. They are designed to make profit for others

Like other forms of entertainment, you pay to play the pokies. The more you play, the more you pay

…   …   …

The machine is never "due" to payout. You can never predict how each play will end.

I believe that as a parliament we must take some responsibility and take more steps to protect our most vulnerable citizens. As with any addiction, breaking a gambling addiction is extremely difficult. As a parliament we can take some steps to shatter the false allure of a pokies jackpot win and give our constituents tools they can use so they have a fighting chance.

This bill will make $1 the maximum bet on a poker machine. It will make the highest denomination a machine can accept $20. Jackpots will be capped at $500. The time frame for the full transition to these measures will be within five years. These measures may seem excessive to some; for others they may not be enough. But, when we realise that 40 per cent of gaming machine revenue comes from problem gamblers, I think this bill is certainly a good start.

This bill really should not face any objection within this chamber. Gambling addiction is an unfortunate, devastating reality for so many in Australia. My office, along with the offices of many in this chamber, receives calls from people needing help. It is tragic to think that children of problem gamblers are two to four times more likely to go down the same path as their parents.

It is important to remember that pokies have an impact on all aspects of our society. They impact on people individually, on their personal relationships and on a community level. Health effects range from mental health problems, through to drug and alcohol abuse, through to depression and suicide. Families find they are not able to pay the bills, buy food or meet medical costs. These stresses in a family environment can lead to the breakdown of marriages and relationships within the family.

Prevention is better than cure. Healthcare professionals can only do so much. They cannot wave a magic wand, bring a family back together or make an old job again available. Poker machines are addictive. If they were not, they would not be so effective. This bill and this issue will not go away. New forms of gambling are constantly being pushed at Australians. These include online gambling companies targeting Australians but not being based in Australia, making legislating a nightmare. Earlier we heard about the philanthropy of the clubs. The question is: is this philanthropy based on the misery of others?

Senator MOORE (Queensland) (10:21): Senator Madigan, your words could not be truer. This issue is not going to go away, and I believe that the discussion that we will have in this chamber today will come back many times because this is one thing that we all agree on. I think that every speaker who has taken part in the debate so far has reinforced the knowledge that the issue of people who have serious problems with gambling, whose relationships, whose lives and whose security are all threatened by their addiction to gambling, is an acknowledged fact in our country.

Work has been done over a number of years by strong activists and people who have gone out of their way to fight in sometimes very unpopular battles to raise these issues; we owe them a great debt of thanks. Their legacy means that we, not just as legislators but as members of the community, need to ensure that there is a commitment to working within our system—and always within our system—to come up with some solutions and options where we can make the balance about which we speak so often in this chamber, for the right and effective role of legislation and regulation as opposed to individual citizens' rights and the ability of business to make what they need to have as an effective profit.

To the three senators who have co-sponsored this bill now over two parliaments: it is always damning when someone gets up and says, 'I deeply applaud the work you've done,' and, 'We acknowledge that your issues are important,' and, 'We agree with the core issue.' That is often the prelude to being told, 'We are not supporting your bill,' and in fact that is indeed true. So the opposition is not supporting this bill in the same way that we did not support it last time that it came for discussion and consideration.

There are a number of reasons for this. The number one reason is that I think there needs to be a lot more work done before we go down the options that are put forward in this bill. A lot of the debate this morning has focused on the one-dollar bets, and of course I will talk about that as well. But with the other elements in the bill, whilst there has been increased scrutiny and research in this area there still remains a lot of debate about what the best responses are to the acknowledged issue of gambling. Senator Madigan raised the fact that there is a range of gambling curses in our country, and that is very true. Looking particularly at the issue of poker machines, there is no clear evidence that people only go to poker machines. With the issues around gambling in our country now there is a range of different options for people to choose from if they wish to get whatever the buzz is that they receive from gambling—there are a number of different ways that they can get that. Poker machines are but one, but I do agree that for access, and through some of the data that we have, they are a particular scourge in our community.

I am never a person to use statistics too often but today I will, from the wonderful Productivity Commission report that I think all of the people who are sitting in the chamber today have read. I would hope that many more people than just the number who are here today are aware of that Productivity Commission report. It is a very large document, but I think it was an important point in the research and acknowledgement of this issue that that Productivity Commission inquiry was actually set up. It was recommended by our previous Senate committee. Senator Boyce was on that committee, as were Senator Xenophon and Senator Siewert, so there are at least a few of us in the room who have read the report—and I know that Senator Madigan has as well.

One of the clear recommendations of our original committee, which I think was in 2010—correct me if I am wrong—was that there should be an independent review by the Productivity Commission into the issues of online gambling in our country. The then Treasurer agreed and put that forward, and the body of work that came out of the commission I think is now like a base document that people can turn to when they are considering the issues. They can read this report and see the issues that are raised in there.

I know that the recommendations in the bill before us were discussed by the Productivity Commission. At the beginning they established a snapshot of the issue in our country. The Productivity Commission report was published in 2010 but I think it is still very timely. What we always need to do with these things is keep upgrading our data; but it gave us an idea, an estimation, of the prevalence of problem gambling in our community. At that time, through the data they had and the research information they had, they said that there were between 80,000 and 160,000—which is a pretty big margin of error—Australian adults suffering severe problems from their gambling. At that time that was calculated to be about 0.5 to one per cent of adults.

In addition there were between 230,000 and 350,000 people at moderate risk, who experienced lower levels of harm. We know that people who are in that group have the potential, if there is not intervention or support, to then have a more serious problem. Then there is the wider concern that if there is not the acknowledgement of the issue and some joint effort to see what responses can be made, these figures could grow. What had happened, and what was said at the time, was that there was insufficient education in our community to make people aware that this was an issue and, probably more importantly, that this was an issue which could impact on you or your family. If you did not know that this was around you would not be able to identify that you may be one of the people who has the potential to do harm to yourself and to your whole network of friends and community by falling into the severe aspects of problem gambling.

Because we are particularly talking in this debate around the issues of online gambling, another point was that about four per cent of adults play gaming machines weekly or more often. Around 15 per cent of this group would be classified as problem gamblers, with around an additional 15 per cent experiencing moderate risk. Given that basis, it was estimated that problem gamblers account for around 40 per cent of total gaming machine spending—the average of a range of estimates is as high as 60 and most conservatively as low as 20. Moderate-risk gamblers account for a further significant share.

So within that there is an agreed acceptance that a large number of people in our community have been identified, often by others, or have self-identified, and this is an issue for them. Always, when you are talking about statistics, the important element is then to translate our mindset, which has become so focused on numbers, to the people involved in this. In their contributions, Senator Xenophon, Senator Di Natale, Senator Madigan and Senator Williams all pointed out the personal impact and the fact that this is not just an argument about numbers.

Going from the acceptance that there is an issue, we move to the bill that we have before us. On the issue of $1 bets, there is some sort of instinctive reaction that, if you could only bet $1 at a time, you would be more likely not to have an accumulated impact of the problem. However, that is one element. You cannot jump from that kind of instinctive response to any proven evidence, to any kind of absolute knowledge that that is the first response that should happen. Too often over the last 18 months, when we have talked about this issue, it has become almost a litany that, if we had $1 bets, there would be no problem and, if we could only achieve this simple thing, we would have a result. I always am concerned when a single kind of response becomes somehow sanctified: 'If only we did that, there would be no problem.' I have a kind of reactive instinctive response: if something is seemingly so simple, why then do we put so much importance on it?

We then had, through the Productivity Commission, and through the Joint Select Committee on Gambling Reform which was set up by Minister Macklin, more consultation and consideration of a range of issues. We had significant evidence from the industry and from various people about the potential impact and the potential cost if we just said, 'Okay, we'll move through all these machines and make them all $1 bets.' To begin with, we had people from our community who said: 'We don't want that. We actually are part of the wider community. Whilst we acknowledge that there are people who have problems, we do not believe that our freedom, our personal choice, our ability to go and gamble, should be legislated from on high and restricted so that the only way we are able to use online machines is if we can only bet $1 at a time. We are adults, we understand what we are doing and it is our right to be able to have options in what we choose to do with our money and our time.' So it was not just industry—although I am going to go on and talk about the industry impact.

I think there has been some kind of battleline drawn up to say that this battle is exclusively between those of us who care about people who are damaged by problem gambling, and the industry whoever they are—this large industry who have, allegedly, according to the people on the other side of the battleline, no concern, no awareness and no knowledge about the impact that their business could have on people who have an illness. And I put it out there that we are talking about people with an illness. The people who are damaged by the issues around gambling have an illness—an addiction that causes them not to be able to have control.

We had a range of submissions to our inquiry, and I know the Productivity Commission did to theirs, from people in the community who said—and I know that there are people who feel very strongly about this—that there is no role for government in stepping into any form of prohibition. Whilst $1 bets is not a full prohibition, it means that people do not have the options that they think they should have in an area of personal entertainment where they receive significant pleasure. There was that group of people who raised their concerns, and there was the industry.

I know the senators who have put forward this bill relied very strongly on the Productivity Commission report, and I think that is fair; that is a great knowledge base. However, when you read the Productivity Commission report, after they make the point that a $1 bet system would be an option to respond to people who have problems, they then go into an extensive chapter about what the cost would be to actually implement that form of limitation. They say—and I apologise, I am going to throw some figures around—that there are approximately 200,000 EGMs, or electronic gaming machines, in 5,700 venues across Australia. They go on to say—this is around page 19.4 of the report—that gaming venues operate a mix of machines of different ages, manufacturers, game parameters and upgrade capabilities. Their advice suggests that the larger venues—and in the debates that we have, people have a bit of a concentration on the larger venues as opposed to the kinds of clubs that Senator Williams was referring to in small country towns—typically have higher volumes of gaming activity and tend to replace their machines more regularly and therefore, on average, have relatively newer machines compared with smaller venues. The Productivity Commission go on to say that there is a cost to the clubs and the venues in upgrading and changing their machines. So they have a bit of a schedule going.

On one of our Senate committees we had the privilege to go and visit one of the larger distributors of these machines—they are not made in Australia—to see how the machines worked. It was interesting that, for all five or six of us there from the committee, it seemed to be the first time we had actually played these machines, so maybe we were not a true cross-section of our community. We were quite transfixed at just seeing how the machines worked and the complex mechanisms that set them up.

The industry's argument around the institution of a $1 bet regime is that to adjust machines is an extraordinarily expensive proposition. To take an existing machine, no matter whether you are in a larger or smaller venue, and engineer a change is a very difficult thing. The idea would be that, as machines turn over, you would upgrade the machines. We talked about this in our committee. If you were going to impose any kind of limitation—$1 bets or any other kind of limitation—you would do that at the time of turnover. That gets back to what I said about how often machines are turned over.

We had evidence that some venues had the same machines for many years, that they did not upgrade because they could not afford to. The licence they had, the turnover they had in their business did not allow them the freedom to turn over like the big operators could. There were estimates of what the cost would be, and again there was a wide range of what that cost could be. There was a significant impost on the industry if you would turn that over. In the same Productivity Commission report it said—and I will put these figures on record because of my natural inclination to put figures on record—that the cost of implementing a $1 maximum bet limit would be in excess of $3 billion to the people working in that industry.

We know that it is a very profitable industry; there is no doubt about that. We have had the philanthropy argument many times about what percentage of income the industry put out to community areas and there have been, I think, some exaggerated claims of the largesse and generosity of some clubs. If you talk to some, you would think that the only reason they exist is to help the local community. Well, we know that is not true. The people who are there are working in a business. They have every right to be in a business, but they need to balance those kinds of exaggerated statements with a true examination of their books. This gets back to one of the core aspects of arguments of this type. What has happened over many years is that people have gone into their battle positions and get overly emotive, I believe, and exaggerate their claims to try and get the attention of the wide number of people in our community for whom this is not such a big issue—if it does not impact on you, you do not really listen to it. So we have had claims and counterclaims all around the place. The one thing that we do know is that there is a problem. What we need to identify is the best response.

One of the other issues raised by the Productivity Commission was the fact that this has for a long time been a state issue and if we do not get the states on board in terms of coming up with a solution then nothing is going to change. So necessarily we need to have the engagement of COAG. We saw amazing pressure being brought out by various people during the previous debates around this issue in the last parliament. It identified that, whilst there is an element of common ground about acknowledging a problem, there was a wide range of concerns about how we actually make that step towards effectively responding to the problem. We need to ensure that at least all the people who are involved in this process should be together so that we can come up with a solution that engages everybody. We know we will not come up with a solution that pleases everybody—I think that is patently obvious. But what we need to do is see that. If people are putting forward significant issues for change and we have seen it, unless we engage the people who have different views around this we will not be able to come up with the solution.

We are not supporting this bill, because though the simple things that are in it are important and are probably or possibly the best way to respond, we do not believe that at this stage there is sufficient evidence to say that we need to have the change put in at the cost it would cause. I seek leave to continue my remarks on the basis that this debate will go on.

Leave granted; debate adjourned.

Senator MADIGAN (Victoria) (10:41): I am very pleased to bring forth the first of a series of fair trade bills before the Senate for debate. As senators are probably aware, the second free trade bill, the Free Trade (Workers' Rights) Bill, is currently before the Defence, Foreign Affairs and Trade Committee. The Fair Trade (Intellectual Property and Patent Protection) Bill and the Fair Trade (Biosecurity and Food Standards) Bill will follow in the coming months.

The basic intention of each of these bills is to look at our trade arrangements and the trade agreements we sign up to from a different perspective. Instead of placing so much of the onus of responsibility on Australian industry, Australian organisations and already overworked and underresourced Australian departments, we need to look at the responsibilities that should be placed squarely on the shoulders of our trading partners. As a small example, the Fair Trade (Worker's Rights) Bill simply states that when making trade agreements with other countries Australia should insist that the products we are getting are manufactured or grown in those countries by workers who receive basic workers' rights. We should not be trading with people who make their money from the blood, sweat and lives of oppressed workers. It is a simple suggestion and one that any Australian would agree with but which trade negotiators seem to overlook on too many occasions. Supporting the rights of workers, whether here or overseas, is supporting basic human rights. In so doing we are helping to improve the lives of people overseas and acknowledging the contribution our own manufacturers make to Australian workers and the Australian economy. Of course we cannot expect poorer countries to provide the same hard-won benefits and rights that are enjoyed by Australian workers, but there are International Labour Standards that are set out at varying levels depending on the economic status of each country and we should do our best to uphold those standards whenever possible. And what better time than when we are negotiating a trade agreement.

In its own way this bill, the Fair Trade (Australian Standards) Bill, hopes to do something similar by putting the onus back onto overseas companies to be more vigilant about their exports and in a small way helping Australian manufacturers to be that little bit more competitive in our own market. None of these fair trade bills is the complete answer to our manufacturing woes or to the imbalance in our trade arrangements, but I hope they will each take a small step on the road to improvement.

As every person here knows, I am passionate about Australian manufacturing and farming and anything that harms our manufacturers' and our farmers' future. Anything that can be done to ensure our trade agreements are more like a level playing field and less like a ski slope with us at the bottom is a step in the right direction. I hope this bill, simple though it is, will make a small step towards that goal.

In my opinion, one of the most damaging influences on Australian manufacturing and farming is ever-growing, unfettered and uncontrolled free trade agreements. Despite the rhetoric from both sides of politics and the big end of town that FTAs are great for the economy, I doubt you would get too many average Australians who share that level of enthusiasm, at least not in the way these FTAs seem so often to be heavily weighted in the favour of our trade partners. Do not get me wrong; trade is good. On that score, Australians would agree that we need to trade to survive, just as the rest of the world does. But in saying that trade is good, we cannot automatically assume all trade is good, fair or beneficial to our economy and to the Australian people as a whole.

I have been told countless times that FTAs are sacrosanct, they are the domain of the executive and they are never to be sullied by the rough handling of lowly parliamentarians, despite us representing the concerns of our constituents. As many of you would know, I am not one to worry about a bit of rough handling and, quite frankly, I think most of the trade agreements we have signed up to could do with a little less political rhetoric and a bit more rough handling by people and parliamentarians alike.

This bill is aimed at the rapidly increasing level of imported products that do not conform to Australian standards. Australian standards exist for every Australian industry, and in every one of those industries I could give you countless examples of product imported into this country that consistently fails to meet Australian standards and yet is allowed to access the marketplace and the worksite. Unfortunately, we often hear about these products after devastating results to life and limb of workers, consumers and companies as well as to the viability of our local industry and the economy itself.

I could tell you about the Australian companies who are going to the wall simply because we do not adequately enforce Australian standards on imported products and materials. Companies like Molnar Hoists in South Australia, who produce a superior hoist, are struggling to survive against a flood of substandard Chinese car hoists that have a nasty habit of collapsing without warning. Lives are at risk, profit is at risk and standards are not met, but the hoists still come into our country.

But instead of telling you about one company after another or one industry after another, let us simply take a look at one industry. There is one industry that exists around the country in every community and involves countless numbers of Australians every day, whether directly or indirectly. Let us use that as a litmus test for enforcing Australian standards on imported goods. The Australian building and construction industry is well known to many senators. In fact, I believe there has been a considerable debate about that industry of late and I am sure there will be plenty more. But for now, we are not looking at that side of it; we are looking at Australian standards and how they are or are not enforced in the building industry. We are looking at the impact inadequate enforcement of standards has on the workers, builders, homeowners, investors and general consumers who are part of that industry.

In the last month, the Australian Industry Group released its comprehensive report entitled The quest for a level playing field: the non-conforming building product dilemma. The report revealed widespread use of nonconforming products across the building and construction sector. Ninety-two per cent of companies that responded to their nationwide survey reported nonconforming products in their supply chain. I will repeat that: 92 per cent of the responding building and construction sector companies reported the use of nonconforming products in the construction industry. That figure alone ought to send shivers down the spine of every occupational health and safety officer in this country.

The results of this report prompted Ai Group Chief Executive, Innes Willox, to comment that:

This raises important questions about quality and safety and it poses serious commercial challenges for the businesses that do play by the rules.

The report also found that almost 45 per cent of those companies surveyed in the steel, electrical, glass, aluminium and engineered wood sectors reported lost revenue, reduced margins and lower employment numbers due to nonconforming products. Most of these products do not meet regulatory Australian or industry standards. Others are not fit for their intended purposes, are not of acceptable quality, contain false or misleading claims or are straight-out counterfeit products.

The Ai Group report findings are backed up by a Customs and Border Protection report stating that in 2008 to 2009 the Australian industry suffered reduced revenue, reduced sales volume, price undercutting, price suppression, reduced profits and profitability, reduced production volume, reduced employment, deteriorating returns on investment and reduced attractiveness to reinvest, with imports from Chile, China, Brazil and Malaysia being a significant contributing factor.

Prior to the September election, the Australian Forest Products Association surveyed the ALP, the coalition and the Greens on matters of concern to the timber and forestry industry. While there were plenty of stock standard election made answers, a few stood out. The question was asked:

Do you support strengthening measures to avoid import of substandard quality forest products?

The coalition answered that they support:

… the enforcement of measures to avoid importation of sub-standard forest products. If necessary, we will also consider the strengthening of these measures. It is important that materials used in the Australian construction industry meet Australian Standards.

In October last year, the then opposition spokesperson Ms Sophie Mirabella stated in parliament that the coalition would:

…ensure that imported products better comply with the mandatory…standards imposed on locally made goods.

I am glad that the now government felt that way in opposition. I look forward to them doing all they can to fulfil those desires now that they are in government. I hope that supporting this bill and its small effort towards improving the situation related to nonconforming products is on their list of things to do, not only for the economic benefit it brings to Australian manufacturers and businesses but also because of the significant costs imposed on Australian workers and families due to injury and death caused by the widespread use of nonconforming products.

Naturally we would assume that any government, whether the current government or the previous ALP government, would want to guarantee that the appropriate bodies were given adequate powers and resources to ensure these measures were enforced. However, according to Mr Willox, Chief Executive of the Ai Group:

… there is significant confusion among companies about how to identify non-conforming products and who to report them to.

He states quite blatantly:

Non-conforming products are allowed onto the market due to inadequate surveillance, audit checks, testing, verification and enforcement.

This seems to be backed up by the Engineered Wood Products Association of Australasia, who in 2010 cautioned Australian timber importers against imported timber products. The association had completed laboratory tests on Chinese structural LVL beams entering our markets and found they failed the Australian standards on bond, grade type, formaldehyde emissions and preservative penetration. The government's own National Industrial Chemicals Notification and Assessment Scheme stipulated that only low-formaldehyde-emitting pressed wood products should be used, as required by the Australian standards for formaldehyde emission limits.

Recently, plywood and veneer wardrobe and joinery items imported from China and installed in a multi-unit building project in northern New South Wales were condemned after the department of housing found emission levels had, in their words 'soared through the roof' and that the health and safety of occupants was at risk.

The President of the Furnishing Industry Association of Australia, Mr Fred White, said he was not surprised at these outcomes if imported Chinese products were used. He said that he had advised project builders:

If they install imported materials that fail Australian Standards for emissions and safety then they have to cop it sweet if these products cause an illness or a death, and that this could go as high as a Royal Commission.

I would hope we could avoid anything like a royal commission by simply enforcing the standards now in place.

Mr Simon Dorries, General Manager of the Engineered Wood Products Association of Australasia, stated that:

… the bottom line is that this imported product is threatening the lives of builders and homeowners and we fear some has already been installed.

But of equal concern to Mr Dorries is that:

Standards Australia does not licence or police the use of Australian Standard numbers on products.

And in a statement I find to be utterly damning of our current controls, he stated:

Any manufacturer in any country can brand an Australian Standard without any testing or checks by anyone.

I know many of you will say; 'We have Customs, the ACCC or Standards Australia to oversee these problems. Surely they can handle it.' I have put a number of questions to the ACCC over successive Senate estimates and, quite frankly, the answers have raised serious concerns.

In late 2011 and early 2012, allegations were made to the ACCC that a specified trader had sold plywood of a certain grade which allegedly did not meet the requirements of that grade. Following approaches from the ACCC, the trader ceased the sale of the plywood in question and conducted an internal investigation. In the ACCC's own words, the trader under investigation was the one who investigated the allegations against themselves. Following this, the trader provided the ACCC with certification of the products, which indicated that the products met the grading requirements. Despite this, the trader withdrew the products from sale and regraded the plywood.

The outcome was that the trader who was selling the allegedly substandard products found, after self-investigation, that there was no problem with the product but that despite there being no problems they had withdrawn the products from sale and regraded the plywood. Self-regulation can be a wonderful thing if you are the beneficiary of it.

The ACCC said it was satisfied with this outcome in the circumstances and closed its 'investigation', if you could call it that. I would like to thank the ACCC for providing us with the solution to the increasing crime rate! Simply have the suspects investigate the allegations and before you know it we can close the jails and disband the police force! How much confidence can we have in the Australian standards of these or any other products entering this country if the agency charged with ensuring these standards are met simply hands all responsibility on to the allegedly irresponsible party?

However, it does not stop there. The ACCC has taken the word of the trader that the products are fine and accepts that, despite having no apparent reason to do so, he will withdraw the product from the market and do a regrade of the suspect plywood. But did the ACCC issue a public statement about the investigation, or about the regraded plywood, or about the withdrawal of a product from the market? No, they did not. So what happens to the product that is already out there? What happens to the product that was sold under an F14 stress grade that should actually have been, at best, an F8 stress grade? Basically, absolutely nothing.

And what happens to the builder or homeowner who purchased and used this product in good faith? We can only hope and pray that nothing happens. But for those of us who have worked in manufacturing, in the building industry, in metal fabrication industry and many others, we know what happens in far too many of these cases where a nonconforming product finds its way onto the job: workers are injured or killed, consumers are put at risk, production is lost, profits decrease and it all ends up in a law suit.

Before people think I am on an ACCC-bashing exercise, I must state that I do not believe the ACCC deliberately intend to let these products enter the marketplace. Frankly, no-one can examine everything that comes into this country; that would be a physical impossibility. In fact, I doubt the ACCC or Standards Australia have ever been adequately resourced. Nevertheless, even though I do understand how it comes about, that does not mean I approve of the way these investigations are handled.

In the end, though, the buck must stop with the government, whether this or the previous one. Consistently Australian governments have failed to ensure Australian standards are being met and Australian industry and consumers being are protected from substandard imported products that have taken everything from Australian jobs to Australian lives. This government has said it 'will consider the strengthening of these measures'. Now we have an opportunity to take a different approach to this and other problems associated with imports. The Prime Minister has already stated that he is giving top priority to the completion of a free trade agreement with China and with numerous other countries through the Trans-Pacific Partnership. So now is a good time to start toughening up our stance when it comes to Australian standards.

Simply put, every trade agreement signed between Australia and any other nation or nations should put the responsibility for conformity with Australian standards back on to the exporting company. While we cannot expect that every product exported to Australia will meet Australian standards, the exporter must ensure and guarantee that their product will not be used or onsold until it meets with the appropriate Australian standards.

At present any product brought in may be expected to meet Australian standards before being used but all the onus is on the importer and far too many times importers fail to bring these products up to standard. They fold up, move on and the consumer is left with no recourse to recover damages. In the meantime the original exporter simply supplies their product to another importer and the cycle continues.

By insisting the exporter guarantee their product meets Australian standards before sale or use they will be more inclined to verify that the importer is reputable and unlikely to cause them loss. As well, should an exporter fail to guarantee their product they would be in breach of our trade agreement and can be refused permission to trade until they comply with that requirement. Local manufacturers and suppliers, as well as reputable importers, would benefit from a decrease in the amount of non-conforming product on the market and an increase in the integrity of their competition.

As I said at the start, this bill is not the whole answer but I believe it goes a small way towards improving the situation. I urge senators to support it.

Senator EDWARDS (South Australia) (11:01): I rise to speak on the Fair Trade (Australian Standards) Bill presented to this chamber by Senator Madigan and I acknowledge his work and endeavours to ensure that the integrity of everything coming to this country is maintained to a standard which we expect in our business community and, indeed, the broader community.

I will address a number of things Senator Madigan raised. I too have an aspiration to ensure that the people from whom we import goods enjoy a reasonable workplace and a fair day's pay for a fair day's work. But to sanction them would be to prejudice them and I fear we have to try to find a balance in there that would give them the opportunity to rise above their Third World status and ensure that we can provide them with trading opportunities which would change their fate more in accordance to what we aspire for them.

Free trade agreements in the context of the society in which we live are good things. I know from my background—the wine industry—that we aspire and seek a speedy resolution as to the trading agreements with the Trans-Pacific Partnership. These are going on and will provide us access to those Asian markets from which we have been denied. We have been shown by our cross-Tasman partners in New Zealand the benefits of free trade agreements with those big trading nations. I would say they are probably flogging us in that particular area—but not only with the wine industry; from where I come from we have just seen a resumption of trade in kangaroo meat to Russia. That also was a sensitive negotiation but an essential one.

The providores of game meats in South Australia are looking for opportunities to send game to all parts of the world, and free trade agreements are good for that. There is even a dearth of camel meat around the world and Australia has some opportunity in that respect which would be ably assisted by free trade agreements being concluded as quickly as possible. Senator Madigan spoke of the South Australian firm that builds car hoists and that, indeed, is an issue which they will have to face from the point of view of innovation. I also take him to that icon of Australian backyards: the Hills hoist. Mr Acting Deputy President Gallacher, as a South Australian you would be well aware that the Hills hoist has had to reinvent itself somewhat. That business's manufacturing is largely domiciled in China and it is now an importer of products of that icon. Therefore, innovation is essential to remain relevant in the marketplace of a global nature.

The other thing that this bill implies is that we have some influence on regulation by governments in other countries when their regulations do not apply to their industrial sector. I understand the sentiment, Senator Madigan, and I think it is a noble one but I know from my dealings prior to coming to this place that trying to impose our level of regulation on other countries meets somewhat with bemusement. But I agree the aspiration should be there.

In short, I know and understand the problem you are looking to address but this bill in every respect sends the wrong message to the world and right now it is a blunt instrument. I hope that the work that both you and I continue to do in the foreign affairs, defence and trade committee—more particularly, with trade—in the inquiries that we have coming up means that we can address the issues which you are looking to essentially set in stone here. This bill—'A Bill for an Act to provide for certain minimum standards for products imported into Australia under a trade agreement'—I contend is probably an unnecessary burden on the current series of Australian trade negotiations.

All Australians benefit from trade. An increase in trade creates more Australian jobs and delivers more opportunities for Australian businesses. Australia has a two-way trade in goods and services and that trade was worth $616 billion in 2012. It is a vital component of Australia's economic prosperity. Last week it was mentioned that within five years the Asia-Pacific region would be the world's largest producer and consumer of goods and services. By 2030, the figure of 500 million people now located in the region's middle class is expected to grow and reach a staggering 3.2 billion souls. Exporting to Asia is a highly competitive environment and the opportunities will not just fall into our lap. We need to do all we can to support our developing and thriving international trade industry, not only in the Asia-Pacific region but worldwide. We need to be innovative and we need to be responsive to emerging needs. However, the bill does not best place us to be at the forefront of facing current trade challenges.

We have many success stories of Australian businesses, something we should celebrate and continue to maintain. Especially with so many hindering factors contributing to trade negotiations—cultural and language barriers, different regulatory systems and ways of doing business combined with the problem of accessing finance and finding distribution channels—we do not need further red tape making way for unnecessary barriers that hinder Australia's economic prosperity. If we talk about free trade agreements, they should be recognised for what they are. They are agreements about making international trade easier and more efficient while preserving the ability to regulate domestically. This bill certainly does not do that.

Across the globe, there is an expanding network of free trade agreements and they play an important role in supporting global trade liberalisation. Through engaging in free trade agreements Australia enters into legally binding commitments to liberalise access to other markets for goods and services and further address issues such as intellectual property rights, government procurement and competition policy. Of course, such agreements fit within the boundaries set by the World Trade Organization to support global trade liberalisation. Free trade agreements help Australian exporters access new markets and expand trade in existing markets.

However, this bill would require Australia to provide less favourable treatment to goods imported from free trade agreement partners than the treatment given to the goods from the other countries. This would have a huge effect on the Australian economy as Australia currently has seven free trade agreements in force. These are with New Zealand; Singapore; Thailand; the US; Chile and the Association of South-East Asian Nations, ASEAN—and that is with New Zealand and Malaysia. These countries covered by these free trade agreements account for 28 per cent of Australia's total trade.

Australia is also currently engaged in nine free trade negotiations. There are five bilateral free trade agreement negotiations—with China, Japan, Korea, India and Indonesia—and four plurilateral free trade negotiations with the Trans-Pacific Partnership Agreement, the Gulf Cooperation Council, the Pacific Trade and Economic Agreement, and the Regional Comprehensive Economic Partnership Agreement. You must admit that is a very busy space. I know that the Abbott coalition government has given this the priority it deserves after six years of its collecting cobwebs.

The countries covered by these negotiations account for a further 45 per cent of Australia's trade. The last thing Australian business needs is an unnecessary roadblock to trade negotiations. It is vital we continue to take into account those rules established by the World Trade Organization to ensure that we do not face issues arising from political and protectionist pressures in other countries. We must ensure that internationally agreed standards are encouraged, that products from complying countries are not discriminated against and that unnecessary barriers to trade do not develop. Furthermore, we must ensure that importers are not exposed to legal burdens in their own jurisdiction. I spoke about that earlier. Rather, the current status quo should remain and be maintained to ensure that the onus is placed on the importer operating within Australia.

The Abbott government agenda is clear. It is an agenda to promote and assist strong trade negotiation mechanisms. The Minister for Trade and Investment, the Hon. Andrew Robb, is participating in the ninth Ministerial Conference of the World Trade Organization right now in Bali and he is continuing this with advanced high-level Trans-Pacific Partnership negotiations in Singapore. These are very important meetings for Australians.

The 38th Cairns Group Ministerial Meeting in Bali is a coalition of 19 agricultural exporting countries committed to agricultural trade reform, including the elimination of trade distorting subsidies and tariffs. Those are the types of negotiations that Senator Madigan should be encouraged by. Minister Robb will have those at the forefront of his thinking and negotiations on behalf of Australian agricultural industries. Agriculture is a key contributor to the Australian economy.

The Cairns conference supports the growth and advancement of Australia's agricultural trade policy interests and provides a means to influence policy reform. It will consider a package of reforms around agriculture, including components relevant to developing countries, as well as trade facilitation, which has the potential to reduce total trade costs for exporters.

Minister Robb and the coalition are committed to resolving trade issues and market access throughout the Asia region. The Trans-Pacific Partnership is the most comprehensive free trade agreement currently under negotiation and involves 12 countries responsible for 40 per cent of global GDP, and all trade policy must be developed to support growth through trade. Policy must provide and support opportunity for Australian businesses and exporters, including farmers, manufactures and service providers. Minister Robb has stated that the government is committed to:

…a very ambitious trade and investment agenda and while these areas of policy are indeed international, they are also of course intrinsically linked to our domestic economic fortunes in terms of supporting sustainable growth, businesses, both large and small and most importantly jobs

That is very different to the rhetoric we heard during those six chaotic years of the previous government around free trade agreements, our trading partners and our export opportunities in general.

As I conclude, trade is vital to our national interest and economic prosperity. While I understand the sentiment behind Senator Madigan's bill, it does not advance the interests of Australian consumers or the economy at large. The increasing burden of red tape as a result of poor Labor policy is placing Australian business and our trade sector in a vulnerable position. Regulators must understand that the cost on business of meeting the ever-increasing red tape burden is crippling and singularly the biggest issue I hear at the business forums I attend around this country.

Those on this side of the chamber are working hard to ensure that Australian businesses and the trade sector at large are not hindered through more unnecessary and problematic regulation. Australia has an established regulatory regime to manage product standards and product safety, and any new legislation should only sit in support of helping our economy grow and prosper so that we can remain strong players in an international trade market. This bill has the effect of obliging Australia to adopt import requirements that will place further unnecessary obstacles in front of potential trade opportunities.

Senator LUDWIG (Queensland) (11:17): I rise to speak on the Fair Trade (Australian Standards) Bill 2013. What struck my interest with this was to go back and look at where this journey on trade started for me. It started some years ago now, though sometimes it feels like yesterday, with the work of the Joint Standing Committee on Treaties, where significant debates occurred about free trade agreements and trade liberalisation, and there was a particular focus on the World Trade Organization. Not everyone will recall this but there were significant debates then about trade, culminating in a range of protests and the like that centred around 2001. I do not want to go to that specifically; I want to take the Senate to the Treaties Committee report entitled Who's afraid of the WTO? In essence, it set out the framework that we have continued on with. Looking across the table, I recognise some senators who may have been in that committee at that time.

That reports says that Australia is a medium-sized economy and our dependence on exports has meant that successive Australian governments have embraced trade liberalisation as a means of securing export trade. In the inquiry, the committee considered how effectively Australia is using the multilateral trading system and asked if we could do better. The report examined the multilateral trading system managed by the WTO and brought out some differing views—differing views on the impact of globalisation and the benefits and costs of trade reform. An understanding of these issues is vital to encouraging and informing debate amongst all Australians about trade policy. The report also examined specific issues, including Australia's interaction with the WTO, challenges for the future operation of the WTO and a range of other matters.

It is not my intention to restate that report, but it does highlight that over that whole period from 2001 we have continued to have a focus on why we trade, why we progress multilateral trade and why we advocate Australia as an open market economy. I went on to look for more committee reports in this area to see how we are progressing as parliamentarians in making that case. Unfortunately, there is a dearth of committee reports in this area. I think it is an area where the Treaties Committee or another committee—and far be it for me to suggest more work—could examine some of these issues. Senator Madigan has referred his bill to a committee, but the broader aspects of why we continue to have an open-market economy, why we continue to progress global trade and why we continue to press for particular areas could be referred.

The most recent work is in two parts. The first part culminated in then Minister Emerson presenting the government's trade policy statement. That statement, in shorthand, ultimately came in part from the Productivity Commission's report on bilateral and regional trade agreements in November 2010. I encourage those with an interest to go back to that Productivity Commission report and the Labor government's trade policy statement for the basis of where trade policy stands. It was and continues to be a defining moment in how to advocate in this area.

The new trade strategy progressed by then Minister Emerson embraced five principles. First, ongoing trade related economic reform should be pursued without waiting for other countries to reform their trade policies. Second, there should be no discrimination in trade negotiations. Third, foreign policy considerations should not override trade policy. Fourth, there should be transparency in free trade negotiations. Fifth, trade policy and wider economic reform should be seamlessly executed. Countries applying these principles champion ongoing multilateral trade liberalisation as a preferred vehicle for non-discriminatory trade between nations.

If we fast-forward a fraction to look at Senator Madigan's Fair Trade (Australian Standards) Bill 2013, it has the essence of many issues we have grappled with since 2001. It does not encompass all of them, but in his opening remarks Senator Madigan mentioned four types of fair trade bills he was progressing to deal with Australian standards, workers' rights and the International Labour Organization conventions on employment. They all touch on multilateral trade and trade liberalisation in an global economy. The bill's key objective, as outlined in the explanatory memorandum, is higher standards for imported goods by restricting the terms under which the Commonwealth can enter into trade agreements relating to compliance with domestic and foreign product standards. The bill seeks ultimately to impose certain obligations on foreign corporations with respect to the importation of goods. It also seeks to impose certain obligations on domestic corporations with respect to the export of goods.

Senator Madigan, in my view—and I do not seek to put words in Senator Madigan's mouth—seems to be seeking to address concerns about the quality of imported goods that have been introduced into the Australian market. While I share Senator Madigan's concerns about the reliability and safety of goods, I am not convinced that trade policy is the mechanism to enforce appropriate standards. That is why I took some time to go back to some fundamental documents that have progressed and continue to underpin trade from parliament's perspective: the Productivity Commission's report, the World Trade Organization, the Joint Standing Committee on Treaties, all of which have spoken about trade.

Debate on the bill presents a timely opportunity to outline Labor's approach to trade, including with respect to upcoming trade negotiations. Labor recognises that reducing barriers to trade can boost our economic growth, create more competitive industries and give consumers access to a wider range of goods and services at lower prices. The pursuit of these objectives drives Labor's support for a more open global trading system. Labor's achievements in office included the establishment of the Cairns Group, as a vehicle to promote our interests in multilateral trade negotiations, and the Asia-Pacific cooperation forum, to strengthen our economic and political ties within the region. The former Labor government placed the Asian century at the centre of the national debate. We included the national food plan, which focussed on our immediate neighbours. We opposed protectionist responses to the global financial crisis, both at home and abroad. Labor had an ambitious agenda for trade and will maintain this position in opposition.

Our assessment of the government's trade performance will be informed by clear-sighted assessment of our national interest. As I understand, next week trade ministers will meet in Singapore to continue negotiations on the Trans-Pacific Partnership agreement, the TPP. Twelve countries accounting for 40 per cent of the global GDP are party to the Trans-Pacific Partnership talks. Potential benefits for Australia include market access for our goods and services to countries with which we do not have an existing free trade agreement. Real regulatory reform and lower behind border trade barriers will be key issues. The TPP could also be an important stepping stone to closer economic engagement across the Asia-Pacific region.

The test for the government in the TPP, and in all other trade negotiations, is in ensuring Australia's national interest is not traded away. It would not be in the national interest for Australia to sign up to the TPP if it undermined the integrity of the Pharmaceutical Benefits Scheme or affected the ability of Australians to access affordable medicine, nor would it be the national interest for the government to sign up to the TPP if it mandated a radical shift in the legal balance between creators and users of protected works. Because the outcomes of trade negotiations can have both far-reaching and long-lasting consequences, the government should not readily sign up to a TPP deal that constrains the ability of future governments to make laws on social, environmental and economic matters where those laws treat domestic and foreign businesses equally. The risk that the Productivity Commission, as I mentioned earlier, identified previously in 2010 from investor-state dispute settlement clauses cannot be ignored either in the pursuit of an announcable from next week's ministerial meeting.

There is a national interest in the government providing the transparency that enables Australia to understand what trade agreements mean, what benefits they bring and what compromises we are being asked to make, and the TPP is no exception. Labor believes the full text of any TPP should be released well before it is signed. This is the commitment that the United States trade representatives have given to Congress, and the Australian parliament and people are entitled to no less. That is what the Senate demanded earlier this week when it ordered the production of the final text well before signing.

The outcome of the TPP talks will be an early demonstration of whether the government can achieve trade reform without trading off our national interest. With the approaching self-imposed deadline for concluding FTA negotiations with China, it will not be the only test in this government's first year in office. It is worth looking again at the issues that have been difficult to include in bilateral trade agreements such as some of the issues that Senator Madigan touches upon.

We do have a strong desire to progress agricultural trade. If you look around the Asia-Pacific region and the world, the ability of our agricultural products to meet markets is being constrained by high tariff barriers in other countries. We have one of the best agricultural products. It is both clean and green, is of exceptional quality and would meet all of Senator Madigan's criteria. What we have not been able to do from the overseas perspective is to get them to include those products in their negotiations on bilateral free trade agreements, more specifically FTAs, and progress them to the benefit of our agricultural sector. It is a task that this new government, I suspect, will have to take up the challenge to try to achieve. All of that will not be easy given the many disparate economies not only in our close region but further too.

If you look at what we have done, Australian governments have entered into a range of bilateral and regional agreements and have done that typically seeking to reduce trade barriers. Of course, trying to include the broad issues that Senator Madigan raises is no mean feat in those negotiations. I do understand that we do have within the Department of Agriculture a strong biosecurity focus. It is one area where many hours are spent ensuring that our borders are secure from foreign incursions of disease, pests and weeds. To date, from recollection, its record has been exemplary. In trying to achieve outcomes across industry as well, we do have domestic standards that we require and we do have strong compliance frameworks in place in our regulatory framework. All of that is, in my mind, where the focus should be.

If we want to talk about how we progress trade agreements, I think there is ultimately great opportunity for this parliament to revisit how we can continue to have outcomes. I note that in July 2011 there was an inquiry into Australia's trade and investment relations with Asia, the Pacific and Latin America. Again, it did not focus on the issues more specifically that Senator Madigan raised but it did—as you see if you have an opportunity of going to that specific document—outline quite easily not only some of the challenges that are before us but ultimately the benefits. It is about where Australia is keen for APEC to intensify work on regulatory form, competition policy and regional economic integration through structural reforms at the border—for example, in Customs, procedures, standards, conformance and business mobility across the border by improving supply chain connectivity; and behind the border by reducing regulatory burden and squeezing the transaction costs. These are the rub areas where more work needs to be done to ensure that the outcomes that Senator Madigan seeks are achieved rather than perhaps the way you are seeking to achieve it.

As the report says, Australia is working with Singapore, Hong Kong, China and other APEC members on a framework on supply chain connectivity to identify choke points that impede trade logistics in the Asia-Pacific region and to assess measures currently in place to ameliorate some of those issues. (Time expired)

Senator WHISH-WILSON (Tasmania) (11:37): The Greens are very sympathetic with the details of the Fair Trade (Australian Standards) Bill 2013 proposed by Senator Madigan. We have not yet made a decision as to whether we will support the bill, and we would certainly be interested in a referral to an inquiry to further explore the issues around the bill—or, as Senator Ludwig suggested, possibly even a larger inquiry into areas surrounding free trade in general, in light of the significant activity in free trade deals that we are currently experiencing particularly with the recent change in government.

I want to start at the beginning where it is really simple with this concept of free trade. We heard Senator Edwards talk about why free trade is good and certainly, according to the high-profile statements being made by the Abbott government in the media, free trade agreements are something that they are hoping to hang their hat on as a significant achievement in their term of government in the next three years, and they will be pushing through free trade deals and negotiating as many as they can as quickly as they can—with the assumption, and it is a flawed assumption, that free trade deals are always good.

I used to teach this theory to first-year economics students, and I have got to say that free trade is real and it does exist, but it only exists in textbooks. It is a good process to learn when you are looking at two countries negotiating with each other to see how they could perhaps integrate their economics systems—the assumption that perhaps one country might have a specialisation in an area and that they could sell a product at a competitive advantage to another country and vice versa. The theory tells you that both countries would be better off under a simple free trade arrangement. As Senator Ludwig mentioned in his speech, our free trade deals are a lot more complex than that. More fundamentally, the assumption that free trade deals are always good is also wrong because the theoretical assumption underpinning it is that the comparative advantage leads to a greater level of wealth—what we call aggregate wealth for all countries involved in a free trade bloc. But what theory does not tell us—and this is essentially what we are arguing in the chamber today around the issues with free trade, fair trade or trade in general—is how that wealth is distributed in any nation.

I turn back to the theory again. If I were speaking to students about this, I would say, 'In theory, the sectors that gain from free trade would quite simply compensate those sectors that do not gain from free trade.' Of course, the criticism that is often levelled at economists is: the world in economics is based on simple assumptions. The way I see free trade, and trade deals in general, is perhaps not the way the majority of Australian people see it. When they watch TV and they see our leaders at big conventions, wearing colourful shirts and doing the right thing by the nation, I have no doubt that the front end of these free trade deals—as with a lot of international cooperation—is done by government; but what is behind trade and trade activity is corporations. It is business activity, it is investment, it is production, it is the search for profits. That is what drives our economy.

I have no doubt that the negotiators at DFAT, for example, with current free trade deals, are all good people doing fantastic jobs in what they see as the national interest. But you really need to strip that back to its more simple foundations. It is the interests of Australian corporations, and not just Australian corporations but multinational corporations. This is the last time I will mention that I have taught something, but I can tell you, having taught international finance: it is very difficult sometimes to work out where multinational or transnational corporations are actually domiciled. But that is what the world has become. There is no doubt that global integration of our economies, in the last 30 years especially, has led to a concentration of business activity and wealth in a small number of very large companies right across all sorts of different industries and sectors. So when we think about a free trade deal like the Trans-Pacific Partnership or the RCEP deal or even simple unilateral, bilateral or multilateral deals, it is the special interests—that employ people, that produce—that are driving these deals. It is the special interests that are behind these. And they are corporations.

I think what we really need to look at is whether the interests of these corporations are also in the interests of our nation, the general public and, of course, the Australian voters. The Greens have long been very strong and fierce advocates for fair trade. There is a fundamental difference in theory and in practice between fair trade and free trade. Let us just look at what is in the national accounts—our current account and our financial account. That is where trade and investment activity is buried. That is where we go every quarter when we want to look at the activity to do with exports, imports and direct foreign investment. That is all good stuff, but that is all measured in monetary terms. When we think of fair trade, we think of those things external to purely monetary measurements. We think of the impacts on existing industries—for example, workplace standards and fair work standards. We think about the environmental aspects of trade and production and whether we are creating any externalities in the products that we may be trading in. Exporting coal to the world is one really good example where we are exporting an externality—probably the biggest externality that has ever factored into our modern economic system. It has been there since the beginning: the creation of the gases that lead to global warming. These are issues, and we could think of a lot of other examples where trade and business production activity do not necessarily reflect these externalities, and it is exactly the same in trade deals.

So the idea of having stronger standards in general is certainly something that our party supports. Of course, across the chamber the most common argument we will get against that is increased cost of doing business and putting imposts on companies and businesses that may lead to the erosion of profits and ultimately to lower employment and the reduction of other activities. But there are also benefits in putting better standards in place—for example, certification schemes on a whole range of products.

I was very pleased earlier in the year that the Senate unanimously passed a motion following the very tragic Rana Plaza collapse in Bangladesh, where 1,200 people were buried alive while working in a factory with appalling labour conditions and safety standards. We later learned, following an expose by Four Corners and significant international attention on the rag trade coming out of a country like Bangladesh—and it is not just Bangladesh—about the conditions that workers in foreign countries were subjected to to produce what are essentially throwaway goods for us—the $5, $10, $15 and $20 garments that we take our kids to buy down in the local shop. There is a price to be paid for having cheap garments in this country made in appalling conditions in foreign countries, and that price of course is the misery and death of human beings.

So what can we do about this? Obviously there is a lot we can do by letting Australian consumers know so that they can make a choice between buying goods that are produced unethically under appalling conditions and buying goods from those companies that do the right thing. I respect that it may cost a little bit more to put in place a certification program that simply has a label or a tag on a product made in a country like Bangladesh that says that that particular item of clothing has conformed to minimum standards and those standards have somehow been verified. This has actually developed from voluntary schemes around the world, and I really think it is something this country needs to face up to.

I understand the focus of Senator Madigan's bill is on import standards, which I will get to in a minute. We need to be very careful about what we import into this country, not just in terms of ethical considerations but also with agriculture: standards around quarantine, MRLs and the conditions under which food has been brought into this country. When I speak to people in the agricultural sector—farmers in Tassie—it is fascinating. Being an economist, I had always assumed that low prices mean low inflation and low interest rates, maximise economic growth and are good for the economy. But I really wonder sometimes whether we should look at the concept of fair prices for products that are produced in this country and the fact that our farmers, for example—I know it is the same for manufacturing industries in this country—cannot compete effectively with international competition. This is classified as competitive disadvantage. There are some reasons why Australian businesses cannot compete on a level playing field against foreign countries. Of course, the low cost of labour in these countries is one of the most common things that we talk about, but there is also a lack of standards and verification processes in, for example, agriculture—a whole range of different issues that relate to other countries' rules and regulations or lack of rules and regulations.

So the simple question is: is the constant focus in our society on low prices necessarily sustainable in the long term and is it necessarily a healthy thing? We all want to lower our cost of living and there is no problem with that, but at some stage—maybe it will come if our dollar ever depreciates—we will have to start paying more for cheap imported products, allowing more of a level playing field. But it is absolutely essential that we start questioning these issues, and I am very pleased to hear Senator Ludwig say that Labor is open-minded about exploring a broad range of issues around free trade—no doubt about the positive aspects of trade, but free trade certainly comes with costs.

Debate interrupted.

Senator KROGER (Victoria—Chief Government Whip) (11:51): I present the 10th report of 2013 of the Selection of Bills Committee. I seek leave to have the report incorporated in Hansard.

Leave granted.

The report read as follows—

SELECTION OF BILLS COMMITTEE

REPORT NO. 10 OF 2013

1. The committee met in private session on Wednesday, 4 December 2013 at 7.19 pm.

2. The committee resolved to recommend—That—

(a) the provisions of the Infrastructure Australia Amendment Bill 2013 be referred immediately to the Rural and Regional Affairs and Transport Legislation Committee for inquiry and report by 17 March 2014;

(b) the provisions of the Migration Amendment (Regaining Control Over Australia’s Protection Obligations) Bill 2013 be referred immediately to the Legal and Constitutional Affairs Legislation Committee for inquiry and report by 3 March 2014; and

(c) the provisions of the Tax Laws Amendment (Research and Development) Bill 2013 be referred immediately to the Economics Legislation Committee for inquiry and report by 17 March 2014.

3. The committee resolved to recommend—That the following bills not be referred to committees:

Australian Capital Territory Water Management Legislation Amendment Bill 2013

Australian Civilian Corps Amendment Bill 2013

Australian Research Council Amendment Bill 2013

Customs Amendment (Anti-Dumping Commission Transfer) Bill 2013

Education Services for Overseas Students Amendment Bill 2013

Grape and Wine Legislation Amendment (Australian Grape and Wine Authority) Bill 2013

Health Insurance Amendment (Medicare Funding for Certain Types of Abortion) Bill 2013

Higher Education Support Amendment (Savings and Other Measures) Bill 2013

Import Processing Charges Amendment Bill 2013

Indigenous Education (Targeted Assistance) Amendment Bill (No. 2) 2013

National Health Amendment (Simplified Price Disclosure) Bill 2013

Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Amendment Bill 2013

Offshore Petroleum and Greenhouse Gas Storage Amendment (Cash Bidding) Bill 2013

Primary Industries (Customs) Charges Amendment Bill 2013

Primary Industries (Excise) Levies Amendment Bill 2013

Primary Industries (Customs) Charges Amendment (Australian Grape and Wine Authority) Bill 2013 

Primary Industries (Excise) Levies Amendment (Australian Grape and Wine Authority) Bill 2013

Rural Research and Development Legislation Amendment Bill 2013

Veterans’ Affairs Legislation Amendment Bill 2013.

The committee recommends accordingly.

4. The committee considered the following bills but was unable to reach agreement:

Social Services and Other Legislation Amendment Bill 2013

Telecommunications Legislation Amendment (Submarine Cable Protection) Bill 2013.

5. The committee deferred consideration of the following bills to its next meeting:

Environment Legislation Amendment Bill 2013

Fair Trade (Workers’ Rights) Bill 2013

National Integrity Commission Bill 2013

(Helen Kroger)

Chair

4 December 2013

Appendix 1

SELECTION OF BILLS COMMITTEE

Proposal to refer a bill to a committee

Name of bill:

Tax Laws Amendment (Research and Development) Bill 2013

Reasons for referral/principal issues for consideration:

Detailed scrutiny of the principles of the Bill, particularly in regards to the

consequences of implementing exclusion criteria to the R&D Tax Incentive.

Possible submissions or evidence front

Australian Industry Group

Michael Johnson Associates (MJA)

Deloitte Access Economics

Ernst & Young

Minerals Council of Australia

Innovation Australia

Institute of Chartered Accountants Australia

Committee to which bill is to be referred:

Economics Legislation Committee

Possible hearing date(s):

Public hearings in January — February 2014

Possible reporting date:

17 March 2013

Senator McEwen

(signed)

Whip/Selection of Bills Committee Member

Appendix 2

SELECTION OF BILLS COMMITTEE

Proposal to refer a bill to a committee

Name of bill:

Infrastructure Australia Amendment Sill 2013

Reasons for referral/principal issues for consideration:

The Bill restructures Infrastructure Australia, changes Its governance and permits the Minister to have a greater say on the type of projects that will be assessed, and how they will be assessed. It also changes arrangements for tax concessions for Infrastructure projects. It replaces the existing IA members with a Board.

This is seeking to substantially rewrite current arrangements and these provisions need detailed committee consideration.

Possible submissions or evidence from:

Infrastructure peaks Environment groups

Public transport organisations

Major construction companies

State Governments Local government super funds

Investor organisations

Committee to which bill is to be referred:

Rural and Regional Affairs and Transport Legislation Committee

Possible hearing date(s):

Possible reporting date:

17 March 2014

Senator McEwen

(signed)

Whip/Selection of Bills Committee Member

Appendix 3

SELECTION OF BILLS COMMITTEE

Proposal to refer a bill to a committee

Name of bill:

Migration Amendment (Regaining Control Over Australia's Protection Obligations) Bill 2013

Reasons for referral/principal issues for consideration:

Detailed scrutiny of the Bill, particularly with regards to removal of the Protection (Class XA) (subclass 866) visa, Australia's non-refoulement obligations being met, investigation of return to administrative procedure (resumption of Ministerial discretion)

Possible submissions or evidence from:

UNHCR

Refugee Council of Australia

Curtin University Centre for Human Rights Education

Foundation House

Refugee Foundation of Australia

Refugee and Immigration Legal Centre

Human Rights Commission

Recipients of the Protection Visa

Committee to which bill is to be referred:

Legal and Constitutional Affairs Legislation Committee

Possible hearing date(s):

n/ a

Possible reporting date:

3 March 2014

Senator McEwen

(signed)

Whip/Selection of Bills Committee Member

Appendix 4

SELECTION OF BILLS COMMITTEE

Proposal to refer a bill to a committee

Name of bill:

Migration Amendment (Regaining Control Over Australia's Protection Obligations) Bill 2013

Reasons for referral/principal issues for consideration:

To examine the impacts of removing complementary protection,

To examine Australia's non-refoulement obligations, and

Other related matters

Possible submissions or evidence from:

Amnesty International Australia

UNHCR

Human Rights Law Centre

Refugee and Immigration Legal Centre

Committee to which bill is to be referred:

Legal and Constitutional Affair Committee

Possible hearing date(s):

Possible reporting date:

3 March 2014

Senator Siewert

(signed)

Whip/Selection of Bills Committee Member

Senator KROGER: I move:

That the report be adopted.

Senator SIEWERT (Western Australia—Australian Greens Whip) (11:51): I want to move the following revised amendment to the Selection Bills Committee report, which I have circulated in the chamber. I move:

At the end of the motion, add "but, in respect of:

(a)   the Social Services and Other Legislation Amendment Bill 2013, provisions of the bill be referred immediately to committees for inquiry and report by 11 February 2014 as follows:

   (i)   the provisions of Schedules 6 and 9 of the bill, to the Education and Employment Legislation Committee,

   (ii)   the provisions of Schedule 2 of the bill, to the Finance and Public Administration Legislation Committee, and

   (iii)   the remaining provisions of the bill, to the Community Affairs Legislation Committee; and

(b)   the Telecommunications Legislation Amendment (Submarine Cable Protection) Bill 2013, the provisions of the bill be referred immediately to the Environment and Communications Legislation Committee for inquiry and report by 31 March 2014.".

The PRESIDENT: Senator Siewert, there is a little bit of confusion. We do not have copies of the revised amendment.

Senator SIEWERT: I understand they are being circulated in the chamber. Perhaps I should explain the revised amendment—I presume you have seen the original amendment that was circulated? I apologise, we were just working out the details and hence its late circulation.

The difference is that we are splitting out some of the provisions of the bills, sending the ones that relate to child care and to the student start-up loans off to the education and employment committee, and the provisions that deal with the Cape York income management process get sent off to the Finance and Public Administration Committee.

The point is that the Social Services and Other Legislation Amendment Bill 2013 has 12 provisions in it, many of which are far-reaching provisions that have implications for many Australians, and these provisions need adequate time and adequate consideration. Because there are so many provisions some of them are not actually appropriate to be sent off to the Community Affairs Committee for inquiry, particularly those that relate to student start-up loans and the issues that relate to the indexation of the childcare rebate. Those issues were originally looked at, as I understand it, by the employment and education committee and it is appropriate that that committee consider those provisions.

Similarly with the Cape York income management process. Now that Aboriginal and Torres Strait Islander issues are dealt with by the Department of Prime Minister and Cabinet, the Finance and Public Administration Committee now has responsibility for inquiry into Aboriginal and Torres Strait Islander issues. So it is more appropriate that that bill, because it deals specifically with the Cape York trial, goes off to finance and public administration. Given the complex nature of these issues it is more appropriate that the committees that are tasked with looking into those issues are the committees that review those particular issues.

But to go back to the substantive matter: the government and, at that stage, the opposition—and I am hoping that we have managed to persuade the opposition to change their minds—felt that these very important amendments should not have any committee review. These provisions, for example, are provisions that are going to start charging interest on certain Centrelink debts—these relate to ABSTUDY and Austudy. In other words, once again this is targeting the most vulnerable Australians. These are vulnerable Australians, Australians who are trying to get by on allowances that are condemning them to live in poverty to begin with. And now the government wants to charge interest on their debts.

We believe that needs to be looked into. We believe that the impacts of these provisions need to be considered, particularly, for example, student start-up loans. These are taking a billion dollars out of support for students: is the government saying that does not need to be inquired into? These are provisions that take millions and millions of dollars out of support for child care and childcare rebate. Again, is this government saying that does not need to be inquired into? These have an enormous ramifications, not to mention—and I am sure my colleagues will want to speak on this as well—the backflip on, or the removal of, the gambling provisions.

We have just had a very informative debate in this place about the impacts of gambling on Australia, and now this government wants to unwind the even very modest changes that the previous government made. It thinks it is perfectly okay for us not to have an inquiry into those provisions. The Greens do not agree. We say that this bill, with such an enormous ramifications, should be inquired into.

My colleague Senator Ludlam will look at the submarine-cabling provisions. When we were first asked to consider this bill in the Selection of Bills Committee, the provisions had not even been properly put up on the website so we did not even know what we were supposed to be considering in the first place. And when I sought to have this referred to committee last night, the government did not want to have that looked into either. I am sure Senator Ludlam will highlight the significant problems with these bills. This government has only been in for a couple of months, and already it is running away from scrutiny of legislation that can have significant impacts. It is not good enough, which is why we have moved to get these provisions referred to committee for proper consideration.

Senator FIFIELD (Victoria—Manager of Government Business in the Senate and Assistant Minister for Social Services) (12:00): I move the following amendment to Senator Siewert's proposed amendment:

Paragraph (a), omit "11 February 2014”, substitute “12 December 2013".

Senator DI NATALE (Victoria) (12:00): I rise to speak about the issue of referring the gambling bill, in particular—the Social Services and Other Legislation Amendment Bill 2013—to inquiry. It is remarkable. The coalition campaigned mercilessly for months in the lead-up to the last election about the new sort of grown-up government we were going to get. It was going to be open, honest and accountable, with no broken promises—and in the space of a few short weeks we have seen this government do everything it can to avoid scrutiny, whether it be on this issue of poker machine reform, the issue of refugees and asylum seekers or a range of other issues.

This bill needs to go to inquiry and we need to ensure that it gets the proper scrutiny. People have very short memories in this place. Occasionally this is referred to as a bit of a goldfish bowl because we look up and we are like goldfish swimming around in an aquarium, but I think it is more because people in this place have the memories of goldfish. Poker machine reform was one of the key issues of the last parliament. It was one of the issues that defined the 43rd Parliament. We saw an election result that hinged on the support of one of the Independents, who made poker machine reform one of the key issues on which that government would be formed. We saw the whole circus of Clubs Australia coming to town. We saw the conniptions that both sides of politics got themselves into because of the brutal campaign of lobbying from Clubs Australia. People forget we ended up replacing the Speaker of the Australian parliament in an effort to avoid voting on a piece of legislation that the then government had agreed to. The issue of poker machine reform was one of the things that triggered the demotion, or resignation, of the then Speaker, Harry Jenkins, and his replacement with Peter Slipper. That was because of the debate around poker machine reform.

We saw the government change the Speaker and renege on the deal it signed with the Independent Andrew Wilkie. It then did everything it could to get the support of the Senate—particularly through Senator Madigan, Senator Xenophon and me—for its watered-down reforms. We spent months negotiating with the government and with the minister at the time to introduce a number of measures that would strengthen that bill, in some effort to try and salvage reform on pokies. It was an issue that caused so much angst, so much heartache, so much grief, for all sides in this chamber, and now we have the government hiding the repeal of that piece of legislation that caused so much angst in the previous parliament—hiding the repeal bill in amongst a range of other measures in an effort to avoid scrutiny. And now we are contemplating the idea of not even referring it to an inquiry? The defining issue of the 43rd Parliament is suddenly going to be dealt with in the space of a few minutes here in this chamber?

Let us just hope that the first few weeks of this new government are an aberration, that its words around open, honest, transparent government were not a promise that we thought it made but it did not really make, just like with Gonski. Let us hope it was a promise that it will keep. Let us make sure we get the appropriate scrutiny that the repeal of these modest reforms deserves and let us ensure we do everything we can to highlight to the community that we have a government intent on doing the bidding of the big end of town rather than supporting some of the most vulnerable people in Australia.

Senator MOORE (Queensland) (12:05): We support the amended motion before the chamber. There is a longstanding norm in this place of support for any senator who wants to refer any bill to a committee for scrutiny. It is important that senators have the right to do that and that they get the support of this place to do that. In fact, that is doing our job. We note that there are some significant time frame urgencies in some elements of the bill, and that is why we are supporting the truncated time for review. There is also an issue around the fact that anyone who brings in such a compendium of issues in one piece of legislation makes it very difficult for us in this place to do our job. I think there are at least eight different elements of this bill, which means that to have any effective scrutiny is very difficult, particularly when there are time frames involved. There is also the need to ensure that the appropriate part of this legislation is referred to the appropriate committee, and that has led to the need to have an amended motion put before us, because there are now three committees that need to work to ensure that the issues are covered. On that basis, we support the referral and we just make a note about our concerns about this form of process in trying to do such a large piece of legislation in one go.

Senator LUDLAM (Western Australia) (12:07): I am just going to add a few comments and not detain the chamber for long on the second part of Senator Siewert's motion, which relates to the Telecommunications Legislation Amendment (Submarine Cable Protection) Bill 2013. It is difficult to know whether this is just an administrative stuff-up or whether it was actually an attempt to avoid scrutiny, but I understand that now reason has prevailed. As Senator Moore has indicated, there is a reason as to why it has become the convention in this place that bills of any degree of moderate or high controversy or complexity should almost as of right be referred to Senate committees. It is what this chamber does; it is us doing our job. Preventing an inquiry into a key piece of legislation prevents the Senate doing what it is here to do. In my experience, you then end up simply litigating it clause by clause in the committee stage before the full chamber, which is not a good use of the chamber's time. You do not get the benefit of expert witnesses and frequently we are dealing with ministers who are acting for someone in the other place and who have a limited experience of what the bill is about. It is not very satisfying for anybody.

My whip tells me that we do have government and, I believe, opposition support certainly for the second part of Senator Siewert's amendment being reported on by 31 March 2014. We sought to refer this bill because when the Selection of Bills Committee was asked to make a call on whether to refer the bill it was doing so in the blind. It had not made its way into the house and none of the documentation was available to us, and it is very difficult to make a judgement call on degree of complexity or controversy if you have not seen supporting documents around the bill. I have received a briefing since then from Minister Turnbull, who made a staffer available to us to talk us through it.

We do have some questions. The bill relates to protection of submarine cables that carry upwards of 99 per cent of data traffic between continents. Obviously senators will be aware of the high degree of public interest at the moment in protection of these cables because they are critical infrastructure. Particularly for an island nation, submarine cables are what link us to the rest of the world. It is not, as some people believe, all satellite traffic—the backbone of the internet is these submarine cables. Not only do they need to be protected from inadvertent disturbance from shipping, for example; they also need to be protected from malicious disturbance, such as people attaching taps to those fibres to divert the traffic entirely unlawfully. Presumably that is what this bill is designed to protect against. We want to ensure that the results of the statutory review that was undertaken by ACMA five years after the 2005 legislation came into force are adequate, to review the decisions taken by government in addition to the outcomes of the review. That is why we have Senate inquiries.

It is not clear to me on first reading whether the oversight mechanisms proposed in the bill are sufficient, whether the streamlining of permits process as outlined improves the security of this telecommunications infrastructure or not. The bill includes new powers for the A-G to direct ACMA to refuse a permit on security grounds. It is not at all clear on what criteria those refusals could be made, and that is what a Senate inquiry is for. Given that, as the bill is drafted, these decisions are not reviewable, we need to know what the Attorney would need to have before him as he is making those judgement calls. So I am pleased that we found reason. I am not at all clear as to why this was not simply resolved amicably in Selection of Bills Committee but I look forward to participating in the inquiry over the summer and coming back and if necessary improving the legislation.

Senator RHIANNON (New South Wales) (12:11): I thank Senator Siewert for moving this amendment to the motion before us. It really is giving leadership on the important issue of an inquiry into such a comprehensive piece of legislation. I have certainly been following it closely because it covers an area that I put considerable work into with regard to higher education. There is an area here with regard to the huge impact this legislation, if it went through in its current form, would have on tens of thousands of students because this covers what is called the start-up scholarships and at the moment it runs to about $1.2 billion. If this was changed in the form proposed, that would bring considerable disadvantage, changing scholarships into loans. So clearly that is another area that needs to be given close attention. What we have here with Senator Siewert's amendment is a possibility for that inquiry to go ahead and be able to provide that valuable information.

We know that there is already considerable community concern about this. The policy was originally one of Labor's, announced in April this year. At that time many people who work in this sector, particularly students, the National Union of Students and other organisations, raised the issue of the impact and if it would prove to be a disincentive. There is particular concern that it was targeting people who are already disadvantaged, many of them coming from families where nobody had ever gone to university before and the start-up scholarship was a real incentive to take their education forward in a way that would really open up so many opportunities for the rest of their lives and in turn help create a much more productive, innovative Australia. Opening up the chances of higher education to a much wider section of our community is something that would be lost if the legislation went through in its current form. We felt this really needed to be looked at closely.

But there is a wider principle of the need for inquiries into legislation, and that is why I was very pleased when I spoke to Senator Siewert earlier to hear that this was being brought forward so that we could have this inquiry into the legislation, one of the most wonderful aspects of the Senate, and that we are able to continue to do this.

Senator HANSON-YOUNG (South Australia) (12:13): I rise to speak in favour of the proposition put forward by the Australian Greens whip, Rachel Siewert, to ensure that we are able to split off these bills to referrals, because it is absolutely important that the Senate plays its part in looking at the detail of this legislation. The one particular part of this legislation that I am interested in is the fact that the coalition late in the last sitting week tried to sneak this piece of legislation through without anybody noticing, which was a total backflip on their promise to families to make sure child care in this country would become cheaper. Well, no, this bill is going to push up prices for families right throughout the country.

We knew when this legislation was first floated three years ago that the number of families that would be affected was over 70,000. Fast forward three or four years and we now know that that is going to be over 100,000 families impacted because this government—despite everything that it has said and despite what it has said in its press releases, what this government does in the chamber seems to be a very different matter—wants to freeze the amount of money that families can get as part of their childcare rebate. Where was that on the coalition's plan of action for Australia that Tony Abbott took around the country? Where did it say that the coalition was going to push up prices so that families would not be able to afford accessible quality child care? It was not there.

This is a broken promise of this government, and it is absolutely imperative that the Senate is able to look into the detail of it so that families, childcare operators and childcare workers know exactly the agenda of this government—it is secret; it is hidden; they are sneaking around like they do on everything else. But, at the end of the day, this will impact the pockets of hundreds of thousands of Australian families, our children, our childcare centres and our childcare workers. Australian parents and families deserve much more than the coalition trying to rush this through with no scrutiny and with cover-up sneakiness. That is exactly why the Senate is here: to make sure we can shine a spotlight and some transparency on a government who has backflipped hoping no-one would notice. You know what, Mr President? We have noticed, and Australian families are starting to wake up. This government promised one thing at the election and are doing something totally different. They are just hoping that they can get away with it. Referring this to an inquiry is an important part of the process, and we will be making sure that we push that through.

The PRESIDENT: The question now is that the amendment moved by Senator Fifield be agreed to.

The PRESIDENT: The question now is that the amendment as amended be agreed to.

Question agreed to.

The PRESIDENT: The question now is that the motion as amended be agreed to.

Question agreed to.

Senator HANSON-YOUNG (South Australia) (12:31): Mr President, I was waiting for this from the Clerk but it came during the selection of bills debate, which obviously happened after the notices of motion. I seek leave to put in a notice of motion, if I could.

Senator Kroger interjecting—

Senator HANSON-YOUNG: Rather than read it in?

The PRESIDENT: You will need leave to give one. Is leave granted?

Senator HANSON-YOUNG (South Australia) (12:32): I seek leave to table a notice of motion, please.

Leave not granted.

The PRESIDENT: Wait a minute, Senator Hanson-Young. I understand leave was not granted.

Senator HANSON-YOUNG (South Australia) (12:32): I move:

That so much of the standing orders be suspended as would prevent Senator Hanson-Young from giving a notice of motion today.

Mr President, I think it is a little unnecessary that I have been stopped from being able to give notice of a motion that would have taken no time in this place whatsoever. If this is the attitude of this new government that every time, because they do not get their own way, they decide to behave like absolute thugs, then I tell you we will do everything we possibly can to try to restore some order in this place that shows a little more decency, a little more respect, a little more basic courtesy to our fellow senators.

After six years of seeing this group over here take liberties wherever they possibly could and often having to seek leave for different things—wanting to hijack the Senate's agenda—there has always been an ability in this place to show a little courtesy to each other. Yet the thugs on the other side of the chamber now think that just because they have the numbers in the House that means that somehow they want to ram through things here in the Senate. Well, it just is not the case.

The notice of motion that I was going to give this morning is in relation to a private senator's bill that will be on the table for debate next week. If others on the other side are not happy to allow a little bit of courtesy, despite the fact that the bill was meant to be given notice of today in order for it to be introduced on Monday, it does not leave much time for proper scrutiny within the Senate process. This is the entire attitude of this government. This is all part of the secrecy, the sneaking around, all then covered with: 'We'll tell you what we want you to hear; we will make sure that we decide what you want to hear and when you want to hear it.' This is absolute thuggery from this government.

Question agreed to.

Senator HANSON-YOUNG (South Australia) (12:35): I give this notice:

That on the next day of sitting I shall move that the following bill be introduced: a bill for an act to amend the Migration Act 1958 and for related purposes. Migration Amendment (Visa Maximum Numbers Determinations) Bill 2013.

Thank you for your indulgence.

Senator XENOPHON (South Australia) (12:38): I, and also on behalf of Senator Madigan, move:

That the following bill be introduced: A Bill for an Act to amend the Reserve Bank Act 1959, and for related purposes. Migration Amendment (Visa Maximum Numbers Determinations) Bill 2013.

Question agreed to.

Senator XENOPHON: I present the bill and move:

That this bill may proceed without formalities and be now read a first time.

Question agreed to.

Bill read a first time.

Senator XENOPHON (South Australia) (12:38): I present an explanatory memorandum and I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard and continue my remarks later.

Leave granted.

The speech read as follows—

Rural and regional Australia is struggling. We have heard over and over again the challenges communities are facing, and how they are trying to survive. In recent years, they have borne the brunt of extreme weather events, a high Australian dollar, and a lack of support from State, Territory and Federal Governments.

This bill has evolved from that introduced in the House during the last Parliament by the Member for Kennedy, the Hon. Bob Katter MP. It seeks to establish a specific board under the umbrella of the Reserve Bank, with the aim of promoting reconstruction and development in rural and regional areas.

In a sense, the proposed board is similar to the Commonwealth Development Bank, which was established in 1960. Its aim was to provide loans to individuals and businesses in the primary and secondary industry sectors, where that support would lead to an increase in productivity and wasn’t otherwise available to the applicants.

The bill establishes the Australian Reconstruction and Development Board (ARDB) under the Reserve Bank to formulate and implement a rural reconstruction and development policy for the Bank. The ARDB will also be required to undertake three tasks: the reconstruction, development and facilitative tasks.

The reconstruction task requires the ARDB to address the debilitating impact of financial arrangements in certain circumstances. This relates to financial arrangements that threaten or reduce the ongoing viability or sustainability of Australian agricultural enterprises or associated entities. These conditions or circumstances include the design of financial arrangements, inadequate evaluation, market or organisational failures, seasonal conditions, or any other adverse circumstances.

The development task consists of requiring the ARDB to contribute to the development of Australian agriculture, associated industries and infrastructure by developing and offering financial arrangements. The aim of this task is to provide support to these industries through tailored financial products and other arrangements so that the sector can begin to develop. The ARDB will also be required to assess these financial arrangements to ensure their ongoing suitability.

Finally, the facilitative task consists of researching, reporting on and helping to develop the resilience, capabilities and ongoing financial viability of Australia’s food and natural fibre systems, and any other Australian industries or sectors that the ARDB has identified as being at risk. The aim of this task is to provide for the ARDB’s ongoing consideration, assessment, review and improvement of this sector.

Rural and regional areas are, in many ways, the lifeblood of our country. Certainly, our farmers play an incredibly important role both in our economy and our food security. Without their produce, we are all vulnerable.

People living in rural and regional areas face challenges on almost every front. In terms of healthcare, of education, of aged care, and of employment, they have to fight to be counted.

If rural and regional communities do not receive the support they so desperately need, the impact on the rest of Australia will be significant, in both economic and cultural terms.

It is time to overhaul our attitude in this area. Government grants and programs are no longer enough. Instead, we need to establish a body that has the power to make a real, long term difference, such as the board proposed in this bill.

We cannot ignore this problem any longer. Australians living in rural and regional communities deserve better. They deserve security, and they deserve to know the Government is taking meaningful steps to fix this problem.

The measures in this bill will bring about real and long lasting change. And that change will not only benefit rural and regional communities, but the rest of Australia as those communities flourish.

This bill is in the best interests of us all.

Debate adjourned.

Senator McEWEN (South Australia—Opposition Whip in the Senate) (12:41): At the request of Senator Carr, I move:

That there be laid on the table by the Minister representing the Minister for Immigration and Border Protection, no later than Tuesday, 10 December 2013, all incident reports, logs, briefings, ministerial notes, internal communications and other reports (excluding any publicly available documents), in relation to the reported incident that took place on Friday, 15 November 2013, involving the towing of an Indonesian vessel near Christmas Island by an Australian Customs, Navy or other government asset or vessel.

Senator CASH (Western Australia—Assistant Minister for Immigration and Border Protection and Minister Assisting the Prime Minister for Women) (12:41): I seek leave to make a short statement.

The PRESIDENT: Leave is granted for one minute.

Senator CASH: The government will not be supporting this motion. I reiterate the words of Lieutenant General Campbell, who, when questioned on the same incident in estimates, said:

It goes to the question of the degree to which an awareness of on-water procedures undermines our capacity to conduct our operations, gives advantage to people smugglers, potentially puts our people's lives in danger and may in certain circumstances undermine bilateral relationships. For those reasons, I think that there is a sound basis for not discussing events that occur on water and to give a brief of releasable information on a weekly basis.

The general continued:

I do note a distinction between commentary that might be offered in the media environment and a statement by an official of government that provides certification of vessel arrival and can very much be used in an authoritative sense by people smugglers to promote their business and indeed to encourage people to get onto boats, some of which are quite unsafe.

If Senator Carr has a genuine interest in breaking the people smugglers model, then I remind him of the offer of a confidential briefing.

The PRESIDENT: The question is that the motion be agreed to.

Senator FARRELL (South Australia) (12:50): I rise to speak on the Australian Capital Territory Water Management Legislation Amendment Bill 2013. I indicate at the outset that the opposition, in the typical constructive way in which we have been working, support this legislation. It is another good example of how we are seeking to assist in the smooth operation of the Senate and indeed the parliament. As you would be aware, Mr Acting Deputy President Bernardi, this bill is similar to a bill that the former Labor government introduced in the last parliament; however, there have been a number of relatively small amendments and additions to the original bill that the former government presented to the parliament.

The amendment legislation concerns commencement provisions by proclamation after 12 months rather than six months as stated in the previous bill. There has been an extension from six to 12 months, and that is the key area in which this bill differs from the original bill the Labor Party presented. We do not see that as a significant issue and for that reason we continue to support this legislation.

The purpose of this bill is to allow the Australian Capital Territory and its government to manage the water resources of the ACT. It ensures that the ACT government has the power to manage all water extraction within the territory. In addition, it continues the improvement of water use by Commonwealth agencies. Most significantly, particularly from the point of view of a fellow South Australian, Mr Acting Deputy President Bernardi, it allows the Commonwealth and the ACT to fulfil their obligations under the Murray-Darling Basin Plan. Mr Acting Deputy President, you would be familiar with that plan. This proposed bill fits in with the overall Murray-Darling Basin Plan, which is important and significant.

This legislation will amend the Australian Capital Territory (Planning and Land Management) Act, otherwise known as the PALM Act, and the Canberra Water Supply (Googong Dam) Act. It will transfer planning and management of all water extraction in the ACT from the Commonwealth to the ACT government. This is a significant transfer of control and power from the Commonwealth, which currently has control of these assets and obligations, to the ACT government. The amendments to the Water Act and the PALM Act will deal with the minor administrative and machinery matters supporting the implementation of the Murray-Darling Basin Plan.

Overall, the purpose of the bill is to strengthen the ability of the ACT to manage its water resources in a way consistent with all obligations under the Murray-Darling Basin Plan and the framework of the Water Act. This is an important step towards the management of the Murray-Darling Basin Plan resources by ensuring that the ACT government is responsible for the day-to-day management of water in the ACT. As you would be aware, Mr Acting Deputy President, the states already have the obligation to manage the water resources that fall in their jurisdiction. Now the ACT is getting that same power, responsibility and obligations that apply to the states. Mr Acting Deputy President, I am sure you are well aware of how difficult it was to get consensus from all of the states to reach that point. This is an important milestone in the history of the ACT. The ACT is now getting that same control of its water resources and the obligations flowing from that.

There are four main sources of water in the Australian Capital Territory. Those water sources are the Bendora, Corin, Cotter and Googong dams. It is worth spending time discussing the Googong Dam because it is somewhat different from the other three water sources in that it was constructed on Commonwealth land in New South Wales. I see Senator Sinodinos nodding; he knows a lot about water management, particularly in New South Wales.

Senator Sinodinos: Not as much as your colleagues.

Senator FARRELL: I do not know. I suppose we will see.

The ACTING DEPUTY PRESIDENT ( Senator Bernardi ): Order! Ignore the interjections, Senator Farrell.

Senator FARRELL: These are helpful comments.

Senator Fifield: At least you're charming, Don.

Senator FARRELL: Did you say I am charming?

Senator Fifield: I did.

Senator FARRELL: Thank you, Senator Fifield. That is very kind of you.

The ACTING DEPUTY PRESIDENT: Would you kindly address your remarks through the chair, Senator Farrell.

Senator FARRELL: Thank you for drawing that to my attention, Mr Acting Deputy President. I will focus on this legislation and not be distracted by the interjections of my colleagues on the opposite side.

I have mentioned the four sources of water with the Googong dam being slightly different from the other three sources in that it is located in New South Wales, but the ACT has a 150-year lease over this dam. It was only a couple of years ago that Simon Corbell, the environment minister for the ACT, actually opened the upgrade of the Googong dam spillway. I had the good fortune, in my previous capacity as Parliamentary Secretary for Water under the previous government, to go out and visit the Googong dam and see the work that was done to improve that spillway. At that time, of course, damage had been done over the years. It was deemed a good thing to improve the dam's capacity.

It took some two years to construct an improvement to that spillway. The construction was done by ActewAGL and the Bulk Water Alliance and ensured, which is most important for consideration for what we are dealing with now, that the spillway was brought up to a modern design and contemporary safety standards. I do not know if you have had the opportunity to go there, Mr Acting Deputy President Furner, but I can highly recommend it. Anybody who has been out there will see it was a terrific addition to the strength and quality of that dam, which is such an important part of the water resources for the ACT.

Under this bill, the surface water of the Googong dam will be treated as if it was in the ACT and incorporated as part of those other three water sources. The ACT is, like the other states, a part of the Murray-Darling Basin Plan. This bill will remove the dual management of water in the ACT. The ACT was in an unusually different position. The other states have control of their water resources and that was all brought in under the Murray-Darling Basin Plan but here in the ACT there was this competing control. We have now simplified the issue of water in the ACT by granting the day-to-day management of water back to the ACT. Currently the management of water on national land in the ACT is the responsibility of the Commonwealth while the ACT government manages water on territory land. That is the current division.

As I have stated, this bill is significant for the ACT because it will allow the ACT government to control its own water resources and take on the responsibilities that it as well as the other states have signed up to in the Murray-Darling Basin Plan. While we are talking about this important piece of legislation, about the rights of the ACT and about water, it is opportune just to go back a little bit and see what precipitated it and go back and give credit where credit is due—to the Gillard government in particular. That wonderful announcement when the final Murray-Darling Basin Plan was signed into law was made just over 12 months ago on 22 November 2012. That was an historic moment in the country's history. Look around the world and see how other countries have not been able to manage their water resources and see what was done on that day in getting the cooperation of all of the states and the Commonwealth to introduce for the first time a full plan for restoring to good health the great Murray-Darling River system. If we go back to that period of time, the most significant part of that legislation and that plan, certainly as it related to my own state—which of course suffered very badly during what we call the 'millennium drought'; we look back and call it the 'millennium drought' now—was the recovery of 2,750 gigalitres of surface water to the environment. As we know, the ACT is part of that overall obligation and plan.

People have already had the chance to see what sort of results have come from the start of the plan, because there were plenty of critics. Minister Burke did such a tremendous job in getting all of the various stakeholders to accept that there was an overarching national good and national obligation in getting this plan through the parliament. When you go through these towns that were affected by the drought and see the sort of dreadful degradation to our great water systems, you see that life is already returning to these regions. I have seen it in the Coorong and the Lower Lakes in South Australia. Things are not back to where they were originally; they certainly are not back to where they were when Captain Sturt travelled down the river system.

I had the great privilege last year of giving the Captain Sturt oration to commemorate the 217th anniversary of his birth. You may know this already, Senator Sinodinos, because I know you know so much about water—particularly in this part of the world—but as a reward for the work that Captain Sturt did on behalf of New South Wales in trekking and discovering that the Murray was in fact part of the Hume, he was allocated the leasehold of Belconnen. He was the original person to get that land lease. That is a very significant historical connection with Canberra because, of course, long after he had passed away that part of Belconnen became part of the ACT, which relates to the legislation we are talking about now.

It is worth giving credit where it is due, and Minister Burke did some tremendous work in getting this legislation up. This legislation is the last piece to ensure that the plan does what we want it to do, which is to restore the health of that great inland river system in Australia. The legislation draws it all together, passes the power back to the ACT and ensures that the day-to-day management of the river systems is consistent with the way in which it operates in all the states.

We hope that we will not see another drought like we saw last time and the dreadful consequences that occurred; but, if the drought conditions do return, we will be in a much better position to resist the dreadful conditions that occurred during that period of time.

I think it is also worth putting on the record the great work that my colleagues in the ACT have done in terms of this legislation and their ongoing interest in water management. Gai Brodtmann, Andrew Leigh and, of course, our own Senator Kate Lundy have all done an awful lot of work in terms of water management and they are to be congratulated for their work. (Time expired)

Senator RYAN (Victoria—Parliamentary Secretary to the Minister for Education) (13:10): There are no other contributions, Mr Acting Deputy President. Before I move to sum up this debate, I pass on a comment from Senator Birmingham. This bill has lapsed in the last two parliaments and so, with its passage through the Senate today, as the first bill through this Senate following the election, hopefully the house will manage to pass it on this third attempt. I thank senators for their contributions and commend the bill to the Senate.

Question agreed to.

Bill read a second time.

Senator RYAN (Victoria—Parliamentary Secretary to the Minister for Education) (13:11): I move:

That this bill be now read a third time.

Question agreed to.

Bill read a third time.

Senator FIFIELD (Victoria—Manager of Government Business in the Senate and Assistant Minister for Social Services) (13:12): I move:

That the committee does not insist on its amendment to which the House of Representatives has disagreed.

Senator MILNE (Tasmania—Leader of the Australian Greens) (13:12): I move the following amendment to be added at the end of the motion, as has been read out:

"but agrees to the following request for an amendment and amendments in place of that amendment:

(1) Title, page 1 (lines 1 and 2), omit "amend the Commonwealth Inscribed Stock Act 1911, and for related purposes", substitute "remove the limit on stock and securities on issue, and for other purposes".

(2) Schedule 1, items 1 and 2, page 3 (lines 5 to 11), omit the items, substitute:

1 Section 5

   Repeal the section.

2 Subsection 51JA(2)

   Omit ", disregarding stock and securities of the kind mentioned in subsection 5(2),".

3 After subsection 51JA(2)

   Insert:

   (2A) In working out the total face value of stock and securities for the purposes of subsection (2), disregard:

      (a) stock and securities issued in relation to money borrowed under the Loan (Temporary Revenue Deficits) Act 1953; and

      (b) stock and securities loaned by the Treasurer under a securities lending arrangement under section 5BA of the Loans Securities Act 1919, or held by or on behalf of the Treasurer for the purpose of such an arrangement; and

      (c) stock and securities invested under subsection 39(2) of the Financial Management and Accountability Act 1997; and

      (d) stock and securities on issue as at the start of 13 July 2008, other than Treasury Fixed Coupon Bonds.

      Note: The time referred to in paragraph (d) is when item 4 of Schedule 1 to the Commonwealth Securities and Investment Legislation Amendment Act 2008 commenced.

4 At the end of section 51JA

   Add:

   (5) For the purposes of this section:

      (a) the face value of a Treasury Indexed Bond is taken to be its face value at the time it was issued; and

      (b) the loan of stock or a security is taken to include an arrangement under which it is sold and repurchased.

(3) Page 3 (after line 11), at the end of the Bill, add:

Schedule 2—Amendment of the Charter of Budget Honesty Act 1998

1 At the end of clause 2 of Schedule 1

   Add:

        Additional statements about Commonwealth stock and securities

   (7) In certain cases where the face value of Commonwealth stock and securities on issue has increased by $50 billion or more since a previous report or statement under the Charter of Budget Honesty, the Treasurer is to table a statement setting out reasons for the increase (see Part 9).

2 Subclause 3(1) of Schedule 1

   Insert:

       Commonwealth stock and securities means stock and securities on issue under the Commonwealth Inscribed Stock Act 1911 (the CIS Act) or the Loans Securities Act 1919 (disregarding stock and securities of the kind mentioned in subsection 51JA(2A) of the CIS Act).

       debt statement, for a report under Part 5 or 7, means a statement that includes:

      (a) the following information about Commonwealth stock and securities on issue, at the time of the report and for the financial year to which the report relates and the following 3 financial years:

         (i) the value of the stock and securities (including their market and face value, and their value as a proportion of gross domestic product);

         (ii) the total expected interest expenses relating to the stock and securities; and

      (b) a breakdown, by maturity and timing of interest payments, of Commonwealth stock and securities on issue at the time of the report.

3 At the end of subclause 12(1) of Schedule 1

   Add:

      ; (f) a debt statement.

4 At the end of subclause 16(1) of Schedule 1

   Add:

      ; and (c) contain a debt statement.

5 At the end of subclause 24(1) of Schedule 1

   Add:

      ; (e) a debt statement.

6 At the end of paragraph 26(a) of Schedule 1

   Add:

      (v) the information required by paragraph 24(1)(e); and

7 At the end of Schedule 1

   Add:

Part 9—Additional statements about Commonwealth stock and securities

33 Additional statements about Commonwealth stock and securities

   (1) This clause applies when the actual face value of Commonwealth stock and securities on issue has increased by $50 billion or more since whichever of the following last occurred:

      (a) a budget economic and fiscal outlook report, a mid‑year economic and fiscal outlook report or a pre‑election economic and fiscal outlook report was publicly released;

      (b) a statement under this clause was tabled.

   (2) The Treasurer is to table in each House of the Parliament, within 3 sittings days of that House after the increase referred to in subclause (1), a statement setting out the reasons for the increase, including the extent to which any of the following contributed to the increase:

      (a) lower than expected revenue;

      (b) higher than expected spending;

      (c) capital purchases;

      (d) grants to State and Territory governments for infrastructure.

8 Application—statements under clause 33 of the Charter of Budget Honesty

   Clause 33 of Schedule 1 to the Charter of Budget Honesty Act 1998 applies in relation to a report referred to in paragraph (1)(a) of that clause that is publicly released on or after the commencement of this item".

I want to make a few remarks about the amendments and what they seek to achieve. There are two things that we are doing with regard to this. One is to end the debt ceiling and remove that. The second thing is to amend the Charter of Budget Honesty. I want to go into the background of this.

Up until 2008 there was a process that federal parliament had engaged in where, through the budget process, through the appropriations process, the debt was managed. In 2008 the then Assistant Treasurer, Mr Chris Bowen, introduced legislation which effectively introduced the debt cap. I have been back over all of the speeches, statements, explanatory memoranda and so on, and whilst all of them talk about why the debt was being increased, none of them go to any explanation of why they introduced the debt ceiling as such. One can only assume that it was a decision that was made by the then government to try to reassure the community that whilst debt was being incurred it would not keep increasing debt, because the Labor government had just been elected at the end of 2007 and no doubt they thought it was a good idea to reassure the community on that front. What they did not anticipate—and no-one could have—was the financial crisis that then set in and changed everything. The Labor government had to come back twice after that to increase the debt limit that they had put in place.

In the meantime in the United States, as we know, the Tea Party had managed to get up a head of steam and it employed the tactic of blocking increases to the debt ceiling in order to create a political crisis. In the United States it is a genuine political crisis, and the reason for that is the American political system, where the congress imposes debt ceilings because it wants to limit the borrowing capacity of the separately-elected executive arm of government. So it genuinely is a debt crisis in the United States, because it is a stand-off between congress and the executive. In the Australian context it is vastly different because, as everybody appreciates, the executive is part of the parliament. Not only is it an entirely different scenario but there is also a capacity for government to use other legislation in order to meet any shortfall. The Loan (Temporary Revenue Deficits) Act 1953 would allow you to cover any shortfall. So all that has happened is that a Tea Party tactic from the United States has effectively been inserted into the Australian political system, and the result of that has been what has become political brinkmanship.

I hold Minister Cormann to account in this regard. I am very aware that he went to the United States and caught up with half a dozen of his Tea Party colleagues, and it was only when he came back from—

Senator Cormann: Mr Chairman, on a point of order, I heard Senator Milne mislead the Australian people during a press conference earlier today, and she is persisting with misleading the Senate here today.

The CHAIRMAN: Order! There is no point of order, Senator Cormann.

Senator Cormann: Senator Milne seeks to make assertions out of context that are designed to mislead the—

The CHAIRMAN: Senator Cormann, that is not a point of order; that is a debating point, and there are other ways of rectifying that.

Senator Cormann: She should talk about my meetings with Obama administration officials in the same visit.

The CHAIRMAN: Order! Senator Cormann, you do not have the call.

Senator MILNE: I just make this point: between 2008 and 2011, 'debt ceiling' was mentioned only once in the Hansard. It was only after 2011 that it was confected into the amazing debate that it became. I can understand why members of the Senate who were in the former Labor government would feel so aggrieved at this, because it was used endlessly and mercilessly as a political tactic. But in reality it has served the people poorly, because it takes away from the appropriate economic management of the country. So when this issue came up again I had a look at all of the commentary around it. I went back to see the reason it had been introduced in the first place and, as I said, I could not find one. What people are recognising here is that governments need to be charged with the management of the economy in the interests of people and the environment. That is what the government needs to do. The parliament still has oversight of debt through the budget process and will continue to have oversight, but we will get rid of this phoney debt ceiling debate and instead we will be able to reframe the argument about debt so that it becomes a conversation on what the debt is being incurred and used for and there will be much clearer reporting.

So what these amendments do is remove the debt ceiling and, in its place, bring in a new requirement for government to justify the debt. That will be triggered every time a $50 billion threshold is crossed, and that will require the tabling in the parliament of a statement explaining why the debt has been incurred—whether it has been incurred because of shortfalls in revenue, because of increases in spending or because of capital spending. It will make that very specific so that the parliament can then have a look at the way the economy is being managed.

This means that the government will have no excuses. Next year in the budget, they have every tool available to them. They have increased revenue opportunities. They will be judged on their spending and also on debt. It means that there can be a clear focus on the coalition's economic management. The Greens will want to make sure that the deep cuts that are being talked about cannot or will not proceed, because if you are serious about investing in the infrastructure that the nation needs then education and health, for example, are fundamental parts of the infrastructure that you need for a 21st century economy that gets beyond digging it up, cutting it down and shipping it away.

The Treasurer, Mr Hockey, has written a letter to me which was tabled in the House of Representatives, and I would be happy to table it here if the government does not intend to do so. It basically sets out a range of transparency requirements which, as I said, will require the tabling in the parliament of a statement going into specific matters in relation to the debt. It will also require a new presentation in the budget documents of much greater clarity around the debt, and it will also go to having medium-term projections out to 10 years, with enhanced detail to encourage discussion and debate beyond the short term about the benefits of funding important investments, particularly, as I indicated, in infrastructure—both infrastructure as economic stimulus and infrastructure in the things that the country needs. The Treasurer has also undertaken to have further discussions about the level of reporting that can be gone into with regard to the public financial corporations sector, and I look forward to greater transparency in that regard. So I think we have now set up a scenario where there will be much greater clarity.

One of the other areas on which we are seeking specific reference in the budget papers and also in the Intergenerational report is the impact of climate policy on the economy and the budget. The reason for this is, of course, that the best way and the cheapest way of reducing the cost of abatement in Australia is through a market mechanism, and emissions trading is clearly the preference of the Greens in this regard. That is why we now have an emissions-trading scheme legislated in Australia.

If you take away that emissions-trading scheme then it is the budget that is going to have to do the heavy lifting. That is, the people of Australia are going to have to pay. We already have on the table a $3.2 billion emission reduction fund, but that is not going to be anywhere near enough. Take it out to 2020, and as Australia has to step up to meet its emission reduction targets, that is when it is going to hit the budget very hard—in those out years. What we have from the government is an agreement that there will be in the intergenerational reports the specific likely impact on the budget and on the economy in the longer term, plus details of the actual spending that has occurred through the budget papers.

I think that they are significant improvements in allowing the community, through its parliament, to be better able to access information about debt—about the sort of debt the government is incurring and why it is incurring that debt. It really goes to this issue of good debt and bad debt. The way that the debt is currently reported makes it nigh-on impossible for people to be able to track this and work it out. But everybody knows the difference between taking out a mortgage to pay for a property as opposed to running up a credit card. And that is exactly what we are talking about here. The Greens are saying that there is nothing wrong with debt if debt is being used for the right things—for investing in the long-term infrastructure that the nation needs.

And that infrastructure is not just things like high-speed rail, but infrastructure in terms of educational infrastructure for the future. The resource of this century is imagination and the investment needs to be in maximising those outcomes. Bad debt, however, occurs when a government does not raise enough revenue, keeps on spending and then has a gap which is covered by borrowing. That is the problem with the credit card mentality. What we have done means that now there will be no excuses; it will all be there, exposed. And more particularly, what will be exposed as a result of this will be the collapse in revenue. It will make no sense at all for the government to try to get rid of the mining tax revenues, for example, at the same time as it is saying the economy is slowing.

In fact, the economy is only ticking over at the moment because of public sector spending. If you look at that and at next year's budget, you would see that it would simply be totally irresponsible to make the deep cuts that are being talked about. This actually enables Australia to reframe the debate, and I am looking forward to being able to have a much more sensible debate about debt than what is just reflected in an argument about whether it is $300 billion, $400 billion or $500 billion, and when peak debt will occur. It is much better to have the debate about what the debt is being used for and if it is in the interests of the country, or if it is to cover up for a government's decision to let the big end of town off the hook by getting rid of the mining tax or cutting the taxes for big companies, for example—giving them excessive tax cuts—and taking away services.

I think all of that needs to be very clear to people, and that is what we have done here. I think that this move by the Greens to have a good look at the whole issue of the debt ceiling and actually to get rid of it is a good thing. It is certainly something that is supported by a range of economists out there—everyone from Ross Garnaut and Saul Eslake, for example, to a number of the financial commentators. They all recognise that this is a silly debate that Australia engages in. Each time we have the debate it is political theatre, essentially, around debt instead of the serious conversation that Australia needs to have.

So I would urge the Senate to support removing the debt ceiling and to support the new transparency measures that will be required as a result of this amendment to the Charter of Budget Honesty. It is legislated change and it will be reported to the highest standards, so it is not something that can be backed away from or run away from. It is agreed, it is legislated and it is to the standards that are specified. And so I urge the Senate to get behind what I think is a step forward in the community's understanding of government debt.

I seek leave to table the Treasurer's letter to me regarding the agreement on this matter.

Leave granted.

The CHAIRMAN: Is it the wish of the committee that the statements of reasons accompanying the requests be incorporated in Hansard? There being no objection, it is so ordered.

The document read as follows—

Commonwealth Inscribed Stock Amendment Bill 2013

(Amendments and request for amendment to be moved by the Leader of the Australian Greens, Senator Milne, during consideration in committee of the whole of message no. 2 from the House of Representatives)

Statement pursuant to the order of the Senate of 26 June 2000

——————————

Amendment (2)

The amendment removes the limit on the total face value of stocks and securities that may be on issue under the Commonwealth Inscribed Stock Act 1911 and the Loans Securities Act 1919 at any time.

On the basis that the projected increase in debt will result in increased expenditure under the standing appropriations in sections 13AA, 13A and 13B of the Commonwealth Inscribed Stock Act 1911, amendment (2) should be moved as a request.

Commonwealth Inscribed Stock Amendment Bill 2013

(Amendments and request for amendment to be moved by the Leader of the Australian Greens, Senator Milne, during consideration in committee of the whole of message no. 2 from the House of Representatives)

Statement by the Clerk of the Senate pursuant to the order of the Senate of 26 June 2000

——————————

Amendment (2)

The Senate has long followed the practice that it should treat as requests amendments which would clearly, necessarily and directly result in increased expenditure under a standing appropriation.

If, as stated, this amendment would result in increased expenditure under the standing appropriations in sections 13AA, 13A and 13B of the Commonwealth Inscribed Stock Act 1911, it is in accordance with the precedents of the Senate that this amendment be moved as a request.

Senator WONG (South Australia—Leader of the Opposition in the Senate) (13:27): If you ever wanted an example of this government not being the government they said they would be, have a look at the deal today. From a government that said in opposition that they were against debt, and from a government that said they were the party of no debt, we now have the government of no debt limit. No debt limit! The party of no debt becomes the party of no debt limit.

But even more extraordinary is the fact that they have done this with the support of the Australian Greens. You could not have written this in a sci-fi or fantasy novel a year ago if you had tried. You could not have written this in a fantasy novel if you had tried: that Joe Hockey would go into a room, negotiate with Senator Milne, the Leader of the Australian Greens, and come out with the no debt limit that he was going to get through the parliament with the support of the Australian Greens.

I do not think that we all need reminding of some of the things that those opposite have called the Greens. The Prime Minister has described them as 'economic fringe dwellers', but he is happy to do a deal on the economy with the economic fringe dwellers. The economic fringe dwellers are on the same side as the Liberal—

Senator Cormann: And you are now on the left of the economic fringe dwellers!

Senator WONG: And look! Senator Cormann is gesticulating. He could not help himself: he had to get up and have a go at the leader of the Greens. He cannot bear the fact that they have done a deal with them.

Senator Cormann: It's a good deal!

Senator WONG: You have done a deal with them to have no debt limit! It is quite an extraordinary proposition. From the party that described the Australian Greens as 'economic fringe dwellers', we have an economic partnership on how much Australia's debt should be. And guess what? Magically, they both agree: there is no limit. We have seen so much change since the last election and this government has come full circle.

I also remind the Senate of some of the other things that those opposite have called the Greens. I think they have been described as 'watermelons'—green on the outside, red on the inside—'economic vandals' and a whole range of things. These are the people with whom you have sat down, to determine Australia's debt position and the provisions which regulate that.

I think it would be useful for us to be reminded, in the context of this debate, of some of the things which were said by the coalition prior to the election. I make this point before I go into that fairly lengthy history of the things that were said. This government talks a lot about mandate. We get lectured about mandate, we get told to get out of the way and we get told we are not allowed to have scrutiny, inquiries or debate because it is all about mandate—all power to Mr Abbott.

I just wonder where, in the many things which were said before the election, anything was said around no debt limit. Was there any policy, any speech, any interview or any comment whatsoever that told the Australian people that, when you told them that you did not want to increase debt, what you were actually saying was, 'We want to have no limit on the debt'? It is the same thing as the statement made by the Prime Minister on the Andrew Bolt show or The Bolt Report—is that what it is called?—'It's the promise people thought they heard.' Everyone in Australia thought that they heard that this was a government that was going to reduce debt. That is what I think I heard. Over and over again, you were going to reduce debt: 'We will reduce debt; we will bring down the debt.' Was there a little footnote in any of the press releases or the transcripts of the interviews or in any of the statements that said: 'Except that we'll do a deal with the Australian Greens to provide no debt limit'? Did you see that? I did not see that anywhere. But that is what is happening today.

So when you come in here and have a go about mandate, maybe you should have a think about the extent to which you are moving away from the mandates you were given. Whether it is on debt or on the Better Schools Plan, the reality is that this is not the government that you said you would be and you are reneging on your promises to the Australian people.

No amount of debate, no amount of ex-post-facto footnoting and asterisks, and no amount of ex-post-facto conditionality can hide that fact. You are walking away from the commitments you gave Australians before the election and, worse, you are now lying about doing so. When it comes to the Better Schools Plan, one of the worst things that the Prime Minister did by saying, 'I'll keep the promise that I actually made, not the one you all heard,' was actually lie to people now. He is now telling people, 'Actually, I'm not breaking that promise,' when everyone knew he was, which is why we had the $1.2 billion backflip when it comes to the Better Schools Plan, money given away to the states without any conditions associated with it. That is quite an extraordinary act of irresponsibility to Australian students and parents, as well as being fiscally irresponsible. But I digress. Let us come back to what we were told before the election. Mr Hockey said:

… if debt is the problem more debt is not the answer.

Amazing, isn't it? Now, all of a sudden, more debt is the answer. In fact, unlimited debt is the answer. He went on:

From our perspective, there is no justification for increase in the credit card limit of the Commonwealth Government …

I love that quote. That is what Joe Hockey said to Australians before the election. He also said:

For the good of the country we need to stop increasing Government debt as quickly as possible.

Absolutely. That is an argument for increasing the debt cap. I suppose that is an argument for getting rid of it altogether in some bizarre universe. Mr Abbott went on and on:

… we do need to take a very, very seriously critical look at this question of the debt ceiling …

The government has to justify this …

But what we are getting instead of a government of the sort that those comments indicated is a government that wants to increase debt and does not want to justify it.

Let us recall what the Labor Party's position on this matter has been. We have said—and I moved in the Senate and it was carried at that time—that we were prepared, without seeing the budget update, to increase the debt cap. We said, 'We will give you an increase to $400 billion'—sight unseen! But, before we went to half a trillion dollars, we believed that it was appropriate that the government issue its budget update, its Mid-Year Economic and Fiscal Outlook. Given that the government were refusing to tell Australians what the budget position really was, what the new debt position really was and before the government sought to do something as significant and as serious as increasing the debt ceiling I think, at minimum, they should be required to provide that information.

But that was not enough for the Treasurer and it was not enough for the government. So, instead, they have come to an agreement with Senator Milne, in which they say, 'Instead of providing this justification, we're actually just going to abolish the debt ceiling.' You shake your head when you watch Mr Hockey. He is being pushed around, led by the Nationals when it comes to foreign investment decisions and led by Senator Christine Milne when it comes to Commonwealth debt decisions. What an extraordinary thing—Nationals on investment and the Greens on debt? And this guy calls himself a liberal Treasurer.

There are many things with which I disagree when it comes to Peter Costello, but this does say something about where this Treasurer and this government have moved. Senator Fifield's former boss, Peter Costello, was so public yesterday and the day before about the debt ceiling and he talked about the merits of a debt limit. He said:

A debt limit would also strengthen the hands of the economic Ministers inside the Cabinet … If there is a limit to borrowing, it will set a limit on the spending. A limit on the spending—that is fairly logical, isn't it? But Joe Hockey is not Peter Costello and the government are not the government they said they would be. The government campaigned on reducing debt and deficit. The government campaigned in part on the risk that the Australian Greens posed to the Australian economy. This is the position you, the government, put at the last election.

Now, less than 100 days since you were elected, we have a government that says: 'Actually, when we said we wanted less debt, what we actually meant was that we wanted no debt limit. When we said that the Greens were economic fringe dwellers, what we actually meant was that we will do a deal with them when it suits us. We're just criticising them now because that's what our constituency wants.' I do not think there has been a more substantive example of a U-turn, certainly in the short time this government has been in office, than this U-turn on debt. Probably vying for the privilege of first position in the list of U-turns and broken promises is the Better Schools Plan, but maybe they are equal first. You have a government that says one thing to people, gives them one impression and gives them a set of commitments and then does something that is completely antithetical, completely the opposite, after it has been elected.

I have some questions in this debate which I trust that the minister can answer. One thing that has been referred to in the press releases and press commentary since this deal was agreed is spending on infrastructure. In the course of this committee debate, given that the government has not released a mid-year budget update, it is incumbent upon the minister to tell the chamber what additional spending plans the government intends to fund through this abolition of the debt limit. What are they? Tell us about the infrastructure plans that the minister at the table, Senator Milne, Mr Briggs and others have talked about when they discussed increased infrastructure spending. If the government is essentially saying, 'We will increase the amount of debt taxpayers have to manage because we want to invest in more infrastructure,' after an election where you campaigned on reducing debt, I think the right thing to do is to tell Australians what those plans are. How much more debt are you planning to take on in order to make these investments? I do not believe that was discussed before the election. If you are suggesting that we want a higher or non-existent debt limit because we want to borrow more in order to fund more infrastructure, you should detail those plans.

I make this point finally. I thought it was really quite extraordinary, when looking at Mr Hockey's press release, the extent to which the Liberals have moved on the Australian Greens—after railing, as I said, that they were economic fringe dwellers. Our very own Senator Abetz is absent from the chamber. Obviously, it is not his legislation, but I suspect he feels extremely uncomfortable about the fact that the government has done a deal with the Australian Greens, whom he describes as watermelons and a risk to the Australian economy. Mr Hockey's press release was quite poignant. The first line was:

The Government has today agreed to the Australian Greens' proposal to repeal the statutory debt limit …

Isn't that wonderful! This is a Treasurer who, when it comes to debt, is being run by Senator Milne. That is the government you are running. It was a very interesting press release. In the first line we see congratulations from the coalition government of the Australian Greens' proposal to repeal the statutory debt limit.

I ask the Assistant Treasurer: given Senator Milne's public comments about increased financing—and do not get up and just say 'private sector financing', because it is in the context of the removal of the debt cap—and infrastructure, what are the government's plans to spend more money on infrastructure? How much additional debt is the government proposing to take on in order to fund infrastructure projects?

Senator SINODINOS (New South Wales—Assistant Treasurer) (13:42): I will make some general remarks and then come to the questions raised by Senator Wong. The first point I want to make is to sincerely thank the Greens for the constructive spirit in which they have approached this matter. Let me give some background.

The reason we are in this situation is that the government made a decision to come to the parliament, in the context of the existing policy framework, and raise the debt limit to $500 billion to take into account the expected profile of spending and, therefore, increase in debt over the forward estimates. When we took advice from the Treasury it was clear we were peaking at $300 billion, the existing limit, sometime in December—12 December, from memory. We had a figure of $370 billion initially over the forward estimates. Then there was the issue of a buffer of $40 billion to $60 billion from the Australian Office of Financial Management. Then, during Senate estimates, the Office of Financial Management actually added a further buffer of $30 billion. That is where the $500 billion came from. The reason I mention that is simply to make the point that, when $500 billion was put to the parliament, this was not a game. This was based on advice and prudence.

But there is a second aspect to this and it goes to why I think the Greens' proposal is very constructive. The Treasurer recognised that he only wanted to do this once in this parliament, if possible, because of what had happened in the previous two parliaments, when there had been these debates every time the limit had to be raised. But let's take ourselves back: why was the limit being raised? It was because the government of the day was unable to stay within the limit, notwithstanding promises—commitments—that the deficit and debt coming out of the global financial crisis would be brought under control during that period, when we faced the highest terms of trade in our history and we should have been taking advantage of that to bring the budget back into the black sooner rather than later. I believe that the 2011-12 budget, in particular, was a missed opportunity to do that. It would have been the right budget in which to have taken more fiscal action.

The result of the previous government's efforts was that their credibility on economic policy was shattered, but not by the then opposition—we were merely drawing attention to what had happened, which was that the public no longer believed that the then government was capable of staying within a particular debt limit. And we took the opportunity each time the issue of raising the limit came before the parliament to remind people of those broken Labor promises to bring deficit and debt under control. That is why we are in this situation. And the Greens are right: we had to find a way through all of this. We could have agreed with the opposition on $500 billion, and that would have been it for this parliament. We could have continued in the existing policy paradigm.

Then what happened is that at Senate estimates there was an opportunity for the Greens, in particular, to question directly the secretary of the Treasury and senior officers of the Treasury. It was during that very interesting interchange—I was at the table at the time—that it became very clear that there was something of a meeting of minds here. The secretary of the Treasury at that stage had alluded to the fact that the Treasury had canvassed the option of not having a limit, for reasons that Senator Milne has referred to today. There are many eminent economists, Ross Garnaut and Saul Eslake among them, who have made the point for some time that the whole issue of the debt limit is separate to the debate about the stringency of fiscal policy—whether fiscal policy is appropriate or not. That is a matter of the budget decisions you make; that is a matter separate from the actual debate over the limit.

So the point is that interchange occurred during Senate estimates and it was clear there that the Greens were thinking, 'Well, maybe there is an opportunity now to shift to a different policy paradigm.' It was in that context that a dialogue occurred—a very fruitful dialogue—which led to the agreement we are talking about today. The government agrees to the proposed amendments by the Greens to repeal the statutory debt limit and to amend the Commonwealth Inscribed Stock Act and the Charter of Budget Honesty Act to improve transparency regarding government debt. And this is the point: we are actually increasing the transparency around government debt. There is a little detail in what the Greens have put forward, and it has a short-term, a medium-term and a longer term focus. That is appropriate, because for too often the economic debate in Australia, when it comes to the issue of debt, has been driven too much by short-term considerations. People will be aware from what the current Treasurer has said, in opposition and elsewhere, that he has been thinking for some time about this issue of how, in the context of budget deliberations, you make appropriate allowance for funding of longer term measures. How do you recognise those longer term measures in a way that does not fall foul of the budget rules? The reality is that you can cut off your nose to spite your face; you can get short-term budget savings but it can be at the expense of the longer term productive capacity of the country.

So what the Greens have done is raise this debate about the debt to a new level by removing the limit. And I remind everybody of one thing, and this is where I think the opposition fall into an old trap. They keep thinking of it as a limit, as something that has to be reached, that somehow it is a target. They seem to think that by raising it to $500 billion we were going to actually try to get to $500 billion. Yes, we were putting in a limit in order to provide certainty to the financial markets, but this is not a credit card limit whereby we say, 'You beauty; we're now headed to $500 billion, full-steam ahead,' et cetera. That was not what a limit was meant to be, and that is not how a limit should be treated. And by removing that issue from the table we can focus on the real issues: the content of the budgetary decisions to both spend and tax, how much debt you put on the table, and what that debt is used for.

I turn to Senator Wong's point. Before the election the now Prime Minister made it clear that he would be an infrastructure Prime Minister; he detailed a very large infrastructure plan.

Senator Wong: But not that he would go into more public debt to do it.

Senator SINODINOS: I am answering your question, Senator Wong.

Senator Wong: No, you're not; you're avoiding it.

Senator SINODINOS: I am not avoiding it. We talked about something like a $20 billion infrastructure plan before the election, and we will deliver on our promises on infrastructure in a responsible way. Both the Mid-Year Economic and Fiscal Outlook and the budget will lay out those plans, and I am not going to steal anybody's thunder by revealing them here today. I think you should see them in all their glory in the MYEFO and in the budget.

But it is important to understand that this agreement with the Greens also means that the Intergenerational Report will have different dimensions to it. One of the greatest achievements of Peter Costello was the Intergenerational Report, and the Greens have picked up on that. The whole idea was to look forward, to look at the intergenerational implications of the decisions we take today. And in that context the Greens have also asked for more information around climate change, because with such issues you have to take a longer term perspective. So we will also be doing that as part of this improved budget documentation.

I make it very clear that, as far as the now government are concerned, we will be judged by the content of our decisions. And for us there is no problem with the enhanced transparency that is going to be part of those discussions as a result of the amendments that are now being pushed by the Greens. It was Wayne Swan who at budget time, looking down the barrel of meeting that $300 billion limit in early to mid-December, essentially said, 'That'll be someone else's problem.' Well, we have inherited the problem, and we are going to fix it. So this is not a debate about whether we hit any particular debt limit; this is now a debate, in this context, about greater transparency.

The opposition had the opportunity to come to an agreement with the government, and it would have all been over and we would not have had the agreement with the Greens. But I think we have actually ended up in a better place as a result of the agreement with the Greens. There will be more rationality in this debate.

As to Senator Wong's point, may I point out: of course the Greens and we will not agree on everything. We are not in some sort of an alliance. We have seen in the last few days deep divisions between us and the Greens on other policy issues. So this is not about some marriage of convenience, alliance or whatever.

One of the marks of this Prime Minister, and one of the aspects of this Prime Minister that the opposition had better cotton on to very quickly, is that he grows in the job, whatever job he gets, and as Prime Minister he has shown that you can be pragmatic on the way to pursuing a principle. He has shown pragmatism by his willingness to deal with the Greens, or by allowing us to deal with the Greens, on these matters in order to get to a principle, and the principle is: the enhanced transparency around the presentation of the budget.

May I take this opportunity to say, on issues to do with infrastructure: contrary to what Senator Wong is saying, for us the infrastructure debate is about the public-private split. It is about: what role does public capital play in underpinning private financing of infrastructure? These are all important issues. The beauty of what we have agreed today is that we will now be able to do that in a fully informed way and in such a way that the electorate can actually participate in the process. If we want more honesty in politics, it starts with greater transparency. We have nothing to fear from that sort of transparency.

The budget rules laid down by the Greens in the press release issued by Senator Milne are actually quite stringent, because they talk about borrowing, about debt, for infrastructure—in other words, longer term capital improvement.

Senator Kim Carr: I love the way the Greens announce government policy!

Senator SINODINOS: I will come to you, Senator Carr, in a moment. But the second aspect of that rule is: not to go into debt simply because there has been a reduction in revenue. That is actually quite a stringent rule—that operating revenue should cover operating costs of government. That is actually quite a stringent budget rule. So no-one should think that this is somehow a free lunch. The standards which have been set in terms of transparency are very high. But we will meet those standards because we are committed to reducing the deficit and debt we inherited. The Mid-Year Economic and Fiscal Outlook will outline the full extent of the problem, including the extent to which the former government postponed necessary capital and maintenance. And this goes to another point about the transparency that we are talking about today: within the Commonwealth sector, we have to get to a point where we make appropriate provision for capital and maintenance, because too often what has happened is that maintenance has been short-changed because it is a short-term budgetary hit and so we put it off until a problem escalates to the point where it has major consequences and that actually escalates the cost of dealing with it. So we need to have a balance sheet which properly recognises short- and long-term considerations, in terms of both our assets and our liabilities, and provides a framework for looking at this in the appropriate way.

The transparency involved in this process means that every time the debt increases by $50 billion or so the Treasurer will have cause to provide a report, within three days or so, outlining the reasons for that. So there is no escape from talking about growing debt—

Senator Conroy: You're growing it; you should be talking about it.

Senator SINODINOS: Well, Senator Conroy, there is $30 billion or $40 billion of debt lying around somewhere with the NBN, which we are fixing.

Senator Conroy interjecting—

The CHAIRMAN: Order on my left!

Senator SINODINOS: We commend the Greens for coming to the table with a sensible set of proposals to enhance transparency around government debt over time and working with the government to provide the certainty to the financial markets that the opposition failed to provide as they should have in government. Of course, the other thing that happened is that the screechy nature of the debate that occurred over the last few years led to uncertainty in the financial markets. We are now parking all of that—

Senator McLucas: 'Parking all of that'!

Senator SINODINOS: Senator McLucas, you may not have been here earlier, but my point was: the reason the debt limit became such a debate is that Labor kept exceeding the limit and coming back into this chamber to get it increased.

Senator Conroy interjecting—

Senator SINODINOS: We know the mess that we have inherited and we are taking responsibility for fixing it.

Opposition senators interjecting—

The CHAIRMAN: Order on my left! Order!

Senator SINODINOS: And the more they chortle on the other side, Senator Conroy and Senator Carr, both of whom were arch-villains of the Labor ERC—and Senator Wong knows this; the pained expression on her face betrays that; she knew what she had to go through with those villains of the ERC— (Time expired)

Senator Conroy interjecting—

The CHAIRMAN: Order on my left!

Senator WONG (South Australia—Leader of the Opposition in the Senate) (13:57): I do have a question for the minister, and obviously this may need to be answered—

Senator Conroy: How can the ERC even meet if Cormann is not there?

Senator WONG: another time, but I would make the point that there is a great deal of detail already—

Senator Cormann interjecting—

Senator Conroy interjecting—

Senator WONG: in the budget papers—

Senator Conroy: So Paul Kelly was wrong?

The CHAIRMAN: Order, Senator Conroy!

Senator Conroy interjecting—

The CHAIRMAN: Senator Conroy, your leader is on her feet.

Senator Conroy: I am sorry. My apologies to my leader.

Senator WONG: I will start again. I would make this point: there is a great deal of reporting already in the budget papers and in the monthly financial statements which the finance minister issues. The AOFM has a website—which is updated, from memory, weekly—which shows the debt on issue, including the Treasury bonds, indexed bonds, notes, other securities, and those aspects which are subject to the CIS Act, and also has recent tender results. So—leaving aside the climate reporting, and I want to come to that—I am struggling, Minister, to see what additional reporting, other than a statement to the parliament, the Greens have actually got for this deal.

Senator Sinodinos: Mr Chairman, on a point of order: I am happy to elaborate in greater detail later. There will be much greater detail around the composition of the debt, as a start, but I am willing to finalise that later.

The CHAIRMAN: Thank you, Senator Sinodinos.

Progress reported.

Senator CASH (Western Australia—Assistant Minister for Immigration and Border Protection and Minister Assisting the Prime Minister for Women) (15:34): I table a document relating to the order for the production of documents concerning the National Broadband Network, and I table a document relating to the proposed order for the production of documents concerning the Trans-Pacific Partnership plurilateral free trade agreement.

The DEPUTY PRESIDENT (15:36): The President has received messages from the House of Representatives informing the Senate that the House has agreed to the amendments varying the resolutions of appointment of the Joint Select Committee on Northern Australia and the Joint Standing Committee on Electoral Matters.

Senator CASH (Western Australia—Assistant Minister for Immigration and Border Protection and Minister Assisting the Prime Minister for Women) (15:37): I move:

That these bills may proceed without formalities, may be taken together and be now read a first time.

Question agreed to.

Bills read a first time.

Senator CASH (Western Australia—Assistant Minister for Immigration and Border Protection and Minister Assisting the Prime Minister for Women) (15:37): I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

OFFSHORE PETROLEUM AND GREENHOUSE GAS STORAGE AMENDMENT (CASH BIDDING) BILL 2013

Australia's exploration and mining success is underpinned by its:

highly prospective geology,

quality pre-competitive geoscience data,

a stable investment environment, and

established regulatory frameworks.

Each year the Australian government releases offshore exploration acreage for competitive bidding by prospective explorers. Release areas are accompanied by an extensive package of pre-competitive geoscience data—this information is prepared by Australia's national geoscience agency, Geoscience Australia.

The areas released are selected to offer the global petroleum exploration industry a variety of investment opportunities.

This regular release of acreage provides Australia with a 'pipeline' of exploration investment opportunities—an essential component of ensuring Australia retains its attractiveness as a premier investment destination for the oil and gas industry.

Currently, Australia's offshore petroleum acreage is allocated through a competitive work bidding system—essentially a tender system. Under this system the right to explore is awarded to those who will undertake the most comprehensive program of exploration work.

This system has served and will continue to serve Australia's interests for frontier areas and basins where the geology is less understood.

While the act already provides the authority for offshore petroleum exploration permits to be offered using a cash-bidding system, changes were required to optimise its use.

From 2014 cash bidding will be used for those areas that are mature in exploration terms, or are known to contain petroleum accumulations.

Cash bidding in these areas is intended to prevent over-exploration where none or little may be required. It also supports the government's policy of enabling the earliest commercialisation of our resources.

By introducing cash bidding, the government will ensure that the Australian community receives an up-front share of the economic benefit derived from having the exclusive right to explore for petroleum in Australia's offshore areas.

Offshore petroleum exploration permits do not, of themselves, authorise petroleum exploration activities. Rather an exploration permit grants the titleholder the exclusive right, in the area for which the permit is granted, to apply for permission to undertake exploration activities that are judged by environmental and other regulators, to comply with the law.

An extensive review of the cash bidding process, and consideration of preferred options, identified several opportunities to improve the current legislation.

To this end the bill implements a number of important measures that are aimed at improving efficiency of the allocation and the integrity of administrative processes, including:

Enabling a reserve price to be set in advance of bids being received. This will ensure the government does not sell the right to explore below its value and secures an appropriate and adequate return to the Australian community.

Requiring pre-qualification of bidders to ensure that potential explorers have the requisite technical and financial capacity to undertake exploration in an offshore area.

Encouraging serious and genuine bidding through the requirement to pay a 10 per cent deposit when a cash bid is placed. This deposit is forfeited if the offer of a permit is subsequently refused.

Specifying a non-discretionary tie-breaker mechanism which comes into effect in the event that two or more cash bids are equal.

Once fully implemented, these necessary key features will optimise the existing cash-bidding system provided for in the act. They will create a more streamlined and efficient allocation of exploration permits, which is consistent with the government's commitment to ensuring Australia is an attractive investment destination.

I note that the opposition has previously supported the introduction of cash bidding to encourage more efficient allocation of Australia's offshore resources. This bill is central to achieving that objective.

OFFSHORE PETROLEUM AND GREENHOUSE GAS STORAGE (REGULATORY LEVIES) AMENDMENT BILL 2013

As the Australian government has announced that it will proceed with the inclusion of cash bidding in the 2014 offshore exploration acreage release.

This additional method of exploration permit allocation in mature areas or those known to contain petroleum accumulations is intended to prevent over-exploration where none or little may be required, and ensure that the release of these areas continues to be equitable, economic and efficient.

While use of cash bidding is already available in the Offshore Petroleum and Greenhouse Gas Storage Act 2006, I have introduced some amendments which will allow optimisation of the cash bidding system.

The National Offshore Petroleum Titles Administrator performs an important function in Australia's offshore petroleum regulatory regime.

The agency does this by assisting and advising the joint authority—and myself as the responsible Commonwealth minister—on the award of titles as well as managing the ongoing titles administration function including keeping registers of titles and data and information management.

This bill consequently amends the Offshore Petroleum and Greenhouse Gas Storage Act (Regulatory Levies) 2003 to allow the National Offshore Petroleum Titles Administrator to cost recover for its annual titles administration activities in relation to cash-bid petroleum exploration permits.

I commend this bill to the House.

Debate adjourned.

Senator CASH (Western Australia—Assistant Minister for Immigration and Border Protection and Minister Assisting the Prime Minister for Women) (15:38): I move:

That this bill may proceed without formalities and be now read a first time.

Question agreed to.

Bill read a first time.

Senator CASH (Western Australia—Assistant Minister for Immigration and Border Protection and Minister Assisting the Prime Minister for Women) (15:38): I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

NATIONAL HEALTH AMENDMENT (SIMPLIFIED PRICE DISCLOSURE) BILL 2013

The National Health Amendment (Simplified Price Disclosure) Bill2013 will amend the National Health Act1953 to improve the operation of the Pharmaceutical Benefits Scheme (PBS) and deliver better value for money for all Australians.

The PBS is a major government investment in the health of Australians. It is currently costing about $9 billion per year. With annualised growth expected to be between four and five per cent over the longer term, it is a sustainable and world-envied model.

The Simplified Price Disclosure measure was announced by the former government as part of its economic statement in August 2013. It will deliver savings to the budget of $835 million commencing 1 October 2014 and these savings are already factored into the forward estimates for the PBS and Repatriation Pharmaceutical Benefits Scheme (RPBS).

Price disclosure was originally introduced as part of the Howard government reforms to PBS pricing policy in 2007 and is a routine part of maintaining PBS listings for medicines subject to competition. It was a farsighted reform that placed the PBS on a sustainable footing.

The objective of the policy is to ensure that the price at which the government subsidises multiple-brand medicines reflects more closely the prices in the market.

However, the current arrangements are complex and the time taken to achieve price reductions is too long.

At present, cycles take at least 18 months to complete. This means the government can be paying higher than market prices for at least 18 months.

The complexity in the current arrangements comes from there being three cycles—one 'main' cycle and two supplementary cycles. This results in additional and irregular periods for data collection, and inconsistent periods between price reductions.

This government wants to partner with business to pursue the efficient delivery of health outcomes. We are committed to reducing the effect that regulatory burden has on the time and cost of doing business.

The changes in this bill provide a simpler and more uniform approach to PBS price disclosure. New arrangements will mean less frequent reporting of data batches for irregular periods for drugs new to price disclosure than under the old three-cycle arrangement.

These efficiency gains are a step in the right direction in reducing administrative and compliance costs.

Price disclosure amendments

The amendments in the bill will streamline the operation of the current price disclosure arrangements. All medicines would be merged into one ongoing cycle rather than having several different cycles over the year.

The changes would also allow price reductions to occur sooner, and more frequently, after medicines become subject to market competition. This would be achieved by reducing the length of each price disclosure cycle.

Operation of price disclosure

Under price disclosure, drug companies are required to report their data on sales to wholesalers, pharmacists and other suppliers as part of their listing. The sales data are used to calculate the weighted average price at which PBS brands are actually being sold in the market place. The weighted average sale price is then compared to the PBS price to determine whether a price reduction will apply.

The PBS price is reduced only if the weighted average sale price is at least 10 per cent lower than the price the government uses to reimburse pharmacists and other suppliers.

Price disclosure is a free market solution which brings market forces and discounting practices to bear in a way that would not otherwise occur for subsidised prices. Over time, PBS prices are reduced in line with average market prices, not down to the lowest price, leaving room for further discounting. At the same time it protects low volume, high need medicines when there is little competition in the market. This reduces the risk of essential drugs being withdrawn from the Australian market.

This approach ensures that PBS prices allow companies, including generic suppliers, to compete in the market at fair and competitive prices and avoids threatening continuity of supply.

Simplified Price Disclosure

Simplified Price Disclosure is intended to streamline the operation of the pricing policy and adjust prices more quickly.

Firstly, the length of each cycle would be reduced from 18 months to 12 months. Cycles would have a data collection period of only six months, followed by the usual six months for calculating and publishing the new prices, and any dispute resolution. This would ensure the savings are realised as early as possible.

Secondly, three cycles would be merged into one cycle and the number of price disclosure-related price reduction days each year would be reduced from three to two. The first price reduction day would be 1 October 2014.

Simplified Price Disclosure will make medicines cheaper not only for government, but also for consumers. Price cuts, such as the almost $16 per prescription already achieved for simvastatin [sim-vA-stat-in—for high cholesterol] will benefit consumers six months earlier, year on year.

Transitional

Under the new arrangements, the majority of medicines would move into the new October 2014 price reduction cycle. For a small number of medicines, there are provisions that would allow their current cycle to continue to completion under the current rules.

Amendments to regulations would also be made to support the transition to the new arrangements, ensuring companies are clear how their brands fit into the new cycles.

Savings

The $835 million associated with the changes is already factored into the budget. Unfortunately, the current fiscal situation means we need to proceed with this change, which was made by the former government with limited consultation with those affected.

I should note that Simplified Price Disclosure is not designed to increase the magnitude of reductions to PBS prices. Rather, it is about applying price reductions sooner after a drug becomes subject to market competition, and more frequently, so the PBS price follows market prices more closely.

Stakeholder groups and agreements

As I mentioned at the outset, the government is supportive of price disclosure arrangements and was responsible for their original architecture in 2007. We recognise that it evolves over time.

The difficulty with these amendments is not the content but the manner in which they were conceived and announced by the former government.

The former government announced these changes on the second of August, only hours before the start of the caretaker period and without consultation.

The Pharmacy Guild had a formal agreement with the previous government through the Fifth Community Pharmacy Agreement. Medicines Australia had an agreement through their memorandum of understanding. Neither of these parties was consulted in any way about these changes despite their agreements.

Because there was no opportunity for negotiation or discussion, pharmacies in particular were not able to factor these changes into their business plans for the future.

These measures were not introduced by the previous government as part of the orderly incremental improvement of the PBS but as a desperate last minute attempt to raise revenue after six years of waste and mismanagement.

I understand that pharmacists are concerned about the effect on their income and, in some cases, the long-term viability of their pharmacies. They contend that they rely on the income achieved from discounts from drug companies to fund other professional services and meet overheads.

Likewise, the National Pharmaceutical Services Association has claimed that pharmaceutical wholesalers and community services obligation distributors will be affected by the change. Manufacturers of generic medicines have also expressed their concerns.

Unfortunately, where in 2007 Labor inherited a $20 billion dollar surplus, we have inherited a projected $30 billion deficit and climbing. While this government would have handled the approach and delivery of this policy in a very different manner, in this fiscal environment we must proceed with the changes.

The government is determined to champion the viability of companies along the entire PBS supply chain. We want to ensure that pharmacies prosper and pharmacists can provide professional services in a predictable business environment.

Industry cooperation and acknowledgement

Implementation of these legislative changes will again draw on the commitment shown by the pharmaceutical industry to work with government to improve the operation of PBS.

Consultation on the details of the changes will occur with pharmacy and industry bodies in the implementation of the new Simplified Price Disclosure arrangements.

Conclusion

In summary, this bill proposes amendments to the National Health Act to improve the operation of the PBS.

Simplified Price Disclosure builds on the pricing policy introduced originally by the Howard government over six years ago. The new arrangement will result in a reduction in administrative burden for industry. It will benefit consumers via earlier access to cheaper medicines, and taxpayers via reduced PBS expenditure.

This is not the way this government wants to approach the delivery of policy changes. However, we should be mindful that the new arrangements are intended to allow PBS prices to be adjusted to market prices more quickly rather than to increase the size of the price reductions.

This government is committed to sound financial management of the PBS. These savings will assist the listing of new and innovative high-cost medicines on the PBS.

The DEPUTY PRESIDENT: In accordance with standing order 111, further consideration of this bill is now adjourned until 9 December 2013.

Debate adjourned.

Senator CASH (Western Australia—Assistant Minister for Immigration and Border Protection and Minister Assisting the Prime Minister for Women) (15:39): I move:

That these bills may proceed without formalities, may be taken together and be now read a first time.

Question agreed to.

Bills read a first time.

Senator CASH (Western Australia—Assistant Minister for Immigration and Border Protection and Minister Assisting the Prime Minister for Women) (15:39): I move:

That these bills be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speeches read as follows—

RURAL RESEARCH AND DEVELOPMENT LEGISLATION AMENDMENT BILL 2013

Productive and prosperous rural industries are a pillar of the Australian economy and a key part of our national identity. Continuous innovation, underpinned by research, is essential to maintaining competitive and profitable industries and maintaining the rural communities that depend on them.

To provide research and development services which are vital to keeping primary producers in business, the rural R&D corporations were established under the Primary Industries and Energy Research and Development Act 1989. Since then they have supported research and development to keep rural industries profitable and sustainable.

Today there are 15 R&D corporations, five statutory and 10 industry-owned, supporting a wide range of rural industries. Through them, producers collectively invest in research, development and extension. Government helps by setting up and collecting a levy if an industry gets together and asks for a levy. After recovering costs, the government pays the levy funds to the relevant corporation. To encourage producers to invest in their own productivity, the government matches the corporation's eligible R&D spending up to legislated limits.

The research and development corporation partnership of government and industry has stood the test of time but improvements can be made. With a changing environment, improvements need to be made. This bill will enhance the existing R&D Corporation model to provide better services and ensure that the model works for primary producers into the future.

Australia's success in agriculture is built on research and development.

In the early days, our industries innovated by necessity. Early pioneers brought crop varieties to Australia that were developed for the European climate and soils. Most of these performed poorly in Australian conditions. They had to be adapted.

In the late 1800's, Farrer led the revolution to breed varieties for the Australian climate which transformed our wheat industry. At the same time, Richard and Clarence Smith developed the stump jump plough to deal with the tough Australian soils and resilient mallee scrub.

By the 1970s our research and development expanded from productivity-focused innovations to include innovations to meet the needs of the consumer. This was epitomised by the development of the Pink Lady apple by John Cripps from Western Australia.

More recently we have made major innovations in electronics and computerisation, with advances like robotic dairies and satellite technology, keeping farmers at the cutting edge.

And for the future, the prospects are very exciting. Research and development is providing advances in precision farming to minimise soil disturbance and compaction, and cut chemical and fertiliser use to what plants actually need. We are seeing the potential to use drones to manage weeds and pests. We are breeding plants and animals to develop taste attributes that markets require, and to tackle specific health issues, such as overcoming the increasing emergence of allergies.

The national interest demands a healthy agricultural sector. Rural industries are engaged with, and firmly support, our R&D corporation model. This model is the envy of other agricultural nations. It has a strong track record. Over recent decades Australian rural productivity has increased at twice the rate of other Australian industries, and rural R&D has been a major contributor to this. In the absence of productivity growth over the last 60 years, it has been estimated that the gross value of production of the Australian agricultural sector would be approximately $12 billion per annum, rather than the current more than $40 billion.

Research, development and extension have a fundamental role in preparing Australian rural industries for the future.

There are many challenges facing our rural industries. These include the effect of the high Australian dollar, a variable climate and strong competition in the global market place. There are big opportunities too, such as a growing world population to feed and increasing demand for our agricultural exports, especially in Asia. Australia has a strong capacity to produce food that is tailored to the needs of new markets.

While our system for research and development is world class we cannot be complacent. The R&D corporation model must be updated to help producers make the most of opportunities and meet challenges as they arise. This, in turn, will help reinforce our food security and keep agriculture profitable and sustainable.

In 2011, the Productivity Commission and the Rural Research and Development Council reported on the rural research, development and extension system in Australia. Both the Productivity Commission and the council acknowledged the strong foundations of the existing system. Both recommended improvements to the system.

Ten consultation meetings were held in Sydney, Melbourne, Perth, Adelaide, Brisbane and Canberra for industry and other stakeholders to give feedback on the recommendations. Since then there has been ongoing consultation with the R&D corporations and industry, including an opportunity for corporations and industry representative bodies to comment on an exposure draft of all three bills.

This bill and its companion bills, the Primary Industries (Excise) Levies Amendment Bill 2013 and the Primary Industries (Customs) Charges Amendment Bill 2013, will commence concurrently.

Marketing activities

Nine of the industry-owned R&D corporations can already carry out collective marketing services for the benefit of their industry. This bill will give the five statutory R&D corporations the same ability to provide marketing services, provided that producers propose a marketing levy, there is demonstrated industry support and the government agrees to collect it. Marketing services will not attract government matching funding, which is only for research, development and extension services.

Some industries are keen to allow statutory R&D corporations to undertake marketing to promote their produce. The prawn industry has already started discussions in the sector about the potential benefits of a marketing levy. There are well-established, clear and transparent processes to guide industry bodies through the consensus-building steps needed for a levy proposal.

Enabling statutory R&D corporations to carry out collective marketing will allow primary industries to tell consumers about their products' safety, nutritional and other production values.

Matching voluntary contributions

Primary producers and the government know that our R&D model is sound, creating a healthy return for the investment made. As a result, some businesses in the rural sector are willing, and able, to make extra, voluntary payments to the R&D corporations.

Currently some corporations receive government matching funding for voluntary contributions to R&D. The bill will make the model fairer by allowing the extension of this arrangement to all the R&D corporations. Overall matching funding will still be limited by a cap based on each industry's gross value of production. This change may allow the corporations to maximise the R&D they fund by strategically using voluntary contributions to top up R&D spending. Matching voluntary contributions for R&D may also encourage supply chain partners to work with an industry on issues of common interest.

Funding agreements

Funding agreements were brought in by the then Minister, the Hon. John Anderson in 1998, and have been used since to agree governance and performance matters with the industry-owned R&D corporations. This bill extends funding agreements to the Commonwealth's relationship with the statutory R&D corporations. Funding agreements will create a flexible mechanism, which can be easily altered if the needs of the parties change.

Funding agreements will be used to drive transparency and accountability. The agreements will be tabled in Parliament and contain requirements relating to corporate governance and performance. These agreements will also allow the government to provide guidance to the corporations regarding the research priorities and needs of the broader Australian agricultural community. The bill allows until 1 July 2015 for the statutory R&D corporations and government to enter into funding agreements.

Appointment process for statutory R&D c orporation boards

Current procedures for appointing directors to statutory R&D corporation boards have proved expensive and time-consuming, diverting resources from the corporations' core function – providing R&D for their industries. Amendments in the bill will streamline the selection process. Selection committees will be limited to five members and the committee itself will be established for up to three years. This is designed to cut the cost of establishing a new committee for each selection process. In addition, the selection committee will create a 'reserve list' of suitable candidates that the minister can use to fill unplanned board vacancies for 12 months. If a candidate with the necessary skills is not available from the list, the process must begin again.

The presiding member must have regard to equity and diversity when recommending members for the selection committee of a statutory R&D corporation. Similarly, the selection committee must do the same when recommending candidates for the board of a statutory R&D corporation. Diversity of skills and background can broaden and enhance the board's skill base to ensure an effective statutory R&D corporation board.

Fisheries research and development

The Fisheries R&D Corporation receives most of its funding through the Commonwealth, state and territory governments. The farmed prawn industry is the only individual fishery with a statutory R&D levy.

The bill creates a new class of fisheries R&D levy that can be matched by the government without having to form part of a jurisdiction's contribution. If a fisheries industry requests a new statutory levy, the amendments will allow the levy to be collected and matched by the government up to a cap specific to that fisheries sector.

Each separately levied fishery will be subject to existing eligibility rules for matching funding. In effect, the fisheries sectors which so choose, will be able to invest in specific R&D and marketing by proposing a levy for that purpose.

Minor amendments

To cut red tape, this bill provides that statutory R&D corporations will no longer have to seek ministerial approval for their annual operating plans. This has become a burden for both the corporations and the government. The minister will oversee each corporation's strategy rather than its day-to-day management. Annual operating plans will still be required, but ministerial approval will not.

Minor amendments will remove redundant parts of the legislation. For example, energy is no longer part of the agriculture portfolio, so all references to 'energy' will be removed from the act. References in the act to R&D councils and R&D funds are out-of-date and will be removed, making the act easier to understand and administer.

Other minor amendments encourage equal and consistent treatment of R&D Corporations, including standardising requirements to comply with ministerial directions and standardising delegation powers. 'Scientific and technical capacity building' will be added to the objects of the act.

Conclusion

The changes in this bill will make R&D corporations more adaptable and better able to deal with the new realities faced by Australian primary producers. The way R&D corporations are run will be streamlined, promoting certainty and consistency for levy-payers and other stakeholders. We will keep a strong focus on transparency, effectiveness and accountability to producers and the government.

PRIMARY INDUSTRIES (EXCISE) LEVIES AMENDMENT BILL 2013

This bill is part of a package of bills streamlining rural research and development legislation to ensure it remains responsive and adapted to industry and national needs. It will commence concurrently with the other bills in the package, the Rural Research and Development Legislation Amendment Bill 2013 and the Primary Industries (Customs) Charges Amendment Bill 2013.

The Australian agriculture, fisheries and forestry industries have asked government to impose levies to allow producers to collaboratively fund essential industry services. These include conducting research and development, extension and in some cases marketing, through the 15 R&D corporations. Levy rates are set in regulations, but cannot exceed a maximum rate that is set in the Primary Industries (Excise) Levies Act 1999.

This bill removes maximum research, development and marketing levy rates from the act. The bill provides that the effective levy rates, set by regulations, must be the subject of a recommendation from relevant industry bodies, who must in turn consult with levy-payers. The bill provides that the regulations will not be able to set a levy rate higher than the highest rate recommended by industry. This will safeguard against arbitrary levy increases by government.

New consultation requirements in the bill provide greater detail and consistency regarding who must be consulted when setting rates, and how to consult levy-payers if there is no declared representative body.

If an industry wishes to increase a levy rate above the legislated maximum, in response to a changing market or seasonal conditions, it can be a time consuming and costly process. The amendments will allow producers to respond more quickly to changing needs or conditions, by cutting the time between a rate increase proposal and the change coming into effect. Removing the need to amend the Act will reduce this red tape and streamline the process.

In 2011 the Productivity Commission recommended the removal of maximum levy rates following a review of the R&D corporation model. Industry representative bodies, other stakeholders and the R&D corporations were consulted on the changes during and after the review. There is broad support for the removal of maximum rates.

Conclusion

This bill encourages primary industries to control their investment in R&D, extension and marketing. The levy setting process will be easier and more responsive to industry needs. Robust consultation and consensus requirements ensure that levy setting remains in the hands of industry itself.

PRIMARY INDUSTRIES (CUSTOMS) CHARGES AMENDMENT BILL 2013

This bill is part of a package of bills, referred to in the previous second reading speech. It will commence concurrently with the Rural Research and Development Legislation Amendment Bill 2013 and the Primary Industries (Excise) Levies Amendment Bill 2013.

Like the Primary Industries (Excise) Levies Amendment Bill 2013, this bill removes maximum research, development and marketing charge rates from the Primary Industries (Customs) Charges Act 1999. The act imposes charges on agricultural commodities for export or import, whereas the Primary Industries (Excise) Levies Act 1999 imposes levies on agricultural commodities sold domestically.

The bill provides that relevant industry bodies must, in consultation with charge payers, recommend the charge rates to be set by the regulations. The bill provides that the regulations will not be able to set a charge rate exceeding the highest rate recommended by industry. This will safeguard charge payers against arbitrary charge increases by government.

Debate adjourned.

Senator CASH (Western Australia—Assistant Minister for Immigration and Border Protection and Minister Assisting the Prime Minister for Women) (15:40): I indicate to the Senate that these bills are being introduced together. After debate on the motion for the second reading has been adjourned, I will be moving a motion to have the bills listed separately on the Notice Paper. I move:

That these bills may proceed without formalities, may be taken together and be now read a first time.

Question agreed to.

Bills read a first time.

Senator CASH (Western Australia—Assistant Minister for Immigration and Border Protection and Minister Assisting the Prime Minister for Women) (15:41): I present the revised explanatory memoranda relating to the Social Services and Other Legislation Amendment Bill 2013 and I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

CUSTOMS AMENDMENT (ANTI-DUMPING COMMISSION TRANSFER) BILL 2013

This is a government that strongly supports genuine free and fair trade and an open and dynamic market economy. An effective trade remedies regime is integral to a robust international trading system. It is also critical to our broader plan to boost the competitiveness of Australian manufacturing, as outlined in our August 2013 policy statement.

We are not talking about protectionism, but about creating and maintaining a level playing field for Australian industry.

Australia’s current regime for combatting injurious dumping and subsidisation is transparent and complies with our obligations under World Trade Organization agreements. But there is clearly room to improve the efficiency and effectiveness of the system—and that is what we plan to do.

To show we mean business, we are moving responsibility for anti-dumping matters to the industry portfolio. This will allow those considering requests for anti-dumping action to benefit from the considerable experience and knowledge held across the industry portfolio. It will also free up the Australian Customs and Border Protection Service to concentrate on other matters of importance to this government.

Processes have already been put in place to ensure that I, as Minister for Industry, have the power to make decisions on anti-dumping matters. However, under current Customs legislation, the administrator of Australia’s anti-dumping system—the Anti-Dumping Commission—remains part of the Australian Customs and Border Protection Service.

This bill contains the changes to Customs and other legislation needed to separate the Anti-Dumping Commission from the Australian Customs and Border Protection Service. This will allow the commission to transfer to the Department of Industry, where it will be better placed.

Speedy passage of this legislation will ensure that the transfer of the anti-dumping function to the industry portfolio is completed as soon as possible.

The transfer of anti-dumping to the industry portfolio is only the first step in our plan to strengthen Australia’s anti-dumping system. We are committed to further improvements to the system that will boost the competitiveness of Australia’s manufacturing sector, enabling it to better perform its critical role in our economy.

SOCIAL SERVICES AND OTHER LEGISLATION AMENDMENT BILL 2013

This bill will implement the first stage of the government's commitment, foreshadowed during the 2013 election campaign, to adopt a different approach to addressing problem gambling.

The bill will also implement several measures affecting family and parental payments, the closed pension bonus scheme, the rules for receiving certain payments overseas, and certain student entitlements.

Encouraging responsible gambling

This government believes in meaningful and measurable support for problem gamblers. Although most people who gamble do so responsibly, gambling is a major problem for some Australians, and effective measures are needed to help these people.

The amendments in this bill represent the government's first step in reducing bureaucracy and the duplication of functions between the Australian government and state and territory governments in this important area.

The bill will repeal the position and functions of the National Gambling Regulator, along with those provisions relating to the supervisory and gaming machine regulation levies, the automatic teller machine withdrawal limit, dynamic warnings, the trial on mandatory pre commitment, and matters for Productivity Commission review.

The bill will also amend the pre-commitment and gaming machine capability provisions to express clearly the government's commitment to the development and implementation of these measures in the near future, informed fully by consultations with industry, state and territory governments, and other stakeholders.

Continuing income management as part of Cape York Welfare Reform

Cape York Welfare Reform is a partnership between the Australian government, the Queensland government and the Cape York Institute for Policy and Leadership. It aims to restore local Indigenous authority, rebuild social norms, encourage positive behaviours, and improve economic and living conditions in the participating communities of Aurukun, Coen, Hope Vale and Mossman Gorge.

Since Cape York Welfare Reform began in July 2008, the participating communities have seen improvements in school attendance, parental responsibility and restoration of local Indigenous authority.

This bill will continue income management as a key element of Cape York Welfare Reform, as part of a two-year continuation of the initiative until 31 December 2015.

Family Tax Benefit and eligibility rules

From 1 January 2014, family tax benefit Part A will be paid to families only up to the end of the calendar year in which their teenager is completing school.

Youth allowance, with its 'learn or earn' provisions that require young people to participate in work, job search, study or training, will continue to be available as the more appropriate payment to help young people transition from school into work or post-secondary study. Exemptions will continue to apply for young people who cannot work or study due to physical, psychiatric, intellectual or learning disability.

Period of Australian working life residence

A further measure in the bill will require age pensioners, and other pensioners with unlimited portability, to have been Australian residents for 35 years during their working life (in place of the current 25-year requirement) to receive their full means tested pension if they choose to retire overseas or travel overseas for longer than 26 weeks. Pensioners will also be paid on their own individual working life residence rather than that of their partner or former partner.

The 25-year requirement has been significantly more generous than the pension rules of other OECD countries, which generally require 35 to 45 years of pension contributions to receive a full pension. Australia's social security system differs markedly from the contributory systems that operate overseas in that payments are made from general tax revenue and are based on the concepts of residence and need. Pensioners with less than 35 years' Australian working life residence will be paid at a proportionally reduced rate. This amendment will apply to pensioners who leave Australia on or after 1 January 2014 and to pensions granted under most social security agreements from that date.

Pensioners who are living overseas immediately before 1 January 2014 will continue to be paid under the previous rules unless they return to Australia for longer than 26 weeks and leave again, after which the new rules will apply.

Interest charge

The bill will allow for an interest charge to be applied to certain debts incurred by recipients of Austudy payment, fares allowance, youth allowance for full-time students and apprentices, and ABSTUDY living allowance. The interest charge will only be applied where the debtor does not have or is not honouring an acceptable repayment arrangement. Debtors who are already making repayments, or who come to a repayment agreement with the Department of Human Services following implementation of the measure, will not be charged interest.

The rate of the interest charge will be based upon on the 90-day bank-accepted-bill rate, plus an additional seven per cent, as is currently applied by the Australian Taxation Office for tax debts under the Taxation Administration Act 1953. Over the last four years, this rate has averaged 11.07 per cent, and currently stands at 9.6 per cent.

Student start-up loans

From 1 January 2014, the bill replaces the current student start-up scholarship with an income-contingent loan, the student start-up loan. There will be a limit of two loans a year of $1,025 each (indexed from 2017). The loans will be available on a voluntary basis, and will be repayable under similar arrangements to Higher Education Loan Program debts. Students will only be required to begin repaying their start-up loan after their Higher Education Loan Program debt has been repaid.

Paid parental leave

To ease administrative burdens on business, the Paid Parental Leave legislation will be amended to remove the requirement for employers to provide government funded parental leave pay to their eligible long-term employees.

From 1 March 2014, employees will be paid directly by the Department of Human Services, unless an employer opts in to provide parental leave pay to its employees and an employee agrees for their employer to pay them.

Pension bonus scheme

From 1 March 2014, the bill will end late registrations for the closed pension bonus scheme. The pension bonus scheme provides a lump sum payment to people who are registered in the scheme and qualified for the age pension, or the equivalent Veterans' Affairs service pension or income support supplement, but who choose to defer their pension and remain in the workforce.

The scheme was closed in 2009, although eligible people who were not registered in the scheme at the time of its closure have still been able to backdate their registration in the scheme if they qualified for the relevant pension before 20 September 2009, but have deferred its receipt and kept working. The work bonus was introduced in 2009 as a different approach to encouraging older Australians to continue working.

Ending late registrations for the pension bonus scheme will simplify and support the flexibility of our substantial system of seniors support. Eligible people have had four years to backdate their registration, and will still have until 1 March 2014 to register in the scheme.

Indexation

This bill will extend the indexation pauses on certain higher income limits for a further three years until 30 June 2017. This means that:

the family tax benefit part B primary earner income limit and the parental leave pay and dad and partner pay individual income limits will each remain at $150,000; and

the current higher income free area for family tax benefit part A also remains at the current level set depending on the number and ages of the family's children—for example, the income cut-out for a family with two children aged under 13 will remain at around $113,000.

In addition, the annual end-of-year family tax benefit supplements will remain at current levels for the next three years—$726 a child for part A and $354 a family for part B.

The bill will also set the annual child care rebate limit at $7,500 for three income years starting from 1 July 2014, with the first indexation of this amount occurring on 1 July 2017. As a result, an individual will be able to receive up to the maximum amount of $7,500 per child per financial year for out of pocket child care costs for those three income years.

Changes to the rules for receiving payments overseas

From 1 July 2014, the length of time that families can be temporarily overseas and continue to receive family and parental payments will reduce from three years to 56 weeks.

In some circumstances, (such as where certain Australian Defence Force and Australian Federal Police personnel are deployed overseas) a person will continue to be eligible for family and parental leave payments for up to three years while temporarily absent from Australia.

Extending the deeming rules to account-based income streams

The Bill will align the income test treatment of account-based superannuation income streams, for products assessed from 1 January 2015, with the deemed income rules applying to other financial assets. Account based income streams held by income support recipients immediately before 1 January 2015 will continue to be assessed under the previous rules unless recipients choose to change to a product that is assessed under the new rules.

Other amendments

Other minor amendments in the bill include improving the administration of debt recovery under the Student Financial Supplement Scheme, clarifying the provisions relating to the time period for lodging tax returns for family assistance purposes, and ensuring that funding under the National Disability Insurance Scheme paid into a person's account, which is set up for the purpose of managing the funding for supports for a participant's plan, cannot be garnisheed for debt recovery purposes.

TELECOMMUNICATIONS LEGISLATION AMENDMENT (SUBMARINE CABLE PROTECTION) BILL 2013

Submarine cables are an important component of Australia's telecommunications infrastructure. They carry the bulk of Australia's international voice and data traffic. Submarine cables provide a vital link for Australia to the global telecommunications network and the global digital economy.

Submarine cables have been in use for over 150 years, beginning with submarine telegraph cables. The first connection between Australia and the rest of the world by submarine cable was the Java to Port Darwin telegraph link in 1872. This in turn was connected to the populous southern capitals by the iconic Overland Telegraph Line built by Charles Todd.

In the 20th century, submarine cable technology evolved as the demand for alternative and faster communication grew. In 1956, the first submarine cable incorporating repeaters came into operation across the Atlantic. In 1988, developments in high-speed and high-capacity transmission over fibre optic cables enabled the transmission of vast quantities of information. Modern submarine cables typically provide multiple terabits per second of capacity when deployed and can be further upgraded, well positioning them to meet future traffic levels.

As an island nation, Australia and its economy is especially dependent on submarine cables. As such, damage to submarine cables can have a significant impact. There are currently seven international submarine cables connecting to Australia that are in operation. The main players are Southern Cross Cable Ltd which operates the Southern Cross Cable, PIPE International which operates PPC-1, Telstra which operates APNG-2 and Telstra Endeavour, and Singtel and Reach which operate the SEA-ME-WE 3 cable.

That is why in 2005 the previous coalition government established a regime for the protection of international submarine cables landing in Australia, in the form of Schedule 3A of the Telecommunications Act 1997.

The regime gives the industry regulator, the Australian Communications and Media Authority or the ACMA, the power to establish protection zones around international submarine cables of national significance. In protection zones, certain activities are prohibited or restricted from taking place including some kinds of fishing, trawling and mining.

The regime also establishes an installation permit system. Carriers seeking to install an international submarine cable that will land in Australia must apply for a permit to install the cable.

To date, the ACMA has declared three protection zones—the North and South Sydney Protection Zones and the Perth Protection Zone. Since the introduction of the regime, there have been no reported incidents of cable damage in Australian waters.

Australia's regime has been praised by both the International Cable Protection Committee and the Asia-Pacific Economic Cooperation as a global best practice regulatory example for the protection of submarine cables.

In 2010, the ACMA undertook a statutory review of Schedule 3A. Based on feedback received from industry, the ACMA made several recommendations to improve the operation of the regime.

These recommendations form the basis of the amendments proposed in the bill, along with other proposals that have been identified by the Government and stakeholders that will further enhance the regime.

The amendments fall into five categories.

First, the bill will ensure consistency between the regime and the United Nations Convention on the Law of the Sea, also known as UNCLOS. UNCLOS sets out coastal nations' rights and obligations in relation to the seas and oceans, including Australia's right to regulate foreign ships and persons beyond its territorial sea.

While it has not been a practical issue to date because the ACMA is required to consider UNCLOS when it exercises its powers, some concerns have been expressed that the regime may seek to regulate foreign nationals for certain actions in waters of the Exclusive Economic Zone or Continental Shelf in a manner inconsistent with international law, including UNCLOS. To the extent that the regime is used as a model by other jurisdictions, this carries the risk that other jurisdictions may replicate this model.

The bill addresses this by modifying the regime's application, including criminal and civil enforcement options, to foreign ships and nationals in the waters beyond Australia's territorial sea.

Second, the bill will provide a structured process for the consideration of matters within the Attorney-General's portfolio in relation to submarine cable installation permit applications by:

requiring the ACMA to consult with the Secretary of the Attorney-General's Department on installation permit applications; and

giving the Attorney-General power, after consultation with the Minister for Communications and the Prime Minister, to direct the ACMA to refuse a permit on security grounds.

During the consultation period, the Secretary of the Attorney-General's Department may make a submission on the permit application, which may include a recommendation about the conditions that should be specified in the permit.

These are mechanisms to enable matters including security, international law and native title that may affect submarine cable installations to be considered.

The changes formalise existing practice. The proposed provisions are based on the current carrier licence application provisions under the Telecommunications Act and are familiar to industry.

Third, the bill will enable significant domestic submarine cables—that is cables that connect two places in Australia—to be brought under the regime and be suitably protected under the regime if appropriate. The bill will give the Governor-General power to specify in regulations that a domestic cable or route warrants protection. The ACMA would then have discretion to decide whether a protection zone should be declared around that cable or route. Consultation would be required before any regulations were made and any new protection zones specified. Carriers will also be able to install domestic submarine cables in protection zones by applying for a permit to do so. This is something not currently possible under the regime as currently in force.

Fourth, the bill will streamline the installation permit process so that:

carriers only need to apply for and obtain one type of permit to land a cable in Australia (whereas now they could require two applications, one for a permit zone and one for outside it);

the default timeframe for processing a non-protection zone permit application will be reduced from 180 days to 60 business days; and

processes under the regime that duplicate existing processes under the Environment Protection and Biodiversity Conservation Act 1999 are removed.

These amendments will reduce red and green tape—a key focus of our new government and something I will have a lot more to say about in the coming months with regards to the telecommunications sector.

Fifth, the bill will make several administrative and technical amendments to enhance the overall operation of the Bill. This includes:

expanding the list of authorities the ACMA must notify when it declares, varies or revokes a protection zone to include relevant authorities involved in sea monitoring, offshore law enforcement and management activities; for example the Australian Customs and Border Protection Service;