Senator KIM CARR (Victoria) (09:32): I've not had a lot of time to look at the Customs Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018 and the Customs Tariff Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018. I understand they have been brought on in a bit of a rush. Clearly the government is a bit short of business again, so I'll give this lengthy consideration. It is a tragedy to see the once-great Liberal Party descend to this level of chaos and indecision so soon after they thought they'd sorted out all their problems. But they were able to find this somewhere deep in the barrel. They ducked in and produced some legislation that they had to get exempted from the cut-off to allow it to proceed. This is not controversial legislation. It's a straightforward matter. I guess you'll have to dig a lot deeper to get to the next piece of legislation. This will not take a long period of time, I expect, because Labor supports the bills.

As much of this legislation goes to development measures as it does to customs and trade matters. These measures amend the Customs Tariff Act 1995 to implement the Pacific Agreement on Closer Economic Relations Plus, known as PACER Plus. Australia, Cook Islands, Kiribati, Nauru, New Zealand, Niue, Samoa, Solomon Islands, Tonga and Tuvalu signed this agreement last year. The agreement is a comprehensive regional economic integration agreement, consistent with World Trade Organization rules. It covers a range of goods and services, investment and established rules and commitment between the various parties to the agreement.

The agreement also, as the bill outlines, includes an aid component to help with the development of the region. Under the agreement, tariffs will be cut on 88.5 per cent of Australian exports to signatory countries, apart from New Zealand. It also means that there will be no tariffs on goods imported from signatory countries to Australia, apart from New Zealand. Under the agreement, we will also provide some $4 million to assist Pacific island nations to prepare to ratify this agreement and $19 million for them to update their customs processes. That, of course, does not even begin to compensate for the $11 billion this government has cut from the aid budget. There's a bit of irony that we should be debating bills that provide $4 million when some $11 billion has been cut from the budget.

The agreement has been scrutinised by the Joint Standing Committee on Treaties, which has recommended that the agreement include an independent economic analysis of the merits of this agreement. That's a proposition that this chamber should fully endorse. The JSCOT has made the same recommendation for other trade bills, including some of the more contentious legislation that is to come before the chamber. The Labor Party will have more to say on this matter when those bills are introduced, but I give notice that a future Labor government will ensure that all future trade agreements are subject to independent economic analysis.

These bills provide for 'free' rates of customs duty, which, when enacted, will mean that a new schedule will be provided for excise-equivalent rates of duty on certain alcohol, tobacco and fuel products in accordance with this agreement. The amendments provide for certain concessional items listed under the Customs Tariff Act to maintain customs duty rates in line with the applicable concession items and in accordance with the agreement. Complementary amendments will be made to the Customs Act by the customs amendment bill to introduce new rules of origin for goods imported into Australia from parties to the agreement. The bill provides that these new rules will determine what eligible goods would be subject to preferential treatment of customs duty in accordance with the agreement. The bill contains no matters which we would regard as being contentious, and it is surprising that it is not being considered in the non-controversial bills section of our normal business. The Labor Party is pleased to support it.

I had a look at the details of some of the measures that have taken my interest in regard to Niue. It is a country of some importance, as the ABC told us in a recent story. Niue is a country with a population of about 1,800. I'm told that about 80 per cent of them are actually from New Zealand and that many of them participate in sporting clubs in New Zealand. Of particular note was the appearance of a mallard duck in Niue. People can't quite work out where it's come from. The ABC has given us very good coverage of the issue; there is a lot of news generated in the Pacific these days from the ABC. The duck even has a name—Trevor—and is said to have come from New Zealand. It's described as a major problem, because there are no wetlands and no ponds on Niue, so the fire brigade has to provide the necessary water conditions for Trevor the mallard duck. I understand that it's named Trevor after the Speaker of the New Zealand House of Representatives. It's said to be a very miserable duck, because it is so lonely. Unfortunately, there are no other ducks on Niue, so it has no partners. We're looking forward to seeing what other biosecurity issues have arisen as a result of this matter and whether or not this agreement will cover these questions in the future.

Senator HANSON-YOUNG (South Australia) (09:38): I rise to add the Greens contribution to this legislation. The Greens remain concerned about the power imbalances in PACER Plus negotiations. We've been concerned for quite some time that Australia and New Zealand have used their big-brother, or big-sister, influence in the region to a point where they have disenfranchised some of the smaller nations in our region and undermined their genuine ability to participate.

We know, of course, that Papua New Guinea and Fiji, the two largest Pacific island nation economies, are notably absent from this deal, and that Vanuatu and Tonga have at various times withdrawn from the process. We've been concerned that in a modern world such as this, where Australia has a responsibility to help those in our region who aren't as big, don't have democracies that are as stable and aren't able to sustain themselves economically in the way Australia is able to, we have in fact stood over them in these negotiations. We are concerned that that is now being reflected in the PACER Plus arrangement that we're debating today.

The refusal of Papua New Guinea and Fiji to sign the agreement is significant, because they represent 80 per cent of the combined GDP of Pacific island countries. If 80 per cent of the economies are not even represented in this deal, you've got to ask yourself why—why is Australia pursuing this in this manner? It raises the question of whether small Pacific nations felt unfairly pressured by Australia and New Zealand to enter the agreement. Anecdotally, of course, we have heard from representatives of these island nations that, yes, they did indeed feel put upon by Australia and New Zealand and felt the pressure immensely.

The primary impact of PACER Plus is to decrease tariffs on Australian and New Zealand exports to these Pacific countries. It's very clear that, as the big nations, we are getting the best deal out of this. Some would say that's fine, except that we live in a neighbourhood and we have a responsibility, as the wealthiest nation, the largest economy in the region, to play better and be a bit fairer in this. We know that this disproportionate pact, which benefits Australia and New Zealand, could easily just be agreed to. But what does that mean and what signal does that send to countries in the rest of the region, particularly the smaller ones, who feel they had to agree or are going to be resentful, going forward, of this and the attitude that's been presented by Australia?

Proposals by Australia and New Zealand to introduce or increase consumption taxes to offset tariff cuts will not provide adequate compensation for revenue loss. Studies have demonstrated that replacing tariffs with consumption taxes in developing nations only compensates for 30 per cent of lost revenue. Countries in the Pacific region are increasingly vulnerable to the effects of climate change, and it's extraordinary that this deal does nothing to address the real-life impact on these countries of rising sea levels and the other impacts of climate change. We know that, despite a growing urgency to support Pacific island countries to combat climate change, this declaration does zilch. Despite the government signing a declaration just weeks ago identifying climate change as the greatest single threat to Pacific peoples, PACER Plus does not even include proper environmental protection measures. It's a case of 'Look over here while we do something else'; of refusing to tackle what will be, beyond any doubt, the biggest impact into the future for our Pacific island neighbours. We know that climate change needs to be tackled and we know that they need help in dealing with that, yet Australia continues to just turn the other cheek. It's not good enough at all.

Tariff cuts will disproportionately affect women in the Pacific region. Women in Pacific communities are largely employed in the industries that will be affected most by these tariff cuts, such as clothing manufacturing and small-scale agriculture. We hear a lot in this place from various NGOs and community based organisations about what Australia can do to show leadership in the region in relation to empowering women, giving them a voice and giving them independence and the ability to be economically sustainable.

This deal, because of its nature, and because it has been managed quite heavy-handedly from the Australian perspective, is going to impact on our sisters in the Pacific region and those Pacific Islands disproportionately. I think this place needs to consider that when looking at this legislation. The last thing we want is women in the Pacific to be even more disadvantaged just because Australia wanted to squeeze more money out of our poor neighbours and our poor cousins throughout the Pacific. It's not good enough. We should be doing more to support women in the Pacific, not simply allowing this to go through and think it doesn't have an effect. When we talk about clothing manufacturing or small-scale agriculture, we should be doing much more to help these women and their families and communities to become self-sustaining and economically robust. This does the exact opposite. This rips the carpet out from beneath them. It will have dire impacts on these women unless we do something to fix it.

The Greens, as I've said, remain very concerned about this. We won't be supporting it. We wish that the government would have been a little more considerate of the desires and concerns raised by our Pacific island neighbours. The fact that climate change isn't in here and the fact that it disproportionately impacts on the poorest women in our region are enough for me to say that this isn't something that Australia should be pursuing.

Senator FIERRAVANTI-WELLS (New South Wales) (09:46): I'm very pleased to speak in support of the Customs Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018 and the Customs Tariff Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018. The key theme of these bills is to promote an open Pacific economic integration and to advance development in the Pacific. PACER Plus is a unique framework and an important part of our trade agenda in the region. The Pacific Agreement on Closer Economic Relations, PACER Plus, is a unique framework because it is both a development centred agreement plus a regional free trade agreement. The agreement includes a substantial development assistance package of $7.7 million to help countries to prepare to ratify the agreement, and a further $25 million in the implementation assistance after entry into force.

But I cannot go beyond making some observations in relation to what Senator Hanson-Young just said. It demonstrates, yet again, the Greens total lack of understanding and a patronising attitude in relation to our neighbours. On the issue of women, clearly, Senator Hanson-Young, you are not aware that the negotiations for PACER Plus commenced in 2009 and they concluded in Brisbane in April 2017. They have been worked through assiduously with our Pacific island neighbours. PACER Plus opened for signature in June 2017, and, to date, has been signed by 11 countries: Australia, the Cook Islands, Kiribati, Nauru, New Zealand, Niue, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu. I have to say that your patronising comments in relation to these countries demonstrate, yet again, your total lack of understanding of what is happening in our neighbourhood.

On the issue of women, we have had a very successful program of Pacific women shaping Pacific development. It's been a $320 million project over 10 years and has brought considerable benefits to our Pacific island sisters. On the issue of climate change, as part of the $1 billion commitment that Australia gave as part of its commitment to the Paris agreement, $300 million over four years is for building Pacific resilience and addressing climate issues in the Pacific. That's in addition to the $200 million that went to the Green Climate Fund. So, Senator Hanson-Young, before you come in here and pontificate on matters that you know absolutely nothing about, why don't you go and check your facts before you are critical about these issues?

Let me get back to PACER Plus. PACER Plus will help drive economic prosperity and raise living standards in our region. Our foreign policy white paper points out that being open to trade and investment creates wealth and supports higher living standards. A strong rules based liberalised international trading system is in the interests of all countries, including providing opportunities for developing countries to engage more in international trade. Perhaps those opposite haven't looked, but some Pacific island countries are in the process of moving towards graduation in relation to their economic status. It is important that Australia be amongst the first countries to ratify the agreement, as early ratification would signal our clear commitment not just to PACER Plus but to this important rules based trade in the Indo-Pacific region.

PACER Plus will deliver modest economic and commercial benefits to Australia, and I'm sure that the minister will elaborate on some of these benefits to Australia—modest though they are, commensurate with the size of participating Pacific island economies. In particular Australian producers of goods, suppliers of services and investors will benefit from more liberal and secure market access in the Pacific. By promoting growth and development, and strengthening reform processes in the Pacific, PACER Plus will expand commercial opportunities for Australian countries in the region to trade with their Pacific neighbours. Pacific island countries will have eliminated tariffs on the vast majority, 91.5 per cent, of their tariff lines, covering the bulk, 88.5 per cent, of Australia's exports. Based on 2016 data this represents a total value of $360 million when PACER Plus is fully implemented.

Australia's largest services exports to the Pacific are tourism and travel services, transport services and financial services, including insurance. Our Pacific island country signatories have made commitments in each of these sectors, many for the first time. Australian service suppliers will benefit for the first time from commitments from non-WTO members such as the Cook Islands, Kiribati, Nauru, Niue and Tuvalu. The 'most favoured nation' provisions in the agreement will help safeguard access for Australian producers of goods, suppliers of services and investors in the event that Pacific island countries apply more favourable treatment for the producers, suppliers and investors of nonparties, such as under free trade agreements.

Our foreign policy white paper identified the following:

Economic integration within the region and with Australia and New Zealand is vital to the economic prospects of the Pacific. Growth is constrained for most countries because of a combination of remoteness from markets, limited land and resource bases, the dispersal of people over many islands and environmental fragility.

The underlying impetus for negotiating PACER Plus and its goals of regional economic integration align with the narrative in our foreign policy white paper. The formation of an interconnected Pacific market which includes Australia and New Zealand will enable Pacific island countries to create a larger market not only for its consumers but also for its producers.

PACER Plus will not only cover trade in goods but also extend to trade in services, in investment, in labour mobility and in development assistance. For many countries in our region this will be the first WTO-compliant free trade agreement. When in force it will stand as a valuable example of the region's collective effort to work together towards greater economic integration. By establishing a common framework through which to transact each element of the participating country's economic relationships, PACER Plus supports the long-term economic development of Pacific island countries through closer integration with Australia and New Zealand, with each other and with the global economy. We recognise that it is important that, for trade to thrive, trade liberalisation has to be accompanied by a supportive policy environment, and that includes sound economic management, reforms and effective service delivery. We have committed to assist our Pacific island neighbours with transition, and we've taken careful consideration of issues like implementation time lines.

The region continues to experience significant economic, social and environmental challenges, and, having been minister from February 2016 until recently, I saw this firsthand. I had the opportunity to visit many parts of the Pacific. Indeed, I made over 35 trips to the Pacific during this time, and I saw for myself that distance and weak infrastructure make international trade expensive, but small domestic markets and narrow production bases mean that countries rely on it for income and consumption. And whilst the agreement provides a regional framework for trade and economic integration, dedicated assistance to each of these countries will be vital to address the barriers that those countries are facing and, of course, to unlock the potential of the Pacific and its ability to partake in the benefits.

An important component of this is the readiness package. We and New Zealand have provided assistance for readiness activities. To help signatories, we are supporting processes like legislative drafting to assist the signatories to review and update their relevant national laws and regulation as well as customs modernisation, harmonisation, implementation of up-to-date tariff codes and transposition of schedules so that each signatory will be able to implement the latest version of the internationally recognised system known as the Harmonized Commodity Description and Coding System. There will be training on notification requirements, including helping governments and private sectors in those Pacific island countries to meet the obligations around transparency. There will be funding for public outreach and stakeholder engagement, and there will also be revenue planning and mitigation to help signatories manage any impact on government revenues associated with tariff reductions. There's also a PACER Plus implementation package. Upon entry into force, Australia and New Zealand will provide a further funding package of $19 million and NZ$7 million respectively over five years, and this will focus on rules of origin and the implementation of those tariff commitments; customs; sanitary and phytosanitary measures; technical regulations, standards and conformity assessment; trade in services; and investment.

One of the key advantages of PACER Plus—and I have had many conversations with different Pacific island country stakeholders, ministers and the private sector—is that, in short, if Pacific island countries get their biosecurity systems up to a level at which they can export to Australia and New Zealand, then they can export to any other country around the world. Therefore, this is a very, very good thing for the Pacific. This is one of the key features that they have been asking us for, and that's why PACER Plus is so important.

One of the other components of development assistance, particularly in the Pacific, has been our Aid for Trade program. As part of PACER Plus, Australia remains committed to our Aid for Trade funding target of 20 per cent of our overseas development assistance budget in the Pacific. This target, of course, will complement the party's own trade related initiatives as Pacific island countries seek to increase growth, generate jobs and increase living standards for their people. Let me share some examples with the Senate of how this is being done. It's being done through agriculture export development. The Pacific Horticultural and Agricultural Market Access Program, PHAMA, helps Pacific exporters meet quarantine standards and other market access requirements of trading partners. It's being done through trade facilitation, export promotion and investment. We have increased funding to the Oceania Customs Organisation to help strengthen Pacific customs administrations, and we will continue our longstanding support for Pacific Trade Invest which provides high-quality export facilitation, investment and tourism promotion services across the region.

A separate non-binding arrangement on labour mobility has also been signed by Australia, New Zealand and Pacific island signatories to PACER Plus. Our new Pacific labour scheme will allow workers from the Pacific to take up non-seasonal low-skilled and semiskilled work in rural and regional Australia in growth sectors such as tourism and hospitality, disability and aged care, and non-seasonal agriculture. Why? Because it's about capacity building. It's about developing and affording opportunities to our Pacific island neighbours and people there to develop their skills, to come to Australia, to work in Australia and then to take those skills back into the Pacific, which is vitally important for their own economic development.

This, of course, is in parallel with our Seasonal Worker Program. Our Seasonal Worker Program will be streamlined to give more Australian employers access to a reliable, seasonal workforce drawn from the Pacific and Timor-Leste. We know how successful the Seasonal Worker Program has been for our Pacific island neighbours. Since its inception, about 12,000 or 13,000 Pacific island workers have come to Australia, and they often take back to their countries net gains of $5,000 or $6,000, which has enabled families to send their children to school, buy their own homes and do those things that are very important: to pay for their education, to set up businesses, and to build houses and community facilities. Of course, we will continue to work on all the outstanding partners to the agreement, because we consider that the benefits for Pacific economies outweigh any potential costs. I know that those discussions are ongoing, and I'm sure the minister will elaborate on how those are progressing.

Whilst PACER Plus will reduce government tariff revenue, it includes lengthy implementation schedules. The first tariff reductions are not required until 10 years after the agreement enters into force, and they are then phased in over the following 25 years. This means that all of the tariff reductions will not be fully implemented until 2053 at the earliest. That well and truly will enable Pacific island countries to take the implementation of this agreement at their own pace and implement it fully within their own economic systems.

The agreement underscores the role of open trade and investment in enabling economic development and rising living standards across our region. The agreement will cover an additional 1.5 million people who are not presently captured under Australia's existing FTAs. Whilst the commercial value of the trade with Pacific island countries is modest, this agreement will lay the foundations for its future growth. In 2015, Australia's goods and services two-way trade with participating Pacific countries totalled $1.2 billion of our total trade.

As I have said, PACER Plus is an unique agreement, because it is both a trade and a development agreement. It has the potential to shape and reshape the economic fundamentals of the Pacific region by creating new opportunities for trade and investment in our neighbourhood. Overall, we will see simplification and enhancing of regional trade, and also, of course, we will help Pacific island countries grow their economies by accessing international markets. It will facilitate greater integration of Pacific island economies into the global rules-based trading system and, of course, reshape the economic fundamentals of the Pacific region, creating new opportunities for trade and investment that will drive economic growth and, as I have said, raise living standards. It will also help Pacific island countries modernise their economies. For example, we will be able to assist Pacific island countries to modernise their customs and tax systems in preparation for implementation of PACER Plus. Our assistance will help build capacity in trade promotion, in investment facilitation, in biosecurity, and in micro, small and medium enterprises. The region has been slow to implement structural reform, and more needs to be done to integrate business environments and promote intraregional trade and investment. This is a great opportunity to promote reform, and it will provide an important impetus for change.

PACER Plus is also designed to remain open to the participation of nonparties, including Fiji and PNG. The agreement will be beneficial for all Pacific island countries, including Fiji and Papua New Guinea, if and when they decide to become parties. And I know that those discussions are ongoing. I, myself, was part of those discussions as minister. The Joint Standing Committee on Treaties noted that the absence of Fiji and PNG from PACER Plus may impact the scope of PACER Plus, but it also noted that, due to the long time frame over which PACER Plus will be implemented, there is sufficient opportunity for these countries to join the agreement if satisfactory conditions can be negotiated.

French Polynesia and New Caledonia, having now become full members of the Pacific Islands Forum, can apply to accede to PACER Plus, and perhaps the minister can also advise us as to how those negotiations are going. As with other parties, participation would require them to conclude negotiations on their market access schedules, and we know that those discussions have been had with countries around their potential involvement. As part of the readiness package, parties will be supported in their preparation to initially implement and ratify the agreement to respond to the needs assessment undertaken by the independent Office of the Chief Trade Adviser. Australia, as I have indicated, and New Zealand are assisting with those readiness activities. (Time expired)

Senator McKIM (Tasmania) (10:06): As it stands, the Greens do not support PACER Plus, and we won't be supporting this legislation. It's worth pointing out that Papua New Guinea and Fiji, the two largest Pacific island nation economies, are notably absent from this deal, and Vanuatu and Tonga have, at various times, withdrawn from the process. But what remains the elephant in the room as far as the Australian government is concerned in its dealings with our Pacific island neighbours is climate change. Of course, climate change is the elephant in the room as far as this government is concerned with regard to a whole range of public policy matters that it considers, but it is particularly relevant when we think about our Pacific neighbours. There are many Pacific island nations that have actually shown fantastic global leadership on the issue of climate change, and that's because they are going to be disproportionately impacted by climate change, particularly sea level rise, when in fact at a global level they have contributed next to nothing to the problem.

It's all very well for Senator Fierravanti-Wells to get up and talk today about some pitifully small amounts of money that Australia has allocated to Pacific island nations to prepare for the climate catastrophe that is looming for them, but let's be clear about the actual opportunity here for Australia. We need to show leadership in emissions reduction, not hand over some pitifully small amounts of money to nations that are likely to disappear off our global maps by the end of the century as a result of sea level rise. What's the Australian government proposing—that a nation like Kiribati, for example, get a few hydraulic jacks under it and jack itself up a couple of metres to avoid it disappearing underneath the surface of the Pacific Ocean in the next century or so? It beggars belief that we had a Pacific Islands Forum recently where the LNP government took deliberate steps to undermine serious action on climate change. And, remember, this government is a wholly owned subsidiary of the fossil fuel sector in this country. The LNP receives tens of millions of dollars in donations every year from dirty, polluting big corporations. We've got a Prime Minister who, of course, is infamous for waving a lump of coal around in the House of Representatives. Typically, he had to have that lump of coal covered in lacquer so he wouldn't get his hands dirty. Well, it didn't work for the Prime Minister, because his hands are filthy with coaldust and they are filthy from accepting donations from big fossil fuel companies.

This is a government made up of climate change deniers, a government made up of climate criminals, and it is posing an existential threat to some Pacific island nations. And do you know what? They know all this. Remember that the Minister for Home Affairs, Peter Dutton, and former Prime Minister Tony Abbott were caught on camera a few years ago having a good old laugh at the impacts of sea level rise on Pacific island nations. Until Australia steps up on emissions reduction, until we become a global leader on climate change, we are a bad neighbour to Pacific island countries. We need to do more. We need to take stronger action. We ought to be a global leader in emissions reduction. And we ought not believe that we can somehow buy off Pacific island nations with pitifully small amounts of foreign aid money that, in the words of the government, will enable them to build climate resilience into their economies and their communities when, in fact, it will do next to nothing to help our Pacific island neighbours avoid the most serious impacts of the disruption to our climate—which half of this government don't believe is being caused by humans and which the other half are not prepared to take the required action on because they have been bought off by the fossil fuel sector.

Senator REYNOLDS (Western Australia—Assistant Minister for Home Affairs) (10:12): I rise to speak on the Customs Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018 and the associated bill. I would note that the bill is, I think rather fittingly, the first bill I am taking through this chamber, and I'm very happy and proud that it is this particular bill.

First of all, I'd like to thank those opposite for their support for this very important bill. I think bipartisanship on this particular issue for our Pacific neighbours is particularly important. Before I go into the specifics of the bill, I would like to address a number of the issues raised by the two Greens senators speaking on this. I think there are a number of areas where they have grossly misrepresented the nature and the benefits of this PACER agreement. Also, clearly, they have no understanding of the strategic context. So I'd like to deal with both of those first.

In relation to the issue of who is joining this, 11 Pacific countries, as we know, have engaged in this already. In relation to the issue of Papua New Guinea, we would note that this is not the end of the agreement; this is just the start. The nations that are still considering joining this agreement are of course very welcome, but I would point out to the Greens that this is a sovereign decision of those nations. In relation to several comments from Senators McKim and Hanson-Young, I'd make this point: like my colleague Senator Fierravanti-Wells, I found them extremely patronising to those nations involved. These negotiations have been extensive and they have been done with the utmost mutual respect on behalf of all of the nations involved. Our officials and the former minister, Senator Fierravanti-Wells, as we've heard, were deeply engaged in this process. But I don't think the senators stopped to think about that or about our trade negotiators, who have spent many months, if not years, on these negotiations. I think that to suggest they were bullying or intimidating our partners in the region is, quite frankly, insulting, and the facts certainly do not bear that out.

In relation to the bill itself, PACER Plus is a regional-development-centred trade agreement. That is why I'm particularly proud to be taking the bill through this chamber today. To date, PACER Plus, as I said, has been signed by 11 member of the Pacific Islands Forum—that is, Australia, Cook Islands, Kiribati, Nauru, New Zealand, Niue, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu. As I said, this is just the start, and negotiations and discussions still continue with other nations.

PACER Plus will provide commercial opportunities for Australian exporters and investors in a range of sectors. These opportunities will increase over time as the provisions of the agreement lead to more open and transparent policies as wider relationships are built regionally and beyond. The agreement itself reflects Australia, New Zealand and the Pacific island countries' commitment to the principles of free and open trade. The underlying impetus for negotiating the PACER Plus and its goals of regional commercial integration is the formation of an interconnected Pacific market that includes Australia and New Zealand, which will enable the Pacific Islands greater access to a larger market for their own consumers and also for their producers, and that is a very good thing.

Despite the somewhat patronising and insulting comments from the Greens, I would just like to remind those in this chamber what this agreement is actually about. Australia and the Pacific island countries are longstanding partners and friends. We have common interests in both economic progress and regional stability. Our partners in the region range from countries richly endowed with people and resources to small atolls with geographically isolated populations. The PACER Plus agreement reflects this diversity as a comprehensive free trade agreement tailored to help Pacific island countries address their specific development challenges and also to assist them in a very sovereign respectful way to better participate in global trade and engage more effectively into global markets.

The coalition government has the most ambitious trade agenda in Australia's history. PACER Plus, a unique trade agreement to drive economic prosperity and raise living standards in our region, will complement our trade agreements already in force, which, I would note very happily, are delivering record export growth and creating hundreds of thousands of more local jobs.

As Senator Fierravanti-Wells has said, this is not a policy done in isolation and it is an important part of the objectives of Australia's white paper—and, again, I commend Senator Fierravanti-Wells for her role in developing this. The Foreign policy white paper has an important process called stepping up. Stepping up support for a more resilient Pacific is one of five priorities for Australia's foreign policy and is set out in the 2017 Foreign policy white paper released only 12 months ago. The white paper states that the Pacific is of fundamental importance to Australia and that 'Australia will engage with the Pacific with greater intensity and ambition'.

The white paper also announced new regional security cooperation initiatives, including the Australia Pacific Security College and work to improve regional information sharing. And we on this side of the chamber, and also the Labor Party, can see that this is an important role for Australia to play in our region. The white paper further reinforces the announcements made by Prime Minister Turnbull at the Pacific Islands Forum leaders meeting year that Australia would step up its engagement through three things—that is, stronger partnerships for economic growth; stronger partnerships for security; and stronger relationships between people—and our PACER Plus agreement assists and works in all three of those areas.

Australia's longstanding development assistance to the Pacific has helped address many of the acute challenges facing the region over many years, including climate change and responding to natural disasters; sustaining economic growth and boosting education, skills and jobs for growing populations; gender equality and recognising the central role women play in achieving better development outcomes for their nations; the threat of major disease outbreak; and, increasingly, the threat of transnational crime across the Pacific. However, we do recognise that the complexities of these challenges demand deeper engagement, integrated policy and fresh ideas to drive transformative change in the region, and this is where PACER Plus assists in that process. Australia's stepped-up engagement is our response to these significant long-term challenges.

In relation to the bills, while PACER Plus provides a framework for integration, dedicated assistance is critical to barriers in Pacific Islands signatories and unlocking the benefits PACER Plus provides for this assistance. The PACER Plus bills represent the key legislative changes required to give effect to the new rules of origin required to implement PACER Plus. The Customs Act 1901 is being amended to include the new rules-of-origin requirements and to enable a full set of related product-specific rules to be made in keeping with our modern free trade agreements. The amendments contained in the legislation will enable eligible goods that satisfy PACER Plus rules of origin to be entered into Australia at preferential rates of customs duty. The Customs Tariff Act 1995 is being amended to set out the preferential rate of customs duty for goods that satisfy the new rules-of-origin requirements. These new rules are consistent with existing arrangements for duties imposed on excise equivalent goods.

Without these amendments, Australia would not be able to complete its domestic arrangements, and the agreement would not be able to enter into force. This would prevent Australian businesses from receiving the various benefits that would flow from the agreement, but it would also prevent the equally significant, if not more significant, benefits that would flow to the PACER Plus partners. It is important that Australia be amongst the first eight countries to ratify, as early ratification would signal Australia's commitment to PACER Plus. As we've talked about in this chamber and in other places many times, PACER Plus is very important for the maintenance of rules based order and rules based trade in the Indo-Pacific region. As I said, PACER Plus does provide commercial opportunities for Australian exporters and investors in a wide range of sectors. These opportunities will increase over time as the provision of the agreement will lead to more open and transparent policies, both here and across the other 10 partners who have already signed up. This agreement reflects our principles of free and open trade and rules based trade. PACER Plus will enter into force 60 days after the eighth signatory notifies Tonga, as the depositary, that it has ratified the agreement.

I'd just like to come back to the point that the Greens made in relation to the 11 countries who are ratifying this and are initial signatories. They specifically raised Fiji and Papua New Guinea. As I've noted in this place, PACER Plus is a truly regional agreement which has 11 Pacific Islands Forum members. PACER Plus will deliver benefits for these nations. Despite the assertions of those on the Greens benches, this hasn't been done in a way that is disrespectful of these nations' sovereignty and it is not disrespectful of those governments. This has been done over an extended period of time with them as partners. Extensive engagement has been undertaken by these nations. In fact, the information that I have back from the minister and the teams who were responsible for this at the time is that this was done in a truly respectful way. We listened to our Pacific partners. There was wide consultation.

The development assistance that is so important that is embedded in this agreement was worked out with each of the individual Pacific island nations, to find out what they needed for this. I would say—through you, Mr Acting Deputy President—to my Greens colleagues in this chamber: this was done with them as full sovereign partners in the process. It was done in a new way to provide the development assistance from Australia and New Zealand that these nations recognise that they need to develop their capability, their processes, their systems and their trade regulations and legislation to make sure that they can engage in the international trade environment.

The Customs Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018 and the Customs Tariff Amendment (Pacific Agreement on Closer Economic Relations Plus Implementation) Bill 2018 represent the main legislative changes for the new rules of origin under PACER Plus.

With those comments I again thank those opposite in the Labor Party for their engagement and support for these bills, I thank all those officials who were engaged in these negotiations for that time, and I also commend the government for this agreement, because I as the minister now responsible think that this is the way forward for our free trade agreements: to not only look at how we as a nation might benefit from this process but also assist other nations and other regional partners, ensuring they are capable of maintaining sovereign trade interests and trade with other countries where their size and their location may in the past have prohibited them from doing so. I commend these bills to the Senate.

Question agreed to.

Bills read a second time.

Senator FIERRAVANTI-WELLS (New South Wales) (10:26): Senator Hanson-Young made reference to an alleged sense of imbalance. I ask the minister to clarify for the chamber. There will be only modest economic and commercial benefits to Australia. Can the minister elaborate on why the trade agreement will assist Pacific island countries more than Australian businesses?

Senator REYNOLDS (Western Australia—Assistant Minister for Home Affairs) (10:27): Contrary to the assertion by the Greens senators in this place, all 11 countries have entered into this agreement as equals, because they realise that there are benefits to their own nations. They have done so in close consultation with our trade officials at minister-to-minister level. A number of countries have been very clear, and we've consulted with them, on the development support they need so they can engage as equal partners in international trade relationships.

PACER Plus is a landmark agreement that covers goods, services and investment. It removes barriers to trade, including tariffs, increasing the flow of goods and investment in the region, generating growth and jobs, and raising living standards in all of its signatory countries. Ultimately what's in it for the nations who have already come on board is the fact that they realise that this is a pathway to greater industry, greater exposure to international markets and greater job opportunities and income for their families, which, as I said previously, is at the heart of the Australian government white paper's proposal for the Pacific, which I know you are fully aware of, Senator Fierravanti-Wells.

PACER Plus is unique. It is both a trade and a development assistance agreement. Australia and New Zealand have committed $33 million in development assistance to help Pacific island countries implement their commitments and strengthen their capacity to trade. That, as all of us in this place except the Greens realise, is a good thing for all the nations involved. There are a number of specific proposals. It provides a vehicle for Pacific island nations to liberalise and reform their economies, a number of which are very small, and also to reverse their economic marginalisation at a pace they are comfortable with. As Senator Fierravanti-Wells noted earlier on, this process takes us through to the 2050s, so it is up to the nations involved as to the time frame and how we do that. Each of the nations has to be comfortable with a range of flexibilities that recognise their own special challenges.

The PACER Plus will also help to facilitate trade in the Pacific island countries. That means it will enhance transparency and harmonisation and reduce the cost of trading and doing business for each one of these Pacific island nations. It also establishes in the development corporation chapter a framework for mutually agreeing with Australia and New Zealand the appropriate support to assist the Pacific island countries develop their capacity to trade. It also provides a modern template for engaging in international trade. This is important for Pacific island countries, as it is for every other country in the world that is not a member of the World Trade Organization, and it is also very important for the Pacific island countries as they move forward and have a greater capacity to negotiate other free trade agreements elsewhere. Probably the fifth major benefit is that, under labour mobility arrangements, it actually expands the opportunity for labour mobility opportunities amongst Pacific island countries, and that includes Australia.

Senator FIERRAVANTI-WELLS (New South Wales) (10:30): One of the wrong assertions, I think, which has been made in relation to PACER Plus is that Pacific island countries would suffer revenue loss as a result of their PACER Plus commitments. Minister, can you just elaborate on that?

Senator REYNOLDS (Western Australia—Assistant Minister for Home Affairs) (10:31): Thank you very much for your question. This issue was raised again in this debate by the Greens senators. Revenue loss will occur under this agreement, but it will be very modest and very small in comparison to the benefits that will flow from these agreements. Reliance on custom duties has been, in the long term, in decline across the Pacific already. Kiribati abolished all of its ordinary customs duty on imports in 2014, while the Cook Islands and Niue apply tariffs on relatively few tariff lines. Most Pacific island countries generally have low tariffs and all Pacific island countries have been negotiating tariff reductions under their existing free trade agreements and with the WTO.

The Office of the Chief Trade Adviser estimated that, when PACER Plus tariff reductions are fully implemented, reductions in tariff revenue for most countries will equate to between one and three per cent of current government revenue. Australia will, of course, continue to assist Pacific island countries undertaking revenue reform through the Pacific Financial Technical Assistance Centre under the auspices of the International Monetary Fund. Target assistance is also available to Pacific island countries under the PACER Plus Readiness Package. Yes, there will be some very modest, one to three per cent, initial impacts in some nations, but the benefits that this arrangement will bring will far outweigh that. We are also providing many other opportunities to assist these nations as they move through that transition period.

Senator FIERRAVANTI-WELLS (New South Wales) (10:33): Can the minister update the Senate on the progress of negotiations with Fiji and Papua New Guinea?

Senator REYNOLDS (Western Australia—Assistant Minister for Home Affairs) (10:33): As I pointed out in my speech—and I thank the senator for the question—PACER Plus is a truly regional agreement, and the first 11 nations are just the start. Discussions continue with a number of other nations—in particular, with Fiji and Papua New Guinea. Australia would very much like to see Papua New Guinea and Fiji join because they have much to contribute to and, I think, would also gain from PACER Plus but, ultimately, as with all nations, their participation is a sovereign matter for their respective governments. PACER Plus will remain open for others to join, including Fiji and Papua New Guinea, even after it comes into force.

Senator FIERRAVANTI-WELLS (New South Wales) (10:34): One of the things that obviously has been a feature of discussions in the Pacific is very much the concept of 'talanoa'—the sitting down, the understanding and the talking through. That has really been the spirit with which this agreement has been under consideration and under discussion. Perhaps at times there have been issues pertinent to whether this is in the public interest of a particular country. Can you elaborate on the ability of Pacific island nations to regulate and to ensure that what they are doing is in the public interest and to put those public interest issues to bed?

Senator REYNOLDS (Western Australia—Assistant Minister for Home Affairs) (10:35): That is another very good question that goes to the heart of some of the matters that have been raised here in this chamber. Pacific Islands countries don't lose their ability to regulate as a result of PACER Plus. One of the most important points here is that this is still respectful of all nations' sovereignty. PACER Plus does not compel parties to give up their regulatory powers and parties are able to introduce new regulations or amend existing regulations.

The commitment of PACER Plus to preserve the right of parties to regulate is highlighted clearly in the preamble to the agreement, which I'll share with the chamber. The preamble says this:

Recognising their right to regulate and their resolve to preserve the flexibility of the Parties to set legislative and regulatory priorities, safeguard public welfare, and protect legitimate public welfare objectives, such as public health, safety, the environment—

I'm sure the Greens would like to know that it does respect their sovereignty in relation to the environment—

the conservation of living or non-living exhaustible natural resources, the integrity and stability of the financial system and public morals;

So that clearly does indicate that the nations do not lose their ability to regulate as a result of this agreement.

Senator FIERRAVANTI-WELLS (New South Wales) (10:36): One of the issues that certainly arose was in relation to alcohol and sugar based products. Is this going to in any way impede the ability of countries to regulate in relation to those? I'm talking more about kava and other issues that are important to Pacific Islands countries.

Senator REYNOLDS (Western Australia—Assistant Minister for Home Affairs) (10:36): In short, the answer is: no, it will not impact in any way their ability to do that.

Senator FIERRAVANTI-WELLS (New South Wales) (10:36): Could you give us some details in relation to the estimated benefits to Australia, especially in terms of export volume and whether there has been any analysis done? I know work was being done in relation to that. Can you tell us where that work is at and what the outcome of that analysis is?

Senator REYNOLDS (Western Australia—Assistant Minister for Home Affairs) (10:37): Yes, I can. According to the National Interest Analysis, once PACER Plus is fully implemented Australian exporters will gain tariff-free access to PACER Plus markets for nearly 92 per cent of all tariff lines carrying 88 per cent of Australian exports to the region. There are clearly significant benefits to Australian exporters and many different commodities right across our nation.

Economic modelling of trade agreements is only one tool to assess whether an agreement is in the national interest. DFAT commissions economic modelling of trade agreements on a case-by-case basis. I've been advised that statistical and methodological limitations mean that current models are unable to estimate the total impact of a free trade agreement on the economy. For example, it is difficult to model accurately the changes to non-tariff barriers, trade facilitation, increased regulatory certainty and other aspects of a free trade agreement such as the rules that are imposed. Also, statistical data on international trade and services, and investment flows into the Pacific, are incomplete.

Two qualitative assessments were undertaken of PACER Plus as a whole. The first one was by the Institute for International Trade at the University of Adelaide, who prepared a report called the Research study on the benefits, challenges and ways forward for PACER Plus, and they did this in June 2008. It did provide an early assessment of issues for consideration in the negotiations. The second one was by the Office of the Chief Trade Adviser, who undertook and published the PACER Plus impact and sustainability assessment in 2016. It was prepared independently by the organisation with input from consultants. It presented an assessment of the potential economic, social and environmental impacts of trade liberalisation under PACER Plus for the Pacific Islands nations themselves.

Senator FIERRAVANTI-WELLS (New South Wales) (10:39): Earlier this year the opposition joined then Foreign Minister Bishop and me on a trip to the North Pacific. Obviously, one of the issues under discussion was the North Pacific countries of the Federated States of Micronesia, Palau and the Republic of the Marshall Islands. They have concluded negotiations on PACER Plus, but they haven't yet signed. There was also an issue there in relation to the compact because they are compact countries with the United States. Minister, can you elaborate on where we're at with the North Pacific countries? In particular, can the North Pacific still join PACER Plus if they don't sign the agreement before it enters into force? How does that work vis-a-vis the compact with the United States?

Senator REYNOLDS (Western Australia—Assistant Minister for Home Affairs) (10:40): The short answer is yes. Should the Federated States of Micronesia, Palau and the Republic of the Marshall Islands not sign PACER Plus before it enters into force, they will be able to accede to the agreement as per provision 9 of article 15, which covers accession. The Federated States of Micronesia, Palau and the Republic of Marshall Islands already have full suites of market access schedules in the PACER Plus legal text. This would significantly expedite their accession to PACER Plus should they decide to do so, but we would very much prefer the Federated States of Micronesia, Palau and the Republic of Marshall Islands to sign PACER Plus as soon as possible so they can start to benefit from the agreement as soon as possible and also access the readiness package that is being made available as part of this agreement.

In relation to French Polynesia and New Caledonia, they joined the Pacific Islands Forum as full members last year. As such, we would also welcome their accession to PACER Plus should they so decide. We would be pleased to see them both join PACER Plus because both nations have much to offer the other nations in that agreement. But also I believe they have much on offer from the agreement with greater economic engagement with other nations in their region. But, as with other new parties, their participation would require French Polynesia and New Caledonia to take an initial market access offer to actually commence the negotiations. We will continue to engage with both countries, should they so desire, on the PACER Plus arrangements.

Senator FIERRAVANTI-WELLS (New South Wales) (10:42): I have one other area which I'd like to cover. We do have other trade agreements that include Pacific island countries, including the South Pacific Regional Trade and Economic Co-operation Agreement. Minister, can you outline how PACER Plus is going to work in that framework and, in particular, how it will interact with other frameworks of which Pacific island countries are members?

Senator REYNOLDS (Western Australia—Assistant Minister for Home Affairs) (10:42): In short, again, the answer is yes. There are a number of forums and arrangements. The first one is with the World Trade Organization, and some Pacific island nations are already members of the World Trade Organization, as Australia is. WTO members already include Fiji, Papua New Guinea, Samoa, Tonga, the Solomon Islands and Vanuatu. Other Pacific island countries do not have the resources needed to participate yet in the WTO, but that is exactly one of the reasons why this PACER Plus program, and its assistance program, is so important. It allows and facilitates these nations to enter the WTO.

Regional economic integration between PACER Plus parties will lead to the deeper and broadened economic integration that is possible between WTO members and it will do so close to home. PACER Plus will cover investment, establish modern rules of origin and also facilitate regulatory cooperation. PACER Plus will actually bring some benefits to WTO membership for Pacific island countries that do not yet have the resources to do so, and that is absolutely a great thing for these nations. It is providing them with development assistance so that they can fully participate in the World Trade Organization arrangements, as well as in other agreements. PACER is a treaty, but it doesn't contain any trade provisions. PACER itself is not a trade agreement, but PACER does have a closed membership.

Another organisation, the South Pacific Regional Trade and Economic Co-operation Agreement, is not itself a regional economic integration agreement and it does not provide for the liberalisation of all of Australia's tariffs, so it is nonreciprocal from Australia's perspective. These rules of origin are antiquated, because they don't cover services, investment, transparency, cooperation or development assistance. Another benefit of the new agreement, PACER Plus, is that it provides greater sovereign capabilities for partners to PACER Plus.

Senator FIERRAVANTI-WELLS (New South Wales) (10:45): Senator Carr earlier made a wrong assertion, I think, that we had the $11 billion. Perhaps, Senator Carr, I can correct you on the issue of your allegation of cuts of $11 billion from the foreign aid budget. This all started when Tanya Plibersek, some years ago, started spreading fictitious and misleading information about your record on foreign aid. Tanya Plibersek repeatedly made claims that the coalition had cut $11.3 billion from the foreign aid budget. This is wrong. It stems from misinformation—lies—and projected forecasts under your own inflated fiscal mismanagement. Only those opposite can spread lies about trying to spend money that they didn't have beyond the forward estimates.

Let me take you through the history, because I keep hearing those opposite going on and on about this $11 billion. ABC's Fact Check found Tanya Plibersek's claim on Labor's own foreign aid budget, that Labor doubled the aid budget whilst in government, was overblown. Looking at real foreign aid spending, Labor's last budget showed that foreign aid, based on 2011-12 prices, increased from $3.5 billion in 2007-08 to a forecast $5.5 billion in 2013-14, which was an increase of only 55 per cent, not the doubling that Tanya Plibersek keeps harping on about. The reason I go back to this is that this is a lie upon a lie that goes back to 2015. Those opposite keep harping on about this when they know it is not right. Indeed, in an op-ed penned in 2006, Tanya Plibersek wrote, 'Our aid efforts should be focused on the alleviation of extreme poverty, not on short-term political gain, such as funding the Pacific Solution.'

I have to say to those opposite that this is hypocrisy writ large, because for a short time when you were in government you actually diverted money from the aid budget for onshore processing costs for asylum seekers. Indeed, you became one of the highest recipients of your own aid budget. The countries that suffered most as a consequence of that act were the very Pacific island countries that you are now coming in here and bleating about. I really wanted to put that on the record because, Senator Carr, you should go back and check your facts. When the ABC's Fact Check tells you that you have your figures wrong, perhaps you ought to heed those comments.

I have a final question for the minister. On balance, assertions have been made that this is not a framework that is actually going to benefit Pacific island countries. We have heard this peddled by those opposite. Can you, in your summing up comments, outline for us the actual economic gain that this is going to give to Pacific island countries?

Senator REYNOLDS (Western Australia—Assistant Minister for Home Affairs) (10:49): Yes, I can. There are a number of elements to that support. One of the points I'd make is that the Pacific region continues to experience significant social, economic and environmental challenges. We all in this place acknowledge that. Distance and weak infrastructure make international trade expensive, and small domestic markets and narrow production bases mean that countries rely on their internal economies for growth and for consumption. While PACER Plus provides the framework for regional trade and economic integration, dedicated assistance is absolutely critical to addressing barriers in signatory countries and to unlocking the Pacific's ability to partake in a global market.

The PACER Plus Readiness Package—which I think the Greens senators who spoke earlier clearly hadn't even read, or understood what was there—is absolutely vital to providing those benefits. The readiness package is that Australia and New Zealand will provide joint funding packages of $8 million for readiness activities. This is to assist signatories from other nations to ratify their PACER Plus agreements and also, as we've said, other agreements—for example, through the WTO framework.

The support that we're providing in this bill is for things like, firstly, legislative drafting to assist signatories to review and update relevant laws and regulations in their own countries. Secondly, there is Customs modernisation and harmonisation, implementation of up-to-date tariff codes and transposition of schedules. Those sound a little bureaucratic but are vitally important for small nations to be able to do. Each signatory will be able to implement the latest version of the internationally recognised systems known as the Harmonized Commodity Description and Coding Systems. Again, it sounds very bureaucratic and technical, but for these nations to engage fully in the World Trade Organisation and also in other FTAs this has to be done.

We're also providing support to those nations as they require. There is training on notification requirements, including helping governments and private sectors to meet PACER Plus obligations around transparency. We're providing funding support for public outreach and stakeholder engagement, and also for revenue planning and mitigation to help signatories manage any impact on their government revenue associated with tariff reduction, as discussed earlier.

As part of PACER Plus, Australia's commitment to an aid-for-trade funding target is for 20 per cent of its official ODA budget in the Pacific. This target complements the party's own trade related initiatives to increase economic growth, to generate jobs and to increase living standards in each and every one of these Pacific nations. As I said, they're challenged by distance, by size and also by having very small agencies which need to be able to deal with those issues.

I will leave you with two examples. The first one is agricultural export development. The Pacific Horticultural and Agricultural Market Access Program helps Pacific exporters meet the quarantine standards and other market access requirements of their trading partners. Again, it is very practical and very development focused assistance to enable these countries to engage in the international trading market. The second example is trade facilitation export and promotion and investment. Australia has increased funding to the Oceania Customs Organisation to help to strengthen Pacific Customs administrations, and will continue our longstanding support for Pacific trade and investment. It provides high-quality export facilitation investment and tourism promotion services across the region.

My final comment to this chamber is that I wholeheartedly endorse PACER Plus and the enabling legislation. This is a good thing. I'd conclude by, again, thanking the Labor Party for their engagement and their support for this very important bill to enable the PACER Plus program. Thank you.

Bills agreed to.

Bills reported without amendments; report adopted.

Senator PAYNE (New South Wales—Minister for Foreign Affairs) (10:54): I move:

That these bills be now read a third time.

Question agreed to.

Bills read a third time.

Senator CAMERON (New South Wales) (10:57): This is a continuation of my contribution to the black economy discussion, as part of the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018 that's before us. This bill, as I indicated in my previous contribution, reflects two of the Black Economy Taskforce measures: electronic sales suppression tools and third-party reporting. These are issues that are becoming more important because of the expansion of the so-called gig economy, where working people are becoming more and more subjected to bad conditions outside of the award system or any agreement system, and the expansion of contracting to try to build a barrier between the employer and the employee so that the employer can simply say that the employer is not responsible for the workers who are doing the work to make the employer's business profitable. These are issues that have been concerning Labor for some time.

The issue of contractor tax compliance in the building and cleaning industry is really important. I'm involved in an inquiry into the cleaning contractors in the retail sector, where major companies like Woolworths—making billions of dollars of profit year on year from the Australian community—won't employ cleaners directly. Those cleaners are then subjected to contractors' pyramid subcontracting. Many of these migrant workers are being forced to work for $7 an hour under the guise that they are being trained. This is reprehensible conduct. The problem is that we have a government that are so divided that they can't focus on the issues for working people or the community in this country. They are so focused on their internal hatred of each other that issues like this do not receive the appropriate attention that they should.

The expansion of the taxable payments reporting system is a good thing. The measures before the chamber will see about $132 million of payments coming in over the forward estimates, with about $56 million of them going back to the states. But what we've seen in relation to the government's incompetence is that there was a $230 million discrepancy in the data that was provided for this bill because Treasury did not up upload the proper data into their analysis.

We take the view that this is a start. The Black Economy Taskforce looked at a massive range of issues. We agree that this is a start, and we will support this bill. I indicate that Labor will also be supporting the amendments from Senator Whish-Wilson and the Greens. We don't believe that enough has been done by government on the anti-money-laundering and counter-terrorism-financing area. More needs to be done in that area. But when you're too busy carving each other up, when you're too busy knifing your own leader, when you're too busy displaying your hatred for each other in the public arena day in and day out and when you're too busy bullying female coalition members to try to get the numbers to knock off a certain Prime Minister, is it any wonder that the important issues for this country don't get dealt with appropriately? That's exactly what we have. Is it any wonder that the now leader of this divided, decaying, decrepit government called his own members muppets? Of course they're muppets. We have the muppets sitting across here too busy fighting each other to deal with the issues.

What we need in this country is a government that can actually address the issues for workers in areas all over the country. If the black economy is working in cash-in-hand payments, employers who do the right thing cannot continue to be competitive. If there's underreporting of income, legitimate companies are put under pressure because they can't compete with the companies that are ripping off the tax department. If companies don't have proper records, or poor or false records, then these are issues that should be addressed by any government worth its salt. These are issues that have been raised in the Black Economy Taskforce. Phoenixing is when a contractor gets a contract with a company that goes bust the next day, and then the same people are sitting in the same building, at the same desk, under another name and ripping workers off. It's just not good enough. Sham contracting is forcing workers to take out ABNs when they are not businesses. There's underpayment and exploitation of workers. We had Senator Molan defending Woolworths at estimates the last time I was there. We had coalition senators defending multibillion dollar companies against cleaners. I think it says everything about this coalition. They are too busy defending their mates. They are too busy fighting each other to actually make this a better country. That's the problem we have.

ABN fraud and abuse are rampant, and this is one of the issues that was raised in the Black Economy Taskforce. Using interposed entities to avoid tax was also raised. These are all issues that we see reported in the Black Economy Taskforce, but what do we get? We get a couple of recommendations. One of the recommendations that the Black Economy Taskforce made was that this government should work with the trade union movement to try and deal with and identify some of the rorts that are taking place. But can you imagine this government working with the trade union movement? They are too busy funding the ABCC and the Registered Organisations Commission. They are too busy putting their own people, putting their mates, into these so-called independent bodies to attack the trade union movement. This government are a disgrace, an absolute disgrace.

We get this problem where they get so engrossed in attacking working people's representatives, attacking the people who actually increase wages and conditions for workers, that they just lose the plot. That's why we've got two recommendations in this bill when there should be a number, a raft of recommendations, coming through. The gig economy, contractors doing the wrong thing and businesses operating on a basis that undermines legitimate companies should all be dealt with. But this government, the muppets, the muppet show that this government is, just can't get their act together to deal with the issues. That's why there is no stability in the government. The government is absolutely unstable.

In the period 2013 to 2018 the Labor Party has had one leader and one deputy leader. What have we had with the coalition? We've had Prime Minister Abbott and Deputy Prime Minister Truss. We've had Prime Minister Turnbull and Deputy Prime Minister Truss. We've had Prime Minister Turnbull and Deputy Prime Minister Joyce. We've had Prime Minister Turnbull and Deputy Prime Minister McCormack. Now we've got Prime Minister Morrison and Deputy Prime Minister McCormack. Is it any wonder that in that period of five years this government could not get its act together in a whole range of areas? They are an absolute disgrace. They are a government that just can't get their act together—

Senator Watt: A rabble—

Senator CAMERON: I've just been reminded that they are an absolute rabble of a government—

Senator Brockman interjecting—

Senator CAMERON: No wonder you're laughing, because you know it's true. You know that you are a rabble of a government. The coalition is an absolute rabble. The National Party is a rabble. The Liberals are a rabble. The Liberal rabble doesn't like the National rabble and the National rabble doesn't like the Liberal rabble, and the Liberal rabble don't like each other. That's the bottom line with this mob. They are too busy attacking each other like a bunch of schoolkids to actually bring a bill here that deals with the rip-offs of taxation in this country, deals with the black economy and provides more tax, so that you can invest in schools, invest in health, invest in the community and invest in infrastructure. This government is so bad, so disjointed and so insecure that none of these big issues get dealt with.

It's about time that the people of Australia get an opportunity to make a decision about this rabble of a government. The sooner we get to an election the better. The sooner people can make a judgement about this new Prime Minister—who was at the heart of all of those changes in government and who defended the attacks on the Australian community in that first Abbott budget, attacking pensioners, reducing pensions, reducing the capacity for families to put food on the table and attacking young people who couldn't get a job—the better. The sooner that people understand that this new Prime Minister, Prime Minister Morrison, was at the heart of every one of the attacks on working families in this country the better.

Was this new Prime Minister, when he was Treasurer, prepared to deal with black economy issues? No. Was he prepared to deal with the banks, which are ripping workers off, ripping families off, ripping pensioners off and ripping disabled Australians off? No, he was not. On 26 occasions, he stood up and said, 'We should not have a banking royal commission.' Now that he is Prime Minister, he has changed his mind.

We know what this government will do. They will do the same as the John Howard and Peter Costello government did. When they're in trouble, they will throw money at every interest group to try to get a vote. We know the argument that they are good economic managers is an absolute myth. The eras when this country behaved in an economically incompetent manner were under Bob Menzies and under John Howard. They are the times when things went really bad. When the money just keeps pouring in, they throw the money out and don't build for the future. They don't build the infrastructure, build the education systems or build the health system. It's a demonstration of the incompetence of this government.

We want a future for our kids. We want a healthy future for our kids. We want an environment that our kids can look forward to in the future. We want to say that they will have the same benefits we had—that is, of a decent environment—but those opposite are too busy carving each other up on environmental issues. They now simply say it's all about reducing electricity prices. Well, it's not simply about reducing electricity prices; it is about maintaining a future for our kids and grandkids. This incompetent government should go, and this bill demonstrates that they don't have the capacity to deal with the issues effectively.

Senator BROCKMAN (Western Australia) (11:12): I will just start by responding to some of the things Senator Cameron put before the chamber. I think the Australian people very well remember the Rudd-Gillard-Rudd years and the true rabble they were and the economic mess that we inherited from that government. The 2014 budget and the governments the coalition have led have done an absolutely magnificent job of putting the budget back on track and getting the economic circumstances in Australia back on a positive note. The Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018 does represent an ongoing effort from this government in the space of the black economy and in the space of those who aren't paying their fair share of tax that all Australians require of both the business community and individuals. Everyone has to make a contribution under the law, and this bill reflects that fact. It reflects an ongoing commitment from the Prime Minister in this area as well.

I will bring us back to the 2018 budget. Senator Cameron said we had done nothing in this space. But then-Treasurer Morrison announced a number of changes in this area: new phoenixing offences, to target operators who conduct or facilitate phoenixing activities; changes preventing directors from being able to improperly backdate resignations to escape liability; changes limiting the ability of directors to resign, if resignations would leave the company with no directors; changes restricting the ability of related creditors to vote on appointing, removing or replacing external administrators; and changes extending the director penalty regime. This bill represents a step in an ongoing process of making sure that everybody—businesses and individuals—pays their fair share of taxation. This is never something that reaches a finishing point. We always see technological change, particularly—and other things, but technological change, particularly—as being one of the ways in which some people in society seek to avoid paying their fair share of tax. That is what this bill addresses.

The government is committed to a fair taxation environment for businesses to ensure that all businesses are compliant with the law. This is absolutely critical to fairness in society. Government has announced these measures to address a growing issue in the black economy, and this is particularly in relation to deliberate tax fraud carried out through interference with point-of-sale technology. The measures in this bill form one part of a broader suite of reforms that the government is progressing through its response to the Black Economy Taskforce final report.

So what does this bill do? It bans the manufacture, distribution, sale and use of sales suppression technology in Australia. This is technology with no purpose other than to facilitate tax fraud by allowing businesses to conceal their income by manually altering sales figures. It extends the taxable payments reporting system to two industries that present tax compliance risks, and they are the cleaning and courier businesses. This is to ensure that payments made by businesses to contractors in these industries are reported to the Australian tax office.

Schedule 1 deals specifically with the electronic sales suppression tools. The schedule creates a number of new offences pertaining to the manufacture, distribution, possession, sale and use of electronic sale suppression tools for the purposes of not disclosing business income. This technology is used solely for the purpose of tax evasion; it has no other reason for being on somebody's computer. The new offence will restore integrity to the tax system. There is evidence that the prevalence of this technology is on the rise globally, with a number of international jurisdictions taking similar actions to crack down on this activity.

This is where the government's involvement in international forums that deal with these sorts of issues is so important, because we see these practices spread out globally. Often, the software is not developed in the domestic context; it's developed overseas, and these matters often appear in other jurisdictions first. By being involved in those forums we are able to get advanced warning that this may be coming our way and be able to take action in a timely fashion. But, as I said, this is an arms race. Our legal system as it stands is never going to be able to take into account what may come next year, or in five years or 10 years, so this place and the government need to be responsive to these changes. And that's what this government has been.

The sales suppression software comes in the form of a physical device or program, or some other thing capable of manipulating or destroying records that an entity is required to keep or make. As I said earlier, there is no legitimate use for these tools. Their only purpose is to erase the transaction records from point-of-sale or accounting systems, leaving no audit trail. Common techniques include the reclassification of GST taxable sales to GST non-taxable sales, or reducing the amount that the sale was for. This is done in such a way that there is no evidence trail of the changes made, making prosecution or recovery very difficult for the ATO.

It is important to note that, while these practices are already illegal, this bill seeks to criminalise the software and devices which allow businesses to evade detection for these offences easily. Obviously, some of these things are very hard to track down—particularly when these pieces of software and devices are specifically designed to erase all records. That's why it's very important that we actually ban the tools themselves and not merely the practice. The offences being introduced by the government are subject to strict liability and heavy penalties to deter the use of this technology and to clamp down on these practices.

Schedule 2 involves third-party reporting. The second schedule implements the third-party reporting requirements for businesses in the courier and cleaning industry. This is in response to evidence that there is significant underreporting of income in these sectors as identified by the Black Economy Taskforce and the Australian tax office.

We're ensuring that we do have a fair taxation system. The government is committed to making sure everyone pays their fair share of tax. But this is also about making sure that taxes are as low as possible. If everyone pays their fair share, then taxes do not need to be in any way artificially high. We need to maximise the revenue under the current system, not seek to impose new taxes on people. Individuals and businesses engaging in illegal tax avoidance undermine the integrity of the entire system and unfairly shift the burden onto law-abiding Australians, which we must always remember is the vast, vast majority of Australians. The vast majority of Australian businesses and the vast majority of Australians are not involved in these kinds of practices, and we cannot tar all industries and all businesses with the same accusation or brush. We don't want to think that every business is involved in this activity. It's simply not true. We know that the vast majority of businesses do pay their fair share of tax. However, those who don't unfairly shift the burden onto those who do.

Just as we have delivered on our plan to crack down on multinational tax avoidance by introducing new laws to close loopholes and ensure that profits are taxed in Australia, as they should be, we're also ensuring that Australian businesses are paying their tax according to the law in this particular area. These measures form part of the government's commitment to cracking down on tax avoidance so that we can continue to deliver to all Australians the services that are essential and so that we can afford to deliver our agenda on tax relief for hardworking Australians. So, we can continue to do all the things that a government does that are worthwhile for people. However, we also need to recognise that business plays a fundamental role in employing and that contracting is not something that is illegal or that should be in any way restricted in our society. It's a very important tool for business. It's a very important way for people to gain jobs, Senator Cameron.

Senator Cameron: Seven bucks an hour. Seven bucks an hour.

Senator BROCKMAN: It's a very important way for people to get a job. All businesses should comply with the law, but it is a very important way in which people find employment, and employment is a source of worth. It is a source of dignity. It is the best thing that we can do for people, and it is certainly far, far better than any form of welfare. So I commend this bill, and I certainly hope that we see it through this parliament.

Senator LEYONHJELM (New South Wales) (11:22): I rise to speak on the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018. Creativity is fundamentally human. When art is found on the caves of Arnhem Land, we know beyond any doubt that it was a human being who drew it. Yet this bill seeks to place creativity under the cloche of the criminal law. Schedule 1 of this bill makes it illegal to create software that can be used to falsify point-of-sale records of businesses. A software creator faces a reverse onus of proof in the event of prosecution. This is contrary to the fundamental principle of our system of justice, dating back 700 years to the Magna Carta, that the accuser makes the case. It also contravenes another principle—that it is the intent of the criminal that matters, not the tools used. A criminal act requires a guilty mind. Tax evasion is a crime in Australia. Criminalising the creativity of software developers whose tools might be used to evade tax is not the answer; better enforcement of tax evasion law is. Sales and tax return information can be recorded by hand, fairly obviously, with no software, all quite legally. Yet if a shopkeeper uses such means to falsify sales records in order to commit tax evasion, should we seek to ban paper or ink? Clearly this is ridiculous.

Schedule 2 to this bill continues the confusion about whom the law should target—the criminal or the consumer. It seeks to impose a regulatory burden on companies that employ courier or cleaning services. The justification for this is that these services are said to be particularly prone to tax evasion. Again, this is wrong. It should be the courier and cleaning operators that are targeted by tax evasion enforcement authorities, not the innocent people or businesses that pay for their services. This is no more than punishing the innocent for the crimes of the perpetrator. I oppose this bill.

Senator STOKER (Queensland) (11:25): I rise to speak in support of the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018. A black economy is one that seeks to avoid the obligation to contribute to the welfare of our society, and it penalises Australians in all walks of life. Its defining feature is an intent by individuals and businesses to avoid making a fair contribution to the operation of this country. It's a problem, and at times it can be looked upon by those who participate in the black economy as their being clever in their efforts to avoid the taxman. The consequence of that deprivation, though, is that we have less available for us as a society to invest in health, education and the range of other essential services that are provided by government. It means that the people who are honest in their financial dealings are penalised by having to carry a greater impost or a greater share of what's necessary to run this country.

What are the features of a black economy? It can be as innocuous as paying the tradie cash to get a lower quote for some work around the house or accepting cash wages off the books. It can be welfare fraud, moonlighting, undeclared income or phoenixing. More worrying is its link to crime and criminal activity. The laundering of money is a major feature of the black economy—or, as it's sometimes called, the cash economy or the underground economy. It's easy to think of this as a victimless crime, but it's not. The victims are those people who do the right thing, the individuals and families who contribute fairly to the tax system, the small businesses who do the right thing but suffer because their competitor isn't operating on the same level playing field.

Another invidious feature is the potential that gaming the system will become endemic, putting increasing pressure on those people and businesses that are doing the right thing. We hear Labor banging on all the time in this place about inequality. Well, here's a classic example of inequality whereby many people are doing the right thing while another group are not. Any growth in the black economy becomes even more disconcerting, given the recent economic observation that 40 per cent of taxpayers are net contributors to the budget while 60 per cent are net consumers from the budget. With the ratio of people who are working to those who are not working in decline as the population ages, the dollars that aren't collected will exacerbate the problem of funding the core operations of a government.

As an aside, while talking about people and organisations carrying their fair share of tax contribution, it's difficult not to query why trade unions and the quite enormous enterprises that many of them run also escape the tax system. When organisations like the CFMMEU have assets in excess of $350 million, quite substantial commercial business operations and an annual income of over $130 million that comes through it but pay no tax, it's a distortion. I'd have to say that that's a classic example of inequality. While the black economy can be traced back to the time that taxes were first collected, its sophistication has increased with the advent of technology and changes in business models. The sharing economy and the ability, through computer coding, to be clever bring new challenges to the tax system.

How big is the black economy and what are its dynamics? Unfortunately, it seems that the black economy is growing at a rapid rate. The Black Economy Taskforce has estimated that the black economy is worth three per cent of GDP, or approximately $50 billion per year. This is 50 per cent larger than the figures estimated by the Australian Bureau of Statistics in 2012. That's an acceleration that is not sustainable. What's just as concerning is that cash wages and unstated business income make up only half of the black economy. For instance, $16 billion is lost to money laundering, $7 billion to $10 billion is lost to illegal drug activity, $3 billion is lost to phoenixing and $2 billion is lost to identity fraud.

This $50 billion burden on the Australian economy hinders the government's ability to fund essential services for those who really need them, to provide the basics of a secure Australia, to provide, quite importantly, tax relief and to pay off the debt and deficit left to us by the Labor Party. And $50 billion could pay for a lot of things. It could pay down an awful lot of debt. It could pay for the construction of 100 new high schools, 22 new hospitals, 12 new submarines or even 15 coal-fired power stations. I am pleased that the government has recognised the problems of the black economy and responded to the Black Economy Taskforce's final report as part of the 2017-18 budget.

Proactively, the government has announced these measures to address the growing economic and social problems that arise from the black economy: banning the manufacture, distribution, possession, sale and use of sales suppression technology, which allows businesses to conceal their income, and extending the taxable payments reporting system to two industries that currently present tax compliance risks, the cleaning and the courier industry, to ensure that payments made by businesses to contractors in these industries are reported as they should be to the Australian Taxation Office.

The bill delivers on the 2017-18 budget decisions. The measures in this bill form one part of a much broader suite of reforms that the government is implementing through its response to the Black Economy Taskforce's final report. In schedule 1 of the bill, the government addresses electronic sales suppression tools. One of these is a device, program or other tool capable of manipulating or destroying records that an entity is legally bound to keep or make. The primary function of sales suppression software is to facilitate the understatement of a business's income to facilitate tax evasion. I can't see a legitimate use for this kind of technology. It's there for the purposes of avoiding an audit trail. Currently, penalties are only imposed on the taxpayer for evading tax or not keeping proper records in the first instance, but they don't, at present, explicitly penalise any part of the supply chain for the possession or use of this kind of software. The new offences target each stage of the software supply chain, including manufacture, production and sale.

The schedule creates new offences for the manufacture, distribution, possession, sale and use of electronic sales suppression tools for the purposes of not disclosing business income. There is no legitimate reason for having these tools. They remove transactions from electronic record keeping systems. They change transactions to reduce the amount of each sale made. They can modify GST taxable sales into being GST non-taxable sales for the purposes of those records. In all instances, no audit trail of the process of making those changes is kept. The government is introducing offences that are subject to strict liability and heavy penalties to deter the use of such technology right across the software supply chain. This technology is used solely for the purposes of tax evasion, and the purpose of these offences is to ensure that there is integrity in the tax system.

Recent reports from the Organisation for Economic Co-operation and Development, the OECD, have highlighted that this software is spreading globally. Its use has been identified in a number of jurisdictions, including Canada, the United States of America, Germany and Sweden. Many of those have also implemented measures to address this risk. The ATO has uncovered concrete examples of the use of this software in Australia. It was recently reported in the US that sales suppression software was allegedly used to collect $20 million in fraudulent sales from the restaurant industry that was sent to Hezbollah, the terrorist group in Lebanon. In Sweden, an undercover documentary team identified 100 companies that were using the software. In Norway, the Norwegian Hospitality Association estimates that between 10 and 20 per cent of sales in the restaurant industry are fraudulent because of the use of tools like this. And sales suppression in Canadian restaurants is estimated to cost Can$2.4 billion per year.

Schedule 2 of the bill deals with third party reporting. From 1 July 2018, it would require businesses in the courier and cleaning industries to give an annual report to the ATO regarding the payments they make to businesses for the provision of courier or cleaning services. Those reporting obligations would apply from the 2018-19 income year, and reports would be required by 28 August 2019. The measure is estimated to result in the inclusion in the ordinary tax system of $132 million in taxes over the forward estimates period. Business-to-business payments for courier and cleaning services are within this scope. The implementation of taxable payments reporting systems in the building and construction industry resulted in improved contractor tax compliance and the reporting of income. This is an extension of that policy—that approach—to other industries that are regarded as high risk for black-economy-type activity.

The ATO has prepared guidance material designed to assist businesses that operate in the courier and cleaning industries to transition to compliance with these reporting requirements, to try and ease the process of compliance with these measures. The information that's reported to the ATO is used for the pre-filling of tax returns or activity statements which should, in fact, ultimately make it easier for contractors to be able to lodge their income tax returns and allow for data matching to ensure that contractors are complying with their tax obligations, such as correctly lodging their income tax returns and complying with business activity statement obligations.

These are all welcome measures to address the black economy and they need to be considered in light of the wider reforms the government has undertaken in changing tax arrangements. This government is getting on with the job of building a strong and fair economy and creating jobs—all within the fairness of a tax system that works for all businesses and for all Australians. I support this bill.

Senator WHISH-WILSON (Tasmania) (11:37): I rise today to say that the Greens support the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018, but I note that I will move a second reading amendment when I finish this speech.

We, as a party, have taken tax avoidance in this country very seriously. My previous colleague and leader, Tasmanian Christine Milne, initiated the original Senate inquiry into multinational tax avoidance. That kicked off nearly four years ago. A number of senators in this chamber have been involved in that long-running inquiry. It's still continuing in various forms, but we've managed to get some good outcomes in this place—one is all of us working together on multinational tax avoidance. We still have a long way to go; there are still many more things we have to do. We have to continue to prosecute the case in Senate estimates every time we speak to the ATO, and we need to continue to push for stronger measures to crack down on tax avoidance across the board.

This bill also targets tax avoidance. It outlaws the use of electronic tools that are used by a business to falsify their sales so as to reduce their recorded income and to misrepresent their employee records. The measures in this bill should ensure that more businesses are paying their fair share of tax and paying their workers their fair due. That's ultimately what this is about: it's about making sure that businesses pay their fair share of tax. We, as individuals in this country, all know that if we don't do the right thing in our own tax returns we run the very serious risk of severe penalties. It shouldn't be any different for the corporate sector. We have to make sure that the Australian tax office and our other regulators have the right resources to audit and monitor tax avoidance, and we need to work through international treaties to target some of the biggest tax avoiders in this country.

While we are strictly talking about tax avoidance, or illegal and unethical behaviour, we should also be tackling some of the bigger issues around corporations not paying their fair share of tax, by looking at things like the petroleum resource rent tax. I have said it a million times in this place and I'm going to continue to harp on about this: we can't talk about fairness and equity and tackling inequality in this country unless we talk about tackling the petroleum resource rent tax. Nearly $300 billion in legal tax credits have been granted through a system, a rort, which has been in place in this country for nearly two decades. It allows some of the biggest and most profitable countries on the planet, which happen to be also the biggest polluters on this planet, to avoid paying tax and avoid paying royalties to the Australian people for the resources that they extract from our sovereign nation. In my opinion, that is very low hanging fruit—for the Senate to bring in changes to the PRRT. There are others around this chamber who want to see this happen. We had the specific sub-inquiry into this issue through the multinational tax avoidance inquiry, and it is something which we absolutely need to get on with. Nevertheless, all these challenges face us. Bills like this matter, in the aggregate.

We support this bill, as we do any measures that are genuinely designed to crack down on the black economy. But, if we are going to talk about the black economy and raise these issues in the federal Senate chamber, then we need to talk about money laundering in the bigger context, especially money laundering through real estate. I will use the opportunity provided in this bill today to move a second reading amendment that highlights 12 years of inaction on this issue—12 years of inaction on what is arguably the biggest issue in the black economy. I don't think there is anyone in this chamber who could deny the reason we haven't cracked down on the dark heart of money laundering in this country, and that is that vested interests have lobbied so hard to stop this from happening. I'll be outlining the details in my second reading amendment.

There are a couple of points to note—they are in my second reading amendment, which I hope all senators have had a chance to look at. The explanatory memorandum to the 2006 anti-money laundering and counterterrorism financing bill forecast a second tranche of legislation that would regulate real estate agents and a range of non-financial transactions provided by accountants and lawyers. That was in 2006. Twelve years ago that legislation said: 'This has to happen. This needs to go the next step.' Once again, I ask senators to reflect on why we haven't got there in 12 years. While I'm not downplaying the importance of what we're doing here today, the biggest issue in money laundering in this country is still an issue, and there has been no solution and no legislative change that has come before this chamber to propose cracking down on that. There has been a discussion paper, which has been looked at by several governments over the years. I understand Senator Brandis himself wanted to tackle this issue before he finished up as Attorney-General, but it never happened. So, even back then, they were saying, 'We need to go this next step.'

In April 2016, the government released a statutory review of the AML/CTF laws—the anti-money-laundering laws. This review recommended that the government develop options for regulating lawyers, accountants and real estate agents under the act. Exactly 10 years later, the government review recommended that we take action on this issue. The government then undertook consultations on the regulation of lawyers, accountants and real estate agents under the act, and this finished in January 2017 with a promise to act soon thereafter—so 18 months or so ago. But, once again, we have seen nothing since. Action on this issue has been stalled.

In the few seconds that I have left before we move to other items—and I presume I will be in continuation after that, Mr President—I just once again ask the Senate to reflect on why we're having a bill like this before us today and yet the issue that's most critical hasn't come to the Senate in legislation.

I move:

The Australian Greens amendment on sheet 8499 as revised:

Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018

At the end of the motion, add:

", but the Senate:

(1) notes:

(a) the explanatory memorandum to the Anti-Money Laundering and

Counter-Terrorism Financing Bill 2006 forecast a second tranche of legislation that would regulate real estate agents, jewellers, and a range of non-financial transactions provided by accountants and lawyers;

(b) in April 2016 the government released the statutory review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 that contained a recommendation for the government to develop options for regulating lawyers, conveyancers, accountants, high-value dealers, real estate agents and trust and company service providers under the Act;

(c) the government commenced consultation on the regulation of lawyers, conveyancers, accountants, high-value dealers, real estate agents and trust and company service providers under the Act, and submissions to this consultation closed in January 2017;

(d) the Financial Action Task Force's April 2015 Mutual Evaluation Report on Australia's measures to combat money laundering and terrorist financing stated that Australia is an attractive destination for foreign proceeds of crime, particularly corruption-related proceeds flowing into real estate;

(e) the December 2017 OECD Phase 4 Report on Australia's implementation of the OECD Anti-Bribery Convention recommended that Australia address the risk that the real estate sector could be used to launder the proceeds of foreign bribery; and

(2) calls upon the government to introduce legislation that would address money laundering through real estate."

The PRESIDENT: Senator Whish-Wilson, you will be in continuation when debate resumes. Being 11:45, the debate is interrupted.

Senator BUSHBY (Tasmania—Chief Government Whip in the Senate) (11:46): I present the 10th report of 2018 of the Selection of Bills Committee, and 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 2018

1. The committee met in private session on Wednesday, 12 September 2018 at 7.20 pm.

2. The committee recommends that—

(a) the provisions of the Aged Care Quality and Safety Commission Bill 2018 and the Aged Care Quality and Safety Commission (Consequential Amendments and Transitional Provisions) Bill 2018 be referred immediately to the Community Affairs Legislation Committee for inquiry and report by 12 October 2018 (see appendix 1 for a statement of reasons for referral); and

(b) contingent upon introduction in the House of Representatives, the provisions of the Fair Work Amendment (Family and Domestic Violence Leave) Bill 2018 be referred immediately to the Education and Employment Legislation Committee for inquiry and report by 12 October 2018 (see appendix 2 for a statement of reasons for referral).

3. The committee recommends that the following bill not be referred to committees:

Veterans' Entitlements Amendment Bill 2018.

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

Commonwealth Places and Services (Facial Recognition) Bill 2018

Crimes Legislation Amendment (Police Powers at Airports) Bill 2018

Shipping Registration Amendment Bill 2018

Social Services Legislation Amendment (Ending the Poverty Trap) Bill 2018

Treasury Laws Amendment (Supporting Australian Farmers) Bill 2018.

Senator BUSHBY: I move:

That the report be adopted.

Question agreed to.

Senator SIEWERT (Western Australia—Australian Greens Whip) (12:37): I move:

That the Social Security (Parenting payment participation requirements – classes of persons) Instrument 2018 (No. 1), made under subsection 500(2) of the Social Security Act 1991, be disallowed [F2018L00238].

This relates to a disallowance on the Social Security (Parenting payment participation requirements—classes of persons) Instrument 2018 (No. 1). This instrument specifies two classes of persons—specifically, the targeted participant and the intensive participant. These two classes of persons correspond with the two program streams—specifically, the targeted stream and the intensive stream—under the national expansion of the ParentsNext program in all non-remote areas of Australia that commenced on 2 July this year. This instrument supports the expansion of the ParentsNext program. This is about the ParentsNext program.

This exemption will impact 68,000 parents annually. Approximately 96 per cent of participants will be women, and 10,000 of these women will be First Nations peoples. ParentsNext is a pre-employment, compliance based program for parenting payment recipients with young children—mostly women—with the aim, supposedly, of helping them with their education and training or employment goals. Ultimately, the program is designed to increase the work readiness of parents by the time their youngest child is six and to increase female participation in the workforce. The national expansion of the program follows a trial in 10 locations from 4 April 2016 to 30 June this year. By 31 May this year, 24,109 people had participated in the trial.

As I mentioned earlier, this expanded program has two streams. The intensive stream will be operating in the 10 existing trial locations and in 20 additional locations that have a high proportion of First Nations peoples who are receiving the parenting payment. Those who are still participating in the trial of the program at the rollout date will have been transitioned to the intensive stream of the expanded ParentsNext program. The targeted stream will be delivered in jobactive employment regions across the country, except in the locations that the intensive stream will be operating in. In the instrument, two classes of persons are set out for those two streams; for each, it specifies that the parent must: have a child under the age of six, have been receiving the parenting payment for at least six months and have not been receiving income from employment in the last six months. I want you to remember that point about not receiving income for the last six months, because I'll come back to that matter later; it is one of the issues that we have with the program.

In addition, for a parent to be within the scope of the intensive stream, they must either be an early school leaver, where their youngest child is at least six months old—inother words, predominantly women, by far, are expected to be participating in this when their youngest child, their baby, is six months old—or be highly disadvantaged, where their youngest child is at least six months old or they have a youngest child aged five years of age. For a parent who was within the scope of the targeted stream, they must also be an early school leaver, where their youngest child is at least one; be highly disadvantaged, where their youngest child is at least three; or be from a jobless family, where their youngest child is at least five or they have a youngest child aged five years of age. In other words, they are trying to capture anybody who is on the parenting payment whose youngest child is aged at least five. Basically, any parent receiving the parenting payment for more than six months without receiving income from employment will be subjected to this program when their youngest child turns five. Many, though, will be subjected to it much earlier, with two of the three additional criteria for the intensive stream requiring parents to commence when their youngest child is six months old—remember that. It's when their baby is six months old.

The criteria for the intensive stream participants, which I mentioned above, differ from the criteria used for the trial. Previously, parents receiving the pensioner education supplement in the three months immediately prior to the addition to the parenting payment were not within the scope of the criteria for the trial. The government removed this additional exemption when drafting this instrument that we are discussing today. This is one of the issues that we have with this instrument. This means that those already undertaking education—such as year 12, certificate III or higher education—will be included in the scope of the eligible parents for both streams, even though they are already studying. In other words, even though they are already doing the thing that the government wants them to be doing, they are subjected to this trial. This makes you wonder why the government is including them when they are already studying.

There are also limited ways for participants to exit the program, specifically: when their youngest child turns six, if they cease receiving the parenting payment, if they move to a remote area or if they gain stable employment. Notably, taking up study is absent from this list. The definition of 'stable' is questionable, because I know, or I've heard from, people who have employment who are included on this program. If they're in employment, they shouldn't be included in the program; but people are being caught up in the program even when they're working.

Those who fall within the classes of persons for the two streams are required to engage with their choice of ParentsNext provider and create a participation plan with this provider that they then must adhere to. Because the participants of the rolled out program are also going to be subject to the targeted new compliance framework, which passed through the Senate earlier and came into effect from 1 July this year, they will receive payment suspensions if they do not meet a requirement—for instance, if they fail to agree to a participation plan, fail to attend an appointment or fail to comply with their participation plan. If they do not have a reasonable excuse for failing to meet a requirement they will receive a demerit point. Once they accrue five demerit points they will be subject to financial penalties for each subsequent demerit point they accrue, up to eight. As of the—

The ACTING DEPUTY PRESIDENT ( Senator Ketter ): It being 12:45, we now move to government business orders of the day. Senator Siewert, you will be in continuation until we get to item 18 on the order of business later this afternoon.

Senator O'NEILL (New South Wales) (12:44): I rise to contribute to the concurrent debate on the Education and Other Legislation Amendment (VET Student Loan Debt Separation) Bill 2018 and the Student Loans (Overseas Debtors Repayment Levy) Amendment Bill 2018. The VET student loan debt separation bill will amend the VET Student Loans Act and the Higher Education Support Act to establish VET student loans as a separate program under the VET Student Loans Act. The second overseas debtors repayment levy amendment bill will amend the Student Loans (Overseas Debtor Repayment Levy) Act to ensure that arrangements for students with VET student loan debt who are living overseas are updated to reflect the changes in these bills.

Labor cautiously supports these bills. While Labor supports increased transparency regarding student loans, this bill reminds us of all the work that needs to be done to ensure that we have a world-class postsecondary education and training system. Tweaking the current system will not deal with the profound systemic problems that we know exist in the VET system; nor will it deal with the inequalities that have grown as student loans have expanded and costs have been shifted onto young people, including apprentices and trainees. This bill reminds us that the coalition government doesn't care enough, or have the capacity, to do the hard work that needs to be done to build a better postsecondary education system.

Effective vocational education and skill formation is essential to national economic and social prosperity. The Abbott-Turnbull-Morrison government has ripped more than $3 billion out of TAFE skills and training funding over the past five years and has presided over the fall of more than 140,000 apprenticeships and traineeships. That's a lot of lives interrupted, because of the action of this government.

In towns and regional centres across Australia, TAFE campuses have closed, courses have been scaled back and fees have been increased. Nationally there has been a 30 per cent drop in government funded training happening at TAFE since this coalition government came into office.

The training regulator ASQA openly recognises that the training market has created what they call 'a race to the bottom', with fast turnaround and poor quality training putting enormous pressure on quality education and training providers like TAFE.

VET FEE-HELP turbocharged rorting where profiteering and dishonest private providers targeted students and saddled them with unfair debt. The government sat on its hands while corrupt for-profit trading providers, like Careers Australia, reeled in hundreds of millions of dollars of taxpayers' money.

The future of TAFE is an issue of great national importance, but this internally riven government consistently washes its hands of it. They have no answers on jobs, no answers on skills, no answers on vocational education and no answers on TAFE. Now more than ever we need a postschool education and training system that works for every Australian. We know that the progress we need isn't being delivered in the system that this government is operating today.

In its first 100 days in government, Labor will establish a once-in-a-generation commission of review into postsecondary education. The sweeping inquiry will look at every aspect of the vocational and higher education systems to ensure that they can best respond to the needs of the Australian economy and our society. Labor's commitment to TAFE is unequivocal. TAFE is the backbone of our skills and vocational education sector. Only Labor will get rid of the rorting and guarantee secure and stable funding for TAFE, skills and apprenticeships. Labor has made the committee that at least two-thirds of public funding will go to the TAFE network, with the balance going to not-for-profit community educators, and only high-quality private providers, with demonstrable links to industry. Labor will waive the up-front fees for 100,000 students to attend TAFE and invest $100 million in modernising TAFE facilities around the country. Labor will ensure that at least one in 10 jobs on priority Commonwealth-funded projects are done by an apprentice or a trainee. Labor will provide 10,000 pre-apprenticeships for young people wanting to learn a trade and 20,000 adult apprenticeships for older workers who want to or need to retrain. A government without a plan for education and training has no plan for Australia's future. It's clear that the members of the Morrison government have no plan beyond saving their own jobs.

Senator RUSTON (South Australia—Assistant Minister for International Development and the Pacific) (12:51): The Education and Other Legislation Amendment (VET Student Loan Debt Separation) Bill 2018 enables the separation of VET student loan debts from other forms of higher education loan program debts. This bill also enables a clearer and more effective transition of approved courses eligible for VET student loans.

Vocational education and training is central to Australia's economic prosperity and employment outcomes for students. For the benefit of senators, I would like to outline how these changes will improve our system for students, employers and policymakers. Income contingent loans in VET help achieve this prosperity by assisting students to access higher-level VET qualifications. The government supports income contingent loans. Without them, students would miss out if they could not afford to pay full tuition fees to undertake high-level VET qualifications.

The VET Student Loans program provides capped income contingent loans to students undertaking higher-level VET qualification. With over a year of the program being in force, it is clear that it is meeting its objectives. Completion rates are up and the course list is successfully balancing industry needs, employment outcomes and student choice. This is imperative if Australia's economy is going to have the skills sector that reacts to demand and an education system that fulfils the promises of employment to students.

The capping of loans to $5,000, $10,000 and $15,000, with the exception of aviation courses, given their high cost of delivery, has limited the excessive price gouging experienced under VET FEE-HELP. In addition, payments in arrears and student progression requirements are ensuring that loan amounts are being paid for genuine students, putting an end to unacceptable enrolment practices in the now closed VET FEE-HELP scheme. With these measures successfully achieving their objectives, this bill will better measure the program's fiscal sustainability.

There is currently limited capacity to measure the sustainability of the VET Student Loans program, because debtor HELP repayments are not disaggregated by loan type. Irrespective of whether the debt applies to a HECS-HELP, FEE-HELP, SA-HELP, OS-HELP, historical VET FEE-HELP, or VET student loans assistance, loan repayments are made towards a single aggregated HELP debt. This means the government cannot accurately determine what proportion of which form of HELP assistance paid by the government has been repaid by debtors. Similarly, where a HELP debt is not being repaid, it is not possible to identify the form of HELP assistance the debt relates to. This bill will separate VET student loan debts from other forms HELP debts, providing greater transparency of repayment rates for VET students and better information to inform policy decisions and the public. This information will be vital to delivering a responsive skills education system for students and employers.

From 1 July 2019, individuals who incur a VET student loan debt will access a separate statement of account for their VET student loan debt. From 1 July 2020, the individual's notice of assessment will display VET student loan repayment details. This bill will enable more timely, transparent and accurate reporting on the financial sustainability of the VET Student Loans program and support greater public accountability of the program. The repayment thresholds, repayment rates, renewable HELP balance and indexation with respect to VET student loan debts will be the same as the repayment thresholds, repayment rates, renewable HELP balance and indexation for HELP debts. A person must start repaying a debt in relation to a VET student loan once they have finished repaying any HELP debts. Consistent with existing arrangements for HELP debts, persons residing overseas who have a VET student loan debt will be required to make repayments with respect to those debts.

A key feature of the success of the VET Student Loans program is the course list—the VET Student Loans (Courses and Loan Caps) Determination 2016. This bill also enables better continuity and more flexibility in delivering approved courses for VET student loan providers—providers who have proven their quality through a rigorous application process. Loans are only available for courses on the course list. This list ensures students are only incurring a debt for courses that have a high national priority, meet industry needs, contribute to addressing skills shortages and align with strong employment outcomes. The list is updated twice yearly. Courses are specified by reference to their course code. If a course becomes superseded or noncurrent, or if a course is reaccredited, students cannot be approved for loans to undertake the new version of the course until the course list is updated. Each time the list is updated, a number of courses are replaced by the superseding or reaccredited version. The bill lays the groundwork for the course list to refer to the National Register as defined in section 3 of the National Vocational Education and Training Regulator Act 2011. The National Register is the authoritative information source on nationally recognised VET courses and training packages and their status. By enabling the course list to refer to the National Register, students will be able to be approved for a loan when a course on the list is replaced without having to wait months for the list to be updated. It is not possible to include anticipated replacement courses on the list. We considered alternatives before coming to the conclusion that referring to the National Register is the best approach.

The VET system is dynamic. A key feature is the capacity to provide nationally recognised training to build skills across almost every industry and sector in the Australian economy through over 2,000 courses. Qualifications developed under training packages are reviewed by industry on a regular basis, with the Australian Industry and Skills Committee meeting six times a year to consider course updates. A qualification only gets a course code once it is included in the National Register. The accreditation of accredited courses is considered by the relevant VET regulator. The regulator can determine to extend the currency of a course until the accreditation of the course is reviewed and approved. Reaccredited courses are assigned course codes once approved and put on the National Register. It is not possible for the course list to predict what courses will be considered and approved by the Australian Industry and Skills Committee or VET regulators in advance; nor will those courses be allocated a course code until they are approved. Updating the course list to refer to the latest version of the course on the National Register won't open up the course list and doesn't change the methodology for adding courses to the list. It just ensures that students are not disadvantaged when a course is replaced. The National Register already has clear linkages between current and superseded or expired training package courses. This ensures that students will only be able to access loans for courses that supersede training package courses on the National Register. We are working to make further changes to the National Register to ensure the accreditation of accredited courses is also clearly indicated on the National Register. These changes are expected to be made before the determination is updated to refer to the National Register. The integrity of the VET Student Loans program will not be compromised.

In addition, I would like to clarify some points that have been raised in relation to this bill. The Senate committee has reviewed the bill and found that it should be passed, with some comments made by the Greens and Labor. In reference to the comments made, the committee found that, while questions around policy differences relating to different forms of higher level education are worth examining, the committee has not received enough evidence to support the changes these submitters advocate. In addition to this, the committee saw many wide-ranging views provided to it in relation to the broader education policy, including that there should be a wholesale overhaul of the system. However, the committee believed that such suggestions were outside the scope of the committee's inquiry. Finally and importantly, the committee found that, if enacted, the bills will ensure that both policymakers and students have access to more accurate information to help inform future decisions. The committee concluded that improved accountability and fiscal sustainability are worth pursuing, and it therefore supports the bills in their entirety.

I would also like to quickly note that changes were made to the bill in the House earlier, which I will clarify for senators. Parliamentary amendments made by the House to the Education and Other Legislation Amendment (VET Student Loan Debt Separation) Bill provided for a renewable HELP balance so that VET student loan debtors' repayments, both voluntary and compulsory, will offset their HELP balance. This will apply from 2020 for repayments made after the 2019-20 financial year. These amendments are consistent with parliamentary amendments to the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018. The parliament amendments also include minor technical amendments, some that are consequential to the enactment of the Higher Education Support Legislation Amendment (Student Loan Sustainability) Act 2018. The others are related to the rounding down of amounts at certain steps of the calculation of a person's accumulated VET student loan debt. The amendments relating to the rounding down of amounts ensure that the Australian Taxation Office, which deals with the collection and repayment of student debts, has absolute consistency with the existing arrangements for HELP debts under HESA.

The former Assistant Minister for Vocational Education and Skills, the Hon. Karen Andrews MP, tabled a correction and addendum to the explanatory memorandum for the VET student loan debt separation bill in the House, which responds to the Senate's Scrutiny of Bills Committee's request for more information on a provision in the VET student loan debt separation bill that applies an offence of absolute liability. As I've discussed, targeting access to higher-level VET qualifications that industry needs and that are associated with strong employment outcomes is the key objective of the VET student loan program. I commend the bill.

Question agreed to.

Bills read a second time.

The ACTING DEPUTY PRESIDENT ( Senator Ketter ) (13:01): As no amendments to the bills have been circulated, I shall call the minister to move the third reading unless any senator requires that the bills be considered in Committee of the Whole.

Senator RUSTON (South Australia—Assistant Minister for International Development and the Pacific) (13:01): I move:

That these bills be now read a third time.

Question agreed to.

Bills read a third time.

Senator O'NEILL (New South Wales) (13:01): The Customs Amendment (Incorporation of Proposals) Bill 2018 contains a number of small amendments to the Customs Tariff Act 1995. Labor will support this bill. These changes will: support businesses, including Australia's agricultural industry; ensure ongoing relations with Indonesia; and clarify the framework relating to tariffs. It has taken the out-of-touch Turnbull-Morrison government much longer than anticipated to implement these changes. Some of these commitments were first announced by the former Prime Minister and the President of the Republic of Indonesia on 26 February 2017, before being reannounced on 20 September 2017. Labor believe that any free trade agreement that Australia reaches with Indonesia should be in the best interest of Australian businesses, consumers and local workers. We urge the government to take the utmost due diligence.

This bill implements an early outcome of the Indonesia-Australia Comprehensive Economic Partnership Agreement. This bill brings forward the removal of customs duties for certain herbicides and pesticides from Indonesia. By bringing the removal of these duties forward, Indonesian pesticides and herbicides used by Australian farmers will be more competitive in the Australian market, offering greater choice to consumers. However, I urge the government to monitor any impacts of the removal of these duties, including ensuring that illegal or counterfeit pesticide products do not enter Australia.

The bill simplifies import reporting requirements for medicaments and placebos imported for use in clinical trials, with the aim to promote Australia as a destination for international clinical trials. The financial impacts of the bill before the house are minimal: a total of $3 million over the forward estimates period, with zero financial impact from the 2020-21 financial year onwards. Following these commitments from Australia, the Indonesian government has agreed to reduce customs duties on Australian sugar exports in return.

I am pleased that Indonesia's agreement has been welcomed by Australian sugarcane growers. Australia is the second-largest raw sugar exporter in the world, with countries in Asia, such as South Korea, Indonesia, Japan and Malaysia, being some of the most important markets to which we export. The value of sugarcane production is worth $2.5 billion. Hopefully, these tariff changes that Indonesia has committed to will allow for further exports and for growth in revenue for an industry which is vital to Australia's economy.

Whilst it may take some time to see the economic benefits of Indonesia's tariff reduction, Labor welcomes the Indonesians' commitment because it means opportunities for Australian sugarcane growers. Labor will always hold the current government to account to ensure the complex and important tariff framework is clear and is functional. I urge the Liberal government to continue to work with their Indonesian counterparts to ensure the best possible trading environment for Australian businesses and consumers.

Senator RUSTON (South Australia—Assistant Minister for International Development and the Pacific) (13:05): I commend the Customs Tariff Amendment (Incorporation of Proposals) Bill 2018 to the Senate.

Question agreed to.

Bill read a second time.

Senator KETTER (Queensland—Deputy Opposition Whip in the Senate) (13:05): No amendments to the bill have been circulated. Does any senator require a Committee of the Whole stage? If not, I shall call the minister to move the third reading.

Senator RUSTON (South Australia—Assistant Minister for International Development and the Pacific) (13:05): I move:

That this bill be now read a third time.

Question agreed to.

Bill read a third time.

Senator O'NEILL (New South Wales) (13:06): The Social Services Legislation Amendment (Student Reform) Bill 2018 will expand access to youth allowance for regional and remote students who move away from home to study. We know that young people in regional Australia are half as likely to have completed a university degree when compared with their urban counterparts. It was a Labor government that introduced the youth allowance regional workforce independence criteria in 2011 as part of our reforms to increase the number of regional students attending university, and we certainly don't need a study to tell us that rural and remote students face extra and sizeable hurdles in undertaking post-secondary education.

The 2017 Universities Australia student finances survey showed that a larger proportion of regional students were experiencing a shortfall between their income and their expenses. Shockingly, it found that almost one in five regional students were regularly going without food or necessities because they couldn't afford them. Many students from regional and remote areas have had to defer studies because they've been unable to continue. According to Universities Australia, under Labor's policies there was an increase in regional and remote undergraduate enrolments of nearly 50 per cent between 2008 and 2016. Regional and remote families won't forget the government's cuts to regional universities and they also won't forget the government's attempt to unleash cuts on regional students—attempts to cut the energy supplement and cuts to Centrelink that have led to long wait times for student payments. But this is the reality for students under this government: cuts to universities, attacks on youth allowance and longer payment and Centrelink wait times.

Senator RUSTON (South Australia—Assistant Minister for International Development and the Pacific) (13:07): The Social Services Legislation Amendment (Student Reform) Bill 2018 introduces changes to improve access to youth allowance for regional, rural and remote students who have moved away from home to study. It will also make technical amendments regarding approved courses for student payments. Schedule 1 of the bill will increase access to youth allowance for regional students who have to move away from home to study. The measures are part of a package of measures announced in the 2018-19 budget that respond to the independent review of regional, rural and remote education. The independent review, carried out by Emeritus Professor John Halsey, identified that young people in regional Australia are half as likely as their city counterparts to have completed a university degree. The review conducted consultations across Australia with educational authorities, peak bodies, schools and communities and received over 300 submissions.

The youth allowance regional workforce independence criteria aim to address the lower participation rates of regional students in tertiary education. They are intended to make it easier for students from regional, rural and remote areas to qualify as independent for youth allowance purposes. When students are regarded as independent, their youth allowance payment is no longer reduced by parental income testing. Regional students can qualify as independent under these criteria if they demonstrate that they are financially self-supporting through paid employment. When it was first introduced in 2011, these criteria required that students prove their independence by showing that they had either been working part time for 15 hours every week over a period of two years since they had last left school or been self-supporting for a period of at least 18 months since they had last finished school by earning at least the equivalent of 75 per cent of wage level A of the national training wage schedule included in a modern award.

The requirement that students engage in employment over an 18-month period after they've finished school meant that many students were deferring their university studies for two years. In 2016, the government announced it would reduce the 18-month self-supporting period to a 14-month period. This means that students can now satisfy the independence criteria by taking a single gap year rather than having to take two gap years. This reduction responded to evidence that, the longer students are disengaged from study, the more likely they are not to recommence study.

To be assessed as independent under the current criteria, students are required to live away from home to undertake full-time study; their combined parental income must be less than $150,000 a year; and a student's family home must be characterised under the remoteness structure as 'inner regional Australia', 'outer regional Australia', 'remote Australia', 'very remote Australia' or on 'Norfolk Island'. The $150,000 parental income threshold was set in 2011 and has remained at $150,000 since its introduction. This threshold is the same, regardless of family size. This doesn't reflect increasing wages or the extra costs associated with raising a larger family. The criteria aim to support regional students, but, due to the normal effects of income growth, fewer families fall under the $150,000 threshold. To address this decline, the bill will increase the threshold from $150,000 to $160,000. In addition, it will introduce a $10,000 per child increase in the parental income cut-off for larger families. It means that, for the average two-child family, the parental income threshold for the youth allowance regional workforce independence criteria will be $170,000, which is a significant increase on $150,000. This improvement will commence from 1 January 2019.

This bill means that more regional students will get more youth allowance in their pockets because students who qualify as independent for youth allowance will not have to have their payments reduced by parental income testing. In addition, feedback from some students has indicated that when they finish school their parental income may be under the threshold, but, by the time they have completed their self-supporting period, their parental income may have increased, therefore preventing them from qualifying as independent. This bill will provide certainty for these students. It contains a provision so that the parental income threshold can be applied to income in the year that precedes the self-supporting period. This means that students who had parental income that was under the threshold at the beginning of the 14-month self-supporting period will be able to use this income assessment when applying for independent status. That way students will know before they decide to take a gap year whether their parental income will be under the threshold.

The bill will provide greater access to youth allowance for regional students. It is expected that the number of students who qualify for youth allowance under these criteria will increase by 75 per cent or about 2,300 individuals. As well as improving access to youth allowance, the schedule also makes some technical amendments to the Social Security Act 1991 and the Social Security (Administration) Act 1999 to address minor legislative anomalies related to the youth allowance maintenance income test reconciliation process and the calculation of the maintenance income test reducibility amount.

Schedule 2 of the bill makes a minor amendment to strengthen the rules relating to courses approved for student payments. This amendment is technical in nature and reflects current arrangements for the payments. The schedule will broaden the legislative instrument-making power for the Student Assistance (Education Institutions and Courses) Determination 2009 (No.2) into the Social Security Act 1991. This will better allow student payment recipients undertaking courses that lose approval for student payments, including master courses, to remain approved in specified circumstances.

In summary, this bill allows for the implementation of measures that will help students from regional, rural and remote Australia who must move from home to study. In addition, this bill ensures recipients of student payments, including Abstudy, who are subject to the maintenance income test receive their proper entitlements. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.

The ACTING DEPUTY PRESIDENT ( Senator Bernardi ) (13:13): As no amendments to the bill have been circulated, I shall call the minister to move the third reading unless any senator requires that the bills be considered in Committee of the Whole.

Senator RUSTON (South Australia—Assistant Minister for International Development and the Pacific) (13:14): I move:

That this bill be now read a third time.

Question agreed to.

Bills read a third time.

Senator O'NEILL (New South Wales) (13:14): I rise to make a contribution in this debate on the Veterans' Entitlement Amendment Bill 2018. This bill seeks to re-insert an element, inadvertently removed in 1996, that deals with the provision of bereavement payments and recovery of an overpayment to the surviving partner. When a veteran passes away, the surviving partner is entitled to a bereavement payment, which is made up of 14 weeks of the partner's income support payment. This payment is to assist the individual with costs following the death of a partner and provide a period of time for the surviving partner to adjust their finances. However, during this time it is not uncommon for there to be a delay in advising the department of the death of the veteran, which results in an overpayment to the partner. In these circumstances, rather than send an overpayment notice, DVA instead deducts the overpayment from the bereavement payment account. This is consistent with similar processes of the Department of Social Services. While DVA has the legal authority to provide bereavement payments and the legal authority to recover the income support pensions paid to veterans after their death, the amendment in this schedule will confirm this authority and streamline the administrative process. Bereavement payments, and the way in which overpayments are recovered, are compassionate processes that have the support of the Alliance of Defence Service Organisations and their member organisations, the War Widows' Guild and Partners of Veterans Association of Australia, in particular. As such, Labor offers our support to this bill.

Senator RUSTON (South Australia—Assistant Minister for International Development and the Pacific) (13:16): I, too, stand to make a contribution on the Veterans' Entitlements Amendment Bill 2018. The importance of family cannot be underestimated in the support they provide to both our serving personnel and our veterans. This government is committed to supporting veterans and their families, and this bill will maintain the current practice for veterans' families when a beloved member dies. The current entitlements to bereavement payments are not changing. The government recognises that these are important payments for our veterans' families during this difficult time. The payment is a one-off, non-taxable payment of 98 days, or 14 weeks, of service pension and is paid to the surviving partner. It is designed to assist the surviving partner with costs following the death of their partner and to provide a period in which to adjust their finances following the cessation of the deceased partner's payments. The bereavement payment is paid automatically once the family notifies the Department of Veterans' Affairs.

Prior to their death, a veteran may have been receiving an income support pension under the Veterans' Entitlements Act 1986. Generally, there is a small period of time after someone has died before the family notifies DVA and this may result in an overpayment of a pension, usually somewhere between $500 and $1,000. The practice when an overpayment occurs is that DVA adjusts this amount from the bereavement payment. For example, if a veteran dies on 7 June 2017 and his pension continues to be paid at the rate of $622.80 per fortnight, including the final payment on 22 June for the period 6 to 19 June, and DVA is advised of the death on 30 June, the veteran was not entitled to $578.31, being the amount paid for 13 days of the final payment period. A bereavement payment is the equivalent of 98 days of the difference between the service pension rates payable to the surviving partner before and after the death of a deceased partner. A service pension totalling $2,935.80 is payable to the partner. The amount of $578.31 is recovered from the bereavement payment, meaning a payment of $2,357.49 is payable from DVA to the partner's account. This ensures that the adjustment is made in a single administrative process rather than through a number of more-formal debt recovery processes. This avoids the need to recover debts from the deceased estate and it avoids disturbing the family during the grieving period. This is a compassionate, sympathetic and unobtrusive response.

The bill will provide legislative certainty for past and future recoveries of pension overpayments from bereavement payments and, out of respect to veterans' families mourning their loss, will maintain the current discreet practices. I understand that the Senate Scrutiny of Bills Committee wrote to the minister today requesting a response to concerns relating to the retrospectivity of this bill and whether it will adversely affect people. A revised explanatory memorandum is currently being drafted and will be tabled once finalised. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.

The ACTING DEPUTY PRESIDENT ( Senator Bernardi ) (13:19): As no amendments to the bill have been circulated, I shall call the minister to move the third reading unless any senator requires that the bill be considered in Committee of the Whole.

Senator RUSTON (South Australia—Assistant Minister for International Development and the Pacific) (13:19): I move:

That this bill be now read a third time.

Question agreed to.

Bill read a third time.

Senator WHISH-WILSON (Tasmania) (13:19): I was just going through a time line of inaction on money laundering or the black economy through real estate. I just wanted to make a point that similar deadlines for action have been set by various governments in this country previously—in 2008, in 2010, in 2012 and in 2014—and all of them have come and gone. There were another six times when the issues that I'm raising here in the Senate have not been acted on by this government. I think I've set out a very comprehensive time line of numerous committees, numerous reports, numerous inquiries and numerous times the parliament's actually looked at this issue but hasn't acted on it.

We have a gaping hole in our laws around money laundering. If this parliament is serious about giving law enforcement more powers to crack down on the black economy then we must deal with money laundering through real estate. Gaping holes in this country's laws have allowed money laundering through real estate to reach epidemic proportions. The ANZ's head of financial crime, Guy Boyd, said last year that Australian real estate is:

… obviously an attractive destination for capital, both legitimate and illegitimate.

I wouldn’t know if it I would call it a haven but certainly it is a place of choice for illegitimate money.

There’s been probably a lack of political will and that’s probably been driven by some very vocal opposition from those industry sectors.

In other words, it's what we see in here every day: rent seekers and vested interests lobbying to get what they want. I would propose to senators in this chamber and others who are listening that if one of the big four banks is saying that we as a country have got a money laundering problem then we've probably got a money laundering problem. I think they would know better than most. And if one of the big four banks is saying that lobbyists are stopping these laws from being introduced then that's probably true, too, because they would know a thing or two about lobbying.

Let's talk about international concerns. Not only are Australia's lax laws a source of local concern, but there's global concern about Australia's inaction on money laundering through real estate. I'd also like to note here in my contribution to this second reading debate that the Financial Action Task Force's 2015 report stated:

Australia is seen as an attractive destination for foreign proceeds, particularly corruption-related proceeds flowing into real estate.

A 2017 OECD report recommended that Australia address the risk that the real estate sector could be used to launder the proceeds of foreign bribery. Further, Transparency International's 2017 report identified Australia, Canada, the UK and the USA as the top four spots globally for laundering money through real estate and said that, on the indications that they used, Australia was likely the worst, failing to address 10 out of 10 identified legal loopholes.

Then there's money logging and the Adelaide Hilton. The Bruno Manser Fund is a Swiss based anticorruption organisation that I have met with. The fund and its executive director, Lukas Straumann, the author of Money Logging, have detailed the horrendous destruction of Borneo's rainforests, the displacement of its Indigenous people and the involvement of the so-called Asia timber mafia in this illegal logging. This is a well-known story globally. Central to this story is the governor of Sarawak, Mr Taib Mahmud, and the ownership of the Adelaide Hilton by Taib's family. Under Taib's governorship nearly 90 per cent of Sarawak's native rainforests have been logged. Despite Taib's modest income as a politician, his family has interests in more than 400 companies in 25 countries around the world, including the Adelaide Hilton, which it acquired in the 1990s and through which it seems it has been able to continue to launder money. But, because we have a gaping hole in our anti-money-laundering laws here in this country, we don't know for sure, and AUSTRAC can't pursue this issue.

Nor can it look into the billions more of dirty money that have likely gone into Australian real estate in more recent times. Last year Fairfax reported that Australian real estate agent giant Raine & Horne's offshore arm was involved in a global corruption scandal involving the sale of prime Melbourne property. The scandal centres around the vastly inflated valuation of a 280-room city apartment building, UniLodge, which mostly houses overseas students, on Swanston Street near Melbourne university. Raine & Horne International's Kuala Lumpur office valued the property at $43 million, despite the fact that the building's seller, Australian businessman Lionel Harber, had simultaneously valued it at $23.5 million.

Another big issue is China. There is plenty of evidence to suggest that a large part of the recent spike in Chinese investment in Australian real estate and in many other parts of the world is money laundering. This is what has been suggested by the French based Financial Action Task Force. But we wouldn't really know, because Australian authorities have no authority to go chasing this.

I reiterate to the Senate chamber: this is a problem that we've known about for 12 years. I've outlined a substantial time line of references to this specific issue by a number of governments, a number of committees, a number of task forces and a number of inquiries over a period of time. When are we going to deal with it? While we support the bill today—as I said earlier, everything we can do, in a holistic fashion, to crack down on this will be a positive—money laundering through real estate is a very serious problem that the government should act upon. I ask the Senate to support the Greens second reading amendment that I have moved. It should have been circulated. Let's get on with tackling the heart of the issue.

Senator MARTIN (Tasmania) (13:27): The Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018 is an important measure demonstrating this government's commitment to being responsible fiscal managers and ensuring level playing fields for those who are willing to have a go. The measures listed before us address the growing economic and social scourge created by the black economy. This black economy scourge unfairly disadvantages businesses doing the right thing, particularly small businesses across the country and in my home state of Tasmania. This includes family owned businesses that rural and regional communities rely on not just for jobs but also for the provision of products and services which support the community's way of life. How is this fair?

Not only does the black economy scourge unfairly impact business and the community in which it sits; the black economy goes further by denying the government tax revenue which could be used to pay down debt created by the Rudd-Gillard-Rudd government or spent on upgrading more roads of strategic importance in regional communities or on funding mobile black spot solutions, grassroots sports programs for our kids or training programs for our young people.

This is why the government has taken action and is responding to the Black Economy Taskforce interim report. The measures in schedules 1 and 2 of the bill seek to address the black economy scourge. Schedule 1 implements the banning of the manufacture, distribution, possession, sale and use of sales suppression technology. It is an important step in addressing participation in the black economy. Electronic sales suppression technology allows businesses to understate their taxable income and, as such, creates an uneven and unfair playing field for business. It fosters the exploitation of workers, erodes trust in the taxation system and results in loss of government revenue and unwarranted welfare expenses.

The schedule creates new offences for the manufacture, distribution, possession, sale and use of electronic sales suppression tools for the purpose of not disclosing business income. These offences are subject to strict liability and heavy penalties to deter the use of such a technology across the entire software supply chain. There is no legitimate reason for these tools. These tools remove transactions from electronic record-keeping systems, they change transactions to reduce the amount of each sale and they can modify GST taxable sales to GST non-taxable sales. In all instances, no audit trail of the changes made exists. Have no doubt that the sole purpose of this technology is to evade tax. The ATO has uncovered instances of this software in operation in Australia, and recent reports from the OECD have highlighted that this software is spreading globally and its use has been identified in a number of jurisdictions, including Canada, USA, Germany and Sweden, many of which have implemented measures to address this risk.

In relation to Schedule 2, the non-reporting of income by contractors and the use of technology to understate income are two activities that are targeted in this bill. The deployment of the taxable payments reporting system in the building and construction industry has been successful, both in terms of industry acceptance and revenue outcomes through improved contractor compliance. The expansion of the taxable payments reporting system initiative to contractors in the courier and cleaning industries is expected to yield similar benefits, by ensuring payments made by businesses to contractors in these industries are reported to the Australian Taxation Office. In fact, the measure is estimated to result in a gain in tax receipts of some $132 million over the forward estimates period.

From 1 July 2018, businesses in the courier and cleaning industries will be required to give an annual report to the ATO regarding the payments they've made to businesses who provide them with courier or cleaning services. The reporting obligation will apply from the 2018-19 income year, and reports will be required by 28 August 2019. To assist businesses in the courier and cleaning industries to comply with the reporting requirements, the ATO has prepared guidance material. The information reported to the ATO is used for the prefilling of tax returns or activity statements, which should make it easier for contractors to lodge their income tax returns, and for data-matching processes to ensure that contractors comply with their tax obligations, such as correctly lodging their income tax returns and BAS obligations.

I think we can all agree that hardworking Australian businesses deserve a level and fair playing field. I support the bill.

Senator HUME (Victoria—Deputy Government Whip in the Senate) (13:33): I rise today to speak in favour of the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018. As the chamber is well aware, the Morrison coalition government has been taking decisive action in the fight against the black economy for a number of years now. The black economy, as we know, undermines community trust in the tax system and gives some businesses an unfair competitive advantage. It puts unnecessary and undue pressure on the margins of honest businesses and often includes the exploitation of vulnerable employees through the underpayment of wages and the loss of entitlements.

The reforms outlined in the legislation we are speaking about today in this chamber follow recommendations made by the Black Economy Taskforce. The Black Economy Taskforce was put together some months ago. It had very broad consultations and has finally reported to government. It will be followed up with a comprehensive suite of supporting measures which build on a number of existing significant tax integrity measures that have already been outlined by the former Minister for Revenue and Financial Services, the Hon. Kelly O'Dwyer MP. She established that task force a long time ago—I think it was back in December 2016—to examine exactly how best to crack down on illegal black economy activity. It was a multi-agency black economy standing task force. It undertook a cross-agency approach to combating the black economy, with more effective exchanges of information to develop increased intelligence, and it was equipped to identify and prosecute the most egregious cases of black economy activity.

As the chamber may recall, additional funding was provided to the Australian Taxation Office, the ATO, at the time to expand its data analytics and data-matching capabilities and to allow a much better leveraging of community through the introduction of a hotline. The hotline was for reporting black economy and illegal phoenixing activity. It was a significant breakthrough, that new capability. It was supported by an enhanced enforcement strategy, including mobile strike teams to break up illegal behaviour as it was identified.

You may recall, Acting Deputy President McCarthy, that there was a story discussed in the media and also reiterated at the economics estimates committee about how Commissioner Jordan had charged a group from the Black Economy Taskforce to go out and speak to traders at one of the markets in Victoria—it was the Queen Victoria Market, if I remember rightly. It wasn't supposed to be a confrontational experience; it was supposed to be helping some of those traders that tend to be associated with black economy activity. It gave them a heads-up. They said, 'On Thursday there will be members of the ATO coming to help you and talking to you about your businesses and how best you can report to them more transparently, more openly and more accurately.' Interestingly, the story goes that when the members of the ATO, the friendly faces of the Australian tax office, turned up to the market on that day—as prescribed, as warned—it was amazing how many traders were unwell and had their shutters drawn.

I think that while it's obvious the black economy is something that's used for egregious purposes it can also be used mistakenly in these cash economies. But it does cost: it costs the taxpayer, businesses and workers millions and millions of dollars every single year. So it's important to tackle it and to tackle it seriously. I'm very proud to be part of a government that has done exactly that. It's not a new problem; a black economy has existed since time immemorial—since taxes began to be charged people have tried to avoid them. But it is important, and this government recognises the importance of not just taxing people but also ensuring that they pay a fair amount of tax—that everybody should pay their fair amount of tax.

It is important that this particular issue, the black economy, has been tackled in a very systematic, a very professional and a very thorough manner. The Black Economy Taskforce should be commended for the work that they've done—as should, dare I say it, the former Minister for Revenue and Financial Services, Kelly O'Dwyer, who has now moved portfolios to take on issues of industrial relations. But she has certainly left a legacy behind her in this particular space.

When we think about the cost of the black economy to the Australian economy as a whole we can only think about what we could spend the money raised in tax revenue on that we are now foregoing because of the existence of the black economy. What could we spend that money on?

What could we implement that would benefit the Australian population as a whole if the appropriate amount of tax was paid by those who are currently avoiding it? Things like new hospitals. Things like new energy solutions. What about pension payments? What about putting more drugs on the PBS? There are so many things that we could do, with appropriate amounts of tax paid, in the form of distributions, which is why it is so important.

Everybody attending the chamber today knows that they have to pay their taxes at the end of the day. It's part of our civic duty. It's part of our moral duty. To avoid it, to partake in the black economy, denies your fellow man, all other Australians, access to better services and a stronger economy. As you may well recall, the government responded to the Black Economy Taskforce interim report as part of the 2017 budget delivered by then Treasurer Scott Morrison, now Prime Minister Scott Morrison. The government announced the measures to address the growing economic and social problems associated with the black economy, banning the manufacture, distribution, possession, sale and use of sales suppression technology in particular. This is technology that allows businesses to conceal what income it is that they are earning. Remember the old days, when we used to have the system of two books? It's similar to that; it's a technological version of the two books.

This bill also extends the taxable payments reporting system to two industries that present tax compliance risks, cleaning and couriers, to ensure that payments made by businesses to contractors in these particular industries are reported to the Australian Taxation Office. This bill that we have before us today delivers on those particular 2017-18 budget decisions. The measures in the bill form only one part of a much broader suite of reforms that the government is progressing through its response to the Black Economy Taskforce final report. The Black Economy Taskforce has been working now for nearly two years to put together its thorough recommendations.

I think we should go into a little bit more detail on the first schedule of this legislation. This schedule creates a new offence for the manufacture, distribution, possession, sale and use of electronic sales suppression tools for the purposes of not disclosing business income. There is, it is important to note, no legitimate reason to produce, distribute, possess, sell or use these particular electronic tools. They actively remove transactions from electronic record keeping systems and they change transactions to reduce the amount of each sale. Essentially, it's falsifying records. They can modify things like GST taxable sales to GST non-taxable sales. In all instances, no audit trail of those changes exists.

There is no reason to have this particular software or these particular tools unless you are actively avoiding tax. It's not enough to just ban the sale or the use of them; it's also important to ban their manufacture and distribution. The government is introducing a number of offences that are subject to strict liability and very heavy penalties to deter the use of such technology across the software supply chain. Because that technology is used solely for the purposes of tax evasion, the new offences will restore a level of integrity to our tax system.

Recent reports from the OECD have highlighted that this particular software is spreading globally. Its use has been identified in a number of jurisdictions, including Canada, the USA, Germany and Sweden. Obviously the black economy is a problem that pervades not only the Australian economy but also the global economy. Many of those countries where this particular software or these electronic suppression tools have originated or proliferated have already implemented measures to address that risk. This legislation simply brings Australia into line with our global counterparts. The ATO has uncovered a considerable number of incidents already where this software has been in operation in Australia. That's schedule 1 of this legislation.

Schedule 2 is in respect of third-party reporting. From 1 July this year, businesses in both the courier and cleaning industries will be required to give an annual report to the ATO, the Australian Taxation Office, regarding the payments they make to businesses for them to provide courier and cleaning services. This particular reporting obligation will apply from the 2018-19 income tax year and reports will be required by 28 August 2019. The measure is estimated to result in a gain in tax receipts of $132 million over the forward estimates period—the four years of the forward estimates. That's $132 million. It's a very significant tax revenue increase from one measure alone.

Business-to-business payments for courier and cleaning services are within scope. Clearly, these industries have been targeted for black economy activities. Implementation of the tax payments reporting system in the building and construction industry has resulted in improved contractor tax compliance and reporting of income. The government has also decided to extend this reporting system to other high-risk industries. The Australian Taxation Office has prepared significant and detailed guidance material to assist businesses in those sectors, the courier and cleaning industries, to comply with their reporting requirements. The information reported to the ATO is then used for the pre-filling of tax forms or activity statements, which should make it much easier for contractors to lodge their income tax returns and also for data-matching purposes to ensure that contractors comply with their tax obligations, such as correctly lodging their income tax returns and also their BAS obligations.

As you can see, the government has acted on the concerns raised by many, many stakeholders that mixed businesses providing those courier or cleaning services may have a disproportionate compliance burden where the provision of those services is merely a small part of the overall activity of the business. The introduction of this threshold test will mean that businesses that receive payments for courier or cleaning services that are less than 10 per cent of the business's overall GST turnover for the reporting period will, in fact, be exempt from the reporting payments they make to contractors commissioned to complete these services. The Commissioner of Taxation, Commissioner Jordan, may, through legislative instrument, amend or alter the threshold test in response to a change in compliance risks or compliance burden identified in these industries. Any alteration to the threshold test would be subject to parliamentary scrutiny. The Australian Taxation Office will also publish guidance material to assist those businesses providing courier or cleaning services to determine when they need to report.

I think you can see, Acting Deputy President, this new approach, which is boosting our capabilities to tackle the black economy, will deliver a targeted, stronger and far more visible enforcement, and it will demonstrate the very, very real consequences of participating in the black economy.

There are other aspects of tax reform that have been tackled under the umbrella, I suppose, of the Black Economy Taskforce. One of them which I want to touch on, although it is not necessarily directly pertinent to this piece of legislation, is the new measures that this government has introduced to tackle illicit tobacco. The illicit tobacco market is one of the barnacles of the black economy. It seems to rear its ugly head over and over again. The problem with illicit tobacco is it's inexorably intertwined also with the flow of funds to organised crime syndicates. It's important to tackle it not just for its own sake but also as a crime prevention strategy.

The previous Minister for Revenue and Financial Services, Kelly O'Dwyer, put together a new multiagency Illicit Tobacco Taskforce which comprised members of law enforcement, border security agencies and the ATO to deliver a multifaceted approach that leveraged the whole-of-government capabilities and powers to proactively target, disrupt and prosecute organised crime groups at the centre of the illicit tobacco trade.

The government has introduced an economy-wide cash payment limit of $10,000 applying to payments made to businesses for goods and services, and that will apply from 1 July 2019. That cash payment limit captures high-value transactions and helps stamp out opportunities for criminals to launder the proceeds of crime into goods and services or for businesses to hide transactions that reduce their tax liabilities.

As you can see, there are a number of aspects to tackling the scourge of the black economy: the Black Economy Taskforce and the legislation that we are considering today are just one piece of the puzzle. There is more to do. However, the government thanks the Black Economy Taskforce in particular, which was led by Michael Andrew AO, as well as the stakeholders who participated in that very broad, detailed and thorough consultation process.

The aim of the game for the government, of course, in its response to the Black Economy Taskforce's final report, is to improve fairness for businesses to ensure there is a level playing field and to continue to strengthen the integrity of our tax system. Fairness isn't all about everybody paying the same thing and receiving the same thing; fairness is about paying what you owe and not avoiding paying what you owe.

As a very proud member of the coalition, I say we should all be very pleased with the work that the previous Minister for Revenue and Financial Services, the Hon. Kelly O'Dwyer, has done in this space. It's fantastic to be part of a government that has tackled one of the most difficult issues in our economy, a scourge on our economy, for many decades.

Senator WILLIAMS (New South Wales—Nationals Whip in the Senate) (13:53): I'll just make a quick contribution to the debate on the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018. I always say that life's about fairness. This bill is about clamping down on tax cheats and the black economy. As you know, Madam Deputy President, there are two certainties in life: death and taxes. I've always been of the opinion that, while ever you've got cash in the country, you'll have tax evasion. If you're handing around $50 notes, $20 notes—whatever—and paying people by cash, of course people avoid tax. However, when they do spend it, at least the GST is paid and the states will benefit from that.

But this bill is about the saving of $132 million over the forward estimates—perhaps not a lot of money in the face of a $450 billion budget, but every bit helps. It is about fairness. As Senator Hume said, everyone paying their fair share of tax, their proper share of tax as they should pay, is fair. If they don't pay those taxes, of course, as you go right across the black economy, it leaves a hole in the budget. What happens then? Government debt grows. They've got to cut spending, and those important finances provided by the taxpayer, via the government, are for aged-care facilities, for our defence, for our child support, for our day-care support, supporting working mums and dads—in most cases working mums—and the many, many services that are provided out of Canberra right throughout our nation and of course overseas. So, the more that is cheated, the less that can be done and the more the budget is under pressure.

We all know in this place that the budget has to come back to the black. We can't go on borrowing for ages. We should have had it back in the black a lot earlier, but the Senate blocked many of those savings. If we'd listened to those opposite, Mr Wayne Swan, the Treasurer for the Labor government, was going to have it in the black well and truly by now. Of course, black print is something you rarely ever see at the bottom of a Labor government's budget.

Getting the budget back in the black is most important, and every bit contributes, whether it be increasing revenue through catching the tax cheats, cutting spending or, as we have done, growing the economy, growing the GDP, hence growing the tax take for Canberra. As we head towards $560 billion of gross debt, of course that does include the HECS debt. What's the HECS debt? Forty-odd billion dollars? Amazing. When I went to university, you either paid your way or you got a scholarship. I was lucky to get a scholarship, but I didn't stay for long in tertiary education, because I thought I'd spent enough of my life with my nose in a book and I didn't really want to spend much more, so it was back to the bush, shearing sheep, driving trucks and farming, which I thoroughly enjoyed—perhaps another mistake I made in my life!

The more you cheat the tax system, the more others have to fill the gap, the others being the honest taxpayers, the honest businesses, the PAYG workers—the working Australians who are paying their tax. So, as I said, whenever you have cash in a society, you always have a form of tax cheating. That is just a fact of life. There are plenty of examples. A pensioner may have a tradie come in to fix their lights—to do some electrical work, to do some building, or to fix something. Of course, the $50 notes come out. Does that tradie declare it? Of course he or she doesn't. But when they hand the money to their wife or to whoever, or when they spend it themselves, that's when it comes back to Canberra in the form of GST, which is handed to the states, also increasing the profits of those businesses where they've spent it, whether it be a holiday resort or a motel, or down at the pub or at the bottle shop or wherever. Those businesses are then paying tax, so it does eventually come back here. But to allow people to simply get away with tax evasion is not fair. It is not right.

This bill—which I know my colleague Senator Seselja will have more to say about in his summary—is about catching the tax cheats and stopping the black market and the black economy. It's about seeing that the money does come into Canberra and is distributed properly throughout Australia, providing services, and that it is distributed to the states and even to local government. Through the financial assistance grants and the Road to Recovery grants, money goes out of Canberra to our local governments—vital money, I might add, especially for fixing our roads. All sides of governments for many years now have continued these grants. I know John Anderson played a big part in getting those policies in place, and I'm glad to see they've been continued. Money is going out to regional areas to help fix roads. Many of us still drive on dirt roads. I know that, to those in the cities, dirt roads are something strange. However, this bill will help close the gap. It will bring fairness across the tax system that will see the people who make money pay their fair share of tax—as they should—and then Canberra can carry out its services and do what it has to do in respect of governing Australia.

I commend the legislation. As I said, Senator Seselja will have more to say in his winding-up remarks on this bill. Let's hope this bill does pass. I see no reason why those opposite would oppose it. Senator Marshall, I'm sure you won't be opposing it.

Senator Marshall: I'll have to take advice on that!

Senator WILLIAMS: I can see that by your reaction! I commend the bill and look forward to it getting passed with support around the chamber.

Senator SESELJA (Australian Capital Territory—Assistant Minister for Treasury and Finance) (13:59): Firstly, I'd like to thank those senators who have contributed to this debate. These measures are about addressing the growing economic and social problem of the black economy, as established in the Black Economy Taskforce's interim report as part of the 2017-18 budget. The black economy undermines community trust in the tax system. It gives some businesses an unfair competitive advantage, puts pressure on the margins of honest businesses and often includes the exploitation of vulnerable employees through the underpayment of wages and the loss of entitlements.

The PRESIDENT: Senator Seselja, you will be in continuation when debate resumes. It being 14:00, the debate is interrupted.