2017-06-19 45 1 3 Senate 0 1

Monday, 19 June 2017

The PRESIDENT (Senator the Hon. Stephen Parry) took the chair at 10:00, read prayers and made an acknowledgement of country.

 

DOCUMENTS 1 DOCUMENTS Tabling 1 COMMITTEES 1 COMMITTEES Meeting 1 10:01 The PRESIDENT e5v Does any senator wish to have the question put on any of those proposals? There being none we will proceed to business. BILLS 1 BILLS Treasury Laws Amendment (GST Low Value Goods) Bill 2017 1

Treasury Laws Amendment (GST Low Value Goods) Bill 2017

Second Reading 1 10:01 Senator WATERS 192970 Queensland I rise to continue my remarks on this bill, which the Greens see as a fantastic opportunity for the GST to be removed from tampons and sanitary pads. We have had statements from both sides of this chamber indicating that others too think this is a sexist tax whose time has come and that it should be removed. This is an opportunity for both sides of this chamber to support the removal of this sexist tax on women's biology. When the GST laws were drafted—perhaps there were no women in the room—it was deemed that sanitary items were a luxury item for women. Guys, it is biology, it is no luxury, and this is something that should not have the GST applied to it. I spoke to that last week. What I would like to do today is move a second reading amendment, which I understand has now been circulated in the chamber. Hopefully people have received that; if not, it will be coming very shortly. It is very brief and asks that the debate on this bill be suspended until such time as state and territory treasurers have time to consider the proposal to remove the tampon tax. Half the states and territories now support the removal of GST from tampons and sanitary items. The remaining states and territories last year did not support it, but with the revenue raised from this bill, which we understand will be going through the chamber with the support of both the old parties, the states would not fall short. They would be able to support removing the GST from tampons and not be out of pocket. This is a great opportunity for us finally to remove this discriminatory tax on women's biology. We have that opportunity today. I want to acknowledge the broad support for this issue that we received over the weekend. We started a petition late last week, off the back of many, many years of campaigning on this issue. Over the weekend, 11,000 people signed a petition saying that we need to remove this sexist and discriminatory tax on women's biology—this tax on tampons and pads that was probably put on with a whole lot of men in the room, and, sadly, not enough women in the room, if any at all. We will be moving that second reading amendment, and I will do so shortly, to ask that this bill be delayed until such time as the states and territories can consider the good financial reasoning for removing this discriminatory tax. I want to thank the 11,600 people who signed the petition over the weekend supporting the removal of the GST on pads and tampons. I will flag that, whilst I do not have it with me at the minute, I will be tabling that petition later today. I am sure signatures will keep flooding in, but I want to thank those signatories who have done so. I move the following amendment, and I presume we will vote on it in due course: Leave out all words after "that", insert: " the debate on this bill be adjourned until State and Territory Treasurers have had an opportunity to consider the Australian Greens’ proposal to remove t he tampon tax." 10:05 Senator IAN MACDONALD YW4 Queensland This is a bill whose time has at last come. The Treasury Laws Amendment (GST Low Value Goods) Bill 2017 is a bill that I believe should have been introduced many, many years ago, to ensure that imported goods under $1,000 had the same tax on them as those same goods would have had if they were sold by an Australian retailer within Australia. For too long, our small businesspeople in Australia and the retailers in our country have had to put up with this very unfair competition; that is, they could sell a good—an item of clothing or some other well-used good in Australia—but they would always start 10 per cent behind the price that a foreign dispatcher of that same good could charge. Over the years, so many constituents who are in small business would complain to me about how our fellow Australians would go into their shop, have a look around, see the particular good they wanted and the statistics of that particular good, then walk out of the shop, go home, and order it online from overseas for at least 10 per cent less than my constituents in Queensland could charge. To a degree, this is an issue that has impacted upon small businesspeople, particularly in Australia, for a long period of time. In our wisdom, the parliament in the past decided that goods over $1,000 in value would be subject to the GST, but we gave this exemption for lower value goods mainly, I suspect, because it was always thought to be too hard to collect money on hundreds of thousands—perhaps even millions—of goods that were acquired by Australians from overseas retailers at relatively low values. I can understand the concern that the Treasury and the public service would have had with that, but I come at this from the position of my constituents and the people who support our party—small business people—who have been unfairly disadvantaged for a long period of time now. I am delighted that this bill is at last going to address that. I tell somewhat humorously that the first person who raised this with me, three or four years ago now, was a local businessman in Townsville who had a number of businesses, but one of them was an adult shop. He came to me and he said that people were no longer using his shop because they could get the same goods much cheaper from overseas because he had to comply with Australian moral laws, but, more importantly, he had to comply with the GST laws. His sale items were always 10 per cent more than those of his competitors who were overseas, who could ship the goods in. According to him and others of my constituents who have raised it with me, within three or four days the goods would be at the residence of the buyer. In his business, that was another attraction. I only mention that because that was a graphic example of why reform was needed in this area. I will briefly refer to Senator Waters' speech, in which she addressed a particular item on which she is introducing a second reading amendment. It would be good if we could remove the GST from everything. Australians would generally love that, but unfortunately the state governments—who get all of the revenue from the GST—would not be very keen on that. That is because the GST is the main revenue of the states. I say to Senator Waters: if she has an important issue there, I would think the first port of call for her would be to see the states and to see— Senator Waters 192970 I have done that, Senator Macdonald. The DEPUTY PRESIDENT 10000 Order. Please continue, Senator Macdonald. Senator IAN MACDONALD YW4 It is another case where there is one rule for everybody else and one rule for the Greens. If I dare interject when Senator Waters is talking, you have everyone in the Greens political party taking a point of order. But as I say, there is one rule for everybody else and a separable rule for the Greens. I do not want to spend a lot on that particular part of the debate. I simply say that if Senator Waters came with the agreement of every state government to that reduction in their GST revenue, then I think it is something perhaps the Commonwealth should look—although I doubt that it is in this bill that you would address something like that. Perhaps it needs a piece of legislation that is more specifically to the point. But I would be interested to hear from Senator Waters if all of the states have agreed to forfeit the revenue in the manner she proposes. That does lead me just to emphasise that this is a GST bill. So far as the Commonwealth is concerned, the revenue raised is not particularly relevant—and I emphasise 'particularly'—because all of the money raised from this will go to the states. My own state of Queensland is a classic example. That state, which has been very poorly managed financially for a long period of time, certainly needs every cent it can get from whatever sources. The revenue raised from this bill, should it be passed, would be going straight to the state government. I do have one concern with this bill that I may pursue further in the committee stage: that is, the method of collection. I have raised this with both the finance minister and the Treasurer. They have been courteous in their responses to me, but I find it difficult to understand why we have a method of collection on goods above $1,000 that I will refer to as the vendor method of collection. According to Treasury estimates, if we use the vendor method of collection—which is that vendors overseas will collect the GST and pay it to Australian government—then that would raise $300 million over the forward years. But I wonder whether every vendor in every country around the world is going to do this, particularly the little vendors. I can appreciate that the big vendors, the people who are in this as a major part of their business, would do the right thing, and if they are of the vendors they will charge the tax, will collect it and will send it to the Australian government. But, if for a little backyard operation sending goods by post to Australia, one wonders how that is going to be enforced. Will these smaller vendors in backyards in America, South America and Europe say, 'Yes, we're obliged to collect a 10 per cent tax on behalf of the Australian government, so we will collect it and, hand on heart, we will send that tax to the Australian government by the next post'? I am sure it does not work like that, but the principle does worry me. It would seem to me far easier to get the logistics companies who bring these goods into Australia, be it Australia Post or any of the international transport organisations, to add the GST, collect it and pay it to the Australian government. Arguments have been raised that this would be very onerous for them, but they already do it, as I understand the system, on goods of over $1,000. They have their computers set up and they have their processes in place to add the GST at the delivery stage—to press a button on their computer, charge the additional GST, press another button to collect it all together and press another button to send the GST to the Australian government. I am not sure why we are changing the system for those goods under $1,000; I have not been convinced that it is a better way to go. KPMG, obviously, are employed by those vendors who do a lot of work in Australia. I acknowledge that have a purpose for it, and I am sure KPMG have been around to see everyone in this building, but I think they have a point: if we do it for goods above $1,000 with the delivery model, why not below $1,000? I find that difficult to understand. According to KPMG—and I make the qualification that they are a reliable organisation—if it was the logistics model, the delivery model, the revenue collected would be $1.8 billion, as opposed to Treasury's estimate of just $300 billion over the forward estimates. It would seem from the point of view of Australian governments' revenue collection that that would be a better model for the states. Again, this is not a matter for the Commonwealth government to be too concerned about in relation to revenue raised because all of the revenue goes to the state governments. But a collection of $1.8 billion as opposed to $300 billion over the forward estimate seems to me to be another reason why the government should seriously look at what is called the logistics model for the collection of this tax. My main concern is that we do it on goods valued above $1,000, and in that way we use the logistics model. But, for goods below $1,000, we are now going to say it is up to every individual vendor around the country to do the right thing by the Australian government. The big vendors—and again KPMG are working on behalf of the big retailers whose business is delivering goods into Australia—have indicated to us that they will comply with the rules, whatever the rules are, and I believe them. But what they are concerned about, of course, is that their competitors will not do the same thing, and there will be lots of little organisations set up that will sell the same goods as the big vendors but that will not be collecting the 10 per cent GST, and therefore the big vendors will become uncompetitive. I can understand that. I do need—and I will in the committee stage, if I get the opportunity—to try and clarify those issues. Can I point out that the Treasury say in their submission that, even when this scheme is fully implemented, the collection rate will only be 54 per cent. I understand that to be saying the Treasury expect that 46 per cent of small retailers who sell into Australia will not be charging and forwarding the GST collected to the Australian government. That in itself is a concern and makes me wonder about the efficacy of the arrangement. Perhaps I have this wrong, but, as I have said, I have spoken to both the Treasurer and the finance minister. There are a number of reasons that I would like the government to seriously consider whether the logistics model would not be better than the vendor model. I make this contribution as I always do: relying on my understanding of these things—not always accurate, but that is as I understand it. I am a little concerned at the way this is going. Having said that, I conclude where I started: this legislation is long overdue. It will put a little bit of balance back into the competition between the small retailers in Australia who were unfairly competing against retailers overseas, in that Australian retailers had to collect the 10 per cent GST, whereas their overseas competitors did not have to do that. Therefore, the overseas competitors could sell goods at commencement at 10 per cent less, and that gave them an unfair advantage over small businesses in Australia, many of whom are currently struggling for survival. 10:21 Senator PRATT I0T Western Australia The Treasury Laws Amendment (GST Low Value Goods) Bill 2017is indeed quite important, yet we see that it is being implemented and debated in this chamber just two weeks before its effective start date on 1 July. It clearly outlines the way in which the government has bungled the management of this very important issue from the outset. The policy objective of ensuring overseas retailers are on a level playing field with Australian retailers when it comes to the GST has been around for a long, long time. I note that when Labor was in government, the Productivity Commission made it clear that this was something worth pursuing. Therefore, the objective is worthy. That was based on the economics of collecting the tax making sense: namely, that the cost of collecting GST from foreign retailers was outweighed by the revenue from those retailers, which, of course, makes sense. But, when we look at the government's solution to this problem—the legislation that is currently being debated—we see that this measure was announced in 2016 budget. Here we are after the 2017 budget, with the legislation only having been introduced last February. It is simply unworkable that this legislation be in operation by 1 July this year. As we know, the bill seeks to apply the GST to goods with a value of less than $1,000 that are being imported directly by consumers into Australia. We know that these goods are exempt from the GST and that the government is seeking to have this measure take effect from 1 July. Under this legislation, overseas suppliers including platforms such as eBay and Amazon, and redeliverer services, with an Australian turnover of $75,000 or more in a 12-month period, will be required to register for and charge the GST. We note from the 2016 budget that this measure was due to raise $300 million over the previous year's forward estimates, and yet it still has not passed in this place. Labor have an open mind on this issue. We are committed to fair taxation, and we support this in principle. It is about a level playing field for Australian businesses, which arguably the government intends to do with this legislation. But the details of it must be right, and plainly they are not. I note that my good colleague Senator Gallagher is moving amendments on behalf of the opposition to try to fix some of the bungles made by the government. We want to see a model that is workable, that retailers are able to comply with and that does not adversely impact on Australian consumers. So we have been concerned for some time about issues regarding this legislation's implementation, particularly how the GST would be collected. Let's talk through what a workable model needs to represent. We note that submissions to the Senate inquiry raised a number of issues with the government's model. Electronic distribution platforms such as eBay, Etsy and Alibaba were critical of being liable for goods they simply served as a platform for, as opposed to owning or holding them, likening it to a shopping centre being liable for GST on goods sold by its tenants. They believe that the system would be complex and costly to administer, with the costs being passed on to consumers. You can see from this that a key problem with the legislation is that it is not platform neutral. We can see online retailers such as ASOS being concerned about the complexity of the measure, and the low level of compliance would provide less reputable firms with competitive advantage. We heard from freight companies and express carriers strongly opposing a system that required the collection of business numbers and vendor registration numbers, saying it would create complexity, resulting in unnecessary delays and increased costs which would be passed on to consumers. In terms of the impact on consumers, the Senate inquiry found that basically the measure would end up in increased prices. In addition, the costs of implementation were going to be passed on to consumers. There was also concern that some platforms might simply need to close their operations. Lastly, on implementation, the Senate inquiry concluded that there would be significant challenges for some parties in implementing this measure. There were some submissions that were critical of the 1 July start date, ranging from saying it was impossible—with some vendors taking two or three years and express carriers another year after that—to saying that the time allowed for implementation was absurdly short. Here we are, just two weeks before the start date for this legislation. Ironically, we have the likes of Senator Macdonald here. Clearly the government senators have concerns among themselves, as Senator Macdonald's comments reflect. The Senate committee was in fact unanimous in its view that the start date should be delayed to 1 July 2018 to ensure the issues around the model, complexity and implementation could be worked through properly. So it seems extraordinary to me that it is up to the opposition to move amendments on issues like the start date, but I am pleased that Senator Gallagher is doing so, because it is only with those kinds of changes that this legislation is at all tenable. We can see that government senators made recommendations for the government's own legislation to be delayed. Importantly, the opposition is also moving amendments that would see this provision reviewed by the Productivity Commission. If you look at the issues that I have already outlined in my speech in relation to a level playing field between different kinds of retailers and some of the complexities associated with it, it is very important that this measure be monitored from the outset and reported on so that further amendments can be made to this legislation in the future. Labor would support the government amending the legislation before parliament to reflect this recommended start date, and I hope they move with us to do so. This is a delay that will help get what we are doing in this chamber today right, and we want to work across the chamber in a bipartisan way to do this. Our principles on this issue have been clear from the outset: we need a level playing field for Australian retailers competing with overseas retailers while ensuring that there is a workable model that can easily be complied with by overseas retailers and online platforms, without any adverse impacts on Australian consumers. In speaking to this legislation, I cannot let an opportunity to talk about the GST in this place go without mentioning the particular plight of Western Australia and the issues that confront our state's finances. It is directly relevant to this debate because, when we look at the states that are pulling their weight in raising revenue, Western Australia works very hard to do things like invest in its mining industry, which takes expenditure, in order that the Commonwealth is able to raise more revenue. In that context, revenue raising measures like this are also important because they will raise more revenue under the GST but will do so in a way that do not adversely affect people who are trying to pay for things like rent and food et cetera. But when it comes to Western Australia's fair share of revenue raising, it only gets 34c in every dollar of GST raised. The GST allocation system in this nation is broken. It is unfair that, when a measure like this is introduced, Western Australians, in buying online goods, will be paying GST on goods under $1,000 but will not be get any more than 34c back in a dollar to the state's finances and that is outrageous The current collection and distribution method of GST in this country has a disproportionate effect on Western Australia, specifically in how it is being applied to remote areas and how gambling revenue is not assessed in the calculation. We desperately need a change in how the distribution is calculated so that it does not discriminate against WA. My priority is a better deal for WA whatever way we are able to make that happen. Labor's priority is clearly about protecting living standards, jobs and providing a secure economic future for our nation, and this means a stronger economy that does not leave the people of my home state of WA left behind. I have to say, the unfairness of the GST distribution system, which was always unfair, is indeed being compounded by the mess made by the previous Liberal Barnett government in Western Australia. The state government is not only facing substantial budget pressures, which are a factor of the bad record of the previous government, but also the unfairness of the current GST distribution system. Reform to this system is desperately needed to alleviate some pressure on the state of WA. We should not bear the burden of paying back more debt and taking on the burden of more debt to cover the shortfall on GST. The federal government clearly has a major problem with the tax system and it needs to be reformed. We have had a federal coalition government side by side with the previous state coalition in WA for some time that have taken no action on the GST. Liberal prime ministers have been playing a game where they promise Western Australia more GST without any jurisdiction but, ultimately, they have come up with no concrete plan or proposal, so Western Australia is very clearly being short-changed. When Western Australia does well, the nation does well. Currently, we are not getting our fair share of Commonwealth resources. WA is doing the right thing by the national economy by pulling its weight in raising taxes across the state by exploiting its resources in a way that helps the Commonwealth raise revenue and is being unfairly punished for that. The deterioration of iron ore prices and the mess of the Barnett government in Western Australia mean that Western Australia needs a fair go with the GST. Western Australia has done its fair share of the heavy lifting for the national economy, so reform on the GST distribution system is long overdue. So, in closing, when we look at this issue and the fact that Western Australians will again, on either 1 July this year or 1 July next year, depending on whether the opposition's amendments are successful—and I note that our support for this legislation is contingent on those amendments passing—be picking up more of the burden of the GST. They will be getting back only 34c in the dollar of all the goods they buy that come from overseas that fall under the $1,000 threshold in this legislation. 10:35 Senator LEYONHJELM 111206 New South Wales It does not matter whether you vote for Labor or the Liberals; either way, you get a government that sets impossible hurdles to employing the unemployed, you get a government that buries businesses in red tape, you get a government that raises the cost of living and you get a government that just loves to tax. When the GST was first introduced, Commonwealth tax, including the GST, was equivalent to $12,000 per person in current prices. Now it is $14,000 per person. But that is not enough for the Liberal-Labor unity ticket. With the bill before us today, the Treasury Laws Amendment (GST Low Value Goods) Bill 2017, the Liberals are extending the reach of GST to imports that are valued at less than $1,000, facilitated by platforms such as eBay and Amazon. And while Labor want to delay this extension, they still support the bill. As well as raise revenue, the bill will bury platforms like eBay and Amazon in a mountain of red tape. How much red tape is anyone's guess. Unlike the dozens of tax bills that have been waved through this place since I have been here, this bill includes no regulation impact statement and hence has no estimate of the red tape burden being piled on. This is extraordinary. At the exact time that we need a regulatory impact statement, the regulatory impact statement goes missing. A cynic would suspect there is something to hide. It is hard to imagine how eBay could possibly collect GST. Suppose Yankee John Doe is selling a product on eBay and Aussie Joe Bloggs is interested. Does eBay tell Yankee John Doe that he will receive only 10 elevenths of the winning bid if the winning bidder happens to be Australian? Or does eBay tell Aussie Joe Bloggs that if he puts in the winning bid he will have to pay 10 per cent more? And how is eBay to know whether what is being sold by Yankee John Doe is new or second-hand? Or do we just assume eBay takes a 10 per cent hit every time someone sells something to an Australian? Perhaps eBay should sell to Australians only goods that cost more than $1,000, so Border Force will be responsible for collecting the GST and not eBay. Given this complexity, some platforms might just refuse to facilitate sales to Australians while those that have no presence in Australia will almost certainly just ignore Australian tax law. The ATO will not be able to do anything about it—and of course those platforms are not likely to bother with payment protection or other safeguards against scams. Either way, the Australian consumer loses. Even if the commencement of the bill is delayed—and I will support the motion to delay it—it would be the height of irresponsibility for the Liberals and Labor to wave into law this radical new approach to the GST, given the absence of any information on the resulting red tape burden and the costs for Australian consumers. To coin a phrase from a Senate colleague, please explain. 10:39 Senator KETTER 244247 Queensland I endorse some of the comments that Senator Leyonhjelm made in respect of the botched policy process that has led to the Treasury Laws Amendment (GST Low Value Goods) Bill 2017 coming before the chamber. Senator Leyonhjelm has talked about the lack of a regulatory impact statement which is just one of the problems associated with this bill. I want to make some introductory comments in relation to the fact that this unfortunately is not the first time that this government has botched a consultation process and a policy process. In fact, it is beyond my comprehension that many people in the media consider the coalition to be the more credible economic managers. That mythology is not supported by the facts. I have made it my mission in this place to highlight some of the areas in which this government has been shambolic and chaotic when it comes to economic management. I have mentioned on a number of occasions the mythology that this government is always going to levy less tax on the Australian taxpayers, and how this mythology—which they always try to perpetuate—does not stand up to scrutiny. There is the fact, that since 1980, ten of the years with the lowest level of tax as a proportion of GDP were Labor government years. When it comes to the highest years since 1980 with tax as a proportion of GDP, eight of those 10 years were under the coalition. So this is another area of mythology. When it comes to orderly development of tax policy in this country, we had some glimmer of hope under the previous Treasurer that we would have a tax white paper and a tax green paper following the Intergenerational report, and that there would be a holistic look at the tax system. But, lo and behold, we find that upon Mr Turnbull coming into the office of Prime Minister that was all scrapped, and all of the effort that was put into putting together a holistic review of our taxation system, which I think everybody was welcoming, was basically scrapped in the name of political expediency. At the time, the Chairman to the Board of Taxation, Mr Michael Andrew, talked about the fact that the process had cost at least $7 million in terms of working towards a tax white paper. In addition, we see the wasting of time, effort and money of 1,000 Australian stakeholders and business organisations who contributed to the review of our taxation system. Having basically scrapped that process, Mr Turnbull—who promised that he would have more credible economic leadership than his predecessor—floated ideas about increasing the GST, about the states assuming taxation powers and about the Commonwealth walking away from funding public schools. This was chaotic economic management. When it comes to the issue of spending, I have said on a number of occasions in this place—and I remind the chamber constantly—that the International Monetary Fund working group identified the profligacy in the Australian system as being on the government side not on the Labor side. In fact, it was Prime Minister Howard who was found to be profligate in his spending in two periods of his term of office. When it comes to spending, I know there are senators on the other side who shake their heads that in 2013 one of the early acts of economic management of this government was to remove Labor's gross debt cap of $300 billion. Last week we crashed through the $500 billion mark. We expect to go through the $600 billion level at the end of this decade, and we are expecting to hit $725 billion in gross debt in 10 years time, with no peak in sight. So, when it comes to economic management this government's record is in tatters, and I hope that the mythology associated with the coalition's economic record is finally debunked. Once again, as I said, the Treasurer has botched the policy process and it falls to Labor to step in and fix up the mess. Coalition governments, under both Prime Minister Abbott and Prime Minister Turnbull, derailed a genuine process that was started under the previous Labor government. The end result after all these years is a bill with numerous problems and plenty of unanswered questions about whether it is the best way to lower the threshold for the GST on online purchases. It is a shame that after the backpacker tax debacle we have to have another piece of legislation put forward by the Treasurer that, again, has so many problems. I want to make the point that Labor supports the concept of evening up the playing field as regards Australian online businesses and overseas online businesses. In principle, that is something that should happen. This bill is not the answer to that problem. To fix this low-value GST situation, Labor will be moving amendments to delay the commencement of the legislation by 12 months while requiring the Productivity Commission to conduct a short inquiry on implementation and other GST collection models. I want to note the sensible comments made by Senator Macdonald in relation to the delay of the commencement of the legislation. I also note his concerns about the method chosen in this bill as to whether it is the right method. On our side of the chamber, we certainly see that that is a problem with the bill. The Productivity Commission is well placed to review the package and ensure that we have a framework where compliance is high and there are no significant adverse consumer outcomes. Before going into the detail of the bill, for the benefit of the Senate I think it is appropriate to state for the record a few points about the history of this issue. There has been some good work done previously, which has been recklessly abandoned. The Senate Standing Committee on Economics' inquiry identified many of the problems with the bill. The outcome was that we had a government-dominated committee, the Economics Legislation Committee, which supported a delay. And of course, Labor's sensible position—supporting the legislation—provided that there be a 12-month delay and a Productivity Commission review. Those are very important caveats. The bill has a long history and was reviewed by the Productivity Commission in 2011. In their report, Economic structure and performance of the Australian retail industry, the commission highlighted the need for tax neutrality while also collecting the levy: As the GST is a broad based consumption tax the LVT should, in principle, be reduced to a low level to ensure tax neutrality. But the costs of collecting additional revenues must be balanced against the gains from removing the distortion. This led to a strong recommendation to establish a task force to find a workable model. The recommendation was very clear: The government should establish a task force charged with investigating new approaches to the processing of low-value imported parcels, particularly those in the international mail stream, and recommending a new process which would deliver significant improvements and efficiencies in handling. The task force should comprise independent members, with the Australian Customs and Border Protection Service (Custom), the Australian Quarantine and Inspection Service (AQIS), Australia Post and the Conference of Asia Pacific Express Carriers providing advice. Following the Productivity Commission report, a task force was established and a final report delivered in July 2012 that considered a number of options and issues that needed to be addressed. To show how detailed that report was, it stated: In considering which of these potential solutions may fit within an integrated package of reform, assessments at both the initial and detailed costing stage are undertaken based on criteria derived from this investigation's terms of reference. The criteria include cost, efficiency, implementation, competitive neutrality, risk, revenue impact and legislative impact. Regard is also given to Australia's interaction with the digital economy and Australia Post's profitability. Not all criteria are relevant to the assessment of every solution, nor are they applied prescriptively. The report then went on to supply a new, streamlined model of GST collection by logistics companies, a so-called 'logistics model'—which I note Senator Macdonald has some sympathy for—although this simplicity does not give credit to the substantial amount of analysis and the detailed recommendations that sit behind these words. The previous Labor government then took steps to develop and implement this model in 2013. What we saw from the coalition government in 2015 was a U-turn on all that work. The then Treasurer issued a media release stating: At the meeting the Commonwealth Treasurer put forward a proposal that relies on a vendor registration model as a method of collecting the GST for the states and territories. As goods would not be stopped at the border, administering a vendor registration model would have a relatively low cost. The so-called logistics model, with the backing of the Productivity Commission report and the task force report, was abandoned with little notice, and instead the so-called vendor model was embraced. No justification was offered for why this change had been made, and the Office of Best Practice Regulation stated that this announcement, without an accompanying regulatory impact statement, was in breach of their regulation guidelines—a point that Senator Leyonhjelm has identified. Fast forwarding to 2017, in March the legislation was introduced into parliament. It is far from ideal when we have an announcement in 2015, yet in March 2017 the legislation is introduced and the start date remains 1 July 2017. It does not give much time for scrutiny or for stakeholders to prepare for this new measure. The government seems to have wanted the parliament to just wave this legislation through. Labor sensibly wanted it to be referred to the Senate Economics Legislation Committee, and this bill is a clear example of how important these committees are when we have a government and a Treasurer introducing legislation like this. The work of the committee culminated in a hearing in April, where we heard from Treasury officials as well as stakeholders on all sides of the debate. To start, I confirm that the Treasury had still, in 2017, not released the regulatory impact statement, and Treasury also admitted that the lack of a RIS was in breach of the Office of Best Practice Regulation guidelines. It was very concerning to hear that the Turnbull government had botched its own policy process in developing this bill. The hearing started with this revelation, and the news only went downhill from there. No explanations were offered by the government for the decision to move away from the recommendations set out in chapter 7 of the 2011 Productivity Commission report Economic structure and performance of the Australian retail industry and the subsequent Low Value Parcel Processing Taskforce: final report. There are still no answers after all these years. In relation to the 1 July 2017 start date, Treasury officials declined to answer questions about whether alternative start dates had been modelled. Witnesses from the Australian Retailers Association, online retailers, the Conference of Asia Pacific Express Carriers and the Freight & Trade Alliance all expressed concerns about the 1 July 2017 start date. Even the supporters of this bill have concerns. EBay claimed that Treasury officials had told them they expected a 25 to 30 per cent compliance rate from the model set out in this legislation. Treasury officials later stated that they expected this compliance rate in the third year of operation and that it would reach maturity in 2022-23 at 54 per cent. So the government has clearly overstated the benefits of this bill. If 54 per cent is the best that can be achieved, it does not appear that this bill actually delivers on the objective of levelling the playing field for Australian retailers, who are struggling. In another worrying sign, some of the online platform companies did not rule out geoblocking Australians and preventing them entirely from purchasing from overseas vendors. EBay stated: Because we do not want to violate the law, we may have to stop all overseas sellers from selling to Australians. Of course, it will hurt our business significantly. I want to make it clear that we are not threatening; I just want you to know how significant an impact this bill will cause to our business. Etsy also made similar comments, stating: Because of the scaling complexity of this task, quite honestly, we are left with a number of unfavourable options. It is absolutely our worst-case scenario that we would have to do this, because, as I mentioned earlier, the revenue from our Etsy sellers is essential revenue. These are typically women at home who are full-time carers. This revenue counts for them, so blocking them from being able to achieve a sale like that is, frankly, devastating for us and for our business model. Alibaba made comments along the lines: Alibaba Group has done some preliminary work looking at this bill, and is of the view that it may not be able to be applied to AliExpress. If that were the case, we would have no choice but to geoblock Australian users from using the AliExpress platform. And they had not provided any costing in relation to that. These potential impacts of a reduced variety of products, reduced competition and higher consumer prices are clearly possible consequences of this bill, and it is important that adverse consumer outcomes like this are avoided. There were not many friends to be found for this bill during the hearing. Even witnesses normally supportive of government policy, such as Dr Berg and Professor Davisdon, associated with the IPA, gave the tax zero out of 10. They said: The idea that 3,000 firms are just going to voluntarily stump up on this policy when there is really no direct enforcement mechanism seems to us a bit fantastical. On this point of compliance the ATO, lumbered with a vague plan by the government, were left to explain that jurisdictions like the USA and China will not enforce the measure on their behalf. Platform compliance is largely reliant on the goodwill of overseas operators. Even the Retailers Association, a strong supporter of this bill, noted in their submission: Our main concern is the speedy implementation of the policy with proposed registration and other measures needing time to be set up and enforced. The logistics companies concurred with this issue of the start date, given the need to have their information systems modified to comply with the legislation. The public hearing clearly showed that the Treasurer had failed to properly consult with stakeholders and develop a workable model for taxing low-value imports. The hearing exposed numerous problems with this bill, and it clearly was not good enough in its proposed form. The outcome of that inquiry was that we saw a government-dominated committee requesting a delay. Clearly, the issues did not just concern the Labor Party. The final committee report, in an unusual move, recommended the commencement date be amended to 1 July 2018. Indeed, in the words of my colleague Senator Hume in the media: I think a delay in implementation is probably a good compromise solution. It's quite understandable that those companies to whom it applies wouldn't be prepared or have made the necessary changes until after the legislation was actually passed. The final report also notes concerns expressed about the proposed implementation date and the complexity of implementation and enforcement. It accepts that business may need more time and assistance to develop their systems to implement the measure. Labor also set out in the report its bipartisan in-principle approach to this bill to delay the start date and to have a review completed so that the best model could be adopted, the playing field could be properly levelled and that suitable consumer outcomes could be maintained. We maintain our position today that we are willing to find a way forward to level the playing field for Australian retailers, to have a taxation system with high compliance and for suitable consumer outcomes to be maintained. However, given the state of the bill and its numerous problems, we have no choice but to step in and give the affected stakeholders, the government and the parliament another chance to fix the Treasurer's mishandling of the GST low-value threshold legislation. Given the Productivity Commission's previous work into the collection of GST on online purchases, it is well placed to review the model. The Labor Party stands ready to find a way forward on this legislation. It is important to get the policy right. 10:59 Senator BERNARDI G0D South Australia Let us not gild the lily: this is a great big new tax on consumers, no matter how the government wants to dress it up and the opposition says they do not support it—they do. This is going to result in higher prices for everyday Australians. I do not think that is justified. It is not about protecting or preserving the domestic retail sector, it is not about getting a better deal for the mums and dads of Australia; it is about providing more revenue to government, because they cannot and will not live within their means. My position, the Australian Conservative position, is quite straightforward: Australians already pay enough tax. We do not spend their tax dollars wisely enough to ask them to give us any more. The spendthrift nature of the former Labor administrations and the existing coalition administration is extraordinary and is doing a huge disservice to our country and our children. We are collectively accumulating hundreds of billions of dollars worth of debt, which we are going to ask future taxpayers to fund, and we are doing it because we are not prepared to live within our means today. The government and the opposition will dress up this big new tax on consumers as an equity measure to protect the Australian retail sector. If they were serious about ensuring a thriving retail sector in Australia, they would look towards cutting the regulation and bureaucracy attached to running, owning and operating a business in this country, which are a direct result of the policies implemented by those on the other side and those on this side of the chamber. Government policy is directly responsible for the massive electricity prices affecting every business and every consumer around the country. You want a more effective and economic retail sector? Cut those regulations and allow their electricity and utility prices to be lower; cut the regulations and red tape attached to employing people and allow more competition. If you want an example of competition, Coles and Woolworths do Australians a massive disservice in the retail sector. They were selling products at a massive mark-up, far higher than the pricing of their international peers. They are under pressure now because their inefficient models, which were ripping off consumers, have been exposed by the likes of Costco and ALDI. I went out to Costco last week. The shopping experience may be different, but the prices are lower, because they are more competitive. If you cut competition, you are going to have a more uncompetitive environment. We need more competition in this country. We need the likes of Amazon to come in here to keep our retailers honest. No longer is it acceptable for them to engorge themselves at the Australian consumer's expense, when we are paying much more for products than it would cost to obtain them internationally. What is the response? It is not to cut regulation but to put a new tax that is going to be paid by the Australian people. I am absolutely in principle opposed to that. That is why I do not support this bill. It is also a problem with the concept surrounding this bill. After Bert Kelly—and I note the Modest Member society chairman here—rather unfashionably first did so, we have argued for decades that free markets are good and tariffs are bad; now we are back to arguing for a new tariff. You can call it whatever you like, but it is a tariff. It is a tariff on low value purchases from overseas. More importantly, the tariff is going to be cumbersome and unwieldy to implement and is going to raise a whole range of questions. Who pays it? Is it collected by the retailer overseas? Should it be collected by the transport agency here? Is it going to apply to second-hand goods? I can game the system already: if I were an overseas retailer, I would transfer it to a second retailer and call it second-hand. I would even repackage it to save money. There are a whole bunch of ways this could be scammed and gamed, because government are trying to be too clever. What is it that the government have against people being able to obtain goods for less money? If they are that opposed to consumers' interests, my message to them is that they are once again putting their own inability to cut the cost of government and to cut the expenses and the programs of government ahead of the interests of Australian people. This is wrong in principle. The concept of it is wrong and overturns what I thought was decades of learned wisdom about getting more benefits. It undermines the principle of competition, and the execution of this is, quite frankly, diabolical. Here we are with a big new tax where the government do not really know how they are going to collect it or how they want to collect it, and this new tax is only a couple of weeks from being implemented. That is why, when the opposition seek to delay this tax for a year, I will be supporting that delay. I am happy to delay it for 10 or 12 years if it helps them to get to a better answer and a better outcome. But, ultimately, I will be voting against this bill in whatever shape or form it is. I am not here to put taxes up; I am here to cut the cost of regulation for businesses and for consumers. I am here to drive prices down so that people get better value not only from government—where we should be lowering taxes—but from the retailers, who have been feasting at our expense for a very long time. Anyone who has been overseas and has gone into the apparel industry in America or Europe knows that you can buy things for much less there than you can in this country, and it is not because they are made in America or in Europe; it is because the regulations attached to selling those items allow for a more competitive environment and a more competitive market. I believe Australian consumers deserve better value from their retail sector. It is up to government to provide that environment by cutting the cost of doing business, not imposing new taxes on those who seek to get the best possible value for their money in a global environment. 11:07 Senator WHISH-WILSON 195565 Tasmania I rise to speak today on behalf of the Australian Greens on the Treasury Laws Amendment (GST Low Value Goods) Bill 2017. Consistency is very important in politics, and the Greens have always had a very strong position of voting against GST when it was implemented. It is not a progressive tax. Members right around the country play a very important role in our policy formulation, and we do not support taxes that are not progressive. GST is a regressive tax. Every time there has been debate and discussion in this place about broadening the GST or increasing the rate of the GST, the Greens have consistently opposed it. Rather than just opposition, we have always embarked on proposition. We have always found other proposals and other ways to raise revenue in this country, and we are all for raising revenue, but we would like to see it done in a fair and equitable manner. We do not believe the GST is a fair and equitable tax. Hence, on applying it to low-value goods, we will again take the consistent position that will be opposing this bill today. We do not support GST as a fundamental principle, and we will not be supporting the bill today. However, I would like to say there are other reasons for this. Even if that were not our policy position, there are other reasons that we would not be supporting this bill today. We do not believe that it is the right model. It is very important to be clear about this. Low-value imported goods are currently exempt from GST because, to date, it has not been considered worth the effort to collect the tax. It has not been considered worth the effort. When we talk about the efficiencies of policies we look at how much it costs to implement, administer and enforce them and weigh that against the revenue benefit and potential economic benefit to get some kind of metric on efficiency. The proposition that the government has in the legislation before us today, certainly on all the evidence that I have heard, is not an efficient tax by any stretch of the imagination. In Mr Hockey's own 2015 tax white paper, he explained: The exclusion from the GST base for imported services reflects how difficult it is to identify the supplier and recipient in a transaction because it has not occurred physically and, unlike imported goods, cannot be stopped at a border. Everybody is clear about this: this is a very complex area. To put this simply, the Australian Taxation Office has better things to do than to go chasing $10 or $20 of GST here or there from literally tens of thousands of suppliers all over the world. The problem with this bill is that it does not seem to address that key fundamental problem. The vendor model that this bill proposes would require each of those tens of thousands of online retailers from all over the world to collect the tax for the tax office and then pass it on. We have already heard some contributions in here today about how difficult that is going to be and how easily that system will be gamed. I think it is fair to say that, even when you look at the explanatory memorandum that has been provided to senators, it has still not been made clear exactly how the ATO will do this. We have sympathy for the idea of parity and equity between domestic businesses and overseas businesses, for trying to ensure that our domestic retailers are not at a competitive disadvantage. But, as noted in an article in The Conversation by Kathrin Bain, from which I will read very shortly, it is still unclear exactly how much parity between domestic retailers and overseas retailers this is going to achieve. One of the golden rules of taxes is that they have to be enforceable, and efficiently so. The Greens believe that the government should go back to the drawing board with this tax and get it right. It has been raised in here already that the government-dominated Economics Legislation Committee also recommended that this legislation not be implemented immediately; that there be a 12-month delay on the implementation, subject to getting it right. I find it quite ludicrous that we are here today to pass legislation that everybody seems to agree is second-rate. Why wouldn't we just get it right and then bring it back so that we can vote on legislation that we are all happy with? That brings me to Labor's amendment. We have a choice, as a party, between voting for legislation that the government is likely to get up and have the numbers on, which begins immediately with a second-rate model, or supporting Labor's amendment to at least delay the legislation for 12 months and get the Productivity Commission to do a study. Of course, that does not bind the government. As Senator Cormann in the chamber here today knows, the government will look at the Productivity Commission's report. It may or may not take those recommendations on board. It has the discretion, as the executive, as to whether or not it wants to do that. So essentially we are, today, voting for the legislation to be implemented. Even a delay is no guarantee that we are going to this fix this and get it right. We can only hope that, if the Productivity Commission does look in detail at the differences between the models—for example, between the logistics model and the vendor model—and properly costs what it will take to administer and enforce the various regimes, perhaps the government will change this legislation and put up an amendment for us to all vote on. We would rather see that happen now. We would rather see the government get it right and bring it forward. With that proposition in front of us, the Greens will be supporting Labor's amendment today. At least it gives us the opportunity to fix some of the mechanics of this bill and get it right. And I would hope that the government would take on board any recommendations by the Productivity Commission in that regard. We do believe there is merit in looking at the logistics model, which would collect the tax through distribution channels. I have met with various online retailers and other stakeholders, and I understand that this proposition has been raised at the legislative committee level and directly with Treasury and government. The merit of a logistics model is that there is a much smaller number—more likely a handful—of businesses through which imported goods are distributed, which makes it easier to administer. The ATO's task would be much simpler under this model and the model is also more likely to ensure that all imported goods are captured, whereas, with the vendor model in the legislation we have in front of us, you could drive jumbo jets through some of the holes in it. If we are trying to achieve parity, then that is not going to be the case. I would like to go into a bit more detail as to why the proposed legislation does not set out to achieve its aim of levelling the playing field for our domestic retailers. It unfairly imposes GST on goods purchased from some overseas sellers that would not be subject to GST if purchased from an Australian seller. Kathrin Bain wrote an excellent article in The Conversation, on 21 April 2017, that explained some of the key or fundamental problems with this legislation. She said: Currently, low-value imports (those with a customs value of A$1,000 or less) are exempt from GST. If the legislation is passed, overseas vendors who sell more than A$75,000 of low-value goods to Australian consumers would be required to register for GST, and collect and remit GST on low-value goods to the ATO. Those imports will continue to be stopped at the border with any GST, customs duty, and associated fees paid to Australian Border Force by the importer before the goods are released. For sellers of low-value goods it will mean that an overseas supplier of both low and high value goods will be subject to two separate tax regimes. The requirement to collect GST will apply only to low-value goods.    …   …   … While extending the GST to these goods is meant to level the playing field between overseas and Australian vendors, treating the online marketplace or mail forwarder as the supplier of goods is inconsistent with the treatment of domestic transactions. As eBay has stated in their submission to the Senate Committee: "eBay is not a seller. eBay is a third-party online marketplace that simply connects buyers and sellers". For Australian vendors who sell items on eBay, it’s the individual seller who is responsible for collecting and remitting GST on products they sell (if they are required to be registered). A seller who uses eBay, but isn't carrying on an enterprise or does not meet the A$75,000 turnover threshold, isn't required to be registered and would not be required to collect GST on their sales. She states further in regard to the proposed legislation we have before us today: However, the proposed legislation does not treat overseas vendors in this way, by treating online marketplaces and mail forwarding services as the supplier of goods. So it seems as though the legislation has missed the point. She states further: … small, individual vendors should not (if their turnover of low-value goods into Australia is less than A$75,000) be required to collect GST merely because they use an online marketplace. EBay has gone as far as stating in their submission that: "Regrettably, the Government's legislation may force eBay to prevent Australians from buying from foreign sellers". This is because they would not be able to comply with the requirements imposed under the new legislation. We can talk more about the various amendments when we come to the committee stage. My colleague Senator Waters has moved an amendment already in relation to removing GST from female sanitary products, particularly tampons. We have had this discussion in here today and it is a very important issue for many Australians—nearly half. For some reason, the razorblades I used to shave this morning are GST exempt because they are deemed to be an essential item for my male hygiene, yet women's tampons are not considered to be an essential item under the GST law. Senator Waters has already given a great speech on this and we are very keen to see this issue fixed. Senator Dastyari, who is in the chamber the moment, has raised this issue at estimates. I know it is something the Labor Party feels strongly about. We look forward to having a discussion on that in committee. Lastly—I cannot let this go unchallenged—some WA senators in here today have used this as an opportunity to talk about how hardly done by Western Australia is under the current GST calculations, with horizontal fiscal equalisation. Senator Smith, I say to you, through the chair, that since Federation Western Australia has been a recipient of the generosity of the other states. This is what fiscal equalisation was set up to do. It is actually extremely complex in terms of the calculations and the assumptions we make, but the principle behind it is really simple. It is about equality around our country. It is about the wealthier states transferring their wealth to help the poorer states. At different times since Federation different states have been donor states under these calculations and different states have been recipients. Throughout nearly all of its history WA has been a recipient of GST and other revenue from the Commonwealth. Through two mining booms, suddenly they are a donor state. They are very likely to be a recipient state again shortly, I understand, Senator Smith. If you squandered the benefits of the mining boom, do not come crying to the federal Senate to try and fix this problem for you. I can tell you that in my home state of Tasmania, when the exchange rate went to $1.15 against the US dollar—we rely on exports from our state. It is ironic that we have an excellent Western Australian senator in the chair at the moment, and this is good. The ACTING DEPUTY PRESIDENT e68 Senator, to clarify the record, what do you mean by 'excellent'? Senator WHISH-WILSON 195565 I withdraw 'excellent' if it makes you happy, Mr Acting Deputy President. The ACTING DEPUTY PRESIDENT e68 I am still Western Australian! Senator WHISH-WILSON 195565 We have this situation where my state, which relies on agricultural exports—and I know other states do as well—got severely punished during the recent mining boom thanks to WA's resource— Senator Smith 241710 On a point of order, I am wondering if Senator Whish-Wilson will give up some of his time on the clock so that I can respond to him, as I not yet actually made a contribution to this debate. The DEPUTY PRESIDENT 10000 There is no point of order. Senator Whish-Wilson 195565 It is a very spurious point of order. Am I to understand that Senator Smith does not have time to speak today? Senator Rhiannon CPR He has been gagged. Senator WHISH-WILSON 195565 He has been gagged by his side, has he? It is a bit rich—pardon the pun—for Senator Smith and all Western Australian senators to come in here and whinge that they been hard done by, when since Federation they have been looked after by wealthier states. If anyone had a reason to have a whinge it would probably be New South Wales, one of the wealthier states. I have taken my great-grandfather's diary and walked his steps in the Somme and the battlefields of World War I, and I know that Tasmanian regiments fought for our federation alongside Western Australian regiments and other soldiers from different states. This is what federation is about. It is about the wealthier states supporting the poorer states at the right time when it is needed. That is why we are a federation. They would roll in their graves if they knew that Western Australia was being so greedy. The point I was making before, before I got distracted by Senator Smith, was that Western Australia had this mining boom. It hurt my state. That exchange rate—call it Dutch disease, whatever you want—impacted Tasmania quite severely. It really did hurt our agricultural exports. But we were not out there complaining and demanding money from Western Australia, which was reaping the benefits of the mining boom. It should have been better invested, may I say— Senator Smith interjecting— Senator WHISH-WILSON 195565 Senator Smith, if you want more revenue, here is my suggestion: fix the bloody petroleum resource rent tax, the PRRT. Fix it! That $238 billion of tax credits that we have given, predominantly off the coast of Western Australia, to some of the largest and wealthiest petroleum companies in the world—$238 billion and counting. Every dollar they spend on exploration or operational expenditure they get to uptick at rates of 15 per cent plus the bond rate, or five per cent plus the bond rate for operational expenditure. They can even claim the clean-up costs of oil spills. $238 billion of tax credits that they can write off against future income. Even if you tweak those numbers slightly, you will be able to raise tens of billions of dollars, which I am sure would help Western Australia and the rest of it. All it takes is a little bit of political courage to take on the big end of town. Do not try and take on my state and take money off Tasmania. We are doing very well at the moment, thank you very much. Our economy is doing quite nicely, because we have sailed through the difficult period when Western Australia made it very difficult for us, thanks to the high exchange rate, and we are now emerging from it. It is times like this that we can look and say, 'The system works; the system works very nicely, thank you very much.' And it has worked since our forefathers fought next to each other for our Federation in those overseas conflicts. That is why we are a Federation. The whole principle that was set up is the principle of equity. It is designed to transfer revenues between states—with the Commonwealth taking responsibility for that—to try to remove inequality around our country. That is what it was set up to do. It just happens to be your luck, Senator Smith, that your state—and Western Australia is my state too, in many ways—through the luck of the draw happened to inherit some of the richest mineral wealth in the world, underneath the ground and underneath the soil. The ACTING DEPUTY PRESIDENT e68 Senator Smith, on a point of order? Senator Smith 241710 Senator Whish-Wilson has the rare distinction of being the only Western Australia arguing against GST distribution reforms. The ACTING DEPUTY PRESIDENT e68 There is no point of order. Senator Dastyari 225099 What about the poor people of New South Wales? The ACTING DEPUTY PRESIDENT e68 Senator Dastyari, no-one needs your help. Senator WHISH-WILSON 195565 That was another spurious point of order. Nevertheless, I am a proud Tasmanian. My father is Tasmanian; my mother is Western Australia—I will put that on record. However, Senator Smith, the half of me that is Western Australian is very happy for you to be giving GST money to the other half of me that is Tasmanian. I make that very clear. But my point remains that for Western Australia and for the Western Australians who are lucky enough to live there, the soil under their feet—and under your thongs, Acting Deputy President Sterle—happens to contain some of the biggest mineral deposits in the world. It is just your luck that you happen to be born there and happen to be lucky enough to live there. There are other parts of the country that do not have those natural advantages, and I would have thought it was perfectly natural that you would want to share those with the rest of the country. Perhaps you were a young Liberal, Senator Smith, and we all know what they say about young Liberals: the one thing that they have in common is that they learnt not to share. That is what they say about young Liberals, and perhaps Senator Smith has inherited such a trait. I am not saying that is the case, but it is possible. Federation is about sharing within our fantastic nation, supporting each other and giving each other a leg-up. On that note, I will get back to the bill. The Greens will not be supporting this bill today for the reasons I have outlined. We will look forward to further discussion during the committee stage on various amendments. 11:27 Senator CORMANN HDA Western Australia I thank all senators who have contributed to this debate for their contributions. I commend the bill to the Senate. The ACTING DEPUTY PRESIDENT 111206 The question is that the second reading amendment moved by Senator Waters be agreed to.

The Senate divided. [11:32]
(The Deputy President—Senator Leyonhjelm)

 10 AYES Di Natale, R Hanson-Young, SC Hinch, D Leyonhjelm, DE Ludlam, S Rhiannon, L Rice, J Siewert, R (teller) Waters, LJ Whish-Wilson, PS 37 NOES Back, CJ Burston, B Bushby, DC Cameron, DN Carr, KJ Chisholm, A Cormann, M Dastyari, S (teller) Dodson, P Duniam, J Farrell, D Fawcett, DJ Fierravanti-Wells, C Gallagher, KR Gichuhi, LM Griff, S Hume, J Kakoschke-Moore, S Ketter, CR Lambie, J Macdonald, ID Marshall, GM McAllister, J McCarthy, M Moore, CM O'Neill, DM O'Sullivan, B Paterson, J Payne, MA Pratt, LC Ruston, A Ryan, SM Sinodinos, A Smith, D Sterle, G Williams, JR Xenophon, N 0 PAIRS

Question negatived.
Original question agreed to.
Bill read a second time.

 In Committee 14 11:37 Senator GALLAGHER ING Australian Capital Territory by leave—I move amendments (1) through (4) on sheet 8153 together: (1) Schedule 1, page 24 (after line 35), after item 53, insert: 53A At the end of Division 177    Add: 177 ‑20 Review of provisions relating to offshore supplies of low value goods (1) By the day after this section commences, the Productivity Minister must, under Part 3 of the Productivity Commission Act 1998, refer to the Productivity Commission for inquiry the matter of the amendments to this Act made by the amending Act, including: (a) the effectiveness of the amendments; and (b) whether models for collecting goods and services tax in relation to *offshore supplies of low value goods other than the amendments might be suitable (including evaluation of the effects of the models on Australian small businesses and *consumers); and (c) any other aspect the Productivity Commission considers relevant to the implementation of the amendments. (2) In referring the matter to the Productivity Commission for inquiry, the Productivity Minister must: (a) under paragraph 11(1)(a) of the Productivity Commission Act 1998, require the Productivity Commission to hold hearings for the purposes of the inquiry; and (b) under paragraph 11(1)(b) of that Act, specify the period ending on 31 October 2017 as the period within which the Productivity Commission must submit its report on the inquiry; and (c) under paragraph 11(1)(d) of that Act, require the Productivity Commission to make recommendations in relation to the matter referred to in subsection (1). Note: Under section 12 of the Productivity Commission Act 1998, the Productivity Minister must cause a copy of the Productivity Commission's report to be tabled in each House of the Parliament. (3) The Productivity Minister must not withdraw the reference before the Productivity Minister has received the report. (4) For the purposes of paragraph 6(1)(a) of the Productivity Commission Act 1998, the matter mentioned in subsection (1) is taken to be a matter relating to industry, industry development and productivity. (5) In this section:    amending Act means theTreasury Laws Amendment (GST Low Value Goods) Act 2017.    Productivity Minister means the Minister administering the Productivity Commission Act 1998. (2) Schedule 1, item 65, page 27 (line 5), omit "1 July 2017", substitute "1 July 2018". (3) Schedule 1, item 65, page 27 (line 6), omit "1 July 2017", substitute "1 July 2018". (4) Schedule 1, item 65, page 27 (lines 9 and 10), omit "1 July 2017", substitute "1 July 2018". I did go into this in some detail in my speech during the second reading, but Labor is proposing these amendments basically to deal with the mess that would be otherwise created if the Treasury Laws Amendment (GST Low Value Goods) Bill 2017 were to pass unamended. These amendments are really about trying to provide the best possible outcome for Australian consumers and retailers. They go to dealing with the issues and concerns that have been raised since these new arrangements were announced and indeed through the Senate process. It is largely around the government's proposed vendor model—how complex and costly it would be to administer—as well as the potential unfavourable impacts on consumers, with the cost of the implementation of this model being passed on, and other issues surrounding compliance, and I think we heard Senator Macdonald raise some of those during the second reading debate this morning. The amendments the opposition is moving today are really to delay the commencement, firstly, by 12 months, to 1 July 2018. I think it is just inconceivable that the arrangements are in place for low-value goods to be subject to GST within the next 10 days. I do not think anyone is pretending to believe that is actually the case. So, this would deal with that problem which is looming before us. It would also allow for a short Productivity Commission inquiry into the legislation's proposed model of GST imposition on low-value imported goods and other, alternative models, with a short inquiry to report by 31 October 2017, which would allow, again, the time to be provided both to the government and to this chamber or the parliament if there are further issues prior to the commencement of the arrangements on 1 July 2018. These are very important amendments—people genuinely want to see GST being levied on low-value goods, but in a responsible way that will not create chaos. Can I just respond briefly to comments that Senator Whish-Wilson made in his second reading contribution around the fact that whatever this Productivity Commission's findings might be they are not binding, and there is no commitment that changes would be made. When you look at the amendment we have drafted, it would be a very brave government that would ignore any findings or recommendations from the Productivity Commission about the imposition of these arrangements. That is why we have put them in as we have. We think that will assist the government and, more importantly, these amendments will responsibly deal with a problem that has really been all of the government's own making and try and put in place a reasonable way forward for a principle that we support but an implementation we cannot support. They will deal with those very significant concerns. Even though they do delay these arrangements until 1 July, we are convinced there is no other way to clean up the government's mess. 11:41 Senator IAN MACDONALD YW4 Queensland I am inclined to agree with the substance of the amendments that are being proposed. I was a member of the Economics Legislation Committee that looked at this in some detail. Some of the concerns that have been raised by Senator Gallagher were raised in that committee hearing. The committee, in its wisdom I think, unanimously recommended that the legislation be delayed for 12 months because, as Senator Gallagher said, it is almost impossible to expect people to get ready in the next couple of weeks to implement the arrangements. There does seem to me to be some merit in having a closer look at the issues. This is a bill that must pass at some stage. I will not repeat what I said in my speech on the second reading, but it is important for small business, for Australian retailers, to have the playing field levelled so that competitors who live overseas do not automatically get a 10 per cent benefit on the sale of goods in Australia. The legislation is essential. As I said before, it is long overdue. I am sorry that supporting the delay for another year will mean another year that Australian retailers will have this unfair competition, but I do not see any other way. I did want ask the minister, as I foreshadowed in my speech on the second reading, to again explain why the vendor model was preferred over the logistics model, bearing in mind, as I understand it, that the logistics model is already in place for goods imported into Australia of over $1,000 in value. If that is the case, wouldn't it be ever so much more simple just to extend that to goods under $1,000? Quite frankly, I understand that these days—I have not been involved in this—you press a button on the computer and it does it all. You press a button and it collects the money; you press another button and it sends it to the Australian government. I just cannot understand where the problem is, so I ask the minister why the vendor model was preferred over the logistics model, which common sense would tell me is better. Could the minister also comment on the things that, again, I mentioned in my speech on the second reading—that the logistics model would return $1.8 billion in revenue, whereas according to Treasury the vendor model will only return $300 million. Also, could the minister comment on the issues, as I understand them, that Treasury have calculated that by the time the whole scheme is rolled out the compliance will be only 54 per cent under the vendor model. I would be interested if the minister could mention those. That is the only part I will take in this debate. I am inclined at this stage to support the amendments being proposed by the Labor Party. 11:45 Senator CORMANN HDA Western Australia I thank Senator Macdonald for his contribution. Let me, on behalf of the government, indicate right at the outset that the government does not support this amendment. This issue has been reviewed many times over the years. All of the various collection models have been thoroughly assessed over the years and the government's judgement is that the vendor collection model is the most appropriate model to collect GST on low value goods as it takes into account who has the information to determine GST liabilities and prevents goods being held up at the border. The vendor collection model has been agreed to by the states and territories, as it is the most appropriate model to collect GST from overseas multinationals and to level the playing field for Australian businesses. Obviously, we will be concerned if the Senate were to vote to delay the implementation of this requirement. The advice that the government has in front of it from the relevant agencies is that the government is ready to administer this from 1 July 2017. Let me also say in relation to the vendor collection model that it is assessed as the most efficient and cost-effective model, which is why Switzerland, for example, has announced legislation to require vendors to collect GST of value added tax on low value imports from 1 January 2018. Within the European Union, vendors are already required to charge and collect GST on sales within the European Union. The OECD and the EU are also focusing on taxation of goods by the supplier at the point of sale. It is also important to note that the vendor collection model has already been used to collect GST on cross-border digital products and services, and this is the case in countries such as Japan, South Korea, New Zealand, member states of the EU, Switzerland, Norway, South Africa and, from 1 July 2017, Australia. We did consider the alternative of the logistics model whereby transport companies charge and collect GST. This model could provide a high level of coverage but it would also be very expensive to implement. Currently, transporters are removed from the point of sale and do not have complete information to assess the GST payable. This model would require the transport intermediaries as well as every vendor they deal with to provide additional data on the taxable or exempt nature of goods, as well as the consumer or business status of the importer, to calculate the GST. An important point in this context is that, according to the Department of Immigration and Border Protection data for 2015-16, more than 33 million consignments came into Australia with a value of less than $1,000. In relation to the specific question that Senator Macdonald asked about evidence by some stakeholders that the logistics model would deliver higher revenue, Treasury's view is that the administration costs associated with collecting GST on the logistics model are likely to largely offset the amount of GST revenue collected, even if the collection model generates greater participation and compliance. For example, Australia Post, in their submission, stated that they would require an estimated $900 million per annum to support a logistics collection model, which would completely offset KPMG's estimate of the potential revenue. The main issue with the KPMG analysis is that it does not account for the differences in administration costs under each collection model. As I have indicated, for these reasons the government will not be supporting these amendments. 11:48 Senator IAN MACDONALD YW4 Queensland Sorry, I said that would my only participation. I have one final question. Minister, I hear what you say about the logistics model, but why doesn't that already apply to goods above $1,000? Senator Whish-Wilson 195565 That is my question, too. Senator IAN MACDONALD YW4 Okay. I will save you asking it. If it works for goods above $1,000 and the end of the world hasn't come then, quite frankly, I do not mind if it does add a little bit of cost to the importation of goods, because, again, that suits the main issue I have with this bill in that it makes Australian retailers that bit more competitive against foreign imports by mail or otherwise. It does not worry me that it makes things a little bit more expensive; it does help the retailers. If you walk down any street of any town in Queensland, you will see many retail shops vacant. One of the reasons given to me by people who used to be in those shops is that they simply cannot compete with the items coming in from overseas, for many reasons; the first of which is that their customers pay 10 per cent more than those same customers would pay if they ordered it online from overseas. Those customers get the good—I am told—in two or three days, because the logistics companies are so good these days at getting the goods to your door. That efficiency is quite remarkable. I struggle to find how those logistics companies would then find it at all difficult to collect and disburse the 10 per cent. This will be my last question: if it is okay for another thousand dollars, why not below $1,000? 11:51 Senator CORMANN HDA Western Australia For goods above $1,000, my advice is that they get processed through a border model. Goods get stopped at the border before Customs processing. Obviously, there is a much smaller volume, and the treatment of these higher value goods has always been quite different to the more efficient way that low-value goods are processed through the border. Essentially, the revenue per item above $1,000 is obviously higher; the numbers are lower; and there is already a process that takes place as part of the normal border and freight forwarding processes that does not apply to the 33-plus million products below $1,000. We would essentially have to set up a very significant process of stopping all these goods at the border in order to implement the sort of process that Senator Macdonald and others have suggested. In summary, this has been looked at by experts in all different directions for a very long time. Consistently, the conclusion that has come back is that to most efficiently administer this sort of proposal—to apply GST to products below $1,000—is through a vendor model. People are entitled to different views on these things but that has consistently been the advice to the government and we have not seen anything that would change our view. The TEMPORARY CHAIR 111206 The question is that amendments (1) to (4) on sheet 8153 be agreed to. Question agreed to. 11:52 Senator WATERS 192970 Queensland I move amendment (1) on sheet 8156: (1) Page 27 (after line 16), at the end of the Bill, add: Schedule 2—Exemptions A New Tax System (Goods and Services Tax) Act 1999 1 At the end of Subdivision 38 ‑B Add: 38 ‑65 Sanitary products A supply of *sanitary products is GST‑free. 2 Section 195 ‑1 Insert: sanitary products means tampons, sanitary pads, panty liners and similar items. 3 Application The amendments made to the A New Tax System (Goods and Services Tax) Act 1999 by this Schedule apply in relation to supplies made on or after 1 July 2017. This amendment aims to use this bill as an opportunity to abolish the tampon tax. It is pretty clear that the revenue that would be raised by this bill—which I understand has the support of both of the large parties and hence will pass—would be about $300 million. We have asked the Parliamentary Budget Office to cost how much removing the tampon tax would cost, and they said it would be about $115 million. So the states would still be $185 million ahead if they were to agree to remove the tampon tax. This is a great opportunity to finally address this sexist taxation of women's biology. For some reason, when the GST laws were written it was decided that sanitary items were a luxury item. It could not be further from the truth. There is no luxury at all to need to buy these products every month, and it is a sexist tax that applies only to women. When you look at the fact that condoms and lubricant are GST-free yet sanitary items are not GST-free, it is clear that women are being taxed for their biology. We have an opportunity to fix that here today. With this bill we have any opportunity to assure the states that they will not be short on money, that they will in fact have a revenue source that could compensate for the loss of revenue taxed off the back of women's biology. So this is a very important opportunity, and I would hope that both sides of this chamber would consider seriously this chance to rectify a historical wrong, which is in fact a sexist tax on women's biology. I would also like to flag that later today I will be tabling the petition I alluded to earlier, which over the weekend has already garnered more than 11,000 signatures from people who agree that this sexist tax on women's biology and women's bodies needs to go. Today is our chance to axe the tampon tax. This has been talked about for many decades, and I want to acknowledge that several decades ago it was members of the Labor Party who moved to abolish the tax. It was then Senator Natasha Stott-Despoja who moved in this place to abolish the tax—wouldn't it be great if today we could finally get that job done for the legions of Australia women who are balancing the budget off the back of their biology? 11:55 Senator CORMANN HDA Western Australia First, I have to correct the proposition that GST applies to those particular goods because they are considered luxury items. That is not right. GST applies to all goods and services unless they have been exempted through relevant means. That is the situation. The government undertook to raise the issue of the application of GST to feminine hygiene products with the states and territories and to seek their views on the matter. At the Council on Federal Financial Relations tax reform workshop on 21 August 2015, the states and territories considered a proposal to remove the GST from feminine hygiene products. As there was no unanimous agreement at the time, no change to the existing GST arrangements for these products will be progressed. I hasten to add that the usual process of dealing with a proposal to exempt any health goods from GST is through a determination by the Minister for Health, not through an amendment to a bill like this. 11:57 Senator GALLAGHER ING Australian Capital Territory Labor certainly agrees that we need a way to fix the current arrangements around the GST and sanitary products, and we have certainly been clear about this in the past, but we do not believe an amendment to this bill is the way to fix it. We think in all fairness, considering how important the GST is for states and territories, and indeed the agreement that exists between the Commonwealth and the states and territories on GST arrangements, that these discussions about how this should be done and when it should be done needs to happen with all of those parties but also needs to be done at the start of the process, not at the end of it here in this chamber. We understand the Greens position on this issue. Labor has previously put forward the proposal that the additional GST on digital downloads be used to more than offset the cost of exempting sanitary products, and I think that was a condition that we urged the former Treasurer to take to the treasurers meeting to discuss and reach agreement on. I think at that meeting there were Liberal state treasurers who disagreed with that approach. Whilst we will not support this amendment this morning, we do acknowledge the intent behind it and certainly the Labor Party's view is that this is something that we need to look at further and we need to examine and discuss with all relevant parties how the removal of GST on sanitary products could be progressed with the agreement of all parties. At this point we will not be supporting this amendment to this bill. 11:59 Senator WATERS 192970 Queensland I am very disappointed to hear that. I acknowledge what the minister said about health items, and that is indeed the point I am trying to make. By not listing tampons and pads and sanitary items as health items they are in effect being deemed as de facto luxury goods. How on earth can condoms and lube and sunscreen be called health products—which they should be—but not sanitary items? So thank you, Minister—you have reinforced the very point I was trying to make, although I do not think that was your intention. Yes, this was discussed at COAG in August 2015. That is almost two years ago now, and what a shame that we have had a continual roadblock. We have half the states and territories on board. We have since had a change of government in WA, so I would hazard a guess that we now have more than half of the states and territories agreeing to remove this sexist tax. I have written to the state and territory premiers and treasurers in the last week, urging them to reconsider their position and pointing out that there would not be any net revenue loss by virtue of the revenue that is likely to be raised from this bill passing with the support of each of your parties. I hope that they are considering that correspondence. I know that they are receiving a lot of calls from their own constituents, because people care about this issue. This is an unfair tax that penalises women, and there is no good reason for it to continue. I am very disappointed that you say now is not the chance to fix it. We have very few opportunities to do the right thing in this chamber, and today is one of them. I find it really disappointing and not very persuasive that you are saying it is not a good idea to do it today. I do not buy that and I do not think the Australian community will buy that. This is, of course, why we moved the second reading amendment, which said, 'Let's delay the discussion of this particular bill until those state and territory premiers can have a chance to consider the views of their constituents and, hopefully, get on board with the momentum to removing this sexist tax.' Unfortunately, we did not receive any support for that amendment. Sadly, it looks like we are not going to receive any support for this amendment either. I think Australian women will be incredibly disappointed with this chamber if that is how the vote goes and I urge both parties to reconsider their position before the vote happens. 12:01 Senator KAKOSCHKE-MOORE 265982 South Australia The Nick Xenophon Team will be supporting the amendment moved by Senator Waters today on sheet 8156. Since the GST was introduced in 2000, the Australian government has slapped every Australian menstruating woman with a 10 per cent tax every time she gets her period. Women do not buy pads and tampons for pleasure or luxury; they are essential health items. It is an absolute absurdity that the government and opposition are continuing to support what is essentially a tax on women's bodily functions. Condoms have been made GST-exempt due to their important health benefits, yet pads and tampons, which are essential for the reproductive health of an estimated six million Australians, are slapped with a 10 per cent tax. It is estimated that women use up to 30 individual pads or tampons during their periods, costing up to $15 per cycle. A woman can have 450 menstrual cycles over the course of her life, meaning she can spend close to $7,000 in a lifetime on pads and tampons, and this is multiplied in households with daughters. What message is the parliament giving to young women in circumstances where the tax on women's menstrual hygiene products is unfairly borne by women only because women bleed? Any argument about the budget bottom line flatly ignores what is fundamentally an issue of social and economic equity. Women earn on average $261.30 less per week than their male counterparts and they are also statistically at greater risk of living below the poverty line. This tax also disproportionately targets those who may already be disadvantaged, including the homeless and the unemployed. We should not be continuing to force an underpaid or disadvantaged portion of society to pay more for basic essentials, and that is why the Nick Xenophon Team will be supporting this amendment. The CHAIR: The question is that amendment (1) on sheet 8156 as moved by Senator Waters be agreed to.

The committee divided. [12:07]
(The Chair—Senator Lines)

 15 AYES Di Natale, R Gichuhi, LM Griff, S Hanson-Young, SC Hinch, D Kakoschke-Moore, S Leyonhjelm, DE Ludlam, S McKim, NJ Rhiannon, L Rice, J Siewert, R (teller) Waters, LJ Whish-Wilson, PS Xenophon, N 33 NOES Bernardi, C Burston, B Bushby, DC Chisholm, A Cormann, M Dodson, P Duniam, J Farrell, D Fawcett, DJ Fierravanti-Wells, C Gallagher, KR Georgiou, P Hanson, P Hume, J Ketter, CR Kitching, K Lines, S McAllister, J (teller) McCarthy, M McGrath, J McKenzie, B Moore, CM Nash, F Payne, MA Pratt, LC Reynolds, L Roberts, M Ryan, SM Sinodinos, A Smith, D Sterle, G Watt, M Williams, JR 0 PAIRS

Question negatived.
Bill, as amended, agreed to.
Bill reported with amendments; report adopted.

 Third Reading 20 12:11 Senator CORMANN HDA Western Australia I move: That this bill be now read a third time. The DEPUTY PRESIDENT 10000 The question is that the bill now be read a third time.

The Senate divided. [12:16]
(The Deputy President—Senator Lines)

 32 AYES Cameron, DN Cormann, M Dodson, P Duniam, J Farrell, D Fawcett, DJ Fierravanti-Wells, C Gallagher, KR Gichuhi, LM Griff, S Hume, J Kakoschke-Moore, S Ketter, CR Kitching, K Lambie, J Lines, S Marshall, GM McAllister, J McCarthy, M McGrath, J McKenzie, B Moore, CM Nash, F Payne, MA Polley, H Pratt, LC Reynolds, L Sinodinos, A Smith, D Sterle, G Williams, JR (teller) Xenophon, N 16 NOES Bernardi, C Burston, B Di Natale, R Georgiou, P Hanson, P Hanson-Young, SC Hinch, D Leyonhjelm, DE Ludlam, S McKim, NJ Rhiannon, L Rice, J Roberts, M Siewert, R (teller) Waters, LJ Whish-Wilson, PS 0 PAIRS

Question agreed to.
Bill read a third time.

 Appropriation Bill (No. 1) 2017-2018, Appropriation Bill (No. 2) 2017-2018, Appropriation (Parliamentary Departments) Bill (No. 1) 2017-2018 20

Appropriation Bill (No. 1) 2017-2018

Appropriation Bill (No. 2) 2017-2018

Appropriation (Parliamentary Departments) Bill (No. 1) 2017-2018

First Reading 20 12:19 Senator CORMANN HDA Western Australia I move: That these bills may proceed without formalities, may be taken together and be now read a first time. Question agreed to. Bills read a first time. Second Reading 20 12:19 Senator CORMANN HDA Western Australia I move: That these bills be now read a second time. I seek leave to have the second reading speeches incorporated in Hansard. Leave granted. The speeches read as follows— APPROPRIATION BILL (NO. 1) 2017‑2018 Appropriation Bill (No. 1) 2017 ‑2018, together with Appropriation Bill(No.2)2017‑2018 and Appropriation (Parliamentary Departments) Bill (No.1) 2017‑2018, form the principal Bills underpinning the Government's Budget. Appropriation Bill (No. 1) 2017 ‑2018 seeks approval for appropriations from the Consolidated Revenue Fund of just under $89 billion. I now outline the significant items provided for in this Bill. First, the Department of Defence will receive just over $32 billion to keep our nation safe and pursue our national interests. This includes over $900 million for major Defence operations including Operations OKRA, ACCORDION, HIGHROAD, RESOLUTE and MANITOU. Second, the Health portfolio will receive just over $11 billion, which includes around $3 billion for the Home Support and Care Program to provide support for older people to remain living at home and connected to their communities for longer; about $1 billion to ensure Australia has the workforce necessary to meet the needs of a sustainable health system under the Health Workforce Program; and just under $1 billion to continue the delivery of health services under the Aboriginal and Torres Strait Islander Health Program, including the Indigenous Australians Health Program. Third, the Department of Social Services will receive over $5 billion. This includes approximately $840 million for the provision of demand-driven Disability Employment Services, about $225 million for other disability and carer services and around $51 million for community organisations to develop and maintain a cohesive Australian community with improved independence and self-sufficiency. Fourth, the Department of Human Services will receive just under $5 billion which includes around $68 million to continue Income Management in all current locations. Details of the proposed expenditure are set out in the Schedule to the Bill and the Portfolio Budget Statements tabled in the Parliament. APPROPRIATION BILL (NO. 2) 2017‑2018 Appropriation Bill (No. 2) 2017 ‑2018, along with Appropriation Bill(No.1)2017‑2018 and Appropriation(Parliamentary Departments)Bill(No.1)2017‑2018, are the Budget Appropriation Bills for this financial year. This Bill seeks approval for appropriations from the Consolidated Revenue Fund of over $15 billion. I now outline the significant items provided for in this Bill. First, the Department of Communication and the Arts will receive just over $9 billion. This will be used to provide NBN Co. with a Government loan on commercial terms to support the completion of the National Broadband Network. Second, the Department of Defence will receive over $2 billion to enable the purchase of military equipment and the construction of support facilities, as announced in the 2016 Defence White Paper. Third, the Department of Human Services will receive approximately $162 million, which includes just under $24 million in Information and Communications Technology capital investments to support the Veteran Centric Reform measure. Details of the proposed expenditure are set out in the Schedules to the Bill and the Portfolio Budget Statements tabled in the Parliament. APPROPRIATION (PARLIAMENTARY DEPARTMENTS) BILL (NO. 1) 2017‑2018 Appropriation (Parliamentary Departments) Bill (No. 1) 2017 ‑2018 provides appropriations for 2017‑18 for the operations of: the Department of the Senate; the Department of the House of Representatives; the Department of Parliamentary Services; and the Parliamentary Budget Office. This Bill seeks approval for appropriations from the Consolidated Revenue Fund of just over $326 million. The Department of Parliamentary Services will receive just under $124 million to maintain the integrity and amenity of Parliament House. Details of the proposed expenditure are set out in the Schedule to the Bill and the Portfolio Budget Statements tabled in the Parliament. 12:20 Senator GALLAGHER ING Australian Capital Territory I rise to make a few comments on the appropriation bills for 2017-18. I will start by saying what a disappointment this government has been on economic management, and that disappointment is measured on its own standards. The hypocrisy of this is really quite astounding. After the hype about a budget emergency and a debt and deficit disaster before they came to government, last week's gross debt reached a record high in this country of half a trillion dollars. That is right: half a trillion dollars, on the Liberal's watch. That is roughly $20,000 for each Australian man, woman and child. This embarrassing milestone comes despite Mr Turnbull, the Prime Minister, claiming in opposition that up to $300 billion in projected debt was 'frightening, gigantic and an almost inconceivable level of debt'. As recently as last week the Assistant Treasurer described the debt under the Liberals as 'a truckload of debt' and 'an extraordinary, an absolutely extraordinary, amount of debt'. No wonder the government tried to downplay its need to increase the gross debt cap in the budget papers. The government will have to increase the debt ceiling again, because it now expects that gross debt will hit over $600 billion in 2019-20. It then expects gross debt to continue to rise to $725 billion in 2027-28, with no peak in sight. Net debt has also blown out by over $100 billion since the government came to power, and net debt will be at record highs for another three years. This cannot be seen as good economic management in anyone's book. The government's failings on economic policy do not stop with debt and deficit. Unfortunately they are also directly impacting the cost of living for Australian households and businesses, particularly small and medium businesses. Real wages have stagnated, but simultaneously the cost of living is going up—energy prices, education expenses, healthcare costs and housing costs. And this government, in the budget that the appropriation bills contain, is doing nothing about it. In relation to energy costs the government's complete failure on energy is leaving Australians facing significant increases in energy prices. AGL recently announced that on 1 July electricity prices in New South Wales will go up by 16 per cent, or $300 per year for a typical household. Here in my community of the ACT prices will go up by almost 19 per cent—18.95 per cent—on 1 July, a $333 per year increase on the average household bill. That is a lot to a pensioner who is living on less than $900 a fortnight. It is a lot to a family that is struggling to make ends meet on an average wage. What is worse is that it did not have to be this way. The Liberals' energy policy vacuum has led to investment strikes, rising prices, falling energy security and growing pollution. On energy policy the government is as divided and dysfunctional as ever—and we saw that last week—incapable of providing the policy leadership the country needs. Even Senator Cormann has acknowledged that if the status quo were to continue then energy prices would continue to go up and up and up, and the stability of the system would continue to be at risk. Sadly, not only is this government failing to take action to address higher energy prices, but also this budget tries to unfairly cut the energy supplement for new pensioners, people with a disability, carers and people on Newstart. A single pensioner would see their pension cut by $14.10 per fortnight, or $365 a year, because of this government's changes, and coupled pensioners would be $21.20 a fortnight worse off, or around $550 a year, all against the background of significant increases in energy prices. The government is also failing to address health costs. We know that 804,000 Australians delay seeing a GP because of cost, with some forced to make the choice between caring for their health and putting dinner on the table for their family. Since the government imposed the freeze in the 2014 midyear economic forecast, out-of-pocket costs are now at an all-time high. Non-referred GP attendances are now $37, up $7, and specialist attendances are now $82, up $14 in just three months. Yet in this budget the government is continuing to attack Medicare, and the freeze on the Medicare rebate is for another three years. Students could have their opportunities decreased as the government, who should be supporting students' needs and nurturing their ability, fails to deliver the funding required, particularly to address inequality across the system. With insufficient funding, teachers, who work around the clock to provide our kids with a quality education, will be forced to teach with fewer resources. In a country which values education and believes in equal opportunity for all, the government will be cutting $3.8 billion from universities and making students pay more and pay off their student debt earlier. University students will start their careers in more debt and be made to start paying it off when they earn a salary just above the minimum wage. Students may think twice about pursuing tertiary education as they watch this government gut resources from universities and expect students to fork out more for less. With the current mockery made of young people and the stereotype that the majority of them are latte-sipping, avocado-eating millennials, the harsh reality of their daily lives is overshadowed. This budget does not address one of the biggest problems young people face today: housing affordability. With house prices and rents increasing, young people are being locked out of the housing market. The government has no plans to counter this, unless the Prime Minister's instruction to parents to shell out for their kids is the grand plan. But, unfortunately, not everybody has rich parents. According to a previous Liberal Party minister, all you need is a good job to be able to afford a house. But, unfortunately, good jobs are not accessible to all Australians either, and, with the prices of houses these days, sometimes even a good job will not cut it. There was an opportunity in this budget for the government to take decisive action on negative gearing and capital gains tax, but it has shown yet again that it does not have the courage to do what is right and indeed what will need to be done at some point in time. At its heart this budget is unfair. It is increasing taxes on people earning less than $87,000 per year, while at the same time giving everyone earning more than $180,000 a tax cut. Under this government, families, who are already facing stagnating real wages, will now also have to pay higher taxes. That is in addition to the loss of penalty rates for up to 700,000 Australians. All the while the government continues with its plan to give big business and the banks a big tax cut. The government strips money away from students, young people, families, low-income earners and pensioners, but is proceeding to give a $65 billion tax cut to big business. The government's increasing of the pension age to 70 will see low-income earners forced to work into their old age. This should be a time for older people to spend with their families and friends; instead they will now be worrying about financially supporting themselves during a time in which they may have additional health needs, and with no support from the government. The Liberal government will always prioritise their millionaire mates over the people they claim to represent. The government's focus on the big end of town is letting down Australia's small businesses, who are critical to our economy. As I meet with more and more small businesses, the message is clear: they are concerned about rising energy costs, inadequate broadband infrastructure, and late or delayed payments. While Labor support the extension of the small business instant asset write-off, we are disappointed that the government has not acted to stimulate jobs growth or address the all-important issue of cash flow for small business. Waiting for payment for supplies or services delivered is debilitating for small business right across Australia. Regrettably this budget has made absolutely no effort to address the payment terms problem exposed in the Australian Small Business and Family Enterprise Ombudsman's recent report into the practice. In order to compete in a global economy, small business need access to high-speed internet to grow their business and sell their products, but this budget provides no solutions other than the Prime Minister's own substandard National Broadband Network. This inaction simply makes it inevitable that Australian small businesses will continue to struggle with one of the slowest and most expensive internet services in the developed world. The latest Akamai State of the Internet report shows that Australia now has the embarrassing global rank of 50th for internet speeds, behind key trading partners South Korea, Japan, Taiwan, the United States and New Zealand. The budget also leaves small business to fend for themselves against increasing energy prices. Again the total vacuum of leadership in the government on energy policy is having a real impact not just on households and low-income households but on small businesses, and means that even higher energy prices and uncertainty for their operations will inhibit their ability to grow and employ. This is something that comes up every time I meet with a small business. They are worried about the prices they pay now and they are also worried about the prices they are going to have to pay into the future. Wholesale power prices have doubled under this government and will continue to rise unless the Prime Minister develops a real national energy policy. Their budget was an opportunity for the government to prioritise small business, but the budget has failed that test. The budget also confirms what we knew at the election, and that was that the government's slogan of 'jobs and growth' was just that: a slogan. This budget forecasts a hundred thousand fewer jobs. While the Liberals say they care about jobs they will happily cut jobs from Human Services and give public servants like those working at the APVMA two choices: move to a regional area that cannot support you or your family's needs, or take a redundancy. And there is a knock-on effect. As the government continues to cut funding, the number of people affected will continue to grow. We see this with the ongoing Centrelink crisis, with over 42 million calls receiving an engaged signal between June last year and April this year. Millions of vulnerable Australians spend hours trying to get through to someone who cannot help them, yet this issue remains unaddressed by the government, who, instead, continues to attack those who actually need additional assistance. Budgets are around priorities. The Turnbull government prioritises tax cuts for big business and banks over families, pensioners, students and small business. Labor does not. We do not support a $65 billion tax cut for large companies. We would not cut the energy supplement which pensioners rely on, particularly when prices are rising. We would unfreeze Medicare rebates immediately. We oppose unfair cuts to universities, increases to student fees and the changes to the repayment threshold that hit women, Indigenous Australians and the lowest paid the hardest. We will never cheat hardworking young Australians out of the chance to get a degree, because we believe that a university education is an opportunity you earn, not a privilege you inherit. Labor would fund TAFE and apprenticeship programs properly. This is because we believe in providing opportunities for all Australians to gain the skills they need to enter the workforce and that will create jobs for them to do so. We believe that every child in every classroom, regardless of where they live or who their parents are, deserves every opportunity, and Labor would restore the $22 billion to properly fund our schools. We would also have the courage to do what is right for housing affordability and tackle negative gearing and capital gains tax exemptions. We believe in a fair tax system, where those who are well off pay more tax than those who are struggling. We will support a 0.5 percentage point increase in the Medicare levy, but only for Australians in the top two tax brackets. Labor's plan would deliver more revenue than the government over the medium term, without putting the burden onto families on modest incomes who need that income to support their families. We would also retain the deficit repair levy. This year's budget deficit is 10 times bigger than the Liberal's first budget predicted. Labor does not support spending $19.4 billion on the wealthiest two per cent of Australians. Labor, of course, would also protect penalty rates. Penalty rates continue to be an important part of a strong safety net for Australian workers. They enable low-income workers and workers in highly casualised industries to share in the nation's economic prosperity. Labor believes that the government should be doing everything it can to ensure we live in a fair and equitable society where we support the needs of all Australians, not just a few at the top end. Labor will support the passage of the appropriation bills in the usual way. 12:33 Senator WHISH-WILSON 195565 Tasmania I will not speak for very long today on Appropriation Bill (No. 1) 2017-2018, Appropriation Bill (No. 2) 2017-2018 and Appropriation (Parliamentary Departments) Bill (No. 1) 2017-2018. I want to make a really important point about this budget. I have made it in here before; in fact my party has been making it for a number of years—that is, we wanted the Treasurer, in the budget papers, to separate debt into recurrent expenditure and capital expenditure, or capital spending. I want to say today how pleased I am that the government has adopted this Greens policy. It is not just our policy; a number of respected financial commentators have been making similar points. I have consistently asked this question to various Treasury secretaries. I am very genuinely pleased that now we have budget papers that allow us to much more easily ascertain how much debt has been put aside. The Treasurer calls it 'good debt'. It could be good debt if it was spent the right way on long-term infrastructure projects that we know enhance productivity, where there is transparency around the selection process and, of course, independent cost-benefit analysis. The Greens would like to go a step further on good debt. I chaired a select inquiry that went around the country. It took nine months of evidence on how we could best finance and fund infrastructure in this country. The committee report recommended a restructuring of Infrastructure Australia that would essentially create a government infrastructure bank that would work with the private sector and allocate government funds on community projects as well as monetising and securitising financing for different infrastructure project working with the private sector that clearly had an independent process between the funding and financing and project selection. In other words, we looked for a process that depoliticised, as much as possible, infrastructure spending in Australia. I know that it is impossible—there is nothing politicians like more than cutting ribbons when infrastructure projects are finished—but, at the end of the day, the system is broken and it needs to be fixed. An important first step is to have a much clearer understanding of where the debt is going. The flip side is that the Treasurer has called recurrent expenditure bad debt. The Greens do not agree with that. It is way too simplistic to say that the money we are spending in this country on education and health care—the kinds of things you might find in the recurrent tables in the budget—are bad debt. They are investments in human capital. They are investments in our communities. They are investments in our youth and children's future. So it is very important that we get our language right in this discussion. I want to say today just how disappointed I am that, since the budget, this issue has been consistently raised by the Labor Party. I understand why you, Mr Acting deputy President, would raise this issue. You believe in small government and small debt, and you have been very clear about that issue. But it does surprise me that the Labor Party, the 'progressive' side of politics, is pretty much a mirror image of what your old party used to be: at every opportunity they get, they talk about debt and deficits and how bad that is for this country. Well, can we please raise the standard of conversation in this country around debt. I mean, not all debt is bad. Households leverage and businesses leverage. It is a standard part of life and economics and business. And there is no reason why governments cannot borrow—especially now, at record low interest rates—for long-term investment in our communities and in our economy, especially in infrastructure projects that we know stack up and actually get the tick of approval. In fact, at a weak time in our economy, it is classic Keynesian economics: our government has a role to play by stimulating jobs and growth—and I hate to use those two words—by sustainable infrastructure investment. The head of the Reserve Bank—who in my opinion has been a fantastic commentator in recent years because the Reserve Bank is independent of government—has been out there saying things like the best possible investment we can have in this country in affordable housing is better infrastructure spending, investing in public transport corridors and a whole range of infrastructure initiatives. The Productivity Commission has also said that, right around the country, bundling small infrastructure projects—in regional Australia, in outlying suburbs and communities in this country—and putting them in portfolios for investment can create enormous benefits and is a really clever way of going about financing debt in Australia. So can we please move on from this 'all debt is bad' shallow political debate, which I genuinely feel has held back this country. My committee spoke to business people and investors. It spoke to some of the biggest infrastructure investors in this country—like the Canadian pension funds. They all said the same thing. The reason they are not investing is because they see the politicisation of this issue as being prohibitive for them. They have risk premiums built into their expected rates of return that reflect the political risk of investing in infrastructure. But this is a good first step in this budget. Senator Cormann, through you, Mr Acting Deputy President: last time I spoke on this my points were completely misrepresented by your side of the chamber. I am very careful to say that we want to see infrastructure spent the right way. We do not want to see money wasted. In fact, that is exactly why we want to see Infrastructure Australia and the whole process depoliticised as much as possible and restructured. Budget cuts and expenditure cuts, when they are aimed at the most vulnerable in our society, are not going to deliver any economic benefits; quite the opposite: they will deliver significant pain to Australians who are most vulnerable. There are other ways of skinning a cat, and I believe this budget is at least a good step in the right direction. 12:40 Senator CORMANN HDA Western Australia I thank those senators who contributed to this debate on the appropriations bills and commend the bills. The ACTING DEPUTY PRESIDENT G0D The question is that the bills be now read a second time. Question agreed to. Bills read a second time. Third Reading 25 12:40 The ACTING DEPUTY PRESIDENT G0D 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. 12:40 Senator CORMANN HDA Western Australia I move: That these bills be now read a third time. Question agreed to. Bills read a third time. Ozone Protection and Synthetic Greenhouse Gas Management Legislation Amendment Bill 2017 25

Ozone Protection and Synthetic Greenhouse Gas Management Legislation Amendment Bill 2017

Second Reading 25 12:41 Senator PRATT I0T Western Australia Today Labor supports the Ozone Protection and Synthetic Greenhouse Gas Management Legislation Amendment Bill 2017. As the chamber knows, this legislation continues the implementation of the Montreal protocol, which was made law in Australia during the Hawke government. Happily, it is considered one of the most successful global environment agreements. It sets a terrific example of what is possible when it comes to global agreement and is an agreement that the world should continue to learn from. We know action needs to be taken on phasing out hydrofluorocarbons, as they are greenhouse gases that are some thousand times as powerful as carbon dioxide in their greenhouse effect. So, it is important that we are taking these actions today. Although hydrofluorocarbons make up only two per cent of Australia's greenhouse gas emissions, their contribution to our emissions has been increasing, because they have been used to replace other ozone-depleting chemicals that are being phased out under the Montreal protocol. This bill now means that Australia's phase down is consistent with the international HFC phase down under the protocol that was agreed in Kigali in October last year. The phase down is being managed through the existing licence system under the Ozone Protection and Synthetic Greenhouse Gas Management Act, and import quota limits will be managed under the ozone act. The international agreement underpinning these changes is to phase down HFC imports by 85 per cent in developed countries starting in 2019 and ending in 2036. So, it is pleasing that Australia is well placed to meet and exceed the global phase down and will start one year earlier, in 2018, and with a limit that is 25 per cent below that of the Montreal protocol. It is terrific to see that industry has been moving in this direction and supports the earlier start and lower limit, and I and the Labor Party would like to commend them for their proactive work in this area. As I said before, the protocol is regarded as one of the most successful environmental treaties. It has phased out over 99 per cent of ozone-depleting chemicals, such as CFCs, HFCs and halon. It certainly shows us what is possible, but it certainly also underscores, I think, the current chaos that exists in the coalition in terms of the current policy vacuum in dealing with greenhouse issues more generally. The government should not be trying to claim this as a key element of Australia's 2030 emissions target. Make no mistake, this is a good commitment, but Australia's climate policies are not sufficient to achieve even its current commitment to reduce emissions by 26 to 28 per cent by 2030 on 2005 levels. We know that the coalition government's Direct Action Plan has proven beyond any doubt to be an ineffective waste of taxpayers' money. As soon as we see something substantive on the table, like the Finkel review, we again see chaos and division reigning within the coalition. The government's own data shows that carbon pollution has been rising since the implementation of direct action. The government's own data projects emissions rising all the way to 2030, which is as far as these projections go. The government's data shows that the government will miss its target of 26 to 28 per cent pollution reduction by 2030 by a full 26 per cent. It shows that emissions in 2030 will effectively be the same as 2005, showing zero progress for those 25 years. So we on this side think that if the government were serious about meeting their obligations under the Paris agreement, just as we were serious about them under the Montreal agreement, the government would have to strengthen their 2030 targets, as well as implement real policies to reduce emissions, especially in the electricity sector. If we accept the premise that it is important to tighten up our use of hydrofluorocarbons because of their intensive greenhouse effect then we also need to deal with the substantive issue of greenhouse emissions right across Australia, our economy and in the energy sector. As we know, the Paris agreement includes a ratchet mechanism that will see countries increase their pledges to meet the two-degree target. Current pledges under the Paris agreement are consistent with three to four degrees of warming, but the government are pretending that their 26 to 28 per cent targets are all they will have to do. They know this is not true, and they are ignoring this fact and misleading the Australian people. Labor's target of 45 per cent by 2030 is consistent with what the Climate Change Authority has said is needed to reach the two-degree target. It seems unlikely that the Prime Minister has the will or the ability to stand up to the Right of his party to deliver the policy leadership we need to modernise our energy system. Again, we can see that the Montreal protocol stands. The importance of this issue is clearly being undermined by a lack of momentum in the coalition to deal with the substantive issues. We see China, New Zealand and Brazil and other countries all asking important questions about Australia's lack of climate and energy policy to meet our Paris agreement commitments. So, just as the government is refusing to give us answers in this place, it is also refusing to answer international concerns about the policy black hole that exists. The Turnbull government also refuses to introduce policy to support renewable energy investment post 2020, which is crucial if we are to meet our Paris obligations. The current figures show that Australia's pollution rose by 0.8 per cent in the year to June 2016 and by almost 2.5 per cent since June 2014. The data also shows a shocking 16.2 per cent increase in annual electricity emissions in the last two years. Power bills and pollution will continue to rise as a direct result of Malcolm Turnbull and his government's decision. Labor have a proud environmental record, and we support strong action on the protection of our climate and our environment, as well as global action on climate change. That is why we are pleased to support the legislation that is before us today, but, in doing so, we would like to make the point that taking action on HFCs in the absence of proper action on climate change will be a meaningless drop in the ocean. The ACTING DEPUTY PRESIDENT G0D Thank you, Senator Pratt. Before I call the minister, a gentle reminder that, when referring to members in the other place, they should be referred to by their appropriate title. 12:49 Senator CORMANN HDA Western Australia I thank Senator Pratt for her contribution to this debate and commend the bill to the Senate. The ACTING DEPUTY PRESIDENT G0D The question is that the bill be now read a second time. Question agreed to. Bill read a second time. Third Reading 27 12:50 The ACTING DEPUTY PRESIDENT G0D 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. 12:50 Senator CORMANN HDA Western Australia I move: That this bill be now read a third time. Question agreed to. Bill read a third time. Enhancing Online Safety for Children Amendment Bill 2017 27

Enhancing Online Safety for Children Amendment Bill 2017

Second Reading 27 12:50 Senator O'NEILL 140651 New South Wales I am pleased to continue my remarks, which are directed at amending the Enhancing Online Safety for Children Act 2015 to broaden the function and the title of the statutory Office of the Children's eSafety Commissioner, which we broadly support. In my initial contribution to this debate last week I said that we have significant concerns about the failure of this government to provide the commissioner with additional powers, and we certainly do not believe that the bill, as it is being advanced in this form, is adequate for dealing with that very significant social problem, a problem that continues to grow—namely, the issue of revenge porn. You do not need to be paying too much attention to what is going on in the online space to appreciate that women, particularly those with a significant public profile, are currently the targets of enormous abuse, threats and intimidation online. What happens to a woman going into a police station to complain both online threats, abuse and intimidation, sadly, can be a little bit of a lottery. There is a lot of research showing that the experience of women in this situation does indeed vary enormously, depending on which station you make the complaint at or depending on whom the officer on watch was at the time. In this respect, changing to an e-safety commissioner with a general remit is valuable, because we have an important culture change task in front of us. We really need to get the message through to law enforcement and to policymakers that this kind of online behaviour can and indeed does have significant impacts that can be just as significant as if these threats, abuse and intimidation were actually happening physically in real life. This includes expanded responsibility to take a leading role in combating the non-consensual sharing of intimate images. While we support the expansion in this bill we believe that the most appropriate approach, indeed the best approach, for dealing with revenge porn would have been to criminalise these acts some time ago. At the Commonwealth level Australian laws have failed to keep pace with the new way that technology is actually being used to cause harm, particularly to women. The law should have been brought up to date and must be brought up to date as a matter of urgency. It is in that area that I think this bill does not meet the standards that we believe should hold. Revenge porn is one of the ugliest manifestations of the trend towards online abuse of women and it is important that we in this parliament, as policymakers, send a strong message to the community that the sharing of private sexual images without consent is wrong, and it is wrong in the clearest possible terms. The easiest way to achieve this message and its reception would be to enact Commonwealth legislation to criminalise the behaviour. While historically we considered family violence and abuse to be physical, psychological and emotional, in the 21st century family violence has also gone digital and it has serious impacts on the mental health of victims. Revenge porn can be distributed via a wide range of methods, from texting private images to friends, colleagues or family members, through to publishing images on social media sites, and even uploading images to commercial pornographic websites. Indeed, it takes just four clicks on a computer to upload a photo to Facebook. That is how quick and simple it is to share an explicit photo of someone, without his or her consent. Four clicks is all it takes to maliciously rob a person of their privacy and their human dignity. The mental and emotional toll of revenge porn is high. Victims experience increased anxiety, and the research suggests they experience this anxiety acutely when they are doing activities that will subject them to online scrutiny—for example, having something like this come up when they are applying for a job with the stress that potential employers might come across the material, which is frequently published with the names and contact details of the victims. Private sexual images and the threat to share them are often used as tools to control, humiliate and abuse individuals. While this practice is commonly referred to as 'revenge porn', it is clear that the sharing of these images without consent or threats to share them occurs in a much wider range of scenarios than just a simple desire to inflict revenge. As the Sexual Assault Support Service recognises, revenge is not the only motive to consider. Perpetrators of the behaviour may seek notoriety or financial gain or believe that they are providing entertainment for others. Some perpetrators may intend to cause emotional harm to their targets and humiliate them, while others will give little or not thought to potential impacts. The problem of revenge porn is complex and not only limited to the publishing of sexually explicit material intending to intimidate or humiliate people in the context of a relationship breakdown. Laws criminalising revenge porn have been slow to emerge. A leading expert in the field, Dr Nicola Henry, said image-based abuse—and that is the broader term rather than just revenge porn—has emerged so rapidly as an issue that inevitably our laws and policies are struggling to catch up. The law can often lag behind advances in technology, but in this instance that lag time is causing real harm in our community. The status of revenge porn legislation in Australia is patchwork at best. Currently there is no federal legislation that criminalises revenge porn or image-based abuse. Most states do not currently have legislative mechanisms in place to protect victims from cyberabuse of this kind. South Australia and Victoria are the only two states that have passed revenge-porn-specific legislation. Victoria passed the Crimes Amendment (Sexual Offences and Other Matters) Bill 2014 in August 2014. It criminalises non-consensual sharing and also provides protection to young people who take and share images of themselves consensually. Western Australia passed the Restraining Orders and Related Legislation Amendment (Family Violence) Act 2016 to criminalise cyberstalking and revenge porn. The general point here is that the Commonwealth Director of Public Prosecutions said that a Commonwealth offence targeting revenge porn would fill a gap within the exiting law. The Australian Federal Police said that uniformity in legislation so that they could investigate and charge perpetrators would be most helpful for police. There is plenty of advice, but the Turnbull government has delayed and delayed on this issue in a way that seems to me completely inexplicable. There remains an urgent need for criminal penalties for offenders nationwide. RMIT and Monash University researchers surveyed close to 4½ thousand people about their experiences with image-based abuse. Their findings document the mass scale of victimisation and the impact it has on victims' lives. According to this research out of RMIT and Monash, one in five people who were surveyed had been victims of some kind of revenge porn. Young people age 16 to 19 were the most vulnerable, with one in three in that age group reporting some form of image-based abuse. Minority groups were also found to be much more vulnerable, with one in two Indigenous Australians, one in two Australians with a disability and one in three LGBTIQ Australians reporting having suffered victimisation of this kind. Even the researchers themselves were surprised at the number of people who had their private sexual images distributed, taken without their consent or used against them in other ways. There is a clear need for parliament to send a very clear message to the general community that this behaviour is not only wrong but should attract a criminal sanction. The study also found that women are more likely than men to be victims of image-based abuse by a former partner or intimate partner. Importantly, they are also more likely to fear for their safety as a result. Dr Anastasia Powell from RMIT, one of the lead researchers, noted: Victims do report experiencing this as a form of … violation or sexual violence. The researchers found that, upon discovering that their private images were publicised, victims felt that it constituted a violation of their sexual autonomy and dignity. This has obvious and difficult long-term repercussions. Overall, those who had suffered image-based abuse were almost twice as likely as nonvictims to report experiencing high levels of psychological distress. This report, the first of its kind in Australia, recommends criminalising revenge porn at the federal level to provide cover for existing piecemeal state laws. It found overwhelming support for criminalising the distribution of private or invasive images without consent. Four in five of those surveyed agreed it should be a crime. Criminalising these acts would send a clear message that this behaviour will not be tolerated by this parliament or this country. If we change the law, this could be a first step in changing community perceptions of this conduct. The law can shape social norms and affect community attitudes, but it is up to parliamentarians like us to send the message that this behaviour is not accepted in the community. Commonwealth legislation on this matter will send a clear signal to young men and young women in Australia that this behaviour is just not on. The experts agree that we need to criminalise this behaviour now, and Labor calls on the government to act and to act now. Meanwhile, the Turnbull government just continues to talk about the problem of violence against women but fails to take adequate action. This bill, sadly, is just another example of all talk and no action from the government. They have made no commitment to introducing or supporting Commonwealth legislation to criminalise this egregious behaviour. The government's excuse is COAG. Recently, indeed, the COAG Law, Crime and Community Safety Council released a national statement of principles relating to the criminalisation of non-consensual sharing of intimate images. However, even with this statement, there will still be no overarching Commonwealth law that can provide consistency across the nation, and there may be inconsistencies from state to state. Labor went into the 2016 federal election promising Commonwealth legislation to criminalise revenge porn within the first hundred days of being elected. The Liberals did not step up and make a similar promise. Instead, their election commitment was a new complaints line. They are now devoting $4.8 million to developing a national online reporting tool to help counter the effects of non-consensual sharing of intimate images. While a new complaints process about so-called revenge porn is welcome, it is not in itself sufficient. There needs to be strong criminal law, making it clear that circulating nude pictures or videos of sex acts without someone's consent, or threatening to do so, is not acceptable. Labor will continue to ensure that so-called revenge porn is criminalised, including by the creation of appropriate Commonwealth offences. In the interim, we support the passage of this bill and commend the work of the former Children's eSafety Commissioner in driving cultural change, and the general powers of the body, in the community. 13:03 Senator LUDLAM I07 Western Australia I rise this afternoon to add a couple of comments in a similar vein, actually, to those of Senator O'Neill on the Enhancing Online Safety for Children Amendment Bill. I say at the outset that the Greens are supporting this bill. I think it is a worthwhile initiative, but it is nowhere near as far reaching as the kinds of reforms that I suspect this parliament is going to need to engage in before too long. Online harassment, or cyberbullying, for the older generation, has been an issue for as long as people have been interacting online. When the Joint Select Committee on Cyber-Safety conducted its inquiry quite a few years back now—in 2011 or 2012—into safety for kids online, the No. 1 issue that came right through the middle of all the others was bullying. One of the most powerful pieces of evidence that we took—because there was a panel of young people who were invited to give their views, not directly to the committee but through a mediator—was that kids do not really talk about cyberbullying. Appending the word 'cyber' to things is what this parliament does, not what kids do. There is a continuum of bullying, where no distinction, really, is being made. The kids who are most likely to be getting bullied, harassed and picked on in the playground are the same kids who are likely to have this horrific behaviour following them home after school. There was no distinction there at all that had been made. We need to be a bit careful about singling the communications medium out for something special. There is human nature at play here, and it is a play in ordinary social space as it is online. But there is a problem here, and it goes beyond some of the measures of people educating each other about conduct online. In fact, it goes a long way beyond that. There are extreme levels of hostility directed at individuals or groups by other people, and most often focusing on any aspect of the target that differs from the white male norm. If senators in this place, particularly male senators, think that that may not be the case, I offer you a little thought experiment. This is something you can do any time you like. Retweet one of your female colleagues, if she has had the temerity to have an opinion, for example, even on the vote that passed just this morning on removing the GST on tampons and women's sanitary products. The level of venom and vitriol and threatening behaviour directed at women online is of a whole different level. I am reminded of this retweeting my colleague Senator Hanson-Young, Senator Rhiannon, or Senator Milne when she was leading the Australian Greens. It is a whole different level of venom perpetrated by people. It can be quite confronting for men to understand just how much harsher the online environment can be. The tools are fairly standard: threats of violence, personalised imagery, relentless repetition. This stuff can follow you around. If you enjoy online spaces and social networks and the social contact with people that they bring it can be incredibly intimidating, and also quite difficult to have accounts pulled. That is the anonymous stuff that we are talking about. Then there is doxing—release of private, personally identifying information, and it can escalate to publication of targets' home and work address. That just adds and makes more physical the kind of menace that can be levied at people. As to the objective of this kind of harassment, there is no-one size fits all, but bullying a target into submission or silence is a frequent outcome, particularly women. There is a chilling effect there. Sometimes women will just withdraw from the space because of the level of hostility that has been brought to bear. I am not saying that this kind of harassment and violence threats are not directed at men—they are. But I am acknowledging that there is a very steep difference in the way that women are treated, and probably twice as much for kids and for girls. Only the most simplistic understanding of the importance of free speech would place a greater importance on the ability of an emboldened and frequently anonymous few to speak without consequence over the ability of a much more diverse but potentially less empowered crowd to participate in speech or social conduct online at all. All efforts to address harassment have to address what are sometimes pitched as competing notions—protection and censorship or support and silencing. In the Greens we have had frequent run-ins, going back years, with government frontbenchers on targeted imposition on people's digital rights. So we have to very carefully scrutinise any legislation that affects digital rights coming from this government. The perpetrators of online harassment use very powerful communication mechanisms of the internet to intimidate and silence and harass people. One of the best ways to combat coordinated online harassment is counterspeech or the kind of social support that you get offline if someone is being victimised or bullied, using the same communications tools to organise and call out harassers' behaviour, and ensuring that minority groups and already vulnerable people are not limited in their ability to respond and defend themselves. Some of that is whether the social networks, nearly all of them based offshore, have appropriate mechanisms for that kind of community self-protection. When somebody is levying hate speech, threats of violence and threats of sexual harassment or rape and beaming that into a particular person's time line, how long does it take for those accounts to be pulled and suspended and for that person to be removed from the net? It is actually incredibly variable. The big social media corporations—I do not understand why—have had to be dragged kicking and screaming at various stages to provide those defensive tools for users of their networks so that people are not harassed into silence. So that is one tool. I recognise that government has only the indirect ability to promote those sort of tools on various social platforms, but it is something, quite clearly, that government has a stake in and government can do. Another key way to combat online harassment is to have strong protections for online anonymity. People who are being harassed are sometimes facing domestic violence, human rights abuses in extreme cases or other consequences for speaking out. Anonymity allows them to be online without fear of exposure and a threat of physical harm. We have to ensure that anti-anonymity or antiprivacy policies are not created and used to further expose victims to harm. I recognise also that anonymity cuts both ways. There are social networks where anonymity is prohibited and people do operate under their real names and still behave in incredibly vile and damaging ways. What this proposed bill will do—and this is the reason why the Australian Greens are supporting it, obviously—is expand the 'soft' functions of the commissioner to broadly cover online harassment. So we get that the government are scaling it out so that the commissioner's activity can legitimately cover more than just kids. That is fair enough. We think there is a need to ensure that there is support, education and protection for everyone using the internet. The proposed changes, though, do not expand the complaints system for online harassment to include everyone. They also do not introduce offences for non-consensual sharing of intimate images. This is the issue that Senator O'Neill addressed in her contribution, and I substantially agree with the way that she put it. Legislation on non-consensual sharing of intimate images or 'revenge porn' has been pushed off to individual states to handle in a rather more piecemeal manner. Some states, including Victoria, South Australia and WA, have moved to criminalise it in a domestic violence context. The ACT Greens have draft legislation for it, as have the UK and New Zealand. Here in our own parliament I acknowledge our colleagues in the other place Ms Terri Butler and Mr Tim Watts proposed a private member's bill to criminalise the act. That was as long ago as 2015, with the Senate committee in February 2016 recommending that non-consensual sharing of intimate images be criminalised. The work has been done in this parliament and so it is something of a surprise, then, to not see it in this bill. The current laws relating to the use of a carriage service to menace, harass or cause offence are insufficient to protect people from intimate-image sharing and are subject to grey areas where intent to cause those impacts must be proven. Quite frankly, the burden of proof should be the other way round. It really should. We know the government is thinking about it because there has been from Senator Fifield and the communications portfolio a discussion paper put out that closes on 30 June. It proposes a regime of steeply increased civil penalties for this kind of behaviour. So we know that it is on the government's mind, but I have to wonder why on earth a substantial reform like that is not in this bill. What better opportunity was there to have got that done? We will want to take a close look at the legislation when it comes forward, but I do not think it is going to be all that controversial to steeply increase the penalties and provide a more nuanced legal framework for prosecutions. Any legislation in this place obviously has to very carefully address safety concerns without opening up Australians to censorship or invasion of privacy. Online harassment is often targeted at people who are already vulnerable, whether they are kids or older, whether they are women or whether they be racial or religious minorities. We have to be very careful to ensure that any laws aimed to protect these people are not instead used to further silence and expose them. In an article in the week before last, Senator Brandis made some sweeping and completely wrong assertions that young Australians do not care about privacy. He thinks that young people of the 'Facebook generation', as he calls them, are too busy spending their time instagramming their smashed avocados to care about privacy. But, as the cartoonist Jon Kudelka rather colourfully put it last week, there is a difference between instagramming your lunch and being forced to have your stomach pumped. People are living more and more of their daily lives online, and I think we should all be able to assume that that is a safe place to congregate as much as a town square should be a safe place to congregate. The government, therefore, should be looking for more ways to uphold and increase protection of people's rights and safety as we migrate online. A broader commissioner for e-safety is a good start. I must admit that we voted for the establishment of the eSafety Commissioner going back a couple of years. I was a little bit unsure at the time as to whether it was going to be a fairly superficial addition, but I think we can all agree here that it has been a worthwhile appointment and that they do good work. That is why the broadening of their mandate is certainly a good start. But we also need to ensure, at the same time, that people's de jure rights are not compromised. The Prime Minister has made it fairly clear that he wants to further erode those rights while simultaneously opening up citizens, businesses and governments to fraud, theft and attack, actively making them less safe online. I am talking, of course, of one of the key mechanisms for protecting privacy and security online: encryption. That is why—and I know this is out of scope of today's bill, but I did want to put it on the record—the Greens proposed a digital rights commissioner to work within the Australian Human Rights Commission, whose mandate would be precisely these kinds of issues. It is a specialised area and it is easy to go wrong. We believe that one of the things that the Human Rights Commission could usefully do would be to have somebody in there with specific expertise on digital rights, on the online space and on how people can protect themselves online. And that is a role that we established and outlined prior to the last election. It is not an enormous cost at all, considering what is at stake for people, and we think it would complement the existing important work that the Human Rights Commission does. The role that we proposed would involve, among other things, scrutinising legislation, directly advising governments and departments, and a general public advocacy role. If anything, the last week has shown that we desperately need it. We look forward to the government bringing forward legislation. We urge them not to delay. A lot of work has been done on the opposition benches, on the cross bench and—I would argue—probably within government as well. We believe there is no need to delay more sweeping reforms any longer, but in the meantime we are happy to commend this bill to the chamber. 13:16 Senator KAKOSCHKE-MOORE 265982 South Australia I rise to speak on the Enhancing Online Safety for Children Amendment Bill 2017. The bill seeks to amend the title of the act and the title of the statutory office of the Children's e-Safety Commissioner to reflect the broader role for online safety that the commissioner has had for some time, which goes beyond providing assistance regarding online safety for Australian children. The bill will insert a new definition of the expression 'online safety for Australians' and also make minor consequential amendments to five other acts to reflect the new title of the act and the title of the statutory office. During Senate estimates in October last year, I asked about the name of the Office of the Children's eSafety Commissioner and whether it could potentially limit public perceptions about the issues the office assists with. I specifically mentioned the fact that adults at that time were not aware that they could go to the Children's eSafety Commissioner for assistance with concerns around illegal or offensive online content, the non-consensual sharing of intimate images and video or for general advice about how to manage technology risks and safety online. The minister conceded this point, and he acknowledged that he has increasingly referred to the 'eSafety Commissioner' in those terms. Shortly thereafter, the minister announced the government's decision to introduce such legislation and address the concerns I had raised during Senate estimates. The Nick Xenophon Team welcomes this decision. The internet began in 1993 with admirable ideals about the free flow of information. Back then, little was known about the technology and less about its endless benefits and possibilities: information and news at our fingertips, e-commerce, the proliferation of social media and even live updates and videos from this chamber. But the internet can also be a dark and intimidating place, where people delight in throwing stones from computerised glass houses, acting with impunity as they engage in their digital diatribes. The anonymity, invisibility and online freedom the internet provides has stripped away societal standards and ethics and given way to a cyberwar of hate. The World Wide Web has become weaponised with words hurled by the coward and bully who rages against women, ethnic and religious minorities, vulnerable children and the LGBTIQ community. Hate has gone viral. Leonard Pozner, who lost his son in the Sandy Hook massacre in America, has been hounded by internet trolls ever since. He recently said: History books will refer to this period as a time of mass delusion. We weren’t prepared for the internet. We thought the internet would bring all these wonderful things, such as research, medicine, science, an accelerated society of good. But all we did was hold up a mirror to society and we saw how angry, sick and hateful humans can be. The statutory office of the Children's eSafety Commissioner has been in place since 1 July 2015 to cater for the overwhelming need to protect children in the digital space, in part due to the tireless groundwork laid by leading e-safety advocate and member of the office's online advisory group, Sonya Ryan. Sonya has pioneered education and awareness of online safety for children for over 10 years following the death of her beloved daughter, Carly, at the hands of an online predator. The Nick Xenophon Team, along with Sonya, recently achieved a momentous milestone in honouring Carly's legacy, with the passage of the Criminal Code Amendment (Protecting Minors Online) Bill 2017 last week. The new law will make it easier for police to prosecute online predators, filling a gap in the Criminal Code and allowing the police to intervene earlier when a predator is preparing or planning to cause harm to a child, including when lying about their age. This law will be crucial in the defence against online predators, with the Office of the Children's eSafety Commissioner's own data revealing that in the 12 months to June 2016 nine per cent of teens and five per cent of children were contacted by strangers. I acknowledge the work of the government in getting this important legislation over the line. It is excellent to see those from all sides of politics finally unite for such an important cause. Importantly for the Nick Xenophon Team it shows the government recognises that in many cases in the online sphere the legislation is failing to keep up with community expectations. There is still much more that we as legislators need to do to protect children online. In the 12 months to June 2016, 19 per cent of teens and eight per cent of children were cyberbullied. The cyberbullying ranged from being socially excluded, being called names, receiving unwanted online messages, having lies spread about them, receiving threats to their safety, having their accounts accessed without their consent, having personal information posted without their consent, having inappropriate private photos posted of them without their consent and even having someone impersonate them. We owe it to Australian children to protect them and provide them with strategies and tools to stay safe online so they can experience the benefits of the internet without being at risk of the pitfalls. The safety of children in the digital space should always be the paramount focus for what is soon to be renamed the Office of the eSafety Commissioner. We must protect those who cannot protect themselves. But prioritising children does not mean that we should turn a blind eye to other areas in desperate need of such legislative reform. More needs to be done to protect women online, particularly from the non-consensual sharing of intimate images online, commonly known as revenge porn. However, 'revenge' is inherently victim-blaming. It suggests the victim did something to warrant such treatment and which ought to be avenged. They did not. Those who publicly release intimate images and videos without consent do so with the specific intention of intimidating, controlling and humiliating the victim. A survey of more than 4,200 people by researchers from RMIT and Monash University found that image-based abuse was far more common and affected a wider range of people than was previously thought. One in five Australians have been the victim of so-called revenge porn, with Indigenous and disabled people the most common targets. These marginalised groups were found to be especially vulnerable, with one in two Indigenous Australians and one in two disabled people affected. Young people and lesbian, gay and bisexual Australians also faced a higher risk of abuse. It is incumbent upon us as parliamentarians to legislate to protect these victims, and it is also incumbent upon social media companies and websites to take stronger action. The Office of the Children's eSafety Commissioner received more than 350 complaints since October last year about the non-consensual sharing of intimate images online. Of the 350 complaints, the images appear in mix of sources: fora, file-sharers, image hosts, search engines, social media and websites. At least seven cases were referred to police, with perpetrators mostly being men and teenage boys. Children's eSafety Commissioner Julie Inman Grant has stated that: At last count, there are over 3,000 web sites hosting so-called revenge porn around the world, 90 per cent of these images are of women. So that is why it is critical that we provide support and redress for victims. Whilst this bill contains amendments to broaden the general functions of the eSafety Commissioner, it does not confer any additional formal powers on the commissioner, particularly to deal with image based abuse. This is an enormous missed opportunity for the government. The Senate Legal and Constitutional Affairs References Committee inquiry into the non-consensual sharing of intimate images reported on 25 February 2016, recommending a number of measures be introduced to combat the growing incidence of non-consensual sharing of intimate images. I call on the government to legislate, to the extent of its constitutional power and in conjunction with state and territory legislators, offences recommended by the Legal and Constitutional Affairs References Committee. South Australia has, since 2013, had legislation that makes it an offence to distribute invasive images of a person without their consent. Further, the Criminal Code makes it an offence to use a carriage service to menace, harass or cause offence. But this legislation does not go far enough. There must be provisions that deal specifically with the recording, sharing of and threatening to share intimate images without consent. Last month the government released a discussion paper calling for submissions on a proposed civil penalties regime, targeting both perpetrators and sites hosting intimate images and videos shared without consent. There will now be further consultation, and the Department of Communications and the Arts would then provide advice to the government on the outcomes of that consultation before the government will even consider any legislative changes. The cross-jurisdictional National Cybercrime Working Group, established under the Law, Crime and Community Safety Council, has produced a non-binding national statement of principles relating to the criminalisation of the non-consensual sharing of images. To emphasise: these principles are non-binding and are yet to be underpinned by a legislative framework. The glacial pace of these changes is failing to keep up with the explosion of image based abuse. Sadly, we are now some 16 months on from the Senate committee's report and still many months away from potential legislative change on this issue. That is why I, on behalf of the Nick Xenophon Team, will be moving the second reading amendment that has been circulated in the chamber calling on the government to criminalise such activity. The government, the opposition and many of the crossbench have shown that they have an appetite for reform to make the online space safer for children. But let us not miss this opportunity to ensure that age should be no barrier when it comes to protecting victims of abuse online and showing perpetrators that online abuse will not be tolerated—not today, not tomorrow, not ever. I move the second-reading amendment on sheet 8163: At the end of the motion, add: ", but the Senate: (1) notes that Australian laws have failed to keep up with the new ways that technology is being used to cause harm, particularly to women; and (2) calls on the Government to criminalise the sharing of intimate images without consent, pursuant to the recommendations made by the Legal and Constitutional Affairs References Committee in its report on the phenomemon colloquially referred to as 'revenge porn'. 13:27 Senator LEYONHJELM 111206 New South Wales The Enhancing Online Safety for Children Amendment Bill 2017 amends the Enhancing Online Safety for Children Act to now make the government responsible for online safety of adults. It goes beyond the existing offences against online harassment as well as current considerations at the state and federal levels of specific offences against revenge porn. On that matter, I indicate that I will be supporting Senator Kakoschke-Moore's second-reading amendment on that issue. But seriously, what a great idea. The world wide web is filthy and in need of a good internet filter! But surely the bill does not go far enough, because social media is not the only means for adult social interaction. We talk on the phone, too, and surely there is a role for government guidance on how to answer the phone, how to politely hang up on people who are trying to sell you stuff, and what the appropriate duration of a phone call with your mother is! People still use snail mail, too, and I cannot tell you how upset I feel when I read letters containing incorrect use of 'Yours sincerely' instead of 'Yours faithfully'. I worry about the dire consequences arising from the absence of taxpayer funded guidance on these issues. I cannot think of specific dire consequences, but I am sure they are out there! This is why we pay taxes: not so that we have a government that does what we tell it to do, but so that we have a government that can tell us what to do. Finally, to those watching on YouTube, let me convey an important message as your elected representative: please be careful—and thank you for paying my salary so that I can tell you that! 13:29 Senator FAWCETT DYU South Australia Mr Acting Deputy President Marshall, it is not often that I find you speechless in this place, but clearly Senator Leyonhjelm's contribution there—with his tongue firmly in cheek—has left you speechless! For those children who are in the gallery watching, the good senator was expressing his dismay at what he sees as too much government control, as opposed to not enough, which may have been the surface interpretation of what he was saying. At a principal level, I too agree in the concept of small government. Opposition senators interjecting— Senator FAWCETT DYU Thank you, to the members opposite. They are my cheer squad today, which is wonderful. On this bill, the government is committed to helping women who have had intimate images shared online without their consent. Clearly, those things are a crass intrusion into the privacy of anyone. We do not wish to see that kind of conduct expanded and damaging more people. Since October 2007, the Office of Children's eSafety Commissioner has received some 370 complaints concerning the non-consensual sharing of intimate images. We hear of a range of sources of that, whether it is teenagers engaging in this activity with sexting or, more troubling, adults engaging in the sharing of images, particularly of younger people, as part of grooming or other activities, which lead to harm for people. So the government introduced the Enhancing Online Safety for Children Amendment Bill into the parliament on 9 February 2017 to expand the general functions of the Children's eSafety Commissioner for online safety for children to online safety for all Australians. It does strike me that this is a topic which Australians need to be aware of, because, as we have dealt with various parts of security legislation in the country, people have been concerned about some of the information, for example, around metadata that may be retained by telcos. It strikes me as odd that people are prepared to place online through Facebook or other platforms far more information than they would ever dream of providing or would like to have available to government or to telcos through things like the metadata bill, which is actually quite a limited set of information. Almost without thinking, many people share not only images but other private information to an extraordinary level of detail with some social media platforms. In contrast, metadata is quite a limited set of information and has been a key part of investigations that have helped to break up child pornography rings, organised crime and terrorism. Almost every successful prosecution in recent years in Australia and overseas has included things like metadata. So I just contrast the concern people have for a limited dataset with what they put on online. It is important, as we look at online safety, that people consider the extent of information which they share through social media. The eSafety Commissioner, Ms Inman Grant, commenced on 16 January this year and is working to put in place a number of practical measures to combat the non-consensual sharing of intimate images. This is commonly referred to as revenge porn or image based abuse, and it will be subject to the passage of this legislation. It will include an online complaints portal for revenge porn, which will be launched later this year. This bill is before the parliament now. I ask members here to keep in mind the fact that there have been numerous calls from women support services to take immediate action in relation to the non-consensual sharing of images because of the harm that is done to them emotionally and professionally in some cases. In terms of the information, once it is online it remains there essentially forever and a day, which can damage an individual. To this end, the Enhancing Online Safety (Intimate Images and Other Measures) Legislative Rules 2017 will confer an additional function on the children's eSafety Commissioner to undertake work that will improve the online safety for all Australians at risk of having intimate images of themselves shared without their consent. The legislative rules will allow the commissioner to access the election commitment funding, which was some $4.8 million over three years, to develop and implement a national complaints portal for victims of non-consensual sharing of intimate images. Likewise, the legislative rules will also permit the commissioner to develop a seniors digital learning portal and outreach program, and this will focus on increasing the digital literacy and online safety skills of older Australians. That is important not only in the area of intimate images. We now see many senior Australians actively taking up digital platforms for a range of things—from staying in contact with people on social media through to banking, bill paying and other activities. Through my own extended network—both family and others—I know the number of times these people are targeted by criminals who would seek to compromise the security of older citizens in our society by essentially rorting from them information about their accounts, their computers and their iPads so that they can defraud them of identity or money. So it is an important aspect of our work with the community to make sure older Australians also are increasingly aware of not only the advantages of the digital environment but also some of the pitfalls and to make sure they have the skills and knowledge required to remain safe in this environment. The legislative rules are an interim measure in advance of this bill's passage through the parliament, and that is in response to those calls for more immediate action to address the risk. A new study by RMIT released in May shows that nearly one in five Australians will have fallen victim to this kind of abuse. This rate increases to one in three Australians when we look at the 16- to 19-year-old age group and it increases yet again to one in two Australians when we look at disabled people and Indigenous populations within Australia. So the study shows that this kind of abuse goes well beyond what may be classically considered to be revenge porn when a relationship has gone sour. Intimate images are being used to control, abuse or humiliate people in a range of different ways. Disturbingly, the study also shows that the perpetrators of the abuse are, more often than not, friends, acquaintances or family members rather than jilted ex-partners. As I touched on at the start, this is not a victimless crime. The most intimate images, or footage, of victims that were never intended to be shared are posted and proliferated without consent and, frequently, with malicious intent. This form of abuse—and it is abuse—has a psychological toll on its victims, with some 75 per cent of victims suffering from moderate to severe anxiety or depression. There are so many examples where we can see the debilitating effect of anxiety and depression, particularly on young people or those who already feel marginalised in our society. If this has such a high correlation of occurrence, then it is clearly an area that we wish to reduce the incidence of. Also perhaps, in terms of people understanding how they interact with digital platforms in the era of mobile phones and the ease of making digital images—whether they be stills or video—this encourages people to exercise more caution and discretion as to when, or indeed if, they make such images in the first place knowing that in the digital environment the potential for these to be shared and then essentially never erased is increasing all the time. The study also called for greater support for victims. If you look at the United Kingdom, it has a revenge porn helpline so that people can seek support when they have suffered this kind of abuse, and the Australian government is looking to put in place a number of initiatives to address the issue of the lack of support that people caught in this environment need. During the 2016 election campaign the government announced that it would provide an additional $10 million to support victims of domestic violence, including those who have had their intimate images shared without consent, and this also goes to improving research and education to counter the risk of technology-facilitated abuse—although I would come back to the very simple premise that if you do not wish such images to be shared then do not participate in making them in the first place. I am a great believer in personal responsibility in such things, so if you think that this is something that would be shattering to your life then I would encourage you not to allow these images to be made in the first place. This research and education measure is being funded through the $100 million Third Action Plan to reduce violence against women and their children, noting that that plan covers a far wider range of violence against women and children than just the online part. Funding is being provided to the Office of the eSafety Commissioner to develop a complaints portal, which will be launched later this year, to allow victims to report cases of non-consensual sharing of intimate images and to access immediate and tangible support. On 23 November the government announced that it would conduct a public consultation process on a proposed civil penalty regime, targeted at both perpetrators and sites that host intimate images and videos without consent, which would provide the eCommissioner with more powers to facilitate the rapid removal of such images. This is the topic of a discussion paper that was released by the Department of Communications and the Arts in May this year, with the consultation period running for six weeks until the end of this month. The eCommissioner welcomes feedback and is looking for a whole range of groups and stakeholders in this space to give feedback throughout this process. Face-to-face workshops will also be held to engage all relevant organisations and individuals. The government is looking to take action now through legislative rules and through this legislation to build a more permanent framework. I reiterate that we are looking to engage with a range of stakeholders, and the opportunity to contribute to the discussion paper is open until the end of June. Whilst the government will play its part, including through research, education and potential penalties, I conclude my remarks on this bill by highlighting the element of personal responsibility, which is: if you do not wish intimate images to be shared then be mindful of the fact that in this day and age anything that is recorded with a smart phone or other device has the potential to go anywhere—so exercise judgement and discernment. 13:43 Senator FIFIELD D2I Victoria I thank all of my colleagues who have contributed to the debate on the Enhancing Online Safety for Children Amendment Bill 2017. I must say that I am very pleased to see that this bill has received support from around the chamber. The Enhancing Online Safety for Children Amendment Bill does contain important amendments to implement the government's 23 November 2016 announcement to broaden the Children's eSafety Commissioner's general functions to cover online safety for all Australians, not just Australian children. Importantly, the bill will change the name of the Children's eSafety Commissioner, reflecting the expanded general functions of the Children's eSafety Commissioner, to eSafety Commissioner, which will make it easier for the public to identify where they can seek assistance and advice in relation to a range of online safety issues irrespective of age. It should be noted that the statutory scheme for complaints about cyberbullying material on social media sites will continue to relate only to material that is harmful to an Australian child, and the commissioner's responsibilities for administering the online content scheme under the Broadcasting Services Act will remain unchanged by the bill. The amendments do not create any offences or civil penalties, provide any new regulatory powers, impose any new taxes or set any amounts to be appropriated from the consolidated revenue fund, because appropriate arrangements for these matters are already in place or, in the case of civil penalties for the sharing of intimate images without consent, will be sought under future legislation. Funding of $4.8 million for work on the online complaints portal for reporting non-consensual sharing of intimate images and $16.9 million to improve online safety for older Australians were announced through the MYEFO in 2016-17. The costs relating to the change of name, including signage and other matters, will be minimal and can be accommodated through the existing budget. While the government recognises that online dangers such as cyberbullying apply to both adults and children, there are existing avenues, including criminal laws, which apply to using the internet to menace or harass people of all ages. The government does not consider that there is a need to create any new powers to investigate cyberbullying complaints between adults at this time. I should mention that there has been some confusion from some colleagues about the function of the bill's amendments. They have in part contended that all the bill does is change the title of the office. This is not the case. At present, the title of the commissioner provides a legal barrier in terms of the work it does. By changing the title, the commissioner is able to better carry out the work of protecting online safety for all Australians. The role of the commissioner has been expanding, particularly in relation to work supporting women and also issues of domestic violence. I should make brief reference to Senator Kakoschke-Moore's second reading amendment. I should note that already there is section 474.17 of the Commonwealth Criminal Code, which makes it an offence to use a carriage service to menace, harass or cause offence. This has been used successfully on a number of occasions. I should also note that, while there are at federal level appropriate criminal laws in place, notwithstanding these existing criminal provisions at Commonwealth level, in most cases victims go to state-based police for help. That is why in parallel the government has worked with the states and territories through COAG to develop a national statement of principles for the criminalisation of non-consensual sharing of intimate images. On 19 May this year, the Law, Crime and Community Safety Council agreed a national statement of principles relating to the criminalisation of non-consensual sharing of intimate images. So there is important work to be done and more to do. I commend the bill to my colleagues. The PRESIDENT e5v The question is that the second reading amendment moved by Senator Kakoschke-Moore be agreed to. The PRESIDENT e5v The question now is that the bill be now read a second time. Original question agreed to. Bill read a second time.

The Senate divided. [13:52]
(The President—Senator Parry)

 42 AYES Bernardi, C Brown, CL Burston, B Cameron, DN Carr, KJ Chisholm, A Collins, JMA Dastyari, S (teller) Di Natale, R Dodson, P Farrell, D Gallagher, KR Georgiou, P Gichuhi, LM Griff, S Hanson, P Hanson-Young, SC Hinch, D Kakoschke-Moore, S Ketter, CR Kitching, K Lambie, J Leyonhjelm, DE Lines, S Ludlam, S Marshall, GM McAllister, J McCarthy, M McKim, NJ Moore, CM O'Neill, DM Polley, H Pratt, LC Rhiannon, L Rice, J Roberts, M Siewert, R Sterle, G Urquhart, AE Waters, LJ Whish-Wilson, PS Xenophon, N 24 NOES Back, CJ Birmingham, SJ Bushby, DC Canavan, MJ Cash, MC Cormann, M Fawcett, DJ (teller) Fierravanti-Wells, C Fifield, MP Hume, J Macdonald, ID McGrath, J McKenzie, B Nash, F O'Sullivan, B Parry, S Payne, MA Reynolds, L Ruston, A Ryan, SM Seselja, Z Sinodinos, A Smith, D Williams, JR 0 PAIRS

Question agreed to.

 Third Reading 37 13:56 The PRESIDENT e5v As no amendments have been circulated, does any senator wish to have a committee stage before I ask the minister to move that the bill be now read a third time? As no-one does, I call the minister. 13:56 Senator FIFIELD D2I Victoria I move: That the bill be now read a third time. Question agreed to. Bill read a third time. COMMITTEES 37 COMMITTEES Economics Legislation Committee 37 Report 37 13:56 Senator FAWCETT DYU South Australia On behalf of the Chair of the Economics Legislation Committee, I present the report of the committee on the provisions of the Major Bank Levy Bill 2017 and related bill, together with the Hansard record of proceedings and documents presented to the committee. Ordered that the report be printed. BILLS 37 BILLS Major Bank Levy Bill 2017, Treasury Laws Amendment (Major Bank Levy) Bill 2017 37

Major Bank Levy Bill 2017

Treasury Laws Amendment (Major Bank Levy) Bill 2017

First Reading 37 13:57 Senator CORMANN HDA Western Australia I move: That these bills may proceed without formalities, may be taken together and be now read a first time. Question agreed to. Bills read a first time. Second Reading 37 13:57 Senator CORMANN HDA Western Australia I move: That these bills be now read a second time. I seek leave to have the second reading speeches incorporated in Hansard. Leave granted. The speeches read as follows— MAJOR BANK LEVY BILL 2017 The Turnbull Government is committed to Australia having a world leading financial sector. Our banks must be unquestionably strong, but they must also be unquestionably accountable, unquestionably fair and our banking system must be unquestionably competitive. The Government is also committed to ensuring that Australia's largest banks are held to account and make a fair additional contribution to the Australian community which they serve. Australia's financial system is strong, stable and well-regulated and has weathered global volatility well. Nevertheless, the banking system in Australia – with a small number of large and highly profitable banks at its core – is highly concentrated. The Government and the Australian Prudential Regulation Authority (APRA) have taken, and continue to take, steps that will force banks to take greater responsibility for their own resilience and avoid the need for taxpayer-funded bailouts. The major bank levy will build on these critical prudential reforms by making stable and secure funding sources relatively less expensive. Importantly, it will also support competition in the financial system by providing a more level playing field for smaller banks and other providers of financial services who compete with the larger banks who enjoy cheaper costs of funding. Australia's five largest banks are highly profitable – earning more than $30 billion a year after tax – and benefit from a regulatory system that has helped to embed their dominant position in the market. For example, the major banks are accredited to use internal ratings-based models that allow them to reduce the amount of capital that they must hold, lowering their funding costs relative to the smaller banks who rely on standardised risk weights. They also contribute to systemic risk through their scale and concentration to the financial system – risks that ultimately fall on the broader Australian community. Hence, from 1 July 2017 all Authorised Deposit-taking Institutions (ADIs), foreign and domestically-owned, with greater than $100 billion in licensed entity liabilities will be liable to pay the major bank levy, which will include the Big Four banks. Unlike the previous bank deposits tax measure, which was abolished by this Government, smaller banks will not be liable to pay the major bank levy. The threshold will be indexed to growth in nominal Gross Domestic Product. The major bank levy will equal 0.015 per cent of each affected bank's licensed entity liabilities each quarter (0.06 per cent per annum), excluding Additional Tier 1 capital, deposits protected by the Financial Claims Scheme (FCS) and the quarterly average value of Exchange Settlement Account (ESA) balances held with the Reserve Bank of Australia (RBA). Unlike previous proposals considered by earlier Governments, this levy will not apply to everyday household deposits. Nor will it apply to banks' assets – such as mortgages. It will also not apply to other financial institutions, such as insurance companies or superannuation funds. It is not a levy on depositors or savers or mortgage holders. Liabilities captured by the levy include, for example corporate bonds; commercial paper; certificates of deposit; Tier 2 capital instruments; operational liabilities and non-FCS protected deposits. Treasury estimates that the levy is expected to raise around $1.5 billion a year. This represents a fair contribution by the banking sector to the Australian community and contributes to a long term balanced Budget. To minimise additional red tape costs, assessment of the levy will largely rely on data already reported to APRA and will be payable quarterly to the Australian Taxation Office. The Government is working with the banks to ensure a smooth transition to the new regime. To assist major banks to begin to comply with the levy, the first levy calculation and instalment will be delayed by three months – at no cost to revenue – to provide additional time for banks to make necessary systems changes. The levy will be administered by the ATO, with APRA's role being solely to assist with data collection. The levy will support efforts to improve financial system resilience. The Turnbull Government and APRA are working diligently – in line with the recommendations of the Murray Financial System Inquiry – to improve the resilience of Australia's financial system. This includes: setting bank capital requirements such that Australian banks are 'unquestionably strong'; strengthening APRA's crisis management powers; improving bank liquidity and encouraging more stable funding; and ensuring that our banks have appropriate loss-absorbing capacity. The major bank levy will complement these important reforms. By excluding Additional Tier 1 Capital and FCS-protected deposits from the levy base, the levy will work in tandem with APRA reforms. The effective exclusion of liabilities used to fund ESA balances held with the RBA will also ensure that the levy does not impinge on the operation of Australia's payments system. The levy is also designed to support competition. The House of Representatives Economics Committee's 'Review of the Four Major Banks', commissioned by the Government last year, concluded that Australia's banking sector is an oligopoly and that Australia's largest banks have significant pricing power which they have used to the detriment of everyday Australians. This is not a situation that the Government is willing to accept. In the 2017-18 Budget we announced a range of measures to improve competition in the financial system, including: a reduction in regulatory barriers for new and innovative entrants in banking; an enhanced regulatory sandbox, to support innovation; an extension of the Crowd Sourced Equity Framework, to help get new businesses off the ground; and a commitment to Open Banking, to empower consumers to have control over their data and get the best possible deal. We have also established a Productivity Commission inquiry into the state of financial system competition, to be supplemented by regular in-depth inquiries into specific financial system competition issues by the Australian Competition and Consumer Commission. These measures will support economic growth and deliver better outcomes for consumers and small businesses. The major bank levy builds on these reforms. The levy will help create a more level playing field for smaller banks and non-bank competitors. This will give existing and new players – including FinTechs – a better chance to grow their businesses and deliver improved services and experiences to all Australians. The major bank levy does not give any bank an excuse to increase costs for their customers. That is why the Government has directed the ACCC to undertake an inquiry into residential mortgage pricing. The ACCC will be able to use its information-gathering powers to obtain and scrutinise documents from any bank affected by the levy and to report publicly on its findings. Following the introduction of the levy, it is my expectation that, in setting their prices, banks will effectively balance the needs of borrowers, savers, shareholders and the wider community. The ACCC inquiry will illuminate how the banks respond to the introduction of the levy and give all Australians the information they need to get a better deal elsewhere from any of the more than 100 other banks, credit unions and building societies, as well as other non-bank competitors. The Turnbull Government has been a world leader in making sure that big companies pay their fair share of tax. To close, this Bill delivers on the Government's promise to ensure that Australia's largest banks are held accountable to the Australian community. It is evidence of our Government's utmost commitment to long term budget sustainability and to ensuring that Australia's largest banks make a fair contribution to the community. It builds on our program of prudential reforms, contributing to the resilience of our financial system and helping to ensure that banks can stand on their own two feet without recourse to taxpayers at times of financial stress. Finally, it enhances competition – supporting economic growth and delivering better outcomes for Australian consumers and businesses. Full details of the measure are contained in the Explanatory Memorandum. _________________________________ TREASURY LAWS AMENDMENT (MAJOR BANK LEVY) BILL 2017 The Treasury Laws Amendment (Major Bank Levy) Bill 2017 is the second Bill to introduce the major bank levy. This Bill makes a number of amendments to support the effective operation of the major bank levy. These include: setting out how to index the levy's $100 billion threshold to growth in nominal Gross Domestic Product, ensuring that only the largest banks are levied in the future; allowing the Australian Prudential Regulation Authority (APRA) to collect the data necessary for the major banks to calculate the levy; allowing APRA to provide information relating to the major bank levy to the Australian Taxation Office (ATO) to assist the ATO in monitoring compliance with the levy, and for the ATO to give information relating to the levy to APRA; ensuring that when the major bank levy is payable to the ATO the ordinary collection and recovery provisions apply; and introducing an anti-avoidance provision to protect the integrity of the levy. Full details of this measure and the major bank levy are contained in the Explanatory Memorandum. 13:58 Senator GALLAGHER ING Australian Capital Territory I welcome the opportunity to speak on the Major Bank Levy Bill. I will have to stop for question time, but when the bill comes back on I will speak further on it. From the outset, Labor will be supporting the bill. We do have a lot of fights with the government about many things, but we resolved quite early on that we would not stand in the way of the government on this measure. The state of the budget and the need for this measure in relation to budget repair has certainly assisted us in coming to this conclusion. Thanks to this government's budgetary mismanagement, gross debt smashed through the half a trillion mark last week, for the first time in the nation's history. With debt and the deficit blowing out under this government's watch, it would be irresponsible of Labor to take an alternative position. But that does not mean we are going to provide a leave pass for the incompetence of the government and the Treasurer. These major bank levy bills give effect to the government's 2017-18 budget measure to impose an annual levy on the big four banks and on Macquarie. Applying to banks with liabilities of at least $100 billion, the government estimates the levy will raise $6.2 billion, which is claimed to be both a revenue raising measure and a competition measure. It is worth stepping through some of the issues that we have encountered since this measure was first announced in this year's budget. All of these issues clearly highlight the sheer incompetence of the government and, in particular, the Treasurer. To start out there was the leak to the Australian Financial Review before the budget lock-up commenced. Budget leaks and drops happen all the time—it is part of the usual operation of a government prior to a budget—but generally it is not something as market sensitive as this proposal. The Treasury secretary, when asked about this, said: … on the basis of what we have been told by our staff, on the basis of informed discussions with my senior executives as to who knew what and when, I would be devastated. I reiterate, I would be devastated, if I had thought that one of my staff had been responsible for this. Debate interrupted. STATEMENT BY THE PRESIDENT 40 STATEMENT BY THE PRESIDENT Parliament House: Security 40 14:00 The PRESIDENT e5v Senators, could I indicate to you all here, as I have you as a captive audience at 2 pm, that all building occupants have been advised today by the Speaker and me that there will be a lockdown exercise in the parliament building this week, lasting about 30 minutes. The exercise will not be conducted in the public areas of the building, but it will be not be possible to move between the public and private sections of the building while the lockdown exercise is in progress. Senators seeking further information about lockdown procedures and the exercise should refer to the email circulated this morning. I encourage senators, if they have any further concerns, to contact either the Speaker or me. Given the environment in which we are living, all building occupants are encouraged to take the exercise seriously so that they know what to do in the event of a real emergency. Let us hope that one does not occur. I thank the Senate. QUESTIONS WITHOUT NOTICE 40 QUESTIONS WITHOUT NOTICE Schools 40 14:01 Senator WONG 00AOU South Australia My question is to the Minister representing the Prime Minister, Senator Brandis. Yesterday it was revealed that the Turnbull government's own documents, reportedly provided to the Senate crossbench, indicate that Catholic schools stand to lose $4.6 billion under the government's education package. One Liberal MP has told The Australian that: It leaves me with a very sour taste in my mouth. I'm wondering if Minister Birmingham deliberately misled the partyroom when he gave his briefing. I ask the minister: did Minister Birmingham mislead the coalition party room, or were coalition MPs and senators fully aware that under the government's package Catholic schools stood to lose $4.6 billion? 14:01 Senator BRANDIS 008W7 Queensland The answer to the honourable senator's question is no. Senator Birmingham did not mislead the party room. As to the rest of the honourable senator's question, it is based on a series of false premises. It is false to suggest that Catholic schools will lose any money at all under the proposal that Senator Birmingham has brought to the parliament. In fact, over the 10-year period to 2027 funding to the Catholic system will increase by $2.8 billion. That is $2.8 billion of the $18.6 billion of additional money that will be spent on Australian schools under the proposal that Senator Birmingham is bringing before the parliament this week. Let me make it as clear as it is possible to be: in addition to the existing expenditure on the Catholic system, Catholic schools will receive, over the 10-year period, an additional $2.8 billion in public funding. The Catholic system know that. That is why, for example, the Archbishop of Brisbane, Archbishop Coleridge, has said that Catholic parents have nothing to be concerned about in relation to what Senator Birmingham has proposed. They know, because there is an additional $2.8 billion for the Catholic system under Senator Birmingham's proposal. The PRESIDENT e5v Senator Wong, is there a supplementary question? 14:03 Senator WONG 00AOU South Australia In relation to the education package, the Liberal member for Menzies, Mr Andrews, says: To do a deal with the Greens seems madness to me, that we’re hellbent on driving our own base away in return for votes from the Greens in which we’ll never be rewarded at the ballot box. Is the member for Menzies correct? 14:04 Senator BRANDIS 008W7 Queensland Senator Wong, I hope the Greens vote for our proposal. I hope all the crossbench vote for our proposal, because this is the best reform to school funding that Australia will have seen in a generation. We will be returning to the original vision of Mr David Gonski for genuine, transparent, nationally consistent needs based funding. So I would welcome the support of the Greens for this proposal that sees an additional $18.6 billion over the 10 years to 2027—$11.9 billion in extra money to government schools, $2.8 billion more money to Catholic schools and $3.8 billion more money to independent schools. Every single element of every single system within the broader school system will benefit from Senator Birmingham's proposal. (Time expired) The PRESIDENT e5v Senator Wong, a final supplementary question. 14:05 Senator WONG 00AOU South Australia Can the minister confirm that his own party room colleagues are so sceptical of the government's schools package that even Senator Back has been forced to say: Please don't make me vote against the government in my last week in the Senate. 14:05 Senator BRANDIS 008W7 Queensland I saw Senator Back's interview on ABC television this morning. Senator Back, we will miss you. We will miss the intelligent contributions you always make to the debates in this House. Like all of my colleagues in the coalition, Senator Back's voice is welcome in this discussion. Senator Back's voice is very welcome in this discussion, and we look forward to Senator Back supporting the legislation that Senator Birmingham will bring before the chamber later in the week, because under the legislation every element of the Australian school system will do better—the government system by $11.9 billion of additional money, the Catholic system by $2.8 billion of additional money and the independent system by $3.8 billion of additional money on the basis of needs based, transparent and nationally consistent funding. (Time expired) Schools 41 14:06 Senator WILLIAMS I0V New South Wales My question is to the Minister for Education and Training, Senator Birmingham. Can the minister inform the Senate of public support for the government's fair, transparent and needs based school funding reforms in my home state of New South Wales? 14:06 Senator BIRMINGHAM H6X South Australia I thank Senator Williams for his question and his focus, in particular, on support from New South Wales. Of course, we saw support from New South Wales on day one of the announcement of the Turnbull government's commitment to schools funding, with David Gonski himself coming out and providing support for the Turnbull government's reforms. David Gonski's endorsement has been backed, time and again, by the other members of the Gonski panel, those people who the Labor Party hand-picked to do a reform package in relation to school funding. But then those opposite chose to ignore what that panel said. David Gonski, Ken Boston and Kathryn Greiner—they have all come along and said, 'It would be a tragedy if the Turnbull government's legislation is defeated,' and yet Labor continue to refuse to listen to those individuals. Today the former education minister in New South Wales, Adrian Piccoli, who has been a strong advocate indeed for needs based funding and at times a critic of the government, has urged the parliament to pass the Turnbull government's funding. He said: We have arrived at a crucial moment for education funding and I am calling on Labor and the Greens not to play obstructionist politics. …   …   … It's in the interests of our children to have a fair funding model and this model makes it fairer. Mr Piccoli absolutely got it right. He is joined by the New South Wales Secondary Principals' Council, who have said: … it's fantastic that we've got the Turnbull Government coming out and engaging with David Gonski and looking at really a genuine commitment to needs-based funding… I think it's great that there's a move away from 27 separate funding models … Those are the 27 models, deals and special arrangements that those opposite put in place. But those 27 different models create distortions, inequities and unfairness which the Turnbull government, with our $18.6 billion in extra funding, are determined to wipe away and ensure we have fair, consistent, needs based funding, as David Gonski recommended. (Time expired) The PRESIDENT e5v Senator Williams, a supplementary question. 14:09 Senator WILLIAMS I0V New South Wales Can the minister outline how these reforms will provide growing, record-breaking funding to government schools in New South Wales? 14:09 Senator BIRMINGHAM H6X South Australia The New South Wales government system will see strong growth, as indeed will government school systems across the country and independent and Catholic school systems as well. If you look at it, New South Wales public schools will see an average growth of 4.9 per cent per student per annum under these reforms—well above inflation and well above wages growth. What this translates to on a per-student basis in government schools in New South Wales is going from around $2,780 per student up to $4,422 per student in support. In Inverell High School—a school that I know will be dear to Senator Williams' heart—around 594 students will see significant funding growth, to some $6,113 per student in 2027. That is because it is a true needs based model that provides support to regional schools like Inverell High School to ensure they get the benefits and support that they deserve. (Time expired) The PRESIDENT e5v Senator Williams, a final supplementary question. 14:10 Senator WILLIAMS I0V New South Wales Can the minister outline how the Turnbull government's reforms will provide equitable funding to government schools across Australia? 14:10 Senator BIRMINGHAM H6X South Australia Our decade-long reforms will invest more than $100 billion across government schools right around the country, ensuring the neediest schools get the greatest support. More than 4½ thousand Australian schools will see annual growth rates in excess of five per cent per student per annum. We will see funding for government schools grow from around $6.8 billion this year to $13.2 billion by 2027. That is growth of $6.4 billion over that time horizon. What it is doing is providing funding to go into those schools to provide the resources they need to help the students who need it most. It means greater support for teacher aides and for speech pathologists, assistance for students who need it, greater assistance for students with disability, greater assistance for Indigenous students. It is about delivering the type of needs based model that David Gonski recommended and it is delivering it through the Turnbull government's legislation, which David Gonski himself has endorsed to this Senate. Schools 42 14:11 Senator CHISHOLM 39801 Queensland My question is to the Minister for Education and Training, Senator Birmingham. I refer to Senator Back, who says: 'The minister is proposing a move from one system of waiting to another. The Catholic system and I are very, very concerned about the impact that is going to have on Catholic schools around Australia.' Is Senator Back correct? 14:12 Senator BIRMINGHAM H6X South Australia Catholic schools around Australia are set to benefit from the Turnbull government's reforms, seeing real growth in their funding right around the country. It is growth from $6.3 billion of funding that goes into the eight different Catholic education commissions this year in 2017, and grows to $9.7 billion by 2027, going to those same eight different Catholic education systems. There are those who want to live in an alternative universe, where they pretend that 'funny money' that was never budgeted for somehow exists and can be provided ad nauseam to the highest— The PRESIDENT e5v Senator Wong, a point of order. Senator Wong 00AOU Thank you, Mr President. I wonder if we could raise the issue of direct relevance. The minister is happy to talk about the Labor Party, but we were actually asking him about Senator Back's quote, which was referring to the system of weighting that was being changed. The minister has not actually gone to that point. It is all very well for him to talk about the Labor Party, but we are asking about what Senator Back says about this minister's changes to the system of weighting. The PRESIDENT e5v Thank you, Senator Wong. I will remind the minister of the question. Minister, you have one minute and 25 seconds in which to answer. Senator BIRMINGHAM H6X The legislation before this chamber, the legislation that the Turnbull government is giving needs based funding effect to, that legislation will provide over the decade around $81 billion in funding support for Catholic education. It will see growth over the next few years of 3.7 per cent per annum per student, on average, across Catholic education authorities, who will retain the absolute right to redistribute funding as they see fit. The PRESIDENT e5v Senator Carr, a point of order. Senator Kim Carr AW5 My point of order is on the question of relevance. The question specifically asked the minister to comment on the issue of the weighting of the funding arrangements, the mechanism by which that funding is distributed. That is the nub of the issue here. I ask that the minister be asked to direct his remarks directly to the question. The PRESIDENT e5v The actual question was not about weighting but it inferred weighting. I do agree with you; the minister has not addressed the subject matter directly. But the minister has half the time left to answer the question. I call the minister. Senator BIRMINGHAM H6X The model we are proposing, net all of the changes in terms of providing consistent application of SES scores around the country, will actually put in place growing funding for Catholic education. That is the point that we have emphasised time and time again. People may wish to create scare campaigns and use scare tactics, but the truth is there is $3.4 billion of additional funding growth that will come into Catholic education in the course of the next 10 years. That is net all of the different changes to the funding model to provide consistency, to provide fairness and to treat all non-government schools across the country equally, according to the same methodology and the same formula, not special deals that might be carved out for one sector, one system or one state, like those opposite sought to do. The PRESIDENT e5v Senator Chisholm, a supplementary question. 14:15 Senator CHISHOLM 39801 Queensland Given the minister's own department has revealed Catholic schools will lose $4.6 billion under his package, and schools like the King's School in Sydney will get a $19 million funding boost, how can the minister pretend that his funding system will protect students from low-socioeconomic backgrounds in Catholic schools? 14:15 Senator BIRMINGHAM H6X South Australia Let me make it very clear for the senator. Catholic education authorities across Australia will receive $6.3 billion this year. That will grow, under our reforms, each and every one of the next 10 years to $9.7 billion. That is growth, on average, of 3½ per cent per student. It cannot possibly be any clearer to the senator that there is $3.4 billion in funding growth available for Catholic education and that that is delivered to them in a manner where those eight system authorities retain their autonomy to be able to distribute it according to their needs based formulas as they see fit, but it is a growing pot of money. I realise those opposite want to pretend that there is some magical pot of money out there that extra funds could be poured into, because that is what they have always done when it comes to the budget. But that is not the reality. The reality is that there is more funding for Catholic education, as there is for independent education, as there is for public education, under— (Time expired) The PRESIDENT e5v Senator Chisholm, a final supplementary question. 14:17 Senator CHISHOLM 39801 Queensland The Executive Director of the Catholic Education Commission of Victoria, Stephen Elder, says: Senator Birmingham is providing his colleagues—even fellow cabinet ministers—with figures to bring to meetings with principals and school communities that are wrong. Why should anyone trust the minister's numbers when his own department has admitted that they are a product of a flawed methodology? 14:17 Senator BIRMINGHAM H6X South Australia In relation to Catholic education in Victoria, I am happy to inform the Senate that average funding will grow from around $8,800 per student in 2017 to $12,200 per student by 2027. That is clear growth in relation to Catholic education, clear growth specifically in relation to Victoria, and it ensures that Catholic education in Victoria continues to receive per-student funding in excess of other non-government schools on average, reflecting the need of students in that system. What we are applying here is consistency, and of course those opposite do not understand that, because every fibre of their being is about doing special deals. The Turnbull government want to stand for fair, consistent application of the one funding formula across all schools, rather than doing the types of special deals that those opposite cherish but that we oppose because we are about giving a fair, needs based deal to all Australian schools. Building and Construction Industry 43 14:18 Senator SMITH 241710 Western Australia My question is to the Minister for Industry, Innovation and Science. Can the minister outline what the government is doing to make Australian buildings safe? 14:19 Senator SINODINOS bv7 New South Wales In light of the tragic incident at Grenfell Tower in London, there has clearly been strong interest in this issue here in Australia, and rightly so. But, before I begin, I offer my sympathies—and I am sure I speak on behalf of all of us in the chamber—to the residents and to the families and friends of residents of Grenfell Tower. Our regulators are in contact with the UK authorities, who are conducting their own investigations, so I will not draw premature comparisons between that incident and the safety of Australian high-rise buildings. But I do want to provide some information about what we do here in Australia. The health and safety risks posed by non-conforming building products are a priority for the Australian government. There is in place a National Construction Code which provides the minimum necessary requirements for safety, health, amenity and sustainability in the design and construction of new buildings. Since its implementation in 1994, the code has specified that combustible materials cannot be used on the external walls of high-rise buildings. The NCC also contains other fire-safety requirements that limit the spread of fire and alert the occupants. These requirements vary with the building size but can include smoke detection, occupant warning systems, more than one exit for each storey, fire sprinklers, fire-resistant construction, resistance to collapse as a result of fire and features to assist fire brigade operations such as fire hydrants. The Prime Minister will be writing to premiers and chief ministers seeking their commitment to address issues around non-compliance and requesting information on current enforcement activities they undertake, because the state and territories are at the front line of enforcing the building regulations. We are also going to be writing to the relevant Senate committee—there is a Senate inquiry into non-conforming building products. Rather than holding a separate inquiry, we will be asking for that inquiry to expand to include examination of current state and territory regulatory frameworks. (Time expired) The PRESIDENT e5v Senator Smith, a supplementary question. 14:21 Senator SMITH 241710 Western Australia Can the minister advise what changes the government is implementing to strengthen building regulations? 14:21 Senator SINODINOS bv7 New South Wales The Building Ministers' Forum—which is chaired by my colleague the Assistant Minister for Industry, Innovation and Science, Craig Laundy—oversees the Australian Building Codes Board, which is responsible for development of the National Construction Code. In December 2016, the Building Ministers' Forum agreed that the codes board would implement a comprehensive package of measures to help address the risks associated with non-compliant use of external wall cladding on high-rise buildings and the broader issue of non-compliant use of building products. The package of measures includes referencing a contemporary and rigorous testing standard based on international best practice for full-scale testing of the fire performance of external facade systems; providing rigorous contemporary and clear NCC requirements to improve application and compliance; enhancing on-site checking, auditing and enforcement; and increasing industry awareness of the need to be cognisant of the risks associated with non-compliance. The Building Ministers' Forum is meeting again next week, and Mr Laundy will be pursuing these issues with his state counterparts. (Time expired) The PRESIDENT e5v Senator Smith, a final supplementary question. 14:22 Senator SMITH 241710 Western Australia Can the minister explain how the government is working with state and territory governments to progress this important work? 14:22 Senator SINODINOS bv7 New South Wales Of course, as I said before, we need to work with our state and territory colleagues because they implement and comply with the regulations. We have taken a leadership role in driving a national effort to strengthen regulations and compliance with regulations, but more work needs to be done. The Victorian government has conducted an audit of 170 buildings in relation to external wall cladding and found a non-compliance rate of 51 per cent. This audit highlights the importance of the states and territories continually auditing and monitoring compliance against the building code to ensure confidence in our world-class built environment. Other states have also recently announced audits into compliance with the NCC on their high-rise buildings. We welcome this important action. We implore all states and territories to enforce compliance with the National Construction Code. We will work cooperatively with them through the Building Ministers' Forum to drive ongoing improvements and compliance with building and construction regulations. Assistant Minister to the Treasurer, Minister for Health and Minister for Sport, Minister for Human Services 45 14:23 Senator McKIM JKM Tasmania My question is to the Attorney-General. Attorney, I refer to comments made by three of your colleagues in The Australiannewspaper last week which resulted in them being called before the Victorian Supreme Court to show course as to why they should not be charged with contempt. I also refer you to comments made by Prime Minister Malcolm Turnbull, who told 3AW: … yes they are ministers in my government, they are Members of Parliament but they are also citizens of Victoria and residents of Victoria … Attorney, can you confirm that your three colleagues' comments were not relevant to their ministerial portfolios, that they were not reflecting the government's position on sentencing in Victorian courts and that they were, therefore, speaking as private citizens, as the Prime Minister implied? The PRESIDENT e5v Before I call the Attorney-General, I will indicate that there are some matters that the Attorney may wish not to respond to but there are some matters which are certainly relevant for him to respond to which do not affect the situation that is currently before the court. I will leave that for the Attorney-General to determine. 14:24 Senator BRANDIS 008W7 Queensland Senator McKim, I do not for a moment accept the interpretation or construction that you have placed on the Prime Minister's remark. In any event, the matter is, as you acknowledge, before the court and in those circumstances it would not be appropriate for me to comment. The PRESIDENT e5v Senator McKim, a supplementary question? 14:24 Senator McKIM JKM Tasmania Yes. What a shame your three colleagues did not show the same restraint, Attorney. The PRESIDENT e5v A question, Senator McKim. Senator McKIM JKM Attorney, I remind you that I am not asking you in any way about what the court ought to do. I have been very careful not to do that. Can you give any other examples of similar situations where people who found themselves before the courts because of what they had said or done as private citizens— The PRESIDENT e5v The time for asking the question has expired. Senator McKIM JKM —have been represented by the SG? The PRESIDENT e5v Order! 14:25 Senator BRANDIS 008W7 Queensland As I said in answer to your primary question, given that the matter is currently before the court I do not propose to comment on it. The PRESIDENT e5v Senator McKim, a final supplementary question? 14:25 Senator McKIM JKM Tasmania Thank you. I doubt we are going to get anywhere on this, Mr President, given the Attorney's refusal to address the issue, but I am going to ask it anyway. Can the Australian taxpayers expect to pay, through their taxes, for the Solicitor-General to represent a minister who is challenging a parking fine? 14:26 Senator BRANDIS 008W7 Queensland I am sorry, but I simply do not understand the reference to a parking fine. The Solicitor-General is remunerated by a salary. He is not paid by a fee, if that is what you are getting at. But in any event for the reasons I have already indicated I do not propose to comment on any aspect of these proceedings. Energy 45 14:26 Senator McALLISTER 121628 New South Wales My question is to the Minister representing the Prime Minister, Senator Brandis. Last week the minister told the Senate: … since the election of the coalition government in 2013 the price of electricity to Australian consumers has stabilised. From 1 July retail electricity prices will again increase, with AGL increasing prices in New South Wales by 16 per cent or $300 per year for a typical household, and Origin by 15 to 18 per cent, which is in the range of $282 to $313. Is this what the minister meant when he said that prices had stabilised? 14:27 Senator BRANDIS 008W7 Queensland What I meant is that since the election of the coalition government the price of electricity to Australian households has stabilised. That fact is apparent from the material collated and graphed in the Finkel report. The Finkel report also discloses that during the period of the Labor government the price of electricity to Australian households doubled and has stabilised under the period of the coalition government. Nevertheless, you are right in one respect. All policymakers, and certainly the government, understand that to do nothing is not an option, because if we do nothing then there will be upward pressure on electricity prices, and that is what we want to avoid. That is why at the moment the government is considering the Finkel report. It is discussing the matter and, informed by the views of Dr Finkel and those others who have contributed to this discussion, the government will in the near future be making some decisions in relation to the National Electricity Market. Those decisions will serve the three objectives, as I said last week, of affordable supply, reliable supply and lower carbon emissions. The PRESIDENT e5v Senator McAllister, a supplementary question? 14:28 Senator McALLISTER 121628 New South Wales Given that AGL has blamed its price hike on wholesale market prices, which have doubled since 2013, isn't it clear that the Abbott-Turnbull government's policy paralysis is to blame for the higher retail electricity prices? 14:29 Senator BRANDIS 008W7 Queensland Far from it. I find it remarkable that somebody who represents in this parliament a party that was incapable of making a decision in relation to this issue for six long years, and on whose watch electricity prices doubles, should be making the observation that you just made. Opposition senators interjecting— Senator BRANDIS 008W7 Let me take your interjection, Senator Wong. The Finkel report was received by the government last Friday week—a week and a half ago. We have discussed the matter at a party room meeting, which, in order to listen to the views of my colleagues and in particular the backbench members of the coalition, informed by the Finkel report, informed by the public discussion of the issue, and informed by the view of— (Time expired) The PRESIDENT e5v Senator McAllister, a final supplementary question. 14:30 Senator McALLISTER 121628 New South Wales Will the minister now admit that under the Turnbull government Australians are paying more for electricity, with those opposite more focused on internal fights than on resolving their own ongoing policy paralysis? 14:30 Senator BRANDIS 008W7 Queensland Well, Senator McAllister, I know that the culture of your party is very different from the culture of mine, but in the Liberal Party and in the National Party we actually do not regard a discussion as a fight. In fact, what we understand the purpose of this process to be—the reason we come to parliament—is to discuss the issues of importance to the Australian people. And there is no issue of more importance to the Australian people right now than the question of affordable and reliable energy supply. So, we are considering the Finkel report. And as I have said ad nauseam and say again to you today: informed by the Finkel report, informed by other expert commentary, informed by the views of our colleagues, all of whom have useful perspectives to bring to bear on this issue, the government will shortly be making decisions that will serve those objectives. Carbon Pricing 46 (Queensland) (14:31): Senator ROBERTS 266524 As a servant to the people of Queensland and Australia, my question is to Senator Birmingham representing the Minister for Environment and Energy. Is the Minister aware—yes or no—of comments of the current economic policy adviser to Prime Minister Turnbull, Dr Alex Robson, who said in his paper entitled Australia's carbon tax: an economic evaluation that 'a central tenet of good economic policy making is that a full cost-benefit analysis should be undertaken, weighing up the gains and losses across a wide range of policy alternatives so that political decision-makers can be better informed of the economic effects of various options'? If yes, when a key adviser to the government says this about the cost-benefit analysis of a carbon tax, what makes the Finkel proposals—essentially a carbon tax—different at a time when cost of living is skyrocketing? 14:32 Senator BIRMINGHAM H6X South Australia I thank Senator Roberts for his question. No, I am not aware of the quote you referenced, but I will take you at your word that it is an accurate quote in that regard. I would equally assure you that in terms of the work that the Turnbull government will undertake in its response to the Finkel review, every impact will be thoroughly considered and analysed as we develop appropriate policy responses to the Finkel review. This, indeed, is exactly the work we are undertaking. The Turnbull government has received the Finkel review and we are now considering the report and its recommendations. We will undertake appropriate and thorough analysis of any policy responses or potential policy responses to that, and that will ultimately inform the direction and pathway that the government takes into the future. The PRESIDENT e5v Senator Roberts, a supplementary question? 14:33 Senator ROBERTS 266524 Queensland Does the Chief Scientist, Dr Finkel, provide a crucial cost-benefit analysis of his economic claims and proposals—yes or no? If yes, in which part of the 220-page ruse does such a cost-benefit analysis appear to justify the enormous price increases that will follow from Dr Finkel's recommendations? 14:34 Senator BIRMINGHAM H6X South Australia As I suspect Senator Roberts is aware, the Finkel review undertakes modelling of certain scenarios, looking at business-as-usual scenarios and looking at scenarios where a clean energy target will be put in place. Like any modelling, that of course is informed and influenced by the assumptions that underpin that modelling. But that is there, detailed in the Finkel review. The government will consider that modelling, which, on the assumptions presented, demonstrates that a clean energy target scenario could produce over a period of time lower price impacts than the business-as-usual scenario. The government will consider that modelling, but that will not be the only input, of course, to the government's decision-making that will ensure that we give full and thorough consideration to the findings, the recommendations and the implications of going down the Finkel review path or modifications thereof. The PRESIDENT e5v Senator Roberts, a final supplementary question. 14:34 Senator ROBERTS 266524 Queensland While noting that electricity CPI has increased more than 100 per cent since December 2007 to 2016, the CPI has increased 23 per cent. There have been media claims that this sham report, if implemented, will save consumers $90 off their potential electricity prices per year compared with continuing the current disastrous policy. On which page in this report is the $90 figure mentioned? And, if it is not in the report, who made this figure up and what are their economic policy credentials? 14:35 Senator BIRMINGHAM H6X South Australia I am not a walking index to the pages and contents of the Finkel report, so I will happily take on notice the aspect of the question that seeks a particular page reference. But the senator did mention the impact of electricity price rises over the period of 2007 to 2016. Of course, there have been many factors there in terms of the retail charges, the wholesale charges and the distribution charges that, at different junctures, have had an impact. The Finkel report does demonstrate that, at present, in terms of some of the price pressures, the generation charges, and particularly the contribution of the peaking of gas prices, is a real factor that the Turnbull government is taking very seriously and working to address. Equally, if you look at the trajectory of price rises, you can see that, in that time horizon, there was one period where prices, in fact, did dip somewhat. That was the period after the coalition government came to power, took out a carbon tax and put in place other measures to meet our emissions reduction targets—measures that are proving to be successful and reduced the impact of price rises. (Time expired) Leader of the Opposition 47 14:36 Senator PATERSON 144138 Victoria My question is to the Minister for Employment, Senator Cash. It relates to developments in questions asked last week in question time. Can the minister further update the Senate on recent reports concerning officials of registered organisations and potential conflicts of interest? 14:37 Senator CASH I0M Western Australia I thank Senator Paterson for the question. Yes, I can. Further to serious questions being raised regarding the failure of the AWU to accurately disclose a range of transactions in which industry super funds gave money to the AWU when Bill Shorten was national secretary and running for parliament in 2007, I can advise that last Thursday the AWU, in an attempt to protect Mr Shorten, amended their 10-year-old disclosure statement. Specifically, they reclassified a $27,500 donation from AustralianSuper to the AWU to say that it was not, in fact, a donation but rather an 'other receipt'. Despite this convenient reclassification, questions regarding conflicts of interest still remain and have not been answered. I remind senators that Mr Shorten, in 2007, wore three hats: being a director of AustralianSuper, National Secretary of the AWU and the Labor candidate for Maribyrnong, all at the same time as money was changing hands. Mr Shorten must now come clean with the Australian people and explain as follows. Did he disclose these conflicts and how? And, if not, why not? Did he remove himself from any decisions around these payments and how? And, if not, why not? Did he personally ask for any of these payments or did others ask for these payments on his behalf? Further, and just as importantly, Mr Shorten should now outline what conversations he and his office have had with the AWU which led to the AWU filing just last week the amended return. (Time expired) The PRESIDENT e5v Senator Paterson, a supplementary question. 14:39 Senator PATERSON 144138 Victoria Why is it important that registered organisations and other bodies that have financial dealings with them show greater transparency? 14:39 Senator CASH I0M Western Australia Ten years after this questionable flow of money occurred, the AWU are still trying to get their story straight about conflicts of interest with their former boss. Organisations like AustralianSuper and the AWU have an important duty to protect the interests of their members. They manage the retirement savings of hardworking Australians, which they hold on trust. I do not believe there would be any Australian who believes that their hard earned retirement savings should be used for political campaigns or events, and that is why greater transparency is needed and Mr Shorten needs to come clean and answer these important questions. He needs to tell the Australian people why payments were made from the superannuation fund of hardworking Australians which ended up benefiting his union. The PRESIDENT e5v Senator Paterson, a final supplementary question. 14:40 Senator PATERSON 144138 Victoria Can the minister advise what steps the Turnbull government is taking to ensure that unions and employer groups are acting in their members' interests and not in their own self-interest? 14:40 Senator CASH I0M Western Australia The payments between Australian Super and the AWU, and then between the AWU and Labor, have primarily benefited the interests of Mr Bill Shorten. It is not clear what benefits have flowed to Australian Super or AWU members, and these questions need to be answered. The Turnbull government believes that unions and employer groups should at all times be acting in the interests of their hardworking members and not their officials. We have critical legislation before this parliament to prevent corrupting and secret payments between registered organisations and employers and full disclosure of any legitimate payments that are made. If it is not a legitimate payment, why is it being made? All registered organisations—employer and union—should be transparent. Energy 48 14:41 Senator KIM CARR AW5 Victoria My question without notice is to the Minister for Industry, Innovation and Science, Senator Sinodinos. Can the minister confirm that the assumptions about demand built into the modelling for the Finkel review assume that, out to 2050, population growth in Australia will be 50 per cent while demand for electricity will increase by only 15 per cent? Is this because the modelling is based on the assumption that, under the Turnbull government, heavy industry, particularly aluminium, steel and cement, would no longer be part of the Australian economy by 2050? 14:42 Senator SINODINOS bv7 New South Wales Not as far as I am aware. The PRESIDENT e5v Senator Carr, a supplementary question. 14:42 Senator KIM CARR AW5 Victoria In his presentation to the government party room, Minister Frydenberg said policy uncertainty is holding back new investment. BlueScope Steel Chief Executive Paul O'Malley recently reiterated that the nation could not afford policy failure and years more uncertainty. Given the ongoing division in the government, why should major manufacturers have any confidence that the Turnbull government will end that uncertainty? 14:43 Senator SINODINOS bv7 New South Wales Both Mr O'Malley and Mr Frydenberg are right: we do need to get more certainty into our energy and environmental policies. But we will not get that certainty unless we as a parliament are prepared to be pragmatic about what needs to be done. This is very important. There are coal fired generators out there who are uncertain about the future. They do not know whether to refurbish or whether they should invest in new stations. We have a situation where the RET has done its job. But the fact of the matter is that we need to create greater certainty by having an appropriate signal to give people certainty that investment over 20, 30 and 40 years will be appropriate in this sector. But it has to meet three requirements: it has to have security, it has to be affordable and it has to reduce our greenhouse gas emissions. This is a difficult 'trilemma', as some people have called it. The government, through the work it is doing— (Time expired) The PRESIDENT e5v Senator Carr, a final supplementary question. 14:44 Senator KIM CARR AW5 Victoria Minister, you have indicated that you do not believe that the assumptions in the modelling are predicated on the basis of the removal of heavy industry. On what basis are the assumptions made? Senator Abetz has accused the Chief Scientist of using creative modelling to promote the clean energy target. Is he correct? 14:44 Senator SINODINOS bv7 New South Wales I will get back to the honourable member with more information. But can I say that I have a lot of faith in Dr Finkel. I worked with him very closely as Chief Scientist. He does a good job. He is not afraid to be frank and fearless in his advice. I will leave it at that. DISTINGUISHED VISITORS 49 DISTINGUISHED VISITORS QUESTIONS WITHOUT NOTICE 49 QUESTIONS WITHOUT NOTICE Energy 49 14:45 Senator IAN MACDONALD YW4 Queensland My question is to the Minister for Resources and Northern Australia, Senator Canavan. I ask the minister if he could advise the Senate of the importance of baseload power for maintaining affordable and reliable energy. 14:45 Senator CANAVAN 245212 Queensland That is a great segue from the question we just heard, where we had Senator Carr wanting to defend the industrialisation of Australia and wanting to defend jobs in Australia but, at the same time, being part of a party who, in their own climate action policy last year at the election, said they wanted to kickstart the closure of coal-fired power stations. And didn't the Labor Party get their wish! In the last year we have seen two major coal-fired power stations close, cheered along by the Labor Party. 'How fast can we make these go?' was their view. 'Let's close them sooner, faster, more often.' Both of them have closed, and we have seen, in South Australia, a massive cost to the economy, with a statewide blackout, where a South Australian Labor government refused the price of $25 million to keep Northern Power Station going. Instead, it is now spending more than $500 million in response to their statewide blackout, including buying diesel generators to use over the summer to keep the lights on. It is absolutely absurd! Likewise with the closure of Hazelwood. We have seen it put pressure on prices—that was the advice of the Australian Energy Market Operator—but we have seen that closure cheered on by the Victorian Labor government as well. They wanted that to close, and they got their wish as well. On this side, we are not embarrassed to stand behind the need for baseload, reliable power in our system. That does rely on using the natural resources that we have been given in this country, including coal and gas—resources that have powered this country for decades, for hundreds of years, and provided thousands of jobs to hardworking Australians. These are industries that we do want to support and keep going. That is why we are not shy about backing the use of our natural resources in this country to create wealth and keep power prices down for the users of power in households across Australia. The PRESIDENT e5v Thank you, Minister. Senator Macdonald, a supplementary question. 14:47 Senator IAN MACDONALD YW4 Queensland I thank the minister for that answer. In asking my supplementary, can I note in passing that the Labor mayor of Townsville certainly supports baseload power stations in the north of Australia. But I ask the minister: who else is supporting investment in clean coal power stations in Australia? 14:47 Senator CANAVAN 245212 Queensland I do note, like the senator, mayor Jenny Hill's support for the coalition on this matter; she thinks we should support baseload power in North Queensland. We know, as I was saying, the Labor Party wanted to kickstart the closure of coal-fired power. Earlier last year Mark Butler, the energy spokesperson for the Labor Party, said: Labor will introduce a framework to kickstart the closure of the older, heaviest polluting generators consistent with the principles set out in our policy documents. That is their position, but we know that Anthony Albanese has a different view. Mr Albanese, the member for Grayndler, supports coal-fired power. He says on his website that he has had more than 70 references to supporting coal-fired power. That is another difference that is emerging there. We have also had people like the state Labor member for Mirani, Mr Pearce, say that he supports a coal-fired power station. We have had Jo-Ann Miller, the Labor member for Ipswich, supporting a coal-fired power station. But we still have the federal Labor Party here wanting to kickstart the closure of reliable power in our country. (Time expired) The PRESIDENT e5v Senator Macdonald, a final supplementary question. 14:49 Senator IAN MACDONALD YW4 Queensland Again I thank the minister for that very informative answer. He would probably be aware that the Queensland alternative Premier is talking about a coal-fired power station in the north. But I ask the minister: is he aware of any alternative energy policies? 14:49 Senator CANAVAN 245212 Queensland As the senator was saying, the Liberal National Party of Queensland also support a coal-fired power station being built. They are not shy about supporting coal-fired power either. I forgot to mention our favourite supporter of coal-fired power in this place, and that is Mr Bob Brown. He is also a big supporter of coal-fired power. There is an article here from The Mercury where coal-fired power is the 'best option' according to Mr Bob Brown. He is a big supporter of coal-fired power. But now what we have here is a religious objection to the use of coal from the Greens and the Labor Party teaming up, whereas what we are saying is that we should do what works. Let us do what works. Let us focus on what works for people so that we can keep them in a job, so we can keep their power bills down. We know that there are more than 300 plants around Asia that are being built or are under construction for coal-fired power, and that can bring emissions down as well as guarantee jobs. Social Security 50 14:50 Senator SIEWERT e5z Western Australia My question is to the Minister representing the Minister for Social Services, Senator Ryan. In the government's recent budget it announced drug testing trials for 5,000 new income support recipients in a number of locations in Australia. On 15 June A Current Affair,the program on Channel Nine, identified sites including north of Brisbane, Western Sydney and Melbourne's north-west as potential trial sites for drug testing income support recipients. Can the minister confirm that these sites are being considered? If so, on what basis is the decision being made and, if not, when will the government inform Australia as to those trial sites? 14:51 Senator RYAN I0Q Victoria I am not familiar with the A Current Affair episode, Senator Siewert. The brief I have does not refer to that episode. This was discussed at estimates, as you will recall. The government is considering the selection of sites. I know that one of the criteria being considered is the availability of both the support services and, of course, the testing services. I am happy to go back to the minister and seek clarification as to the particular program you refer to. The PRESIDENT e5v Senator Siewert, a supplementary question. 14:51 Senator SIEWERT e5z Western Australia I understand that the government will need an exemption from the Disability Discrimination Act to implement the trials. Can you confirm this? 14:52 Senator RYAN I0Q Victoria The Social Security Act has been exempt from the operation of the disability discrimination law since the Disability Discrimination Act commenced in 1992. The intent of this is to ensure that pensions and allowances, including for those with disability, are made according to the purposes of those payments. I understand this was also discussed, if I recall correctly, at estimates, Senator Siewert, and any exemption that will be sought will be consistent with the exemption that already applies to the Social Security Act that I have just mentioned. The PRESIDENT e5v Senator Siewert, a final supplementary question. 14:52 Senator SIEWERT e5z Western Australia I was hoping there was some progress on that matter. Given that in the US and New Zealand similar measures have been proven an expensive failure, is the government willing to now tell Australia how much these trials are going to cost? 14:53 Senator RYAN I0Q Victoria The government will of course, I imagine, be in a position to do that once various aspects of this program, as was outlined clearly at Senate estimates, have actually been settled. But at the time when we are going to tender, we are not going to expose the taxpayer to risk of the Commonwealth showing its hand, so to speak. Senator Siewert, what I always come back to, as I have in this chamber and as I do at estimates, is the absolute and utter hostility of the Greens to undertaking any measure that you and no-one else deems to be against the interests of people taking illegal, illicit drugs. Just because something has been trialled elsewhere and has not worked does not mean it should not be tried again. We are interested in helping people get off illegal, illicit substances, yet your constant belligerence and refusal to look at these measures betrays the old policies you took off your website a year ago. (Time expired) Opposition senators interjecting— The PRESIDENT e5v Order on both sides! Energy 51 14:54 Senator MARSHALL 00AOP Victoria My question is to the Minister representing the Prime Minister, Senator Brandis. On the same day the Chief Scientist presented his review into the future security of the National Electricity Market, the Prime Minister said: I would say this about the clean energy target mechanism. It has a number of virtues, very strong virtues. One is that it is technology agnostic … Does the Turnbull government remain committed to a technology agnostic mechanism? 14:54 Senator BRANDIS 008W7 Queensland Yes. The PRESIDENT e5v Senator Marshall, a supplementary question. 14:54 Senator MARSHALL 00AOP Victoria Is the government considering designating coal as a clean energy source as part of that target? How is picking a winner, by explicitly including a technology that investors will not invest in, consistent with a technology-agnostic approach? 14:55 Senator BRANDIS 008W7 Queensland As I said in my answer to your primary question, yes, we do believe in a technology agnostic approach, and our consideration of the Finkel report will be guided by that consideration. That having been said—and as I said in reply to the earlier question of your colleague Senator McAllister—the government at the moment is considering its response at the moment to the Finkel report. The Finkel report was, of course, only received the Friday before last. We have had, as you know, a long discussion in our party room in relation to it. The government will be announcing certain policy measures in response to the Finkel report in the near future. They will be informed, as I have said before, by the three overriding objectives of affordable electricity, secure supply and meeting Australia's international obligations to reduce carbon emissions. The PRESIDENT e5v Senator Marshall, a final supplementary question. 14:56 Senator MARSHALL 00AOP Victoria Will the Prime Minister protect what he has described as a virtue of the clean energy target, or will he again cave in to the ideologues on the far Right of his party? 14:56 Senator BRANDIS 008W7 Queensland There is only one party that takes an ideological approach to energy policy, and that is the Australian Labor Party. We saw the result of an ideological approach to energy policy in the state of South Australia last year, when the entire state was blacked out because the Premier, Mr Weatherill, and his government did take an ideological approach. They struck a 50 per cent renewable energy contribution with the electricity market in South Australia without backing it up, so there was no redundancy in the system. That is what an ideological approach gets you. We take a pragmatic approach. We take an approach based on economics and based on engineering, not on ideology, so as to ensure that we have affordable electricity and secure supply while meeting our international commitments. The PRESIDENT e5v A point of order, Senator Macdonald? Senator Ian Macdonald YW4 I could barely hear the minister in that answer, because of Senator Wong's shouting, and I am wondering if you could declare a suspension of the Senate so that Senator Farrell could explain to Senator Wong how to properly lead the opposition. The PRESIDENT e5v There is no point of order. Shangri-La Dialogue 51 14:57 Senator FAWCETT DYU South Australia My question is to the Minister for Defence, Senator Payne. Could the minister update this Senate on the discussions on regional security held at the recent Shangri-La Dialogue in Singapore. 14:58 Senator PAYNE M56 New South Wales I thank Senator Fawcett for his question. Both the Prime Minister and I participated in the region's pre-eminent defence dialogue recently, the Shangri-La Dialogue, which was held in Singapore slightly earlier this month. It is true to say that as a region we have experienced an unprecedented period of stability and in fact rising prosperity, but neither stability nor prosperity have come about by chance; they are the result of concerted efforts to set and to live by rules that govern our economic integration and also our security cooperation. The region's rules based order has been the cornerstone of equity, stability and transparent decision-making, which protects us from actions that might destabilise that security and prosperity. These were the focuses of much of the discussions, both in the dialogue's plenary sessions, which both the Prime Minister and I addressed, and in bilateral meetings with our counterparts. Our regional security partners, it is fair to say, share many of our security concerns, including—most self-evidently in recent weeks—the growing threat posed by returning foreign fighters seeking to create disturbances within the region; North Korea's unlawful, reckless and dangerous conduct; and, indeed, continued territorial disputes in the South China Sea. Upholding the rule of law is the best way to ensure that stability prevails. Australia is working closely with our regional partners and our allies to support regional security architecture, particularly the East Asia Summit, APEC, the ASEAN Defence Ministers' Meeting-Plus and also the South Pacific Defence Ministers' Meeting. We will continue to do our part to address security concerns, including through enhancing international defence engagement, as the 2016 Defence white paper sets out. Our Defence Cooperation Program is being enhanced to build the capability and capacity of our regional partners, from Papua New Guinea to Timor Leste, Tonga, Samoa, Indonesia and Malaysia. (Time expired) The PRESIDENT e5v Senator Fawcett, a supplementary question. 15:00 Senator FAWCETT DYU South Australia Can the minister advise the Senate of other ways that Australia is working with our regional partners to address the threat of returning foreign fighters? 15:00 Senator PAYNE M56 New South Wales The effectiveness of our regional cooperation is absolutely vital to addressing the threat of foreign fighters returning to our region. We are seeing the impact that, in part, is being made by such individuals in Marawi, in the Philippines, at the moment. We have built strong counterterrorism relationships with our regional partners. The ADF undertakes an extensive program of counterterrorism engagement and capacity-building activities, including special forces training with Thailand, Malaysia, Vietnam, the Philippines and India, to name some. Whilst at the Shangri-La Dialogue, the Five Power Defence Arrangements group came together to discuss this very dynamic security environment. Since 1971 the FPDA has fostered practical defence cooperation and interoperability between Australia, Malaysia, New Zealand, Singapore and the UK. The FPDA made a significant change to our focus during that meeting, with an agreement and an intention to work together more closely on terrorism related issues that affect Singapore and Malaysia. (Time expired) The PRESIDENT e5v Senator Fawcett, a final supplementary question. 15:01 Senator FAWCETT DYU South Australia Can the minister inform the Senate of how else Australia is working with like-minded countries to help create a secure and stable region more broadly? 15:01 Senator PAYNE M56 New South Wales Multilateral agreements most often underpin our regional stability and prosperity because they foster cooperation, formalise security commitments and build trust. But, as well as the regional arrangements I have already mentioned, there are a number of bilateral and trilateral defence relationships that are also very important. We have been working hard on strengthening our trilateral defence cooperation with Japan and the United States. They both share our commitment to the rules based order and strengthening of our regional security architecture that underpin our region's stability and prosperity. In fact, during the dialogue I met with the US Secretary of Defense and Japan's Minister of Defense, Ms Inada. We reiterated our close commitment to coordination and cooperation in humanitarian assistance, disaster relief and maritime security—of which we received a timely reminder on the weekend, with the very shocking collision between a freighter and the US Navy ship USS Fitzgerald. We extend our condolences to those members of the US Navy on that ship, their families and the US Navy itself. (Time expired) Senator Brandis 008W7 Mr President, I ask that further questions be placed on the Notice Paper. STATEMENT BY THE PRESIDENT 52 STATEMENT BY THE PRESIDENT Parliamentary Budget Officer 52 15:03 The PRESIDENT e5v Senators will recall that on 13 February this year the Speaker and I announced that Mr Phil Bowen, the inaugural Parliamentary Budget Officer, will be retiring from the position when his term ends on 22 July this year. After advising the Joint Committee of Public Accounts and Audit, we commenced the search for a new Parliamentary Budget Officer. We looked for a person with strong public policy experience and close familiarity with the Commonwealth's budget framework and fiscal policy issues. We also thought it important that the successful candidate had the capacity to operate in an independent and non-partisan manner with a high level of confidentiality, integrity and accountability to the Australian parliament. On 29 May we advised the Joint Committee of Public Accounts and Audit of the outcome of the competitive selection process, and in accordance with the requirements of the Parliamentary Service Act 1999 sought the approval of the committee for our proposed appointment. The committee gave its approval on 15 June last. It is my pleasure to now inform the Senate that the next Parliamentary Budget Officer will be Jenny Wilkinson. Ms Wilkinson is currently the division head, Retirement Income Policy Division in the Treasury. Ms Wilkinson's term will begin on Monday, 24 July 2017. The Speaker and I look forward to working with Ms Wilkinson, and I am sure that all senators will join me in wishing her every success in her new role. At this point I would also like to take the opportunity to acknowledge and thank Mr Phil Bowen for his service as Parliamentary Budget Officer. Mr Bowen has had a long and distinguished Public Service career, for which he was awarded the Australian Public Service Medal in 2006. In establishing and leading the Parliamentary Budget Office for five years, Mr Bowen has done an outstanding job undertaking his duties at all times with complete impartiality. The PBO's rigorous independent modelling and analysis has been of great assistance to members of both houses of the parliament and has improved the budget process. I gratefully acknowledge his having remained in the role for longer than he originally intended, upon the request of the Speaker and I, continuing to provide a great service to senators and members, particularly during the costing of policy proposals in the lead-up to the last election. I wish Phil and his family well for his retirement. In accordance with the requirements of the act, I now ask the Chair of the Joint Committee of Public Accounts and Audit, Senator Smith, to make a statement on behalf of the committee on the appointment. 15:05 Senator SMITH 241710 Western Australia On behalf of the Joint Committee of Public Accounts and Audit, I am pleased to advise the Senate of the committee's deliberations and subsequent approval of the appointment of Ms Jenny Wilkinson as the Parliamentary Budget Officer. The Senate will be aware section 64XA of the Parliamentary Service Act 1999 requires the presiding officers to seek the approval of the Joint Committee of Public Accounts and Audit when appointing the Parliamentary Budget Officer. The committee welcomes the announcement of the President of the Senate today confirming the appointment of Ms Wilkinson and associates itself with his remarks. The purpose of the Parliamentary Budget Officer is to increase transparency and support informed public debate by providing independent and non-partisan analysis of the budget cycle, fiscal policy and the financial implications of proposals. As the committee responsible for parliamentary oversight of the Parliamentary Budget Office, the JCPAA is of the view that Ms Wilkinson's appointment will continue the strong and astute leadership of the Parliamentary Budget Office. Following its meeting with Ms Wilkinson, the committee unanimously agreed to the appointment. The committee considers Ms Wilkinson's economic and fiscal-related background, complemented by a diversity of public-policy roles, will allow Ms Wilkinson to steward the PBO through its next phase. The committee is confident in Ms Wilkinson's knowledge, skills and expertise and believes that in the position of Parliamentary Budget Officer Ms Wilkinson will ensure the PBO continues to produce relevant work that affirms the independent and non-partisan nature of the PBO. Since 2013 Ms Wilkinson has performed senior executive roles with the Commonwealth Treasury, including in the macroeconomic and fiscal groups. During her time as a Commonwealth public servant Ms Wilkinson has been responsible for delivering a number of high-profile economic reforms. Prior to joining the Public Service, Ms Wilkinson worked for the Reserve Bank of Australia, where she held various positions including that of Deputy Head, Economic Analysis Department. The committee looks forward to working with Ms Wilkinson upon her commencement with the PBO. In welcoming Ms Wilkinson the committee would also like to acknowledge the very fine contribution made by Mr Phil Bowen, the inaugural Parliamentary Budget Officer, to the establishment and formative years of the Parliamentary Budget Office. Mr Bowen has led the PBO for five years since mid-2012. At this important juncture it is worth reflecting on the tremendous achievement to our democratic discourse that has been provided by the Parliamentary Budget Office during Mr Bowen's tenure. The recent report of the independent review panel of the Parliamentary Budget Office undertaken by Dr Ian Watt AC remarked: The PBO is regarded as an independent and non-partisan organisation that produces rigorous analysis relevant to public policy debate. …   …   … … the PBO has been a successful institutional development in Australian governance … and has filled a significant gap in Australia's public policy landscape. On behalf of the committee I would like to thank Mr Bowen for his strong leadership and for his effective and faultless commitment to the office's effective operations since its inception. The committee wishes Mr Bowen all the best for his future endeavours. QUESTIONS WITHOUT NOTICE: ADDITIONAL ANSWERS 54 QUESTIONS WITHOUT NOTICE: ADDITIONAL ANSWERS Energy 54 15:08 Senator SINODINOS bv7 New South Wales I wanted to add to an answer to a question from Senator Carr. He asked me about the demand modelling in Finkel. Jacobs Group, who did the modelling for Finkel, used the AEMO—that is the Electricity Market Operator—medium demand forecast, which does not see a change in areas like aluminium or steel. It was using those generic assumptions taken from another source. It did not provide its own assumptions. National Disability Insurance Scheme 54 15:08 Senator RYAN I0Q Victoria I have some further information I said I would come back to the chamber with for an answer I gave Senator Kakoschke-Moore last Thursday. I have been advised that the NDIA works closely with Vision Australia on engagement and accessibility services for people with a vision impairment. In May 2017 the NDIA began to work with Vision Australia on developing a nationally consistent approach before supplying NDIS documentation to participants with a vision impairment in their preferred format such as braille, electronic text and CD large print, and audio and CD. In addition to this consultation, I am advised NDIA staff regularly engage Vision Australia on a case-by-case basis to provide accessibility advice on external communication products. The staff also have access to Vision Australia's digital accessibility toolbar for Microsoft Word to ensure documents produced for the NDIA and released publicly are accessible and meet level AA of the Web Content Accessibility Guidelines 2.0. Earlier this year NDIA staff also featured in five Vision Australia radio segments to ensure people with vision impairment have access to NDIS information in a format that is accessible to them. The NDIA also regularly shares Vision Australia content on our social media channels and has engaged with Vision Australia through the Australian Blindness Forum and has been an active contributor to these forums, with senior executives attending this event in the last two years. QUESTIONS WITHOUT NOTICE: TAKE NOTE OF ANSWERS 54 QUESTIONS WITHOUT NOTICE: TAKE NOTE OF ANSWERS Schools 54 15:10 Senator JACINTA COLLINS GB6 Victoria I move: That the Senate take note of the answers given by the Attorney-General (Senator Brandis) and the Minister for Education and Training (Senator Birmingham) to questions without notice asked by the Leader of the Opposition in the Senate (Senator Wong) and Senator Chisholm today relating to schools funding. Senator Brandis and Senator Birmingham have continued in their attempts to justify what is a policy fraud. They are unable to substantiate the shift to a Commonwealth-only school education funding model, try as they might. I will use this opportunity today to highlight several aspects of that policy fraud. The first is that this is the real Gonski. Let me quote from Mr Gonski in a speech he gave on 21 May 2014 when he said: Lost in the discussion for more money were the central tenets of our review. We advocated:- A. Funding to be unified i.e. Given by state and federal governments to the different sectors together rather than states substantially only funding their school system and the bulk of commonwealth funding being as a consequence paid to independent and faith based schools. This is why we continue to challenge the government embedding this 80-to-20 shift. This is the position that Mr Gonski took. Read as you might the comments by the Prime Minister or the verballing by Senator Birmingham, Mr Gonski has not changed his position. We saw this verballing continue today. We saw Senator Brandis verballing Archbishop Coleridge very much in the same form. The basic fact is that there has been no substantiation for the shift that this Turnbull cabinet has taken. I asked during the Senate inquiry if I could be directed to any academics, thought leaders or anyone else who could justify this significant shift in approach that will deny public schools the funding they need into the future. I was told no. The only thoughts on this shift available are cabinet in confidence. This is simply not good enough. It is not good enough for a policy measure that has been rushed through a Senate inquiry and that this government is attempting to rush through the Senate this week. But let's look at the other elements of this fraud. There are the fantasy figures. We have all seen the Fairfax report on the fantasy figures that Minister Birmingham and his department have put out using their funding estimator. There is the fantasy of recreating the funds that schools get in the 2017 year on the basis of a formula that will never apply to that year. Now we are seeing the fraud of this government in attempting to rewrite the PBO figures that Senator Leyonhjelm received to his questions to the PBO. Thank God for the PBO, I say! Thank God we have a PBO that can provide some independence in these situations. I welcome its new head. One further issue I should bring to the attention of the Senate is a correction that was received after the Senate inquiry into the bill on this. First, though, let me read Senator Birmingham's claims in this respect. He said socioeconomic data has been used in the school funding system since 2001 and has been 'refined, expanded and broadly accepted as a credible way to measure capacity to contribute'. This is a fraud. Gonski recommended that that model be reviewed and replaced. Indeed, the department tied themselves in knots when they sought to justify it. They were such a bad knots that Mr Tony Cook needed to subsequently write to the committee to correct his evidence. He attempted to justify the minister's claims by arguing that the measure had gone down to ABS mesh blocks. Of course, he had to correct that, because it simply is not true. There had been no response to the Gonski recommendation back in 2011 that the SES needed to be reviewed. Instead, now we have a government trying to make significant changes in ways that have not been properly tested, have not been properly modelled and have not been properly canvassed and that will damage a lot of our delivery of school education. Everyone, in their local area, in their local suburb, has a local primary school and usually a local Catholic school. The changes that this government is proposing will ensure that that education delivery cannot continue. (Time expired) 15:15 Senator HUME 266499 Victoria I thank Senator Collins very much for that extraordinary outburst! I think that is the first time I have heard the word 'fraud' used with regard to Gonski. That is absolutely extraordinary—no, it was the word 'corruption'; the corruption of the original Gonski report—when you consider that the report was presented by the Labor Party in its original proposal. What the coalition has presented in its school funding reform package is in fact the original Gonski proposal, the original Gonski measures and the original Gonski meaning, which was genuine needs-based funding—transparent, nationally consistent needs-based funding. Every school and every element of the Australian school system benefits from the coalition's school funding reform. It has overwhelming public support, yet those opposite clutch at straws, desperately searching for an opportunity to criticise the coalition, which, overwhelmingly, is being supported for its proposals. The Turnbull government is introducing genuine needs-based funding. It will increase investment and it will give Australian students the quality education that they deserve. It is committing an additional $18.6 billion for Australian schools over the next decade, starting from 2018—an additional $18.6 billion. That $18.6 billion is distributed according to a model of fair, needs based, transparent funding tied to school reforms which are proven to boost students' results. This landmark Quality Schools reform package means Commonwealth funding for Australian schools will grow from a record $17.5 billion this year, 2017, to over $30.6 billion in 2027. More than $2.2 billion in new funding just in the next four years is included in this year's budget, and that follows on from an additional $1.2 billion in last year's budget. The coalition's school funding model has the imprimatur of David Gonski himself, who is also preparing an updated report for the government on how best to spend the money to improve student performance and improve student results. A child's education should never be dependent on any particular sector's lobbying abilities, yet under the previous government, the now opposition, there were 27 separate deals and special arrangements. The opposition did not have the political courage to deal with those particular lobbying groups, those particular sectors, and their demands. This coalition government has the political will and the political courage, and it has the imprimatur of David Gonski himself—and not just David Gonski but other members of the Gonski panel. Ken Boston was a Gonski review panellist, but he is also a very strong supporter of public education and is a former head of the New South Wales education department. Ken Boston said: Five years after the release and subsequent emasculation— they were his words— of the Gonski Report, Australia has a rare second chance … There are no grounds for opposition to the schools funding bill in principle, and every reason to work collaboratively towards its successful implementation and further refinement in the years ahead. He also said it would be a 'tragedy' if the government's bill is voted down. In fact another former panellist, Kathryn Greiner, said it would be a disaster if the current model remained in place. A child's education, as I have said, should never be dependent on a sector's lobbying ability. It is imperative now that we grab the opportunity to implement the true Gonski reforms—fair, needs based funding—with both hands. I urge the opposition to reconsider its recalcitrance and embrace those reforms, if for no other reason than on the grounds of equity. 15:20 Senator KETTER 244247 Queensland This is just another policy disaster from this incompetent government. The government's education funding reforms are now starting to come apart. If one were to listen to Minister Birmingham and the Attorney-General, one would think that all of the concerns raised by the Catholic system are unfounded; there is nothing to them; and somehow the Catholic education system is wanting more than its fair share of federal government funding. This is an extraordinary accusation or insinuation to make in respect of this matter. What really illustrates the fact that this is not the case is that we find Senator Back coming out this morning on ABC television to highlight the point that he cannot support this change to the funding arrangements. He does not believe that the Catholic system is receiving a fair deal. If one of the government's own senators cannot bring himself to support this proposition, then why on earth should anyone else in this chamber come forward and support something which is obviously seen as a backward step for the Catholic system, which does pull its weight and does an extraordinary job around the country in educating young Australians. With Senator Back standing up to the government, we also hear that One Nation are likely to support the government and support an unfair deal. I would express my disappointment with that announcement and ask our colleagues in One Nation to review and reconsider their approach. Senator Hanson seems to talk about the fact that it is not just money that is going to solve the problems. Of course, money alone does not solve problems, and having proper funding does not exclude attention being given to the standards in schools as well. These are not mutually exclusive objectives. We need to have both. The Queensland government's education minister, Kate Jones, also knows the truth. It is not just the Catholic system, it is not just the government's own senators that have expressed concern—there are also some concerns about this in the public sector. Minister Kate Jones has referred to Gonski 2.0 as just 'smoke and mirrors'. What she is saying is that she is concerned that the Turnbull government, after promising at the last election that they would not walk away from the Gonski funding model, in fact did so. 'They tore up the six-year agreement and now they are saying we should trust them on a 10-year agreement.' Those are the words of the Queensland education minister. Queensland schools stands to miss out under this government. They are claiming extra funding, but really it is now just less of a deep cut. Labor understands the importance of education and its links to the dignity of work. Labor has announced that we will restore $22 billion that the Prime Minister will cut from schools. Only a Labor government can be trusted with education funding, and only a Labor government can be trusted to properly equip the Australian people with the skills they need to meet the embrace of the economy of the future. We know that what the government is proposing is not fair. We notice that it is not sector blind and we know that it is not needs based. Just returning to Minister Jones's comments, she has pointed out that government schools across the state of Queensland will be $300 million worse off under the Gonski 2.0 changes, in contrast to the $1.43 billion surplus spruiked by the federal Minister for Education and Training, Minister Birmingham. Whilst Minister Jones has indicated that she is happy that the cuts will not be as deep as was flagged last year, the reforms will still result in a decrease in funding. This is an attempt, as Ms Jones has indicated, to trick schools and to trick parents in Queensland, so she wants to compare real dollars flowing to our schools right now to after June. A $300 million cut for Queensland public schools over the 10-year plan means that decisions get tougher. This government is no friend to Queensland schools. 15:25 Senator WILLIAMS I0V New South Wales I noticed Senator Collins mentioned the word 'fraud' in her brief presentation as the first speaker is this debate. The biggest political fraud I saw in this whole debate and issue was when, in 2013, the Labor Party—they were back to Prime Minister Kevin Rudd; yes, I think they swapped back—promised this $80 billion that the coalition has supposedly cut out of education and health funding. The $80 billion was never there. It was never budgeted for. It was a promise. It was a good political ploy to take to each election so they could say, 'Here's a promise'— Senator Jacinta Collins GB6 Neither was yours, over four years. That is what you are doing now, over 10 years. It is no different' Senator WILLIAMS I0V It was never budgeted for, and Senator Collins knows that. The money was never in the budget; it was never in the forward estimates. It was a promise, knowing full well that Labor would lose the 2012 election, which they did, of course. So now they keep saying that it is the coalition that is cutting the spending back. You cannot cut back on something that was never ever delivered. It was never funded. It was simply a political statement. I find it amazing when we see the increase in funding in education. For example, in New South Wales, this year's funding for the government schools is $2.186 billion. For the non-government schools, it is $3.306 billion. So that is about $5½ billion of funding for New South Wales government and non-government schools this year. In 2027, that $5½ billion will go to more than $9 billion—almost double. In fact, that is an 83.1 per cent increase for the government schools and a 56.6 per cent increase for the non-government schools. So here we have the funding going up. If you look across Australia, the figures I have here show that there will be $17½ billion of funding this year for government and non-government schools and $30½ billion of funding by 2027, in 10 years time. So there will be a huge increase in funding by the federal government, and it is needs based funding, I might add. It is about time the states looked at their education budgets. I know that in the last 10 years, in New South Wales, the federal government has increased spending in real terms—Senator McCarthy, that means above inflation—by 66 per cent. Many of the states have increased their funding to education by only six per cent and seven per cent, yet the liability of education falls on the state government. But we know who is doing the funding. It is the federal government doing the funding. I have more to say on that briefly, as I watch the clock and see I have only a couple of minutes to go. The government is spending $18.6 billion on schools through real, needs based funds that are fair, transparent and consistent. Labor's alternative is based on 27 special deals that treat students in one state differently from the students in another state. Why would you treat students differently because of a state border? Our plan means that every Australian child, regardless of the state in which they live, is treated consistently based on needs. That is fair, and I say: life is about fairness. The funding we are providing to schools is fully transparent—that is also fair. Funding to Catholic schools will grow by $1.2 billion over the next four years and $3.4 billion over the next 10 years. Catholic Education retains autonomy to distribute their funding however they please. In other words, a cheque is given to the Catholic Education management, and they allocate the funding where they consider it to be most important. We will continue to fund systemic schools in Catholic education and other parts of the non-government sector directly, and they will continue to have autonomy and accountability for how that funding is distributed. While we know that a strong level of funding is vital, we also know that what is more important is how that funding is used. That is why we have used David Gonski and a panel of education experts to provide advice on most effective teaching and learning strategies to improve student outcomes and school performance. This is about improving student outcomes. For years we have put billions and billions more money into education and our literacy and numeracy standards have gone down and down and down. Perhaps a little bit more discipline in the schools would be a good thing. Perhaps a little bit more respect for the teachers would be a very good thing. Perhaps, in many cases, parental involvement and parental interest would be a good thing. Those three things—discipline, respect and parental involvement: what do they cost? They cost nothing at all. I think that is where we have really fallen down in our education system over decades: it is the lack of discipline, respect and parental involvement, to some degree. There is the problem in itself. The money is there but we need to do a few other things as well. (Time expired) 15:30 Senator McCARTHY 122087 Northern Territory This government's approach to education funding is certainly yet another example of their chaotic, divided and out of touch approach. Fairness it certainly is not. This is not some political argument removed from the lives of Australians. In fact, it is about a fundamental issue: the education of our children and who gets access to a decent, fair and equitable education system. Yet again, the Turnbull government is selling Australians short. They are doing it to our kids and our young people. In the Northern Territory this attack on education, in a way, is about shattering the hopes and dreams of the education of our young people. It is actually starting to erode any thoughts of what our future will look like—in a positive way. How can Mr Turnbull's policy be needs based when the nation's most disadvantaged schools systems—our schools in the Northern Territory—get the least help. We just want a fair deal for our kids, but fairness is not what we are receiving. Instead of supporting Territory schools and students, the Prime Minister is punishing them. One of the government's own, Senator Back, said this morning that he will cross the floor and vote against these changes—$22 billion in cuts to schools across the country. These are real cuts that will impact on the standard and delivery of education in our schools and that directly affect our children. To talk about needs based funding is almost laughable—if there weren't such serious consequences. If you want to talk about need, let's continue to look at the schools in need in the Northern Territory. Every government school in the Northern Territory will lose money under the model put forward by the Turnbull government—151 government schools across the Northern Territory will lose funding. The Commonwealth's funding proposal will see federal funds cut to 20 per cent of the School Resourcing Standard. Currently, NT government schools received 23 per cent of the SRS. Under the Turnbull schools policy, all 151 government schools across the Northern Territory will lose funding, because they have been classified as over-funded The coalition must be the only people in Australia who think Northern Territory public schools, on average the nation's disadvantaged, are overfunded. I visit a lot of schools across the Northern Territory and I know of the great work of teachers, principals and students in those schools. They deserve proper funding. More than 40 per cent of students in Northern Territory schools are Indigenous. We heard here in February that the Closing the gap: Prime Minister's report 2017 shows that none of the eight literacy and numeracy targets are on track. The gap will never close without adequate schools funding. I ask again: how can this policy be needs based when the nation's most disadvantaged school systems, and particularly our schools in the Northern Territory, get the least help? Cutting the funding to the most disadvantaged schools and students with the most need is definitely not fair, not just and is certainly not reasonable. It is such a bad idea that even members of the Turnbull government are sceptical of supporting it. A senator from WA is prepared to cross the floor to vote against it. But this is not the only cut this government is inflicting on education in the Territory. Federal disability funding to public schools in the Northern Territory will be cut by $10 million next year. Commonwealth funding figures for students with disability loading by state show that the NT's take of $27 million in 2017 will be cut by more than a third, to $17 million, in 2018. The more vulnerable you are, the more education funding the Turnbull government will take away from you. That is the message being given to the people of the Northern Territory. This government is about giving tax cuts to big business while making schoolchildren pay. Investing in schools is smart. What this government is doing is totally the opposite. Question agreed to. Social Security 58 15:35 Senator SIEWERT e5z Western Australia I move: That the Senate take note of the answer given by the Special Minister of State (Senator Ryan) to a question without notice asked by Senator Siewert today relating to a proposed trial of drug testing of income support recipients. I asked about locations of the trial sites because I am getting contacted by people who are quite worried about where this drug testing is going to occur. But in his nonanswers to my questions the minister made a point of saying that the Greens 'are opposing this measure as we usually oppose income support measures'. In fact, on this side of the chamber we have been campaigning for an income support system that actually takes us into the 21st century, and drug testing certainly does not. We support evidence based policy. And if anything lacks an evidence base it is drug testing of income support recipients. The government first off could—and should—look no further than the report to government by the Australian National Council on Drugs in 2013 on drug testing. For those who have not read the report, I strongly advise you—particularly the government and the minister—to read where the report clearly says: There is no evidence that drug testing welfare beneficiaries will have any positive effects for those individuals or for society, and some evidence indicating such a practice could have high social and economic costs. In addition, there would be serious ethical and legal problems in implementing such a program in Australia.” Drug testing of welfare beneficiaries ought not be considered. Further, it says: Drug testing programs are highly expensive. For example, the cost of implementing drug testing programs in Australian schools has been estimated to be up to $355 million. —not that the government is considering that particular program— A program of drug testing welfare beneficiaries which operated for four months in Florida, USA, and discontinued benefits to those who tested positive, cost the state an estimated $118,140, and ran at a net loss of approximately $45,000. Drug testing programs are unlikely to have any economic benefits in most contexts. That is evidence that this sort of drug testing regime will not work. And if you look further to some of the results in the US, in America the results coming back positive for drugs were absolutely farcical. From 2011 to 2014, just two people out of 108,408 had tests that came back as positive in Arizona. Over in Missouri, just 0.1 per cent came back positive from 2013 to 2014. And these programs cost millions. In other cases, US states spent $1.3 million on drug tests and just 396 recipients tested positive. There were zero positive tests coming back in four states for the whole of the year. The UK rejected the concept before they even started it, when they actually had a look at it. When their Social Security Advisory Committee had a look at it, they realised that it was not going to be effective and they rejected it. That was in 2010. In 2015 they had another look at it and again rejected it. In Canada they rejected the concept and also found that it was discriminatory—a question that I asked the minister. And apparently the government still does not know if this program is going to be discriminatory—although the Australian Human Rights Commission said at estimates that, in all likelihood, it would be found discriminatory if it were taken to court, in the same way that, in the past, testing for opiates has been found to be discriminatory. We do not reject this on an ideological basis; we reject it because it is discriminatory. It is not evidence based. It is going to be expensive; the government will not tell us how much it costs. It discriminates against young people; they are obviously targeting young people. It discriminates against people with addiction. It is a flawed policy, it is recognised around the world as flawed, and it should be rejected. (Time expired) Question agreed to. NOTICES 59 NOTICES Withdrawal 59 15:41 Senator SIEWERT e5z Western Australia Pursuant to standing order 78(1), I give notice of my intention, at the giving of notices on the next day of sitting, to withdraw business of the Senate notice of motion No. 2 standing in my name for today proposing that the National Disability Insurance Scheme Specialist Disability Accommodation Rules 2016, made under the National Disability Insurance Scheme Act 2013, be disallowed. I also seek leave to table a letter pertaining to this matter which, if you read it, explains why we are withdrawing. In other words, the government has responded to our concerns. Leave granted. Presentation 59 BUSINESS 60 BUSINESS Leave of Absence 60 15:43 Senator BUSHBY HLL Tasmania by leave—I move: That Senator Abetz be granted leave of absence for the entirety of this week for personal reasons. Question agreed to. COMMITTEES 60 COMMITTEES Reporting Date 60 Joint Select Committee on oversight of the implementation of redress related recommendations of the Royal Commission into Institutional Responses to Child Sexual Abuse 61 Appointment 61 15:44 Senator HINCH 2O4 Victoria I ask that general business notice of motion number 352 standing in my name for today relating to the establishment of a joint select committee be taken as a formal motion. The DEPUTY PRESIDENT 10000 Is there any objection to this motion being taken as formal? 15:44 Senator BURSTON 207807 New South Wales Standing order 86 provides that a question shall not be proposed if it is the same in substance as any question already determined. I know it has been changed— The DEPUTY PRESIDENT 10000 Senator Burston, the question has not been proposed because there was an objection by you last time. So that rule does not apply. 15:45 Senator McGRATH 217241 Queensland I seek leave to make a short statement. The DEPUTY PRESIDENT 10000 Leave is not granted. 15:46 Senator HINCH 2O4 Victoria I move (1) That a joint select committee, to be known as the Joint Select Committee on oversight of the implementation of redress related recommendations of the Royal Commission into Institutional Responses to Child Sexual Abuse be established following the tabling of the final report of the Royal Commission to inquire into and report upon: (a) the Australian Government policy, program and legal response to the redress related recommendations of the Royal Commission, including the establishment and operation of the Commonwealth Redress Scheme and ongoing support of survivors; and (b) any matter in relation to the Royal Commission's recommendations referred to the committee by a resolution of either House of the Parliament. (2) That the committee present its final report on the final sitting day of November 2018. (3) That the committee consist of 8 members – 4 senators, and 4 members of the House of Representatives, as follows: (a) 2 members of the House of the Representatives to be nominated by the Government Whip or Whips; (b) 2 members of the House of Representatives to be nominated by the Opposition Whip or Whips; (c) 1 senator to be nominated by the Leader of the Government in the Senate; (d) 1 senator to be nominated by the Leader of the Opposition in the Senate; (e) 1 senator to be nominated by any minority party or independent senator; and (f) the Leader of Derryn Hinch's Justice Party (Senator Hinch). (4) That: (a) participating members may be appointed to the committee on the nomination of the Government Whip in the House of Representatives, the Opposition Whip in the House of Representatives, the Leader of the Government in the Senate, the Leader of the Opposition in the Senate or any minority party or independent senator or member of the House of Representatives; and (b) participating members may participate in hearings of evidence and deliberations of the committee, and have all the rights of members of the committee, but may not vote on any questions before the committee. (5) That every nomination of a member of the committee be notified in writing to the President of the Senate and the Speaker of the House of Representatives. (6) That the members of the committee hold office as a joint select committee until the House of Representatives is dissolved or expires by effluxion of time. (7) That the committee may proceed to the dispatch of business notwithstanding that all members have not been duly nominated and appointed and notwithstanding any vacancy. (8) That Senator Hinch be appointed as chair of the committee and the committee elect as deputy chair a member or senator nominated by the Opposition. (9) That the deputy chair shall act as chair of the committee at any time when the chair is not present at a meeting of the committee, and at any time when the chair and deputy chair are not present at a meeting of the committee the members present shall elect another member to act as chair at that meeting. (10) That the committee have power to send for and examine persons and documents, to move from place to place, to sit in public or in private, notwithstanding any prorogation of the Parliament and have leave to report from time to time its proceedings and the evidence taken and such interim recommendations as it may deem fit. (11) That the committee be provided with all necessary staff, facilities and resources and be empowered to appoint persons with specialist knowledge for the purposes of the committee with the approval of the President and the Speaker. (12) That the committee be empowered to print from day to day such papers and evidence as may be ordered by it, and a daily Hansard be published of such proceedings as take place in public. (13) That the committee have power to adjourn from time to time and to sit during any adjournment of the Senate and the House of Representatives. (14) That the provisions of this resolution, so far as they are inconsistent with the standing orders, have effect notwithstanding anything contained in the standing orders. (15) That a message be sent to the House of Representatives seeking its concurrence in this resolution. Question agreed to. MOTIONS 62 MOTIONS Elder Abuse 62 15:45 Senator POLLEY e5x Tasmania I move: That the Senate— (a) notes: (i) the release of the Australian Law Reform Commission Report on elder abuse which coincided with World Elder Abuse Awareness Day on 15 June 2017, (ii) that World Elder Abuse Awareness Day is a global awareness day which promotes dignity and respect for older people, and recognises the contribution older people make socially and economically, (iii) that elder abuse is a form of domestic violence and can be physical, sexual, financial, psychological, social or neglectful, and usually occurs at the hands of someone trusted, such as family or friends, and (iv) that the Law Reform Commission Report on elder abuse focusses on financial exploitation, which continues to be the most common form of abuse experienced by elderly people; (b) urges federal, state, territory and local governments to raise awareness of and take action against the mistreatment of older people in Australia; and (c) urges the Turnbull Government to respond immediately to the recommendations of the Law Reform Commission report on elder abuse. 15:46 Senator McGRATH 217241 Queensland I seek leave to make a short statement. The DEPUTY PRESIDENT 10000 Leave is granted for one minute. Senator McGRATH 217241 The government welcomes the Australian Law Reform Commission's report. This foundation report was commissioned by the Attorney-General in 2013. Later that year, the coalition became the first major party to go to an election with a specific commitment to take action against elder abuse. Elder abuse may be physical, financial, psychological, sexual or social, and it includes neglect. It often occurs in circumstances in which people are reluctant to report it. It is therefore vital to raise public awareness of elder abuse and options to respond to it. The government supports the motion and welcomes the support of the opposition. Question agreed to. COMMITTEES 62 COMMITTEES Education and Employment References Committee 62 Reference 62 15:47 Senator XENOPHON 8IV South Australia I, and also on behalf of Senator Griff as co-sponsor, move: That the following matters be referred to the Education and Employment References Committee for inquiry and report by 16 October 2017: (a) claims that many employees working for large employers receive lower penalty rates under their enterprise agreements on weekends and public holidays than those set by the relevant modern award, giving those employers a competitive advantage over smaller businesses that pay award rates; (b) the operation, application and effectiveness of the Better Off Overall Test (BOOT) for enterprise agreements made under the Fair Work Act 2009; (c) the desirability of amending the Fair Work Act 2009 to ensure that enterprise agreements do not contain terms that specify penalty rates which are lower than the respective modern award; (d) the provisions of the Fair Work (Pay Protection) Bill 2017; and (e) any other related matter related to penalty rates in the retail, hospitality and fast-food sectors. Notice of motion altered on 11 May 2017 pursuant to standing order 77. Notice given 30 March 2017 Question agreed to. MOTIONS 63 MOTIONS Mining 63 15:47 Senator WATERS 192970 Queensland I seek leave to amend general business notice of motion No. 356 standing in my name for today relating to the Adani Carmichael coalmine. Leave granted. Senator WATERS 192970 I move the motion as amended: That the Senate call on the Federal Government to: (a) Add a 'suitable person' test on Northern Australia Infrastructure Facility; (b) strengthen the environmental history test under the Environment Protection and Biodiversity Conservation Act 1999; and (c) review Adani’s approvals for the Carmichael mine under the Environment Protection and Biodiversity Conservation Act 1999. 15:48 Senator McGRATH 217241 Queensland I seek leave to make a short statement. The DEPUTY PRESIDENT 10000 Leave is granted for one minute. Senator McGRATH 217241 The northern Australia investment act 2016 and investment mandate already require reputational consideration when assessing any funding application. Australia's national environmental laws, including the Environment Protection and Biodiversity Conservation Act 1999 already represent a strong approach to environmental protection and enable the minister to have regard to the environmental history of a proponent when making decisions related to approval. Processes, including the courts, which are well used by green activists, already exist and are frequently used in our well-explored review processes. The DEPUTY PRESIDENT 10000 The question is that the motion as amended and moved by Senator Waters be agreed to.

The Senate divided. [15:53]
(The Deputy President—Senator Lines)

 12 AYES Di Natale, R Griff, S Hanson-Young, SC Kakoschke-Moore, S Ludlam, S McKim, NJ Rhiannon, L Rice, J Siewert, R (teller) Waters, LJ Whish-Wilson, PS Xenophon, N 44 NOES Back, CJ Bernardi, C Brown, CL Burston, B Bushby, DC Canavan, MJ Collins, JMA Dodson, P Duniam, J Farrell, D Fawcett, DJ Fierravanti-Wells, C Fifield, MP Gallagher, KR Georgiou, P Gichuhi, LM Hanson, P Hinch, D Hume, J Kitching, K Leyonhjelm, DE Macdonald, ID Marshall, GM McAllister, J (teller) McCarthy, M McGrath, J McKenzie, B Moore, CM O'Neill, DM O'Sullivan, B Payne, MA Polley, H Pratt, LC Reynolds, L Roberts, M Ruston, A Ryan, SM Scullion, NG Seselja, Z Sinodinos, A Smith, D Sterle, G Urquhart, AE Williams, JR 0 PAIRS

Question negatived.

 MOTIONS 64 MOTIONS Cashless Welfare Card Trial Sites 64 15:57 Senator SIEWERT e5z Western Australia I move: That the Senate— (a) notes that: (i) two extra trial sites of the cashless welfare card were funded in the 2017-18 Budget, (ii) the locations being considered to date for these additional trial sites are Port Hedland, East Pilbara, Kalgoorlie, Laverton, Leonora, Broome, Redlands, Bundaberg, Fraser Coast and somewhere in Tasmania, and (iii) the Government has claimed to be consulting with the community in these areas but has not consulted with those who will be directly affected by the card; (b) acknowledges that evaluations of the NT Intervention, including compulsory income management, show it met none of its objectives; and (c) calls on the Government to abandon the additional two trial sites and halt further expansion of the current cashless welfare card sites. 15:57 Senator GALLAGHER ING Australian Capital Territory I seek leave to make a short statement. The DEPUTY PRESIDENT 10000 Leave is granted for one minute. Senator GALLAGHER ING Labor cannot support this motion today. Federal Labor will take a community-by- community approach to further trials of the cashless debit card. We support community-driven initiatives designed to tackle alcohol abuse. Any proposal for the cashless debit card to be rolled out in a particular community must be driven and supported by that local community. Labor understands that the vast majority of social security recipients are more than capable of managing their personal finances. That is why we do not support the cashless debit card being rolled out nationwide. However, where individual communities believe that the cashless debit card can make a positive difference, we will discuss it with them. If the community does not want it, then Labor will not support the card being imposed on that community. We understand that this is a difficult and sometimes emotive issue for people. Labor did offer support for the cashless debit card trials in both Ceduna and Kununurra. We listened to the people in Ceduna and Kununurra and heard that they are desperate for action to tackle these issues in their community. Community leaders in both locations offered their support for the cashless debit card trial, so we take a realistic and pragmatic approach to this issue. The DEPUTY PRESIDENT 10000 The question is that the motion moved by Senator Siewert be agreed to.

The Senate divided. [15:59]
(The Deputy President—Senator Lines)

 9 AYES Di Natale, R Hanson-Young, SC Ludlam, S McKim, NJ Rhiannon, L Rice, J Siewert, R (teller) Waters, LJ Whish-Wilson, PS 41 NOES Back, CJ Bernardi, C Burston, B Bushby, DC Canavan, MJ Collins, JMA Duniam, J Farrell, D Fawcett, DJ Fifield, MP Gallagher, KR Georgiou, P Gichuhi, LM Griff, S Hanson, P Hinch, D Hume, J Kakoschke-Moore, S Kitching, K Leyonhjelm, DE Marshall, GM McAllister, J (teller) McGrath, J McKenzie, B Moore, CM O'Neill, DM O'Sullivan, B Payne, MA Polley, H Pratt, LC Reynolds, L Roberts, M Ruston, A Ryan, SM Scullion, NG Seselja, Z Sinodinos, A Smith, D Sterle, G Williams, JR Wong, P 0 PAIRS

Question negatived.

 BILLS 65 BILLS Vaporised Nicotine Products Bill 2017 65

Vaporised Nicotine Products Bill 2017

First Reading 65 16:03 Senator LEYONHJELM 111206 New South Wales I, and also on behalf of Senator Roberts, move: That the following bill be introduced: A Bill for an Act to make provision in relation to vaporised nicotine products and to distinguish vaping from smoking, and for related purposes. Question agreed to. Senator LEYONHJELM 111206 I present the bill and move: That this bill may proceed without formalities and be now read a first time. Question agreed to. Bill read a first time. Second Reading 65 16:04 Senator LEYONHJELM 111206 New South Wales I move: That this bill be now read a second time. I seek leave to table an explanatory memorandum relating to the bill. Leave granted. Senator LEYONHJELM 111206 I table an explanatory memorandum and seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows— The Bill represents the first step towards removing the ban on the sale of e-cigarettes. Currently the Commonwealth's Poison Standard has nicotine classified in Schedule 7, which relates to dangerous poisons. Exemptions are provided for a handful of products including products packed and prepared for smoking, such as cigarettes, and nicotine‑containing products for quitting smoking, such as gums and patches. The States and Territories rely on the Commonwealth Poison Standard when determining what can and cannot be sold. Because the Commonwealth Poison Standard provides an exemption for cigarettes but not e‑cigarettes, the States and Territories allow the sale of cigarettes, but not the sale of e‑cigarettes. This makes no sense. There is no evidence that e-cigarettes are remotely as harmful as cigarettes. A report commissioned by Public Health England concluded that e-cigarettes are in fact 95% less harmful. And there is no evidence that e-cigarettes could lead more people to take up cigarette smoking compared to the number of people who could use e-cigarettes to quit cigarette smoking. What evidence there is suggests that e‑cigarettes would reduce the overall level of cigarette smoking. Comparable countries around the world have allowed the sale of e-cigarettes. This includes the UK, EU, and the US, and soon Canada and New Zealand will be added to this list. Right now, Australians are free to purchase e‑cigarettes, as long as they import them from a business overseas. They can't buy them in Australia from an Australian business. This is reverse protectionism. It hurts Australian businesses, misses opportunities to gather tax revenue, and prevents our regulators from regulating the sale of e-cigarettes for the good of consumers. The bill would change the Commonwealth's Poison Standard so that e-cigarettes were classified in the same way as cigarettes. So whilst cigarettes remain exempted from classification as a dangerous poison in Schedule 7, e‑cigarettes would also be exempted. The bill also clarifies that smoking is distinct from vaping, so that the regulation of smoking at airports and the advertising ban on smoking do not affect vaping. The substance of the bill would not commence for twelve months, giving the Commonwealth Government an opportunity to make any regulations for e‑cigarettes within its areas of responsibility, and to start discussions with States and Territories on the treatment of e‑cigarettes in their laws. This is a modest, sensible and practical bill, and I commend it to the Senate. Senator LEYONHJELM 111206 I seek leave to continue my remarks later. Leave granted; debate adjourned. MATTERS OF PUBLIC IMPORTANCE 66 MATTERS OF PUBLIC IMPORTANCE Energy 66 16:04 The DEPUTY PRESIDENT 00AOP I inform the Senate that, at 8:30 am today, two proposals were received in accordance with standing order 75. The question of which proposal would be submitted to the Senate was determined by lot. As a result, I inform the Senate that the following letter has been received from Senator Hanson: Pursuant to standing order 75, I propose the following matter of public importance to be submitted to the Senate for discussion: The need to understand why the Japanese pay less for our gas than we do. Is the proposal supported? More than the number of senators required by the standing orders having risen in their places— The DEPUTY PRESIDENT 00AOP I understand that informal arrangements have been made to allocate specific times for each of the speakers in today's debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly. 16:05 Senator HANSON BK6 Queensland We need to understand why the Japanese pay less for our gas than we do. The Japanese consumer pays less for our gas than the Australian consumer. We need to understand why if we are to do something about it. In May 2017 the price for gas per unit was, in Tokyo, $7:11; in Sydney, $10.05; in Adelaide; $9.34; in Brisbane, $9.82; and, in Melbourne, $9.50. The fact that the Japanese consumer pays less for our gas than we do is even more shocking when you consider their price of $7.11 also includes things we do not pay for like turning the gas into a liquid so it can be shipped, the shipping cost and, finally, the payment of an import duty to the Japanese government. Another shocking fact is that the Japanese government estimates it will over the next four years make $2.9 billion from the import duty on Australian gas while we make nothing with the exception of a royalty on the North West Shelf Project. Not only does the Japanese consumer pay less than we do for gas; but their government makes more than our government does on Australian gas. What has gone wrong? Can we do anything about it? I asked myself how it is possible that Australia, as one of the largest exporters of gas in the world, has a gas shortage and the world's highest gas prices. The answer is simple. Firstly, we lack a disclosure regime which would require companies to provide information on average production costs, average sales costs and reserves based on a standard oil price. This means petroleum companies have all the information and the government has only part of the story, making it impossible to develop sound policies. The government and Treasury are overly reliant on what business tells them. Secondly, we have given away our natural gas resources for peppercorns, with the results that the owners of our gas are foreign-owned multinationals and some Australian companies keep the domestic market just short enough of gas to maximise prices. Thirdly, we accept a situation where foreign-owned petroleum multinationals pay more in political donations to the major parties than they pay in corporate income tax. In 2015-16 Chevron paid no corporate income tax, but they did manage to pay $53,365 to the Liberal Party and $44,950 to the Labor Party. Finally, the government is reluctant to address failed policies of the past, because of worries Australia's reputation will be damaged by changing the rules after investment decisions have been made, even though foreign-owned multinationals have breached their social contract with Australia through decades of non-payment of corporate income tax. The problem is we already have a sovereign risk because our gas and electricity prices are the highest in the developed world, causing loss of competitiveness and jobs. Once we lose manufacturing jobs, we will not get them back. The government needs to decide whether it will choose Australians over foreign-owned multinationals. We are at a tipping point where high gas prices and uncertainty about gas supply are causing Australian manufacturers like brickworks to import bricks, and they are evaluating whether to move our production offshore—possibly to Malaysia. The tragedy of high gas prices and shortages is that they could have been prevented. All we needed was good government policy, and I am here to say that it may not be too late, although we will never really see low gas prices again. I want to see a 10 per cent royalty regime put in place on all gas projects where none now exists. In this way, we will see some payment for our gas. I want to see an Australian domestic gas reservation policy introduced, which will mean that 15 per cent of all gas in Commonwealth waters that is not already covered by the Western Australian domestic gas reservation policy be provided to the government at cost price. This will increase the supply of gas in the long term and will lower prices. We need to build import gas terminals so that we can bring cheap gas from areas of Western Australia to the east coast. I commend the AGL energy company for their feasibility study, which will see the first gas import terminal in Australia. Unfortunately, the gas they plan to import from other countries is cheaper than ours and will not be available until 2021. I ask the government to abandon plans to spend $60 million on unconventional and costly gas in the eastern states and to divert that money to encourage the building of another gas import terminal. In September 2016 the largest floating liquid gas plant and storage facility, Prelude FLNG, moored in Commonwealth waters. It is not too late to require this project to be subject to a domestic gas reserve policy, because they need government approval to anchor in Commonwealth waters. The policy of not ring-fencing Petroleum Resource Rent Tax, PRRT, credits to the exploration project where the expenses were incurred is costing us billions of dollars in revenue. Let's be clear that the mountain of PRRT credits owned by multinationals will mean that no corporate income tax will ever be paid for our offshore gas projects. It is common knowledge that electricity and gas prices are increasing at a rate beyond the capacity of individuals and businesses to pay. If the government does not intervene in a meaningful way in the next few weeks then the Turnbull government will allow Australia to sleepwalk into recession. Pensioners cannot continue to pay 11 per cent of their non-discretionary income on gas and electricity. Australians in work cannot manage electricity and gas bills that double from one quarter to the next. I am not interested in clean energy targets. I want gas and electricity prices brought down right now so that Australian businesses can stay in business and so that Australians will have jobs. Small businesses like a fish and chip shop cannot pay $7,000 a quarter for electricity and survive. Small hotels in rural towns cannot pay $17,500-plus a quarter for electricity and keep the doors open. We have a national emergency and drastic measures are required. Nothing is working, including the partnership between industry and government known as AEMO, the Australian Energy Market Operator. It is 60 per cent owned by government and 40 per cent by industry. AEMO has failed Australians and the government stands by and lets it continue. AEMO failed to change the electricity rule when China Light and Power, which owns 30 per cent of Australia's electricity generation, blocked the change from 30 minutes to 5 minutes, which means that Australians pay too much electricity. Once again, the sale of our precious assets to foreigners is costing us dearly. These critical assets should never have been sold and we must stop any future sales. We face a national emergency. Will the government wait for an energy-policy-induced recession to occur in Australia or will it back now? I will be seeking the support of like-minded crossbench senators to take the necessary action to pull back from disaster. I will be discussing with them a jointly sponsored private senator's bill to enact a domestic gas reserve policy. We hear it daily from people talking on our radios, people across the country, and just from talking to people in general on the streets: they cannot continue the way they are going. Businesses are shutting. The rising costs of electricity and gas are devastating to a lot of families, pensioners—everyone right across our country. I have sat down with and spoken to Minister Canavan with regard to this. He was enlightened on quite a few issues, because he knew nothing about them. I think it is important, if we are going to be able to provide gas for all Australians and for industries and manufacturing—because manufacturing consumes about 30 per cent of all gas—that we provide it at a cheap, reliable, affordable price. We need to build more terminals and we need to be able to say, 'You want our gas from WA? You have to give us at least 15 per cent before you can actually ship it out of this country and make more out of it from other countries.' 16:15 Senator McALLISTER 121628 New South Wales There is a great quote from American newspaperman HL Mencken: 'For every complex problem, there is an answer that is clear, simple and wrong.' And so it has been too often in this chamber in the debate about our energy crisis—because we are facing an energy crisis and we are facing a gas crisis. But, day after day, I have seen senators come into this chamber and point the finger at just one element of the problem. The truth is that the energy crisis will not be simple to solve, and the gas crisis will not be simple to solve either. The gas crisis has arisen as a result of complex causes over a number of years. What is needed is strong national leadership to respond to it. Unfortunately, with this challenge, as with so many policy debates, I have very little confidence that this government is going to be able to provide national leadership of that kind, because on energy, more than any other problem, this government seems unable to move beyond shallow, populist bickering towards a serious examination of the genuine policy challenges that face the nation. On energy, more than any other policy question, this government is drawn time and time again to debates and arguments which seek to prosecute a culture war rather than a policy solution. Unfortunately, in the last 12 months in particular, we have seen Mr Turnbull, who once styled himself as a rational person, a sensible contributor to the energy debate, leap back to this old and familiar mode of debate from the coalition when it comes to energy. Mr Turnbull's intervention in the energy crisis after the storms which hit South Australia was embarrassing—absolutely embarrassing. For a man who once prided himself on being a sensible contributor to Australia's energy debate to argue, as he was willing to do, that the worst storm ever recorded in South Australia had no role in the blackouts which faced that state but, instead, that those blackouts were a result of state government policy was a shameful and embarrassing contribution to the debate. But it is a contribution that has characterised the approach taken by the coalition at every point, at every opportunity, since. Australia's gas market is in crisis. Our industry is paying far more than international prices for new gas—upwards of $20 per gigajoule, whereas it is just $8 per gigajoule internationally. It is not just a question of the cost of supply; there are some industrial consumers reporting they are unable to access gas at all, and this will have real consequences for Australian industry and consumers. It has impacts on the retail energy market. It is impacting not only energy prices and security today but also the viability of new gas-fired power stations. If someone were seeking to develop a new gas-fired power station today, they would have real doubts about their ability to secure long-term supplies at a reasonable price. There are many incentives, as Dr Finkel has documented, for gas plants to run on a peaking basis only, and that is impacting on the average price of electricity in the NEM. There are manufacturing processes which can only take place if gas is available as a feedstock. There is no substitute; unlike the NEM, there are no alternatives. We have been hearing cases of even large manufacturing companies being unable to get the supplies that they need. The chair of our competition watchdog, Mr Rod Sims, has said that this is now a worst-case scenario. He said: I do think companies will go out of business because of this and I think that will be a crying shame. There have been simplistic suggestions that the root cause of all of this has been some of the restrictions that have been placed on gas exploration at a state government level. As I have indicated, I think this is overly simplistic, but it is difficult to talk about gas without talking about the conflicts that have arisen in the past decade between landholders and resource developers. It is probably fair to say that many stakeholders who were seeking to develop their gas resources would have handled things very differently if they could have their time again. Ventures that are wishing to develop these resources need to engage seriously with both landholders and local communities. There needs to be a serious conversation about a fair return in exchange for access and there needs to be a serious conversation grounded in data about the risks that are presented to their assets and the impacts that developments may have. There needs to be a satisfactory resolution of the conflicts that have arisen between landholders and resource developers. But, in any case, allowing wholesale development of fracking would not solve this problem. We would not be able to get the resources on line in time and, in any case, this is not a simple supply problem. We are producing a lot of gas. Australia is presently the world's second-largest LNG exporter, and it is expected to become the largest exporter by 2020. This has come about because our suppliers are overextended. They are diverting gas from domestic markets in order to fulfil overseas contracts. In the eastern markets, we have gone from using approximately 700 petajoules a year to needing about 2,200 petajoules a year, and this is largely because of the huge export operations that are running out of Queensland. These operations entered into long-term overseas contracts as part of building a bankable case for the export facilities, but new ventures have not been able to produce sufficient gas to fulfil these obligations. They are buying gas that would otherwise have been used to supply the domestic market. This was not what was anticipated when these projects were first put forward. The environmental impact statement, for example, for the Santos project says: The project ... is not diverting gas from local markets to export markets ... the project has no direct implications for domestic prices. That same venture now relies on third party gas from the domestic gas market for 60 per cent of its exports. The situation has been worsened by the uncompetitive arrangements in some parts of the eastern gas market. The ACCC conducted its review into the east coast gas market and released its report early last year, and the problems it identified are still in place. Transparent contracts remain the exception, not the rule. The Finkel review observed that no-one can really say what the current market price is, because there is no visibility on the contracting arrangements. There are issues with pipelines and networks. The ACCC said: Pipeline pricing exacerbates the effect of supply tightness on wholesale gas prices. There are currently very few constraints on monopoly pricing by pipeline operators. These are serious structural problems in the market and none of these factors is particularly new. This crisis should not have taken government by surprise, yet, as with so many things in the energy sector, they seem to have been taken by surprise—caught on the hop. The ACCC reported last year. Labor has been calling for action for years. At our last national conference back in 2015, we adopted a gas export national interest test. That test would commit a future Labor government to ensure that Australian suppliers would not be hurt by the LNG export industry. So this has all been on the table. It has all been known. These problems have been understood for some time, and yet we have from this government almost no response. We have the complete pretence that, through a casual conversation between the Prime Minister and some of the market participants, it would be able to resolve this. Well, nothing came of that—nothing at all. We now find ourselves with a domestic gas security mechanism proposed by the government that will be delayed in its implementation and that seems to have many features that suggest it will be fairly ineffective in responding to the problems that confront us now. My great concern is that the division within the government on this and the broader energy market will make it unable to respond to the crisis. 16:25 Senator WILLIAMS I0V New South Wales Following on from Senator McAllister and her comment about, 'Labor saw this in 2015 and we are going to do this and we are going to do that': I wonder if Senator McAllister has spoken to the Victorian Premier, Mr Andrews, who has put a total ban on all sorts of conventional and more modern ways of gas extraction? Senator McAllister interjecting— Senator WILLIAMS I0V They have. They have put a total ban on it. That is a fact. That is the way Victoria is treated under a Labor government: cut off the tap, cut off the exploration, do not do anything and all will be right, mate. Well, no, it will not, Mr Andrews—no, it will not. Why is Japan buying gas cheaper than Australia? That is a very good question. It all comes down to two things: demand and supply. In 2009 the then Labor government approved the construction of three LNG gas plants in Gladstone for export. I repeat: for export. Australia is now the world's second largest exporter of LNG behind Qatar, providing approximately 12 per cent of the world's gas. It is expected to become the world's largest exporter by 2020. The development of the gas export market has meant Australian producers have had to compete with overseas buyers. Australian gas prices have also risen because gas production is becoming more expensive and because of the reduction in supply due to moratoriums—by, as I said, Victoria, the we-will-not-produce-gas state. You would think at this time of the year you would want a bit of heating and cooking gas down there! Respected independent industry expert EnergyQuest continues to report: While the gas contract prices paid by most east coast gas buyers continue to be well below LNG prices, short-term gas prices have increased significantly. … International comparisons are not simple. Much of the public commentary about local and international gas prices does not provide an apples-for-apples comparison. Misleading commentary has been happening for a long time and is usually produced by anti-fossil fuel activists or parts of the manufacturing lobby. Critics usually compare landed spot LNG prices with Japan with delivered contract gas prices in eastern Australia. I will repeat that: critics usually compare landed spot LNG prices in Japan with delivered contract gas prices in eastern Australia. However, there is really no comparison between the short-term spot price of an LNG cargo and a long-term contract with guaranteed supply and prices. The LNG spot market in Japan is a global market with possible supply from up to 18 LNG exporting countries. In other words, when Japan sets its gas price, they have up to 18 countries exporting gas to Japan. Unlike eastern Australia, the global LNG market was oversupplied, so prices have been depressed—although they are now rising again. By comparison, the east coast spot market is a purely local market that lacks the liquidity and scale of Japan. It is essentially a day-to-day balancing market. Its prices reflect whatever relatively small quantities of gas are available on a given day. That is important. As such the spot price is not a good guide for long-term contract prices. Commercial and industrial users do not rely on the spot market to meet their ongoing gas requirements. The average price of landed—not delivered—spot LNG imported into Japan, contracted in May 2017, is AU$7.50 per gigajoule. Looking at the east coast spot price for gas delivered to the relevant capital city today, the prices are: $9.33 per gigajoule in Sydney, $8.69 per gigajoule in Adelaide, $7.24 per gigajoule in Brisbane and $10 per gigajoule in Victoria—the declared market. These prices include pipeline transportation costs, which are a focus of the Commonwealth led reform to lower pipeline costs. That is very important. To get the gas to the consumer, we need efficient pipelines and a reduction in costs there. The best way to ensure affordable and reliable gas for the domestic market is to increase gas supply, including from unconventional gas sources and improved gas market competition, transparency and operation. I want to focus on the unconventional gas sources—that is fine, but make sure we look after the environment. We have had a big argument in many regional areas of New South Wales and Queensland about coal seam gas. We in the National Party, along with our Liberal colleagues, have said, 'Make sure there is no interference with underground water, look after the environment and abide by the science and the EPAs of each state to see that it is all done correctly.' In March 2017 the Australian Energy Market Operator released its 2017 Gas Statement of Opportunities, which drew attention to the domestic gas market's tightness and forecast shortfalls of between 10 petajoules per annum and 54 petajoules per annum in the residential, commercial and/or industrial sectors from 2019 to 2020 for New South Wales, Victoria and South Australia. In response to potential shortfalls of domestic gas supplies, Prime Minister Turnbull held urgent meetings with gas producers. Following these meetings the Prime Minister acted decisively and, on 27 April, announced the introduction of the Australian Domestic Gas Security Mechanism, the ADGSM. Given the abundance of gas resources, Australians expect to have their gas needs met. It is unacceptable for Australia to become the world's largest exporter of LNG but not have enough to meet the gas needs of Australian households and business. The ADGSM takes effect from 1 July. I commend the Prime Minister for saying simply this: we are a huge producer of gas, but why export it all and leave a shortfall here for our domestic consumption? That is crazy. The ADGSM takes effect on 1 July. It will apply across all LNG producers and operates alongside other key gas market reforms underway, including the Australian Competition and Consumer Commission's gas market transparency work and the peak supply guarantee given by gas producers. The ADGSM is a targeted and temporary measure of last resort designed to restrict LNG exports in the event that supplies are unable to satisfy domestic market needs here. In other words, this is a government intervention saying that if the market is failing here because of multiple reasons, such as the Labor government in Victoria, then it is time for the government to intervene. Any restrictions or offset requirements would only be placed on export operations that are, in effect, drawing down supply in net terms from the domestic gas market. LNG companies required to operate under restrictions will have flexibility to find commercial solutions that meet their domestic market responsibilities, such as swapping cargoes out of portfolios or on the spot market. All LNG companies will be treated the same. The exposure draft of the mechanism was released on 5 June 2017. The government is in the process of considering feedback from states and territories, gas producers, exporters and consumers, including large industrial gas users, before finalising regulations and guidelines. The government continues to strongly support the ongoing operation of Australia's world-class LNG industry and acknowledges the industry's commitment to work collaboratively on this issue of national significance. As I said, it is about supply and demand. The MPI under discussion refers to Japan. There are some 18 countries competing for the market in Japan—lots of competition—hence their price is cheaper than ours. Several years ago I went to Narrabri to inspect the Santos project. They were under exploration. They had the gas coming out of the ground. It was flared out of a pipe. It was just being burnt into the air 24 hours a day, seven days a week, 365 days a year, because under state law they cannot flick a switch, turn on the gas-fired generator in Narrabri and power 300 houses. Instead, the gas is just flared out of the pipe and burns into the atmosphere and is wasted. That to me is a terrible waste, and that needs to change. Here we are, swimming in gas in Australia—we have heaps of resources. Down the east coast we have enough gas resources to power a city with a population of a million people for over 5,000 years. So, no matter what type of gas extraction we use, we need to do it properly, look after the environment and see to Australia's needs—because this gas actually belongs to the people. Under the state collection royalties, it is owned by the Crown. The people own the gas. To see a shortfall here in Australia is crazy. I commend Mr Turnbull and his leadership for intervening in the market and saying: 'We're not just going to export it all overseas and leave a shortfall here. We need to take action to see that we have a big enough supply here so that all Australians have ample gas to get us through our wintertime, for cooking, for our motor vehicle needs or whatever.' I think it is a case of good government that we have intervened to ensure that we keep enough gas supply here until more supply is brought on the market here. It will no doubt reduce the price as well. 16:35 Senator WHISH-WILSON 195565 Tasmania Thank you, Acting Deputy President Reynolds. I happened to be over in your home state of Western Australia only a few weeks ago for a very important Senate inquiry which I initiated into the petroleum resource rent tax. That particular day—Senator Smith put in an appearance, if I remember rightly—we had some of the CEOs of the biggest oil companies in the world, operating out of Australia, come and give evidence on why they do not want the petroleum resource rent tax changed. You were also there, Senator Reynolds, I understand. What was interesting about that day was two other things that happened that morning. The first thing that happened was the government released its own internal review into the petroleum resource rent tax at the exact time—9 am—that the Senate inquiry began. So none of us had time to read the government's review. Nevertheless, we had good evidence from companies. The second thing that happened was that the Prime Minister, Mr Malcolm Turnbull, released the concept that he may some kind of gas reserve or gas price here. What did the big petroleum companies do, both in the media and at the inquiry? They screamed blue murder. Why? It is simple: they do not like being told by the government what they should and should not do. They have not had a government interfering in their business in this country for many decades now. Let me give you a good example. The petroleum resource rent tax came in in the 1980s. It was a tax designed essentially for petroleum products. Pretty much the only people that pay it in this country now are BHP and the international subsidiaries of multinationals that operate in Bass Strait. Although it was designed for petroleum products, it is mostly applied now to big LNG projects, the massive projects off the North West Shelf in Western Australia. Because it is so incredibly generous in the concessions that it gives these big companies, each year they get to compound all their exploration expenditure at 15 per cent plus the bond rate and every dollar of their operations expenditure at five per cent plus the bond rate. The situation we have in this country now is that $238 billion of tax credits are sitting amongst the big petroleum companies, so they do not want to change the petroleum resource rent tax. Why is the government not stepping in and saying: 'That is a massive source of revenue. All we need to do is tweak those uplift rates and we'll bring in tens of billions of dollars'? This is the punchline: the government—and it is not just yours, Acting Deputy President; it is previous governments as well—are only interested in two things, and this applies directly to the gas policy here in this country. The first thing they are interested in is investment and the raw dollars they are bringing in investment into this country because it helps to balance the payments and the current account figures. Of course, that contributes to GDP growth, so those big numbers are important. Secondly, they are interested in jobs. They are interested in jobs that are attached to these investments. Are they interested in getting the taxpayer of Australia a good return on the resources that we essentially give to these companies? No, they are not. So I ask the question: why are not we getting a bang for our buck? We are selling the gas, the oil, the condensate and the other products to these big multinational companies, right? That is what a royalty is. Incorrect. Under the PRRT, they have now clocked up $238 billion of tax credits. That means that the $238 billion of revenue that they may earn in the future they will not have to pay tax on because of these extremely generous concessions that have been in place now for decades. But no-one wants to change them, because governments are interested in only two things: investment numbers in the current account and jobs. Well, if we actually took a far-sighted view or policy prescription we would say, 'No, we need a fair return as well on the resources that are owned by Australian people, and we need a fair policy for our domestic gas markets.' But that would require courage from the government to actually take these people on, and that is not something I have seen from the big parties since I have been in politics. On top of that, we have these layers of trade deals that make it extremely difficult for government to be discriminatory at all against foreign producers. In fact, it attracts state-to-state dispute settlements as well as investor-state dispute settlements. Even in my home state of Tasmania, there was a furore when the price of rock lobsters went to over $100 a kilo because they were all being exported. Suddenly all the local restaurants and local punters had to pay that kind of money for their own rock lobsters. So, it is not just gas. This is the global world that we live in, and if the free market is our religion and our ideology then we are never going to change any of this. So, I think the government needs to be pushed and actually look at this, much more importantly, from a long-term perspective— (Time expired) 16:40 Senator CHISHOLM 39801 Queensland The export gas industry in Queensland has really driven economic growth over the past decade. We have seen particularly in Gladstone the development of export facilities by a number of companies that have created thousands of jobs in that area and economic opportunity for the region. Since those facilities came into operation they have employed substantially fewer people than they did during the construction phase. That has also been the case in the downstream operations, largely in western Queensland, where they benefited from some booming economic activity during the construction phase. It concerns me, having spent time in Gladstone and having seen what it was like while these facilities were booming, that some of these facilities have gone from employing a couple of thousand people to now fewer than 200. You get a sense of the economic downturn that has occurred as a result of these production facilities moving into operation. But we also are seeing a flow-on effect from these export contracts that have been signed to justify the development of these facilities. We are seeing a domestic shortage that is impacting on industry and affecting jobs. That is of significant concern to me. I would like to acknowledge the contribution of Senator McAllister, who gave a very thoughtful analysis of the situation and also provided some solutions to the challenge we face. For me this debate highlights a couple of issues. One is the hypocrisy of Senator Hanson on this issue. I will deal with that in a bit more detail later, but I will just say that Senator Hanson is happy to say one thing in this chamber but another thing when she is in western Queensland and in communities that are being impacted by coal seam gas exploration. This debate also highlights the emerging energy crisis we are seeing from the Turnbull government. They have no idea how to address it. We have seen no substantial response from this government to the Finkel review, which was delivered more than a week ago now, other than continued discussion and debate, which they are actually trying to pass off as business-like. Well, that is a different business meeting than any that I have ever been involved with, with the screaming match that has been reported in relation to former Prime Minister Abbott and one of his opponents. But we have also seen inconsistency from them over a number of months when it comes to the domestic gas issue. As recently as 6 March this year Senator Canavan was arguing against a gas reservation policy to alleviate the cost pressures in the domestic gas market. He was quoted as saying, about gas reservation: I think they'd be a band aid solution which would be unlikely to be effective in the short term, and would be quite damaging in the long term. Let's hope we don't get there. But less than two months later, on 27 April, we saw Prime Minister Turnbull announcing an Australian domestic gas security mechanism. To quote from his media release: The Turnbull Government will secure domestic gas supply with the introduction of export restrictions to ensure the Australian market has adequate supplies before exports are permitted. In their words, this government is applying bandaid solutions which they say can actually be quite damaging in the long term. Industry needs certainty and not knee-jerk crisis summits and constantly changing policy from those opposite. Again, as we have seen over the last two weeks in the response to the Finkel review that was handed down, the Abbott-Turnbull 'war', that is at the heart of this government, has led to policy paralysis on energy issues and also on gas. The government is responsible for the parlous state of the electricity sector and emissions policy in this country. Wholesale power prices have doubled under the Turnbull government and retail prices are shooting up due to investment uncertainty being fuelled by this government. What we have seen is the triple whammy under this government: power prices are up, pollution is up and jobs are down. That will be the lasting legacy of this government. It is more interested in internal party politics than governing and creating solutions to this issue which will affect jobs across Australia. It is important to reiterate the Labor policy on gas. Labor have been warning about the problems in the gas market for many years. Since 2015, we have advocated a gas export national interest test, and through 2017 we have been warning that more drastic measures were needed to address the short-term crisis that the Turnbull government has let develop under its watch. The government's policies on gas are not enough to secure supply certainty, reduce power prices and protect jobs for the long term. I believe that the gas shortage is going to get worse before it gets better. Labor has been urging the government to copy our policies and to adopt them, which are: a permanent national interest test for the gas market so that Australian businesses and households are at the front of the queue; establishment of a domestic gas review board to consider whether any new gas export facility or proposal to expand an existing one would meet Australia's national interest; and requiring foreign companies to say how much gas they plan to make available for local manufacturers and households. Indeed, my own union, the Australian Workers' Union, have been advocates for a domestic reservation policy for a number of years. I think their stance on this has been vindicated, unfortunately, by what we have seen over the last couple of months. What this motion also highlights, and what Senator Hanson's speech highlighted, is that One Nation will continue to sit on both sides of the fence when it comes to energy and coal seam gas. They hypocritically call for cheaper energy, yet also oppose coal seam gas exploration at the same time—they clearly want to have their cake and eat it too. One Nation's policy states—and this is directly from their website: One Nation opposes CSG Mining until there is substantial evidence that it does not affect people's health, the environment, our farming and water. Yet, here today, they are complaining about the price of gas that CSG mining creates. You would have to ask: where do they think the gas comes from? We also know of a topic that has substantial evidence that it does 'affect people's health, the environment, our farming community and water'. It is, of course, climate change. But One Nation do not care about that. It is CSG that they have focused on. Senator Hanson has had many different views on coal seam gas, even just in the last three years. It really depends on which parliament she is running for. In an article titled 'Hanson to lead One Nation against Lockyer CSG', on 16 December 2014, then candidate for the state seat of Lockyer Pauline Hanson argued against coal seam gas mining. The article says: Pauline Hanson has declared for the seat of Lockyer in the 2015 Queensland election saying she would fight for the farmers and against coal seam gas. Ms Hanson, who returned recently to lead the One Nation party, made the announcement at a Crowley Vale farm in the electorate saying she was prepared to "go in all guns blazing." This is the hypocrisy that we see from Senator Hanson on this issue: three years ago campaigning against this, ramping up community concerns about exploration, and now coming in here and bemoaning that it is being sold too cheaply overseas. While you cannot ignore the need for more exploration—sure it is not the most important issue in this debate—increasing gas exploration is one that is important if we are to see more supply to the domestic market. Then we have to look at Senator Roberts. I daresay a conversation between Senator Roberts and Senator Hanson on this issue would be quite an exciting one. Senator Roberts has said that when it comes to the Finkel review 'the only priority should be making energy as cheap and reliable as possible'. Then we see Senator Roberts responding to Josh Frydenberg on energy prices: Josh, the cause of power prices soaring is government intervention. The solution is not more government intervention. You cannot get a consistent line from One Nation on this important issue. A tweet from Senator Roberts on 8 February this year condemns the 'gutless Victorian Liberals' who 'want to ban gas drilling'. He is happy to target the Victorian Liberals on this issue but ignores the concerns that Senator Hanson has expressed. I think it should make for an interesting party room discussion between Senator Hanson and Senator Roberts. One Nation needs to get some consistency on this important issue. But once again it just shows how out of touch One Nation are. This is an important issue to Queenslanders and Australians. Jobs are at stake. They need a consistent line on it. Senator IAN MACDONALD YW4 It is always interesting to hear what the Labor Party might and do what they might talk about. We have heard what the Labor Party's policy was in 2015 and 2017. In both years they were in opposition and they could not do anything. But what the previous speaker forgot to mention was the Labor Party policy in 2009. That was the time when the Labor government approved the construction of three LNG plants in Gladstone for export. In 2015, and now in 2017, they talk from opposition—when they do not have to do anything—about other policies. But if you go back to when they were in government and could do something about it, were they doing what the Labor Party is now talking about? No. They were issuing licenses for LNG plants for export only. The problems that the previous speaker and other Labor speakers have identified is really one of the Labor Party's own making. It is so typical of the ALP. They have all these wonderful suggestions and great policy ideas now that they are in opposition and do not have to deliver. But, when they had the ability to do it, what did they do? They issued licenses for export only. Perhaps, if there are other speakers in this debate, they might address this. The potential shortfalls of domestic gas have been addressed by the Prime Minister. As most senators know, the Prime Minister held urgent meetings with the gas producers to try and resolve the issue without the government intervening. The Prime Minister then acted very decisively on 27 April and announced the introduction of Australian Domestic Gas Security Mechanism. Given the abundance of gas resources in Australia, Australians do expect to have their gas needs met; notwithstanding that the Labor government had licensed these gas producers for export only. It is unacceptable for Australia to become the world's largest exporter of LNG but not have enough gas to meet Australian households and businesses. The mechanism takes effect from 1 July. It will apply across all LNG producers and will operate alongside other key gas market reforms currently underway, including the Australian Competition and Consumer Commission gas market transparency work and the peak supply guarantee given by gas producers. It is a targeted and temporary measure of last resort and is designed to restrict LNG exports in the event that supply is unable to meet domestic market need. Any restriction or offset requirements would only be placed on export operations that are in effect drawing down supply in net terms from the domestic gas market. LNG companies required to operate under restrictions will have flexibility to find commercial solutions that meet their domestic market responsibilities, such as swapping cargoes out of portfolios or on the spot market. All LNG companies will be treated the same. As senators know, the exposure draft of the mechanism was released on 5 June, and the government is currently in the process of considering feedback from states, territories, gas producers, exporters and consumers, including the large industrial gas users, before finalising the regulations and guidelines. Hopefully, that will address the subject of this debate on why gas is more expensive in Australia than it is in Japan. Of course, it is a bit simplistic to compare one with the other. As Senator Williams pointed out, you must compare apples with apples in this debate, and I am not sure the debate as proposed does that. I was interested in the previous speaker's comments about the union that supports the gas workers—the AWU, I thought he said. They have been in favour of some domestic gas regulation for some time. I wonder why the AWU did not make that a condition of the money—the huge donation—they gave to Mr Bill Shorten when they got the money from the industry super funds. Remember the $53 million they got from the Australian super funds? That was the retirement nest-eggs of mums and dads and these super funds gave it to the AWU, which in turn passed it on to the Labor Party in a much publicised event in which the AWU gave that money to Mr Bill Shorten. If the AWU were worried about domestic gas reliability, perhaps when they initially gave the large sums of money to Mr Shorten for his election campaign they should have made it a condition that the Labor Party would do something about the gas market when they were in government. It is okay to say anything when you are in opposition, but take a look at what they did when in government. This whole debate, of course, is about cheaper electricity—cheap power. Australians simply cannot afford the sort of luxury that you see in Victoria, where the Victorian government—the Labor government there—with oodles of gas sitting under the ground has banned even exploring for gas. That sort of thing does push up the prices. As Senator Williams said before me in this debate, it is a matter of supply and demand. If you cut off the supply, obviously the prices go up, and Labor governments in Victoria are cutting off the supply by stopping even exploration for gas. In Australia we used to be so lucky, because, of all of the nations in the world, we had the best reserves of high-quality coal, and we used to use them during the forties, fifties and sixties to produce cheap power, which I know for certain brought one Korean zinc company to Australia to manufacture their zinc here. Why? Because we had the cheapest form of power. It was reliable. It was always there. It was good quality coal. We were fortunate as a nation to have that high-quality coal. But we have the Labor Party running around with their mates in the Greens saying that 'coal' is a dirty word—that we cannot have it. I am delighted that, first of all, we have an unexpected ally in Dr Bob Brown, the former leader of the Greens political party, who said that the coal-fired thermal power was the best centralised option we have. I do not often agree with Dr Bob Brown, but I certainly think he was on the mark when he made that very forthright and forward-thinking comment. I come from a part of Queensland where there are unlimited quantities of high-quality black coal. What needs to happen for Australia—for all those people who cannot afford electricity at the rate we are going in Australia because of Labor-Greens policies over the years—is that we need to get that coal out of the ground and use it to create cheap power for Australians. We are exporting it to other countries, including Japan. That might answer the question of why Japan has cheaper electricity prices than Australia—because they are using Australian black coal to create power that is very inexpensive, comparatively. What we need to do is start using that coal resource we have. Think of the jobs it would create for the miners. I can never understand why the CFMEU is so opposed to it. They have clearly become ideological, rather than being about looking after the jobs of their workers. I am delighted to see that Mr Tim Nicholls, the leader of the Liberal National Party in the Queensland parliament, made a firm commitment just last week to have, within 100 days of his election as Premier, a coal-fired power station, finally, with all of its approvals and hopefully based somewhere in the north of Queensland. I look forward to that. I know the Labor mayor of Townsville, Councillor Jenny Hill, joins me in welcoming that initiative. It will be great for the north, it will be great for Australia, and the sooner it happens the better. I wish the LNP leader in Queensland, Tim Nicholls, all the very best in his campaign and urge him to bring cheap electricity to my constituents in the state of Queensland. 17:01 Senator XENOPHON 8IV South Australia We are in the middle of an energy price crisis. If high gas prices are not addressed immediately, we will see a tsunami of job losses not just in my home state but across the nation. That is why, during the March negotiations for the enterprise tax plan bill, I negotiated a number of gas measures aimed at reducing prices. I want to talk about one of these measures, the restriction of gas exports. As mentioned by Senator Williams, the government is in the final stages of introducing an Australian domestic gas security mechanism, which empowers the minister for resources to restrict exports to ensure that there is a sufficient supply of natural gas for the Australian domestic market. A 2016 ACCC inquiry into the east coast gas market found that we have a distorted gas supply market and 'evidence of monopoly pricing' in gas transport. In that environment, we will not achieve reasonable prices by simply ensuring there is sufficient supply. In these circumstances, we need to ensure that there is an oversupply to counter the monopoly factors at play. The draft regulations do not go far enough to ensure that we can achieve a domestic price which is comparable to or better than the Japanese long-term contract rate. The regulations must be amended to ensure that affordability, not just supply security, is a formal consideration. We cannot afford to tread softly. That time has well and truly passed, and on any test—a pub test, a national interest test, an economic benefit test—it is simply wrong and unsustainable that the price of Australian gas in Japan is actually half the price of Australian gas being sold here in Australia. We must address this as a matter of the utmost urgency. 17:03 Senator ROBERTS 266524 Queensland As a servant to the people of Queensland and Australia I rise to speak to the matter of public importance proposed by Senator Hanson. Look at the crocodile tears flowing in this chamber! There is only one party that is the party of cheap energy, and that is Pauline Hanson's One Nation. Currently, Australian consumers actually pay around 60 per cent more for our own gas than Japanese customers do in Japan. This is doubly difficult to understand, as, in order to be exported, Australian gas first has to be liquefied; that should increase the price by around 25 per cent. It is fine to hear Senator Xenophon, the Liberal Party and the Labor Party, and the Greens especially, talking about energy prices, but they caused this. Coming back to gas, just like runaway power costs, Australian working families are being ripped off with sky-high gas prices, due to overregulation forcing a decrease in supply and an increase in prices. Regulation also decreases competition, which leads to overcharging by a cartel of Santos, Origin and BHP. With less regulation, though, customers would pay less and companies would earn more. Further costs are being added by the quasi-monopoly control of gas transmission pipelines, mainly by the APA Group, which, from looking at a map, controls around 95 per cent of the gas pipelines in this country. Their return on equity for some pipelines is as high as 159 per cent—enabled by government regulation. No wonder they call Australia 'treasure island'. Why does this situation occur? Maybe it is because instead of tax, gas cartel members pay political donations to the major parties, as Senator Hanson itemised. We need to remove restrictions on supply and demand. That would encourage efficiency. As Senator Hanson has said, we clearly need to allow companies to build gas import terminals, including revaporising plants, on the east coast, to allow us to transport our own gas around the continent and then return it to domestic consumption. Transport costs from Western Australia to the east coast would be around 70c per gigajoule, and revaporising costs would be around 75c per gigajoule. This would allow us to import gas which is currently selling for less than $4 a gigajoule, in comparison to the Sydney spot price now of $10. The impact on our economy and living standards of runaway gas prices cannot be overstated. On top of the spiralling electricity prices created by the obsession with expensive, unreliable, intermittent wind and solar power, the current failed policies of the government, the opposition, the Greens and the Xenophon party must be changed as a matter of urgency before our economic growth grinds to a halt. Only One Nation is the party of cheap energy—Pauline Hanson's One Nation Party. The ACTING DEPUTY PRESIDENT e68 The time for the discussion has expired. DOCUMENTS 76 DOCUMENTS Consideration 76 DOCUMENTS 76 DOCUMENTS Consideration 76 Australian Communications and Media Authority 76 Tabling 76 17:06 Senator PAYNE M56 New South Wales I table a report of the Australian Communications and Media Authority on the review of the captioning obligations in the Broadcasting Services Act 1992. BILLS 77 BILLS Treasury Laws Amendment (GST Integrity) Bill 2017 77

Treasury Laws Amendment (GST Integrity) Bill 2017

First Reading 77 17:07 Senator PAYNE M56 New South Wales I move: That this bill may proceed without formalities and be now read a first time. Question agreed to. Bill read a first time. Second Reading 77 17:07 Senator PAYNE M56 New South Wales I move: That this bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows— TREASURY LAWS AMENDMENT (GST INTEGRITY) BILL 2017 Today, I introduce a Bill to amend the A New Tax System (Goods and Services Tax) Act 1999 (`GST law') to give effect to changes that were announced by the Hon Kelly O'Dwyer MP, Minister for Revenue and Financial Services, on 31 March 2017. The Bill provides that entities buying gold, silver and platinum that have been supplied as a taxable supply for GST purposes will be required to apply a reverse charge. This means they will remit the GST to the ATO instead of the seller remitting GST. In addition the Bill clarifies that precious metals are not second hand goods. These changes will negate two types of avoidance activity by entities exploiting the different tax treatment applying to 'precious metals' and 'scrap metals.' Precious metals are gold, silver, platinum and other prescribed metals meeting particular investment form and fineness requirements. Generally, a supply of precious metals is not taxable, whereas a supply of scrap metals will be a taxable supply under the GST rules. However, precious metals can be altered to turn them into scrap metals, for example by removing logos or brand markings, or chopping the metal so that it is no longer in investment form. The first type of avoidance activity involves entities altering precious metals to turn them into scrap metals. On sale of the scrap metal, GST would be charged. However, the seller would go missing without having remitted the GST to the ATO, and the purchaser would still claim an input tax credit on their purchase. To address the 'missing trader' scheme, the Bill applies a reverse charge to supplies involving these metals which ensures the purchaser becomes responsible for remitting the GST to the ATO. This removes the opportunity for the seller to keep the GST and go 'missing'. The second type of avoidance activity involves entities altering precious metals to turn them into scrap metals, so they are treated as second-hand goods. The GST law allows entities to claim input tax credits for second-hand goods bought from the public, with the policy rationale that GST is embedded in the price when dealers purchase these goods. However, scrap metals, broken jewellery and other items that are bought and later sold to refiners for their valuable metal content are very unlikely to have any GST embedded in the price. Allowing an input tax credit in such situations is not consistent with the policy underpinning the second-hand goods rules. The Bill clarifies the law to ensure it operates as intended and this avoidance, and at times fraudulent, activity is stopped. The Bill will have effect from 1 April 2017, as announced. To make sure this activity does not simply shift from gold to other metals, the amendments also apply to goods containing silver, platinum or other metals that may be prescribed. The Government is committed to protecting the integrity of the tax system. By making these changes to the GST treatment of precious metals, the Government is securing necessary funds for States and Territories that provide crucial services such as hospitals and schools that Australians rely on. Full details of the measure are contained in the explanatory memorandum. Senator PAYNE M56 I seek leave to continue my remarks later. Leave granted; debate adjourned. Major Bank Levy Bill 2017, Treasury Laws Amendment (Major Bank Levy) Bill 2017 78

Major Bank Levy Bill 2017

Treasury Laws Amendment (Major Bank Levy) Bill 2017

Second Reading 78 17:08 Senator GALLAGHER ING Australian Capital Territory I am in continuation of the speech I started just before question time. I was quoting from the Treasury secretary about the leak that occurred around the major bank levy prior to the budget lockup on budget day. The Treasury secretary went on to say: I have seen nothing in the time I have been secretary to make me think that it came from Treasury. But can I give you a guarantee? No. I do not think anybody can. He did go on to say there was only a small number of people in the Treasury who knew about this—five or so Treasury officials who would have been in a position to understand the detail of the leak that was in the paper and announced before the lockup. The opposition believes that how and when it was leaked is a very serious matter. We know that it will continue to be assessed and probed and that indeed there is an ongoing ASIC investigation into this matter, as there should be. I will now go to the specific concerns that have been raised about the major bank levy and talk for a moment about the impact on consumers. From the get-go, we have had to witness the absurd spectacle of the government denying reality about the banks passing this levy onto consumers. When the member for McMahon, as Treasurer, introduced the concept of a bank levy, at least Labor was honest about the effect it would have on consumers. This is in stark contrast to the approach the government has taken on this levy. We had the Treasurer at his Press Club speech after the budget, pleading with the banks not to pass the tax on: Don't do it. They already don't like you very much. He went on to say: Prove them wrong. Don't confirm their worst impressions … Tell them you will pony up and help fix the budget. We now find out that these are all hollow, empty words. After a whole series of denials, once the legislation was released the RIS put a nail in the coffin of the government's claims: It can be passed through to those the banks lend to (in respect of residential mortgages, business lending and personal credit), deal with or provide services to, or their non-equity funding sources (wholesale capital markets, depositors) or be borne by the banks themselves (through reduced profits, or via increased efficiency or other cost-cutting measures). This was further underlined in the testimonies by the banks to the Senate inquiry last week, where they all said that the bank tax will not simply be absorbed. The banks have said that it would impact on a combination of consumers, shareholders, staff and profits—not just absorbed. The inquiry exposed the Treasurer's fiction that the banks can swallow the tax without anyone paying for it. Shareholders or customers will pay for it. Treasury further underscored this point through their answers to the questions on notice that were put to them prior to the inquiry. Indeed, I asked the finance minister this at estimates, and the line of questioning was shut down and the questions taken on notice. When we asked for a copy of the modelling and what assumptions were contained in that modelling, we were told they would take on notice whether they would release that. When the answer came back, the answer was a very clear no: we will not be releasing the modelling. However, during the inquiry, without the finance minister there, Treasury answered questions and admitted something that the Treasurer and his colleagues could not bring themselves to do. Treasury said that the costing takes into account some pass-through of the levy to customers as evidenced by previous behaviour by the banks. This is all information the government had prior to budget day. They knew from the get-go that the banks would pass some element of this cost onto consumers. The budget measure itself has also provided the ACCC $1.2 million to monitor the situation. But, really, how much of a difference is this going to make? The ACCC told the Senate committee on Friday that it only has the power to track mortgage costs for the next year. It will not have the power to look at other products such as credit cards or small business loans. We found out on Thursday from the RBA that banks pocketed a whopping $1.562 billion in credit card fees from Australian households in 2016. This was an increase of 3.2 per cent and it comes on top of a bumpy year in 2015 for the banks when they raised credit card fees by, I think, over six per cent. These numbers are just the fees. They do not actually include the hefty credit card interest rates. In 2016, annual fees went up and late payment fees went up, even though Australians were making fewer late payments. We have been talking about the need to improve credit card competition and consumer outcomes since 2015, when a Senate inquiry made recommendations for reform. The government responded and said that they would promise to act on these recommendations, including allowing simple online cancellation of credit cards and outlawing tricky interest charging practices—but it has been over a year and we have seen nothing. So, what we see in practice is the government spending over a year giving the banks a free pass on credit cards, and now we see the very limited scope of the powers they have given ACCC. It is entirely consistent with the hollowness of their rhetoric on the banks passing on this tax. We have also heard in recent days the budget numbers themselves and some concerns around the figures contained in the budget about how much money the bank levy will raise. The four banks have made disclosures to the ASX, which they are required to do under the Corporations Act and the ASX guidelines, about the impact of the bank levy. Prior to Macquarie revealing what they thought the impact would be, analysis from the Deutsche Bank and Morgan Stanley both estimated that the tax take for next year would be $1 billion—well short of the $1.6 billion a year figure the government has outlined. Macquarie outlined what they thought the impact would be when they were before the Senate inquiry on Friday—a $65 million to $70 million pre-tax impact and a $50 million post-tax impact. Adding these figures to the disclosures the ASX made by the big four, there is a total of $1.45 billion in pre-tax revenue and $1.015 billion post-tax. Either way, there is a shortfall. We know that the $1.6 billion figure is a post-tax figure and it takes into account the effects of deductions and the like. This shows that there is a $2 billion black hole in the government's figures. Treasury have given a couple of reasons that there might be a shortfall between what they budgeted and costed—in particular, credit growth and the interaction with other taxes. However, the assumption for credit growth by Treasury—5.9 per cent, which of course they would defend as a valid assumption—is higher than what Westpac assumed when asked about this at the Senate inquiry. It remains to be seen whether this will all play out in reality. However, the disclosures and statements from the bank do not bode well at all for the bank levy take-up. Given that the operation of certain provisions allowing for the liability base for the bank levy to be adjusted by the Treasurer by legislative instrument worked only to decrease the base, what will the Treasurer have to do to plug the substantial hole in the numbers? There were also revelations in The Australian Financial Review a few weeks ago that Macquarie were considering leaving Australia. The shadow Treasurer said previously that the bank levy liability base was clearly designed to ensure that Macquarie Bank was captured by the tax. So, Scott Morrison owns any decision by them to move operations or to be domiciled overseas. This is quickly moving from just a terrible mishandling of the process surrounding the bank tax to more concerns about the government's inability to manage the economy. Now, I do not know what Macquarie will do here, but if they do decide to leave then it is on the head of the Treasurer. If they are not domiciled in Australia then they do not pay any tax at all. This just goes to the heart of the government's and the Treasurer's incompetence—that all the consequences of this policy were simply not thought through. And for all their bluster and rhetoric, we all know in this place where the government stands with the banks, and we saw that on full show last week. In fact, ever since we announced our policy for a royal commission the government has instituted at least 12 reviews and measures. They will do anything and everything they can do but hold a royal commission. Only a royal commission, which Labor will deliver, will get to the bottom of the culture and practices in the banking and financial services sector that have led to so many being ripped off. Only a royal commission will deliver the change the banking and financial services sector needs. Just last week the Senate acted where the Prime Minister has been too weak, by passing legislation that would establish a commission of inquiry into Australia's banking and financial services system. In the House of Representatives, government members blocked the progress of that legislation. Labor will continue to do everything we can to get to the bottom of the systemic failures and cultural issues within the financial services sector to ensure that consumers are protected from the rip-offs and scandals of the past and that Australia's banking and financial system remains strong, profitable and well-led into the future. The Prime Minister, however, will give the big banks a tax cut; under Labor they will get a royal commission. On the Turnbull government's watch the list of scandals and investigations into the banks continues to grow. In the past year we have seen that more than $300 million has been or will have been coughed up by the banks in fines or compensation for fraud, misleading conduct, illegal conduct or breach in consumer protections. This has included a number of scandals, including the fee for no service scandal. ASIC has released a report revealing that Australia's biggest banks and AMP spent years charging more than 200,000 customers almost $180 million in fees for financial advice services they did not even receive. Recently ASIC revised those figures up to 330,000 customers being owed $204 million—and that is not including the interest. You have to ask: if this is not enough justification for a royal commission, on top of all the other scandals we have seen, then what is? These were not just technical glitches. In its October report ASIC found that these organisations did not have the systems in place to ensure that services were being provided in return for the fees being charged. By contrast, the licensees had much more effective systems for recording incoming revenue. In plain English, the systems were there to take your money but the systems are not there to back up justification for taking your money. What is striking is that ASIC has stated that two Future of Financial Advice requirements that were being resisted by those opposite helped to bring light to this massive fees for no service scandal. Both before and after FoFA went through, the coalition repeatedly sought to deny annual fee disclosure statements to existing clients. They repeatedly sought to remove the opt-in requirement entirely. This was a simple requirement that clients should have to opt in to the advice relationship every two years, and yet ASIC found: The changes made under the FOFA reforms—in particular, the requirement that customers opt in to receiving ongoing advice services, and the introduction of fee disclosure statements—contributed to some AFS licensees identifying the fee-for-service failures. The record of those opposite on FoFA is consistent with their record of giving a free pass to misconduct in the banking and financial services sector. In the last month alone we have learnt that, despite all the Treasurer's rhetoric, the banking executive accountability regime will not protect consumers, as it will be limited to poor prudential outcomes only. These new powers would not have prevented many of the scandals that have ruined so many people's lives in the past, and it will not protect them going forward. The government's new one-stop-shop complaints authority will not have any new or additional powers that existing dispute resolution bodies do not already have. We also know that the banks have not been adhering to unfair contract terms legislation, with the small business ombudsman finding that not one small business loan written by the big banks since November is compliant with these laws. The small business ombudsman is now investigating potential systemic issues in relation to the takeover of BankWest. We also learnt that ASIC has concerns about the delays in reporting potential breaches by the banks to the regulator. We know that ASIC has launched a special investigation into loan fraud. ASIC is investigating insurers for false and misleading and unconscionable conduct in relation to add-on insurance products. The government is also, as we have heard in the last few weeks, dragging its feet on new penalties and rules for bank bill swap rate rigging and looks set to miss the 2017 winter sittings time frame for introduction, set by the Council of Financial Regulators. Other legislation is being delayed, including an ASIC product intervention power and much-needed credit card reforms, and the government has not even started drafting the promised reforms to payday lending laws. If all of that was not enough, the government, despite promising it would, has not even bothered to update and finalise the ASIC statement of expectations, which was provided by ASIC to the government in November last year and which has now not been updated since 2014 and has not been responded to by the government. This is the document that would tell ASIC exactly what the government expects of it, and it has not been updated, despite them having sat on it for months. In conclusion, I want to emphasise that we support the legislation, because we are prepared to help the government in budget repair and we believe that the banks can play a role there. But, gee, they make it hard sometimes! You try to give support, and yet they still manage to bungle the implementation of this so comprehensively. There are a number of concerns with this bank levy, including the revenue that it is predicted to generate. Notwithstanding all of these issues that I have outlined with the government's measure and with the government's and Treasurer's incompetence, clear for all to see, in terms of how this has been handled from the get go—we start with the leak, we go to the provision of information and the assumptions that have been made and the withholding of critical information, we go to the costings, and then we go to who is telling the truth: the banks to the ASX or the Treasury advice to the government to write it into the budget. Despite all that we believe that budget repair is critical; we believe that the banks can play a role; and time will tell in regard to the assumptions by the government, including the fact that these costs will be passed on to consumers in some way or another—how much of it lands with consumers is yet to be seen. Despite all of this we will support this bill through the Senate when it goes to a vote. 17:24 Senator WHISH-WILSON 195565 Tasmania I rise with much gusto today to contribute to the debate on the Major Bank Levy Bill 2017. I am very glad to say that Greens policy now for nearly a decade has been to put a levy on the big banks here in this country. This levy is not quite as big as we would like to have seen, and it may have been structured differently under our policy. Nevertheless the principles are the same. To me, turning good policy into legislation and laws is a bit like baking a cake. It has to have the right mix of ingredients for it to be appetising and even edible for lots of people. But, no matter how much you put in it, if you do not set the oven to the right temperature you are not going to be able to bake it and you are not going to be able to eat it. When I look at what is before us here today—this cake before us here today—this is hopefully $6 billion of revenue that we have taken off the big end of town—$6 billion of revenue from the five big banks, which are the most profitable banks in this country and certainly amongst the most profitable banks in the world. If we did not take $5 billion off them, or $6 billion, hopefully, if we have our numbers right, then we would be taking it, under this government, based on their track record, off pensioners, off the unemployed and off the vulnerable. That has been the track record of this government for the last four years. So let's be very clear about this: this is the top line. We are taking money off the big end of town. This is coming from a government who fought tooth and nail to scrap a mining tax and who I never believed, even a year ago, would put in place a policy like this policy that is in front of us today. So when I think about the oven temperature, there are a lot of things that have set the oven at the right temperature for us to be, hopefully, passing this piece of legislation in the Senate very soon. We have seen the global backlash not only in Europe recently and in the UK but also in the US. We have seen people wanting their government to tackle inequality and to not just focus on trickle-down economics and zombie cuts to the most vulnerable. They want to see the government actually taking on big business and big multinationals. We have seen a backlash against multinationals and globalisation, and, in this country, I believe this Senate and many people in this Senate have fought really hard to hold the big banks to account in recent years. Let's be completely honest—Senator Gallagher talked a little bit about it in her speech—the banks have not done themselves any favours in this country. There has been scandal after scandal, which a number of us have heard the evidence on. We have heard from the victims of financial crime, and I have no doubt that the threat of a royal commission will help. For the record, let's must make this very clear: the Greens were the first to campaign on this, and we are very glad Labor joined us—make no doubt about that. The parliamentary Banking and Financial Services Commission of Inquiry Bill—the historic bill that passed this Senate last week—has set the oven at the right temperature in this country for this piece of legislation. I am very proud to be part of a party that has consistently fought for this kind of policy, and I commend the government for bringing it forward. Let's talk a little bit about those ingredients in the cake. To be clear, this is not a radical idea. As much as people think the Greens only have radical ideas, levies on banks, in some form or another, whether they are transactional taxes, levies an assets, levies on liabilities or a Tobin style transaction tax, are common around the world, especially since the GFC. There are nearly 18 countries around the world that have levies on their major banks. The justification for those levies is not just that governments are tackling inequality by levying revenue off wealthy banks. The justification in many of those countries is the same underlying principle as why we have this legislation here before us today, in my humble opinion. That is, the taxpayers of these countries and of this country have conferred an advantage on the big banks since the GFC. In Australia, it is really clear. If we look back to the GFC in 2008, stock markets were collapsing and Macquarie Bank's share price had nearly halved in Australia. The ex-finance minister, Nick Sherry, met with bankers in Sydney at Kirribilli, I understand. Five days later, we got Prime Minister Rudd's gold plated response to the GFC. We got an explicit guarantee on wholesale funding and on retail funding and we got a ban on short selling. It might have been a coincidence that the big bank executives had just met with the government, and one might think that they had even suggested this might be a good policy, but it worked. The banks' share prices recovered, and those big five banks in Australia had an explicit guarantee on wholesale funding and an implicit guarantee. It would probably take me 10 minutes to explain the difference, but let me say that the implicit guarantee is that markets price in a too-big-to-fail guarantee anyway. The banks have ripped tens of billions of dollars in guarantees from the Australian taxpayer. And it was good policy—do not get me wrong. I do not think the government did the wrong thing; I think they did the right thing. We had financial contagion around the world at the time, and this steadied the ship. The implicit guarantee—that these banks are too big to fail—has allowed the big banks to have a wholesale funding cost advantage that has reaped their shareholders, and the banks would argue the Australian people, tens of billions of dollars. So how much money has the too-big-to-fail guarantee made for the banks? The Reserve Bank, in an occasional research paper, estimated that the implicit guarantee reaped the big banks $3.75 billion in 2013 alone. On Friday we heard evidence in the legislative committee inquiry from Mr Mike Hirst from Bendigo and Adelaide Bank that, on his bank's estimation, this year alone the banks have made $4 billion out of this too-big-to-fail guarantee. Think of the too-big-to-fail guarantee as an insurance policy that the banks had whereby, if they failed, the taxpayer and the government would step in and bail them out. But they have never paid a premium for that insurance policy. That is what this bank levy is. This bank levy is an insurance premium paid back by the banks to the Australian people. But I tell you what: if they paid the full premium of what this has been worth to them, this levy would be four or five times bigger than it is now, set at six basis points—much bigger. My estimation—I ran this by some witnesses on Friday, who did not disagree—is that during the GFC and after the GFC they have reaped $40 billion to $50 billion from taxpayer guarantees, explicit or implicit—call it whatever you like. In fact, during the GFC the Reserve Bank estimated that the benefit they accrued was three to seven times the amount they calculated in 2013, which is $3.75 billion. So the number is probably even higher than that. So what is wrong with us as a parliament and the taxpayers of Australia saying, 'Time for you now to pay back that advantage that we gave you that you have consistently traded on.' That is what this is today. I want to talk about a couple of other policy justifications, firstly in competition. It was pointed out to the committee on Friday that, when the too-big-to-fail guarantee was put in place—the insurance policy underwritten by the Australian people—the banks' share of the mortgage market went from 60 per cent to 80 per cent, where it currently is. For various reasons—it has not just been the too-big-to-fail guarantee—the nature of their diversified businesses means that they have a lot of advantages over smaller banks. But they have seized market share from the smaller banks. This will go some way to levelling the playing field. That is exactly the evidence that was provided to us by Bendigo and Adelaide Bank, ME Bank, the Customer Owned Banking Association and a number of other smaller banks. In fact, did you know that the Australian Bankers Association, who has been lobbying against this piece of legislation, has 25 members. Five of them oppose the levy and 20 support the levy. I had to draw that out of the Bankers Association on Friday. But it is no surprise that those five are the big banks. They do not support this levy. By the way, I also drew out of them in questioning that they are very unlikely to support any kind of policy that takes money off them and their shareholders. So, had we put a superprofits tax up and had we gone through a lengthy consultation process, it is very likely we would have got a mining tax style, aggressive advertising campaign to undermine good public policy. We would have gone back to where we were five or 10 years ago. Once again, I do not believe the banks would have supported any policy that asked them to put their hands in their pockets. So there is a good chance this will go some way to increasing competition. In relation to systemic risks, one of the underlying policy objectives that you can find in the budget papers is this: The major bank levy is similar to bank levies imposed in other advanced countries, recognising that large leveraged banks are a source of systemic risk in the financial system and the wider economy. Those risks were made evident in the global financial crisis. It will complement prudential reforms being implemented by the Government and APRA to improve financial system resilience. As to those systemic risks, the head of Treasury and other senior public servants, during estimates, came out and said, 'The modelling shows there will be no impact on increasing systemic risks, but potentially this could help reduce systemic risks.' What about non-systemic risks—the risks that are directly associated with the banks? Adelaide Bank made a really good observation: if this is going to do so much damage to the banks, as they would like you to believe, from the evidence they provided to the committee on Friday—and there are thousands of financial minds out there, every minute, every hour of the day, looking at pricing risk—why have their credit spreads not changed since the implementation of this policy? Clearly financial markets do not believe this is going to increase the risk to these banks' balance sheets or present any problems to them. That is also why Standard & Poor's left them with a AAA rating only a couple of weeks into this bank levy debate, because nobody sees this as being a particular impost on the banks. So let's get to the point that Senator Gallagher focused on. May I say to those people listening who may have heard Labor's contribution—and I am sure Senator Ketter will follow suit with similar lines of debate—you might be wondering why a progressive party like Labor is throwing mud at the government on this bank levy, because it is $6 billion from the big, wealthy banks that we do not have to find from elsewhere. When playing politics, we throw mud if it is not our policy. I understand where this comes from with the Labor Party; they were mercilessly, viciously, ruthlessly and cynically pursued by the other side of the Senate over a policy that could have worked—a super profits tax on the mining industry. I am sure there is just a little bit of payback in the Labor Party's rhetoric on the back of this. Nevertheless, as Senator Gallagher made clear, they will be supporting this, because the oven is set at the right temperature and this is a cake that we all want to bake in the Senate. Getting onto the banks' key argument against this policy: they do not believe that the word 'absorb' exists; they say they cannot absorb these costs. Firstly, may I point out that, from the levies overseas, we have no evidence, unfortunately, as to exactly how these costs are being passed on, if they are being passed on—whether they are being passed on to various stakeholders like customers, shareholders or potentially even workers. It is a function of the concentration of the bank sector and a number of other variables, so we are flying blind. I thought the banks were very quiet on Friday as to how they might pass these costs on—it is not something they particularly want to talk about—but the Treasury did model them, and so they should. When we go into committee I will ask some more specific questions on this. The Australia Institute did try and model it, and they said, at least in terms of shareholder impact, the average impact to Australian superannuation balances would be $7 a year. We may see some costs passed on to customers, but we have to ask ourselves: would we rather be taking $6 billion off banks, potentially their shareholders and perhaps some of their customers, in higher charges, or taking it off the vulnerable in this country? I am guessing that, if they do make small increases in charges to customers and they change their dividend policies, those who have the most bank shares and the most financial products will, by definition, pay more, and that, in a sense, is a progressive form of taxation. But we do not know those numbers; I would be fascinated to see if there has been a study. But here's a fantastic idea from some very good journalism by Michael Roddan at The Australian, who published an article—which, interestingly enough, the chair read out on Friday. Mr Roddan's estimate is that last year alone CEO bonuses at the banks were $300 million amongst Australia's top 164 executives. Get this: $300 million is nearly one-third of the annual amount that the banks are going to pay in the levy under this system. One-third of the levy that they are going to pay the Australian taxpayer for schools and hospitals could come out of their bonus pool. If we want to talk about absorbing the cost of this levy, why don't the CEOs of these banks forgo their bonuses and pay that money directly to the Australian people, or at least take on some of that levy from their own bonuses? I kind of joked about it, but maybe I should have been more direct in the inquiry on Friday. It will be very interesting to see if they sting customers and shareholders but do not penalise themselves and their massive bonuses that they take every year. I would like to finish to by talking a little bit about Macquarie Bank. I thought they whinged the most on the weekend. It is interesting to note that Macquarie Bank were trying to say, 'We're not really a bank; we shouldn't be covered by this,' but some very interesting has been analysis done on the value Macquarie Bank has received from this too-big-to-fail guarantee, this insurance policy. There is an excellent article by Colin Kruger in today's CBD column. He and his predecessors have written a lot about Macquarie Bank and how much money they have made out of the taxpayer guarantee. He says: My CBD predecessor, Michael Evans, detailed just how adept Macquarie was at ensuring the guarantee was transformed into a very lucrative business for the investment bank. The guarantee did not just ensure these banks, like Macquarie, could raise money offshore at a time when it was extraordinarily difficult to get funding without government backing—it meant the bank could raise money cheaply. Through its Corporate and Asset Finance (CAF) division, Macquarie deployed this funding to snap up financial bargains that were being offloaded by desperate corporations which did not have this guarantee. In one year, CAF's profits surged from $66 million to $264 million. Macquarie borrowed more than $16 billion under the guarantee—which is more than Big Four bank NAB. Keep that in mind next time Macquarie argues for an exemption from the levy which is expected to raise about $50 million after tax from Macquarie, according to Moore— who presented evidence on Friday. Mr Moore has also more or less insinuated that Macquarie might leave Australia to avoid paying this levy. That is a bit rich coming from the millionaire factory. He is one of the most highly paid CEOs in this country. His bonus last year was nearly $20 million. I can tell you for a fact that Macquarie has made a lot of money out of the Australian taxpayer guarantee. It is not a big ask for them to pay some of that back. That is what this legislation is. In the very limited time I have left I would like to move a second reading amendment. I move: At the end of the motion, add: "but the Senate calls upon the Council of Financial Regulators to annually assess the adequacy of the levy in covering the estimated benefit received by major banks by way of reduced funding costs for being perceived to be too-big-to-fail." The Greens believe that the Council of Financial Regulators is the appropriate body. It is the coordinating body for Australia's main financial regulatory agencies. It is a non-statutory body whose role is to contribute to the efficiency and effectiveness of financial regulation and to promote stability of the Australian financial system. It consists of the Reserve Bank, the Australian Prudential Regulation Authority, ASIC and the Treasury. They get together, share information and advise the government on the adequacy of Australia's financial regulatory arrangements. If this falls short because in some way or another the banks are able to play the levy through the liabilities that they add or do not add or because somehow the Treasury have made a miscalculation at as to the total amount this would raise, this amendment would adjust the levy on an annual basis to make sure we meet the $6 billion target, based on the justification that these banks have reaped $40 billion to $50 billion of taxpayer benefits over the last decade following the GFC. With my last 14 seconds I would like to ask the Senate to consider that. We will obviously also be acting during the committee stage. 17:44 Senator KETTER 244247 Queensland As has been stated previously, the Labor Party will support this measure, continuing the bipartisan approach to budget repair. Let us be quite frank about this measure: it is absolutely no substitute for a banking royal commission. We know that, as Senator Gallagher has outlined, there are so many reasons for a royal commission into the banking sector: the poor culture and the thousands of Australians who have been impacted by poor conduct on the part of the banks. But this measure is a budget repair measure, and for that reason we support it—although there are so many policy development shortcomings associated with this bill that the government does make it very hard to support even something like this. As we heard last week, gross debt has smashed through the half trillion dollar mark for the first time in the nation's history. Labor is prepared to work with the government to achieve budget repair in a way that is fair. However, this support is not a blank cheque. Labor senators will not be excusing the incompetence of the Treasurer or the government. Labor senators are supportive of the bill, but it must be noted that the recommendations in the economics committee's report are a sign that the Treasurer has once again botched the policy process. Whether it is the backpacker tax, the low-value GST or the bank levy, there is a pattern here. We have a Treasurer who fails to properly manage the Australian economy. The Senate inquiry, as short as it was, last week did not need much time to expose the incompetence. I could spend all day talking about the policy process problems with the bill, but I will limit myself to seven areas: first, the leak on budget day, which the Treasury secretary, Mr Fraser, was quite concerned about—quite rightly; second, the impact on consumers; third, the revenue black hole; fourth, potential responses by Macquarie, which do give cause for concern; fifth, lack of policy clarity; sixth, lacklustre ACCC powers; and, lastly, the foreign banks issue. Firstly, on the issue of the leak on budget day, the whole process with this bank levy did not start well. We all remember the leak on budget day and the response of the share market. This is not the first time a leak has occurred prior to budget night, but a policy as market sensitive as this one is normally treated with great care. The Treasury secretary stated that very few people would have known about this policy. In his words: On the basis of what we have been told by our staff, on the basis of informed discussions with my senior executives as to who knew when what, I would be devastated. I remain, I would be devastated, if I had thought that one of my staff had been responsible for this. I have seen nothing in the time I have been Secretary to make me think that it came from Treasury, but can I give you a guarantee? No. I don’t think anybody can. It is important that ASIC conducts a thorough investigation and determines what exactly has occurred. How and when it was leaked is a very serious matter, and I do expect that their investigation will be thorough and will include the minister's office. Secondly, regarding the impact on consumers, the regulatory impact statement released with the legislation stated what the Treasurer would not: that consumers, non-equity funding sources, shareholders and employees could bear the brunt of this levy. This was further underlined in the testimonies given by the banks at the hearing, where they all said that the levy will not simply be absorbed, including the Australian Bankers Association. Treasury further underscored this point through their answers to questions on notice put to them prior to the inquiry. Treasury said in their answers to questions on notice, very late on Friday afternoon, that the costing issue takes into account some pass through of the levy to customers as evidenced by previous behaviour by the banks. We were very keen to find out what the assumptions were that underpinned the costings for the revenue measure. The response I received, I might say, an hour or so before we were due to ask the Treasury representatives further questions, which I think was of some concern, was that bank responses to the imposition of the levy include some pass through of the levy to customers but also consequences for dividend payments and franking credits should profitability impacts have a flow-on effect to the amount of dividends they pay out. So, customers and shareholders could feel the consequence of this levy. It took Treasury officials to admit something that the Treasurer could not bring himself to admit. Labor senators are disappointed that the government has chosen to hide this information from the public. Even at this late stage, after all the questions at estimates, the questions put on notice through the inquiry and questions put to Treasury officials at Friday's hearing, the details of the policy costing and all related assumptions have not been made available. The banks indicated to us—not that one has a great deal of sympathy for banks in this type of situation—that they were promised the modelling and the assumptions associated with the costings, and that has never been delivered to them. I turn to the issue of the revenue black hole in this policy. Testimony given at Friday's hearing now gives a full picture of the pre-tax and post-tax bank levy figures that each bank is expecting to pay as a result of the bank levy. The banks are required by law under the Corporations Act and ASX guidelines to inform shareholders about the impact of the bank levy and to take this issue very seriously. With Macquarie's answers on their expected bank levy figures, we now know that the total bank levy figure reported by the five banks totals $1.45 billion pre-tax, and $1.015 billion post-tax—a shortfall when compared to the budget's expectation of $1.6 billion, or compared to any other bank levy figure you find in the budget papers for that matter. Clearly there is a shortfall, and time will tell how large this revenue shortfall is. The Treasury officials would not admit this on Friday; they remained committed to the projections. There are two problems with this revenue shortfall. First, it seems that the figure for next year will not be met and, second, any revenue shortfall is likely to be exacerbated by lower than expected growth in the liability base in future years. Treasury explained on Friday that the reasons for the shortfall might be due to credit growth figures and interactions with other taxes. Regarding credit growth, the assumption of 5.9 per cent liability growth year on year seems high—Senator Gallagher made reference to this—when banks such as Westpac have indicated that their estimates are in the order of four to five per cent. Any shortfall in revenue next year will widen if the banks' estimates are closer to the mark than Treasury's forecast. Regarding the interaction with other taxes, it must be said that this is quite a complicated matter. From my reading, it seems Treasury's response implies that dividend cuts could be a reasonable response for a bank to take—impacting franking credits available. Time will tell if these revenue shortfalls will occur in reality. However, the disclosures and statements from the banks do not bode well at all for the actual bank levy revenue raised. In addition, given that the operation of certain provisions allowing for the liability base for the bank levy to be adjusted by the Treasurer by legislative instrument only works to decrease the base, I would like the Treasurer to explain what actions he will take if the revenue shortfall does occur. I note that the shadow Treasurer, Mr Bowen, issued a release on Friday which provides a breakdown for the expected costings, both pre-tax and post-tax, for each of the major banks. We shall see whether those shortfalls do occur. Senator Whish-Wilson touched on the issue of responses by Macquarie. I asked direct questions to Macquarie about media reports that they were considering leaving Australia. Macquarie responded by saying that no final decisions had been reached yet but that this matter was under regular review. They said: … we would like to express our surprise that the levy is applying to Macquarie Bank, given our size and the benefit we bring to domestic competition and the role we play in bringing export income into the Australian economy. Whilst we recognise and respect the government's right to introduce laws and impose taxes for the good of all Australians, we are concerned that the impact of the major bank levy on Macquarie Group is not fully understood and that unintended consequences may result. The concern about unintended consequences arising from this rushed policy measure was not only confined to Macquarie Bank. Other banks expressed that view. On this matter the shadow Treasurer captured the issue very well when he said: The bank levy liability base was clearly designed to ensure Macquarie Bank was captured by the tax so— the Treasurer— owns any decision by them to move operations, or to be domiciled overseas. This is quickly moving from just a terrible mishandling of the process surrounding the bank tax, to more concerns about the government's inability to manage the economy. I hasten to add that Macquarie Bank did indicate to us that they had no current plans to relocate overseas. However, the fact that they have indicated that this is a matter that they keep constantly in review is a matter which should be on the radar screen of the government. Issues like this are foreseeable. Macquarie has been considering the issue since 2007, and the bank levy is another factor that they will use in their decision making on this issue. Like the shadow Treasurer, I am concerned that this matter shows that not only has the Treasurer mishandled the policy but that the government cannot manage the economy either. Australia deserves a government that can handle these matters in a careful, considered and thoughtful way. The next point I want to touch on is the lack of policy clarity. Several reasons were given for the rationale behind the levy. Foremost is budget repair, and this is the aspect of the bill which Labor seeks to provide support for. However, other rationale were provided—for example, competition, complementing prudential reforms and the major banks' contribution to systemic risk. These were other objectives. After sitting through Friday's hearing, it has become much clearer that competition effects are likely to be small—notwithstanding the comments made by representatives from Bendigo Bank and ME Bank—and that the levy does not complement prudential reforms, and, if anything, is slightly detrimental to reforms like total loss absorbing capital. Treasury officials acknowledge that the levy in part is in response to the systemic risk of major banks, which, in the Treasurer's words, 'ultimately fall on the broader Australian community'. Labor supports the bill and its contribution to budget repair, as I have indicated. However, it seems that the Treasurer has only fuelled confusion when it comes to these other policy objectives. It became clear to all senators who sat through Friday's hearing that this bill raises more questions than answers when you look at these other issues. The fact that a government dominated committee had to make additional recommendations in their report is a sign that not even some government senators are clear as to the policy purposes of the bill. If you want to confirm this, you just need to read recommendations 1, 2 and 4. Recommendation 1 recommends a review of the legislation. Recommendation 2 seeks an explanation for the inclusion of Macquarie Bank in the levy but the exclusion of large foreign banks. Recommendation 4 seeks to give APRA powers to suspend the levy in times of financial or economic distress. As these paint the picture that the Treasurer has failed to properly explain the merits of the policy to senators of his own party, it is an admission that the Treasurer has once again botched the policy process. When it comes to competition the benefits are likely to be small. The Customer Owned Banking Association said on Friday: We think it will have a small positive impact on competition but it is certainly not enough on its own to influence competition in the way that we would like to see banking competition promoted within the Australian banking market. I return to comments from Bendigo Bank, who acknowledge that there was a small step in the right direction that was made in respect of this matter. In terms of the ACCC powers, my questions to the ACCC on Friday found that the ACCC's powers to take action will be limited to scrutiny of owner-occupied and investor mortgages and not other banking products. Furthermore, the scope is limited to any cost impacts that occur before June 2018. It is concerning that the government has not appropriately equipped the ACCC to discover and take action on cost pass-through, especially after all the Treasury's comments in the media lecturing the banks not to pass on the costs. As it stands, it is likely that the design of this measure will do little to prevent banks from passing on the majority of this levy to customers. While the Treasurer talks big, when you look at the detail, he is not taking tough action on the banks. The ACCC measure is just one example of that. I took the opportunity to ask the ACCC about the scope of the watchdog's role. The powers that the ACCC will be using are not new powers; they are existing powers. They made the point of saying they are very good powers, but these are powers that are pre-existing. So the impact of the ACCC will be basically shining a light on the activities of the bank and digging into the way the bank talks to itself about how it increases its rates so as to try to set a benchmark for the future. I have a great deal of respect for the ACCC. I think that the work they do in certain market studies that they have undertaken—particularly the petrol retailing market—is very worthwhile, and in those situations there are examples where prices are affected by that ACCC activity. I do remain concerned that this approach seems to leave a lot of scope for the banks to pass on costs to consumers in ways that are not picked up by the ACCC's activity. The ACCC is already on the record as saying that in the financial sector there is a lack of rigorous competition, and in that situation it is very easy for market participants to pass on costs to consumers. Finally, in relation to the points I wanted to talk about, I will talk quickly about the foreign banks. We heard evidence from the major banks, who argued the levy should be extended to cover large foreign banks to maintain competitive neutrality in finance markets. Major banks argued that foreign banks are strong competitors in low-margin international markets such as institutional banking, trade credit and custodian services, so they were concerned about business being lost to foreign banks in relation to that—the Commonwealth Bank and Westpac in particular. Labor senators noted the comments from Treasury officials stating that they had considered these issues when designing the policies. However, we remain concerned about this. In conclusion, despite the policy process issues I have gone through, Labor will support the bill and its contribution to budget repair. The issues uncovered in the Senate estimates and the short inquiry make it clear the government has botched the policy process once again, and it is fallen to the economics committee to try to clean up the mess. It should not have to be this way, but with the incompetence of the government and the Treasurer it is clear to see. Labor will still support this bill. (Time expired) 18:04 Senator BURSTON 207807 New South Wales I rise to speak against the government's new bank tax. The behaviour of the banking industry in this country is a disgrace. However, this new tax is not the right response to it. To quote Yes, Minister: 'Something must be done. This is something; therefore, we must do it.' That is the argument used to corral support for half-baked and ineffective ideas. Fortunately for all of us, there are a few differences between One Nation and Sir Humphrey Appleby. This tax is something, but we must not do it. Our banks are busy ripping off and exploiting consumers. They are getting rich at the expense of ordinary people. The government's response is to let them continue but to take a bit of the loot for themselves. People are looking to the government to protect them from predatory practices. They want structural reform of the sector. What we get instead is this new tax. It is like calling the cops to deal with a thug demanding protection money, but, instead of arresting the thug, the policeman just puts his hand out to get his cut. So, yes, something must be done, but this is not that something. This is a lazy, ugly, cheap solution that will hit shareholders and superannuation savings without fixing any of the real problems. I challenge the government to, instead of bringing in this tax, address some of the real structural issues affecting the banking sector. Most people do not realise this, but the government regulators actually allow the big banks to help write their own regulations. Smaller banks get told how much they are allowed to borrow and how risk-exposed they are allowed to be. This is prudent; it protects against financial instability. But this same system is not applied to the big banks. Instead, they are allowed to use their own formulas and algorithms to determine how risky their loans are and how much capital they need to hold to be stable. It will surprise no-one that these internal calculations invariably result in a favourable outcome for the big banks, giving them a competitive advantage and allowing them to earn better returns than their smaller competitors. The upshot of this sort of favourable treatment is not only the big advantage for the banks but more risk and instability for the system as a whole. A stress test conducted by the Australian Prudential Regulation Authority in 2004 found that the smaller banks held sufficient capital for housing to withstand an economic downturn, but the bigger banks used their own risk formulas and did not. But, of course, the big banks do not mind taking these sorts of risks. That is because they know they are too big to fail. The economic damage to the country would be so severe if any of them were to collapse that no government would let that happen. I know that, if things really get dire, it will be us bailing them out and paying the cost. The government needs to look at structural reforms that prevent the big banks from shifting the burden of risk onto the public purse. This tax does nothing of the sort. The government needs to address the horrendous behaviour of some of these institutions, where we see people's properties being foreclosed on although they have not missed a single payment. More than anything, the government needs to hold a royal commission into the banking sector to expose and examine these predatory practices in a clear, systemic way. With this tax, the government want to pretend they are finally getting tough on the banks. They are doing nothing of the sort. They continue to let the banks run rampant whilst skimming a little off the top of the banks' ill-gotten gains. This tax will do nothing to fix the problems facing our financial system. It will just make it uglier, clumsier and an even bigger mess for the people who eventually decide to clean it up. One Nation will not support the bank tax. Come back to us with some real solutions to the real problems. Until then, I am afraid we will have to say, 'No, Minister.' 18:08 Senator XENOPHON 8IV South Australia I say on behalf of my NXT colleagues that we do support the broad principles of the bank levy. One of the main reasons is that this will give a leg-up to those regional banks, those community owned banks, and a chance to compete more fairly and more effectively, because they have been at a competitive disadvantage since the GFC, when the Rudd government—quite appropriately, I believe—put up a package of measures to ensure the safety of the banks. I understand why Wayne Swan as Treasurer and Kevin Rudd as Prime Minister put up those measures to ensure the safety and stability of our major banks. But it did have the side effect, it did have the unintended consequence, of putting the regional banks, the community owned banks, at a competitive disadvantage. That is something that has been apparent over the years. It is something that I have spent a lot of time talking to the smaller banks—the non four major banks—about. This measure will help them. It will mean more active competition in the marketplace, and that is something I unambiguously welcome. But I also think it is important that the foreign owned banks that have a big presence here in this country, introduced as part of the economic reforms of Paul Keating when he was Treasurer, should also be hit with this levy, because this could raise some $750 million to $800 million over the forward estimates. That in itself could fund a last-resort compensation scheme for the many tens of thousands of victims of financial mismanagement and fraud in this country, particularly those managed investment schemes where there are literally thousands of Australians whose lives have been devastated by them. I note that there are a number of managed investment schemes that are doing okay, but there were some big managed investment schemes that collapsed—Great Southern, Timbercorp and others—and left thousands of Australians devastated financially. I have dealt with these victims, as has my colleague Senator Dastyari. We need to give them some real hope and some tangible help by having a last-resort compensation scheme. Those managed investment schemes which were introduced in the final term of the Howard government were, I think, an accident waiting to happen. Those schemes were so highly leveraged. They were so fraught with difficulty. Because of the very high nature of their leverage, they really were schemes that could easily fall over—and they did, leaving thousands of Australians in very difficult circumstances. That is something we need to look at in the longer term. A levy on the foreign banks would help fund such a last-resort compensation scheme. That would build on the work of the Ramsey review into that. The levy as currently proposed excludes foreign banks operating in Australia. This has the perverse impact of according a preferred status to foreign banks over Australian banks in the latter's home market. Three of the banks in question are global in size. Some of them have assets or liabilities in the trillions of dollars. They have global size and reach, and they compete in precisely the types of lending that is targeted by the levy—in particular, lending to large companies and institutions, as well as lending in the home loans in the case of HSBC and ING. They are significant lenders. Evidence given to the committee indicates that what is being proposed in the current bill would apply to domestic borrowings. The evidence from the Commonwealth Bank in their submission is that the levy would apply to domestic borrowings if those were over the threshold of $100 billion. My understanding is that none of the foreign banks operating in this jurisdiction have domestic liabilities that exceed the threshold. But their global liabilities are very, very large and our point is that the levy should be applied to the domestic balance sheet, which is what the Commonwealth Bank has been saying. Westpac has said, 'Selectively applying the levy places extra burdens on Australians while allowing foreign bank shareholders off the hook for budget repair.' I agree with what Westpac says about that. I should disclose that I bank with the ANZ. For a number of years I have been a happy customer of theirs, but I am sure that small community and regional banks could also provide a terrific service as well. ANZ said that: … we believe the levy should apply to major foreign banks operating in Australia and exclude the offshore branches of Australian banks. This would be consistent with principles of international taxation, avoid double taxing Australian banks and mean that all major banks in Australia, foreign or domestic, are treated equally. Without the levy applying to major foreign banks, Australian banks will be at a significant disadvantage in the institutional markets where foreign banks mainly compete. Further, we borrow money in offshore branches to lend to offshore institutional customers. If the levy applies to our foreign branches, it makes us less competitive overseas. The CEO of ME Bank, one of the smaller, community owned banks, has said: 'What I believe is that we should have a level playing field and then if it can be clearly demonstrated that the foreign banks are getting into the market and there might be a real disadvantage from wherever they are domiciled et cetera then I think the levy should also apply to levelling the playing field, making everyone able to compete fairly.' There have been some arguments put forward as to why foreign banks should not be included in the levy, and I think it is important to say why I think they are not convincing. One argument is that foreign banks might leave if the levy is extended. Spare me! That is not a credible argument. This argument is far from convincing since these banks face bank-specific levies in a range of their offshore markets—levies that were put in because banks had failed in those markets, markets where they had far larger operations than in Australia. Making the yardstick all banks with a global balance sheet above $100 billion shows that it can be done. It will raise significantly more revenue and mean that the parliament is not actively and unnecessarily discriminating against our domestic industry. I will be circling an amendment shortly so that foreign banks are captured in the levy. This amendment will ensure that the trigger that hooks in foreign banks will be the global liability of the entity. However, the levy will only be payable on the domestic liabilities of that entity. Therefore, you will get that $750 million to $800 million in revenue over the forward estimates. As my colleague Rebekha Sharkie, the member for Mayo, outlined in the other place in her contribution to the debate, applying the levy to major foreign banks that operate in Australia will also provide the additional funding required to set up that last resort compensation scheme for the victims of financial mismanagement and fraud. Too many financial services businesses have gone into liquidation and too many financial advisers have gone bankrupt. This has meant there are no means of redress for many thousands of victims. Any compensation scheme should also be complemented with stricter requirements for insurance for financial planners. The government's review into the dispute resolution and complaints framework, better known as the Ramsay review, has been considering exactly such a scheme. And, according to a supplementary issues paper to the review, as of 2 May 2017 an enormous $14.3 million of determinations made by the Financial Ombudsman Service and the Credit and Investments Ombudsman still remain unpaid in favour of complainants. And this figure only accounts for people who have chosen to go through a formal ombudsman complaint process. I have spoken to so many victims of financial malpractice—especially, retired Australians who placed their trust in managed investment schemes. An ongoing compensation scheme should be a priority for any federal government. The cost of such a scheme would be but a small fraction of the total revenue that the foreign bank levy would raise—$800 million over the forward estimates would go a significant way to remedying those cases of treble hardship. I think it would be a fair measure. So we support this piece of legislation—subject to the issue of the foreign bank levy. We think it is important that the foreign banks are captured by this legislation. We do not think it is unreasonable. I think the argument put by the big banks as to why they should not be put at a competitive disadvantage are actually quite compelling. But I do believe that if we want this levy to be fair and equitable then it needs to capture those foreign banks. With those words, I can indicate that my colleagues and I will be supporting the second reading stage of this bill. We look forward to the committee stage of this bill. My colleagues and I urge the government to urgently consider the whole issue of the levy on the big foreign banks. 18:18 Senator LAMBIE 250026 Tasmania I rise to speak on the Major Bank Levy Bill 2017 and the Treasury Laws Amendment (Major Bank Levy) Bill 2017, which seeks to impose a 0.6 per cent levy on five banks which have more than $100 billion in liabilities. I intend to support this bill, and I hope the Liberal government will put to good use the $6.2 billion in revenue this levy is expected to raise over the forward estimates. The Liberals may think this levy shows that they are suddenly being tough with the banks. The Treasurer might even think he can bash the banks all the way from here to the next election. But I have news for him: nobody is buying the act, absolutely nobody. Nobody thinks the Liberal Party are committed to helping the battlers, because taxing a group like the big banks is never going to be a hard sell. There is a big difference between sticking it up the bankers and sticking it up the battlers—the battlers who have had their life savings ripped away from them thanks to dodgy financial advice; the battlers who are sick and dying trying to claim on the insurance they hold with the big banks and being turned away at the door due to a technicality; the battlers who were led to put their money into dodgy investments because they trusted their financial planner to do the right and responsible thing. They trusted their bank, and that trust was broken. Tens of thousands of Aussies have had their lives ruined by these banks—and the Liberal Party thinks the problem is that they do not pay enough tax! I am here to tell the Liberal Party that the problem is cultural. I will say it again: the problem is cultural. For decades, the banks thought it was okay to take advantage of the ordinary Australian, and, like a naughty child with slack parents, they have gotten away with it. The banks have been treating the government as a doormat, and the Liberal government has rolled over and let them. This tax on the banks is an attempt by the government to prove they really are in control, but the banks know that if their tantrum is big enough and loud enough the Liberal government will eventually cave. We need a banking sector that is strong, not a banking sector that is able to strongarm a government. The banks reckon this is the fault of a few bad apples. Let me tell you, I have worked with a few bad apples in my time. Here is what you do with a bad apple: you throw it out, because it is rotten to the core. You do not give it a giant bonus cheque. Only a royal commission will go to the core of the problem in the banking and financial sector. A royal commission will not make the banking sector weaker. What weakens the banking sector is the way the big banks are treating their customers. They have done it to themselves. Every scandal weakens their reputation; it wrecks their reputation. A royal commission will trigger an overhaul of the banking and financial sector culture, which will be the first step to restoring the banks' reputation, let alone going a little way to giving the public out there some trust back of our banking sector. A royal commission will target the banks attitude of profit before people at all costs. Ideally, I would love to see a change in the way banks do business, to a focus on supporting the community. Banks are an important institution in the lives of Australians, and to approach customers with an attitude of, 'What can we do to help you?' rather than, 'How can I profit from you?' would go a long way to restoring the banks' reputation. I challenge the banks to take a people-first approach. When a customer comes to claim insurance, the banks should do everything possible to ensure that person is paid out to help support that person through the difficult times. And, if it is not too much to ask, doing so in a timely manner would be even better. People and businesses should not have to fight tooth and nail for what is owed to them, and if the bank cannot find even a little bit of compassion in their hearts and see people as people rather than the dollar signs that they see in them, let me remind them of good old-fashioned customer service. Any customer driven business owner would be able to tell you the value of customer service. It is a well-known principle: if you look after your customers, your customers will look after you. Not only will your customers look after you; they will stay with you for a lifetime. 18:22 Senator DI NATALE 53369 Victoria I rise today to speak in support of the Major Bank Levy Bill 2017. I take this opportunity to speak in support of this bill with a degree of pride. This was something that the Greens proposed many years ago. It was something that the Greens put forward as a solution to the nation's revenue problem. It was a solution that we put forward at a time when we were told that there was no prospect of a levy on the big four banks being passed. Yet, like so many other areas of public policy, we have seen the Greens lead the debate and take an issue that was rejected by both of the old parties—and, indeed, by the political establishment—and, sure enough, we see it adopted and now being put forward as a measure by this government. The reason the Greens first proposed this bank levy is, firstly, we need to recognise that if we want to fund schools and hospitals, if we want to fund a social welfare system, if we want to fund all of the foundations that we believe are the pillars of a decent society, then we need to raise revenue. We can do that in a number of ways. We can do that through our progressive income taxation system, which is why we have continued to support, for example, a tax on millionaires. It is why we support a buffer tax, a tax that says, 'If you are a millionaire we think that you should pay some tax,' and that means putting a floor on the amount of tax that people on high incomes can pay—in this case, a 30 per cent floor. It is why we support increased measures to deal with multinational tax avoidance—again, another area of public policy where the Greens lead the charge and we have now seen some action from all sides of politics. We proposed the levy on the big four banks because they are a part of the Australian economy that makes record profits and benefits from an implicit taxpayer funded guarantee. Again, if we look at the big four banks, in profits last year alone, we are talking about $30 billion. We have the most profitable banking sector anywhere in the world. If we do not raise money from the big banks, we know that the other choices that governments make are cuts to revenue that affect ordinary Australians. We know that this government has proposed to cut funding for services and also to look at taxation measures that will affect the most vulnerable Australians. So, it is, as I said, with some pride that we stand up to say that, when a banking sector receives billions of dollars in an implicit taxpayer funded guarantee—something that gives them an advantage over their smaller rivals—it should be forced to front up for the guarantee that it receives. We know that it has taken a while to shift the government on this, but we are pleased that ultimately they came to the table. It is good to see them recognise sound economic policy from the Greens—well done. Soon, we hope, they will come to adopt some of our other revenue proposals: reforms to negative gearing and capital gains tax, making sure that we end the big rort that is cheap fuel to the mining industry and, as I said, some of those issues around our progressive taxation system. The banks say that they are prepared to pass on costs to consumers; they are going pass on these costs. The first thing to remember when we are talking about the raft of financial products available is that they are skewed disproportionately to those bank consumers who are on higher incomes. So, if this levy is passed on, it will be passed on to people on higher incomes. But just a word of caution to the Greens: when my colleague Senator Peter Whish-Wilson last week in the chamber put forward a private member's bill that would establish a parliamentary commission of inquiry into the banking sector, we saw that bill pass the Senate. We had what occurs very infrequently in this place—a private member's bill pass the Senate. Now we know that it is being dealt with in the House. The banking sector should know that what it has hanging over its head is the threat of a parliamentary commission of inquiry or, indeed, a royal commission. I suspect that, should this legislation proceed through the House, before it comes to a vote the government would have no choice but to support a royal commission into the banking sector. That is what faces the banking sector if it proceeds with not absorbing some of these costs, not taking the record $30 billion in profits that it made last year and recognising that that should make some contribution to this bank levy. We know that the bank CEOs are receiving enormous bonuses; they are published regularly. Australian consumers now know that our banking CEOs are basically the beneficiaries of a combined total of $300 million in bonuses, commissions and salaries for last year alone—$300 million. Here is a tip to banking CEOs: how about leading by example? How about recognising that it is an opportunity to forgo some of those enormous bonuses they receive and ensuring that they, rather than the mums and dads who use banking services, shoulder some of the burden and demonstrate that the big end of town is prepared to do some of the heavy lifting? The bottom line is this: we are having debates in the chamber this week about how we fund our public education system. We have legislation in the form of a Medicare Guarantee Bill. The way you guarantee Medicare is not by some accounting trick, not by setting up a special bank account that does nothing to guarantee Medicare. You guarantee Medicare by funding it, by making sure that you raise the revenue to fund it. We believe that the fairest and most equitable way of doing that is to ensure that the most profitable industries in Australia do their fair share. This is why the banking sector needs to recognise that, as one of the most profitable sectors in the world— Proceedings suspended from 18 : 30 to 19 : 30 Senator DI NATALE 53369 Just to conclude, what we have here is one of the most profitable industries in the country, with record profits. We had bank executives making $300 million in bonuses last year alone. We have an industry that gets a taxpayer funded guarantee—the too-big-to-fail guarantee. There are not many businesses like it. If things go badly, the taxpayer stumps up the cash. If things go well, the banks cream it off in record profits. It is appropriate that the banking sector do its fair share. If we are going to pay for schools and hospitals, if we are going to pay for welfare and if we are going to pay for all the things that we think are the foundations of a decent society, then it is fair and just that the banking sector contribute to the prosperity of this nation. That is why the Greens led the charge for the establishment of a bank levy on the big four banks. It is why we are now pleased to see that our policy has been adopted by the government, and it is about time we see the government move on some of those other key areas that we have long argued need to be reformed, such as negative gearing to end the huge taxpayer funded handout that goes to people not to buy their first home but to buy their third, their fourth or their fifth home; capital gains tax reform, again for the same reasons; ending the huge subsidy that goes to the fuel industry; and having a Buffett rule so that millionaires actually start paying their fair share of tax. It is only by recognising that we have to raise revenue to fund the things that Australians want and deserve, like Medicare and a well-funded public education system, that we will begin to make the progress we need to make towards a fairer and more decent society. 19:32 Senator IAN MACDONALD YW4 Queensland I will be supporting the Major Bank Levy Bill. But, having said that, there are some issues relating to the bill which I do not like. I despair as a Liberal that we are taxing different companies differently. I think taxation should be even across the board. Carving out five or six particular companies for an additional levy seems to me to be not appropriate. I am not going to go into that. Those with much more learning than I have would give you a wonderful treatise on why that is not appropriate, suffice to say that I am uncomfortable with that, and I know that many in my party are. It also gives a sort of go-ahead for other governments, not our government, to introduce things like a super profits tax—picking on certain companies and picking on certain individuals and not others—and that concerns me. While we have a Liberal government, I am relatively satisfied that that will never happen. But there will not always be Liberal governments, and I am concerned that, when that does happen with other governments, it will make it rather hypocritical for us to say, 'You can't do that.' So that is a political reason. I have mentioned the policy reason ever so briefly, and, as I said, others could expand on that more eloquently. That is not the purpose of my being here today. In spite of those misgivings, I am persuaded that we do need to repair the budget, and I think the purpose for which the levy was introduced is a valid one. If we can do anything to repair the budget mess left to us by the Rudd-Gillard government then we should look at it, even though it is done in a way which, as I said, I and many other Liberals do not really like. But the idea of using this additional money to bring the budget back into surplus to repair Labor's mishmash of the country's finances is probably balancing more towards me supporting this than against my natural concern about it. Also, there is the argument that this is—put in another way—a payment for the licence which Australian taxpayers give the major banks by way of a permanent guarantee in times of difficulty. Certainly at the time of the global financial crisis it was the taxpayer-backed guarantee that the Australian government was able to give the Australian banks that kept us relatively free from any major catastrophe. The argument is that this is some recompense by the banks for Australian taxpayers against that guarantee that certainly protected Australian banks at that time. Before I go on to the main purpose of my speech today, I indicate that, again, there has been a bit of talk about royal commissions. I do not think they achieve anything. They get a lot of headlines and a lot of good, easy stories for the media but, regrettably, they achieve very little. I also make the point, in responding to some of the previous speakers, that profit is not a dirty word. The fact that banks make money, and make it out of me as a borrower, is the way that the world goes around. That is commercial activity; that is business activity. Good luck to them if they make big profits if they run their businesses well. As a customer of a bank, I have alternatives that are always open to me. I also remind senators who are howling loudly about the profits that banks make that, of course, those profits go to shareholders. Many shareholders are mums and dads around Australia that we all know, and perhaps the greater number of shareholders are superannuation funds that invest in major corporations. Shareholders expect banks to make profits—the bigger the profit, the bigger the shareholding revenue and dividends to shareholders. That means that superannuation funds, which we all subscribe to, are investing in businesses that are making money and making good profits. That is what we all want as potential superannuation recipients in the years to come. When senators get up and rubbish the banks for the profits they make, they should remember that a lot of those profits go back into the superannuation funds that are trying to make the nest eggs of every retiree even better. Many people in their later years of life have direct shares in the banks and they look forward to the banks making the best possible profits. I mention these couple of things in passing. I wanted to participate in this debate—and I will briefly take part in the committee stage later on—because of some of the recommendations of the Senate Economics Legislation Committee, of which I am a member. Last Friday, the committee heard from all the relevant interested parties that we could fit in. The committee, which has a government majority, made five recommendations. I am yet to hear whether the government has adopted those recommendations. A journalist rang me not long before the dinner break and said he had heard the government was not going to make any amendments to this bill, which to a degree does distress me. Unfortunately, Senator Cormann is not here, although I appreciate that Senator Fierravanti-Wells, who is the minister at the table, will no doubt pass this on. I find it incredible that the government would not support the committee's unanimous recommendation 4. I repeat: this is a committee with a government majority and two Labor senators as well, and all agreed with the five recommendations that have been made. Recommendation 4 says that the legislation should be amended so that the Treasurer may, on the advice of APRA, suspend the application of the levy to any or all deposit-taking institution—the banks—in extreme financial or economic circumstances. Hopefully, there will never be extreme financial or economic circumstances that might make it necessary to refer to this particular brute provision, but it was raised by witnesses at the hearings. The committee, in its wisdom, thought that this was probably an amendment that the government could easily introduce; it would give the Treasurer some discretion to remove the levy in some extreme financial or economic circumstance. It would cost the government nothing, but give the Treasurer that additional flexibility which may be needed should those circumstances ever arise. As I said, I hope those circumstances never will arise, but if they did it would give the Treasurer that power. I think he would have thought that was a very reasonable recommendation that the government would have grabbed with both hands and taken on board. In the committee stage I will be asking whether the government intends to adopt that—and, if not, why not. All of the recommendations were thought through carefully by the committee. The committee did not make the recommendations just for fun; they made them because they thought they would improve the bill. The final recommendation of the bill says that 'subject to consideration of the other recommendations, the committee recommends that the bills be passed'. So the committee adopts the bills and says they are appropriate for all the reasons mentioned in the committee report and in the second reading speech. I would hope the government will seriously consider them. Recommendation 1 says: The committee recommends a review be conducted by the Senate Economics Legislation Committee— the same committee that has made these recommendations— in a minimum of two years. So in two years time the same committee would have a look at that bill to determine, as stated in the recommendation, the efficacy of the policy in fulfilling its stated objectives—that is, is this levy actually going to repair the budget? Because that is what it is all about; it is not just another tax; it is there specifically to repair the budget. So the committee thought it might be a good idea for someone to have a look in two years to see if it was actually going towards doing that. We could have recommended that some independent authority or some other organisation might have a look at it; but we thought it was probably safer to send it back to this committee, so ably chaired by Senator Hume, to see if it was fulfilling that obligation. The committee recommended that, in that two-year review, the committee would also have a look at the effect on competition in the Australian banking market. So there was a lot of evidence given about why this did not apply to international banks, why it did not apply to what I would call the smaller banks. There were reasons for that, which were explained by the department and others. Whether the submissions made to the committee were valid or not, it is something the committee thought we should look at again after the scheme had been in operation for two years. The third dot point in the recommendation was about whether the levy is required in perpetuity, which it currently is; this legislation puts the levy there in perpetuity. The recommendation was that the committee should review whether the levy is required in perpetuity, including the need for a further review at that time that the stated objective of the levy is achieved—that is, when the budget has been repaired. For the reasons I mentioned earlier, I am a bit uncomfortable with the idea of the bill, but if it is all about repairing the budget then I will go along with it. But once the budget is repaired one would think: if the principal underlying reason was to repair the budget and then it achieved that goal in four or five years time, why do you keep the levy going? What was urged upon the committee by several of the witnesses was that there should be a sunset clause that would say that, once the budget is repaired, the legislation stops. But the committee thought a better way to approach it would be to have a review, see where that is going, see whether the levy was repairing the budget and then, if it was, look at whether this additional levy would stop once the budget was repaired. I thought that was a fairly reasonable recommendation of the government. It does not really cost the government anything except having a committee meet in two years time to have a look at those issues and to see whether in two years time the committee thinks the levy works properly, is doing what it was set to do and it was necessary to continue it without any time limit. I would certainly hope that the government might seriously look at that and I would be interested to hear the minister who is taking this bill through actually comment upon that in the committee stage. The committee also recommended in recommendation 2 that the Treasury should closely examine issues relating to the technical aspects of the bill to determine if changes are required to avoid double taxation and/or to narrow the liability base. There was some evidence given to the committee—I suspect most other committee members understood that a lot better than I—but, whilst we could not agree that there were technical aspects of double taxation issues that needed to be addressed, the evidence given to us suggested that there was the possibility that in some cases there might be that sort of taxation. Accordingly, the committee, without being definitive on that, did ask the government to perhaps look at that. I hope that, when the minister responds at the end of this debate or in the committee, he can indicate whether those concerns about double taxation were in fact real or otherwise. The committee also recommended in recommendation 3 that Treasury provide a greater explanation of the rationale for the method of liability calculation, which presently excludes foreign banks and specifically provides an explanation as to why Macquarie Bank is subject to the levy while foreign based competitors are not. Again, evidence was given to the committee by, obviously, Macquarie Bank and by the Bankers Association and all the individual major banks, who urged the committee to apply the same levy to foreign banks who do collect deposits in Australia. The suggestion was that they should be levied not on their deposits outside Australia but on their deposits inside Australia. There were reasons given by the department and others as to why that was not appropriate and not in the best interests of the goal being sought by this particular piece of legislation. But the committee thought that it would be useful for the Treasurer to provide a better explanation around those issues. I will leave my contribution there, but I am asking the minister to indicate why recommendation 4, which clearly cost the government nothing and which gives the Treasurer a little bit of extra flexibility, in the hopefully unlikely event of an extreme financial or economic circumstance arising—I hope that the government would adopt that, and I would be very keen to hear why the government would be opposed to recommendation 1, which was the one about having a review in two years. So while I support the bill for the reasons I have mentioned, I also think that these recommendations are appropriate and should be considered by the government, and I will be interested to hear the minister's response. 19:50 Senator BERNARDI G0D South Australia Here we go again! Already today the Senate has dealt with one great big new consumer tax, which of course put the price up for things that consumers need and have been buying from overseas. Now we have a great big new bank tax. You can tell from my opening that I am opposed to it. I am hoping you can detect that I am opposed to it. I do want to pick up on one thing that Senator Macdonald said, which is that those in this chamber who decry the fact that the banks are very profitable have lost sight of the fact that there is only one thing worse than a profitable bank, and that is an unprofitable one. Do we really want a banking industry that does not make money? The effects and impacts of that can be seen in America, where the banking industry, by its own design and fault, cost the taxpayers over there, I guess, a trillion dollars or more. The executives got very rich; the banks were recapitalised; the government has not benefited from it and the consumers have not benefited from it. So I think it is entirely reasonable for a bank to make profits. They deal in lots of money and they deal in a very important space. They make a lot of money, quite frankly, but they also pay their fair share of tax like every other corporate in this country. What is next? This is where you have to apply principle to these things They make too much money in the banks, so you want to add a super profits tax on them, just like Labor did with a mining tax. Do you remember, Mr Acting Deputy President Sterle, that your colleagues on the other side introduced a mining tax, which was to capitalise on the super profits from the mining industry. Of course it never raised the money, and the expenditure is still with us today. It is the only tax that ever actually lost money, I suspect. That is its rather remarkable record, and it is little wonder that those on that side of the chamber are supporting the bill before us today. However, I am amazed—incredulous, quite frankly—that the once-proud Liberal Party, of which I used to be a very proud member, has been reduced to chasing billions of dollars from industries and targeting specific industries because they cannot buttress their budget bottom line in any other way. I have given suggestions previously about how they could save money, but instead they have chosen the tax and spend way. What is next? Coles and Woolworths have been very, very profitable for a very long time in this country. Why not have a supermarket tax? Why not go down to Wesfarmers, a very profitable company, and whack an extra super profits tax on that. Or the fuel companies that happen to be making money, or the gambling companies. You can keep going and going and going. But about 60 per cent of corporate tax is paid by about 0.1 per cent of the companies in this country. They are paying a massive amount already, but because it is popular and because very few people in this place will stand up and defend the principle attached to this—it is not because I like the banks, it is not because I think they are doing a great job by the consumers—they are making as much money as they possibly can, but it does not mean that we should be slugging them another $6 billion or thereabouts, which they will claim as a tax deduction, to prop up the government. The government has enough money already. This tax is going to hurt individuals, as it always does. The corporates will claim it as a tax deduction, so you will not get your $6 billion—it will probably end up being around $4 billion or thereabouts—but customers will invariably be asked to make up the shortfall. It might come in a centre transaction, tweaking of an interest rate here and there or putting a new fee onto something, but the banks will do that because their job is to act in the interests of their shareholders. For those in this place who are naively or blithely unaware of what happens in the reality of markets, the moment—in fact, before this bank tax was even announced, the share price of the banks fell considerably. Senator McAllister 121628 That is an interesting question all of itself. Senator BERNARDI G0D I hear the interjections. I understand there have been calls for inquiries as to why insider trading takes place and all that, and I am not defending that, but the simple fact was it obviously did leak and then it was compounded by the announcement on the day itself. Following the day itself billions and billions of dollars were wiped off the share price of banks, because that share price is a product of their profits. That capital is gone. Who owned it? Sure, there were some internationals. According to your own team, or Mr Leigh, it is some sort of conspiracy and the Bilderberg Group, through the National Bank nominees or someone, owns 90 per cent of Australia's corporates. That proves how naive and foolish they are on the other side. But the fact is that a lot of these bank shares are owned by self-funded retirees, super funds and other individual investors, who have all suffered immeasurably already as a result of this bank tax. It is going to transmute itself into lower dividends until the banks can claw it back from consumers. We have a government policy which will probably achieve less revenue than it stated and set out to. There is nothing unusual about that. We know Treasury produce a number of figures, and the governments choose the ones they think most suit their agenda. But more importantly, it promotes a very dangerous principle. In this case it is, 'If you are too successful, the government is going to come for you.' If you are unsuccessful—let me give you another example—like wind farms or solar thermal plants or whatever, and your technology does not stack up, the government will throw money into it. They bag and penalise the winners to subsidise the losers. That is inane, it is foolish and it is probably why we have a circumstance where this country is over $500 billion in debt through the governance of the last 10 years. There is no sign of that changing; in fact they have given up. They are saying, 'We'll take more money out of the economy,' and that means the economy itself will be diminished as a result, because money that flows from private industry or individuals into government coffers does not produce the same results as it would if it were left in private hands. If you have any doubt about that, think about it for a moment. The banks cumulatively make a significant amount of money: the NAB makes $3 billion, Westpac about the same, the Commonwealth makes about $5 billion, Macquarie makes a couple of billion in a good year, and so on. All of those profits, or all their revenues, in actual fact pale in comparison with the revenues of government, yet this government with its $400-odd billion worth of revenue every year taken from taxpayers—an ever-diminishing number of taxpayers, might I add—still cannot eke out a profit every year. In fact, it spends $50 billion, $40 billion or whatever it is in any particular year more than it takes—I will not even say earns—from taxpayers. That demonstrates how poor the public system is. The government system is less accountable, less robust and does not generate jobs. It is a weight, a yoke, around the neck of the Australian people. It is doing too much and it does not do it well. We would be much better served allowing companies, through lower taxation, to invest in this country, to develop new industries, to provide new jobs and allow individuals to keep more of their own money. I thought these things were taken for granted on the government side of the chamber, but the coalition seems to have jumped the shark, in Happy Days parlance. They have become increasingly desperate for acceptance in the marketplace and they think imitation is not only the sincerest form of flattery but that it will somehow make them more popular, so they have chosen to imitate the Labor-Greens alliance. I find it extraordinary. You will never be able to out-tax the Labor-Greens alliance. You will never be able to outspend the Labor-Greens alliance. You will never be able to out-class-warfare the Labor-Greens alliance. Yet that is precisely what they are trying to do. There is one minister in this place who says that the coalition has become the party of slightly fewer new taxes or the party of slightly lower taxes than the other. There is no meaningful or substantive difference any more—it is Tweedledum and Tweedledee—and business as usual is not serving this country nor this parliament as it should. I stand here taking a principled position. It is very easy to beat the banks up and say that they should give us more money. It would be popular to people out there, superficially, just as it is popular for governments to target anything that people overwhelmingly think is somehow unfair or manifestly wrong. But we are next. Are we just going to wait for someone to make a successful business and then go after them and say, 'You are making too much money and we are going to take it from you.' We should be celebrating people making money in this country. Yes, they should be paying their fair amount of tax and, yes, they should be doing their fair share of corporate lifting, but you do not chase them for additional taxes simply because you are unable or unwilling to make the decisions that are necessary. If you really want to target it, why not look at the extraordinarily profitable superannuation administration sector. They say they are not-for-profits but they make a pile of money administering a government mandated savings scheme in which the government at the same time has successfully undermined any faith or integrity. It has enriched union bosses and it provides a job for people like Mr Shorten, before he gets into parliament to supplement their union egos and union salaries. Why not target something like that? It is a reasonable question. I do not particularly support it, because I think the principle is wrong. But once you overturn this rock and look underneath it how many more rocks are you going to look at and turn over? I say: shame on the government for imposing this tax and shame on those who are going to support it. But at least in a principled or clinically pure manner we know the tax and spenders on the other side have always advocated in this space. There has never been enough money for them. There have never been enough wasteful programs for them to enact. But I am disheartened, and the Australian people should be disheartened, that that infection has crept over to, and taken over, the government benches. I will be voting against this bill. 20:03 Senator ROBERTS 266524 Queensland As a servant to the people of Queensland and Australia, I rise to decry this lazy government. The Major Bank Levy Bill 2017 is just window dressing. It is avoiding the clear problems. At Pauline Hanson's One Nation we are certainly no fans of the banks. We have proclaimed for some time now that a royal commission is needed into the banking sector. We so far have been unable to have that passed. We have been working to get a Senate select committee inquiry into lending to rural production customers, and I have been selected by Senator Hanson to chair the committee that she managed to negotiate. We have also become a co-sponsor of the commission into banking, and we are proud to join Senator Whish-Wilson in that initiative. But bank bashing itself does no good if it simply avoids the core issues. This is yet another example of policy on the run, as we have come to see. This will be passed onto customers. I will read some quotes from the Centre for Independent Studies' study of this bank levy, but, before I do, let us look at an overview of what is happening in our country. The cost of living is foremost on people's minds. Last year incomes rose 1.9 per cent while the cost of living rose 2.1 per cent. That is a backward step for everyday Australians. Real issues include energy prices skyrocketing. Senator Brandis today said that, under the Liberal Party, prices for energy are stabilising. Oh, really? In South Australia, since the federal Liberal Party came into power prices have risen from 5c per kilowatt hour to 16c. That is over three times more! That is not stability. In Victoria, prices have risen from 5c per kilowatt hour to 11c, a more than doubling. Queensland has doubled from 5c to 10c. That is not stability; that is ignorance. Look at overregulation. When I listen to constituents in Queensland, overregulation is their second-most mentioned hurdle. Overregulation is killing small businesses, killing personal enterprise, choking farmers, choking small businesses and choking individual income earners. The third issue—hardly any surprise—is tax. Tax has gone out of control in this country. Why do we tax payroll? We all know that when we tax something it decreases the use of that taxed object. So why are we taxing payroll? Do we really want to decrease payroll? Then there is the PAYE tax. That is also a tax on employment. And what do we see from the government and from the opposition? They blame the Senate for not being able to tackle the real issues. That is a lazy approach. Government is not a right. Just because people get elected into the government benches, that does not mean they get whatever they want. That is not their right. The opposition's job is to oppose the government and come up with better options, and the crossbench senators' job is to continue to work that process even stronger and make something workable from the opposition and the government. I will give you an example of a first-class international leader from not so long ago who inspired me. In 1980 I was fortunate to be in the United States when President Reagan was inaugurated. I watched that man. He did not complain about the Democrats having the majority in the lower house when he was a Republican president. No, he didn't. He rolled up his sleeves and got to work. He got the data, and he made a presentation to every person in America through the TV one night. All he did was take five or so graphs on an easel—simple graphs, simple language, everyday connection with the real people across America. And what happened? As a result of his forthright leadership and his understanding of the basic issues addressing every American, 40 southern Democrats jumped ship and joined the Republicans to vote in favour of President Reagan's economic initiatives. So that is cost of living. What about the fact that governments continue to keep pushing costs onto people through mad policy? The Murray-Darling Basin Plan, spending billions—$13 billion and counting—of taxpayer money to buy water rights, to sell water and, eventually, to put it in a foreigner's hands is a policy initiated by the current Prime Minister and perpetuated by both the Liberal Party and the Labor Party. I have just given you an example of energy policy. We see regulation causing the destruction of our energy sector. There is no more vital sector in this country, no more vital sector in an industrial country, than energy. We are seeing the de-industrialisation of our wonderful country. We are seeing regulations choking the energy sector. The problem is clearly regulation. What did the Finkel review say: more regulation is the solution. What a dishonest mess. Then we see climate change policy that contradicts empirical evidence. The real world, hard measured data is contradicted by our policies. All of these things and many, many more are raising costs directly and indirectly through the impost of government. Let's turn to post offices and how this government and its predecessors have been screwing people who are trying to do a good job in this country and finding it very hard to do so. The CEO of Australia Post recently resigned after receiving salary of over $5 million a year and then a payment of $2 million for severance. He reportedly received $8 million in his last year. Then we see the salaries of the heads of departments and agencies right across federal government—$400,000; $600,000; $680,000; $800,000; $900,000; $1 million; over $1 million; and, for Ahmed Fahour, many millions of dollars. When we delve into that 1.9 per cent increase in incomes, we see that those in the private sector got an increase of 1.8 per cent, and they paid for an increase of 2.4 per cent in the Public Service. Then what do we see? We see post office franchisees in my office last Thursday, detailing that in the commitment that Australia Post has given them they are entitled to receive $1.38 for 20 minutes of work, because the banks have left town and they are now the bankers' agency. It is 20 minutes work for $1.38 pay. That is not sustainable. That is disgraceful. And then the CEO makes out like a bandit. Then we see welfare. The abuse of welfare is on the lips of so many Australians. Senator Hanson has been proclaiming her national identity, the Australia card. A reputable economics consultancy has recently valued it as saving more than $4 billion each and every year once it is put into place, and then it would also save money in health. It would increase revenue by preventing people's attempts to avoid paying their fair share of tax and fulfilling their responsibilities. It would save many more billions of dollars than this initiative with the banks. Fourthly, looking more broadly, there are the states and what happened to competitive federalism. Competitive federalism was designed by the forefathers of our Constitution to put in place a check against a rampant central government. We now have rampant central government in our country, sadly. It is running out of control. In fact, 20 years ago, the states found that they were getting more than 50 per cent of their revenue from the federal government; it was under federal control. Let's listen to the people. The councillors and deputy mayor at Balonne Shire Council said in February that 73 per cent of the Balonne Shire Council's annual revenue comes from the federal government, with no security of ongoing payment—just conditions that change periodically. So who is running the Balonne Shire Council? The federal government. Who is running the states? The Murray-Darling Basin covers 80 per cent of New South Wales. Who controls the water rights? Who controls the land rights—the property rights? Who controls the income of so many states and local councils? It is the federal government. So we now have a de facto all-powerful federal government. We have also seen a need for looking back in our history, because there are many solutions we can find. If we look to the Commonwealth Bank, which was formed in 1911 after the legislation passed by the Fisher Labor government, we saw Australia flourish and blossom under that initiative. We saw Denison Miller invest money through the Australian people in developing Australia's infrastructure, agriculture and transport, giving us access to international markets. We now see the public Bank of North Dakota. That is right—an American state has a public bank. And it is one of the very few banks that has continually made profits ever since its inception. It is continuing to give cheap loans to its farmers and its business people. It is continuing to put dividends back into the hands of the state governments, back into the coffers of the people of North Dakota. It is much like the Commonwealth Bank. So let's get into some more details after that overview and think about some of the comments from the Centre for Independent Studies in Sydney: 'Who pays the levy? Well, the banking levy will most likely be passed on as increases in mortgage and business interest rates. This expectation is based on overseas experience, including in research cited by the government and an analysis by Australian experts. As a result, the levy will act as a tax increase on households already afflicted by flatlining real wages growth and ongoing increases in personal tax, including through bracket creep. The ratio of personal tax to gross domestic product has been increasing by about 0.3 percentage points per year cumulative since the global financial crisis. An increase in business borrowing rates will dampen business investment, which is already at near-record lows as a share of the economy and is forecast to decline further.' Only a fool or a cynic would laugh, but that is what we hear. Then we see based on an IMF study that, according to the Centre for Independent Studies, Australia's levy could reduce GDP by about $1.7 billion per year, a substantial impact compared to the revenues raised of $1.5 billion to $1.6 billion per year. In the executive summary, the Centre for Independent Studies says that the bank levy is likely to feed through to higher mortgage and interest lending rates. As I have said, this will hit many households already facing tax increases. Secondly, if the big banks have substantial market power, as the government already implies, the banks would just use this power to ensure the levy is fully passed on to customers. We can not have it both ways. They either have substantial market power or they do not. If they have substantial market power then they will just pass it on. The government, thirdly, cannot use international experience to justify the levy, as many other developed countries have chosen not to implement a levy on borrowing. Fourthly, the levy will help mortgage customers only if they switch to smaller banks and then those smaller banks cut mortgage rates. The government has provided no evidence that this will occur. The process for developing the levy breaches numerous government requirements for best-practice regulation and consultation. That could be an echo in this chamber. How many times do we see government requirements for best-practice regulation and consultation just bypassed? Next, the harmful impact of the levy appears small, but this in no way justifies the levy. A bad policy is bad, no matter what its size. And the levy rate could easily be increased in the future to have a large adverse impact on households right across the country. Former Prime Minister John Howard just two weeks ago was quoted in the newspaper on a Saturday saying that he is appalled at energy policy, and he specifically referred to the Renewable Energy Target favouring intermittent energy sources. Who introduced the Renewable Energy Target? It was former Prime Minister John Howard's government. Who accelerated it? That was the governments of Kevin Rudd and Julia Gillard. These are both parties that have been responsible for irresponsible government in the last couple of decades—in fact, since the 1940s. And who pays? Mums and dads, boys and girls, families and small businesses right around this country. The Centre for Independent studies concludes: Given these flaws in the levy, it should be abandoned in its entirety. If however the levy is not abandoned, it should be subject to a much more detailed inquiry over the coming year, with a consequent delay in the start date. This detailed inquiry would enable the government to meet its own guidelines for best practice regulation, ensure unintended consequences are known, if not addressed, and allow the levy’s interaction with other work to be included—including interactions with changes in prudential regulations, and the inquiry by the PC into competition in the financial sector. We need to face up to the real issues. The real issues are the abysmal lack of accountability in governance from the central Commonwealth government at the moment in this country. We need to face up to the enormous and rapidly increasing cost of living burden on every person in this country—every working man and woman, and their kids. And we need to face up to the severe, daunting challenges for economic security that people in the government and the opposition just seem to turn a blind eye to. Our economic security is under threat. Until 10 years ago, energy prices for the last 170 years, since the industrial revolution, have continually decreased in real terms. That is the secret to an increasing standard of living for 160 years. In the last 10 years, through insanity and contradiction of the empirical evidence, we have seen policy after policy destroying our economy, destroying the key energy sector, destroying livelihoods, killing jobs and sending them overseas, where they are increasing real pollutants—particulates, sulphur dioxide, nitrous oxide. What is happening in our country is insane, and the people who are paying for this insanity are everyday mums and dads. That is why we will be opposing this legislation. 20:22 Senator LEYONHJELM 111206 New South Wales It is tragic that this Major Bank Levy Bill 2017 is supported by the Liberal government and the Labor opposition. Let me be clear: it is absolutely opposed by the Liberal Democrats. This is a tax on banks, and not even all banks—only the biggest banks. I will give you three sound reasons it should be thrown out. First, it amounts to redistribution. The government hopes to collect $6.2 billion from this tax over the next four years so that it can continue to provide funds to welfare recipients and public servants. Some of this money would come from bank shareholders. Even if you subscribe to the view that money is better in the hands of the poor rather than the rich, you should remember that bank shareholders range from Australia's rich list to anyone with funds in superannuation, including low-income Australians. And we should remember that recipients of welfare in Australia are more often high and middle-income earners than they are low-income earners and that Australia's public servants are invariably high-income earners. Some of the $6.2 billion that the government hopes to collect from this bank tax would come from bank employees through reduced remuneration over time, yet bank employees do a useful job of intermediating funds, meaning that they direct money from deposits towards investment ideas that stack up. By contrast, most public servants do not contribute in any economic sense, and some of the $6.2 billion that the government hopes to collect from this bank tax would come from bank customers who will receive reduced interest on their deposits and pay higher interest rates on their borrowings. Banking is not a sin that warrants a new sin tax. The welfare recipients and public servants that this $6.2 billion is earmarked for do not deserve the money more than the banks' shareholders, employees and customers. Bank shareholders, bank employees and bank customers do not deserve this tax. It is their money. There is no justification for redistributing bank money. It is better off where it is. Beyond the question of redistribution, I oppose the bank tax because it will change the way we do things for the worse. The bank tax will make people less inclined to finance banks, meaning that less bank lending will occur, fewer business ideas will get off the ground and fewer private sector jobs will be made. Perversely, this will lead to more pressure to grow the ranks of welfare recipients and public servants and the downward spiral of a shrinking private sector and burgeoning public sector will continue. How the banks go about their business will change, too. International experience cited by the government suggests that banks may increase the ratio of their capital to lending. The government says this is a good thing, but this is curious, because it implies that the minimum capital levels required by the prudential regulator are too low. We should be weary of suggestions that it is always good to lift the ratio of capital to lending. The people who think that are mostly the same people who believe that fractional reserve banking is a massive Jewish conspiracy. The government also acknowledges that international experience suggests that a bank tax will encourage banks to pursue riskier lending. Perhaps banks facing an extra tax when they borrow funds will borrow only if the returns from on-lending are that little bit higher. The mere task of paying and collecting the bank tax will also divert resources and time. To pay the tax, each of the affected banks will need to undertake systems upgrades costing around $3 million each. This is money down the drain. The banks will have to hire more lawyers and tax accountants to walk the line between paying too much tax and falling foul of a new antiavoidance provision. This provision will say it is against the law for a bank to do something that a court subsequently thinks is for the sole or dominant purpose of getting a tax benefit. Putting taxpayers in this limbo land position is irresponsible. The tax office and prudential regulator will no doubt have to assign staff to get their heads around this new tax, too. That is more people employed in unproductive activities. If this keeps up, no-one in this country will be employed to make anything useful. It is incumbent on me to slay some myths about the wisdom of putting a tax on big banks but not small banks. A lot of people in this place say that they stand up for small business, but I seem to be the only person in this place who also stands up for big business. More should do so, because it is big business that is more productive, that is innovative, that generates higher paying jobs and that employs more Australians than small business. Every big business began as a successful small business anyway. The decision to tax some banks and not others creates inherent problems at the boundary. It unfairly treats banks that are just over the threshold compared with those that are just below the threshold. This is particularly the case given that a bank will be taxed on all the relevant liabilities, not just those over the threshold. This boundary issue may not be urgent now, given the current make-up of the banking sector, but it is foolish to enact a permanent law based solely on current circumstances. The bank tax also discourages small banks from becoming big banks. The government justifies its attack on big banks by noting that they have lower costs, but it makes no sense to put a tax on the businesses in an industry that have lower costs. This just discourages striving for lower costs and rewards waste. Higher costs across the industry will be the result. The government justifies its attack on big banks by noting that the big banks charge higher prices and still maintain market share, but this suggests that the government thinks the customers of the big banks are stupid and will not shift banks even though it is in their interest to do so. If that is the case—and I do not believe it is—then putting an extra tax on big banks will not change it. It will just punish those who are loyal to the banks for other reasons, which is hardly a good basis for public policy. The government also says that its bank tax is fair because big banks pose risks to the financial system and the economy. This is not true. The primary victims of the collapse of a big bank would be the people who choose to do business with that bank. Beyond these costs, there would be significant system- and economy-wide problems only to the extent that the government poorly manages the payments system between banks and only to the extent that the government does something as stupid as bailing out a failing bank. And basing policy on the social costs from big banks without considering the social benefits from their service of redirecting funds from savers to borrowers is piecemeal. If we take into account the social costs and benefits from big banks, then big banks would be more deserving of a special subsidy than a special tax. I oppose the bank tax. It is unwarranted distribution. It will change the way we do things for the worse. Taxing big banks but not small banks makes no sense. With bill after bill that passes this place with Liberal and Labor support, Labor is drifting dangerously into jingoistic self-destruction. The Liberal Democrats are determined to call out this mad descent. For the record, we have never received any donations from the banks—more's the pity, although we live in hope! But my point is this: the Liberal Democrats are a party of principle, and this bill is just wrong in principle. 20:31 Senator RICE 155410 Victoria It is with great pleasure that I am rising to speak on the Major Bank Levy Bill 2017, because it is a rare day that as a Greens senator I get to speak on legislation that is Greens policy that has been adopted by the government. The idea of a levy on the banks has been Greens policy for over a decade, and there is a very simple reason: this money that is in some way going to be recouped from the banks is in fact money that belongs to the people of Australia. Since the global financial crisis, the government's implicit guarantee to the big five banks that they are too big to fail, that if anything happened to them the government would come in behind them and make sure they do not fail, has been worth real dollars, real cash, to the banks. The estimate of how much that implicit guarantee is worth to the big five banks is somewhere around $3¾ billion to $4 billion a year. That is money that, if anything happens to them, we will come in and support them. It is our money that the banks are benefiting from. And it is a benefit that those big five banks have that the other banks do not have. There is a very clear logical reason that we, as the people of Australia—and the government of Australia—should be recouping some of that value from those big five banks. So this bill today is going some way to recouping that, in the order of $6.2 billion over the next four years. As Greens we reckon that, in order to really be recouping it, it could be twice if not three times as much. But look, it is a start. And that $6.2 billion is an important piece of revenue. The issue we have in terms of balancing the budget in this country is that we get told a lot that we have a budget crisis, but we do not have a budget crisis; what we have in this country a revenue crisis. There are many, many opportunities we should be taking up to be raising revenue, to be able to spend it on the critical services, the critical infrastructure, the critical resources that we need as a country. So, if there is $6.2 billion that is there and that is fair to be gained from the banks, then getting that $6.2 billion is absolutely the right thing to be doing. Let's have a think about the sorts of things that $6 billion is being put towards and that, if we doubled or tripled it, could be put towards. This week we are focusing on education funding. As you know, we are in negotiations as to how much money is going to be spent on schools. This is not money to be frittered away on fanciful extras in our schools; this is critical money that is needed by our schools to make sure every student in this country has the resources they need, to bring every student up to the level that has been determined as being fair—the school resource standard. That is the sort of thing we need money for. That is the sort of thing this $6 billion is being put towards. If we were raising more money, if we were having this bank levy at a level that the Greens feel would be justified, we would have money we could afford to be putting towards higher education so that we do not have to have these cuts that are being imposed on higher education. I was talking with friends at the weekend who told me how tragic were the cuts underway at Victoria University in Melbourne, where 168 academics are losing their jobs and there are large class sizes because resources are not going into higher education. That is the sort of measure we should be supporting with extra revenue. We should be raising enough money to make sure we can provide quality health services and sure is working effectively. If we had more revenue coming in, we might be able to continue and expand, keeping dental care included in Medicare. Again, everybody in Australia knows it is ridiculous that the rest of our body is being covered by Medicare—but not the problem of the mouth! Dental care should absolutely be included under Medicare. But we are told, 'Oh no, we can't afford to do that!' But with extra revenue coming in, that is the sort of measure we would be able to afford. Unemployment benefits have stagnated, flatlined, for so long. People on unemployment benefits are now living in poverty. They cannot afford to rent a house anywhere in any of our major capital cities. Imagine if we had the revenue to increase unemployment benefits to make sure every Australian has the resources to live a life of dignity. We could put solar panels on all social housing, on all low-income houses. That would be a really important thing for reducing the energy bills of the most vulnerable in our society. We could pay for major infrastructure projects. The $6 billion we are talking about today could pay for a major rail project in any of our cities. These are all critical projects that we need to have the revenue to pay for. So it is very pleasing that we are at least moving forward in some way and recognising that there are legitimate, fair responsible ways of raising that revenue. The other issue raised in debate today is that this levy is a very significant impost that is going to affect the banks and potentially be passed on to their customers. My colleague Senator Whish-Wilson pointed out what a furphy this is. The banks have just retained their AAA credit rating, and the bonuses of the bank CEOs add up to $300 million a year, which is a third of the amount being raised by this bank levy. As I said at the beginning, this our money. The banks can afford to pay it, and it is a legitimate thing for them to pay it. There is a lot more that needs to be done to make our banks socially responsible and regain their place as top-quality corporate citizens. We have been doing work to get a parliamentary commission into the banks, which went through the Senate last week. Once that gets up, or a royal commission gets up, it will shine a spotlight on what needs to happen for the banks to lift their game. It is worth noting that there are only two banks in Australia that are members of the Global Alliance for Banking on Values. Notably, neither of those two banks is one of the big five. The mission of the Global Alliance for Banking on Values is to use finance to deliver sustainable economic, social and environmental development, with a focus on helping individuals to fulfil their potential, and to build stronger communities. I reckon that is a pretty good mission for all banks. It is the sort of mission that I think all banks should be able to sign up to. I look forward to some of our big five banks deciding that they too can join the two banks in Australia that are members of that global alliance. At the moment Bank Australia and Teachers Mutual Bank Limited are the only two banks in Australia that have signed up to that alliance. There is a long way to go for the banks. But what we are debating today—this decision to have a levy on the banks—is a really good start towards getting the banks, and those big five banks in particular, to pay their way. I look forward to seeing the government adopting other Greens policies in the future. It would be a really lovely thing to see, but it is probably too much to ask for. We will put issues like reforming negative gearing and the capital gains tax discount, and ending fossil fuel subsidies on the agenda as well, and hopefully we might get the same sort of support that we now have for this bank levy. In the meantime I am very pleased to be joining my other Greens colleagues in supporting this bill. 20:41 Senator CORMANN HDA Western Australia I thank all Senators who have contributed to this debate and commend the bill to the Senate. The ACTING DEPUTY PRESIDENT 247871 The question is that the amendment moved by Senator Whish-Wilson be agreed to. Question negatived. Original question agreed to. Bills read a second time. In Committee 100 20:42 Senator XENOPHON 8IV South Australia by leave—On behalf of the Nick Xenophon Team I move the requests on sheet 8166 together: (1) Clause 4, page 3 (lines 7 to 9), omit subclause (2), substitute: (2) The total liabilities amount for a quarter in relation to an ADI is: (a) if the ADI is a foreign ADI (within the meaning of the Banking Act 1959)—the amount equal to the total liabilities of the ADI and its related bodies corporate (within the meaning of the Corporations Act 2001) for the quarter (excluding any liabilities to each other); or (b) in any other case—the amount equal to the total liabilities of the ADI for the quarter; as reported under an applicable reporting standard. (2) Clause 5, page 3 (lines 20 and 21), omit paragraph (2) (a), substitute: (a) the amount equal to the total liabilities of the ADI for the quarter, as reported under an applicable reporting standard; and (3) Clause 6, page 4 (line 18), omit "paragraph 5(2) (b)", substitute "(5) (2)". (4) Clause 7, page 5 (lines 19 and 20), omit "subsection 4(2), paragraph 5(2) (b) or subsection 6(2)", substitute "subsection 4(2), 5(2) or 6(2)". (5) Clause 8, page 5 (line 28), omit "subsection 4(2), paragraph 5(2) (b), or subsection 6(2)", substitute "subsection 4(2), 5(2) or 6(2)". Statement pursuant to the order of the Senate of 26 June 2000 These amendments are framed as requests because they are to a bill which imposes taxation within the meaning of section 53 of the Constitution. The Senate may not amend a bill imposing taxation. Statement by the Clerk of the Senate pursuant to the order of the Senate of 26 June 2000 As this is a bill imposing taxation within the meaning of section 53 of the Constitution, any Senate amendment to the bill must be moved as a request. 20:43 Senator XENOPHON 8IV South Australia I raised these issues in the context of my second reading contribution earlier today. I can indicate that these requests would ensure that the provisions of the Major Bank Levy Bill would also apply to foreign banks that have significant assets of over $100 billion in terms of their global assets. What this would mean is that banks such as HSBC, ING and BNP Paribas would be liable for this levy in terms of their Australian liabilities. I think it would lead to an unfair and uneven playing field if foreign banks got a free kick on the bank tax. We heard the evidence that was given to the inquiry just a few days ago. The major banks have set out—as I did in my second reading contribution—the reasons why this particular levy ought to apply to the foreign banks. They will get a strategic competitive advantage over the major banks, and I believe that is fundamentally unfair. We are looking at three foreign banks active in Australia whose global liabilities are well over the government's $100 billion threshold. ING has something like $794 billion in liabilities. Banque National de Paris has 1,971 billion—close to two trillion—euros in liabilities. HSBC has over 2,000 billion British pounds in global liabilities. A bank levy of six basis points on all foreign banks on their Australian liabilities would be in the order of about $180 million per annum. A bank levy of six basis points on all foreign banks under their Australian assets would be in the order of $228 million per annum. This is something that I think would be equitable and fair. I know that there does not appear to be much support in the chamber for this, but I have yet to hear a good explanation as to why the foreign banks should be exempt from this and major Australian banks should be put at a competitive disadvantage. 20:46 Senator CORMANN HDA Western Australia I thank Senator Xenophon for his contribution. Firstly, foreign banks are not excluded from the application of the major bank levy. It just happens to be the case that no foreign bank in Australia is a major bank. What is relevant is the RD liabilities under the Australian licence, and no foreign bank operating in Australia is a major bank in Australia. No foreign bank operating in Australia has liabilities of $100 billion or above. If in future any foreign bank operating in Australia grows to have a large presence with a subsidiary above $100 billion in total liabilities, they would be subject to the levy on the same basis. The concern of the government is that, if we were to support the amendment that Senator Xenophon has moved, the effect actually would be a lessening of competition in the banking market. It was indeed none other than former Labor Prime Minister Paul Keating who made a very significant effort to strengthen competition in the banking market in Australia by attracting foreign banks into the Australian market. If we were to assess foreign banks not based on their liabilities in Australia but on their liabilities worldwide, it would obviously put them at a significant disadvantage in terms of their activities in Australia, which would lessen competition, which would not be good for consumers. That is why the government has proposed to structure this major bank levy the way we have. 20:47 Senator GALLAGHER ING Australian Capital Territory Labor will not be supporting this amendment. We note that Treasury has considered issues relating to foreign banks when designing the measure that is before us in the bill. Labor believes the government should release this work to explain why large foreign banks should be excluded, and we agree with the recommendation of the Economics Legislation Committee that Treasury provide greater explanation of the rationale for the method of liability calculation, which presently excludes foreign banks. Such information is important to consider the significant policies such as this, but in the absence of this information we emphasise that the importance of this legislation before the Senate is for budget repair, and we cannot let the government off the hook for its poor management of the budget. We will not delay the passage through the Senate of this legislation, which has a start date of 1 July. 20:48 Senator WHISH-WILSON 195565 Tasmania For several reasons, the Greens will not be supporting Senator Xenophon's amendment. Senator Xenophon was at the committee on Friday and may be aware this question was put to the second-tier banks, which appeared in the afternoon and which included Adelaide and Bendigo banks, ME Bank and Customer Owned Banking Association. They have themselves, interestingly enough, come out and lobbied for the bank levy, so let's be clear about that. Twenty out of 25 of the Australian Bankers Association's members support this bank levy because they want to see increased competition in the market. So we got this from the second-tier banks, and you would have expected that, when you put to them, 'Do you support this levy also including foreign banks,' they might say yes, because actually these foreign banks are quite fierce competitors for our second-tier banks. The answer was illuminating, and it is exactly my view. They said that the policy rationale, the underlying logic behind this bank levy, apart from increasing competition, is to pay the taxpayer back for its too-big-to-fail implicit and explicit guarantee to the big five banks. They made it very clear when they were asked. I asked the question: 'Do you support this levy?' and they said no, because it defeats the purpose. The foreign banks did not get a too-big-to-fail bank levy. In fact, the Australian banks, putting aside the Canadian banks, were the only banks in the world with this government guarantee. That is quite extraordinary. As I mentioned in my speech earlier, you could easily come up with $50 billion worth of profits they had made for shareholders from this too-big-to-fail guarantee. We are only asking them to give back $5 billion of that. That is paying a premium on an insurance policy provided by the Australian taxpayer. The other reason, as I think Senator Cormann pointed out, is that the policy cannot be discriminatory against any bank. It is very clear: it sets a liabilities level of $100 billion, and if you go over that, whether you are a foreign or domestic bank, you pay the levy. I have explained this to Senator Xenophon. If we set $100 billion and then set a lower level for the foreign banks and leave the second-tier Australian domestic banks out of it, that will not work. It is almost certainly going to be challenged in international courts through state-to-state trade dispute mechanisms. It would be discriminatory against foreign banks. The only way it would work would be for all banks to have the same policy applied to them, which is the case. I believe this foreign banks business has been thrown in by the big banks as a poison pill, and I am disappointed that we have fallen for what I think is the oldest trick in the book. The big banks are throwing this in there to try and kill this legislation, because they do not want to see more competition. I have a lot of respect for Senator Xenophon. It is interesting that in your speech you talked about supporting the smaller banks and that is one of the reasons why you will be supporting the levy. You talked about increased competition, but in a way you are contradicting yourself because, as Senator Cormann said—and I agree—what we want is more competition in the market, including from the foreign banks. Why make it harder for them? We want to make sure we have the most competitive market possible for all the banks. There are a lot of good reasons why we do not support the inclusion of foreign banks. If somehow everybody in here were to agree that the liability should be $10 billion and not $100 billion, and that included all the banks in Australia, we would be happy with that. But this is the policy that has been set at $100 billion. This is an opportunity that we should not squander. We should pass this legislation tonight. 20:52 Senator IAN MACDONALD YW4 Queensland As I mentioned in my speech on the second reading, there are couple of elements of this bill which I, as a Liberal, do not like. It does open the way for future governments to have a super profits tax, and that raises the issue of how we can argue against that in the future, in the next 10 to 15 years, when there might be another government in power. But I am persuaded, because of the need to repair Labor's mess in the budget, that we have to do something. I am prepared to go along with that. I also acknowledge the argument that this is a sort of payment or licence fee for the guarantee that the Australian taxpayers give to these banks, as they did in the time of the global financial crisis and more broadly. On balance, as I mentioned to my speech on the second reading, I do not really like it, but I am prepared to support it. But I do refer the minister to the recommendations of the Economics Legislation Committee—which, I might say, has a government majority—which had unanimous recommendations. There are five recommendations there, which I know the Treasurer would be aware of. I really want to confirm the government's position, particularly on recommendation 4, which I will summarise very briefly by saying it was all about the fact that it was raised with us that the Treasurer, if the economic and financial situation of the banks became quite critical—hopefully it never happens—but it was pointed out to us that currently the Treasurer was unable to give any relief in those extreme circumstances. We hope and expect they will never happen, but the committee thought that in that event it would be a good idea to give the Treasurer that ability and flexibility in those extreme circumstances to suspend the application of the levy. The committee was hopeful that the government would adopt that amendment. All of the amendments were done by the committee in good faith and after hearing the evidence. I will spend a couple of seconds on recommendation 1. It was put to us—and I personally agreed with this—that this is a budget repair levy and when the budget is repaired the levy should stop. I easily equated to that view. But the committee took a more moderate approach, saying: 'Well, let's have a look at whether we should look at stopping the levy when the budget is repaired. This has been sold to the Australian public as a budget repair measure and, once the budget is repaired, why do you continue on with a levy which many Liberals do not like?' We do not like it because, again, I will briefly mention, profit is not a dirty word. The banks make profits, and we hope they do make profits. As Senator Bernardi said, 'The only thing worse than a very, very profitable bank is an unprofitable bank. We do not want them.' There are lots of mums and dads who are shareholders in banks and they want the banks to make profits. Of course, the biggest shareholders in the banks are the superannuation funds, who want the banks to make money so that they get big dividends so that they can adjust their superannuation payouts to all of us in Australia to look after us all in retirement. The committee thought, as a mid-way post, that in two years the government should refer this back—not to an independent group or to some other organisation to assist—to the same committee, the Senate Economics Committee, to have a look to see whether the policy was fulfilling its stated objectives—that is, is it repairing the budget? Also, to look at the effect of competition on the banking market—let's have a look at that in a couple of years—and in two-years' time, after the levy has been working for two years, to see whether it is required in perpetuity, which is the current legislation as I understand it, and where it is going. It is there forever; it is not just until the budget is repaired. I would have hoped that in two years the— Senator Whish-Wilson 195565 'You keep going in perpetuity.' Senator IAN MACDONALD YW4 Sorry, you were— The TEMPORARY CHAIR 247871 Senator Whish-Wilson, you should be in your seat if you want to speak. Otherwise— Senator IAN MACDONALD YW4 It was obviously an inane comment, which we often get from the Greens political party. Senator Whish-Wilson interjecting— The TEMPORARY CHAIR: Order! Senator Dastyari interjecting— The TEMPORARY CHAIR: Senator Dastyari, no. You should resume your appropriate seat in the chamber if you have something to say; otherwise, it is most disorderly. Senator IAN MACDONALD YW4 Chairman, thank you very much, but I do not need protection from Senator Dastyari or from Senator Whish-Wilson. They have their own problems that are not relevant to this debate. The committee thought that the same committee should, in a couple of years, see whether this was needed to be in perpetuity—whether it needed to be there forever—or whether, once the budget was repaired, the levy should stop. That seemed to me to be a very reasonable compromise, which I had hoped the government would take some notice of. There were a couple of other things that were raised by witnesses at the committee which formed the basis of recommendations 2 and 3. Again, they are not recommendations that oppose the principle, for the reasons I have mentioned. The committee goes along with the levy, somewhat reluctantly—but we understand why. There was some evidence given at the committee which the committee thought if more fully investigated might actually improve it or might work to the government's disadvantage. I would like to get the minister's comments on how the government is going to deal with the unanimous recommendations of this committee. 20:59 Senator CORMANN HDA Western Australia I thank Senator Macdonald for his contribution and his questions. Firstly, in relation to recommendation 1, the government of course supports the Senate's role and the role of the Senate committee system in reviewing legislation. Ultimately referrals to the Senate Economics Legislation Committee are a matter for the Senate. If the Senate in future considers that these matters should be reviewed at that time, that is of course entirely within the Senate's prerogative, and from the government's point of view we are completely comfortable with that occurring at that time. In relation to recommendation 2, the committee recommends that Treasury closely examine issues relating to the technical aspects of the bill to determine whether changes are required to avoid double taxation and/or to narrow the liability base. Treasury has already undertaken extensive work and examined issues relating to double taxation. Consistent with the UK, it is expected that any double taxation will be prevented through the use of international tax treaties and that Treasury will monitor the practical operation of the law and make recommendations to government if necessary. In relation to recommendation 3, I have actually in responding to Senator Xenophon's amendment explained why the government does not think it is a good idea to exclude foreign banks. Foreign banks are actually covered by this legislation; it is just that there is not a single foreign bank operating in Australia that is a major bank in Australia. But if a foreign bank were to exceed the $100 billion liability threshold in the future then the levy would apply to it. To do otherwise would reduce the level of competition in the banking sector in Australia, and Senator Whish-Wilson has also made a very accurate observation that we are not at liberty to discriminate in the Australian market between domestic and foreign banks. The same policy has to apply on the same basis. In relation to recommendation 4, the committee recommends that the legislation be amended so that the Treasurer may, on the advice of APRA, suspend the application of the levy to any or all authorised deposit taking institutions in extreme financial or economic circumstances. Given the strength of the major banks, the government does not believe that this is either appropriate or warranted, and we do not believe it would send the right signal for the government to indicate that such a measure is required by supporting any initiative to that effect. Consistent with the levy being deductible, like other expenses for tax purposes, the expectation is that the banks will manage the cost of the levy as with all other expenses. 21:02 Senator IAN MACDONALD YW4 Queensland I will not pursue this any further except to ask the minister one question in relation to recommendation 1. I hear what the minister says, and of course it is appropriate that the Senate is able to set up committees in two years time to look at whatever it needs to. The committee would have hoped that the government might have actually made a firm commitment to that. There were calls which, I have to say, I and some other committee members thought had some merit, in that there should be a sunset clause in the legislation. So, the legislation would read 'when the budget got into surplus'—but better words than that!—then this levy would stop. But that was a bit prescriptive, so the committee, as I said, took a conciliatory view in saying, well, let's not make that mandatory but let's get the government of the day—and it may not be this government; I hope it is, but it may not be—to at least have a look in a couple of years to see whether the levy is repairing the budget, which is the basis upon which it is introduced, and whether it is affecting competition in the banking market and whether it is one that should continue forever rather than only, as was the rhetoric around it, to the time when the budget is repaired. Whilst the minister is right—the Senate can set up whatever committees it likes—I would have hoped that there might have been some government imprimatur that says, 'That's a good idea; we will do that in two years.' It does not cost the government anything. It does not in any way limit the passing of the bill. But it is something that I think would show good faith and would also address some of the very genuine concerns that were raised at the committee hearing. I accept that some of the submissions made to the committee may not have been 'genuine', but many were, and the committee tried to pick up on those and made what we hoped would be helpful recommendations to the government. 21:05 Senator CORMANN HDA Western Australia Firstly, Senator Macdonald is quite right. The government does not support a sunset clause for this legislation, and it is indeed our intention for the legislation to operate on an ongoing basis, which is something the government has made clear all the way through. In relation to the Senate Economics Legislation Committee, the difficulty I have is that, as all senators know, the government does not have the numbers in the Senate at present. In two years time it will be up to the Senate at that time to decide whether or not they proceed with this inquiry. From the government's point of view we support the Senate's reviewing of legislation and the Senate committee system through which legislation is reviewed. We would support an inquiry of the type that is proposed by the committee, but we are not be able to bind a future Senate, and it will be a question for the Senate ultimately as to if and how that proceeds. 21:06 Senator DASTYARI 225099 New South Wales I was paying attention to what Senator Macdonald was asking and was not trying to interject in debate; I was talking to Senator Whish-Wilson across the room, so my apologies about before. Senator Cormann, my understanding of the point that you made, which I think was a fair one, is that we want to be careful about binding future Senates to decisions. Senator Cormann HDA We can't do it. Senator DASTYARI 225099 We cannot. We can move motions and say whatever we want in this chamber, but a future Senate will determine its own destiny. I accept that. I am not as familiar with this as others or as the advisers you have around you. The process for having a review of legislation in two or three years time: is the review of these types of tax bills by Treasury or others an uncommon process? I do not know what the normal process is for this kind of taxation legislation and whether there is a precedent for doing that. That is not a loaded question; it is a genuine one. 21:07 Senator CORMANN HDA Western Australia Neither the committee nor I believe the Labor opposition are proposing that an inquiry from time to time is included in legislation. Senator Dastyari 225099 No, no; it's a genuine question. Senator CORMANN HDA And the genuine answer is that from time to time reviews are part of legislation. As Senator Macdonald explicitly pointed out, he was not proposing an independent inquiry or any inquiry other than through the Senate Economics Legislation Committee. As I have indicated, the government is supportive of that proposition. 21:07 Senator XENOPHON 8IV South Australia I would address some of the arguments put forward by Senator Whish-Wilson, who made reference to the attitude of the smaller banks. When I put the question of foreign banks to Mr McPhee, the CEO of ME Bank, he said in evidence: But what I believe is that we should have a level playing field and therefore if it can be clearly demonstrated that the foreign banks are getting an advantage, and it might be a rulings advantage from wherever they are domiciled et cetera, then I think the levy should also apply to levelling the playing field and making everyone able to compete fairly. I think this is an argument. I do not accept many of the arguments of the big banks as to why they should not pay the levy, but I accept this argument as to why foreign banks should pay the levy. The foreign banks in question compete with the big banks mainly in corporate lending—not so much in retail lending. They are already more competitive than the Australian majors, because they borrow in their home markets where interest rates are often zero or close to zero. That will see those big foreign banks that operate and have a significant presence in this country gain a competitive advantage over Australian banks. If you look at the total assets on the consolidated balance sheets—they are not at the same time as the balance dates are not all the same, given that some of these are overseas banks—the approximate foreign currency figures, by comparison, are: Westpac, $840 billion in consolidated balance sheets; CBA, $972 billion; NAB, $790 billion; ANZ, $897 billion; Macquarie, $167 billion; HSBC, $3.29 trillion; ING, $1.2 trillion; and BNP, $2.6 trillion, I say that, insofar as they are liabilities here in Australia, that should be subject to the levy. I will not push it any further as I know it does not have the support of most of my colleagues in this chamber, but I think it is an important principle. I would ask Senator Cormann a final question on this: if it is demonstrated that this is giving a competitive advantage to the major foreign banks, such as HSBC, ING and BNP, is that something the government will be monitoring and taking appropriate advice on? 21:10 Senator CORMANN HDA Western Australia The answer is that it is an explicit and deliberate design feature to ensure that the major bank levy does not apply to the smaller banks, whether they are Australian banks or foreign-owned banks. There is no foreign-owned bank that is a major bank in Australia. We actually believe that the way that this is designed, deliberately, will help to strengthen competition in the banking system. The CHAIR: The question is that the requests (1) to (5) on sheet 8166 as moved by Senator Xenophon be agreed to. Bills agreed to. Bills reported without amendments; report adopted.

The committee divided. [21:15]
(The Chair—Senator Lines)

 8 AYES Burston, B Georgiou, P Griff, S Hanson, P Kakoschke-Moore, S (teller) Lambie, J Roberts, M Xenophon, N 44 NOES Back, CJ Brown, CL Bushby, DC Cameron, DN Cash, MC Cormann, M Dastyari, S (teller) Di Natale, R Duniam, J Fawcett, DJ Fierravanti-Wells, C Fifield, MP Gallacher, AM Gallagher, KR Hinch, D Hume, J Ketter, CR Ludlam, S Macdonald, ID Marshall, GM McCarthy, M McGrath, J McKenzie, B McKim, NJ Moore, CM O'Sullivan, B Payne, MA Polley, H Pratt, LC Reynolds, L Rhiannon, L Rice, J Ruston, A Seselja, Z Siewert, R Singh, LM Smith, D Sterle, G Urquhart, AE Waters, LJ Watt, M Whish-Wilson, PS Williams, JR Wong, P 0 PAIRS

Question negatived.

 Third Reading 105 21:19 Senator CORMANN HDA Western Australia I move: That these bill be now read a third time. Question agreed to. Bills read a third time. Medicare Guarantee Bill 2017, Medicare Guarantee (Consequential Amendments) Bill 2017 106

Medicare Guarantee Bill 2017

Medicare Guarantee (Consequential Amendments) Bill 2017

First Reading 106 21:19 Senator CORMANN HDA Western Australia I move: That these bills may proceed without formalities, may be taken together and be now read a first time. Question agreed to. Bills read a first time. Second Reading 106 21:20 Senator CORMANN HDA Western Australia I move: That these bills be now read a second time. I seek leave to have the second reading speeches incorporated in Hansard. Leave granted. The speeches read as follows— MEDICARE GUARANTEE BILL 2017 The Turnbull Government is guaranteeing Medicare so that all Australians can be assured Medicare is not only here to stay, but will be strengthened into the future. Australians place great faith in our world class health system. In 2015-16, 89.3 per cent of the population accessed a Medicare service, using over 384 million Medicare services. The Pharmaceutical Benefits Scheme (PBS) is a key component of Australia's health system that has provided affordable access to necessary and lifesaving medicines for Australians for almost 70 years. Around 208 million services — 91.7 per cent of which were concessional — were provided under the PBS in 2015-16. The Government is building on our world class system by strengthening Medicare. In this year's Budget, the Government will provide $1 billion to reintroduce indexation for certain items on the Medicare Benefits Schedule (MBS). The Government is investing record funding for our public hospitals and will deliver an additional $2.8 billion in the 2017-18 Budget. The Government has also committed to an additional $1.2 billion to list new and amended, cost-effective medicines on the PBS, as announced in this year's Budget. This adds to more than 1,400 new or amended listings on the PBS since 2013, compared to just 330 in Labor's last three years in office. Labor rationed the PBS, they did not list life-saving drugs, when they could have and should have. We do. The MBS and PBS combined will account for almost 45 per cent of Commonwealth health expenditure in 2017-18. The Government is guaranteeing Medicare. According to those opposite, the Government was apparently meant to have sold Medicare by now. With this bill the Government is guaranteeing the MBS and PBS so that all Australians can continue to access timely and affordable health care and medicines into the future. By law, we will establish a Medicare Guarantee Fund to pay for all expenses on the MBS and PBS from 1 July of this year. The fund will secure the long-term future for the Medicare Benefit Schedule and the Pharmaceutical Benefits Scheme. The Fund will consist of the Medicare Guarantee Fund (Treasury) Special Account and the Medicare Guarantee Fund (Health) Special Account. Proceeds from the Medicare levy, less the portion set aside for the National Disability Insurance Scheme, will be paid into the fund to meet MBS and PBS costs. Because the Medicare levy does not and has not ever covered to full costs of providing healthcare in Australia, an additional contribution from income tax revenue will be paid into the Fund to meet MBS and PBS costs. The money will be placed in the fund every year – transparently, assuredly, responsibly. In 2017-18, an estimated $33.8 billion will be credited to the Fund. The Medicare levy will contribute about $12.1 billion. The remainder, an estimated $21.7 billion, will be drawn from personal income tax receipts, equivalent to around 10 per cent of all personal income tax. The funds credited from the Medicare levy will be equivalent to three-quarters of the revenue raised by the Medicare levy for the next two years. This will shift to become three-fifths of the revenue raised by the Medicare levy from 2019-20 when the Medicare Levy will need to be increased to cover the full costs of the NDIS and fill the funding gap left by those opposite. The amounts credited to the Medicare Guarantee Fund will be held in the Fund for the sole purpose of meeting the cost of essential health care provided under the MBS and PBS. They will provide transparency about the costs of Medicare and the PBS and a clear guarantee on how we pay for them. The Fund demonstrates the Government's commitment to Medicare by ring-fencing revenue for the sole purpose of MBS and PBS spending. Ring-fencing the revenue in the Medicare Guarantee Fund will increase the public visibility of the costs of the MBS and PBS, the quantum of revenue generated by the Medicare levy and the additional revenue necessary to meet these costs. The Fund does not change the demand-driven nature of MBS and PBS funding. To make sure that there is always sufficient credit in the Fund to meet MBS and PBS costs, the credit to the Fund will be adjusted at every Budget update. This will ensure that it is in line with forecast future growth in MBS and PBS expenditure over the forward estimates. In the event that the Fund has insufficient contributions to meet estimated MBS and PBS expenses in any year, a special appropriation will meet those expenses. This ensures that MBS and PBS funding is always guaranteed. Full details of the bill are contained in the Explanatory Memorandum. MEDICARE GUARANTEE (CONSEQUENTIAL AMENDMENTS) BILL 2017 The Medicare Guarantee (Consequential Amendments) Bill 2017 makes amendments to the Health Insurance Act 1973 and National Health Act 1953 to reflect the proposed operation of the Medicare Guarantee Bill 2017, which secures the ongoing funding of the Medicare Benefits Schedule (MBS) and Pharmaceutical Benefits Scheme (PBS). The MBS and PBS are currently paid under the Health Insurance Act 1973 and National Health Act 1953 respectively. These acts meet payment obligations under those schemes by appropriating from the Consolidated Revenue Fund. The Medicare Guarantee (Consequential Amendments) Bill 2017 makes a number of consequential amendments to the Health Insurance Act 1973 and National Health Act 1953 to replace the current special appropriations under those acts with the Medicare Guarantee Fund. These changes will increase transparency around the cost of running the MBS and PBS and will guarantee the Government's commitment to fund the affordable health care all Australians rely on. Full details of the bill are contained in the Explanatory Memorandum. 21:21 Senator POLLEY e5x Tasmania I rise to speak on the Medicare Guarantee Bill 2017 and the Medicare Guarantee (Consequential Amendments) Bill 2017. Let me be clear: while these bills might have 'Medicare guarantee' in their names, they do not do anything to actually guarantee Medicare. They are a sham, with no guarantee of policy stability and no guarantee of additional funding. In fact, at the same time as the government announced their Medicare Guarantee Fund in the budget, they were locking in cuts of billions of dollars to Medicare. To understand why this fund is such a joke, we need to look at the government's approach to health, starting with the government's Medicare freeze. The former Prime Minister put in place a Medicare freeze in December 2014. It was the current Prime Minister who extended it to 2020. While this freeze has been in place, we have seen impacts on bulk-billing, with GPs saying they can no longer afford to bulk-bill all patients, and out-of-pocket costs soaring. For years GPs, specialists and health experts have been sending a clear message to the government: the freeze is hurting now and it should have been dropped a long time ago. This is what the AMA said during the election; I quote the AMA president: 'We know there are some GPs that are changing their billing practices. That commences today, on 1 July. The reality is that there are a lot of GPs who decided they could probably take the hit for a couple of years, but they are saying enough is enough.' And still, after all this evidence, did they drop the freeze immediately? No. Australians will have to wait years until the freeze is finally dropped. These are not the actions of a government that understands the impacts of its health cuts and listens. These are the actions of a government that wants to pay lip service to the idea of doing something, but cannot bring itself to do the right thing. We know the impact the freeze is having on access to GPs, with bulk-billing for GPs dropping since the election and out-of-pocket costs skyrocketing. But it is not just in the GPs' waiting rooms. It also impacts Australians who need specialist care. In the past 12 months 40 per cent of Australians needed to see a specialist. That is around 7.4 million Australians who need to see a specialist each year. But more than 600,000 Australians will delay seeing a specialist at least once because of the cost, with those in low socioeconomic areas more likely to delay because of cost. Keeping the freeze in place will continue to impact Australia's sickest and most vulnerable patients, such as people undergoing oncology treatment, children needing paediatric care and people undergoing dialysis. The decision in this budget to keep the freeze in place for years comes when out-of-pocket costs for specialists have skyrocketed. Only last week, new data showed that on average patients are paying an extra $24 out of their own pockets every time they visit a specialist. That is up 42 per cent since the government introduced their freeze in December 2014. Every day the government's freeze continues is another day that Australians will pay more for vital health care. The budget is woefully inadequate when it comes to hospitals funding. It was a bitter disappointment for our public hospitals that the government did not allocate any additional funding to address the blowout in elective surgery wait times or the queues in our emergency departments. Our public hospitals are in crisis under this government. Elective surgery waiting times are the worse they have been since records began to be kept in 2001. Patients presenting to emergency departments requiring urgent medical attention are being left in emergency departments for too long. In the last financial year, only 67 per cent of emergency department patients classified as urgent were seen within the recommended 30 minutes. Critically, public hospital capacity is not keeping pace with population growth and is not increasing to meet the growing demand for services. The government's budget has done absolutely nothing to do this—nothing for elective surgery and nothing for strained emergency departments. And not only that; the government has changed the funding formula for 2021, meaning public hospital funding will revert to the level set in the disastrous 2014 budget without a new agreement. In another sign of the government's appalling approach to public hospitals the Medicare Guarantee Fund does not even include public hospital funding, long considered an integral part of Medicare. How can this fund come close to guaranteeing Medicare when it does not even include hospital funding. Let's look at what this fund does. This fund simply changes the manner of appropriating funds from the budget for the purpose of paying MBS benefits and PBS payments. Currently authority to appropriate funding from the consolidated revenue fund, the only fund that constitutionally exist for the purpose of MBS benefits, is granted through the Health Insurance act 1973. Similarly, authority to appropriate funding from the consolidated revenue fund for the purposes of the PBS payments is granted through the National Health Act 1953. So, basically, the way the system works now is that the funds from the budgets are appropriated through the authority granted by two pieces of legislation directly for the purpose of MBS benefits and PBS payments. What these bills will do is change this so that the consolidated revenue fund will be appropriated directly—firstly into the Treasury special account, then into the health special account and then on to MBS benefits and PBS payments. Former Health Secretary Stephen Duckett said: 'The Medicare Guarantee Fund is nothing more than a rebadging exercise. It changes the badge on a policy in the hope people might think it is a new policy.' Does this fund guarantee the government will not cut Medicare? No, it does not. Does this fund guarantee the government will not cut hospitals? No, it does not. Does this fund guarantee that the money the government will save through PBS price disclosure arrangements will be reinvested in new medicines? No. Once again, this is another example of desperate smoke and mirrors in an attempt to distract from the fact that the government is cutting billions of dollars from Medicare. Only Labor can be trusted to fight for Medicare. Only Labor can be trusted to protect Medicare. So that is exactly what we are doing—introducing an amendment that will properly protect the future of Medicare. This amendment will mean the bill cannot be considered until funding to support universal access to public hospital treatment is included in the Medicare Guarantee Fund. As I have noted, it beggars belief that hospital funding, a core pillar of Medicare, has been left out of this fund. This is yet another sign of how this government approaches public hospitals with neglect and disdain. The government has also failed to properly invest in public hospitals, with their budget confirming they plan to return to the disastrous funding formula of the 2014 budget in the 2020-21 financial year. There is a reason this funding formula was so widely rejected and why it needs to be rejected again. The amendment will guarantee immediate and annual indexation of Medicare rebates that have been frozen by this government, including GP rebates and rebates for specialists, consultations, procedures and allied health services. Every day the government's Medicare freeze remains in place is another day that Australians will pay more for critical health care. Finally, given that we know this government cannot be trusted with anything on health, this amendment will mean that the bill cannot be considered until there is a guarantee that savings from the Medicare Benefits Schedule review and agreements with stakeholders will be reinvested in Medicare and not used as an excuse for further cuts. This government is hell-bent on gutting Medicare through any means possible. At the last election, Labor committed to reinvesting every single dollar of savings found through the ongoing Medicare Benefits Schedule review back into Medicare. The government has not made the same undertaking, and we know that they will cut into Medicare if they get their way. If the government votes against any of these amendments, it will be more confirmation that their budget was a complete sham. With their disastrous record of cuts to health and Medicare, we know the government can never be trusted to do the right thing. I understand the amendment has been circulated. I move: Leave out all words after "that" insert: "the bill be withdrawn and redrafted to provide actual guarantees for the future of Medicare, specifically by: (a) setting out the purpose of Medicare, namely to provide a universal public health insurance scheme that provides access to medical, pharmaceutical and public hospital services based on clinical need, not capacity to pay; (b) including funding to support universal access to public hospital treatment, along with medical and pharmaceutical benefits, in the purpose of the bill; (c) guaranteeing immediate and annual indexation of Medicare rebates that have been frozen by this Government; (d) guaranteeing proper Commonwealth investment in public hospitals, so that all Australians can access acute care without financial or other barriers; and (e) guaranteeing that savings from the Medicare Benefits Schedule Review and agreements with stakeholders will be reinvested in Medicare, and not used as an excuse for further cuts." 21:31 Senator DI NATALE 53369 Victoria I will be brief. I rise to speak on the Medicare Guarantee Bill 2017, but let's be very clear that this is a bill about nothing. It is a Seinfeld bill. It does nothing. It gives no effect to supporting Medicare. This is a headline without any substance. It is all tip and no iceberg. No-one is a bigger supporter of Medicare, the Pharmaceutical Benefits Scheme, the funding of our hospital system and our universal health care than the Australian Greens. We understand how critical it is that every Australian citizen gets access to world-class health care. Medicare, the Pharmaceutical Benefits Scheme, our public hospitals—they are all the foundation of our universal health system. They are critical tools to provide high-quality health care to every Australian. They need to be protected. Our system is not perfect, and we do need more investment and better targeting. We need to ensure that there is better access to our universal healthcare system and we will continue to strive to achieve those outcomes. But you would think that, given the audacious name for this bill, it somehow achieves some sort of guarantee for patients to achieve those outcomes. The truth is that this bill does nothing. It strikes me as something that was developed out of one of the episodes of The Hollowmen. You have got a problem where the government is not trusted to be able to deliver health care for Australians. They are seen as a government that does not support Medicare and is prepared to cut funding for our universal health system. So what do we do? We have got to try to come up with a solution. Rather than actually addressing the substance of the problem confronting the government—that we need to see greater investment in our universal health system—someone from the brains trust in the government has decided: 'I know. What we'll do is the money that we park into consolidated revenue we'll call something that somehow gives the impression we're doing something to protect that money from further cuts.' It does nothing of the sort. The truth is that, if this government wants to cut funding for health care, it can do it at the stroke of a pen. The so-called 'Medicare Guarantee Fund' offers absolutely no protection. Let's remember Medicare funds only a small proportion of all healthcare costs. Our hospital system, our pharmaceutical benefits system—all of the things that contribute to universal health care—are only funded in small part by the Medicare levy, so offering the Medicare Guarantee Fund offers nothing but window dressing. We know that the reasons for this bill are purely political. We know that the government was slammed during the last election campaign for its lack of support on Medicare. It must be said it was quite a crass campaign. The notion that the government was going to privatise Medicare got some traction and, of course, given the government's record, people simply do not trust them. But, again, rather than dealing with the substance, what we saw was a response that is all about window-dressing. When asked at Senate estimates recently about how this bill actually guarantees Medicare, we simply could not get any answers from the government. They simply could not answer the simple question that was posed to them, which was: 'Just explain how this Medicare Guarantee Fund protects Medicare? If the government wants to cut funding for health care, how is it that the establishment of this fund prevents that from happening?' No answer. There was absolutely no answer. So I think what we have here in is an example of politics trumping decent policy. We are not going to get in the way of this bill. We think that, ultimately, if the government wants to bring in legislation that it thinks somehow will allow it to claim the mantle of offering some sort of protection to Medicare, well, we will back that in. But, let us remember: when you are a government that has slashed funding for health care; when you have frozen Medicare indexation over a number of years, meaning that billions of dollars are being ripped out of the health system; and when you are a government that has tried to introduce Medicare co-payments but have been thwarted by the Senate, what you need to do is look at the substance of what you are doing, not offer hollow responses like the establishment of this bill. I think that the government needs to go back to the drawing board and recognise that, ultimately, what Australians want and what they deserve is a strong commitment—in practice, not just in spin—on how we are going to deliver world-class health care for Australians. The government might believe that Australians are gullible enough to think that this measure speaks to some sort of commitment, but we all know that most Australians are much, much smarter than that. 21:37 Senator WATT 245759 Queensland Thank you Mr Acting Deputy President Back, and, given that this may be one of the last times that you will be in the chair while I am on my feet, I wish you well in your retirement and thank you for your service, which is obviously much longer than mine. Congratulations on everything that you have achieved while you have been here. The ACTING DEPUTY PRESIDENT J7Q Thank you, Senator. Senator WATT 245759 I rise to make a short contribution on the Medicare Guarantee Bill 2017. Really, my primary objective is to commit Labor, once more, to one of Australia's great institutions, and that is Medicare. We, on the Labor side of this chamber, are extremely proud of Medicare. We have always been great defenders of it. We initiated it back in the Whitlam-Hayden years. It was taken away by the Fraser government, aided and abetted by former Treasurer John Howard. The Hawke-Keating government brought it back. When John Howard finally became the Prime Minister of this country, we saw repeated attempts by the conservatives to whittle away Medicare and whittle away public health care in this country, and we are very proud that, again, the Rudd-Gillard government backed in Medicare. We see this repeated cycle in Australian politics: every time there is a Labor government in power federally we see attempts to strengthen Medicare, and every time we see a conservative government elected in this country we see repeated attempts to whittle away Medicare, undermine public health and boost private health at the expense of everyday Australians. On this very day, when this bill was debated in the House, the opposition repeatedly gave the government opportunities to take a stand for Medicare. We gave them the opportunity to do something that was actually tangible behind this so-called Medicare Guarantee Bill. We gave them the opportunity to guarantee that Medicare would last well into the future, would continue to serve everyday Australians and would provide them with the public health care that they deserve and that they pay their taxes for, but this government did not want to do that. This bill is a so-called Medicare guarantee bill but all it actually guarantees is that a source of funds exists for Medicare which already exists in consolidated revenue. This is just a pea-and-thimble trick by this government, which we know is not committed to Medicare, which in its last term of office tried to privatise Medicare. We see a look of horror from the government every time you talk about their attempts to privatise Medicare, but that is borne out by the facts—they tried to outsource Medicare claims processing to the private sector. The mere mention that this government want to privatise Medicare is greeted with howls of disbelief, which demonstrates exactly how sensitive they are to the reality that they do have a very long history, going back 30 years, of trying to undermine Medicare. Today our Labor counterparts in the House of Representatives tried to give the government the opportunity to put some flesh on this legislation and demonstrate that they actually did guarantee Medicare, that they would continue to provide decent rebates for people receiving Medicare funded services and to provide GPs with rebates that actually increase not in two, three or four years time but immediately. But every time that this government was given the opportunity to put some flesh on its bones and demonstrate a real guarantee to Medicare, they ran the other way. I am sure I was not the only senator looking up over the course of the afternoon to see bell after bell being rung in the House of Representatives and wondering what on earth was going on. What was going on was that this government repeatedly failed to back amendments that Labor moved in the House of Representatives to actually guarantee Medicare, to actually guarantee that all Australians would receive quality public health care no matter who they were, no matter where they lived. Every single time one of those amendments was put in the House of Representatives today government members toddled in and voted against it. We know that this is a government that knows the cost of everything and the value of nothing. Today was a prime example—they had the opportunity to vote for real guarantees to Medicare, to really guarantee that all Australian's would receive quality public health care. They voted against it repeatedly in the House and I have no doubt that they will vote against it in the Senate this evening. Australians have been watching this debate for long enough to know who the real defenders of Medicare are, and they are the people sitting on this side of the chamber—not the conservative parties, who take every opportunity they can to undermine public health care in Australia. Let us hope that at some point this government does listen to Australians and really does come forward with a genuine guarantee of Medicare rather than some ridiculous accounting trick that is not actually backed up by any weight or any substance, any commitment, to properly fund Medicare, to properly fund public health care into the future. Labor is the party of Medicare—we will always be that—and the Liberals continue to show that they do not understand it. 21:43 Senator GALLAGHER ING Australian Capital Territory I know my colleagues have made a number of comments on essentially the accounting trick that has been moved in the Medicare Guarantee Bill and the Medicare Guarantee (Consequential Amendments) Bill to make it look like Medicare is guaranteed, but in practical terms these bills do very little. I would like to put on the record some comments about the use of special accounts and I think the broader push from this government to create special accounts. These are not bank accounts; they do not hold actual funds in them. I think Peter Martin, the economics editor for The Age, made an excellent point when writing about the government holding the NDIS to ransom with childcare cuts. He said there are no locked boxes, and there are no separate jam jars. The funds for Medicare will still come from the same place, consolidated revenue, and that reflects our Constitution and how budgets are put together. Each year the government will sit down and look at the estimates of consolidated revenue coming in on the one hand and a list of expenditure going out on the other. Funding sources do not fundamentally matter in this equation—it is essentially incomings versus outgoings. Section 81 of the Constitution sets out that consolidated revenue is all of the taxes that the Commonwealth raises. This includes personal income tax, company tax, excise, the petroleum resource rent tax and the new major bank levy, which we have just debated and passed in this chamber. On the expenditure side, we have many demand-driven programs like Medicare and the age pension, where, if you meet the specified criteria, the government will be able to appropriate money from consolidated revenue to pay for those services. Other government services, like the NDIS, are estimated and appropriated annually. A special account is just another way of appropriating these funds. Changing the appropriation source is relatively harmless, but it is worth pointing out that in this case these special accounts require the two ministers to calculate and credit sufficient amounts to be able to fund Medicare. Given the track record of those opposite—the robo-debt debacle and the census fail—you could be forgiven for being at least a little bit concerned about them having responsibility for paying our doctors and other transactions. In relation to the NDIS, these broader points about special accounts are relevant not just to the meaningless and harmless Medicare fund but also to the NDIS. The difference is that the NDIS special account is a harmful political instrument. The government is using it to pretend that it is necessary for the future of the National Disability Insurance Scheme, to pretend that the NDIS is not fully funded and to excuse its harsh cuts, cuts that are not necessary because Labor fully funded the NDIS. Let me spell it out clearly for the benefit of those opposite: the costs of the NDIS are already built into the budget bottom line and have been since the 2013 budget. This government has reported those for the last four years, and the Productivity Commission has observed that the NDIS is on budget. There has been no blowout. Importantly, the Productivity Commission report says that, if implemented well, the NDIS will significantly improve the lives of people with a disability. Labor got the funding right, but it is now crucial that the government gets the rollout right. Those opposite only came up with this special account last year when they were looking for a new way to justify their harsh cuts. Not even the Commission of Audit of the former Prime Minister, Mr Abbott, or the Liberal's first budget in 2014, renowned for its cruelty, used the NDIS as a political tool like those opposite are now doing. The 2013 budget set out the 10-year cost of the NDIS and the 10-year impact of the difficult but necessary decisions Labor used to fund the NDIS. These were not easy but, as a Labor government, we knew they were critical to the future of the NDIS. Savings included reforms to private health insurance of $6½ billion, reforms to superannuation of $6 billion and $20.6 billion from reforms to fringe benefits tax, reform to personal income-tax offsets, increasing the tobacco excise, reforms to import processing charges and, yes, increasing the Medicare levy. But, in our case, it was not accompanied by big unfair tax cuts for the highest income earners. These measures raised about $66 billion over 10 years, significantly more than the cost of the NDIS in the early years, and more than covered the cost of the NDIS in the year that the government claims it to be unfunded, 2018-19. The increase in the Medicare levy was placed into a special account, the DisabilityCare Australia Fund, to provide visibility as the Commonwealth reimburses the states and territories. Just because our other measures were not put into a special account does not mean that they were not being used to fund the NDIS. We do not have special accounts for the age pension, child care, the Defence Force or the Treasurer's wage—and no doubt that is funded. Even the former Treasurer, Joe Hockey, understood that consolidated revenue was fungible when he introduced a tax receipt to show individuals where the proportion of their tax was being spent. The government have looked at Labor's measures to fund the NDIS but they are not going into the special account; in fact, they ignore these completely in funding the NDIS. Instead, they use them to fund their own priorities, including part of their $65 billion tax handout to multinationals and the big banks, and they put at risk the NDIS. The disability sector has raised its own concerns around a special account being established for the NDIS and the governance issues surrounding it. They include: undermining the shared responsibility arrangements between jurisdictions and the neutrality of the National Disability Insurance Agency structure; undermining funding stability, given it is tied to the budget cycle and political debate; and a lack of transparency and accountability. This government could choose to cut funding to the NDIS at any point by not crediting sufficient funds to the NDIS special account. And here is the kicker: when the parliament decides not to pass this government's harsh cuts, those opposite could use it to hold the NDIS hostage. I will conclude my comments in light of the time, but these bills really are presentational. They are not worth the paper they are written on. You do not even need to look too closely at this legislation to know that. When it comes to Medicare, you cannot trust the Liberals and you cannot trust the Turnbull government. Only Labor can be trusted to fight for Medicare. 21:49 Senator CORMANN HDA Western Australia I thank the senators for their contributions, and I commend the bill to the Senate. The PRESIDENT e5v The question is that the second reading amendment moved by Senator Polley be agreed to. Original question agreed to. Bills read a second time. Ordered that consideration of these bills in Committee of the Whole be made an order of the day for a later hour.

The Senate divided. [21:54]
(The President—Senator Parry)

 28 AYES Cameron, DN Carr, KJ Chisholm, A Collins, JMA Dastyari, S Di Natale, R Dodson, P Gallagher, KR Ketter, CR Kitching, K Lines, S Ludlam, S Marshall, GM McAllister, J McCarthy, M McKim, NJ Moore, CM O'Neill, DM Polley, H Pratt, LC Rhiannon, L Rice, J Siewert, R Sterle, G Urquhart, AE (teller) Waters, LJ Watt, M Whish-Wilson, PS 33 NOES Back, CJ Bernardi, C Birmingham, SJ Brandis, GH Burston, B Bushby, DC Canavan, MJ Cash, MC Cormann, M Duniam, J Fawcett, DJ Fierravanti-Wells, C Fifield, MP Georgiou, P Griff, S Hanson, P Hinch, D Hume, J Kakoschke-Moore, S Leyonhjelm, DE Macdonald, ID McGrath, J McKenzie, B O'Sullivan, B Parry, S Payne, MA Reynolds, L Roberts, M Ruston, A Sinodinos, A Smith, D (teller) Williams, JR Xenophon, N 0 PAIRS

Question negatived.

 ADJOURNMENT 112 ADJOURNMENT Ballarat 113 21:57 Senator HUME 266499 Victoria I rise this evening to reflect on the fantastic work done in my home state of Victoria, specifically in Ballarat. As a senator for Victoria, it is an honour to represent the hardworking people of the Greater Ballarat shire as they shine in the state's sporting competitions, inspire cultural events in rural areas and drive economic growth in their communities. But firstly I would like to thank two people who have interned in my office for the last eight weeks. They have both had input into this adjournment speech. Claudia and Finn, I would like to thank you for your good attitudes and your tremendous hard work. I have really appreciated your company and your good humour over the last eight weeks and I wish you all the best for the future. Go Pies! I would like to begin by applauding the Ballarat Miners on their win over the weekend in the South East Australian Basketball League competition. It was tremendous news this morning to hear of the solid effort by the team to overcome the Hobart Chargers, with particular mention going to Mr Craig Moller for his impressive contribution of 26 points. This very impressive performance by Mr Moller and his team saw the Miners defeat their southern counterparts, the Hobart Chargers, by just five points. I must admit that I enjoyed holding this over my parliamentary colleague from Tasmania Senator Duniam at dinner tonight! The efforts of the Ballarat Miners over the weekend and in the previous nine games throughout the competition are a reflection of the hard work that has been put in by the people of Ballarat and the rewards that the region enjoys from it. Ballarat's basketballers are not the only sporting stars from the weekend. The Sebastopol Vikings are celebrating after beating the Melton Phoenix 2-zip—very impressive—this Saturday, as are Ballarat City for their proud win of 4-nil in the National Premier League. Sport is evidently alive and well in the great city of Ballarat. However, it seems that the great athletes of Ballarat are to share their sporting prowess with the rest of the world over the coming months. I was ecstatic to hear that both the Mount Clear College and St Patrick's College of Ballarat have secured the opportunity to host two international teams for this year's international AFL match. This August these two great schools will play host to teams from both Japan and China as they visit Australia once again to fight out the battle for the global title in AFL. The international visit will deliver an enormous benefit to local communities as fans from across the state, from across the country and now from across the world descend on the beautiful city of Ballarat. This is the second time that Ballarat has had the amazing opportunity to host the international competition, and I know that the businesses and the people of Ballarat will not disappoint with their hospitality. But of course sport is not the only domain that the people of Ballarat are excelling in. This year our marvellous sheep farmers in the Ballarat region have enjoyed some of the strongest prices seen since July last year, with lamb prices recorded as high as $240 a head. Not long ago these prices were half as low as that. I can assure you that Ballarat's farming families, such as the Mahers of Springbank, who were fortunate enough just last Saturday to capitalise on such strong returns, and the Frawleys of Leigh Creek, who last month boasted an even higher return of $250 a head, are thoroughly thrilled by the prices rewarding Ballarat's farmers. This is at the same time that Ballarat wool producers have seen prices increase more than 25 per cent in just the last six months. Our crop growers have enjoyed much-needed rain and our cattle producers have seen prices bounce back up in the last six months to almost 700c a kilogram. Returns like these and those received across much of Victoria are reflective of the great times ahead for Australian agriculture. I cannot begin to explain how thrilled I am to see the farmers in this very special region, this great part of Victoria—and indeed all of Victoria—feel some of those benefits. This prosperity is evident in Ballarat's thriving arts scene also. Just in the last three months Ballarat have had acclaimed pianists, an a capella group and artists from all over the world descend on Ballarat for a number of exhibitions and showcases. I would like to thank Caroline Almonte for her exquisite piece at the Wendouree Centre for Performing Arts last month and also the VOX capella group for their performances throughout Ballarat. Performers like these are examples of the phenomenal talent that exists within the region of Ballarat, and where better to showcase them than in the beautiful community halls this tremendous region has to offer. So it gives me great pride to represent such accomplished people and to share with you their amazing achievements. I thank the chamber for its indulgence. Queensland Government 113 22:04 Senator KETTER 244247 Queensland The recent federal budget saw a lack of investment in educational infrastructure. In the case of infrastructure $1.6 billion was cut this financial year, and over four years investment declines from $7.6 billion this year to $4.2 billion in 2020-21. This is from a government which claims to be focused on jobs and growth. There is a government which is focused on jobs and growth, and that is the state Labor government in my home state of Queensland. I want to take time in this adjournment debate to talk about how the Queensland state Labor budget is delivering jobs for Queenslanders. In particular I would like to talk about how the state budget has provided an extra $200 million over two years, allocated to councils, through the Palaszczuk government's successful Works for Queensland program. This additional funding means the program will pump a total of $400 million into local communities throughout the state. This funding is about kick-starting projects and getting people working as soon as possible. Across regional Queensland councils are telling the state Labor government that this program is already creating jobs, building great community infrastructure, and that they want to see more invested. The Queensland Labor government has listened and in fact in this budget they are delivering. Current projects in construction range from roadworks to upgrading parks and playgrounds and even to delivering renewable energy infrastructure. The initial Works for Queensland spend saw councils with more than 700 projects approved, supporting almost 6,000 jobs across our regions in Queensland. They note that these projects are having an enormously positive impact on regional communities and I am excited to see this continue. Every member of the Palaszczuk government is absolutely focused on creating local jobs and the extension of this program shows their commitment to regional communities. Every council in the regions will benefit with additional funds allocated to Far North Queensland, $53 million; North Queensland, $34 million; Central Queensland, $22 million; Wide Bay-Burnett, $39 million; Mackay-Whitsundays, $17 million; Western Queensland, $20 million; and the North-West, $15 million. Councils are encouraged to nominate, by 28 July 2017, projects for the second round of funding. All approved projects are expected to be completed by June 2019. The Works for Queensland program is part of the State Infrastructure Fund. How does this stack up with the Deputy Prime Minister's claims last week? Last week Mr Joyce launched into an explosive and unacceptable tirade aimed at the Queensland Labor government. Mr Joyce asserted that there was nothing in the Queensland state budget for regional Queenslanders. How truly wrong he is. He cried foul over the Rookwood Weir, as though he has a few thousand jobs for Central Queensland in his back pocket. Nothing could be further from the truth. The federal government has monumentally failed to deliver for Central Queensland, despite having the resources to do so. If Minister Joyce and his rabble were serious about getting Rookwood Weir off the ground they would be funding the project in its entirety. The number of fake announcements from the federal government around job-creating projects is at an all-time high. Since their re-election, Mr Joyce and the LNP have promised a litany of projects to be delivered in Central Queensland. However, we have yet to see anything come to fruition. The pick of these has to be the failed $30 million Bowen Basin jobs package. And don't get me started on their hollow promises in respect of decentralisation. These were promises from the 2016 election campaign. However, we are well on from that and not one job has been created, not one sod has been turned and not one business has been boosted. The Deputy Prime Minister's claims around the lack of commitment to Central Queensland from the state Labor government are appalling and untrue. In terms of delivering for regional Queensland, this has to be one of the best state budgets in recent history. As the Premier said, 'This budget will deliver a jobs bonanza.' The fact is that there is roughly $85 million earmarked for projects and services in and around Gladstone alone. This was confirmed in the Gladstone Observer only a few days ago. Instead of playing politics, the Deputy Prime Minister should really be focusing on how he can create more jobs in central Queensland. He should be focusing on the workers who have been sacked from Aurizon, the miners who have been on indefinite stand-down that Cook Colliery, or the thousands of retail, hospitality and fast food workers who are about to lose their penalty rates. People in Central Queensland deserve better than petty politics and it is high time that the Deputy Prime Minister acknowledged this. The fact of the matter is that the Queensland state Labor government is delivering for Queenslanders. They are creating the jobs that our regions so desperately need. They are not the ones making 'Not Actual Infrastructure Funds', or NAIF, as it is otherwise called, and they are not the ones currently being subjected to a Senate inquiry around their models of funding. So, let's be clear, it is with good reason that we announced a Senate inquiry with the following terms of reference: a. the adequacy and transparency of the NAIF’s governance framework, including its project assessment and approval processes; b. The adequacy of the NAIF’s Investment Mandate, risk appetite statement and public interest test in guiding decisions of the NAIF Board; c. processes used to appoint NAIF Board members, including assessment of potential conflicts of interest; d. the transparency of the NAIF’s policies in managing perceived, actual or potential conflicts of interest of its Board members; e. the adequacy of the Northern Australia Infrastructure Facility Act 2016 and Investment Mandate to provide for and maintain the independence of decisions of the Board; f. the status and role of state and territory governments under the NAIF, including any agreements between states and territories and the Federal Government; and g. any other related matters. The only government budget that does not deliver for Queenslanders is that of the Turnbull-Joyce government. I have said this before in the chamber, but I have to say it again: what an absolute failure this federal budget has been for working people across all of Queensland. In this budget, we see tax cuts for the wealthy, tax cuts for multinationals, a tax hike for working people and devastating cuts to our schools. Mr Turnbull sent us to the hustings for two long months last year, promising jobs and growth. He fielded candidates all over Queensland, making hollow promises to invest in our great state, lifting the hopes of Queensland voters that our state would finally be offered more support than was offered in the Abbott-Hockey era. He has monumentally failed to deliver. Instead, the Prime Minister has delivered a tax cut to millionaires and a tax hike to working Queenslanders. Residents of Point Piper and Toorak earning $1 million get a $16,000 tax cut; Queenslanders earning $65,000 get a $325 tax hike. Mr Turnbull and Mr Joyce have replaced the two per cent debt levy on incomes over $180,000 with an extra half a per cent tax hike for everyone, shunting the tax burden back on to low- and middle-income earners. How did it get to this? The Liberal-National party has 21 members, of the 30 House of Representatives seats, who are from Queensland, but not one of them is up to the job of getting our state its fair share. Not one federal Liberal-National party member was prepared to stand up to their mates and stick their neck out Queensland. As a result, Queenslanders are being hit with higher taxes and cuts to education, with nothing in return. This is a government that loves to pretend it is helping Queenslanders, but there is nothing new in its budget for our great state. Gun Control 115 22:12 Senator RHIANNON CPR New South Wales The Turnbull government have announced the first national gun amnesty since the 1996 Port Arthur massacre. With great fanfare, the government is attempting to use this gun amnesty to project a positive image of tackling terrorism and of reducing the number of guns in circulation. However, the reality is quite different in terms of what is being achieved. While the Greens do not dispute the value of a gun amnesty, we do sound the alarm on how the government is managing firearms. Over the last decade, firearms legislation has been eroded in this country. At the same time, the number of firearms in circulation has increased. The number of illegal guns in the black market in Australia is deeply alarming: 9,000 firearms have been stolen since 2004. If the government were serious about public safety, the gun amnesty would be linked to a number of stronger gun control measures. But this is where the government attempts to walk both sides of the road, hanging out with the gun lobby and taking their donations, and meanwhile taking a very soft approach to gun control—which, effectively, the gun amnesty is if it is not backed up by strengthening the National Firearms Agreement. That should be at the top of the list of measures that are needed in terms of ensuring gun control is taken seriously in this country. We certainly need a ban on semiautomatic handguns to be brought in immediately. After the tragedy of the Port Arthur massacre, the ban on semiautomatic long-arm weapons was incredibly significant, and it is largely understood that that is why we have not had such a terrible massacre since then. But we have had so many people murdered, many suicides, drive-by killings and people injured in a large number of shocking acts, and by far the majority are undertaken with semiautomatic handguns. They clearly should be banned. We also need to bring in a ban on political donations from the gun lobby, which are becoming more insidious. In 2015-16, political parties in Australia accepted more than $300,000 in political donations—in just 12 months. It was from the firearms lobby—the people who supply guns and the manufacturers. It should really spark deep concern about how we are handling this issue in Australia. It is insidious. When that political money starts to come in, we see the influence. We do not know what deals go on behind closed doors; but when you look at the outcome of what is happening in this country with the weakening of the National Firearms Agreement, the failure of the government to ban semi-automatic handguns and, in particular, the failure to be open about what is going on between political parties and the gun lobby, we need to become very worried about what is happening with regard to how these activities are played out. The National Firearms Agreement came out of the 1996 Port Arthur massacre, and it was a very fine part of the negotiations that occurred. I have previously paid tribute to former prime minister John Howard for what he achieved under really tough circumstances. But now that agreement is under increasing threat as industry groups infiltrate review committees, advisory groups and even our parliaments. There is increasingly a voice among politicians here who are active for the gun lobby. We have seen that with the Shooters Party and the Liberal Democratic Party. I certainly saw this in the New South Wales Parliament. As the Shooters Party came on the scene and their vote started to increase, the national party started to flirt more with the gun lobby and be a flag waver for the relaxation of gun laws. In our own parliament, Senator Bridget McKenzie is a strong advocate for this position. Again, it is very worrying. It is certainly linked with the electoral aspect of chasing votes. But surely public safety should come first. This is a government that bangs the drum of law and order and says it is committed to public safety and security; but, when you look at what is going on with gun laws, the hypocrisy is extreme. The National Firearms Agreement came under review recently. The review was established following the joint Commonwealth-New South Wales report on the Martin Place siege. Various states also undertook their own reviews. This review was undertaken by the Firearms and Weapons Policy Working Group, chaired by the Attorney-General's Department. That sounds exactly like what you should do when you are in government; but again you have to look at what actually happened when that review was set up. The National Firearms Agreement review set up an industry reference group. And who did that include? The National Firearms Dealers Association, the Sporting Shooters Association, Field and Game Australia and the Shooting Industry Foundation of Australia. Okay, you can say they have a right—and they do. Please do not represent the position of Greens: it is not about getting rid of all guns; it is about the issue of public safety. Those are organisations whose commitment is to advance the position of their members or, in cases where they are industry bodies, increase the profits of the companies. So, yes, they have a right to be at the table. But surely organisations such as Gun Control Australia, those who are advocating for gun safety and the organisations that represent the victims of gun violence have a right to be a table. But they were not. Again, this exposes the very dangerous way this government is approaching gun control measures. On top of the increase in firearms numbers in Australia, our government is also trading in firearms with the US, which is actually adding to gun violence in other countries. So we have the problem of an increasing number of firearms in our country; but when you look at how the federal government and some state governments are allowing a trade in weapons that were once part of the police force and then become redundant because new weapons are brought in, that is highly worrying, particularly when you consider what goes on in the United States. Most countries, except Australia, have a declared government policy to destroy surplus state owned small arms rather than resell them on the secondary arms market. But that is what we engage in—a secondary arms market, which is fuelling more firearms on the streets of Los Angeles, New York, you name it. South Australia and Victoria are part of this. They have signed contracts with US arms dealers to export thousands of surplus Smith & Wesson arms for resale in the US civilian gun market. This is how it works. The maker—in this case Smith & Wesson—picked up two tenders to arm the South Australian and Victorian police. As part of the deal, they bought back their old revolvers in a new-for-old gun swap, with the guns then sold in the US, where they clearly would be contributing to the gun violence. We have heard many of those tragic stories, particularly involving black Americans. The Black Lives Matter movement has arisen from so much of that terrible gun violence from both the police and then people on the streets. Again, many of our governments are dealing with this issue in an irresponsible way. I was interested in some of the comments about the Queensland deal from former Australian Federal Police Commissioner Mick Keelty. He said: When the AFP went from Smith & Wessons to Glocks we actually destroyed the Smith & Wessons. Other agencies, for purely economical reasons, did trading deals with the firearms suppliers so there is no guarantee where those weapons ended up. That is coming from the former police commissioner. There is no guarantee where those weapons ended up. That is an extraordinary statement when our police are supposed to be managing public safety and the use of firearms. Here their own weapons are being distributed and sole around the world. Who knows where they end up? And that comes out of the mouth of the former police commissioner—and I understand that he said that when he was the police commissioner. To add to evidence about the shocking way the Australian governments are managing these older firearms: the United Nations Comtrade Database indicates the revolvers and pistols figures show large increases in exports to the US in 2012, 2013 and 2014 and to New Zealand in 2016. So the evidence is in. We are involved in this trade. We are causing a lot of destruction and a lot of injuries and deaths in other countries because of that irresponsible policy. But let's start with our own country. It is time we brought in that ban on semiautomatic handguns and tightened up the national firearm agreement. It is not about stopping people using their weapons for recreational purposes when public safety comes first. We can get the balance right. Senate adjourned at 22:22 DOCUMENTS 117 DOCUMENTS Tabling 117 Tabling 117