The President (The Hon. Dr Meredith Burgmann) took the chair at 11.00 a.m.

The Clerk of the Parliaments offered the Prayers.

Message received from the Legislative Assembly agreeing to the Legislative Council's amendments.

Bills received.

Leave granted for procedural matters to be dealt with on one motion without formality.

Motion by the Hon. John Della Bosca agreed to:

That these bills be read a first time and printed, standing orders be suspended on contingent notice for remaining stages, and the second readings of the bills be set down as orders of the day for a later hour of the sitting.

Bills read a first time and ordered to be printed.

Petition requesting conservation of historic fig trees in The Domain, Sydney, received from Mr Ian Cohen.

Petitions praying that the House reject legislative proposals that would detract from the exercise of freedom of religion, and retain the existing exemptions applying to religious bodies in the Anti-Discrimination Act, received from the Hon. Patricia Forsythe and Reverend the Hon. Dr Gordon Moyes.

Petition opposing closure of the Shannon Vale Field Station, received from the Hon. Duncan Gay.

Petition calling for disallowance of the application by Blue Circle Southern Cement to burn alternative fuels, received from Ms Sylvia Hale.

Petitions opposing national competition policy amending legislation that would lead to the deregulation of the liquor industry and failure to control liquor licences, received from the Hon. Rick Colless and the Hon. Duncan Gay.

Petition requesting support for the Anti-Discrimination Amendment (Equality in Education and Employment) Bill and the Anti-Discrimination Amendment (Sexuality and Gender Diversity) Bill, received from Ms Lee Rhiannon.
Petition opposing the replacement of CountryLink rail services with bus services in rural and regional New South Wales, and calling for reversal of the decision to close the Casino to Murwillumbah rail line, received from Ms Lee Rhiannon.

Ms SYLVIA HALE [11.13 a.m.]: I move:

That standing and sessional orders be suspended to allow a motion to be moved forthwith that Private Members' Business item No. 102 outside the Order of Precedence, relating to the former ADI site at St Marys, be called on forthwith.

This motion is urgent because the opportunity to save the former ADI site at St Marys is rapidly disappearing. The Commonwealth has sold the land to Lend Lease, and the sale must be finalised by the end of June. The sale will pave the way to send in the bulldozers. The motion is urgent because anecdotal evidence from local residents suggests that the illegal shooting of kangaroos is occurring on a nightly basis. Heaven knows what is happening to the emus on the site! The sale is soon to be finalised. The State Government has rezoned the land, and Blacktown City Council has approved the master plan, yet the site is completely unsuitable for development.

The motion is urgent because the development juggernaut is ploughing headlong towards a social, planning, and environmental disaster. The ADI site is an area of spectacular beauty and outstanding environmental value. It has the last significant expanse of Cumberland Plain Woodlands, and spectacular wetlands, and is home to threatened species and populations of wild kangaroos and emus. For its environmental values alone, the site should be protected. Development of the site will also have disastrous social and planning outcomes. Large areas of the site remain heavily contaminated after decades of armament manufacture and testing. Some areas remain so contaminated with asbestos, chemical residues and low-level radioactivity that they are fenced off. It is truly breathtaking that the master plan proposes the building of houses in the vicinity of the worst areas of contamination.

Up to one-third of the site is at risk of flooding, and large areas are at risk of developing salinity if vegetation is cleared. The motion is urgent because urban sprawl is a worsening problem for Sydney. Traffic congestion, air pollution, and inadequate infrastructure are unfortunate hallmarks of our city. We simply cannot continue to bulldoze bushland and expand the urban fringe. The ADI site is too environmentally valuable to develop and is totally unsuitable for housing development. The development proposal has been driven solely by private sector greed: Lend Lease is projected to make more than $1 billion dollars profit from the development. Yet it is the community and the taxpayers who will be left with the legacy of contaminated land, flooding of homes, and isolated communities with inadequate infrastructure, not to mention the loss of a magnificent natural wonderland.

The motion is urgent because in answer to a question from me on Tuesday this week the Treasurer indicated that the Government is not liable to pay compensation if the sale of the site does not proceed. I suggest that his answer should be drawn to the attention of the Minister for Juvenile Justice, who has suggested that the State may be liable to pay compensation. That is not the case. There is still time to stop this planning, social, and environmental disaster in the making, but we must act immediately. I hope that members will support my call for suspension and take part in this important debate.

Question—That the motion be agreed to—put.

The House divided.

Ms Hale Ms Rhiannon Dr Wong Tellers, Dr Chesterfield-Evans Mr Cohen

Mr Breen Mr Catanzariti Mr Clarke Mr Colless Ms Cusack Ms Fazio Mrs Forsythe Miss Gardiner

Mr Gay Ms Griffin Mr Hatzistergos Mr Jenkins Mr Lynn Reverend Dr Moyes Ms Parker Mrs Pavey

Mr Pearce Ms Robertson Mr Ryan Mr Tingle Mr Tsang Tellers, Mr Harwin Mr Primrose

Question resolved in the negative.

Motion negatived.

Debate resumed from 12 May.

The Hon. DUNCAN GAY (Deputy Leader of the Opposition) [11.24 a.m.]: As my colleagues in both this place and the other place have already indicated, the Coalition cannot support the State Revenue Legislation Amendment Bill in its entirety. The Coalition will seek to block the land tax increase and exit stamp duty elements but, as we have done in the past, we will support relief for first home buyers purchasing properties valued at less than $500,000.

[Interruption]

The Hon. Henry Tsang is from the old school of "feed them cake when they do not have bread". Unlike this Government, which is out of touch, the Coalition wants to help the people of New South Wales. It is interesting that this tired old limping Government has introduced its first tax reform measure after nine years in government. And what does that tax reform involve?

The Hon. Rick Colless: Shoving it up!

The Hon. DUNCAN GAY: As my colleague said, it is about shoving it up sky high. It also copies an initiative proposed by John Brogden. After nine years in office the Government is bereft of ideas. It had to wait for the new young Leader of the Opposition and copy his ideas.

The Opposition wishes to amend the Government's mini-budget property tax bill to reject the increased tax imposed on investors. As indicated by other honourable members, the Opposition has received written advice from the Clerk of the Parliaments that that is possible. Given that this is not an Appropriation Bill, it can be split, amended or rejected. Frankly, any attempt by the Government in the upper House to ignore advice of that nature is an attack on the sovereignty of the Parliament. It would be similar to the situation in Egan v Willis. The upper House is a House of Review, and if the Government ignores that advice it will be challenging one of the principal reasons that the House was established. The Treasurer should stop trying to push the deceit about the Coalition's options in defeating the legislation.

In another capacity as a member of the Legislative Council I have responsibility for the seats of Bathurst and Dubbo. They have ordinary representation and they need something extra. I will take this opportunity to highlight how those areas, in particular, will suffer as a result of Labor's mini-budget. The raft of tax increases and budget cuts in this legislation will sting the residents of Bathurst. The mini-budget will have a dramatic effect on the regional property market, and the extension of the land tax base and the new stamp duty measures will mean a likely increase in rents in Bathurst.

As has happened in my home town of Crookwell, Bathurst has experienced a kick in the residential property market because of its proximity to Sydney. The introduction of the 2.25 per cent stamp duty on the sale of investment properties, combined with the abolition of the land tax threshold, will put a stop on investment in regional centres such as Bathurst and Dubbo. The Hon. Rick Colless pointed out that regional businesspeople who own a residential property plus a garage, real estate agency, record shop or pie shop will probably be required to pay land tax on that property under this new tax regime.

The Hon. Rick Colless: Every small business.

The Hon. DUNCAN GAY: Every one of those small businesses in the main street of Taralga will now pay land tax. Whether it is a bed and breakfast or a converted bank, every business will now pay land tax. They will pay tax on the way in by way of stamp duty, they will pay tax while they own the business, and they will pay tax on the way out. While stamp duty relief for first home buyers is welcome, the overall impact of the mini-budget will be a deeply negative one. It simply beggars belief that the Government plans to increase taxes on rural residents even further—despite nine years of record revenue from already unreasonable taxes and the extra money that has been stolen from the government trading enterprises!

The Carr Government's failure to adequately manage essential services in rural and regional New South Wales has left local residents worse off today than they were nine years ago, and the bill does nothing to address that; in fact, it will simply accelerate the process. This year the Carr Government celebrates its ninth anniversary in office. I assure the House that no-one else is celebrating! I can also assure the House that Bathurst and Dubbo have no reason to celebrate, as the Coalition's report card on the Government's performance in Bathurst shows that since 1995 the number of assaults in the Bathurst electorate has increased by 120 per cent; the number of people waiting for surgery at Lithgow Hospital has increased by 122; stamp duty in Lithgow has increased by 160 per cent; and stamp duty in Bathurst has increased by 120 per cent. The people of those towns have Gerard Martin to thank for that!

Since 1995, in the Dubbo electorate, which is represented by an ineffectual Independent member and friend of the Labor Party, assaults in the Dubbo local government area of Parkes have increased by 130 per cent; assaults in the Dubbo local government area of Wellington have increased by 130 per cent—that is why Tony Kelly is so busy on the road at the moment; and the provision of adequate health services in the Dubbo electorate has been hindered by ongoing budgetary mismanagement. Pushing the bill through the House will simply increase financial pressures on local residents, and that is why, in part, the Opposition cannot support the bill in its current form.

I take this opportunity to place on record once again my very real concerns about the mini-budget announcement that $37 million is to be cut from the Department of Primary Industries budget next year. In merging NSW Agriculture, Fisheries, Forestry and Mining into one department, Labor will slash $37 million from that budget. That will not be achieved through savings; the Government has been told that it must cut $37 million from the Department of Primary Industries budget this year, $37 million next year, which will compound, and $58 million the following year. Yesterday we were all amazed to learn that the Minister's first foray into primary industries saving measures was to appoint a new director-general.

The Minister's first effort was to increase the number of directors-general from four to five, which means there will be even more pressure on the jobs at the coalface. It now seems increasingly likely that these massive budget cuts will cause a recentralisation of front-line services away from regional centres. The Labor Party cannot keep regional New South Wales in the dark about these cuts. How will we tell the staff of NSW Agriculture in the regional offices at Albury, Alstonville, Armidale, Balranald, Bathurst, Bega, Berry, Boonah, Bourke, Boyds Bay, Broken Hill, Casino, Coraki, Cobar, Coffs Harbour, Condobolin, Cooma, Coonabarabran, Coonamble, Cootamundra, Cowra and Cullendore whether they will still have their jobs and, indeed, whether the offices will remain there?

NSW Agriculture staff in the following regional offices are wondering whether they will keep their jobs: Parkes, Paterson, Queanbeyan, Richmond, Richmond Gap, Scone, Shannon Vale—we know about Shannon Vale—Singleton, Somersby, Stanthorpe, Tamworth, Taree, Temora, Texas—they even have some just across the border—Trangie, Tumut, Wagga Wagga, Walgett, Warren, Wellington, West Wyalong, Windsor, Wollongbar, Woodenbong, Yanco, Yass, Young, Dareton, Deniliquin, Dubbo, Finley, Forbes, Glen Innes, Gloucester, Goondiwindi, Gosford, Goulburn, Grafton, Griffith, Gunnedah, Hay, Hebel, Inverell, Jennings, Kempsey, Killarney, Kyogle, Lismore, Lockhart, Manila, Menangle, Moree, Moulamein, Mount Lindesay, Mudgee, Mullumbimby, Murwillumbah, Narrabri and Nyngan.

Department of Mineral Resources staff in regional offices in Armidale, Broken Hill, Cobar, Gateshead, Lightning Ridge, Lithgow, Londonderry, Orange, Singleton, and Wollongong are also wondering what will happen to their jobs. State Forests staff across the State—in Sydney, Newcastle, Albury, Alstonville, Grafton, Queanbeyan, Braidwood, Wagga Wagga, Dubbo, Tamworth, Kempsey, Orange, Tamworth, Paterson, Gunnedah, Yanco, Wollongbar, Goulburn and Dubbo—have similar concerns. The staff in all the towns I have referred to are crucial to the operations of the respective departments. In some instances there is one employee, in other instances there are two employees, and they are front-line services. Cuts of $37 million this year, $37 million next year, cumulative, and $58 million the following year amount to a fair bit of money.

Given that about 85 per cent of the budget of those portfolio areas relates to staff payrolls, we are looking at a cut in staff of about 600 just to cover those savings. I believe the Government has stuffed up on this. I reckon that somebody has hit the button on the calculator and said, "This is what we will do; these are the cuts we will make," without considering whether the cuts are achievable. During a time when we are in the grips of the worst drought in 100 years, rather than cutting $37 million, plus $37 million, plus $58 million, the Government should have provided extra budget funding for those portfolio areas.

What does that mean? Does it continue to mean that we have a government that is out of touch? Does it mean we have a junior Minister who is not at the big boys table and has not stood up for regional New South Wales? In the past Ministers for Agriculture had a habit of being gutsy, bawdy, nasty bits of gear. This bloke is pathetic! He has been walked over by Egan, he has been walked over by Carr, and he has accepted it. This is the worst kick in the guts that regional New South Wales has ever had. The Minister sits in the Chamber and smiles and rejoices in the fact that he has a new title. The Government has given him a new title: he is now the Minister for Primary Industries. But he does not have a portfolio to go with it; the Government has cut the guts out of it. I oppose the legislation and condemn the Government for introducing it.

The Hon. Dr ARTHUR CHESTERFIELD-EVANS [11.39 a.m.]: I give qualified support to the State Revenue Legislation Amendment Bill. I am not a fervent student of economic history but I understand that when South Australia was settled Edward Gibbon Wakefield proposed an economic model that assumed that people who lived in that colony would invest capital. My understanding is that this model was sadly wrecked by real estate speculation. The ongoing trend of Australians putting too much money into land speculation is reflected in poor investment in venture capital, and even solid industries are undercapitalised through misdirection of capital.

Historically, the better financial option in this country has been to put money into real estate than almost any other investment. A person who asked a bank for $100,000 to buy shares would have almost no chance of having the loan approved. However, if the same person asked to borrow money to buy real estate the bank would merely ask for the certificate of title, and the purchase would be a breeze. One can borrow 85 to 90 per cent of the purchase price to buy real estate. Business people who have real estate can borrow money for their business, but a person who has nothing more than skills to offer would be battling.

I believe many members of this House have negatively-geared real estate; I have, and that is on the record. Indeed, four years ago I thought I should buy more real estate, as advised by my real estate agent. I discussed it with a financial adviser¯who would receive a percentage if I stayed with shares¯and she said to stay in shares. My shares went down 35 per cent, but housing prices doubled in the area I was going to buy. That is proof that anyone who put their money recently into real estate would have made a lot of money. The Council of Social Service of New South Wales [NCOSS] has released figures, which I believe are somewhat conservative, showing that in 2002-03 Sydney real estate prices rose 29 per cent and that property prices across the rest of New South Wales rose 39 per cent but from a lower base. Most property owners made a motser. They did not expect to make that amount of money, and they made far more than if they had invested in the stock market, which fell dramatically during that period. They were extremely lucky.

The vendor transfer duty only applies under this new scheme if the price of a property rises more than 12 per cent. The other amendments remove the premium property tax, which has been very hard on people who have saved money all their lives to enjoy civilised conditions with just enough money to live on. They have been hit by this so-called millionaires tax because they are asset rich but income poor. They have been forced out of their home or have been rendered unable to leave their asset to their children because land tax had nibbled away at its value. And if the children want to have the family property, they will have to pay for it.

The Government has said that the broadening of the land tax base by removing the threshold will be cost neutral in the first year, but of course in future years it will give the Government an increasing windfall. The Government has been a little greedy there. I have an amendment that I believe will lessen the burden for some people who might otherwise have hardship. NCOSS has pointed out that with all this money derived from land tax, some of it should be hypothecated to housing because the rise in house prices has made home ownership less affordable, particularly for poorer people. The Government has done nothing about that problem, and that is very disappointing. The stock held by the Housing Department is insufficient and is declining as a percentage of demand. That is a big problem and it can only increase. Federal rent subsidies, which are set to an Australian mean, are very low in relation to Sydney rents. Sydney property prices have driven New South Wales property prices, and rents here are generally far higher than in other States.

As soon as this tax was announced, many newspaper articles declared that it meant the end of the world. Opposition members have been very disappointing in making their Henny Penny, end-of-the-world, skies-are-falling-in speeches. Shelter New South Wales carried the headline "Henny Penny, there's a storm in my teacup" in its May 2000 edition. An excellent, more rational assessment can be found in an article by Peter Martin on page 19 of the Sydney Morning Herald of 21 April, in which he said:

For a moment there I thought that Bob Carr had done the wrong thing. I read that his new transaction tax on sale of investment properties was a "shocker", a "major attack" that would erode retirement savings and consign the property market to "oblivion". And those were just the reactions in the Herald.

In The Australian Financial Review an industry analyst explained that for an investor who bought a property for $600,000 and then sold it for an extra $200,000, the tax take would be $22,000 on the way in, $18,000 on the way out, and $39,000 in capital gains tax ¯ a take he described as "outrageous".

And then the spell broke. The taxes in the analyst's example add up to just 39 per cent. Australia's top marginal rate of tax is 48.5 per cent. The rate below that is 43.5 per cent. About half of us pay those rates on every additional dollar we earn at work, as well as on every single dollar we earn in interest on our savings.

Looked at that way, the real question isn't "how did the taxes on trading in property ever get to be so high?" but "how did they ever get to be so low?"

Most of the blame (or credit) belongs to two people: the Treasurer, Peter Costello, and John Ralph, the doyen of Australian company directors, at present chairman of both Telstra and the Commonwealth Bank.

In 1998 Costello asked Ralph to inquire into business taxation. One of the terms of reference was odd, and extremely specific. It dealt with individual, rather than business taxation. Costello wanted Ralph to examine "the scope for capping the rate of tax applying to capital gains for individuals to 30 per cent". Until that point capital gains had been taxed at the individual's marginal tax rate, minus inflation.

Ralph went further than Costello had suggested. In September 1999 he recommended that only half of each capital gain be taxed, which as he pointed out would effectively cut the top rate to 24 per cent.

What followed was an avalanche of funds pouring into investment real estate, and a change in our financial psyche. One in every eight Australian taxpayers now owns an investment property, firming to one in every three where annual income exceeds $100,000.

Ralph didn't see it coming. His report contained not a word about real estate. He said instead he expected the cuts to bring about a surge in sharemarket investment, "particularly in innovative, high-growth companies".

Mark Latham saw it more clearly than most. In an extraordinarily prescient speech he said the cut would add "to the great Australian disease of asset and property speculation, particularly in our big cities. It will take away resources from the knowledge economy and put them into the least productive, least honourable aspects of Australian economic activity."

It was already legal to negatively gear. That is, to borrow so much to buy a property that your interest payments ensured you made a loss each year, which you could use to cut your income for tax purposes. It was also legal to claim a depreciation deduction after buying a new house or unit, regardless of whether or not the investment actually declined in value.

But as attractive as these benefits were, they did little more than defer the payment of tax. It would be paid on the day the property was sold. All that was the theory, until September 1999. From that date, as Melbourne University's Professor Cameron Rider puts it, only half of the deductions were recouped - the other half were converted from a deferral of tax to a permanent exemption from tax.

The changes gave property an advantage over competing forms of investment. Shares could match it when it came to negative gearing and capital gains tax, but couldn't match the associated depreciation deduction, as scores of mesmerised Australians were being told in investment seminars each weekend.

Borrowing to buy property became the "smart" thing to do, even for Australians who had never borrowed before except to buy their home. As Macquarie Bank's Rory Robertson told his clients: "It is almost as though the Australian tax system has been screaming at taxpayers to gear up to earn increased capital gains rather than to work harder to earn increased wages or salaries."

Or to make money renting out the properties they bought. The Tax Office says six out of every 10 of Australia's landlords actually lose money on an operating basis.

This tax-driven diversion of money and effort away from work, away from small businesses, away from productive investments, is without recent precedent. It has helped push property prices into uncharted territory and may have brought on our last two interest rate increases.
All this from a change that Ralph recommended in order to "achieve a better allocation of the nation's capital resources".

When Latham tried to have Labor oppose it in September 1999 he was overruled by his leader, Kim Beazley. Shortly after becoming shadow treasurer last July he explored with Access Economics a plan to restore full tax to capital gains and use the billions of dollars liberated to cut the top tax rate for all forms of income. Access believed it could sell the plan as being fairer for both high and low income earners

When news of the plan leaked last month, Latham ruled it out. He did so again this week. In election mode neither Latham, Howard nor Costello is likely to propose what an increasing body of expert opinion believes has to be done.

The Productivity Commission is said to have recommended some sort of action on property taxation to Costello. He is yet to release its report.

By rushing in and taxing where our federal leaders are scared to tread, Bob Carr and his Treasurer, Michael Egan, may have done the nation a favour.

And they get to keep the money as well.

That assessment by Peter Martin is quite persuasive. A constituent told me that he owned a little house at Malua Bay, which is just south of Batemans Bay, but as he could not find employment in the area, he rented out his house and moved to Sydney. He will now get a rise in land tax.

The Hon. Rick Colless: He will not get a rise. He will be paying land tax. He was not paying it before.

The Hon. Dr ARTHUR CHESTERFIELD-EVANS: That is a rise. This man is not well off and he is in fact paying more rent in Sydney than he is receiving for his property in Malua Bay. The rent he is paying is not tax deductible but the rent he is receiving from the Malua Bay property is now subject to tax. That is unfair and I will move an amendment in Committee to exempt from land tax people who own only one property. It has also been pointed out that people financing property, particularly commercial property where improvements have been undertaken and the property is then sold, should be exempt also. The Government does not like that idea because the Office of State Revenue does not have the facilities to evaluate improvements to property. A person who made a 15 per cent profit on the sale of a property after making improvements amounting to 15 per cent of its worth should not have to pay the tax, because there was no profit. I will move an amendment in Committee to that effect.

I note that this tax measure has received the strong support of the Property Council of Australia, which often represents those who invest in other than residential property and expect to make less profit. The Government said that the hardship tribunal would help people facing difficulties, although that provision was not evident in the second reading speech. Indeed, the tribunal has received very little publicity, and that is a matter for concern. The tribunal has the power to deal with individual cases, although not the power to investigate financial transactions, except when a person is going broke. A tribunal equipped with that expertise could deal with these matters, although its workload may become burdensome.

Other States have been cited for lowering their land tax rates in order to draw capital away from New South Wales. Presumably, those States will experience a building industry boom as capital is invested interstate. The Federal Government still favours the real estate industry, but to some extent New South Wales has discouraged it more than the other States. I am not the greatest fan of the New South Wales Government, particularly because it has refused to borrow, which has caused degeneration of the housing stock, and has sold off infrastructure assets to cover debt. The finance world maintains credit ratings and does not have a problem with debt provided it is supported by sufficient equity. The Government is obsessed with the size of the State's debt and has sought to lower that debt rather than retain the necessary infrastructure.

Welfare and Health portfolio expenditure, especially on wages, is a form of consumption spending, and revenue is necessary for that. It is the role of any party in opposition to oppose taxes and to suggest that the Government is irresponsible. My brother-in-law, Sir John Vasileff, is a financial journalist. Whenever I talk about tax matters he always argues against any tax I may suggest. We have had numerous arguments on this subject. I remember asking him which tax he preferred and he said that there is a disadvantage to all taxes, and that it is up to the individual to work out the relative disadvantages and come up with a reason for imposing a tax. He said it was not his job to do that for me. It is only natural that Opposition members to cite the needs of the battler as a reason for not imposing certain taxes.

Taxes always take money, and those who pay a tax can always find strong arguments against it. In recent years the vast majority of property owners have received a motzer from their investments. The Australian taxation system favours real estate, although that has created a major problem in optimising national wealth and productivity. The Federal Government is not addressing this problem because an election is looming, and I am concerned that it does not have the courage to change the tax structure. The Hon. David Oldfield has foreshadowed that he will move an amendment in Committee to prevent the tax being retrospective. In theory I am sympathetic to his view, but I acknowledge that not making the tax retrospective would exclude most of the returns arising from the windfalls that investors have received over the years. I support the bill. I trust that my foreshadowed amendments will be agreed to because I believe that they will improve the bill.

The Hon. ROBYN PARKER [11.58 a.m.]: I am pleased to have the opportunity to speak on the State Revenue Legislation Amendment Bill, but I am sure that the people of New South Wales are not pleased with the bill, because they live in the only State in Australia that is increasing taxes. It is ironic that we are debating State revenue and the Treasurer's mini-budget in the same week that the Federal Government handed down a fantastic budget for the people of New South Wales—a budget that will make a huge difference. The Federal Government is cutting taxes while the State Government is increasing taxes. But New South Wales can see the spin that the New South Wales Government is churning out as a result of the mini-budget.

Pursuant to sessional orders business interrupted.

The Hon. MICHAEL GALLACHER: My question without notice is directed to the Minister for Transport Services. When will the Minister do the right thing by ferry passengers and order an immediate independent investigation into the management of Sydney Ferries and its safety practices after last night's crash of the supercat Louise Sauvage into Rose Bay wharf, which is the fifth crash involving Sydney ferries since February? Despite the Minister's statement in the House on 9 March that a full report on the Lady Herron crash would be made public, that report has still not been released. When will the report be released?

The Hon. Dr Arthur Chesterfield-Evans: He has replaced the CEO.

The Hon. MICHAEL COSTA: That is right. As the Leader of the Opposition should know, because he was in the House and opposed the introduction of the Independent Transport and Safety Reliability Regulator [ITSRR], we have a mechanism to investigate incidents, and I expect that body to investigate all public transport incidents.

The Hon. Michael Gallacher: Why don't you do what you did with Waterfall—bring in someone truly independent? Restore some confidence!

The Hon. MICHAEL COSTA: The Leader of the Opposition is scraping around for issues to run, as he normally does. We set up a body to investigate the matter. That body will investigate the matter in the normal way.

The Hon. Patricia Forsythe: We know what the normal way is for the Carr Government—cover-up.

The Hon. MICHAEL COSTA: Is the honourable member accusing ITSRR of a cover-up? There is a body called the ICAC, to which members opposite are entitled to take any information. So don't make statements if you don't have any evidence. Don't malign the integrity of people who are doing a good job to maintain safety in public transport. This morning I announced that Matt Taylor, a former chief executive officer of the Waterways Authority and a commodore who has had a distinguished naval career, will be the new chair of Sydney Ferries. I am pleased that Matt Taylor has taken on this job, because he is well regarded in the maritime industry and he conducted a review of Sydney Ferries in 2001. That review is commonly referred to as the Taylor report.

Today I released a report that looks at progress in implementing the Taylor report. The Fellows Medlock report provides a number of strategies on how we deal with issues relating to Sydney Ferries. The corporatisation of Sydney Ferries is an important step in that process. Again, I note that members opposite opposed that. They were happy to have Sydney Ferries run as a second-rate cousin to the bus company. But that is consistent with Opposition members. They cannot take the good bits of the Greiner era—the legacy that we all share in relation to some of those good bits of the Greiner era—and throw them out for political advantage when it suits them. They get embarrassed when the Coalition's history is thrown back at them. I am sure Nick Greiner would be amazed by what has happened with the Liberal Party in terms of the sensible reforms he made. Nick Greiner made a lot of silly decisions. However, in relation to corporatisation, which he effectively stole from the New Zealand Labour Party, he made some sensible changes to public administration.

Matt Taylor's role will be to look at how we have progressed in relation to the original Taylor report. He will look at the audit systems relating to safety and maintenance. I welcome the fact that Matt Taylor has come out of retirement to take on this important responsibility. We are well on the way to putting a competent management team and board structure into Sydney Ferries. All of that is based on a reform that the Opposition opposed. I note that the Opposition opposed that reform and the introduction of the transport regulator.

The Hon. KAYEE GRIFFIN: My question is addressed to the Minister for Justice. What is the latest information on periodic detention compliance? In particular, what action has been taken to improve compliance by Federal periodic detainees?

The Hon. JOHN HATZISTERGOS: Honourable members will recall that in December last year I outlined to the House how the compliance rate across New South Wales periodic detention centres was at a historic high of about 80 per cent, and that in some instances compliance was as high as 90 per cent. Honourable members will recall that I indicated that, prior to Labor coming to government, the compliance rate in periodic detention centres was lower than 60 per cent. The impressive statistics achieved following changes to the law, which transferred the jurisdiction for periodic detention revocations to the Parole Board—reforms that also reduced the necessary time to revoke periodic detention—have not only improved compliance rates but also lead to speedier revocations.

However, as I indicated at the time, the impressive statistic was blemished by the fact that about 45 per cent of Federal periodic detainees regrettably thumbed their nose at the periodic detention system. Reporting failures to comply in relation to Federal offenders is a much more complicated process. It involves the Commissioner for Corrective Services reporting the matter to the Federal Director of Public Prosecutions [DPP]. The Federal DPP then reports the matter to the court; the court then issues a summons, which is required to be served. A hearing then takes place between the offender and the DPP at the court to determine whether there was a reasonable cause or excuse, and the court then determines what the outcome should be. The provisions of the Federal law actually allowed the outcome to be zero.

The Commonwealth law was further complicated by the fact that it hijacked the provisions of State laws. In particular, it hijacked provisions relating to leave. However, it did not specify what leave laws were incorporated into the Federal law; it simply stated that they applied except when they were inconsistent with anything else in the Federal law. As I indicated, this mishmash of laws lead not only to one-third of periodic detainees not complying at any point in time; in contrast to what was happening in this State, some offenders were missing more than 200 weekends without being brought to account. In one case an offender failed to turn up for several years, but nothing had been able to be brought into effect to revoke that outcome.

As a consequence of a high-profile instance earlier this year, which honourable members will recall, the Federal Government agreed that it would undertake a review of its periodic detention laws, and at my request the Federal justice Minister, Senator Ellison, agreed to allow New South Wales Corrective Services to participate in that review. I am pleased to inform the House that discussions between the Commonwealth and the State have been cordial and fruitful. Following extensive lobbying on the part of New South Wales, the Commonwealth has indicated that it is prepared to consider amending its periodic detention laws to prevent what occurred in the Rivkin case. I am advised that the proposal to amend Commonwealth laws is to enable Federal offenders to be treated with the same efficiency as State periodic detainees are dealt with.

At the conference of corrective services administrators held in Hobart this week, a decision was taken to call on the States to give any information relating to non-compliance with periodic detention and other non full-time custodial sentences, and to ask the other States and Territories to provide information as to whether they are contemplating allowing periodic detention to be available as an option for offenders. The paper presented at the administrators conference showed that under existing Commonwealth law the non-compliance of Federal offenders is unable to be dealt with as expeditiously as non-compliance by State offenders. One of the more significant changes would be the removal from Commonwealth legislation of the provision for Federal offenders to avoid serving weekend detention because he or she has a reasonable cause or excuse.

The Hon. KAYEE GRIFFIN: I ask a supplementary question. Will the Minister elucidate his answer?

The Hon. JOHN HATZISTERGOS: The non-compliance was recognised in the paper that was presented at the administrators conference. As I indicated, the proposal to amend the law would include the removal of the provisions that would allow Commonwealth offenders to argue reasonable cause or excuse before the court. The Commonwealth's proposal is basically to adopt the provisions that exist in the New South Wales Crimes (Administration of Sentences) Act. The provisions require that if a person fails to attend on three occasions without having obtained the leave of the corrective services commissioner the order can be revoked automatically. Any person who fails to attend on two occasions will incur a penalty.

Co-operation between State and Federal agencies on this matter appears to be producing results. The importance of periodic detention cannot be emphasised enough inasmuch as its deployment not only contributes millions of dollars to the community through the work carried out by detainees, but is also a pivotal step in leading inmates away from the path of social alienation when they are about to re-enter the community. I am hopeful that the Commonwealth will enact the amendments, which will go a long way to tightening up the administration of Federal periodic detention.

The Hon. DUNCAN GAY: I direct my question to the Minister for Primary Industries. Do New South Wales and Federal Labor share the same approach to drought policy? If so, was Federal ALP leader Mark Latham also speaking for New South Wales Labor and the Minister when he wrote in the Daily Telegraph:

The farm sector is already the most heavily subsidised part of the economy. Over the years it has secured from government a long list of tax concessions and handouts: (Including) drought investment allowances … But wait there's more. Just last week I uncovered another nice little earner called FarmBis–

Does the Minister stand by Mr Latham's additional comments in the Daily Telegraph when he criticised "the political bunnies who want to put more taxpayers' money into farmers' pockets"? Does the Minister also stand by Mr Latham's plan to cut the exceptional circumstances program from two years assistance to one? [Time expired.]

The Hon. Michael Egan: Point of order: I draw your attention to Standing Order 64, which states:

Questions may be put to Ministers relating to public affairs with which the Minister is officially connected …

The policies of political parties throughout Australia, while of great interest to many of us, is not a matter for which the Minister for Primary Industries is responsible to this House. In any event, the question was clearly asking for a number of opinions.

The Hon. Duncan Gay: To the point of order: I would have thought at the very least the Treasurer would have known that FarmBis had a New South Wales component. To that extent, this is clearly connected to the Minister's portfolio of Primary Industries. If the Treasurer is telling me that he does not trust his Minister to have the ability to answer this, or that his Minister agrees with Mark Latham, he should tell us.

The Hon. Michael Egan: Further to the point of order: It is not a matter of whether the question is of some wider interest. The only matter that concerns us is whether the question is in order, and the question is clearly not in order. Obviously, the Minister is able to answer questions about New South Wales Government administration but his responsibility to the House goes no further than that. Any question beyond that is out of order.

The Hon. Rick Colless: To the point of order: The question is asking for the Minister to expand on the drought policy approach between the Federal Labor Opposition and the State Labor Government. The question most definitely is in order as it is a matter of policy that is being inquired about rather than a matter of opinion.

The PRESIDENT: Order! The question sought an opinion from the Minister. As the Hon. Rick Colless rightly pointed out, the question also referred to statements by the leader of the Federal Labor Opposition. Standing Order 64 (1) states that Ministers can be asked questions relating to public affairs with which they are officially connected. The question is out of order on two counts.

The Hon. Duncan Gay: Point of clarification: Exceptional circumstances has a joint Federal-State role, as does FarmBis. Can you explain to me why you are ruling that out of order? I am not challenging the ruling, I am seeking a further explanation on why this cover-up is taking place.
The PRESIDENT: Order! Clearly the member asked the Minister whether he agreed with the leader of the Federal Opposition. The question has asked the Minister for an opinion and it is out of order.

The Hon. JON JENKINS: My question without notice is addressed to the Minister for Transport Services. Will the Minister please explain how a wheelchair-bound person with disabilities can be loaded and unloaded onto a bus at Murwillumbah and Casino? How will the family and friends be present at in-transit stops, such as Casino, to load and unload disabled people with sometimes very personal issues like catheter bags? Using these in-transit transport stops, how will the luggage of disabled people be handled and transported during these stops? How will toilet facilities be handled for disabled, elderly or incontinent people on bus systems, considering their often frail and unsteady gait in these environments?

The Hon. MICHAEL COSTA: I do not know whether the honourable member is aware that part of the Government's announcement was that it would be putting half a million dollars a year into community transport for precisely the reason the honourable member has pointed out. On a number of occasions I have spoken to the House about this issue.

[Interruption]

The Hon. Michael Egan: Point of order: The Hon. Jon Jenkins has asked an important and sensible question and the Minister is giving a sensible and thorough answer. Unfortunately I am certainly not in a position to hear it because of the continual noise being created by the Leader of the Opposition and his deputy. I would like to hear the answer to a very good question.

The PRESIDENT: Order! I ask members at the table not to talk amongst themselves, especially when the table microphone is activated.

The Hon. MICHAEL COSTA: As I was saying, Community transport is an important issue that we were able to focus on through the Parry process. Many of the changes the Government is looking at are aimed at putting more resources into community transport. To my mind, community transport is the emerging issue in transport disadvantage that we have to address as a government and as a community. Mass transit systems are not the best way to handle community transport. If honourable members understood what community transport is all about, they would understand it is about providing individualised solutions for people with individual transport problems.

The Government has spoken to the relevant Ministers who have areas of responsibility that overlap community transport co-ordination. Recently the Government announced a number of regional community transport co-ordinators to get better value out of our transport resources. This will emerge as one of the great transport legacies of this Government, the fact that we have been able to take the issue of community transport seriously and to address that issue through the provision of community transport services.

The Hon. Duncan Gay: Have a look at the support behind you. They are ashen-faced.

The PRESIDENT: Order! I call the Deputy Leader of the Opposition to order for the first time.

The Hon. MICHAEL COSTA: The Opposition members do not like hearing about positive achievements. The Government has made great strides in, firstly, putting community transport on the agenda and, secondly, providing the co-ordination of resources required for community transport. All of our activities in transport reform are focused on how we can provide better community transport outcomes. As the Hon. Jon Jenkins would know, many isolated regional communities do not have access to any form of government provided transport. As the honourable member quite rightly pointed out, the solution for those communities with special requirements is community transport.

The Hon. JON JENKINS: I ask a supplementary question. Will the Minister elucidate his answer? Will he confirm that he will put funds into community transport out of the savings from the branch line closure?

The Hon. Michael Gallacher: Put your raincoat back on, Jon, for another spray.

The Hon. MICHAEL COSTA: The Hon. Jon Jenkins is a good bloke, and he asks very sensible questions. My spray was at the Leader of the Opposition for being under-prepared, as usual. I confirm that the Government is looking at greater resourcing of community transport. The Hon. Jon Jenkins may not know that the reason the Government has had to take a number of these decisions is because the Federal Government has pulled $376 million out of our budget every year for the next five years. It is not the case that we have savings. We have had to take these measures because the Federal Government savagely cut the State budget. There are not any actual savings, but I can assure the honourable member that over the tenure of this Government there will be an increase in the resources provided to community transport.

The Hon. TONY CATANZARITI: My question is addressed to the Minister for Community Services. Will the Minister advise the House on the progress in recruiting additional staff to the Department of Community Services?

The Hon. CARMEL TEBBUTT: I thank the Hon. Tony Catanzariti for his important question. There has been significant progress in recruiting a range of new staff to the Department of Community Services [DOCS], which is good news for the department, its non-government partners and, more importantly, the community who the organisations seek to provide services to. This year 150 new caseworkers will be employed by the department as the first phase in the plan to recruit 875 caseworkers over five years. This represents a virtual doubling of caseworker numbers in the Department of Community Services. The extra staff will include: 350 early intervention caseworkers to help prevent family problems from escalating, 375 high priority caseworkers to respond to serious child protection issues, and 150 out-of-home care caseworkers to help provide safe, stable and appropriate placements for children who cannot live at home.

The employment of designated early intervention caseworkers represents an important shift that is supported by a wealth of domestic and international evidence. If problems can be identified and addressed early, two things follow: firstly, issues can be addressed before they are given an opportunity to escalate, and therefore are often easier to resolve; and, secondly, demand for future services will be reduced. The Department of Community Services is systematically building its work force and service capacity. The focus right now is on the community service centres at Blacktown, Bankstown, Maitland, Tweed Heads, Epping, Campbelltown and Gosford. In Maitland DOCS is employing an additional 15 new child protection caseworkers, at Blacktown 23 new child protection caseworkers are being employed, at Bankstown there will be 15 additional caseworkers, and at Tweed Heads it is anticipated that the number of child protection caseworkers will double from 8 to 16. There will be 12 new child protection caseworkers employed in both Campbelltown and Gosford community service centres. Ryde and Hornsby community services centres will merge in the near future to form a larger centre at Epping and five new caseworkers will be appointed.

These significant increases do not include new caseworkers in the area of out-of-home care, which are additional to the allocations I have just referred to. Later this year more sites will be announced and DOCS will launch a second recruitment round. It is hoped the second recruitment round will be as successful as the first, which was extremely successful. Any anxiety about whether the employment market could provide sufficient interested candidates for these positions was quickly displaced. I am advised that more than 5,000 information packages were sent out or downloaded from the Internet and DOCS received more than 1,500 applications. I trust that the impressive standard of job applicants will be reflected in round two of the recruitment campaign.

The Department of Community Services also plans to recruit 14 new caseworkers to strengthen the department's and Police joint investigative response teams by the end of June. Ultimately, this number will increase to 35. This challenging but critical work involves working with serious cases of physical and sexual assault. More caseworkers will mean more referrals to other family support services or child and family services that are run by the non-government sector. As DOCS expands its community services centres it will simultaneously provide new funds to build up non-government service networks with a particular emphasis on early intervention. The department's caseworkers will work more closely than ever with these services under new structured programs that will require them to combine their efforts to assist families.

Building DOCS capacity to deliver a better service involves much more than simply employing new caseworkers and rolling out new funding. It is a process that requires careful planning, strategies and a commitment to implementing and monitoring those plans. I congratulate the department for its dedication to this task. Child protection work is complex and often takes a toll on the people who are professionally obliged to intervene in trying circumstances. The recruitment of these new caseworkers will assist them in carrying out this difficult job.

The Hon. CATHERINE CUSACK: My question is addressed to the Minister for Transport Services. Has work been scheduled or otherwise planned to put a stopper in the track at Old Casino for the purpose of severing rail access to the main line from the Murwillumbah branch line? If so, when is the work to be undertaken? Why is the Minister severing rail access to this branch line?

The Hon. MICHAEL COSTA: It is obvious that the Opposition has decided to perform for the mayors from the North Coast, who are in the gallery. I was trying to work out what was going on. They have decided to perform to show them that they are relevant. They hope that the mayors have forgotten that it was the Coalition Government that cut out the Gold Coast motor rail and the Grafton XPT. I could go through the list of services that that lot, when they were in government, cut from our rail system. But that would not assist them with what they wanted to do, that is, to perform. I have already answered this question on many occasions. I welcome the mayors from the North Coast, whom I will meet with this afternoon. I am sure they will ask very sensible questions and receive very sensible answers.

The Hon. CATHERINE CUSACK: I ask a supplementary question. For the benefit of members of the House and the mayors in the gallery, will the Minister remind the House of the answer he says he has given?

The Hon. Michael Egan: Point of order: The Hon. Catherine Cusack, although she is only a fairly recent member, would be well aware that it is out of order for members to address people in the gallery.

The PRESIDENT: Order! It is out of order for members to address people other than the Chair and other members in the Chamber. The Hon. Catherine Cusack may complete her supplementary question if she rewords it.

The Hon. CATHERINE CUSACK: Will the Minister remind the Chamber of the answer he says he has given on previous occasions?

The Hon. MICHAEL COSTA: I will remind the Hon. Catherine Cusack of the answer I have given previously. I said it was the Coalition State Government that cancelled many country rail services in 1988. They cancelled the North Mail, the Western Mail, the North Coast overnight express to Grafton and the Canberra Express.

The Hon. Catherine Cusack: Point of order: The question and the supplementary question related to the infrastructure of the branch line, not the service. Madam President, I ask you to draw the Minister back to the questions and direct him to make his answer relevant.

The PRESIDENT: Order! The Minister was answering the question. The Minister has the call.

The Hon. MICHAEL COSTA: Honourable members opposite do not like to be reminded of what they did when they were in government. They presided over the largest cut in country rail services.

The Hon. Catherine Cusack: That was a decade ago.

The Hon. MICHAEL COSTA: They are happy to quote Mark Latham's statements made 10 years ago, but they are not happy to be reminded of their own track record. They cut more country rail services than any government in the history of rail management in this State. Not only did they cut the North Coast overnight express to Grafton and many other services in the south, they also cut the Gold Coast motor rail, the Grafton XPT and other services across New South Wales. Unlike this Government, they did not have a reason for making those cuts. They were not facing the savage $376 million cut that the Federal Government has imposed on New South Wales every year for the next five years. If they want to save services, they should be talking to the Federal Government.

The Hon. PETER PRIMROSE: I direct my question to the Minister for Commerce. Will the Minister inform the House how the changes to the New South Wales workers compensation system compare with those recently announced by Governor Arnold Schwarzenegger, which are to be implemented in California?

The Hon. JOHN DELLA BOSCA: Honourable members may be aware—

[Interruption]

The PRESIDENT: Order! I call the Deputy Leader of the Opposition to order for the second time. I call the Leader of the Opposition to order for the first time.

The Hon. JOHN DELLA BOSCA: The Deputy Leader of the Opposition is anxious for reasons that remain unclear to me. As honourable members may be aware, the new Governor of California, Arnold Schwarzenegger, recently proclaimed that California is open for business following the passage of reforms he proposed to California's workers compensation system during his campaign.

The Hon. Michael Gallacher: Hypocrisy!

The Hon. JOHN DELLA BOSCA: The analogy is coming.

The Hon. Duncan Gay: We cannot ask questions about rural issues but the Government can ask questions—

The Hon. JOHN DELLA BOSCA: The honourable member can take a point of order if he wishes. Governor Schwarzenegger described the reforms as necessary to save jobs, to reduce costs for employers and to improve care for injured workers. The honourable member for Gosford has been lavish in this enthusiastic support of the Schwarzenegger plan. I do not know whether that is an attempt to cultivate his tough-guy image. So excited was he that he rushed out a press release in his capacity as the shadow spokesperson on industrial matters. The honourable member claimed that the Schwarzenegger package could be the answer. I am referring to the shadow Minister, so my answer is relevant.

I will examine the similarities in the two plans. The Schwarzenegger package, which the honourable member for Gosford has enthusiastically praised, includes the American Medical Association guidelines being implemented, immediate provisional payments to injured workers, an increase in payments to permanently disabled workers, and the establishment of an independent medical examiner to resolve disputes. Those proposals sound familiar. They are familiar because they were the core elements of the Government's 2001 reform package that Mr Hartcher and his party voted against. The theatrics of the Leader of the Opposition, who was then the shadow Minister, when I commenced by answer are explained. He opposed the reforms that his colleague and friend and now shadow Minister for Industrial Relations is enthusiastically supporting.

But there is more that explains why the shadow Minister is so enthusiastic about the Schwarzenegger plan. It also includes cutting disability payments from a five-year maximum to two years. New South Wales pays benefits until retirement. That is an informal answer to the interjections earlier of Ms Lee Rhiannon. There is a significant difference. The Schwarzenegger package abolishes journey claims, makes claims for pain and suffering ineligible, and requires that doctors are selected by employers. Presumably these are the critical elements that the shadow Minister likes and would support. The average workers compensation premium rate in California is 6.3 per cent and in New South Wales it is 2.5 per cent. These are the reforms honourable members opposite voted against. They refuse to accept the fact that whatever was wrong with the New South Wales workers compensation regime is well on the way to being fixed, and they voted against the reforms.

Honourable members opposite go on about small business, caterwaul at question time and rail at the Treasurer and Minister for Transport Services, but they do not know what they are talking about. The Opposition voted against the reforms. The employers of New South Wales know that, and they know that the premiums are higher as a result. They had the choice and they took the wrong option. They can go to employers not only during the next election campaign but also during the campaign after that, and the employers will not believe a thing they say about workers compensation because they know that the Government did what it had to do to maintain jobs and prosperity across New South Wales. Members opposite voted against the reforms when they had the choice.

The Hon. PETER PRIMROSE: I ask a supplementary question. Will the Minister please elucidate his answer?

The Hon. JOHN DELLA BOSCA: The Opposition was cavalier in its rejection of the Government's reform package. Members opposite thought it was a bit of a joke and they still do everything they can to frustrate WorkCover. They conspire with various interests to make the workers compensation reform program as difficult as possible. The highest risk premium in New South Wales is capped at 15 per cent of payroll. The Californians obviously want a litigation-based system, because that approach was supported in their legislature. Some construction companies in California pay premiums at 50 per cent of payroll. The honourable member for Gosford has previously complained that the New South Wales Government could give no guarantees about premium reductions.

However, the Schwarzenegger package that he supports suffered the same criticism: it contains no regulation of premiums. Major savings in the New South Wales package have resulted from reducing legal and dispute costs. In fact, the Government's 2001 reforms have now saved the scheme more than $1.7 billion and more than 90 per cent of that has been in legal and related costs. The deficit has fallen by $300 million in the past year and 75 per cent of injured workers now receive their benefits within seven days. Republican Governor Schwarzenegger enjoyed one significant advantage that we do not have in New South Wales: He had a Democrat Opposition that was smart enough to support his package.

Reverend the Hon. Dr GORDON MOYES: I direct my question to the Special Minister of State, representing the Minister for Health. Is the Minister aware of a recent four-week study carried out by NSW Health into the potential health risks of the M5 East stack that claims to show no evidence of an association between the prevalence of eye, nose and throat symptoms and modelled emissions from the stack? Will the Minister please explain why there has been an increase in the incidence of itchy eyes, runny noses, coughs and asthma among residents living near the M5 East stack since the opening of the M5 East tunnel? Is the Minister aware of complaints that the study is seriously flawed in its methodology due to the use of annual averages of pollution to predict what residents were exposed to during the four-week study? What assurance does the Minister give that NSW Health will continue epidemiological studies into the health effects on the community surrounding the M5 East stack?

The Hon. JOHN DELLA BOSCA: I thank the member for his detailed question. I will pass it to the Minister for Health and get an answer as soon as possible.

The Hon. RICK COLLESS: I direct my question to the Minister for Primary Industries. Is the Minister aware that two months ago the University of New England expressed interest in taking over the research facilities at Shannon Vale field station that NSW Agriculture will be selling in July 2004? Does NSW Agriculture's failure to respond to this expression of interest indicate a lack of commitment to agricultural research and development in New South Wales? Will he give an undertaking to arrange a meeting with the university this week to discuss possible co-operation and cost sharing that would keep this important field station up and running?

The Hon. IAN MACDONALD: As the honourable member is aware, NSW Agriculture has been building up the capacity and quality of services delivered through its major centres of excellence. The department has also been working to refocus its activities on farming systems and agriculture to support important Government initiatives being delivered to catchment management authorities. Disposing of surplus assets makes good sense as it frees up underutilised resources and reduces operating costs for facilities needed to run a highly technical department in the twenty-first century.

What is happening here is an appropriate and considered response to the Government's commitment to improve the efficiency and effectiveness of the public sector. My department has ongoing review processes for evaluation of its program outcomes and corporate operating systems to reduce expenditure costs and ensure that the people of New South Wales get real value for the money they invest in the agency. These processes identified three properties surplus to NSW Agriculture's operational requirements. The properties are Shannon Vale field station, at Glen Innes; Pearces Creek field station, at Wollongbar; and the old Murwillumbah Tick Office.

At each of these sites the department has held discussions with staff and managers to determine what concerns need to be addressed and what arrangements need to be made to ensure that the projects and operations currently carried out at the sites are efficiently maintained. I am satisfied with the way in which the department has sought to minimise the impact on staff of the decision to sell those properties. The sale of these three properties is simply an outcome of responsible and effective corporate management by my department.

I would like to clear the air about the absolute right of NSW Agriculture to sell these properties. It has been suggested that the properties have been bequeathed to NSW Agriculture or may have been purchased using trust funds, and that selling them would be inappropriate. These claims, which have been made in the north of the State, are absolute nonsense. The facts of the matter are that Shannon Vale field station and Pearces Creek field station were purchased by NSW Agriculture from consolidated revenue in 1950 and 1961 respectively.

The parcel of land that was the site of the Murwillumbah Tick Office has never been released from ownership by the Crown. The memorandum of transfer for Shannon Vale, for example, shows that James Fredrick White, in consideration of £3,731 and 12 shillings, transferred the property to the Minister for Agriculture on 27 July 1950. These properties unequivocally belong to the Crown and NSW Agriculture is free to dispose of them—which it will do.

The Hon. RICK COLLESS: I ask a supplementary question. In my original question I asked the Minister whether he will give an undertaking to arrange a meeting with the university. The Minister has not answered that part of the question, and I ask him to expand on his answer in that regard.

The Hon. Michael Egan: Point of order: The Hon. Rick Colless cannot simply repeat his first question as a supplementary question.

The PRESIDENT: Order! A member asking a question again may be regarded as that member seeking elucidation, but only if the original question was in order. Often the original question is not in order, and therefore if a member simply repeats the question, it cannot be a supplementary question and must be ruled out of order. However, this supplementary question is in order.

The Hon. IAN MACDONALD: My response is very simple. The stations will be sold. If the university wants to contact me, I will listen to its request.

The Hon. TONY BURKE: My question without notice is addressed to the Minister for Industrial Relations. Will the Minister update the House on the Government's commitment to develop an email service to notify employers and employees when changes are made to New South Wales awards?

The Hon. Melinda Pavey: That's a beautiful red tie you're wearing.

The Hon. JOHN DELLA BOSCA: The comment about my tie is interesting. I once had the privilege—not as a parliamentarian but in my previous occupation—to go on a study tour of Great Britain. When I did so I visited the House of Commons. As I sat in the gallery of that Chamber I observed, first, that a large number of the members of that Parliament were women, and, second, that the overwhelming majority—in fact, I would say probably 100 per cent—of the women on the Conservative benches at that time were wearing something blue, whether it was a scarf or some other garment, and that the vast majority of the women on the other side of that chamber were wearing something red. It then the struck me that the reason for that was that in Great Britain blue is the traditional party colour of Labour and red is the traditional party colour of the Conservatives. That being so, I presume that the Hon. Melinda Pavey is moving to our side, and that Country Labor has a new recruit!

The Hon. Don Harwin: What colour are you wearing?

The Hon. JOHN DELLA BOSCA: I am wearing red. I want to blend in, as always.

The Hon. Michael Egan: Red has always been the Labor Party's colour, at least for as long as I remember.

The Hon. JOHN DELLA BOSCA: The Leader of the Government is correct. However, in New South Wales, the traditional colour of the Labor Party is blue. Last year the Government made a commitment to develop and deliver an email service that would give employers and workers in New South Wales instant advice on any changes to award entitlements. This followed a survey by the Office of Industrial Relations which found that 85 per cent of small businesses are now connected to the Internet and are very interested in receiving by email information that may help them manage their businesses.

This morning I had the pleasure of launching the Office of Industrial Relations latest online service, Pay Rate Updates, which gives employers and employees under the New South Wales awards system the chance to be notified quickly, easily, and at no cost to the business and minimal cost to the Government whenever changes are made to awards affecting their workplaces. Anyone can register and receive advice on changes to pay rates, leave and other entitlements for 115 private sector awards in New South Wales. The service will make it easier for employers to ensure they are meeting their obligations, make it easier for workers to know they are getting their full entitlements, and help us all to build fairer, more productive workplaces.

Contrary to suggestions made last year by the Opposition, collecting business registrations for the Pay Rate Updates service will not require an expensive publicity campaign. The Office of Industrial Relations is currently finalising an agreement to use a list of email addresses held by the Australian Taxation Office. This will enable the office to promote the service to more than 300,000 businesses at almost no cost. Pay Rate Updates will also be publicised through the effective, low-cost strategies that have been used to successfully promote other services of the Office of Industrial Relations.

Pay Rate Updates builds on the success of the Government's Awards Online service, which provides electronic access to New South Wales awards, which are kept up to date and provided in full at no cost. Awards Online was visited by more than 160,000 users per quarter in 2003, or more than 1,700 visitors per day. This level of interest was in part achieved through the award inquiry service of the Office of Industrial Relations, which answers more than 300,000 telephone inquiries a year. Another recent initiative to help employers and employees better understand their rights and obligations is the new Check Your Pay service.

The Hon. Tony Burke: I ask a supplementary question. Will the Minister elucidate his answer.

The Hon. JOHN DELLA BOSCA: Check Your Pay, which was launched last November, is a free and easy-to-use tool that enables employees and employers to calculate their wages and entitlements, check pay against hours worked, develop time sheets showing all allowances, penalties and loading, and calculate holiday and long service leave. This unique service, which is the first of its kind in Australia, is already attracting around 2,300 visitors per week.

Given the popularity of Awards Online and Check Your Pay, it is clear that the Office of Industrial Relations has proven strategies in place that are both effective and cost efficient. In addition to these services, the office produces a free monthly e-newsletter, "Your Workplace Online", which keeps subscribers informed on a range of industrial relations issues, including award information, legislative changes and test cases. These information and advice services ensure that employers and workers in this State are able to obtain the information they need, when they need it.

In April last year the shadow Minister for Industrial Relations suggested that an email award update service was an empty promise that "will never benefit the workers and employers of the State". The shadow Minister is the same person who once described the relocation of WorkCover to his own electorate of Gosford as an "impossible dream". The delivery of the new Pay Rate Updates service rejects the shadow Minister's constant stream of negativity, and reflects this Government's continued commitment to building fairer, more productive workplaces.

The Hon. DAVID OLDFIELD: I had intended addressing my question to the Hon. Tony Kelly, representing the Minister for Energy and Utilities. However, as the Hon. Tony Kelly is absent, I imagine the Treasurer will take the question. Is the Minister concerned by the public view that nothing other than water restrictions is being done to address water shortages? Has the Minister considered that statements by the Minister for Energy and Utilities, including yesterday's "We are reaching a point where our dams will be closer to being empty than they are to being full", are giving the public the impression the Government has no plan to resolve water issues? What action is the Government taking in the form of infrastructure to ensure future unhindered water supplies throughout New South Wales? Is the Government moving towards massive water reuse? Does the Government have the building of new dams on the agenda? Does the Government acknowledge the view that water restrictions are not the answer but merely a stopgap measure, as rationing supplies cannot substitute for appropriate water supply infrastructure? Is this Government's only real plan in regard to water to pass the problem on to the next government? Just what exactly is the Government doing about water?

The Hon. MICHAEL EGAN: I was inclined, when the Hon. David Oldfield indicated it was a question to the Hon. Tony Kelly in his capacity as Minister representing the Minister for Energy and Utilities, simply to pass the question to the Minister for an answer down the track. But, as the question went on I became more and more amazed at the ignorance of the Hon. David Oldfield. Only a few weeks ago the announcement of the Minister for Utilities and Energy and the Minister for the Environment on the Government's infrastructure plans for Sydney's future water supply was splashed all over the front pages of all Sydney newspapers.

I do not want to be too harsh on the honourable member. I know how difficult it is to read some of our daily newspapers or even to understand what is going on in the daily media, so I will not blame him entirely for not reading, not watching and not listening. However, he does have staff and they should have told him what the announcement contained. I will go and get a copy of the press releases for the honourable member because even if he did not read the newspapers on the day after the announcement was made, as a member of Parliament he should be aware of the statements that were issued by the Ministers.

The Hon. DAVID OLDFIELD: I ask a supplementary question. As the Treasurer clearly knows the answer but did not give it, could he perhaps tell me what was on the front page of the paper and inform the House just what this infrastructure plan is?

The Hon. MICHAEL EGAN: No, go and do your own homework! You know, I have always wondered why we have any problems at all in this almost paradise that we live in. Occasionally you can explain it away by original sin—

The Hon. Rick Colless: That is a very arrogant attitude.

The Hon. MICHAEL EGAN: What is?

The Hon. Rick Colless: To say that we are living in paradise. What about those poor people out in the west who have been in drought for the past five or six years?

The Hon. MICHAEL EGAN: That is the point I am making: why do we have problems? Original sin is part of it. It has come to my attention during question time that when Governor Arthur Phillip arrived here in 1788 he made a certain proclamation, which included the declaration that there is not any transubstantiation of the—

The Hon. Patricia Forsythe: Point of order: My point of order relates to relevance. Quite clearly an answer about 1788 has absolutely nothing to do with the Government's plans for the future of water supplies in New South Wales.

[Interruption]

The Hon. MICHAEL EGAN: As the Hon. Michael Gallacher just interjected, it was a protestant interjection.

The Hon. Michael Gallacher: No, it was Costa. Your hearing is gone! Madam President, I ask the Leader of the Government to withdraw that statement.

The Hon. MICHAEL EGAN: Madam President, I just want to tell the House that this matter that I am being silenced on will be brought back to the attention of the House for rectification in the very near future!

The PRESIDENT: Order! The Leader of the Government referred to original sin, which presumably can be an answer for anything, so the answer was relevant.

The Hon. MICHAEL EGAN: Madam President, I apologise for the remark that I made about you some weeks ago about not understanding the notion of original sin. You are showing that you do.

The Hon. GREG PEARCE: My question is directed to the Minister for Transport Services. Has the Minister investigated the alleged altercation between the master and the engineer of the ferry Lady Northcott on the afternoon of 22 April? Was the engineer missing from the vessel either while it was under way or docking? Did Sydney Ferries notify NSW Waterways of this incident at the time, and if not why not? Could the Minister tell the House why crew members were not interviewed immediately after the alleged incident and why the engineer has not been interviewed a fortnight after the event? Could the Minister also tell the House whether the engineer has now taken a month's sick leave? Also, have tapes of relevant Sydney Ferries radio transmissions been secured as evidence, and what is the current status of the investigation?

The Hon. MICHAEL COSTA: When a final status report is received I will certainly make it public.

The Hon. HENRY TSANG: My question is directed to the Minister for Primary Industries. Can the Minister inform the House about the recent breakthrough in agricultural trade to China?

The Hon. IAN MACDONALD: As everyone knows, the Hon. Henry Tsang is one of the great promoters of trade and cultural exchange with China. One of the strengths of agriculture in New South Wales has always been the ability of our farmers to trade on a remarkable reputation, both within Australia and around the world. I recently led a trade delegation to China, seeking to open even more valuable export markets—in this case, for dairy and other agricultural industries. Among the industry stakeholders accompanying me was Mr Arthur Burns, Chairman of the Dairy Committee of the New South Wales Farmers Association.

The visit included advanced talks with the Chinese Government that could see us exporting dairy cattle and cattle products to China. Until now most New South Wales dairy heifers have been blocked from this market because of outdated information used by the Chinese quarantine service about the disease blue tongue virus [BTV]. Today BTV is found only in the north-eastern tip of New South Wales. Yet documentation still used by Chinese officials—I think dating back to about 1989—refers to a restriction on the importation of cattle from most of New South Wales, apart from one small region north of the Murray River.

During the visit the delegation met with groups including China's Federal Quarantine Service, better known as the General Administration of Quality Supervision, Inspection and Quarantine Service. It is my great pleasure to inform the House that discussions following the visit are progressing well. In fact, we have just confirmed that we will be welcoming a Chinese technical delegation in June to progress the issue in the near future. The exact dates for that visit will be determined shortly according to the convenience of the Chinese officials, as well as the availability of Australian experts. But New South Wales will certainly be the focus of the visit, which will run for approximately two weeks. The delegation will also visit Queensland and the Northern Territory, and it will, of course, meet with representatives of the Federal Government.

During the visit NSW Agriculture experts will give officials from China's Federal quarantine body a first-hand perspective of our disease-testing regimes and will reassure that body of the low prevalence of BTV in New South Wales. There is no doubt that there is a very great potential for trade following these negotiations. The Chinese economy is expanding at a rate of 7 per cent to 8 per cent a year, and its international trade value has quadrupled in the past decade. The consumer market juggernaut in China is expected to push exports of agricultural and agri-food products from $2.4 billion in 2002 to over $6 billion in 2010. Dairy products alone already make up the third-largest export sector for Australia, and there has been a staggering 65 per cent growth in exports to China in just the last 12 months. Victoria, which already has access to the live cattle export market, has reaped at least $60 million from the sale of 50,000 heifers to China in the past 18 months.

If the Chinese authorities agree to the use of more current BTV prevalence maps, there will be potential to significantly broaden export market opportunities for our dairy farmers. The State Government will work closely with Animal Health Australia, BioSecurity Australia, the Australian Quarantine and Inspection Service, and the Department of Agriculture, Fisheries and Forestry in this endeavour. I am confident that we will be able to secure this very valuable trade option for New South Wales dairy farmers.

Ms LEE RHIANNON: I direct my question without notice to the Minister for Justice. Has the Ombudsman's office undertaken an inspection of the high-risk management unit at Goulburn Correctional Centre? If an inspection has been carried out, will the report of that inspection be released publicly? Does the high-risk management unit at Goulburn Correctional Centre accommodate people charged with terrorist offences? Is the Minister confident that the United Nations standard minimum rules for the treatment of prisoners are being adhered to at Goulburn high-risk management unit?
The Hon. JOHN HATZISTERGOS: I have no intention of divulging to the honourable member where prisoners may or may not be housed. That is information that the Ombudsman has access to if he wishes to access it. I do not make it a habit to tell the Ombudsman what he is or is not entitled to see and what he is entitled to report on privately or publicly. I understand that under the provisions that govern his operations, he is entitled to make those decisions largely by himself. Minimum standards have been of some interest to people whom the honourable member represents. All I can say is that I am confident that the high-risk management unit at Goulburn meets all the international standards that the New South Wales Department of Corrective Services is obliged to meet. I am happy for the Ombudsman to review them and make any criticisms he feels inclined to make at any point in time.

The Hon. MICHAEL EGAN: If honourable members have further questions, they should place them on notice.

[The President left the chair at 1.02 p.m. The House resumed at 2.30 p.m.]

Motion by the Hon. Carmel Tebbutt agreed to:

That this House at its rising today do adjourn until Tuesday 1 June 2004 at 2.30 p.m.

Debate resumed from an earlier hour.

The Hon. ROBYN PARKER [2.30 p.m.]: When the Treasurer delivered the mini-budget he said that changes to land tax would be revenue neutral. We have now heard that that will not be the case; they will only be revenue neutral for the first year. The Government's new land tax will raise an additional $30 million or more per year. The Government is punishing the people of this State for working hard, trying to get ahead, and planning for their future. It is punishing them for doing the right thing in ensuring they will be secure in their retirement. The abolition of the land-tax-free threshold will mean that for the first time more than 300,000 additional families—couples, mums and dads—will be drawn into the land tax net. The Premier and the Treasurer have created the only State in Australia where people are taxed when they buy an investment property—no matter when they bought it—while they own, it and when they sell it.

The Hon. Rick Colless: It is triple-dipping.

The Hon. ROBYN PARKER: It is triple dipping. The Premier and the Treasurer should be ashamed because the tax is deplorable. It should come as no surprise to the Government that the Opposition opposes the increases in land tax and the 2.25 per cent stamp duty exit tax. The people of New South Wales are being punished for the Government's nine years of mismanagement and waste. The list of waste is lengthy and I shall outline significant waste in the Hunter region. First, $21 million was wasted on the failed Austeel project; an outrageous $9.5 million was spent to overcome processing delays and to upgrade systems at the Infringement Processing Bureau at Maitland; $691,000 was wasted on the Unsworth bus review; Hunter and outer suburban train carriages had a $78 million blow-out; there was a $660.5 million blow-out on the Pacific Highway; and $850,00 was wasted on post-electoral ministerial office fit-outs.

The Coalition supports the $500,000 threshold for first home buyers, and I place on record my support for the removal of this tax for first home buyers. For some time now the Coalition has argued for that. It is our policy and the Government has picked up on it. Exemption from stamp duty for dwellings worth up to $500,000 and for land worth up to $300,000 is a welcome initiative for first home buyers, but it will not be without some pain. Rents will increase, making it more difficult for people to get into the housing market. Many young families and prospective home buyers are increasingly asking the question: How will we ever get a deposit for our first home when the Government is driving up rents? One could not deny that rents will increase through the imposition of the land tax.

I did not attend the same economic classes as the Hon. Patricia Forsythe, but it is basic economics that rents are dependent upon supply and demand, and the rental market will be under more pressure as a result of the tax. The Government is making it even harder for young families and young single people to save that elusive deposit for a home. It is always just out of reach for some home buyers. The Government has given with one hand and taken away with the other. Bob Carr has put $1 into the pockets of the people of New South Wales but the Treasurer has cut a hole in their pockets so the money falls out. I urge the people of New South Wales to keep this image clearly in mind, and the Government should do so also. The morning after the mini-budget I travelled down the F3 to Sydney as usual. On the way I stopped at McDonald's for breakfast, and two council workers, wearing their fluorescent vests, were eating McMuffins.

The Hon. Ian West: That is unhealthy.

The Hon. ROBYN PARKER: I know, but it was also unhealthy that they were reading the newspaper, lamenting what will happen with their investment properties, their nest egg for retirement. The Government has peddled the myth that the tax will be imposed on wealthy stockbrokers. That is not the case. It will be imposed on the mums and dads and council workers who have bought investment properties for their retirement. These people are standing on their own two feet and have put a little money aside for their retirement in the belief that they are doing the right thing. They are the ones who will suffer, not the millionaire stockbrokers. Their properties are usually modest but rents will have to rise because they will not be able to manage this tax. In Newcastle and the Hunter approximately 25,000 property investors will be affected by the land tax. The average land value in the region is $220,000, so most investors will pay $800 a year land tax when currently they pay nothing. For those who have more than one investment property, the land tax will be calculated in an accumulative process that will push some investors into a higher tax bracket.

The Treasurer and the Premier should know the story of people like Mrs Rosalyn Wright, of Coal Point. The day after the mini-budget was handed down the Newcastle Herald ran a story on Mrs Wright. She is a resident with two modest investment properties that she bought 10 years ago to fund her retirement, when this tax had not even been envisaged. Mrs Wright is a small investor and the Government should be helping such people, not slugging them with a 2.25 per cent stamp duty. Mrs Wright is an ordinary investor, who has tried to do the right thing by saving for her retirement and ensuring she will not be a burden on the Government. She is only one of many people in the Hunter who will be slugged by this tax. Mrs Wright will now lose a significant amount of her savings because the Government cannot manage its finances.

The Mrs Wrights of this world will suffer from this tax imposed by the Premier and the Treasurer. Also to suffer will be the mums and dads who are trying to get ahead, men and women who have worked their whole lives and have tried to make sensible investments for the future. The Government should encourage people to plan for their future instead of punishing them. Property groups have labelled the Government's plans to raise stamp duty and land tax as crazy. The Executive Director of the Property Council of Australia, Ken Morrison, said that increases in stamp duty for investors were a direct tax on the retirement wealth of ordinary Australians. The President of the Real Estate Institute of New South Wales, Rowen Kelly, said the changes to land tax and stamp duty were bad news for renters. The New South Wales peak welfare body has called on the Government to protect tenants because this extra pressure on investors will force rents to rise.

With all these new taxes, and the subsequent pressure they will put on the rental market, has the Treasurer committed any further money to public housing? No. The image I mentioned earlier of Bob Carr putting a dollar in your pocket after Mr Egan has cut a hole in the pocket is one that I want the people of my area of Port Stephens and the Hunter to keep in their minds. The Carr Government's failure to adequately manage essential services has left residents in Port Stephens and the Hunter worse off today than they were nine years ago, and this mini-budget makes it worse. As well as killing the property market, Bob Carr has failed to provide us with the basics, such as lower taxes, safer streets and better access to hospitals.

In the past nine years Hunter residents have seen waiting lists blow out of control, and stamp duty has gone through the roof. For example, in Raymond Terrace the amount of stamp duty paid on the average family home has gone up by 185 per cent. At the same time the number of assaults has increased by 119 per cent. There are 559 fewer hospital beds available in the Hunter than there were nine years ago. This Government is imposing extra taxes and putting extra pressure on the people of Raymond Terrace and Port Stephens. It is not good enough. The Government is leaving a legacy of failure. With 11.8 per cent of Port Stephens residents listed as investors and approximately 14.6 per cent listed as renters, there are a lot of unhappy people in the property market and potentially a lot of unhappy people unable to make it into the property market.

I am urging the people of Port Stephens and the Hunter to ask whether their streets are safer and their hospitals are better than they were nine years ago. We know the answer. Bob Carr and Labor have failed, yet they impose another tax on the Hunter. With some of the lowest housing figures since 1993, the property market was already cooling before the Treasurer's mini-budget. The slowing of the housing market, coupled with the new tax grabs in the mini-budget, equates to financial disaster for many families in Port Stephens and the Hunter that have invested in property to secure their future. They are no different to people across rural and regional New South Wales. Country Labor members should tell us what effect these measures will have on small business. Perhaps the Hon. Tony Catanzariti might like to tell us what effect they will have on rural New South Wales and on small businesses.

Put it on the record! Let us know what effect they will have, because I know that people in rural and regional New South Wales will suffer. But why should Mr Carr worry about that? He has not invested in New South Wales; his investment property is across the Tasman. The message he is giving people is: invest anywhere but in New South Wales. People will invest in Queensland and Victoria. The Premier has invested in New Zealand. New Zealand is a lovely place, and a holiday property there might be nice, but that does not mean we should have confidence in the Premier. He should not be sending that message to the people of New South Wales. He has made it so difficult to invest here that he had to invest offshore.

People in Port Stephens, where I spend much of my time, are investing for their retirement. They are investing in the sorts of holiday properties that keep the tourism market going. However, they will now invest in Queensland, Victoria, or even New Zealand. That is the example the Premier has set for them. Investing anywhere but in New South Wales is a more viable option. We have established that Mr Carr will benefit from his mini-budget because his investment property is not in New South Wales. What will people think about selling their rental properties now? They know they will have to pay a retrospective tax when they sell; they only wish that they had followed the Premier's example and invested in another State or perhaps in New Zealand. When they bought their investment properties they did not know they would be taxed retrospectively. They thought they were doing the right thing.

The workers at McDonald's and Mrs Wright will not forget this tax, because we will keep reminding them. I place on the record that we wholeheartedly support relief for first home buyers. That is something we have talked up for a long time. However, we will not stop reminding people of the unfair tax that the mini-budget and this revenue bill will impose on many people in New South Wales. We will remind the people that Mr Carr, the Treasurer and Government members support this bill, and we will remind people in rural and regional areas that Country Labor members support it as well. When businesses start to go to the wall and people cannot afford to invest, we will remind them about this tax, right up until 2007.

The Hon. Tony Catanzariti: In 2027.

The Hon. ROBYN PARKER: No, 2007. Members opposite should wait and see. The people will not forget. They will not forget when they go to the ballot box, unless the Carr Government fixes it, and fixes it soon

The Hon. GREG PEARCE [2.45 p.m.]: This is supposed to be a mini-budget bill, but a quick look at it shows that it is all about raising more taxes. It is extraordinary that this is the legislation to support what was supposed to be an urgent mini-budget at a time when the State's finances are in disarray. What do we get? Simply a bunch of new taxes! Contrast that with the other news of the moment, which is the excellent budget brought down by the Federal Government. I join other speakers in congratulating the Prime Minister, John Howard, and the Treasurer, Peter Costello, on a sensational budget for this country. Not only did the Federal Government manage to hand back some $5 billion to people by way of tax cuts and financial assistance for families, it still managed to deliver a responsible surplus of more than $2 billion.

Not only did the Federal Government cut taxes and provide valuable assistance to families while maintaining the surplus, but according to the rating agencies, the country's triple-A rating will be maintained. All these things come as a result of the Federal Government's good management of the Australian economy. As some of my colleagues said, that comes at a time when the State Government is increasing taxes to rectify its mismanagement and waste. The bill proves that the entire mini-budget exercise was a stunt. Notwithstanding the puffery associated with the Treasurer's speech in the other place, the mini-budget was simply a stunt. Interestingly, the bill was introduced in the other place by the Parliamentary Secretary, the honourable member for Campbelltown, on behalf of the Minister for Infrastructure and Planning, and Minister for Natural Resources. The Parliamentary Secretary made the point that the bill dealt with more than a number of tax measures in the mini-budget. In the second reading speech he said:

The bill also contains a number of minor miscellaneous amendments that deal with issues that have previously been identified by the Government.

He went on to detail those issues. The first was to make an exemption from transfer and mortgage duty granted to certain public housing tenants. There were other changes including clarification of the situation in which entities are linked for the purpose of determining liability for transfer duty upon acquisition of land-rich entities. In other words, when introducing this bill in the other place the Parliamentary Secretary did not make a pretence that this was a money bill and should be treated as such. He made it plain that this bill is merely a normal bill relating to State revenue and can be amended. I have had the pleasure of reading the excellent speech my colleague the Hon. Patricia Forsythe made last night. I commend to members her analysis of the status of money bills and the Opposition's advice from the Clerk.

Putting that advice aside, the Parliamentary Secretary did not even make the pretence—he did not support the Premier at all—that this was a money bill. He dealt with it as a normal bill and took the opportunity to deal in his speech, as does the bill, with a number of miscellaneous amendments to do with issues previously identified by the Government. There is no doubt that that is the case in relation to this bill. The Parliamentary Secretary also referred to the speech by the Treasurer in relation to the mini-budget. While he initially tried to make the argument that there was some urgency for this mini-budget, at the end of the day he conceded in his speech that there is no crisis in relation to the New South Wales budget. He concluded his speech by saying:

Even with the expenditure savings and revenue measures I have announced today, we expect the 2004-05 budget result to be a deficit in the order of $300 million.

The Treasurer went on in his speech on 6 April:

But after a string of surpluses, our triple-A finances can withstand a $300 million deficit in the coming year.

He does not for a second suggest that there is any real urgency about this unfortunate deficit that has been brought about by the Government's mismanagement. He went on to say that in his view the deficit would be eliminated very quickly. He said this would probably be the only deficit budget he would introduce. Perhaps that means he is going to retire shortly and will not be here to deliver another budget. At the end of the day there was no urgency about the State's finances. The $300 million deficit is a result of the mismanagement by this Government of the New South Wales economy and the laziness and waste the Government allows to continue. The Treasurer's own mini-budget speech made the point that the State's finances can withstand the budget deficit and that our triple-A financial rating is not threatened.

This bill deals with a number of taxes, but before I speak more on them I remind honourable members that they are not the only taxes being increased by the Government. The 2003-04 budget announced club and hotel taxes to be phased in over seven years commencing this year. So, we do not have just these land and other tax grabs; gaming taxes are also coming into play. The last publication of Treasury, the 2003-04 half-yearly budget review, estimated that taxes to be raised by the Government in 2004-05 would increase from $14.981 billion to $15.163 billion—an additional $639 million in taxes that this Government expected in December to achieve in 2004-05—before these additional measures. One has to ask where is all this additional money going? That question is being increasingly asked in the community.

The Hon. Patricia Forsythe: You do not see it in services.

The Hon. GREG PEARCE: We do not see it in services, so where is it going? One place it is going is into the burgeoning and out-of-control public service, where, again using the half-yearly budget review from December, employee-related expenses are budgeted to go up to $16 billion in 2004-05, an increase of $648 million. This is an extraordinary increase and no doubt it will be even greater than that when we see the budget figure in June. Following on from that increase in employee-related expenses of $648 million is an increase in other operating expenses of $382 million. In the December half-yearly review there was an increase of almost $1 billion over the estimates included in last year's budget. If that is not a public service that is out of control, I do not know what would be.

I do not want to repeat what many other members have said about land tax and vendor stamp duty. Vendor stamp duty is something the Government will come to regret ever introducing. Numerous members have already dealt with that so I do not propose to say anything further, but it will be known as Egan's tax. It was introduced with a great deal of arrogance and one has to ask how much thought was given to it. In the mini-budget hearings next week we will be asking how much thought was given to it and how much analysis there was of it.

I support other members of the Opposition who commended the first home ownership concessions. We all hope that the first home ownership concessions will assist young people in New South Wales to buy their homes. However, I place on record a concern I have about the Government's real attitude to first home ownership, and I place on record my astonishment at the apparent change of heart the Treasurer had on the weekend before he made his mini-budget speech. Treasury publishes an interesting newsletter called "Treasury Focus." In April, the same month the Treasurer announced his mini-budget, "Treasury Focus" contained an article on the Productivity Commission inquiry into first home ownership.

I will not cite it in great detail, but in December 2003 the Productivity Commission issued a draft in relation to first home ownership that attributed rising house prices in the past decade to the exceptional demand for residential property, which exceeded housing supply. The commission specifically recognised that government intervention in relation to taxes is unlikely to immediately improve housing affordability. The newsletter argues that over the longer term, government policy can promote a more responsive and efficient housing market that would improve housing affordability, and it makes certain suggestions on how to achieve that.

The New South Wales Government responded to the draft report of the Productivity Commission with a second submission. In that submission—according to "Treasury Focus", the Treasurer's own publication—the Treasury stated that abolishing transfer duty is unlikely to improve first home ownership affordability. Then the Treasurer jumped on the bandwagon and changed that opinion. That is a good thing for first home buyers, but it goes to show that the Treasury is run as a rabble and that policies on the budget depend on what happens to the Treasurer over the weekend. After nine years of this Government we face the extraordinary situation where billions of dollars—already $8.3 billion in overbudgeted revenues—have been wasted. The Premier and the Treasurer claim that there is a catastrophe that they need to deal with in the budget and new taxes are required. The Government is out of control. It deserves what it gets as people recognise the Government's waste and mismanagement and the adverse impact of the Treasurer's taxes and realise that this State is no better off with this Government in office.

The Hon. JENNIFER GARDINER [3.01 p.m.]: I join with my National and Liberal party colleagues in condemning the tax increases contained in the bill and perpetrated on the people of New South Wales by the Carr Labor Government. Whilst the Opposition supports the stamp duty exemption for first home buyers—which has been lifted to a property value of $500,000 and phases out at $600,000—we oppose the new vendor stamp duty which the Carr Labor Government is imposing on the sale of investment property with its new stamp duty of 2.25 per cent. The bill provides that the seller of land-related property in New South Wales will pay a vendor duty of 2.25 per cent. That tax will apply to the same sale price or value as used for transfer duty, to be paid by the purchaser. The sale of business assets, including land, will be liable for vendor duty if land-related assets account for 60 per cent or more of the assets being sold. Australia's highest taxing government—the Carr Labor Government—seems unable to unhitch itself from its old and bad ways. It is a Government in a State-tax-lined rut.

A number of constituents have been in touch with me to raise specific concerns about the bill and have pleaded with me as a member of the Legislative Council to vote to reject the new taxes. The Opposition trusts that the majority of the House will join with us in opposing the new taxes. The people of New South Wales are watching very carefully to see what tricks the Carr Government will get up to in trying to hoodwink some members of the House to go along with the Labor Party's narrow view of the role of the Legislative Council in a debate such as the debate on this bill. Only yesterday we heard the Minister for the dismantling of country railway services, the Hon. Michael Costa, rubbish the role of the Legislative Council, in which he has the two-faced gall to serve. His remarks were scripted by the Treasurer, who pulled the stunt that was his mini-budget. That is all it was: a stunt. The Treasurer read out his mini-budget speech at a sitting of the Legislative Assembly without being able to produce a bill. Weeks later he turns up with a bill. If that is not arrogance, I do not know what is. No wonder he did not want the Legislative Council to sit simultaneously with the other House on the day that the mini-budget was delivered!

The Independent Retirees Association at Tamworth is one example of an organisation that has asked why the Carr Labor Government is discriminating against a particular type of investment, namely, property investment. These taxpayers feel particularly hard done by, as they rightly feel proud of the fact that they do not rely upon a government to get by on a daily basis. These same people have paid their taxes and many of them have bought investment properties. That is how they came to be self-funded retirees. Their reaction to the new exit tax is one of anger and disbelief. I do not believe that a satisfactory explanation has been given to those groups as to why a particular form of investment has been targeted. I am sure this very angry sector of the community will exercise its long-term memory when it comes to the 2007 State election.

For months The Nationals have been pointing to the relative attraction for businesses to move across the Tweed River to gain the benefits of a lower tax regime on the other side of the river and State border. The Carr-Egan mini-budget, which is now before the House, adds to the incentives to up stumps and go to Queensland or, to put it another way, to escape the disincentives to doing business in the State of New South Wales. I am not sure what the Government has against the honourable member for Tweed, but it would seem that his ministerial colleagues are doing absolutely everything imaginable to see him ousted from the Legislative Assembly at the next election.

The Hon. Tony Catanzariti: Are you worried about him?

The Hon. JENNIFER GARDINER: The honourable member for Tweed does not seem to be doing much to save his skin. Perhaps he has given up the ghost. As many other speakers in this debate have mentioned, there is a dramatic contrast between the budgetary approaches of the Carr Labor Government and those of the Howard-Costello Government, which brought down its latest budget only this week. As the Prime Minister says, the Government reaps tax revenue and allocates it to services, and if there is scope for returning some directly to taxpayers in one form or another, then that is what should happen. The Carr Labor Government has unprecedented revenues, courtesy of a strong and well-managed national economy and John Howard's brave tax reform measures, which were adopted by the Australian people and have produced GST revenues for the States.

Everywhere we go in New South Wales the questions being asked are: Where has all the money gone? What does the Carr Labor Government do with the stream of revenue that rushes into the State's coffers? Our constituents are at a loss to see any value for money. The hospital system is chronically and seriously sick, the rail system is literally off the tracks, and parts of the State are being closed down or threatened with closures. Yet the Carr Labor Government wants to rip more and more taxes out of the hard-earned income of more and more of our constituents and taxpayers of this State. I am happy to be part of the Opposition that opposes the new stamp duty to be imposed on vendors, whilst at the same time supports that part of the bill that increases the stamp duty exemption for first home buyers. I look forward to the remainder of the debate and trust that the majority of the House will support the position of the Liberal Party and The Nationals on this bill.

The Hon. DAVID OLDFIELD [3.08 p.m.]: I applaud the relief being brought to some home buyers by changes to stamp duty, but I am appalled at the attack on investors and the land tax changes that accompany it. The Government does not really care about the difficulty of purchasing a home. I believe absolutely that the very little it is giving away is the stuff of smoke and mirrors merely intended to divert attention from what is really a revenue-raising assault on hardworking people. The Government is clobbering far more people than it pretends to help. Hence, it is a little hard for it to use the fraud of a caring nature as a shield against the exposure of its real agenda.

For the record, I am completely opposed to the existing level of stamp duty. It is a tax that the Government imposes because it can; it does nothing at all for it. It is theft with no real benefit in return. I feel equally strongly, if not more strongly, about land tax. That tax also should not exist. Many middle-income earners are sick to death of working hard to pay for those who do not work at all. No doubt the Government will succeed in pushing through this demonstrably unfair tax on investment, combined with the equally unfair land tax changes. But the aftermath of that success may, in many respects, be the complete undoing of the exercise. We know that this Government's policy is to tax, tax and tax again. We also know that the people of New South Wales will pay for this Government's mistakes. The question is what the Coalition's policy will be. We know where the Labor Party stands and it is often said that the Liberal Party and The Nationals have trouble clearly differentiating themselves from Labor.

If the Coalition were to announce that upon gaining government it would remove these onerous new taxes on investors, a number of interesting issues would likely come into play. The first would be the obvious and clear policy difference between the Government and the Coalition. Labor will steal taxpayers' hard-earned money but the Coalition would not. It does not get much clearer than that. The Opposition would have a tool with which to batter the Government for the next three years. We all recognise the difficulty of keeping an issue going for weeks, or even days, let alone years. However, in this case so many people will be personally affected right where it hurts—in the pocket—that it would not be difficult to get them on edge and to re-ignite their anger at the appropriate time. I can assure the House that I know all about igniting anger.

The Government should be reminded that three to five years in property investment is a relatively short time. Therefore, such a promise from the Coalition may seriously reduce the revenue the Carr Government expects to steal from those who saw property investment as a way to secure their future. Many are likely to decide not to sell their investment properties while this law is in force and then back the Coalition in the next election. In some areas of Sydney a consequent shortage of sales could further increase property values and improve the overall property gain for those who hold off as they await the fulfilment of such a Coalition promise. If the result of this heinous crime the Government is about to commit against hardworking people is a tax that fails to deliver at expected levels, budgetary difficulties over the next three years and election losses in 2007, a result that this greedy little group of bad managers deserves.

Reverend the Hon. Dr GORDON MOYES [3.12 p.m.]: I speak on behalf of the Christian Democratic Party on the State Revenue Legislation Amendment Bill 2004. The object of this bill is to amend certain State revenue legislation for the following purposes: firstly, to increase the duty concessions available for first home buyers under the First Home Plus scheme and align the eligibility criteria for that scheme more closely with the First Home Owners Grant scheme; secondly, to remove the tax-free threshold for land tax and introduce new rates of land tax in respect of all land that is subject to land tax; thirdly, to repeal the premium property tax and to replace it with a premium rate of duty on purchase of residential land where the dutiable value of the land exceeds $3 million; and, fourthly, to introduce a vendor duty on land-related transactions that are dutiable under the Duties Act 1997.

The Christian Democrats are concerned about a number of provisions in this legislation and have raised those concerns with the Treasurer. He has sought advice on some of those issues and we await his response. We are concerned that this legislation provides for taxes at the beginning and the end of transactions. The Treasurer said the legislation is designed to cool the property market. The market is well and truly in decline and cooled, and Queensland and Victoria have moved in quickly to take New South Wales investment. We are very unhappy with the thought that duties are imposed at three stages: stamp duty is imposed on the purchase of a property, land tax while it is held, and vendor tax when it is sold. Some 800,000 people will now be taxed for the first time. The most objectionable aspect of this legislation is its retrospectivity with regard to the vendor duty. That should apply only to properties purchased after the bill's assent.

The Christian Democratic Party appreciates that the Government needs money for hospitals, schools and the like. However, the Federal Government budget delivered in Canberra this week will increase the GST income to New South Wales by more than $1.1 billion over the next four years. We do not need these new duties. The Christian Democratic Party believes that the Government is wrong, but also that it is entitled to be wrong and to have its money bills passed even if some provisions are unfair. The Christian Democratic Party will therefore wait with interest to hear what the Treasurer has to say in reply about our concerns.

The Hon. MICHAEL GALLACHER (Leader of the Opposition) [3.15 p.m.]: I congratulate honourable members of the Opposition on their contributions to this debate.

The Hon. Duncan Gay: I would have thought a Federal Labor candidate would have supported this.

The Hon. MICHAEL GALLACHER: I particularly thank the Hon. Patricia Forsythe for leading on behalf of the Opposition. It comes as no surprise to members of the crossbench, and it is most certainly no surprise to members of the Coalition, that in the debate leading up to the introduction of this legislation the Government used every threat available to it, delayed legislation, resorted to constitutional law, and argued about the definition of the word "originate". Honourable members opposite have been pulling rabbits out of hats, but they have failed. Members of the crossbench were prepared to entertain the notion that this matter fell within the scope of section 5B of the Constitution Act. The Legislative Council could have fulfilled its proper role as a House of Review. We now know that it is not a section 5A appropriation bill but a section 5B money bill. Its origin was debated, but that is a matter for another day. The issue should be investigated beyond this debate in terms of the definition of "originate" as it relates to a section 5B money bill. The House should refer the issue to the Clerks for further examination.

I take this opportunity to congratulate the Clerks for rising to the challenge and working through a large volume of information. They have examined previous decisions of this House and balanced them against superior court decisions. They have risen to the task and supplied members of the Opposition and the crossbench with the most recent and fairest appraisal of the Legislative Council's position. Apart from Government members, who were trying every trick in the book to undermine and dismantle the sovereignty of the Legislative Council, honourable members stood together to ensure that the House maintained its true role as the House of review. We must continue to develop a better understanding of this Chamber's role to ensure that we maintain our integrity and our relevance. I encourage the Clerks to continue what they began in the lead-up to this debate.

Many members of the Coalition have spoken on this legislation, which will have the most negative effect on the lowest socioeconomic groups. There is no doubt that rents will increase. The option of superannuation came late for many mum and dad workers. As a result, they have invested in property to secure their future. At one time the Australian Labor Party proudly proclaimed it represented these people. The party has definitely lost its way. The only Government member who has spoken on this legislation is its architect—Dr Frankenstein himself, the Treasurer. Indeed, as the Deputy Leader of the Opposition rightfully interjected a moment ago, one would think that a prospective Federal member who purports to represent the workers and mums and dads, who will be hit hardest by this legislation, would have been involved in this legislation and contributed to the debate on it. The Australian Labor Party's silence on this legislation is absolutely breathtaking. I will be interested to see how it conveys—

The Hon. Henry Tsang: He's saving his speech.

The Hon. MICHAEL GALLACHER: He's saving his speech until the end, is he? He is saving it for the Federal election. It is only a matter of weeks or months before Labor will be looking for another Federal Opposition leader, because the dud it has now will not be there for much longer. I wish the Hon. Tony Burke all the best. The half a dozen ALP members who will be left following the Federal election will draw straws—

The Hon. Duncan Gay: Whatever you do, don't out Tony Catanzariti.

The Hon. MICHAEL GALLACHER: He'll be the deputy leader. The ALP members will be drawing straws to see who is going to step up to the plate to take on John Howard in three years time following the next Federal election, as John Howard continues to go from strength to strength as the leader of this country. I wish ALP members all the best. Hopefully they will get enough members to form a quorum in the ALP's party room following the election. There are a lot of pieces missing from Mark Latham, but the public are filling in the blanks. They know that the guy is a shonk.

Labor belts the workers in the hip pocket. The Treasurer belts them in the mouth by driving up taxes, and he will continue to do so. I have looked at some of the statistics on how this legislation will affect the people whom I, as a member of the Legislative Council, represent. For the benefit of members who may have forgotten, the Assistant Treasurer in New South Wales is the Hon. John Della Bosca. He is also the Deputy Leader of this House, and the Minister for the Central Coast. However, not only is he not in the Chamber but he has not said a single word on this issue.

I have looked at the statistics on how this legislation will affect the Central Coast. The Australian Labor Party loves to paint the picture that the legislation is about helping the workers, by getting stuck into the rich silvertails who live on the North Shore and in the eastern suburbs. According to the Australian Taxation Office, Gosford, which has the postcode 2250, has the fifth highest number of investment property owners in New South Wales. That one postcode area has some 3,146 investment property owners, and all of them will be hit by this legislation.

The Hon. Rick Colless: Who are they going to vote for in the next election?

The Hon. MICHAEL GALLACHER: Are we talking about the next Federal election or the next State election? The team opposite have done their Federal counterparts in the neck. Members on this side of the Chamber wonder whether that is part of the grand plan. Is that what Bob Carr is really about: making sure that there is only one leader of the Australian Labor Party nationally? He does not want Mark Latham, or any of the second-grade players who represent the other jurisdictions around the country; he wants to be number one. In true Marxist fashion, when there is a challenger you destroy the challenger. In this case, you provide the ammunition for the other side to take out the challenger. Bob Carr has done it very well. There are no fingerprints at the crime scene at this stage, but you can see it starting to unfold. It will unravel for the Federal Opposition, and the Federal Government will take every advantage of it in exposing the fraudulent way in which Federal Labor says one thing and State Labor does the complete opposite.

Residents of The Entrance, which has the postcode 2261, are not silvertails. They are average workers. The Entrance was once the holiday capital of New South Wales. People did not go to the Gold Coast. Many working-class families used to go The Entrance during school holidays.

The Hon. Patricia Forsythe: And when the mines closed.

The Hon. MICHAEL GALLACHER: When the mines closed, everyone went to The Entrance. Many people have bought property in The Entrance. They have bought old shacks and they have gone there year after year.

The Hon. Jennifer Gardiner: At The Entrance they've got an exit tax!

The Hon. MICHAEL GALLACHER: Yes, exactly.

The Hon. Henry Tsang: They've got good prawns at The Entrance.

The Hon. MICHAEL GALLACHER: The Hon. Henry Tsang says they have good prawns at The Entrance.

The Hon. Jennifer Gardiner: And Labor has the raw prawn.

The Hon. MICHAEL GALLACHER: Exactly. As the Hon. Jennifer Gardiner says, Labor has the raw prawn. The Entrance has the thirtieth-highest number of investment property owners in New South Wales, with some 2,246 investment properties in that postcode area alone. Those people will be hit hard and fast. Once again I draw attention to the fact that the Assistant Treasurer is not in the Chamber. I note that the outgoing Treasurer, who is in his swan song, is now entering the Chamber. He was probably not aware that the hardworking families who have put away money for their retirement by investing in property in and around the Central Coast will be brutally struck by this legislation. The Opposition, on behalf of the working people of this State, proudly protests that the Government has got it wrong, and we are prepared to go to the wire over it.

The Central Coast area has at least 14,000 investment property owners. I am sure the Hon. Patricia Forsythe, who comes from the Hunter, would not be surprised to hear that just under 25,000 investment property owners in the Hunter Valley will be hit by this legislation. The legislation is indiscriminate. It has hit many people, and will hit many more. And the Government is quite happy to rake in the dough. If the Government had the courage of its convictions it would have split the legislation into two bills. It would have said, "We will ensure that the parts of the legislation that the Coalition puts forward as sensible are supported and incorporated in one bill. But we will put all those nasty, ugly pieces into a separate bill and debate them."

It is similar to the way the Government presents regulations to the House: members have to accept the whole package. The Opposition is up to it. As has been indicated, we will oppose schedules 2 and 4 of the bill. Not only will we oppose the legislation today but we will oppose it tomorrow and the day after that, and we will continue to do so until we have an opportunity to revisit the legislation post-2007—unless, of course, the Government revisits the legislation before 2007 and increases taxes yet again. And there is no reason to suggest that it would not do so. When the Treasurer goes, and the Hon. Michael Costa has his hands on the purse strings, the left wing will grimace every day he comes to work. They know that he has the opportunity to rake in more dough and that he will do so, and that he does not care about the cost. The social and environmental costs are not important to the Hon. Michael Costa; he is only driven by the economic bottom line.

One has only to look at what the heir apparent to the Treasurer's position is doing to public transport in this State to confirm that he will do whatever he has to do to rake in the dough. He will slash and burn, and jack up fares and taxes. I am proud to be a member of the Opposition that opposes the key, nasty parts of this legislation. I hope that the crossbench members have listened to the contributions of the Opposition, commencing with the contribution of the Hon. Patricia Forsythe, and that they will vote in support of our amendments.

The Hon. DON HARWIN [3.28 p.m.]: It is not my intention to speak at length to the State Revenue Legislation Amendment Bill, because a number of my colleagues have spoken to it. The Hon. Patricia Forsythe, in leading for the Opposition, outlined our position on the bill in a detailed and well-reasoned contribution.

Since the date on which the Treasurer delivered his so-called mini-budget ministerial statement in the other place, the wheels have rapidly started to fall off the package that is encapsulated in the proposed legislation we have here today. Honourable members will recall that this mini-budget came at the end of a publicity campaign by the Government that cost almost $1 million, in which the Government tried to fabricate a case against the Federal Government to justify Treasurer Egan's attempt to expand the tax base. It is in no way a response to what the Federal Government has allegedly done through the Grants Commission process. That fact is absolutely clear from a number of pieces of information now in the possession of the community.

First and foremost, we know that over the next four years the State of New South Wales will receive $1.1 billion more in GST revenue than was originally expected. That is a very important factor to note. It certainly puts the comments of the Treasurer and those of the Premier in his television advertisements into proper perspective. As a number of Opposition members have pointed out during the debate, this legislative package is revenue neutral in year one only.

With regard to premium property tax, the agenda of the Government is absolutely clear. Premium property tax has been the subject of much emotional debate over the years—emotional in the sense that supporters of the tax claim that it is a tax on the rich, whereas it has been shown repeatedly by the Opposition and other land tax activists over the years that this so-called premium property tax has principally been about taxing people living in their own homes. There are dozens, if not hundreds of examples of people who have simply not been able to afford to pay this tax on houses that have been in families for years. There has been incredible hardship. I bring to the attention of the House a question that I asked on notice of the Treasurer and the response that I received from him, which shows clearly that the Treasurer has come into this House with a package of legislation to expand the tax base for his own purposes, not because of anything the Federal Government has done.

In relation to real property subject to premium property tax under the relevant legislation, I asked the Treasurer how many properties were valued above the relevant threshold in the years 2000, 2001, 2002 and 2003. The response I received was interesting. In the year 2000 the number of properties over the threshold was 1,953; in the year 2001 the relevant figure was 1,434; in the year 2002 it was 1,356; and in the year 2003 it was 1,324. Although we had a tax that was punitive in that it taxed people living in their own homes, fewer and fewer people were required to pay it. In my view, in large part that explains why the Treasurer has done what he has done on premium property tax. He certainly has not had a conversion on the road to Damascus about whether people should be taxed for living in their own homes. I note the Treasurer is nodding. I fear for what may happen in the future.

I do not want anyone in the community to be under any illusion that the agenda of this Government has somehow changed and that it has bestowed incredible generosity on people who were taxed for living in their own homes. The reality is that this tax was catching fewer and fewer people and as a result the Treasurer had to look elsewhere for revenue. And we have ended up with a monster! The result is vendor duty and land tax applying to a much wider base of people. My fear is that if this Government and this Treasurer are not prepared to do something about their expenditure, land tax will be imposed on the family home. I hope that the Treasurer will give us an assurance in his reply that that will not happen. However, I doubt that we will receive that assurance.

The Treasurer may be able to help me with one matter in his reply. I note that in his second reading speech he talked about new arrangements for low-income landowners who own taxable land with a land value of less than $400,000 that generates no income, in that they will be able to defer payment of their land tax. I draw attention to this quote for a particular reason. Through this legislation—and, of course, the Coalition welcomes this provision, which has received considerable attention—young first home buyers will be exempt from having to pay stamp duty. But I am concerned about young couples who buy a block of land but do not immediately have the resources to build on that land. Of course, it is not their home so there is no exemption from stamp duty. They might be living in a home unit somewhere else and saving to build a house on their land.

I have tried several times through several avenues to explore what their position is, and I have not had a satisfactory answer from very senior public servants from whom I have sought the information in a totally open way. I have even looked on the web site of the Office of State Revenue. Now, if I have missed something, I am very happy to concede it. This is an important matter. What is the situation with regard to young people in that position? I am pleased that the Treasurer has referred to circumstances in which low-income landowners will be able to defer paying the tax where they are not actually earning income from the land. That is important and most welcome. There are many couples all around the State who cannot afford immediately to build upon their block of land.

The Hon. Michael Egan: But they do get stamp duty exemption on the land.

The Hon. DON HARWIN: That is exactly the point. I realise they receive a stamp duty exemption, but I am asking about land tax. Will this legislation involve a whole new group of people paying land tax—not just investment property owners, but young people who bought a block of land with the intention of building a house on it in the future? I would be grateful if the Treasurer could direct some comments to that matter in his response. Admittedly, the tendency these days is for young people to buy a house and land package rather than vacant land on which to build. My parents had their land at Peakhurst for several years before they built on it. Times and people's attitudes have changed, but this situation needs to be looked at.

I note the Treasurer has left the Chamber. I hope that means he has gone off to find an answer and that he will provide the answer in his reply. The question is asked with the best of intentions, and it seeks reassurance for a number of constituents who have approached me on this very issue. I have been contacted by many people concerned about the widening land tax net, which will catch a whole raft of investment property owners who previously have not had to pay land tax. Various members have mentioned the retrospectivity aspect of the legislation, and that too is important to note. The Hon. Patricia Forsythe has put the position of the Opposition in that regard.

This tax has made it very difficult for a large number of people who decided to make arrangements for their own retirement based on a particular understanding of the tax law. We should encourage people who have worked hard all their lives to make provision for their own retirement. Treasurer Peter Costello, in successive budget papers, has done excellent work on intergenerational equity, resolving some of the difficulties faced by an ageing population. Many people approaching retirement have bought property as nest eggs for their retirement, and in doing so they have made various assumptions about the income they will receive. However, the goalposts have completely shifted. The tax will be paid not only by the class of investment property owner that it was designed to target, but also the mums and dads of Australia who have chosen to purchase property for their retirement.

I am sorry that the Australian Labor Party candidate for the Federal seat of Watson is no longer in the Chamber, although I realise he is undertaking important parliamentary duties. I wish to emphasise the plight of people from non-English-speaking backgrounds—of whom there are many in the Federal electorate of Watson. Retirement income in the form of superannuation, annuities and other alternative arrangements, which are available in Australia, are often not available in other countries. Traditionally, the retirements of people from non-English-speaking backgrounds have been financed from property investment. Many of these people have been faithful Labor supporters all their lives and they now feel betrayed by this legislative package. Clearly, the Government has failed to take that matter on board.

I cannot resist the temptation to comment on the remarks made by Reverend the Hon. Dr Gordon Moyes earlier this afternoon. I am sure he will forgive me if I paraphrase him incorrectly. Basically he said, "We think that the Government is wrong but it is entitled to be wrong." I take it from those comments that he will support this legislative package. I note that this week his colleague Reverend the Hon. Fred Nile announced that he intends to stand for a position in the Senate. If for the past eight years the Senate had crossbench members who shared those views, things might have been very different for the Howard Government. I shall read onto the record details of the years in which legislation in the Senate has been blocked in circumstances analogous to this bill.

In 1996 the Appropriation Bill (No. 1) and the Appropriation Bill (No. 2) were either amended or blocked; in 1997 Committee amendments to the Veterans Affairs Legislation Amendment (1996-97 Budget and Other Measures) Bill and two similar bills were agreed to; in 1998 Committee amendments to the Social Security and Veterans Affairs Legislation Amendment (Budget and Other Measures) Bill were agreed to; in 1999 Committee amendments to the Family and Community Service Legislation (1999 Budget and Other Measures) Bill were agreed to, along with second reading amendments to the Appropriation Bill (No. 4) and two other appropriation bills. Of course, the GST legislation was also introduced in 1999 and the Senate amended or blocked significant aspects of that legislative package. Also in 1999 Committee amendments to the Social Security Legislation Amendment (Budget and Other Measures) Bill were agreed to; in 2000 the Senate took action on the Veterans Affairs Legislation Amendment (Budget Measures) Bill; in 2002 the Senate rejected the National Health Amendment (Pharmaceutical Benefits—Budget Measures) Bill; amendments were made at the second reading stage and in Committee to the Family and Community Services Legislation Amendment (Australians Working Together and other 2001 Budget Measures) Bill and second reading amendments were made to the Veterans Affairs Legislation Amendment (Further Budget 2000 and Other Measures) Bill. In 2003 the Senate heavily amended the Higher Education Support Bill, it defeated the National Health Amendment (Pharmaceutical Benefits—Budget Measures) Bill, and it took action on the Family and Community Services Legislation Amendment (Australians Working Together and other 2001 Budget Measures) Bill.

I realise that the constitutional position of this place is quite different from that of the Senate. I shall not labour the point, because my colleague the Hon. Patricia Forsythe has adequately done so. Reverend the Hon. Dr Gordon Moyes and other crossbenchers might reflect upon the fact that this Government has had a pretty good ride with respect to budget measures passing through this place. It is a shame that this Government has not done as excellent a job as that done by the Federal Howard Government, despite years of obstruction by the Senate to various budget bills. Having said that, I believe the Opposition's position is clear. We will vote against schedules 2 and 4 in Committee.

The Hon. Dr PETER WONG [3.46 p.m.]: What is before the House is crisis management at best, even if it is only a demonstration of how not to go about it. A capable government should have clear objectives, well thought out strategies, focused effort, strong adaptation, a record of consultation with stakeholders and good short-term, medium-term and long-term planning for the financial affairs of our State. In the hands of the Premier and the Treasurer, New South Wales now has a dismal report card, the bottom line being a deficit of $376 million, and rising. In the past the Carr Government has always been eager to remind the public and all honourable members that it was responsible for the surpluses. I shall refer to some previous statements made by the Treasurer and the figures he quoted.

We were reminded in the 2002-03 budget that the budget surplus for 2001-02 was estimated to be $670 million, compared with an original estimate of $368 million. The Treasurer stated also that for the 2002-03 Budget the surplus was expected to be $168 million. In the budget overview for 2003-04, which is not that long ago, the budget surplus of $43 million in 2003-04, increasing to $932 million by 2006-07, continues the pattern of conservative surpluses over recent years. The Treasurer stated further that in 2003-04 the expected rural recovery and moderate world growth will boost exports but a modest housing downturn is expected to slow domestic demand and employment growth. Of course, in some ways he was wrong because the real estate market was still going strong. In his Budget Speech on 24 June 2003 the Treasurer said:

In the coming year the Government will be aiming for its eighth successive balanced budget …

This year, I'm almost pleased to predict that an eighth balanced budget, unprecedented for any government in Australia, will hardly rate a mention.

Interestingly, at that time he did not place too much blame on the Federal Government. He said further:

They represent our underlying financial strength, our capacity to ride out the tough times without the need, currently being experienced by most of the major American cities and states, to savagely cut services or impose crippling tax hikes.

Suddenly we have a mini-budget, because the Treasurer said he was facing a huge deficit. Interestingly, he mentioned that he would provide additional funding for country and city hospital running costs of $572 million per year. That means that he has done nothing over the years. He also talked about the biggest ever overhaul of Sydney's rail system, with a six-year, $1 billion program for five rail clearways and a $1.5 billion program for 498 new airconditioned train carriages. He referred to extra funding of $356 million for education, including the roll-out of smaller class sizes, and so on. Obviously, the Treasurer has never spent money on infrastructure. The education, hospital and transport systems have been run down, and now we are in big trouble.

So when the accounts do not balance, suddenly the ball is in someone else's court—teachers, nurses, hospitals, schools, taxpayers, the Federal Government. Whatever penny pinching is necessary, whether from disadvantaged groups or those simply being prudent about retirement, the Government is desperate to plug all the holes in the dam. That is true to form. Many of those who will suffer can least afford it—thousands of mum and dad investors, people who have made an investment in their children's future or those who have invested to avoid being a burden on the State. And what a slap in the face! We remain subject to pressure from the Government to give a decision, preferably one that will see the money pouring back into the State's coffers.

Yet what is the Government employed to do? Most certainly it is not to ensure that our rail system runs smoothly, to keep our hospitals and medical services healthy, to house our sick, the disabled and the homeless, or to make the best possible investment for education and growth for future generations. Conveniently, after gorging for years on land tax and stamp duty, the taxpayers must face the latest malady in this legislation. While other State governments, one after another, boast of financial and economic booms, New South Wales is fast becoming like a poor relation. The Treasurer claims that he wanted to cool the real estate market. What a sympathetic, passionate thought!

Even the announcement of the consideration of this legislation has done that admirably. Indeed, things are congealing quite nicely. As we debate this deterrent to property investment, our neighbours in Queensland and Victoria are handing out investment incentives and tax cuts that will see investors flying over our borders to the greener pastures of other States. We know that because investment advisers, many in New South Wales, are advising us of just that. I expect there will be a temporary reprieve in demand, but taxes ultimately add to prices. In the long term we are not looking at lower prices, improved accessibility, or greater inroads to the property market for average New South Wales investors, including mum and dad investors. Quite the reverse could eventuate as supply grows but investors shy away from property investment in New South Wales because taxes are eroding capital gains.

Surprisingly, or not surprisingly, there has been no mention of separately taxing the big boys such as Lend Lease, Mirvac, Meriton, and Australands; the Government is taxing ordinary mum and dad investors. This is the only time I have witnessed such non-discrimination from this Government. What we have seen consistently is eight years of the Premier and the Treasurer basking in the budget surplus limelight. Now it is all over and we are left to do the dirty work and clean up their mess. Not once in my five years as a member of this House have I heard a heartfelt word from the Treasurer on the plight of low-income families, the underprivileged, and the socially disadvantaged.

How much of the cool $690 million collected as the vendor duty tax made its way back to the poorest citizens in our community, or to stemming the millions haemorrhaged weekly in public housing? Yet the Government expects the House to accept at face value this magnanimous offer to make property investment more affordable to average citizens. I cannot see my way to supporting this legislation simply on basic moral grounds. If the Government gave an undertaking that public housing programs, the disadvantaged, and the homeless would be the recipients of these new tax revenues, I would be happy to vote for the legislation. But it will not, and I cannot. The debacle we are hearing about, and no doubt will continue to be burdened with, is not an overnight phenomenon but a product of consistent management failure and systemic cover-up over a long period. I agreed with many of the comments made in a letter from the Real Estate Institute of New South Wales which states:

NSW Treasurer Michael Egan is misleading the people of NSW into thinking his new property sellers' tax (Vendor Transfer Duty) is merely a tax on "profit" being paid by a few high-end investors who will be able to off set any potential loss through negative gearing.

The reality is:

• All investments, whether shares, business ventures or property can be negatively geared. However, ONLY property is subject to entrance taxes (Stamp Duty), holding taxes (Land Tax) and (proposed Vendor Transfer Duty) exit taxes. There are no comparable taxes on other forms of investment.

• Property is the preferred form of investment of most ordinary Australians. The high end investors spread their money across whichever investment offers the best returns and where possible to minimise tax.

• Property owners who have not had an income from their investment, and are therefore ineligible for any negative gearing benefits, WILL pay the seller's tax. This includes people who own vacant land, holiday homes and weekenders.

• Many families, particularly migrant families, own a number of properties held in one family member's name for sound economic reasons. For example an elderly parent or adult children may live in a home held in another family member's name. While a variety of family members may be contributing to mortgage payments, the families aren't receiving an income from the home and can't claim expenses under negative gearing but WILL pay a seller's tax.

• The property sellers' tax will almost certainly result in some property owners making a loss on their investment—

As many honourable members have said. The letter goes on:

The "profit" margin is assessed on the total sale price without any regard for acquisition, holding and sales costs. It also unfairly disregards expenses incurred improving the property and thereby increasing its final sale price.

As, again, many honourable members said. The letter continues:

Wealthy high-roller investors and the Federal Government will not be hurt by this tax.

The ones who will be hurt are the less-educated, less-wealthy, blue-collar, migrant and "mum and dad" investors. These people have traditionally created wealth for their families through property investment. The Australian Dream and financial independence may be lost to future generations if this tax is introduced.

Western Australia, Victoria, ACT and Queensland have all cut property taxes in their recent budgets. Not only is NSW the only State to increase property taxes, it will be the only "developed" region in the world to implement a property sellers' tax.

Please vote against this retrospective tax for the sake of ordinary Australians, who will be unfairly burdened with costs they could have never anticipated.

You have demonstrated repeatedly in recent years that you are truly in touch with the aspirations of so many Australians who feel let down by other political parties.

I hope you will be able to do that again by helping to reject the introduction of the Vendor Transfer Duty in NSW.

Or at the very least, support any amendments which eliminate the most unfair aspects of this tax. That is, its retrospectivity and failure to consider expenses incurred improving the property.

Yours sincerely

Rowen Kelly
President
Real Estate Institute of NSW

I do not understand why the Treasurer could not introduce a tax similar to the Federal Government's capital gains tax and therefore save his officers the job of assessing the profit and taking part of it. That would be much more equitable than the existing 2.5 per cent vendor transfer duty tax.

The Hon. JOHN RYAN [4.02 p.m.]: Needless to say I concur with my colleagues who have spoken in this debate, both in this place and the other place. This bill is another example of how the State Government has exhibited a greedy appetite for increasing taxes. The ironic and disgraceful fact is that the Government increases tax despite its being the recipient of an enormous amount of increasing revenue as a result of not addressing bracket creep on land tax and stamp duty in a buoyant economy. This Government has benefited from rivers of gold from stamp duty transactions. When the Government first came into office a stamp duty transaction on an average home was quite modest, but now the stamp duty cost of moving home is of the order of $20,000. So, families who need to move from one place to another for work or family reasons or to upgrade their homes find themselves contributing in the order of $20,000 to the New South Wales Government, in addition to all the other costs associated with moving home.

This Government has benefited from a glut of increasing taxes and a buoyant economy. Unlike previous governments it has not had to increase, for example, social service measures to make up for increasing levels of poverty in the community. I recall that during Paul Keating's recession that he said we had to have, the Greiner Government was expending large amounts of money to assist families who were falling increasingly into financial crisis, and providing small cash grants for emergency purposes such as paying electricity bills, emergency grants to assist people with financial counselling, and so on. They are the sorts of things that governments facing financial crises normally have to deal with. The drought is the only crisis this Government has had during the time it has enjoyed massive levels of revenue. By and large, its contributions to addressing the drought have been quite modest and they would have been incredibly modest had they not been boosted by further efforts by the Federal Government.

The State Government has not sunk the ship while it has been on calm waters. Government members will often praise themselves for their wonderful economic management, but all they have had to do is keep afloat a ship that was buoyant and more than capable of floating in conditions that could not have been better. The so-called crisis the Government believes it is introducing these measures to meet is dodgy, because the Government is not subject to massive cuts by the Federal Government. That is simply not true. Vertical fiscal imbalance—which is the technical term for the Government's complaint about the distribution of grants to other States made at the Premiers' Conference—has been a problem for every State government since the 1920s. This Government is in no special circumstances in that regard. That imbalance is trumped up as an excuse to blame the Government's increasing revenue measures on the Howard Government. That is why we had this mini-budget stunt.

There is not one measure in this package that could not have been part of the normal budget process that occurs around this time. It is all about spin and marketing decisions the Government wants to make. The Government used to blame bureaucrats, prior to that it blamed the former Government, and now it blames Canberra. What excuse it will have in the future we do not know, but it is running out of excuses. The Federal Government has not generated a crisis. We are simply experiencing a supposed crisis that was predicted ages ago by no more objective a commentator than the Auditor-General, who, on two occasions, warned all members of Parliament that the Government's level of expenditure was unsustainable. He said the Government would have to do one of two things if it was to maintain the level of expenditure to which it had become accustomed: increase revenue or cut expenditure.

We have had some examples of cuts to expenditure that the Opposition believes to be completely unjustified. One we have not discussed much in Parliament relates to adoption charges, and one we have examined in close detail—and justifiably so—is the decision to cut North Coast train services. The Government does not want to cut unnecessary expenditure, so it chooses victims it believes can accommodate the political damage, or it assails people it believes will not be in a position to vote against it, and then increases taxation. That is what this measure is about. It was in response to something the Auditor-General said was coming a long time ago. If there is any crisis, it is of the Government's making.

There is no way the measures in this bill can be attributed to any external factor. The external factors operating on this Government and the State generally are all positive. The Federal Government has bolstered and maintained the State Government's income by guarantees under the GST agreement. No previous State government has had the Federal Government underwrite one of its major areas of revenue. This State Government has not had to worry about the economy going down; it has a written agreement with the Federal Government that obviates its facing uncertainty. As a result of that agreement, never has a government had so much stability and certainty.

Not only has the Government experienced stability for the past few years as a result of that written agreement, it even has an expectation of increasing revenue yields: it will enjoy revenue increases as a result of the GST arrangements. In the coming year the potential net gain in GST revenue to New South Wales will be $113.7 million, in 2005-06 $89.2 million, in 2006-07 a massive $319.9 million, and in 2007-08 $620 million. The State Government is in a position where it not only has had stability but has expectations of increasing revenue. Yet it increases taxation.

One of the areas of concern is that, unlike the situation that generally occurs when revenue measures are introduced in a budget, members have not been supplied with any detail about the impact of these taxes, other than for the forthcoming 12 months. Therefore we are unable to assess the impact of these taxes as they become subject to bracket creep and other economic factors, almost all of which will see these taxes probably bring in a great deal more than the $690 million the Treasurer has suggested to date.

The Opposition supports the first home owners scheme, but we make the comment that at present it looks superficially appealing. It is possible to cite a few circumstances in which people will enjoy the benefit of the first home owners scheme because they are able to find one of the rare properties available under the $500,000 cut-off threshold. That will represent a fraction of the total take from the introduction of these revenue measures. Additionally, until now there was an opportunity to alleviate the impact of stamp duty on first home owners through the first home owners scheme. But it virtually became ineffective because the Government at no time addressed the threshold.

When the threshold was left at that point, it became a scheme that had a title and some criteria under which it would operate, but it was virtually impossible to find a home at a price that satisfied the criteria. We have a series of taxes which will increase revenue over time, and we have one relief measure that will decline over time. That is how we are used to seeing this Government introduce measures: so it has a story for the front page of the Daily Telegraph that will divert concentration for a few days. We have seen plenty of examples of the Premier, members in another place, and members in this place endlessly debating the first home owners scheme in an attempt to divert attention away from the $690 million revenue that these measures will rake in in one year.

We support the first home owners scheme, but we point out that the benefit will decline over time. It is of limited use now because of the way in which it has been set up. Unless there is a commitment from the Government, which is unlikely, to ensure that the threshold remains realistic, its usefulness for young and first-time home owners will decline. The Government is unbelievably out of touch on how its revenue measures affect ordinary people. There is no better way to illustrate that point than to refer to the second reading speech, which said:

According to an analysis produced by Macquarie Bank, "few investors are likely to feel more than minor cash-flow stress as a direct result of NSW's proposed land tax changes."

Many people who will pay land tax for the first time are those who own a weekender from which they do not generate any revenue—it is a weekender for the family to holiday in. At the very least they will find they will pay roughly double the amount they pay in council rates on a property that does not return any income. For a family with a couple of kids, finances are usually tight, but suddenly the Government introduces a brand new tax that will cost them in the order of $1,000 each year in land tax on a weekender that generates no income. How out of touch can a government get! Yet it is referred to as "minor cash flow stress".

The second reading speech goes on to explain how some people in rare circumstances will be able to get some relief by claiming the land tax payment as a tax deduction. The people who apparently will be able to get this relief are investor couples, mums and dads, earning $52,500. There would be very few people like that who are in a position to earn $52,500. That is an average wage but, as we know, many self-funded retirees whose income is derived from investment properties do not earn $52,000. They would not be able to claim their land tax as an income tax deduction. I have drawn attention to that passage and those circumstances to demonstrate beyond doubt, if any demonstration were needed, that the Government is irresponsible in the way it increases taxation at a time when there seems little need to do so, and that it is out of touch in terms of the impact of the tax changes on ordinary people.

Among the other measures that were introduced during the mini-budget was a tripling of the cost of overseas adoptions. I have to comment on this as I am responsible to the Parliament as the shadow Minister for Community Services. In response to that mini-budget decision by the Government, I have received a huge amount of mail from distressed families who are hopeful of making an overseas adoption. Some of them have already adopted one child and are looking forward to adopting a sibling, and now they are told by the Government that in addition to other stresses that may be placed on them—such as paying increased rent because of the land tax changes—they will have to pay extra to adopt their next child. Many people put the money aside before they make the decision to adopt, and they will now have to pay an extra $6,000 to $7,000 for an adoption.

What does that say about the Government's views about family values? Of all people on whom to place an impost, the Government chooses people aspiring to start a family. For new applicants, adoption fees will rise from $2,967 to $9,700 from 1 July. That compares with fees of approximately $6,000 in Victoria and $7,600 in South Australia. In New South Wales the fees for subsequent adoptions are expected to be $6,900. Of all people to slug, the Government slugs people who want to become adoptive parents. It does not impose a minor increase to cover inflation; it slugs them by tripling the costs. When the Minister was asked a question in the House about this issue she made a comment across the Chamber that, sadly, did not make it into Hansard, but I will put it on the record now. She said, "Poor people don't adopt."

If the Government's view is that people seeking intercountry adoptions are wealthy people making a discretionary expenditure, clearly the Government is no longer fit to occupy the Treasury benches. This situation needs to be fixed quickly. It is incomprehensible to think that a government and a Minister for Community Services would make that kind of value judgement about people seeking to have a family and look after children who do not have families. It is beyond my comprehension that they have so little compassion and such a warped value system. The costs involved in arranging overseas adoption, including travel, legal and accommodation, are considerable, as much as $30,000 or $40,000.

One family who wrote to me explained that it has taken over 18 months to have their application processed by the Department of Community Services. For many families, especially those with fertility problems, adoption is the only option for trying to have a family. More than a few people who are seeking overseas adoptions have already tried other options, and many of them are extraordinarily expensive. Often couples have spent tens of thousands of dollars on IVF and other procedures. Intercountry adoptions benefit those people and the children who are adopted into a family they would not otherwise have.

The best people to describe the problems are those affected by this decision. An email arrived shortly after the Government's announcement and I was struck by the eloquent manner in which this family described the impact of this legislation and how they feel about adoption. I am pleased the Treasurer is in the Chamber to hear me read the letter because I understand that the issue is still being discussed and perhaps has not yet been finalised. I challenge him to take on board this family's concern and think seriously about what will happen to families if he introduces this measure. The email states:

We like other parents wish to extend and build our family via inter-country adoption.

To do so we already take on a second mortgage to fund all the costs involved. We are by no means people of wealth; just lucky equity in our home has increased thus allowing us to borrow more.

To learn that those costs are going to increase further puts an added strain on us. We are already into the process (thankfully) of adopting a second time. Our child needs a sibling of similar origin. DOCS also tell us that. But any more will now be out of our reach. What about all those families who are just starting or already have just one child?

To learn the proposed increases will only apply to inter-country adoptions seems to us to be outright discrimination.

We are already disadvantaged in many ways just by choosing adoption. Other benefits that other taxpayers enjoy are excluded from us. We are dictated to in so many ways (eg. forced to take extended periods of time off work after adoption with no pay).

We would like to remind people that we too are taxpayers.

We too are families. We are real. We as taxpayers fund IVF (never any guarantee of a child), births etc but when it comes to giving support to those of us who choose to adopt; choose to adopt a child that actually exists we are ignored. Maybe we are a minority but is it really any wonder?

I am in contact with many adoptive parents from around the world. Did you know that in the US you are actually granted a taxation rebate of US 10k to assist you in your adoption expenses? Other countries are providing similar support. They see adoptive families as being a valid part of society.

Here in NSW we are now being asked to pay the equivalent of 10k just to be assessed and approved here. That is before our file actually goes anywhere. It is going to exceed the cost of adopting through any other state by at least 4k.
It seems to me that adoption is viewed by our country as something negative. It really makes me wonder what I have done in some ways by bringing my daughter into a country that will never see her or her family being treated with the same validity as other families.

As you can see I am very disheartened in my own country and its attitudes.

Another letter states:

In our case, the adoption of our son cost around $40,000 in processing costs, immigration costs, fees paid to the overseas orphanage and travel costs. While we do not begrudge paying this money and our son cannot be discussed in terms of monetary value, it is, nevertheless, a great deal of money and we are not wealthy people. This money came from our mortgage and from the generosity of our families. The second time around we are again looking at all possible avenues to finance our forthcoming adoption.

Furthermore, we came to intercountry adoption after making a decision against attempting IVF, thus saving the public purse a great deal of money. Because our son came home at 16 months of age we were not entitled to the "Baby Bonus". We have private health insurance, as such our family demands little of the public health system. We are certainly a case of "user pays", over and over again... and this is the case with most of the adoptive families we know. Is it fair that the small amount of government subsidy we currently receive (in the form of the subsidisation of the DoCS' processing fee) is to be removed?

We would suggest that such a large increase in fees would certainly make intercountry adoption more difficult for many families and impossible for others. Certainly second adoptions would become a much harder proposition for potential adoptive families...

In conclusion, we ask that this unjust fee increase is abolished. It is simply not fair to continuously discriminate against adoptive families and to treat them as though they are all wealthy, with unlimited funds. All adoptive families want is to be treated fairly. Many other countries, including the US, value adoptive families, providing them with tax concessions and other benefits, while Australian governments, state and federal, treat them with little more than contempt.

The Government's tripling of these fees is beyond belief. It demonstrates again that it is out of touch. I urge the Treasurer to think twice about it. Sadly, given the contributions that have been made today, these new revenue measures will probably pass without amendment. This will not be the last time honourable members debate this issue. If these changes are gazetted I promise to ensure that they are debated and that honourable members get the opportunity to disallow them. The Opposition is totally opposed to what the Government is doing to people who are seeking to do what many of us can do for nothing, that is, to bring into their life the joy of having a family and giving a home to people who do not have one.

The Hon. JON JENKINS [4.25 p.m.]: This is the most important legislation I will have voted on. It is a money bill that will provide the Government with funds to enact its policies during the next year. I have no illusions about the legality of amending or rejecting the bill. I accept the Clerk's advice, and my own reading of the Constitution Act leads me to believe that we can amend or reject it. I will state my interest in this matter. I do not own an investment property, nor is it likely that I will in the near future. Nor do I own a business. I have a mortgage on my primary place of residence, and from what I can determine I will not be subject to any change in land tax or duties.

The Hon. Melinda Pavey: It isn't about you.

The Hon. JON JENKINS: I am declaring my financial interest in this matter. I do not think I will be subject to any change in tax or duties, at least not directly. However, as a result of lower profits on my rather meagre superannuation and other investments and the increased cost of doing business, I may end up paying.

I will explain to the House the process by which I arrived at my decision. I had to ask how this legislation would affect my constituents, and to be honest I am not entirely sure. Many of them do not have investment properties, but many have small businesses. This tax will now become a deduction that will reduce capital gains on any small business. That reduces the burden somewhat, but it still amounts to the loss of a small percentage of the worth of the business. Many of my constituents will be struggling to help their children buy their first home. What they will lose on the sale of a business they may gain in the form of a first home buyer grant for their children. I also had to ask whether the Government is being deceptive about the reason for introducing this tax.

The Hon. Greg Pearce: Did you really have to ask that question?

The Hon. JON JENKINS: I hear the Opposition howling. The Treasurer stated that he wants to cool the property market. This measure will certainly do that. "Deep freeze" is a more appropriate term. It will certainly stop rapid property sales turnover. I also suspect there may be some form of social engineering involved to encourage people to move away from the expensive property market in Sydney to regional areas, which offer more affordable properties. Has the Government been honest in its statements about the effects of this legislation? Given the lack of evidence to the contrary, I have to say that the Treasurer has been bluntly honest. As he has stated, he and many members of the Government will be subject to the tax. However, I note the irony of the Premier's recent purchase of a New Zealand property exempting him from paying the tax.

Concerns have been expressed about the tax exemption for first home buyers. I could certainly not afford to buy a house in Sydney. Indeed, several members of this House have told me that they also could not afford to buy a house in Sydney. The reason my family and I left Sydney many years ago is that we simply could not afford to live here. Both my wife and I are professional people; we are middle-income earners with two children. The first home buyers I know could not afford to buy a property in Sydney—certainly not in the main residential areas—and be able to provide the basic necessities for their families. I have sympathy for young couples who are struggling to purchase property in Sydney, and anything we can do to help them in this regard must be good.

Will this legislation, either by design or by accident, directly disadvantage the majority of the people of this State? Again I have to answer no. The vast majority of the people in this State do not own an investment property or business of any sort, let alone one worth $500,000. So I have arrived at a decision of basic support for the legislation, but that is not the end of the matter. The next question is whether there are problems with the legislation. I believe there are. If an amendment were moved to remove the retrospectivity provisions, I would wholeheartedly support such a change. However, I do not support the market risk argument, on the basis that any property or business is risky.

Heaven forbid any catastrophic event happening, such as increases in interest rates or increases in world fuel prices. Such market movements can wipe out the value of investments and businesses. However, it is the risk people take with investment. My superannuation has lost between 3 per cent and 7 per cent a year for several years. It is simply the risk we take with investment. Where possible, the Government should try to avoid this uneven playing field. Retrospective tax grabs are abhorrent. I would have thought that the Government would want to introduce any changes to the property or rental markets gradually. I would support the introduction of the tax on a gradual or sliding scale. Why is it that there are no Opposition amendments to soften the blow of this tax?

The Hon. John Ryan: Because we voted against it.

The Hon. JON JENKINS: I acknowledge the Opposition interjection. I ask them: In the event that the bill passes through this House, why not move amendments to soften the blow?

The Hon. Patricia Forsythe: You can't make a bad tax good.

The Hon. JON JENKINS: You can make it better, though. You can soften the blow on the people of this State—and you know that. You have no right to take the moral ground.

The Hon. Patricia Forsythe: We don't acquiesce in anything this Government does with this tax.

The Hon. JON JENKINS: And the people of this State suffer. I acknowledge the interjection. Why is it all or none? I think crossbench members would probably support a gentler introduction of the tax. Finally, I warn the Treasurer that he is effectively removing 2.25 per cent from the property market and this will have a definite effect. The Treasurer will not be able to claim down the track that the effect was unforseen or unexpected. The rental market in New South Wales involves about 421,000 properties. Based on average land values, the average residential rental increase will be about $4 per week, so the legislation will not drive up rents substantially in the short term. However, what will tend to drive up rents is either a lack of properties—in other words, market forces—or people trying to recoup the vendor tax loss amortised over several years. For example, a $100,000 profit amortised over the last five years will drive up rents by $25 a week, which is a substantial increase.

The Hon. John Ryan: So you'll be voting against it?

The Hon. JON JENKINS: Well, help me to make it not retrospective. Any major rent rises will come probably not from land tax but from the retrospective vendor tax. I am not sure what effect this will have. Will it mean that investors will not sell, and therefore the rental market will remain reasonably stable, at least in the foreseeable future? The experts seem to be unsure what will happen, and there are widely diverging opinions on the matter. In effect, the vendor tax will be paid by investors. The cost will be able to be claimed as a deduction against capital gains. Concerns have been expressed about mum and dad investors. Such investors usually do not to buy and sell in rapid succession; rather, they tend to buy either a holiday property or an investment property, which they retain for many years.

The Hon. John Ryan: On which they will pay land tax.

The Hon. JON JENKINS: The land tax on most of those types of properties would be very small. There are two complications in this scheme. An owner who value-adds to the property cannot claim the expense against the tax differential. However, it would be very complex to recreate the facilities of the Australian Taxation Office, so I can see why the Government would not accept this result. I will support the amendment that allows for capital investment to be claimed against the property. However, there must be a hardship clause where there is obvious loss and where the vendor does not have the cash to pay the vendor tax. In fact, it may well pay a vendor to completely refurbish a property in order to avoid the vendor tax. How the decision is made as to whether it is a new building is unclear. I envisage a plethora of schemes to avoid the tax. Already I can see a very obvious hole in the legislation.

In truth, the vendor tax is just another tax; it is not really different from income tax, payroll tax, sales tax, poker machine tax, or the endless array of other taxes. If it is Government policy to increase tax, so be it. Let the people decide at the next election. My main criticism of the legislation is the retrospectivity aspect of it. The representations of the Hon. John Brogden almost convinced me not to support the legislation. Why is it that the Opposition would not agree to an amendment to remove the retrospectivity provisions of the bill?

The Hon. Patricia Forsythe: To ease your conscience?

The Hon. JON JENKINS: To ease the burden on the people of this State.

The Hon. Patricia Forsythe: Then you should vote against it and get rid of it.

The Hon. JON JENKINS: When you are in Government, I will support your tax policy.

The Hon. John Ryan: You won't be here then.

The Hon. JON JENKINS: I acknowledge the interjection: I probably won't be here then. But if I am here, I will support your tax policies. An Opposition amendment to remove the retrospectivity provisions of the bill would have levelled the playing field and allowed investors to make informed choices. The Government has been penalised several hundred million dollars. It has also faced massive increases in costs due to nurse and teacher salary increases. So the black hole is not solely due to the Government's financial incompetence. Although, as I have said before, the Government's practice of providing jobs for the boys at the executive level, resulting in grossly incompetent management, is at the heart of many of its problems.

In conclusion, I will support the bill. I would also support any amendments that allow for the retrospectivity to be removed and hardship to be included. I would also support amendments that allow for a capital expenditure rationalisation procedure. As I said before, the Government is ripping the heart out of regional New South Wales, and the vendor tax will hit regional business hard. I say to the people of New South Wales: If you are unhappy with the Government, you should not vote for it next time. Vote for the party who would remove the vendor tax.

[Interruption]

As I said before, if I have the privilege of being a member of this place when you are in government, I will support your policy to remove the tax.

Ms SYLVIA HALE [4.39 p.m.]: This debate is about raising money and spending money. I have serious concerns about how the money to be raised will be spent. The greatest disappointment I have is that not one cent of a tax that is largely based on land values is to be hypothecated to the provision of public housing. If ever there was a service that is crying out for assistance it seems to me it is the provision of public housing. In the absence of public housing there are homeless people on the streets, there are families suffering enormous rental stress in the private market, and there are people in crisis refuges where homelessness is no longer a criterion for immediate crisis assistance in housing.

I am also concerned that the wealthiest people in the community, who at the moment pay 1.7 per cent in land tax, will in fact be paying less land tax. I think that is unfair and unprincipled. It is certainly something that I personally would not be anxious to live with. I think it is only fair that the people who benefit most from this society owe a duty to the people who benefit least. I believe that makes a better society for all of us. I do not believe that my private good should be bought at the cost of public loss. I believe that ultimately we all benefit from a society where no-one is excluded, no-one is homeless, and no one is unemployed.

The mini-budget was about not only how money should be raised but also how cuts should be made. I noted the comments by the Hon. John Ryan as to the effect on families who are contemplating adoption and how unfair the impact of the mini-budget is on many of those people. There are at least another two categories of people who are also going to be extraordinarily adversely affected by the cuts the Minister for Education and Training, Dr Refshauge, has announced: people who are currently being assisted under the Mature Workers Program and the Skilled Migrant Placement Program. These people are among the most vulnerable in our community, because often they are not entitled to other forms of assistance. For example, many mature workers have been retrenched and they do not have the skills or the expertise to appropriately navigate their way through the job market.

In the case of skilled migrants, for the first two years they are ineligible for assistance from the Federal Government. These programs have been axed on the pretext that the provision of jobs is the Federal Government's responsibility. These programs do not provide jobs, but they do provide training to people so they can set about applying for jobs. For example, many of the programs and services provided to unemployed or migrant people not only help them to prepare a curriculum vitae [CV] and suggest avenues where they might seek employment but also give many of them access to the Internet. In a media conference in Parliament House this morning, attended by 40 or 50 people who are participants in or who have been employed on the project, it was pointed out that many unemployed people cannot afford to go to Internet cafes and pay to submit their job applications online. The Mature Workers Program and the Skilled Migrant Placement Program provide people with the skills to navigate the Internet, to write their CVs, and to make applications.

I believe that it is extraordinarily shortsighted of the Government to cut these programs. At a time when people are being urged to stay in the workforce for as long as possible, not to become a drain on the community, not to become a drain on welfare services, but to continue to contribute productively to the community, the State Labor Government is cutting the very programs that would assist that to take place. These cuts fall most heavily on areas such as Lismore and Lithgow. Two or three weeks ago I spoke to a project officer from Lithgow who pointed out that if it were not for these programs almost all of their retrenched miners would be on the employment scrap heap. The programs have been remarkably efficient; they have been described as being the most efficient training programs in the country.

There has been such a feeling about the issue that the Council for Social Services of NSW [NCOSS] has held a number of meetings with people who have been involved with both the Mature Workers Program and the Skilled Migrant Placement Program. They not only held a media conference this morning, they also have been actively lobbying members of Parliament to endeavour to get these programs restored. In my area of Marrickville—the electorate of the Minister for Education and Training—one of the centres to be most heavily affected by the program cuts is the May Murray Community Centre, which provides these sorts of facilities. In that area there is a high percentage of people of a non-English-speaking background, yet Dr Refshauge and the Labor Government are prepared to turn their backs on these people.

The Government suggests that it does so because employment is a Federal Government responsibility, but the Government knows full well that in the Federal budget that was handed down last night, absolutely no provision was made to take up the slack to provide programs for these people, who are now going to miss out. The Government knows full well that when it cuts these programs there is nothing out there for these people. Workers in some of these programs were assured one day that yes, their funding would be continued—at least for another six or nine months—and the next day they were told that it would be scrapped. It means that many of the centres are closing their doors immediately so they will have the money for retrenchment payments to their employees and so they will have money to pay rents and leases they are committed to. This is extraordinarily shortsighted action on the part of the Government.

NCOSS has prepared quite a bit of material on both these programs, so I think it is worth recording for the benefit of the Parliament just what will be lost with the departure of these programs. The aim of the Mature Workers Program is to maximise the training and skills development opportunities for unemployed mature age people, and to assist them with their attempts to gain employment. The program has been funded by the New South Wales Government since 1989. It is a skills development and employment assistance program that funds 67 projects across New South Wales. It provides practical assistance to unemployed people aged over 40 to help them upgrade their skills and find employment and it addresses their support needs. These local projects are operated by not-for-profit community organisations that contribute at least 25 per cent of the operating costs of the projects from their own resources. They are heavily reliant upon volunteers.

The Mature Workers Program has always been characterised by highly successful outcomes. In 2003 over 12,000 clients were assisted, and nearly 60 per cent of clients found employment or gained accredited vocational training because of the mature worker projects. These results are better than most other employment and training programs that operate across Australia. I think it needs to be pointed out to the Government that it is going to raise considerable sums of money through these legislative measures, but that the cost of the Mature Workers Program and the Skilled Migrant Placement Program are miniscule. The fact sheet states:

Currently, $3.1 million pa is provided for the MWP, from a total NSW Department of Education and Training Budget of nearly $10 billion pa. [That puts the matter into perspective.] The positive results of this program save the NSW Government significant costs in human services through clients not experiencing long term health problems, lack of housing, domestic violence situations etc.

It should be noted that the cost of the MWP is just 5% of the annual non-means tested "Back To School" Allowance.

These are people in desperate situations. Unemployed people suffer from depression, violence, and criminal activity, and their lack of work has repercussions for their families. Yet, to save a pittance the Government proposes to cut the program. The fact sheet continues:

The network of MWP projects indicates that less than 30% of current MWP clients across NSW will receive a Job Network Service. There is no comparable Commonwealth Government program to MWP and no indication that the Commonwealth will pick up (especially as the NSW Government Mini Budget decision was taken with no notice or consultation).

There has been no indication that the Commonwealth Government will meet the needs of these people. The sheet continues:

Other State Labor Governments (eg Queensland, Victoria, South Australia and Tasmania) either continue to operate employment and training programs or are expanding them. They are not cost shifting them to Canberra.

The impacts from the program being discontinued are quite serious. The fact sheet states:

Over 100 employees of MWP projects will be retrenched before 30 June 2004. 70 % of these workers are mature-aged people themselves. The loss of these local services will place further pressure on other human services to support the over 12,000 unemployed mature aged people who the NSW Government is disregarding.

In addition, other assistance for retrenched workers which the NSW Government often requests MWP projects to provide, especially in regional areas such as the Hunter, Illawarra and the Central West, will be lost.

The Skilled Migrant Placement Program is the other program to be scrapped. Its aim is to maximise the utilisation of the skills, qualifications, and experience of skilled migrants who settle in New South Wales and are disadvantaged in the labour market. A fact sheet provided by the Council of Social Service of New South Wales states:

The SMPP has been funded by the NSW State Government since 1989. There are currently eighteen SMPP projects across NSW, with two in regional centres and the rest in metropolitan Sydney. Each project receives limited funding to employ a full-time worker and a part-time administrative assistant.

There are two skilled specialist programs for skilled female migrants and for new arrivals who have been victims of torture and trauma provided by Immigrant Women's Speakout and STARTTS.

In the context of present world events New South Wales should not axe programs that assist victims of torture. We should try to resurrect the good name of Australia, as well as America and Great Britain, in Iraq. The fact sheet continues:

The Program is part of the Migrant Skills Strategy funded by the NSW Department of Education and Training and managed by the Overseas Skills Unit within NSW AMES.

The objectives of the SMP Program are to:

• enable overseas skilled migrants to make informed decisions to maximise the use of their overseas skills in the NSW work force
• assist overseas skilled migrants in becoming job ready with the necessary skills to gain employment in an area relevant or related to their skills;

• provide overseas skilled migrants with work experience that builds on their overseas acquired skills;

• place overseas skilled migrants into employment that is relevant or related to the overseas acquired skills.

The fact sheet outlines numerous successes experiences by the program as follows:

Between January 2003 and March 2004, the program assisted in excess of 5,500 overseas skilled migrants.

The SMPP has had an exceptionally high success rate. During the same period, the Program assisted over 1,500 overseas skilled migrants into employment and professional work placements commensurate with their field of expertise.

These outcomes generate measurable economic benefits for NSW, in addressing skills shortages, boosting productivity and economic growth, and also bringing social benefits.

It is extraordinary that the Government is prepared to scrap programs, which are obviously of benefit to recipients and to the broader community, aimed at increasing the skills base within this country. The Government is refusing to assist those people. The Skilled Migrant Placement Program has other benefits. They are:

The Program educates and assists clients to negotiate learning pathways and appropriate ways to seek employment.

Many skilled migrants arrive in Australia without family networks. They do not have the language skills and are unfamiliar with the way in which people go about acquiring a job in this society. It is a short-sighted approach for the Government to suggest that these people should be left to manage for themselves. That is what will happen with the loss of this program. The fact sheet continues:

SMPP clients receive assistance early in the process of finding employment which has meant that they are less likely to become welfare dependent and much quicker to become productive members of society.

It is a well researched fact that employment is the most important factor for successful adjustment and integration into a new society and it also determines physical and psychological well-being.

The Program acts as an early intervention measure helping to avoid the health and depression problems that can occur when migrants find themselves unemployed and unable to use their skills that they have trained for, for many years.

Losing the Skilled Migrant Placement Program will mean that New South Wales will not be able to benefit from the skills of its residents as effectively, because, by working in lower skilled occupations, over time they will lose some of the valuable skills they have brought to Australia. It is one thing to talk about the Government's responsibility to balance budgets, but Lee Rhiannon has rightly exposed what I believe to be the fallacy of that position. It is the responsibility of government to provide services for all its citizens. Government should not provide services only to those who are well off and who, in many ways, are least in need of assistance.

These two categories of people include people over the age of 40 who have lost their jobs and who are anxious to contribute to the community, and people who have come to this country in possession of excellent skills Therefore, it is not in the interests of the community as a whole for the Government to turn its back on them. The Government has done so because this group is the most vulnerable and powerless, the weakest, and the least able to stand up and fight for their rights. The Minister for Education and Training, Dr Refshauge, once upon a time was supposedly a member of the left-wing of the Labor Party. He represents an area with significant unemployment and a high proportion of migrants and people from non-English-speaking backgrounds. It is appalling that he has blithely turned his back on the very real needs of his constituents.

The Hon. MICHAEL EGAN (Treasurer, Minister for State Development, and Vice-President of the Executive Council) [4.59 p.m.], in reply: I thank honourable members who participated in the debate. I shall make only a few comments in reply. The Greens spoke about voluntary conservation agreements. I understand that certain voluntary conservation agreements will not qualify for the exemption from vendor or stamp duty contained in the Government's amendment moved in the other place. I note the Greens concerns regarding the need to exempt these areas from land tax. The Government's intent is for an exemption from the vendor transfer duty and land tax to apply to all voluntary conservation agreements made under the National Parks and Wildlife Act 1974. So I can give the Greens an undertaking that the Government will amend the Act at the earliest available opportunity to reflect this intent. When the legislation is amended it will be retrospective. In the meantime the Office of State Revenue will administer the Act as though this change had already been made.

The Hon. Greg Pearce: Why don't you just amend it now?

The Hon. MICHAEL EGAN: We will be amending it but not in this Chamber. I was not in the Chamber to hear all of the comments of the Hon. John Ryan but I am told that he said that the Government continually blames Canberra, but that he said, "in the future I do not know". I do not know whether he meant he was expecting his own Federal leader to lose the next Federal election. While I have been critical of the current Federal Government for its unending financial cuts to New South Wales during its time in office, before the election of the Howard Government I was also critical of the way the previous Federal Government penalised New South Wales because of the way in which the Commonwealth Grants Commission worked and the principle of horizontal fiscal equalisation.

I assure the House that when the Latham Government is elected, unless there is a rectification of this permanent injustice to New South Wales, members opposite can expect the Carr Labor Government and me as Treasurer to maintain the same sort of criticism we have levelled against the Howard Government in Canberra. During debate on this bill in both this House and the other place I have been amazed by the way the Opposition suggested that the Federal cuts to New South Wales are somehow a figment of my imagination.

The Hon. John Ryan: They are.

The Hon. MICHAEL EGAN: If the Hon. John Ryan and other members opposite had been paying attention, particularly at the time of the Treasurers' conference in Canberra, they would have noted that the Federal Treasurer was not denying that New South Wales payments were being cut by $376 million this year. Indeed, that figure is clear from the documentation provided to the Treasurers' conference by the Federal Treasurer.

The Hon. Patricia Forsythe: These taxes are not a tax for this year; they are taxes for many years into the future.

Hon. MICHAEL EGAN: That is right, and for many years in the future the relativities that the Federal Government ticked off at the Treasurers' conference in March will apply to New South Wales. The cuts did not come about only this year. Certainly, $376 million is the annual cost as a result of the changed relativities, but the changes that have been made over the past four years mean that New South Wales is now losing in excess of $800 million, which it would have been getting if the change in relativities over the past four years had not occurred. We contribute 37 per cent of the Commonwealth GST and we will get back 28 per cent. That sees us being short-changed by about $2.9 billion each and every year. Unfortunately, that will not decline in the future; it will increase in the future. As proof of that, one need only look at the actual amounts that New South Wales has received as general purpose assistance from 2001-02 and the projected amount for 2004-05.

The Hon. John Ryan: Are you getting less this year from the Commonwealth than you got last year?

The Hon. MICHAEL EGAN: Yes.

The Hon. John Ryan: The answer is no.

The Hon. MICHAEL EGAN: I refer the honourable member to Peter Costello's Budget Paper No. 3, which shows that the GST that New South Wales was entitled to last year—

The Hon. Patricia Forsythe: That is not your only source of revenue.

The Hon. MICHAEL EGAN: I am talking about general purpose assistance. It is not our only source of Commonwealth revenue. The specific purpose payments—

The Hon. John Ryan: You will get more money from the Commonwealth this year than you got last year. True, you may be short-changed.

The Hon. MICHAEL EGAN: What did the Hon. John Ryan say? Did he say that we might be short-changed?

The Hon. Amanda Fazio: Not "might be". He said, "True, you are being short-changed."

The Hon. MICHAEL EGAN: That is right, and I will tell the House how much we are being short changed.

The Hon. John Ryan: Short-changed does not mean less money.

The Hon. MICHAEL EGAN: Work that one out! The Hon. John Ryan said that short-changed does not mean we lose money.

The Hon. John Ryan: It is not hard to work out. You have had more money this year from the Commonwealth than you got last year.

The Hon. MICHAEL EGAN: In other words, if the Commonwealth general purpose assistance to New South Wales does not rise in line with inflation and population growth we are not being short-changed! Of course we are being short-changed! The effect of a change in relativities at the Treasurers' conference will cost us $376 million that we would otherwise have received. I will take honourable members through the figures. This year, 2004-05, the general purpose assistance we will get—

The Hon. John Ryan: You are complaining about money you didn't have and are not going to get, not money you had and then lost. That is what a cut is.

The Hon. MICHAEL EGAN: So a cut has to be in nominal terms, does it? Is that what the Hon. John Ryan is saying?

The Hon. John Ryan: That is what I understand a cut to be, yes.

The Hon. MICHAEL EGAN: So if it is a real cut it does not count. Is that what the honourable member is saying? If it does not cover inflation and population growth it is not a cut. From the mouth of the Hon. John Ryan, we now know how hollow the argument of the Opposition is. According to the honourable member, payments can remain at a stationary nominal level forever and a day, and we will be no worse off. What a lot of nonsense!

The Hon. John Ryan: The payments are growing.

The Hon. MICHAEL EGAN: They are growing, are they? In 2001-02 New South Wales received $9,662 million in general purpose payments; in 2004-05 we will receive $9,774 million. Would the honourable member like to work out what sort of nominal increase that is? I will tell him: It is a nominal increase of 0.07 per cent over three years.

The Hon. John Ryan: It's still an increase.

The Hon. MICHAEL EGAN: In the meantime we have had inflation of 2.5 per cent and population growth of about 1 per cent. In real terms that amounts to a cut of 8.5 per cent. Let us have a look at what has happened in the other States. Victoria, which has also been badly dealt with, at least—

The Hon. Melinda Pavey: But they are not increasing taxes.

The Hon. MICHAEL EGAN: The Victorian Government is reducing land tax to what level? It is reducing land tax from 5 per cent to 3 per cent over five years. What are we doing in this bill? We are bringing the top marginal tax rate down to 1.4 per cent. And we are doing that now, not in five years time. So even in five years time—assuming we do not reduce our rate further, which is on the cards—Victoria will have a top rate of 3 per cent, compared with our 1.4 per cent. But there is something else Victoria is not doing. Victoria is not providing the assistance to first home buyers that we provide in New South Wales. Indeed, it made a virtue of the fact that it will provide a first home owners grant of $5,000. That is in addition to the Commonwealth-State first home owners grant of $7,000. That means someone in Victoria buying a first home will still be paying about $11,000 in stamp duty on a $300,000 home.

Another thing about Victoria's assistance to first home buyers is that it is for 12 months. We have abolished forever stamp duty for first home buyers for homes worth up to $500,000. No other State has done that. The other night I heard the Hon. Melinda Pavey suggest we have only eliminated stamp duty for first home buyers because we have been embarrassed by the Opposition into doing that. I do not know whether the honourable member follows what her leader says in the other place but the Opposition has never proposed the abolition of stamp duty for first home buyers. The Opposition has been advocating a 10 per cent cut across the board. So, instead of an $18,000 saving for someone purchasing a $500,000 first home in New South Wales, under the Opposition's suggestion that person would still be paying $16,200.

The Hon. Greg Pearce: Point of order: The Treasurer is supposed to be replying to the second reading debate. He has spent the last 10 minutes talking about what is happening in Victoria and the Opposition's policy. I ask you to direct the Treasurer to continue his reply to debate on the second reading stage of the bill.

The Hon. Peter Primrose: To the point of order: This has been a very broad-ranging debate. Members have raised many issues. It is appropriate that the Treasurer should be able to address some of those issues.

The DEPUTY-PRESIDENT (The Hon. Christine Robertson): Order! Opposition and crossbench members have referred to many issues far removed from the subject matter of the bill. The Treasurer is replying to the debate and he is in order.

The Hon. MICHAEL EGAN: I think I have made my point. I will move back to the question of whether New South Wales has suffered financial cuts from the Commonwealth Government. Last night the Hon. Patricia Forsythe took up a line that the Leader of the Opposition in the other place also used: she suggested that over the next four years New South Wales would get an extra $1 billion dollars from the Commonwealth Government. Here again I worry that Opposition members may have been told something by their Federal colleagues, because if that is true, if Peter Castella told the Hon. Patricia Forsythe and the Leader of the Opposition that over the next four years we will get only $1 billion in general purpose assistance grants, he is telling them that over the next four years we will be penalised by another $200 million.

As I said, we will be getting $9,744 million in general purpose assistance in 2004-05. Adjusting that for inflation and population growth, we should be getting approximately $300 million extra next year; $300 million the year after—that is $600 million; another $300 million the year after that—that is $900 million; and another $300 million the year after that—that is $1,200 million. So, I fear that the Hon. Patricia Forsythe and the Leader of the Opposition in the other place are telling us that the Federal Government has let them into the big secret that we can expect further cuts in real terms of another $200 million. If that is the case, it is despicable. Obviously it is something that has the approval of the State Opposition.

When I was shadow Minister for Finance before we came to government, on each and every occasion New South Wales was shortchanged by the Commonwealth Government I supported the New South Wales Government in getting a fair deal from Canberra. That has not happened since I have been Treasurer of this State. The bipartisan support we gave—not to the Greiner or Fahey governments but to New South Wales—has been lacking for the past nine years. That is why Mr Howard and Mr Costello have been able to get away with the subsidies from New South Wales to the other States increasing from $1.2 billion when they took office to almost $3 billion now. There has not been bipartisan opposition to Canberra's treatment of New South Wales. It shows that for the Opposition everything is a political game and that New South Wales does not matter. I commend the bill to the House.

Motion agreed to.

Bill read a second time.

Clauses 1 to 4 agreed to.

Schedule 1 agreed to.

The Hon. PATRICIA FORSYTHE [5.17 p.m.]: The Opposition firmly intends to vote against schedule 2, which will introduce an iniquitous tax. Our position has been stated quite clearly and I will not reiterate it. I urge all members of the House who believe that this land tax ought to be opposed to join with the Opposition in opposing schedule 2.

The Hon. Dr ARTHUR CHESTERFIELD-EVANS [5.19 p.m.]: I move Australian Democrats amendment No. 1:

No. 1 Page 17, schedule 2.2. Insert after line 30:

[10] Section 10 Land exempted from tax

Insert after section 10 (1) (r1):

(s) with respect to taxation leviable or payable in respect of the year commencing on 1 January 2005 or any succeeding year, land suitable for occupation as a principal place of residence that is owned by a person or persons who reside elsewhere, provided that all owners of the land are natural persons and do not own (whether solely or jointly) any other land within Australia,

I was approached by a person who used to live at Malua Bay, just south of Batemans Bay. He could not find suitable work in the area, but found work in Sydney. He now lives in Sydney and lets out his property in Malua Bay. The rent he receives from his property in Malua Bay does not cover the rent he pays in Sydney, so he suffers a loss on the deal. This person, not by choice, does not live in his own house. He would like to live in his own house but cannot because he has had to move to Sydney to find employment. He rents out his principal property and lives in another.

Under the land tax changes this person may have to pay land tax. Previously he would not have had to pay land tax because his property would have been under the threshold. With these changes, he will have to pay land tax, particularly with the inflation of property values on the South Coast. Although he receives rent on his property at Malua Bay, he has to pay rent in Sydney that is more than he receives from his property. Many people, such as engineers and information technology people, are employed on one-year or two-year contracts and frequently move. They may own property, but they cannot buy a new house every time they move. Such people will be caught by these land tax changes. They have not left their home by choice; they are only trying to make a reasonable living. I suggest that a person who has a principal place of residence and does not own any other property should be exempt from land tax. This amendment provides for such an exemption.

The amendment relates to people who own a property but do not live in it, generally because they are seeking employment. In some cases, students may buy a property but live elsewhere. They may be single and saving for the future. This amendment will look after people who are not living in their own house not by choice but by necessity, and people who are trying to save money—the battlers, about whom everyone has been waxing lyrical in this debate. I commend the amendment.

The Hon. PATRICIA FORSYTHE [5.22 p.m.]: As I understand it, the same situation applies to people in nursing homes. Under the existing land tax legislation, provided they have owned a principal place of residence for two years, they can be out of occupation for a period of up to six years. I am not certain that this amendment is necessary.

The Hon. Dr ARTHUR CHESTERFIELD-EVANS [5.22 p.m.]: Perhaps the Treasurer could clarify the matter.

The Hon. MICHAEL EGAN (Treasurer, Minister for State Development, and Vice-President of the Executive Council) [5.22 p.m.]: If a person vacates his principal place of residence, he is entitled to obtain exemption for up to six years provided the property is not rented for more than six months in any calendar year. Obviously, if the property is rented for more than six months in any one year it becomes taxable for that year.

The Hon. Dr Arthur Chesterfield-Evans: That is my point exactly.

The Hon. MICHAEL EGAN (Treasurer, Minister for State Development, and Vice-President of the Executive Council) [5.23 p.m.]: Can I finish? The measure in the bill recognises that some people on low incomes who own a non-income producing investment property may have difficulty meeting the land tax liabilities. The Australian Democrats' amendment proposes to allow property owners to have one investment property free of land tax where the property is the only property they own. That would allow everyone who chooses to live in rented accommodation to be able to obtain a land tax exemption for one residential property whether it earns income or not.

More than 40 per cent of existing land tax payers own only one liable property. The Government does not know how many of them own a principal place of residence as well. Under the Australian Democrats' proposal these taxpayers would be exempt from land tax if they lived in rented accommodation, irrespective of their income and the rental income of their investment property. More than half of all land tax payers with only one taxable property own taxable residential properties—that is, more than 20 per cent of all land tax payers own only one residential investment property. The Australian Democrats' proposal could see all of these landowners exempt from land tax if they live in rental accommodation. Obviously such an exemption would cost tens of millions of dollars.

The Hon. Dr ARTHUR CHESTERFIELD-EVANS [5.24 p.m.]: The six-month period referred to is of no use. If a person is living in Sydney by necessity—for example, the person from Malua Bay—he will have to rent out his house to maximise the rental return in order to offset the extra rent he has to pay in Sydney. To have the property unoccupied for more than six months would be of no value to him. Naturally he would try to have his property occupied all the time. Interestingly, the Treasurer did not produce figures stating how many people have investment properties but do not live in them. Most people who have investment properties would own their own property and the investment property, and therefore would not be in this situation. The people I have referred to own one property and the rent they receive replaces their income. They are being discriminated against because they do not live in their principal place of residence.

Amendment negatived.

Question—That schedule 2 be agreed to—put.

The Committee divided.

Mr Breen Dr Burgmann Mr Burke Ms Burnswoods Mr Catanzariti Dr Chesterfield-Evans Mr Cohen Mr Costa

Mr Egan Ms Griffin Ms Hale Mr Hatzistergos Mr Jenkins Mr Macdonald Reverend Dr Moyes Ms Rhiannon

Ms Robertson Ms Tebbutt Mr Tingle Mr Tsang Tellers, Mr Primrose Mr West

Ms Cusack Mrs Forsythe Mr Gallacher Mr Gay Mr Lynn

Mr Oldfield Mrs Pavey Mr Pearce Mr Ryan Dr Wong

Tellers, Mr Colless Mr Harwin

Mr Della Bosca	Mr Clarke
Mr Kelly	Miss Gardiner
Mr Obeid	Ms Parker

Question resolved in the affirmative.

Schedule 2 agreed to.

Ms LEE RHIANNON [5.35 p.m.], by leave: I move Greens amendments Nos 5 to 8 in globo:

No. 5 Page 22, schedule 3.1 [2], lines 21-24. Omit all words on those lines.

No. 6 Page 23, schedule 3.1 [3], lines 15-17. Omit all words on those lines.

No. 7 Pages 23-24, schedule 3.2 and 3.3, line 23 on page 23 to line 22 on page 24. Omit all words on those lines.

No. 8 Page 27, schedule 3.4 [2], lines 24-27. Omit all words on those lines.

The purpose of these amendments is to retain the premium property tax of 1.7 per cent levied on the top 0.2 per cent of land as measured by value. The Greens strongly support this tax. We were pleased when it was introduced and we were concerned when the Treasurer announced that it would be abolished. It targets wealthy property owners and it clearly has a place. As I noted in my second reading speech, very few people affected by this bill have claimed difficulty in paying it. Members should remember that we are talking only about land value, not house value, of $2 million or more. That is the very top end of the top end. It was a tightly targeted tax and the Greens support its retention. These amendments speak for themselves and I commend them to the Committee.

The Hon. MICHAEL EGAN (Treasurer, Minister for State Development, and Vice-President of the Executive Council) [5.36 p.m.]: Obviously the Greens amendments seek to remove an integral provision of the legislation: the abolition of the premium property tax and its replacement with a premium property duty.
Question—That the amendments be agreed to—put.

The Committee divided.

Mr Cohen Dr Wong Tellers, Ms Hale Ms Rhiannon

Mr Breen Dr Burgmann Mr Burke Ms Burnswoods Mr Catanzariti Dr Chesterfield-Evans Mr Clarke Mr Colless Mr Costa Ms Cusack Mr Egan

Mrs Forsythe Mr Gallacher Miss Gardiner Ms Griffin Mr Jenkins Mr Lynn Mr Macdonald Reverend Dr Moyes Mr Oldfield Ms Parker Mrs Pavey

Mr Pearce Ms Robertson Mr Ryan Ms Tebbutt Mr Tingle Mr Tsang Mr West Tellers, Mr Harwin Mr Primrose

Question resolved in the negative.

Amendments negatived.

Schedule 3 agreed to.

Ms LEE RHIANNON [5.45 p.m.], by leave: I move Greens amendments Nos 9 and 12 in globo:

No. 9 Pages 43-45, schedule 4 [3]. Line 1 on page 43 to line 21 on page 45. Omit all words on those lines.

No. 12 Page 53, schedule 4 [7], lines 9-15. Omit all words on those lines.

These amendments would bring some balance to the bill. In its present form the bill gives a free kick to developers. The Greens are concerned that developers are being given large exemptions while individual owners of investment property are not enjoying parallel tax breaks for improving their property. The amendments do not in any way change the intent of the legislation; they simply give it some balance so property developers do not receive favoured treatment. If the Government is not prepared to listen to the concerns of small investors, it should not listen to the concerns of the big end of the market. The Greens amendments seek to establish even ground in relation to the vendor duty. I commend them to the Committee.

The Hon. MICHAEL EGAN (Treasurer, Minister for State Development, and Vice-President of the Executive Council) [5.47 p.m.]: The Government does not accept Greens amendments Nos 9 and 12. As I said out in my mini-budget speech, the Government does not intend the vendor duty to become the equivalent of a value-added tax on the building of new homes and new commercial buildings, and these provisions have been included in the bill to ensure that does not occur. The Greens amendments would allow the vendor duty to operate in a similar manner to a value-added tax, which would inevitably increase the cost of new housing and new commercial buildings.

Amendments negatived.

Ms LEE RHIANNON [5.58 p.m.], by leave: I move Greens amendments Nos 10 and 11 in globo:

No. 10 Page 46, schedule 4 [3], line 20. Omit "two or more". Insert instead "three or more".

No. 11 Pages 46-47, schedule 4 [3], line 37 on page 46 to line 5 on page 47. Omit all words on those lines. Insert instead "consent granted in respect of the land, or".

These amendments relate to development on vacant land. The Greens believe that the current exemption is far too wide. A developer need only do two of the following: put in water and sewerage, put in stormwater drainage, put in transport infrastructure, do some conservation work, provide recreation and community services on the land, or get a subdivision approved.

The Hon. Michael Costa: Only two?

Ms LEE RHIANNON: Yes, only two of them. Some of these activities are clearly much more substantial than others. Again, that is where these exemptions are out of balance. It seems to us that a subdivision plus a small amount of conservation work or drainage work appears to be enough to qualify as an improvement and gain an exemption. We know that is abused, and it clearly will be abused again in order to get an exemption from paying the tax. If the Government is intent on making this land tax work, surely it will accept these amendments.

To really earn this vendor duty exemption we believe that developers should be required to make substantial improvements to vacant land. We are therefore suggesting that a developer be required to do three of the things on that list to qualify for the exemption. Again, nothing in these amendments changes the intent of the tax or the intent of the bill; they just tighten it up. The amendments also remove subdivisions as one of the improvements in the list. Amended in this way, this exemption from vendor duty would give developers of vacant land a major incentive to undertake substantial conservation and infrastructure provision on the land. I commend the amendments to the Committee.

The Hon. MICHAEL EGAN (Treasurer, Minister for State Development, and Vice-President of the Executive Council) [5.50 p.m.]: The Government will not accept Greens amendments Nos 10 and 11. We believe that the provisions of the bill are adequate, and we will ensure that the vendor duty is exempt only when there has been a substantial investment on the part of the developer that contributes significant value to the land.

The Hon. Dr ARTHUR CHESTERFIELD-EVANS [5.51 p.m.]: I think this is very difficult to support in the sense that although not much has been done to the land, any tax at this point will directly hit people who are buying that land. So it will directly affect home prices. If the Government is trying to keep prices down and chooses to forgo that tax in order to keep those prices down, I think that is a very defensible stance. I move Australian Democrats amendment No. 2:

No. 2 Page 42, schedule 4 [3]. Insert after line 23:

(5) However, if the Chief Commissioner is satisfied in relation to a vendor duty transaction that, after the vendor acquisition date, money was expended by the vendor in making improvements to the land-related property or in maintaining the land-related property (including any improvements to the land-related property), there is to be deducted from the dutiable value of the land-related property on the transfer date, for the purposes of this Division only, such amount as the Chief Commissioner considers fair and reasonable to account for that expenditure.

As this is a retrospective amendment, this new regime will not apply to people who buy properties, but if somebody has bought a property and improved it, and if there is a market downturn—which we hear there is going to be—if they had bought the property recently they have then made a 15 per cent so-called profit on the land as measured by the purchase and sale price. If they have put that amount of money, or more than that amount, into the property while they have held it, such that they are actually making a loss after their costs are considered, they should not have to pay the tax.

This is particularly the case with commercial property, which, if one was hoping to get a better rental return, one might have renovated or carried out some repairs to the property. Such repairs may not be very evident—such as repairs to lifts, which is a considerable expense that cannot be recouped in the short term. An application should be able to be made to the Office of State Revenue or a tribunal—should the Government wish to use a hardship tribunal or other tribunal—to have the costs deducted from the 15 per cent or the 12 per cent so that tax does not have to be paid unless a genuine 12 per cent profit has been made.

If a large profit is made I have no objection to the Government getting a share, because the recent abnormal rise in property prices has provided a huge windfall of which the Government is merely taking a relatively small amount. But if it is the case that a genuine loss has been made from a perfectly reasonable investment decision, and particularly given that this is a retrospective tax, the exemption in my amendment is necessary. I commend it to the Committee.

The Hon. MICHAEL EGAN (Treasurer, Minister for State Development, and Vice-President of the Executive Council) [5.54 p.m.]: The Government does not accept the amendment of the Hon. Dr Arthur Chesterfield-Evans. If renovation and capital improvement costs were allowed, the vendor duty tax would become a quasi-capital gains tax rather than a transaction tax on disposal. There would obviously be a significant cost to revenue, and the administration of the tax would be substantially more complex, given the need to verify the validity and cost of capital improvements claimed.

I also point out that any capital improvement to an investment property attracts a depreciation allowance from the Commonwealth Government, which can be quite substantial. But in most cases a capital improvement or renovation will enhance the value of the property to a greater extent than the capital cost involved. There will certainly be cases in which someone might invest in a capital improvement or renovation that has a negative effect on the value of the property. Unfortunately, that is one of the risks people take in renovating a property. For example, with a residential investment property I think everyone would be aware that sometimes the renovations we make to our own homes are not reflected in any subsequent sale price because the renovation is to our own taste but may not be to the taste of the market generally. I urge any member thinking of renovating their house before they sell it to be very cautious.

Mr IAN COHEN [5.55 p.m.]: Under this new Committee procedure a few members might have missed amendments, and I would like to put on the record Greens amendment No. 1, which I was too late to move. It reads:

No. 1 Page 17, schedule 2.2. Insert after line 30:

[10] Section 10 Land exempted from tax

Omit section 10 (1) (p1). Insert instead:

(p1) with respect to taxation leviable or payable in respect of the year commencing 1 January 2005 or any succeeding year, land that is the subject of a conservation agreement entered into under Division 12 of Part 4 of the National Parks and Wildlife Act 1974,

The purpose of this amendment is to remove an anomaly that exists in the land tax arrangements on voluntary conservation agreements [VCAs]. VCAs are a well-recognised process for private landholders to contribute to the conservation objectives of New South Wales. Voluntary conservation agreements are well used throughout New South Wales. Many farmers have taken out conservation agreements on parts of their land to achieve conservation objectives. Also, many other citizens of New South Wales have formed alliances with like-minded individuals to jointly buy land intended not as a residence but as a private contribution to conservation objectives through the mechanism of VCAs.

Increasingly, this Government and other governments are calling for private contributions to conservation; voluntary conservation agreements are one of the mechanisms. In discussions on this issue, the Treasurer has made it very clear that it is not the intention of the land tax changes to discourage or disadvantage those people from contributing to conservation through VCAs. The Greens appreciate and acknowledge this. The intention of voluntary conservation agreements is already recognised in the Land Tax Management Act 1956. This amendment aims to remove the anomaly that exists whereby VCAs that are not for the primary purpose of protecting threatened species are not exempt from land tax.

About 20 per cent of VCAs fall into this category. They include VCAs that are for the purpose of providing a buffer to national parks, protecting water catchments or protecting Aboriginal cultural heritage. Currently, all land that is under conservation agreements in a similar program under the Nature Conservation Trust Act 2001 is exempt. It is important to provide consistency across these exemptions to ensure that no-one is discouraged from private land conservation. I move Greens amendment No. 2:

No. 2 Pages 47 to 48, schedule 4 [3]. Line 35 on page 47 to line 3 on page 48. Omit all words on those lines. Insert instead "conservation agreement entered into under Division 12 of Part 4 of the National Parks and Wildlife Act 1974."

The aim of this amendment is to include the approximately 20 per cent of VCA holders who do not fall within the definition of "primary purpose of the agreement is the maintenance of threatened species populations or ecological communities to assist in their preservation", as outlined in the above amendment. Yesterday in the lower House the Government moved an amendment that exempted VCA land from vendor transfer duty where the primary purpose is for threatened species conservation. I congratulate the Government on that amendment. The Greens amendments have been moved so that there will be no discrepancy where those VCAs that are for the broader purpose of conservation are not disadvantaged under this law. I commend both amendments to the Committee. I acknowledge that the Treasurer referred to these issues in his reply.

The Hon. JON JENKINS [6.00 p.m.]: I support the amendments, but I understand that the Treasurer will make further amendments at a later date.

The Hon. MICHAEL EGAN (Treasurer, Minister for State Development, and Vice-President of the Executive Council) [6.00 p.m.]: I indicated in reply to the second reading debate that the Government will introduce legislation in the next session of Parliament. We introduced an amendment in the lower House, but that amendment did not cover the area intended. That omission has been drawn to our attention. Therefore, the Government will draft an amendment and introduce it during the next session. In the meantime, we will ensure that the Office of State Revenue administers the legislation as though that change had been made. We are able to do that—it is called variation of statute, which can operate in favour of taxpayers. I give the Committee the undertaking that we will do that.

Ms LEE RHIANNON [6.01 p.m.]: I return to a matter that was discussed earlier. There has been some confusion in the way that amendments have been moved. I take responsibility for my own amendments. However, I suggest that the Chair calls on amendments and movers as we come to them. I was too late to move my amendment, but I shall make reference to the amendment now. I appreciate that my amendment would probably not have been successful, but it is an important amendment to the Greens. The amendment would have set the highest marginal rate for land tax at 1.7 per cent as opposed to the 1.4 per cent proposed in schedule 2 [3]. The Greens support the existing rate but not a major tax cut for wealthier landowners. We are told that, in money terms, this tax cut could be in the order of 30 per cent or more. The system was working well and we support a fully progressive and graduated land tax system. The Greens amendment held the status quo for the top rate while allowing everyone else to enjoy the more progressive tax scale proposed by the Government. I acknowledge that the time has passed for moving the amendment, but I appreciate the indulgence of the Committee in allowing me to speak to it.

The Hon. DAVID OLDFIELD [6.02 p.m.]: I move:

Page 52, schedule 4 [7], lines 12-14. Omit all words on those lines. Insert instead:

(2) Vendor duty is not chargeable in relation to land-related property transferred by a vendor duty transaction if the vendor (or, if there is more than one vendor, at least one of them) first acquired a legal or equitable interest in the land-related property before the date of commencement of schedule 4 to the State Revenue Legislation Amendment Act 2004.

I am opposed to the current impost of stamp duty and any increases to that unjustifiable tax. I understand the unlikelihood of defeating the bill outright. The Carr-Egan New South Wales Government should acknowledge that the introduction of this retrospective tax on investment property is, quite simply, unfair. Many investors in the property market are hardworking middle-income earners and hard-pressed small business people endeavouring to secure their retirement. Indeed, many who have not been able to afford to purchase their own home have utilised negative gearing to purchase an investment property. These people have been able to afford an investment property but not their own home. They are not at all wealthy and are simply trying to get ahead. No-one deserves to be slugged with a retrospective tax and, hence, I have moved that the tax apply only to investment properties purchased after the date of the bill's assent or 1 June 2004, whichever occurs last. This Government has been kept afloat by booming real estate, not good management. The end of that boom should force better management, not another raid on the superannuation of hardworking taxpayers.

The Hon. MICHAEL EGAN (Treasurer, Minister for State Development, and Vice-President of the Executive Council) [6.04 p.m.]: The Government does not accept the amendment of the Hon. David Oldfield. The first point I make is that if his amendment were carried, it would only apply to the sale of property that was actually purchased by the ultimate vendor after the date of commencement of this legislation, which would mean that in 2004-05 there would be a shortfall of almost $700 million in revenue, and probably the same in the second and third years—in fact, the revenue, which this bill obviously seeks to raise, could not be raised. The Hon. David Oldfield suggests that the legislation is somehow retrospective. I would challenge that. In fact, the only aspect of the legislation that is retrospective is the 12 per cent exemption that is given to vendors. In other words, when vendors sell property they are exempt from paying the tax if the sale price is not 12 per cent greater than the price for which they acquired the property. That is the only retrospective aspect of the legislation, and that is actually an exemption that works in favour of the taxpayer. It is not a retrospective tax. It is not a capital gains tax.

The Hon. DAVID OLDFIELD [6.05 p.m.]: I appreciate the comments of the Treasurer. Clearly, the intention of the amendment is to do exactly what the Treasurer does not want done—that is, to position the legislation so that it will not apply to anybody except those who do purchase property after that period and then sell it after that period. I contest that the legislation is retrospective. The Treasurer says that it is not a capital gains tax. It is most certainly a tax that is proportionally based by the Treasurer on a capital gain. He may call it a stamp duty but it is still, in effect, in every way a tax on capital gain, which the Treasurer is taking as an exit percentage.

The Treasurer's colleague and former Prime Minister, Bob Hawke, at least had the decency in 1985, when he introduced the capital gains tax—and this tax is very similar but is applied in a different way—not to make it retrospective on all of those people who currently owned properties. He did not do that. He had the date fixed, and it was after that date that those properties would be subject to the changes to the capital gains tax legislation that he introduced at that time. However, that is not what the Treasurer is doing. He is catching everybody who has had a property, for however long, and sells it after 1 June. They will be done by a tax, whichever way the Treasurer wants to describe it, that is on capital gain.

The Hon. PATRICIA FORSYTHE [6.07 p.m.]: The Opposition opposes the vendor or duty tax. There is no intention on our part to seek to make a bad tax any better and to support any amendments. We oppose the tax outright. We will oppose schedule 4 to the bill.

Greens amendments 10 and 11 negatived.

Australian Democrats amendment No. 2 negatived.

Greens amendment No. 2 negatived.

One Nation amendment negatived.

Question—That schedule 4 be agreed to—put.

The Committee divided.

Mr Breen Dr Burgmann Mr Burke Ms Burnswoods Mr Catanzariti Dr Chesterfield-Evans Mr Cohen Mr Costa

Mr Egan Ms Griffin Ms Hale Mr Hatzistergos Mr Jenkins Mr Macdonald Ms Rhiannon Ms Robertson

Ms Tebbutt Mr Tingle Mr Tsang Tellers, Mr Primrose Mr West

Mr Clarke Mrs Forsythe Mr Gallacher Miss Gardiner Mr Gay

Mr Lynn Reverend Dr Moyes Mr Oldfield Ms Parker Mrs Pavey

Dr Wong Tellers, Mr Colless Mr Harwin

Mr Della Bosca	Ms Cusack
Mr Kelly	Mr Pearce
Mr Obeid	Mr Ryan

Question resolved in the affirmative.

Schedule 4 agreed to.

Schedule 5 agreed to.

Title agreed to.

Bill reported from Committee without amendment and passed through remaining stages.

The Hon. Christine Robertson, on behalf of the Chairman, tabled report No. 3 entitled "9^th Meeting on the Annual Report of the Health Care Complaints Commission", dated May 2004.

Ordered to be printed.

The Hon. John Hatzistergos tabled the following paper:

Report by the Hon. Gordon Samuels AC, CVO, QC, entitled "Review to Consider the Merits of Establishing a Specialist Gun Court in New South Wales", dated 2004.

Ordered to be printed.

Government Business Orders of the Day Nos 2 to 6 postponed on motion by the Hon. Michael Egan.

The Hon. MICHAEL EGAN (Treasurer, Minister for State Development, and Vice-President of the Executive Council) [6.18 p.m.]: 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 Appropriation (Budget Variations) Bill 2004 is a key part of the annual budget process.

Essentially it ensures that the Parliament is able to examine changes to expenditure from what is forecast as part of the Budget at the start of the financial year.

The Bill ensures that there is a transparent process for examining expenditure.

And so, this practice of seeking approval for supplementary appropriations to cover payments not provided for in the annual Appropriation Act has now become an important part of the process.

This is a process that has been endorsed by the Auditor-General as well as the Legislative Council's General Purpose Standing Committee No.1 in its report on appropriation processes.

There are four key parts to the Bill:

1. Firstly, account to Parliament on how the Treasurer's Advance has been applied for recurrent and capital expenditure;

2. Secondly, seek an adjustment of the Advance prior to the end of the current financial year;

3. Thirdly, seek appropriation to cover expenditure approved by the Governor under Section 22 of the Public Finance and Audit Act 1983; and

4. Finally, seek additional appropriations for payments which are intended to be made in the current financial year where no provision was made in the annual Appropriation Bill.

Schedule 1 of the Bill covers appropriations for 2003-04, and schedule 2 covers payments made in 2002-03. The payments from last financial year have already been brought to account in the agencies' audited financial statements and have no impact on the published Budget result for that year.
This Government, in presenting further Appropriation Bills, has sought as far as possible to ensure the Parliament has the opportunity to scrutinise anticipated additional funding requirements prior to expenditures being incurred.

However, it is not always possible to seek Parliament's authority in advance for pressing expenditure needs and the Parliament has previously established procedures to provide for this eventuality.

Each year Parliament makes an advance available to the Treasurer to meet unforeseen expenditures. In addition, Section 22 of the Public Finance and Audit Act 1983 enables the Governor to approve of payments to cater for unforeseen expenses, in anticipation of appropriations by Parliament.

The Appropriation (Budget Variations) Bill 2004, in respect of the 2003-2004 financial year seeks:

• appropriations of $290.523 million in adjustment of the Advance to the Treasurer;

• $177.399 million for recurrent and capital works services approved by the Governor under Section 22 of the Public Finance and Audit Act 1983; and

• additional appropriations of $135.3 million.

Schedule 1 of the Bill has a full account of how the Treasurer's Advance has been applied this year.

The Treasurer's Advance payments in 2003-04 highlight the commitment the Carr Government has to ensuring appropriate services for the community, and includes:

• $60 million for increased disability services;

• $57.038 million for education.

• $32.053 million to upgrade Police computer systems;

• $6.796 million to establish the Independent Transport Safety and Reliability Regulator.

The additional appropriation required under Section 22 of the Public Finance and Audit Act 1983 relates to the provision of funds to meet certain expenditures that were unforeseen.

This amount includes:

• Appropriations of $67.780 million for natural disasters, including $45 million for drought assistance, as well as additional aid required due to the impact from floods, storms and bushfires across significant areas of the State. This is in addition to the $15 million allocated for natural disasters in the 2003-2004 Budget. It takes the total cost of natural disaster assistance to farmers and businesses this year to $82.780 million; and

• An appropriation for the across-the-board increase of 3.5 per cent for nurses under the Public Hospital Nurses Award of $38.5 million.

An additional appropriation of $135.300 million is required:

• Towards an operating subsidy of $52 million for the recently established Rail Corporation;

• To fund $38.3 million for extra police officers;

• $25 million to meet the increased cost of services to high-needs children in Out-of-Home Care; and

• $20 million to meet a higher than expected number of First Home Owner Grants.

The Bill also seeks appropriations to adjust certain payments made during the 2002-2003 financial year either from that year's Advance to the Treasurer, or approved in that financial year by the Governor under Section 22 of the Public Finance and Audit Act.

Additional funding in 2002-2003 was provided for the retirement of debt, a contribution to the General Government Liability Management Fund and towards improved transport, education and disability services.

Last year Parliament approved of some $20 million being invested to provide additional funding for hospital and health capital works. Also the State's Net Debt as a per cent of Gross State Product was reduced from 6.5 to 5.1 per cent compared to the previous year.

Each of the payments made in 2002-03 has been included in the audited financial statements of the relevant agencies for that year.

The practice of introducing further Appropriation Bills has enhanced accountability for the expenditure of public moneys from the Consolidated Fund.

It is further evidence of the Government's commitment to transparent and full financial reporting to the Parliament and the community.

I commend the Bill to the House.

The Hon. PATRICIA FORSYTHE [6.20 p.m.]: The Opposition will not oppose the Appropriation (Budget Variations) Bill, but it is appropriate to comment on it. Every year the Treasurer introduces this type of bill to explain how he has spent the Treasurer's Advance or to seek money under section 22 of the Public Finance and Audit Act for expenditure that was unforeseen at the time the budget was introduced. That is fair and reasonable but, unlike the budget bills, general purpose standing committees, meeting as estimate committees, do not normally have an opportunity to scrutinise this legislation. This year is no exception. The Treasurer's Advance is shown in a series of line items. Some of the expenditure is self-explanatory, worthy and understandable. For example, one could not foresee natural disasters. This year money from the Treasurer's Advance has been spent on drought relief and bushfire recovery. In other years it may have been spent on storms or floods.

However, underlying this bill is the Government's waste and mismanagement of the economy. For example, the Government has spent $17.4 million on displaced public servants. If ever a Government bill came home to roost it is this one—and it relates to unfair dismissal. That amount has been expended on displaced public servants because the Government is not prepared to sack those it believes are not doing an adequate job, yet it makes extensive payouts resulting from contracts. What has the State to show for $17 million spent on the failed Austeel project in Newcastle? Sadly, there is absolutely nothing to show: no new jobs or investment creation in Newcastle. That is another example of botched management by the Carr Government.

In the debate on the State Revenue Legislation Amendment Bill the Treasurer spoke about the Commonwealth Grants Commission and the Government's attitude to it. That has been the subject of comment many times. In the past couple of years the Government has conducted a nonsensical political advertising campaign costing $875,000 to highlight the activities of the Commonwealth Grants Commission. In March 2001 the Treasurer went to great length to tell us that he was about to embark on an advertising campaign that would feature a toad. I believe it was supposed to represent the Queensland Government, or perhaps the Queensland Premier or Treasurer. Certainly it was an insult to the people of Queensland. The Government tries to justify seeking additional money because it has not lived within its budget. We accept that the Government cannot plan for drought and bushfire recovery. Each year the Treasurer's Advance contains a significant amount, but the Treasurer is here again with his begging bowl. The purpose of this bill is to provide an account to the Parliament on how the Treasurer's Advance has been spent.

The Hon. Duncan Gay: Most of it is for the Premier, Minister for the Arts, and Minister for Citizenship.

The Hon. PATRICIA FORSYTHE: I will come to both recurrent and capital expenditure. The bill seeks an adjustment of $290.5 million in the Treasurer's Advance. The Treasurer is given an Advance for the unforeseen: the drought, floods and unforeseen matters that cannot be budgeted for. But over and above that the Treasurer is seeking an additional $290.5 million. An appropriation of $177.4 million is sought under section 22 of the Public Sector Finance and Audit Act for departments that have overspent their budgets in 2003-04. In addition, $135.3 million is sought for recurrent services and capital works and services for 2002-03. For a variety of reasons, some good, the Government has been living beyond its means, as it has on other occasions.

Unlike the budget bills, we have not taken the opportunity to appropriately scrutinise budget variation bills by estimates committees. However, the time is now approaching when the Government must place budget variation bills, which involve significant amounts of money, on the table for appropriate scrutiny by estimates committees. We are failing the people of New South Wales if we do not adequately scrutinise the legislation. Some of the expenditure is acceptable, but some of it highlights matters that the Government should have foreseen. We certainly do not begrudge the additional money spent on security for the World Cup, the Opera House or even the additional stabilisation of the Kosciuszko road in the national park.

However, at a time when the Government has cried poor and spoken about the need for additional money and the need for new taxes to provide education and hospital services, part of the Treasurer's Advance is an additional $1 million for the purchase of four elephants from Thailand. I accept that Taronga Park Zoo is an important icon and tourist attraction for New South Wales. The possibility of purchasing those four elephants this financial year may not have been foreseen, but the zoo's budget surely must include an amount for the acquisition of new animals. Obviously it was not sufficient for the purchase of the elephants. That is an unusual priority at a time when the Government has had to impose new taxes. Indeed, we have just dealt with a taxing bill because the Government did not have sufficient funds to meet its core obligations in education and health.

The Government has strange priorities. The Opposition has no opportunity to scrutinise this bill. We have to accept at face value that the money has been spent, and we have to legitimise the spending. I do not understand why the Royal Botanic Gardens, which has adequately managed New Year's Eve celebrations for many years, needed an extra $198,000 to manage the 2002 New Year's Eve celebrations. Those celebrations were only months before the last State election and I wonder whether an additional splash was made that night. The Romans used to understand how to win the citizens. Sometimes it was with bread and sometimes with circuses. That is what the Government is about. It seems odd that just months before the State election more money than normal was spent on the 2002 New Year's Eve celebrations. After all, the Royal Botanic Gardens is involved in those celebrations each year.

Another unusual item of expenditure under the heading "The Legislature" is a former member's ex gratia legal fee of $47,000. I do not know what that was for, but at some stage I may be enlightened about it. Another interesting item is the need to spend money on the replacement of what is described as failing equipment in ministerial offices. When I read that item I thought it might have been better if the Government replaced a few failing Ministers rather than just the equipment in their offices. It is not an insignificant amount of money that has been allocated—$850,000—for corporate services to Ministers and to replace failing equipment. One can buy a lot of equipment for $850,000.

The Hon. Duncan Gay: That may be to put a new title on the door of the Hon. Ian Macdonald's office.

The Hon. PATRICIA FORSYTHE: This is in addition; it is corporate services. This is the Treasurer's Advance. He is now seeking money that has been spent over and above what was planned for.

The Hon. Duncan Gay: It is a big title.

The Hon. PATRICIA FORSYTHE: It may be a big title. I do not know whether it has anything to do with relocation of offices or new head offices. We are not given an explanation. The item I am most interested in relates to 2002-03. It seems that the Department of Women needed an additional $500,000 in operational funding. I do not believe the community of New South Wales—certainly not the women of New South Wales—gained a $500,000 benefit from the additional operational funding of the Department of Women. It seems to me that the Government, in looking retrospectively at that spending, would agree with the Opposition. It has now abolished the Department of Women. It will now be an adjunct to the Premier's Department.

How and on what that additional $500,000 was spent is something about which we have not been enlightened. Another item refers to a shortfall in grant funding to the Heritage Office of $1.4 million in 2002-03. I wonder whether somebody had a white board when the Government was giving out grants prior to the last election and whether there was a need for additional funding. We do not have explanations. We are taking these on face value. I should acknowledge some important items. Only minutes ago in debate on other legislation the Treasurer was talking about the Federal Government being a mean government. In this regard I refer to three items in this bill, two relating to education and one relating to the Department of Ageing, Disability and Home Care.

In the Treasurer's Advance for the Department of Ageing, Disability and Home Care there is an additional $9.17 million. Why? Because there was an increase in Commonwealth funding under the disability agreement and that required the State to match it. In education it is even more significant. In 2002-03 there was additional Commonwealth funding of $21.4 million, and in 2003-04 an additional $20.1 million in Commonwealth funding. This funding had to be matched by the State. One may ask where that money went. I suspect it is the end result of more students than the Government had anticipated exiting the public system and going to non-government schools.

The chickens are coming home to roost for this Government in many ways. There is the allocation of money for special inquiries as a result of the fundamental mismanagement of the Government. I could not miss the $2 million that has been allocated for the commission of inquiry into Campbelltown and Camden hospitals. That inquiry was brought about because of the exposure of problems and mismanagement within the hospital system, the cover-up that Bret Walker, SC, is now required to investigate. That is $2 million that would not have had to be spent if the Government properly managed the health system, and particularly the Southern Western Sydney Area Health Service and Campbelltown and Camden hospitals. There are other inquiries that some of my colleagues may want too. As I said, the Opposition will accept them but the Government is beholden, particularly in this House, to be more open and explain some of these line items.

The Hon. GREG PEARCE [6.36 p.m.]: I support the comments of the Hon. Patricia Forsythe and want I to point out a couple of other examples of the gross waste and mismanagement of this Government, and the fact that this appropriation variations bill is being used to clean up some of its worst mistakes so it can continue on its way of cover-up and spin. I note first that $550,000 has been allocated for office accommodation for the Minister for Police. I find that quite extraordinary given that the police have just occupied a new building at Parramatta. I recommend that honourable members have a look at his new office. There has also been additional expenditure for accommodation and staffing for ministerial offices in the Hunter, Central Coast and Illawarra—recurrent expenditure of $833,000 and another $180,000 capital expenditure. That seems quite out of kilter with what those ministries achieve.

The Hon. Patricia Forsythe has already mentioned the Austeel project. That is an extraordinary example of waste and mismanagement by the Government, and the indulgence of the Premier and the Treasurer, who are inclined to make announcements, get the State into trouble and expect us to pay for it. The $2 million to pay for the inquiry into Campbelltown and Camden hospitals is just one of the disgraceful examples in this bill of money the Government has had to spend to deal with some of the outcomes of its mismanagement and cover-ups. Another example is the public inquiry into the Liverpool City Council, which is costing another $600,000. Liverpool City Council is infamous because of the involvement of numerous Labor Party hacks, including Mr Latham himself, and the disastrous Bulldogs investment.

Another example of the Government's mismanagement is the payment of an extra $1,012,000 to the Department of Local Government for the implementation of structural reform of local government. The Minister often proclaims the savings that are supposedly being made from local government amalgamations that were forced on various councils despite the many promises that that would not be the case. Here we see $1 million being spent to deal with that. In a similar vein, the creation of the Independent Transport Safety and Reliability Regulator cost $6,796,000 because this Government has for years not managed or invested in the rail system and allowed it to become unsafe and a real disgrace. Large amounts are included for the Treasurer and Minister for State Development, particularly in relation to the catastrophe at the Infringement Processing Bureau. We have had the figures on this before, but in this bill there are three separate amounts to deal with the problem of processing delays: $4,341,000, $12.5 million and $5,149,000.

The last item I want to mention is the $304,000 Cabinet Office expense for the Albury-Wodonga project. This was a so-called initiative dreamed up by the Premier on the plane to Albury one day. He realised he did not have an announcement or press release and he came up with an indulgent, nonsensical proposal that ultimately cost the people of New South Wales $304,000. I endorse the comments of the Hon. Patricia Forsythe that we need to improve our scrutiny of these bills. They have been used to allow the Government to continue its policy of spin, cover-up and lack of accountability. As examples such as the Albury-Wodonga project show, it is an indulgence that is completely out of place when the Government has such a terrible record of waste and mismanagement.

The Hon. JOHN RYAN [6.42 p.m.]: Two things need to be said about some expenditure relating to the Minister for Community Services. The first relates to an item noted as $60 million for additional funding for increased disability services. I had not noticed the Minister for Community Services, Minister for Ageing, Minister for Disability Services, and Minister for Youth running round the country explaining where these new services are. I need to point out to the House and to the disability sector generally that this is not expenditure for additional services; it is to plug a black hole that has existed for some time in the budget of the Department of Ageing, Disability and Home Care. It is an allocation for services that the department has been used to providing.

The department is significantly stressed because each year it has been trying to claw back some of that black hole, but year after year it has been getting larger. This is an attempt to put a line under the black hole but perhaps it is expenditure that will be carried through to next year's budget. However, as I have said, it is farcical to describe this as additional funding for increased disability services. It is certainly additional funding, but it does not result in any increase in services. The actual number of services being delivered by the Department of Ageing, Disability and Home Care is exactly the same as it has been in previous years. The Government is simply being more honest about how that is being paid for.

The other matter to which I will draw attention is an allocation of $25 million for the increased cost of services to high-needs children in out-of-home care. This matter got some media attention a little while ago, and it deserves further inquiry. I recall that immediately after the election I had a meeting with Mr Shepherd, the Director-General of the Department of Community Services, in which he explained the department was aware that the cost of high-needs children in out-of-home care was a problem that needed to be addressed. I notice that not only has that problem not been addressed, but we need to add another $25 million to that bonfire. Clearly, something needs to be done to examine how this money is being spent, and to make sure that the funds are being spent appropriately, because this also seems to be an area where we are simply spending more money but not necessarily getting a better outcome.

The Hon. HENRY TSANG [Parliamentary Secretary] [6.45 p.m.], in reply: I commend the bill to the House.

Motion agreed to.

Bill read a second time and passed through remaining stages.

The Hon. HENRY TSANG [Parliamentary Secretary] [6.46 p.m.]: I move:

That this House do now adjourn.

The Hon. Dr PETER WONG [6.46 p.m.]: At the request of many of the staff of this Parliament, I would like to record in Hansard a written tribute to Peter Doe, whom many respected and loved. Peter Joseph Doe was born on 29 November 1946 and passed away on 20 April 2004. Peter, who at the time of his death was cellar attendant, joined the parliamentary staff on 4 July 1975 in the old building in the Members Bar. Although he intended to stay here for only three months before continuing on his travels, he stayed on for nearly 29 years. Peter lived life fully until illness struck, and even then he kept his sense of humour and independence. His job in the cellar was an important part of his life and he always tried to come in to work no matter how he was feeling.

Peter spent 6½ years in the Merchant Navy as a steward and could tell many stories of ship life visiting Alaska, South Africa, Canada, Mediterranean islands, and many other places around the world. His stories suggest that he was a bit of a lad, once or twice missing a ship as a result of on-shore activities. After his time at sea he immigrated to Perth, and eventually to Sydney, where he worked for a short time at the old Aquatic Club in Kings Cross before joining the staff of Parliament House. He married June, who has now passed away, in 1982, and lived in Bondi and later at Bondi Junction.

He loved sport. His first love was football—soccer as it is called here—and when he was young he rarely missed a match at his beloved White Hart Lane, the home of the Tottenham Hotspurs, and would travel to the Spurs' European games. After his death, the first game the Spurs played was against the dreaded Arsenal at home, and Spurs drew in the last minute with a disputed penalty. Perhaps Peter had something to do with that! Cricket was his next love. A Kent supporter, he talked of the famous tree at Canterbury Cricket Ground that stands inside the boundary ropes. If you hit the tree it counts as four runs.

Peter's biggest passion was England. Many a morning he came in bleary-eyed—and lately teary-eyed—from staying up to watch and listen to the ball-by-ball commentaries. He went many times to the Sydney Cricket Ground and gave in-depth descriptions of how harsh the umpires had been against English batsmen. Peter was also an Australian supporter against all other nations, and appreciated Aussie skill, but you could not take the English out of Peter. Peter showed his true colours during the last Rugby World Cup, when he was thrilled that England had won something at last. Let us hope that he has some influence over the outcome of the European Nations Cup in June, which he was really looking forward to.

Peter will always have a lasting remembrance at Parliament House because the cellar affectionately became known as Peter Cellars, where his famous reply, "A very pleasant drop, that one" could be heard. All at Parliament House, past and present, will remember Peter for his pleasant and friendly attitude—and terrible jokes, which were mainly Tommy Cooper jokes, but he told them in a way that made us all laugh. He would be pleased to know that Peter Cellars is still open for business.

The Hon. CHRISTINE ROBERTSON [6.51 p.m.]: Yesterday this House agreed to make available a number of papers in relation to the Acmena Juvenile Justice Centre. I have been advised that the Department of Juvenile Justice is happy to accommodate the request. This House was told yesterday that there had been a long campaign to get those papers—a campaign that comprised a single demand for the release of the report into the incident which, as the Minister made clear in January and the Hon. John Della Bosca reiterated yesterday, could not be released by virtue of clause 4 of schedule 1 to the Freedom of Information Act 1989.

The long campaign consisted of two visits to the centre after the incident and a sum total of zero requests for information from the Minister or the department. No correspondence was received by the Minister's office asking for information, and not one freedom of information application was submitted to either the Minister's office or to the head office of the Department of Juvenile Justice. No wonder the Opposition is exhausted from its long campaign of misinformation! Contrary to claims that the Government has sought to cover up the incident, in January the Minister for Juvenile Justice invited news media representatives to inspect the centre with her. The Minister was impressed by the commitment shown by staff in returning the centre to normal operations as quickly as possible.

Following a request for further clarification of the cost of the damage caused, the honourable member was given information that had already been provided by the Minister on Prime State news and again on NBN State news on 28 January, again on ABC Radio on 29 January, and once more in the Legislative Assembly on 19 February. The cost was $400,000. The Minister released a media statement on 29 January including an update on repairs and improvements. This included strengthening of windows in the residential units, fitting of stronger locks to internal doors, installation of a new secure drug safe to better protect medicines, refresher staff training in handling difficult detainee behaviour, implementation of the Keywatcher system to improve the security of keys, and new steel security cabinets installed in the woodwork rooms.

The young people responsible for the damage did not get off scot-free, as was suggested yesterday. The 14 detainees involved in the disturbance were charged and dealt with by the Children's Court. Claims were made that the Minister blamed the staff for the incident. This is a load of rubbish. In fact, the Minister, in a statement to the media, praised the work of police and centre staff who resolved the situation.

Yesterday it was put to the House, in relation to comments made by Dr John Howard about the link between cannabis use and mental illness, that we should be concerned "that a person in Dr Howard's position would be putting forward a message to the community that there is no correlation between cannabis use and mental health issues". Clarification was sought about Dr John Howard's qualifications. It is my pleasure to advise the House of Dr John Howard's position to make such statements. Dr Howard is an internationally respected researcher and clinician in adolescence and substance abuse. He has worked as an academic at Macquarie University, he is the clinical director of the Ted Noffs Foundation, and he provides clinical consultation internationally through the World Health Organisation.

I have been advised that the Department of Juvenile Justice provides funding of $1.8 million to the Ted Noffs Foundation for its Program for Adolescent Life Management in Dubbo and Coffs Harbour. Ted Noffs provides a residential alcohol and drug rehabilitation program to young people aged 14 to 18 years who have a history of alcohol or illicit drug abuse, which has caused them to drift into the justice system. The Department of Juvenile Justice provides many alcohol and other drug services, including alcohol and other drugs and detoxification counselling in custody. I commend the community in metropolitan and rural areas and the department for their efforts with these initiatives.

The order for papers shows that once again the Hon. Catherine Cusack seems to go about obtaining information in the most unconventional manner. Rather than take the most logical course to write to the Minister's office requesting information or to submit a freedom of information application. However, the path had to be politicised. I agree with the Hon. Dr Arthur Chesterfield Evans. He said it is a shame that these papers will take up a "huge space in Parliament" that members will have to wade through. These papers could have been requested through routine applications under the Freedom of Information Act 1989. I am very disappointed that the Hon. Catherine Cusack chose to attack one of our very valuable youth drug and alcohol services in such a fashion when we already have difficulty in the community ensuring that the full cross-section of drug and alcohol services are available to young people, particularly in country New South Wales.

The Hon. ROBYN PARKER [6.56 p.m.]: The Carr Government's decision to close the Mature Age Workers Program shows just how hypocritical is its claim that it supports older people. In April, the month of the mature age person, the Carr Government in its mini-budget axed the Mature Age Workers Program. Such an act highlights the hypocrisy of the Government. Mature age workers were sacrificed on the altar of economic incompetence. The Government should be ashamed of itself. The Mature Age Workers Program aids unemployed people over the age of 40, who have been sent a message that the Carr Government does not care about them. The Mature Age Workers Program in Maitland and my area has helped thousands of local people to find jobs over the years. The program is due to stop on 30 June. No notice was given; the guillotine will come down on 30 June. The caseworkers in the program will also lose their jobs.

The Coalition calls on the Government to reverse this heartless and misguided decision. Throughout the State mature age workers programs have helped more than 12,000 unemployed older people find work by providing advice about jobs, training, resumes, interviewing and presentation, and helping them with work experience placement. These people may have become a cost on the Government. This program is of particular importance in the Hunter and has helped local families and coalminers for the past 15 years. The Carr Government is telling older unemployed people they are not worth the investment of $3.1 million, when it has wasted tens of millions of dollars on consultants' fees, media monitoring and displaced public servants. The difficulty in getting jobs experienced by older people who are retrenched or out of work is well known, and the Mature Age Workers Program is needed now more than ever.

The Minister for Education and Training announced that the Department of Education and Training will no longer offer this program, claiming that it should have been funded by the Commonwealth. I believe it is the responsibility of all governments to pull their weight on behalf of older Australians and not hide behind other governments. The Carr Labor Government cannot manage its finances, and when the wheels start to fall off the first to be sacrificed are the most disadvantaged in the community, including the unemployed. The next thing we are likely to hear from the Carr Government is that rather than help people obtain jobs, it will place mature age workers on disability support pensions, just as Federal Labor did in the 1990s when it abandoned mature age workers. This decision is disgraceful!

The Minister and his department acknowledged that these programs deliver excellent results for their clients in an extremely cost-effective manner. Not only were there cuts to the Mature Age Workers Program; there were cuts also to the Migrant Workers Program. Only five days before the mini-budget, the Minister formerly stated his support for the Mature Age Workers Program in correspondence, noting that the program is "an important part of the Government's effort to address the skill needs of the population of New South Wales". In the Hunter region the following programs have been scrapped: the Newcastle Migrant Resource Centre, Cessnock Community Training Centre programs, the Wallsend-Toronto Skills Centre, the Hunter Business Chamber, the Raymond Terrace Mature Age Workers Program and the Uniting Church of Australia Wesley Mission in Charlestown.

What have the wall-to-wall Labor members of Parliament in the Hunter and Port Stephens done about it? They have put platitudes in the paper. The honourable member for Maitland said he has made inquiries about why the program has been abolished and what can be done to save it. Good on him! What a passionate call by the Labor member! In the Maitland Mercury he is reported as saying, "Any scheme which helps mature aged people get back into the work force is extremely valuable." Well, he forgot that statement when he crossed the Hawkesbury River and turned up at Macquarie Street because I have not heard a passionate plea on behalf of mature age workers from him, or from any of the other Labor members in those areas where the programs are being axed. The programs are being axed because the Government wastes money and is an incompetent manager. Isn't this a great message to send to mature age workers! The Coalition will take on this issue and we will fight to have the program reinstated.

Ms LEE RHIANNON [7.00 p.m.]: Exploration for coal in New South Wales continues unabated. It is interesting to note that the Premier recently visited London. He was one of three Australians on an international task force on climate change that was launched by the Institute for Public Policy Research. Professor Tony McMichael, Director of the National Centre for Epidemiology at the Australian National University, is another member of the task force. He has stated that people can see that world weather patterns are becoming more unstable, more extreme; that we are experiencing hotter heatwaves, more severe drought and more storms; and that people are starting to make the connection that this is a manifestation of the climate change.

Coal already supplies about 80 per cent of Australia's total energy and it represents 11 per cent of Australia's merchandise exports. The Australian Greenhouse Office figures show coal emissions account for about 33 per cent of the almost 543 megatonnes of the carbon dioxide equivalent that Australia spews out each year. Let us look at some statistics from New South Wales. In 2001-02, 145.2 million tonnes of coal was extracted in New South Wales, producing 114.3 million tonnes of saleable coal. Coal exports from New South Wales totalled 78.5 million tonnes in 2001-02. The estimated amount of carbon dioxide that would have been produced from the complete combustion of coal consumed domestically in New South Wales in 2001-02 was about 99 million tonnes. The estimated amount of carbon dioxide that would have been produced from the complete combustion of coal exported from New South Wales in 2001-02 was about 243 million tonnes. This means that New South Wales alone is responsible for producing at least 342 megatonnes of carbon dioxide annually. The Port of Hunter at Newcastle is the world's largest exporter of coal. The coal mining industry in the Hunter Valley is chewing up large areas of once fertile agricultural country and is now planning to extend further into the Upper Hunter.

At least 16 new mining proposals are on the books, with new exploration licences being handed out as we speak—Bickham, Anvill Hill, Castle Rock, Mount Pleasant and Wilpinjong, just to name a few in the Upper Hunter. How genuine is the Premier about fixing climate change? Communities in the Hunter are suffering health problems from air quality, noise blasting and machinery vibrations, loss of water quality, loss of ground water, loss of amenity and loss of general quality of life. They are asking: Where are the royalties the New South Wales Government is collecting from the coal industry? Where is the regional monitoring program? Where is the sustainable rehabilitation of diverted river systems, acid drainage, erosion and soil stability? The Premier must answer these questions if he is sincere. He has the responsibility to reduce greenhouse gas emissions in his own backyard before he heads overseas, spruiking global warming concerns. New South Wales is one of the biggest contributors to climate change. The people in the Hunter Valley are already paying a high price. It is time the Premier acted on global warming.

On another matter, I commend to the House issue 13 of Speaking Out, a publication of the Immigrant Women's Speakout Association, subentitled "The Women Trafficking Issue". The editorial in that publication states:

Trafficking is a grave violation of human rights, which occurs in the context of global inequality, poverty and desperation. Globalisation and the feminism of poverty have been linked to the increase in trafficking, particularly of women, either as unpaid labour or for sexual exploitation.

… for sexual servitude, trafficking also includes other forms of exploitation, such as women, children and men trafficked to work in agriculture or in the clothing industry

The Greens very much support recommendations put forward by the Immigrant Women's Speakout Association to the New South Wales Government's working party into illegal non-citizens in the sex industry. A key recommendation is that special visas provided to these workers are valid only as long as special services are needed, and then they roll into another type of visa such as a protection visa. This is critical because while these special visas have helped remove people from servitude resulting from trafficking, they can also become a terrible stigma for them.

The Hon. TONY BURKE [7.05 p.m.]: One of the first adjournment speeches I gave after my election to this place related to the counting procedure used for election to the Legislative Council in the hope that my speech would kick off debate on the subject. However, no-one contributed. I thought it was time to raise the matter again because the same counting procedure is used in the local government elections. We must ensure that we have a one vote one value system because the present system for election to this House and the proportional representation system used in local government elections are a long way from being true proportional representation. The implications of not doing so are clear. A change to the system of election to the Legislative Council has implications for the Constitution. Therefore, if we are going to work through it, we must do so consensually.

The impact of optional preferential voting is a high exhausted vote in both local government elections and elections to this place. The quota that is struck at the beginning of the count becomes irrelevant to the number of votes still in the count by the time one gets to the end of the election. Without any disrespect to the person who was the last elected to this place in the last ballot—the Hon. John Tingle—I advise members that he received one-sixteenth of the number of votes received by the Coalition ticket. One-sixteenth of the vote secured one position in this House for that member, yet 16 times that vote secured the Coalition only seven positions in this House. That is not to say that I think the Coalition should have 16 positions.

The Hon. Duncan Gay: Of course we should!

The Hon. TONY BURKE: Not out of 21—never! If we want this to be a Chamber of proportional representation, we must have a method of counting that gives that result. Today I printed down from a web site the following information relating to local government election results. Just over 1,000 votes secured one position in Manly for a person elected at the end of the ballot, but for those elected at the beginning of the ballot a ticket worth 7,500 votes secured only four positions, with 7,600 votes securing only five positions. The same thing happened in Gosford City Council where more than 16,000 votes secured only two positions, whereas 3,700 votes was enough to secure one position. In Strathfield Municipal Council 1,000 votes was enough to secure one position at the end of the ballot, but 5,500 votes would secure only four positions at the beginning of the ballot. The situation is easily fixed through a reducible quota system. These are complicated methods of counting, but there are ways of resolving the problem.

Given that our counting system is fully computerised, it makes sense to have a reducible quota system. If the counts were conducted manually, that could not be done. But there is no reason whatsoever, given that we now have a fully computerised ballot, for local councils or the Legislative Council not to have a reducible quota. We should abolish the system of random sampling, which exists only to streamline manual counting. All preferences should be fully distributed. Random sampling is not our only problem. The pile of votes that is taken for random sampling is the most recently arrived pile. The pile will always be a minority of votes because if someone is elected after someone else is eliminated, by definition the person eliminated must have received fewer votes. Yet the extent to which they end up beyond the quota means that it is only the last distribution that is transferred onto the next candidate. Not all of these methods apply to the Senate count because, in part, the Senate count is compulsory preferential. It would make no sense to have a reducible quota in the Senate count. It is not needed because votes do not disappear from the count.

The Hon. Duncan Gay: We should have compulsory preferential as well.

The Hon. TONY BURKE: The Deputy Leader of the Opposition raises a new set of problems, including that which arose with the election of a member of the Outdoor Recreation Party to this Chamber, when a small number of votes were cross-preferenced through a series of arrangements that had no relationship to the intention of the vote.

The Hon. GREG PEARCE [7.10 p.m.]: I draw the attention of the House to the poor performance of the Department of Corrective Services. The Auditor-General's report, volume 6 of 2003, concluded:

NSW performance in correctional services remains below the national average on a number of key available figures. It is not performing as well as most other states in prisoner on prisoner assault, in recidivism, and in average inmate costs …

The Department's net cost of services was $610 million in 2002-03, an increase of 13.3 per cent over 2001-02.

Bob Carr has to explain the massive increase in costs associated with keeping prisoners in New South Wales gaols. His Minister for Justice—read Corrective Services—is running scared when he has to answer questions about the administration of his portfolio. The Auditor-General revealed that the $550 million the Government spent on prisoners in 2003 represented an 11.7 per cent over that spent in 2002 when the average number of prisoners increased by less than 200, from 8,021 to 8,194.

The Government spent an extra $55 million on 8,000 prisoners in 2002-03 and another $112 million on an extra 180 prisoners. In fact, the cost of keeping each prisoner is about the same as the cost of employing another nurse. The cost increased from $61,265, on average, in 2002 to $68,419 in 2003 for each prisoner. That is an almost 12 per cent increase, or an increase of $7,150 for each prisoner. No explanation has been offered for the cause of that massive increase. The only change that can be identified is the appointment of Mr Hatzistergos as the Minister for Justice. The position is even worse when one compares the cost of the private prison at Junee. The average cost to maintain a prisoner at that facility is $34,145, which is a marginal increase from $33,595 in 2002.

The Premier is now providing prisoner beds at an average cost of $187 a day. We have four-star prison accommodation when the State's finances are in crisis. The $55 million blow-out in the prison system in one year has cost the State 856 nurses. That is yet another example of the Carr Government's mismanagement and another blow-out of costs that cannot be explained. Bob Carr should be called to account. He should be managing the State's revenue properly so that we get the nurses and teachers we need. The Government should undertake urgent maintenance and infrastructure works to stop the State grinding to a halt. Despite all this, the Minister for Justice has given deluded answers to questions in this House. On 30 March he referred to the "glowing report card from the Productivity Commission". That is the same Productivity Commission report to which I have just referred. The shadow Minister for Justice, Andrew Humpherson, stated in a media release:

NSW has the highest rate of assaults by prisoners on other prisoners with nearly 1,400 recorded assaults in 2002-03...

The NSW Government is failing to curb violent behaviour in our prisons with assaults in NSW prisons 215% higher than Victoria and 258% higher than Queensland.

In response, the Minister has continued to give answers that can be described only as deluded. On 31 March 2004 he raised as one of the Government's successes a reduction in the rate of reoffending. Perhaps the Government is worried about these responses from the Minister. That may explain why he is protected by Treasurer when he is asked questions about the Productivity Commission report. I am sure the Minister does not stand by his analysis of the report as glowing. He should answer why New South Wales' performance in correctional services remains below the national average on key indicators, including prisoner assault, recidivism and average inmate cost. This Minister should not be so precious and gutless.

The Hon. Dr ARTHUR CHESTERFIELD-EVANS [7.14 p.m.]: I wish to express concern about marketing of junk food in Sydney. Krispy Kreme Doughnuts, which is about to open a shop at Wynyard, has been distributing free doughnuts around the city. A Krispy Kreme representative calls an office manager to get permission to give away doughnuts. When permission is obtained they are delivered and then distributed by employees. The doughnuts are accompanied by a fax order form, which encourages employees to order even more doughnuts. The original glazed doughnut weighs 52 grams and has 12 grams of fat. Of its 200 calories, 110 are derived from fat. The New York cheesecake doughnut has 330 calories, of which 170 are derived from fat. The total fat content is 19 grams, which is 30 per cent of the daily requirement. Those figures are provided by the company.

Krispy Kreme Doughnuts is based in Winston-Salem, the home of the R. J. Reynolds Tobacco Company, and I imagine that it is a branch of R. J.R. Nabisco, which is the food branch of the parent company. Employees are being recruited to market the doughnuts. Arguably employers have a duty of care to their employees, and presumably the employees would not be allowed to distribute cigarettes. One wonders whether, in view the obesity epidemic, they should be allowed to distribute fatty foods. Should the Minister for Health make a public statement about the dangers of consuming excessive levels of fats and sugar? Surely that has been done. Should fatty foods carry health warnings? Should a levy be imposed on companies selling high-fat foods to compensate for the health costs of obesity? Should there be restrictions on marketing, like those that should apply to tobacco? This is not simply a question of deciding whether products are legal or illegal; they have to be seen in the context of whether they are good for society as a whole given public health concerns. Marketers must accept some responsibility for the product they sell.

Motion agreed to.