John Howard (Bennelong, Liberal Party, Prime Minister) Share this | Hansard source

If the member for New England is patient, he will find out that we are both broadly on the same side. The difficulty that we have is that the way in which the payments have been cast by the New South Wales government attracts a certain taxation treatment. We have suggested to the New South Wales government, without in any way wishing to engage in anything that is other than totally transparent, that if the payments were couched in the nature of compensation, which they plainly are, then a different and more beneficial taxation treatment would accrue. Thus far, as I understand it, the New South Wales government has been resistant to that, because they do not want to acknowledge that if you take something from somebody you ought to compensate them.

But I do thank the member for New England for asking me this question. It enables me to say to the parliament and to say particularly to the people who are affected that I think it is absolutely outrageous what is now happening in parts of New South Wales concerning water entitlements. I spoke with somebody near Finley on Friday who had paid $30,000 on the Friday to buy water on the private market, and that water entitlement had been taken away or reduced by the New South Wales government on the following Monday without any compensation.

I know of another case, where a man—I think his name was Pat Kennedy—was paid a $100,000 interest rate subsidy by the federal government under our interest rate EC subsidy scheme, where we pay the first 50 per cent of the interest in the first year of EC and then 80 per cent in the second and subsequent years. This man had received a $100,000 subsidy from the federal government. He was then required to pay $70,000 out of that $100,000 in, effectively, water rates, but he has no water because that water entitlement has been taken away. You cannot do that in the federal government because of the just compensation clause in the federal Constitution, and rightly so.

I thank the member for New England for raising this issue. I am deeply grateful to the member for New England for raising this issue because under the federal Constitution if you take somebody’s property without just compensation it is unconstitutional, but state governments are not bound by that kind of restraint. Let me make it very plain.

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