Tony Windsor (New England, Independent) Share this | Link to this | Hansard source

My question is addressed to the Prime Minister. It relates to a question I asked on 7 December last year and the Prime Minister’s follow-up answer in writing on 22 December regarding the taxation of adjustment payments paid to ground water users in the Namoi Valley, wherein he confirmed that the Commonwealth is going to treat as income for taxation purposes any payments received by irrigators from the joint irrigator-state-Commonwealth funded program, even though the payment is for the loss of a capital asset. Prime Minister, given that another grant from the Namoi Valley structural adjustment program given to some Namoi Valley ground water irrigators in the Carrol area near Gunnedah has not been subject to taxation, even though both adjustment programs are to alleviate the same problem and assist irrigators to adjust to reductions in ground water allocations, and given the confused position that many irrigators and their accountants find themselves in, could you please explain and release for public scrutiny the methodology used to establish the different taxation regimes for these two structural adjustment programs?

Honourable Members:

Honourable members interjecting—

Tony Windsor (New England, Independent) Share this | Link to this | Hansard source

This is a serious question. Prime Minister, do you believe it is fair for the Commonwealth to tax not only its own one-third contribution to this $150 million program but also the New South Wales government’s contribution and irrigators’ contributions?

David Hawker (Speaker) Share this | Link to this | Hansard source

In calling the Prime Minister, I would remind the honourable member that the last part of that question asks for an opinion. But I call the Prime Minister to respond to the question.

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

In reply to the member for New England, it is a very detailed question, but I will have a look at the methodology. I do recall writing. It was my understanding, when I got the advice that was given to me at the time I signed the letter, that the principles we have applied are longstanding principles that have been applied for decades by governments of both political persuasions. But it is a fair question. I do not mind digging into the methodology and I will provide the honourable member with whatever information I can find that might help explain the rationale for a policy that has been adhered to by governments for a long time.