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

I move:

That this House:

(1)

recognises the hardship faced by families who face significant losses with the withdrawal of water rights;

(2)

acknowledges that a similar problem confronts those whose livelihood is threatened by government imposed changes in the use of forest resources;

(3)

acknowledges that compensation is being made in recognition of the loss of property rights caused by such policies;

(4)

recognises that any benefit such compensation confers will be substantially negated unless the government changes its stated policy of treating such compensation as income and taxing it accordingly; and

(5)

calls for the introduction and passage without delay of amendments to the Income Tax Assessment Act to correct this anomaly.

This is a very important motion. I am pleased that the Parliamentary Secretary to the Prime Minister is here, but I am disappointed he is not speaking. To relate some history to this issue, back in 1995 the Council of Australian Governments in the competition policy arrangements agreed on two essential ingredients to water reform, one being the recognition of compensable property rights and the other being the establishment of a trading market in water entitlements. Eleven years later there has been very little movement, although the parliamentary secretary may relate to some movement in the trading market between the states.

At that meeting of COAG there was agreement between the Commonwealth and the states that competition payments would be made only if certain aspects of water reform were reached. Since then, $4.6 billion of Commonwealth money has been handed to the states, with very little movement by the states, who have constitutional responsibility for water, in recognising the property right issue or until recently even the trading market issue. The property right issue has become paramount in the minds of water entitlement holders and of other land users and farmers around the nation.

The issue relates to the compensation arrangements that have been put in place for the six ground water valleys across New South Wales—a compensation payment of $150 million made up of three sections: the state, the Commonwealth and the irrigators from within those valleys—and relates specifically to the taxation treatment of that compensation. The Australian Taxation Office is treating the compensation arrangements, $50 million of which is from the Commonwealth government, as income in the year of receipt and not as capital whereas the irrigators and accountants et cetera would regard the removal of the water entitlement as a capital loss to gain sustainability in the ground water system. The Namoi Catchment Management Authority has:

... applauded the National Water Initiative for endeavouring to achieve good natural resource outcomes, however good 21st Century NRM—

natural resource management—

policy is fraying at the edges because it is aligned with a Dickensian taxation policy.

It goes on to say that the Australian Taxation Office ruling is ‘academically bankrupt’. I commend Mr Bruce Brown for his comments on the taxation policy. Namoi Water’s John Clements has adopted a double-barrelled approach: one is to attempt to get the Commonwealth to change its tax treatment of the compensation arrangements and the other is to get the New South Wales government in this case to change the deed of offer from adjustment arrangements to compensation.

The Prime Minister has responded on both occasions I have written to him. I alluded to some of the exit packages that have been compensated when government has put forward some compensation arrangements. But the glaring inconsistency is that there is no consistency in the way adjustment or compensation packages are treated by the tax office, and the Catchment Management Authority has commented that we really need to bring some consistency into the way these things are treated. For instance, the contract for the Brigalow exit package, which is a New South Wales scheme, specifically states ‘exit’—and the Prime Minister, in one of his letters, said that exit packages, whether they be dairy or sugar, are treated differently from water adjustment packages—but, as far as the tax office is concerned, it is being treated as income in the year of receipt. Six valleys are affected. I am disappointed that the members for Gwydir, Parkes and Riverina will not be speaking on this issue, but the members for O’Connor and Mallee will be—and they were both members of the House of Representatives inquiry into rural water supplies and I am sure they would recognise the recommendations for compensation payment and taxation treatment. I call for an amendment to the Income Tax Assessment Act. I think there should be a very simple one-line adjustment to change the circumstances whereby compensation is being taxed at the Commonwealth level—not only for ground water users but very specifically for other land users in the future. (Time expired)

Peter Lindsay (Herbert, Liberal Party) Share this | Link to this | Hansard source

Is the motion seconded?

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

John Forrest (Mallee, National Party) Share this | Link to this | Hansard source

The member for New England has raised an important issue. It is certainly an issue that is dear to my heart, as the only engineer in this place and someone who has worked hard over the years to bring the argument along. The member for New England has commenced the discussion by reference to water, and I would like to spend some time on that. He has also raised in his motion some other natural resource management issues which require discussion as well.

It is a real triumph to be able to stand here in 2006 and boast about a National Water Initiative that has substantial carrots attached to it to encourage the states to address water as a national resource management issue. Clause 100 of the Constitution refers to the problem of bringing the states along on this issue, and I would like to read it for the record. It states:

The Commonwealth shall not, by any law or regulation of trade or commerce, abridge the right of a State or of the residents therein to the reasonable use of the waters of rivers for conservation or irrigation.

I mention that because it is important for the member for New England to recognise the difficulty this parliament has in bringing the states along on the issues which are dear to his heart. The fact is that we have already seen some direct benefit from the National Water Initiative, including right across the north-west of Victoria where, with the government’s very strong support, there is a commitment of $334 million, in partnership between Victoria and the Commonwealth, to complete the piping of the northern Mallee-Wimmera stock and domestic water system. After 100 years of argument, we are finally going to finish off this scheme and save this most precious of the nation’s resources. There is the benefit.

It is worth continuing to work with the states to resolve all of the yet unresolved issues, and it needs to be recognised that there is still a considerable amount of work to be done. The member’s motion draws attention to some of those issues but, with his experience in a state parliament, he must understand that this government has done more than its share in bringing the states along. We have made tremendous mistakes in the 100 years of this nation on the management of our natural resources. Water is just one of them; there is also the land, timber and vegetation. It is a huge challenge in a political context to encourage communities to come along and address these issues, but it is a delight these days that so many of the land-holders in the areas affected are coming along and starting to understand these issues.

The issue the member raises to do with the taxation treatment of compensation is ongoing business and work to be done, but people need to understand whether the compensation they receive is for exiting or for lack of income. That is the difficulty the Commissioner of Taxation has and it makes a difference in the assessment. If it is compensation for loss of income, by its very nature it is compensating them for income they would have received anyway, which would have been taxable. I do not have the ground water problems of those members representing northern New South Wales, but I do have some understanding of the difficulties of protecting and making sustainable the precious ground water resource in the western half of my electorate associated with the South Australian border. This is a precious resource and we need to be extremely careful about the prolific way in which we have been using it. If we bring the communities along with us in the discussion, we will achieve a fine result. (Time expired)

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

We are very appreciative that the Parliamentary Secretary to the Prime Minister is in the chamber to listen to this debate on the motion of the member for New England. I had the pleasure of reading the report that he did on housing in Australia with the Oxford don, and it was one of the few reports I have read on housing in Australia that made some sense—although I would say that there was a little variation that I would have liked to have seen him put in. But we hope that we have an intelligent person, a person determined to do the right things.

Mr Deputy Speaker Lindsay, you and I know what happens when you take property rights away from people, because both of us are familiar with the situation on Palm Island. If you have a place on earth where nobody is allowed to own any property, as is the situation on Palm Island—and you and I have advocated our views on this on many occasions—then there is no reason to get out of bed in the morning. Is it any wonder that these people are in the state that they are in?

In Australia, we are rapidly moving to a situation where our property rights mean absolutely nothing. You are not allowed to cut down a tree in your backyard. You are not allowed to take any water out of a stream that might flow through your backyard, whether you are in an urban or a bush situation. It amazes me that people in the cities—and I never realised what a Sydney-centric place Australia was until I became a federal member of parliament—can draw a distinction between a water right and a share certificate. Suppose I have a piece of paper here that says I am entitled to take this amount of water and suppose I have a piece of paper here that says I am entitled to own one-millionth of BHP Billiton. I fail to see what the difference is. If you take the share certificate away from me, you are a thief and you will be put in jail. If you take the water right certificate away from me, you are a person who is saving the nation from the terrible damnation of salination. I fail to see the difference here.

If there is one single distinguishing feature of the Anglo-Saxon race, it is that in the year 1290 they passed legislation called Quia Emptores, and they gave people the right to own property. Over the next 300 or 400 years, it became a sacred right. The French did not get it until 1788. The Germans did not get it until about 1820. The Russians did not get it until 1984. But the Anglo-Celtic people had it and it was one of the reasons that they leapt ahead of the rest of the world.

We have lost the right in my area to clear timber off our station properties. I do not hesitate to say that the family of the famous footballer, Martin Bella, bought a big area of land there on the basis that they were going to clear it and turn it into a partly sugar and partly cattle area. Of course, they had the ground cut right out from under them. That family—a very wealthy, prosperous and successful family—have been placed in a very desperate situation because of the actions of government. Yet they are allowed continuously to take these property rights away from us. We have been told that we cannot clear timber—a right taken away from us that we had before. We cannot access the water in our rivers—a right we had previously that we do not have now. I am talking about Queensland now, not New South Wales. And now we are having the riparian rights taken away from us under Queensland wild rivers legislation. I hope that the parliamentary secretary takes note that half—42 per cent, to be exact—of Australia’s agriculture comes off the Murray-Darling system, off a tiny little 22 million megalitres.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Sixty per cent.

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

Sixty per cent—I am corrected by the member for Page, who is very knowledgeable in this area. They have 22 million megalitres of water that is producing 60 per cent of Australia’s agricultural produce. In the Gulf Country, we have 126 million megalitres of water. We would be flat out producing two per cent, and our right to access that water has been taken away from us with no compensation.

If you are going to steal our property rights from us, you should at least not tax us on the small modicum of compensation for the outrageous theft of the property rights that we once owned. That single distinguishing feature that enabled the Anglos to leap ahead of the rest of the world has seen our poor First Australians reduced to the state that they are in. This distinguishing feature, private property, will be taken from us today unless we address the problem. A small part of the redress is contained in this motion of the member for New England. (Time expired)

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

At the last Federal Council meeting of the Liberal Party in Canberra last year, a motion that I had the privilege of submitting was passed unanimously. That resolution, carried unanimously, requested of this government that section 51(xxxi) of our Constitution, the power of acquisition on just terms, be extended by referendum—in other words, we would have to test the people—to all state and local government decisions that represent a diminution of the property rights of individuals and persons, as the Constitution describes them. I have to admit that I have not had a written reply from the government on the passage of that motion, but it stands there as put by the Western Australian division on the ground that we are fed up with the treatment of the people of Australia, not by the Commonwealth in taking decisions where compensation is due under our Constitution but by all the planning and other decisions, particularly of state and local government, that can materially affect the value of a person’s property.

The issue before us today relates to the treatment of compensation where both the state and the federal governments have agreed. I could probably take the whole afternoon discussing the various aspects of these matters. I am well aware of the time I have available, but I think it is worth putting on record that, just as I was prepared to argue a case at the Federal Council of the Liberal Party for a proper responsibility of all governments not to steal from the people—to use the previous member’s words, and I endorse those words—the fact of life is that we do have a problem where compensation is paid and the proceeds are subject to taxation. There are so many complex issues around this I have discovered, having looked at it. I understand that, if it is classified as restructuring, it is not taxed. I understand that the Commissioner of Taxation himself has put out a discussion paper looking at some of the complexities of this issue.

But I really wanted to spend my last couple of minutes asking: how often has it been duly necessary to take away people’s rights in the name of the environment, in the name of a healthy Murray River? I participated in an inquiry that found out that most of the decisions related to its health were taken by computer modelling. You go and take a four-gallon bucket of water out of the river and you come to all sorts of conclusions. But we as a committee, with one dissenter, advised the government in an interim report that they should go back and get some serious data.

When it comes to underground aquifers—and I know that is particularly where the member for New England’s concern rises—it is very difficult not to have to say, ‘Stop.’ I have been an observer of that in another part of Australia. It is a serious problem. It comes down to compensation. But when the authorities have failed to replace every open channel in the Murray-Darling irrigation system with pipe and when we are allowing 50 per cent of the water that flows into South Australia to evaporate in a recreational lake—that is a statistical fact; it is called Lake Alexandrina—why are we going around trying to steal people’s water entitlements when they are turning them to a productive benefit for Australia? What is more, why are we sneaking through the backdoor, Mr Parliamentary Secretary—I have written to you on this matter—and starting to stand in the marketplace to buy water from distressed growers? Fix the problems first. And when we have secured every drop of water, we can let some flow on a river that used to dry right up before man’s intervention. (Time expired)

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

I will start by congratulating the member for New England for his single-minded advocacy for the people of his electorate. I live in an electorate that is completely different from the member’s. Mine is an inner-city, suburban electorate. I am often heard to say that it contains all of Australia except for rural and regional Australia. All the rest of it is in Parramatta. So, in my electorate, I do not hear the views of rural and regional Australia. I would like to remark that, in this House, I hear more articulate argument for the people in rural and regional Australia from the members for New England and Kennedy than I do from the National Party members combined. I thank you for that, because it well and truly broadens my view of regional Australia. None of us can deny at the moment that a large part of Australia’s prosperity has ridden on the back of rural and regional Australia for decades. If we want rural and regional Australia to continue to prosper, and benefit us all through the next decades, we must all invest in rural and regional Australia at one of the most difficult times, as it seeks to respond to changing environmental issues and the changing economic structures that come with those changes.

This private member’s motion calls on this House to acknowledge the hardship faced by families in rural communities who face withdrawal of water rights. I note that the member does not suggest in this motion that those changes were not necessary, but he does ask that rural communities and individuals be adequately compensated—and not have compensation given with one hand and taken away with the other. The basic principle underlying this motion is that, when you change the ground rules, when you change rules for people who have made family, economic, business and personal decisions based on one set of rules, a government must be very careful about the way it compensates people for their futures. This is true in all areas, and particularly true in rural and regional Australia at this point.

The issue of water resonates in my electorate as well, although on quite a different basis. It is probably the area of the environment that is raised most often. In fact, I hear the word ‘water’ almost on a daily basis in my electorate. For people living in an inner-city area, the changes in our lifestyles as all of us across the country deal with our status as one of the driest continents in the world are largely peripheral. They involve planting native species in our garden, putting in water tanks, washing our car on the grass—doing all the small things that are on the edges of our lives. For people in rural Australia it is a fundamental change, a change in their relationship with the land, the very meaning of ownership of land. These are major changes, which will affect, if we are not careful, the economic viability of rural Australia.

What is the nation’s role in responding to this? We as a nation have benefited incredibly from the prosperity of rural and regional Australia. We have ridden on the back of commodities booms and we have ridden on the back of wheat and wool for decades. We have all benefited and we continue to benefit. We have all reaped the rewards of the work of the people who live in the remote and rural areas of this country, and we all have a responsibility to make sure that rural and regional Australia continues to prosper.

This is one of the many areas affecting our future that this government has failed to respond to in any really serious, coherent way, without a major plan for the future of this country, as we spend and enjoy the prosperity paid for by past generations but refuse to invest seriously in the infrastructure and economic issues that will support future generations. If we want our grandchildren in 50 years time to reap the benefits of rural and regional Australia, we really have to assist our fellow country Australians to find their way through probably the most significant changes to the way that rural and regional Australia operates that we have ever seen. This is one of the biggest issues facing the country—the change in the way we think about our environment, the way we think about water. It is going to affect every single one of us and we all need to get behind one of the major drivers in this country, which is rural Australia.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

As the longest-serving Minister for Water Resources in New South Wales, I think I have some background in this area and some reason to speak on it. The ground water in New South Wales is one area that I think the department of water resources thought they had right. When in my term as minister I asked them on several occasions whether we were mining the water resources of New South Wales—which, by way of some explanation, is drawing down the watertable without it being replenished—I was told that no, we were not, that our licensing on ground water was correct and that we were not mining the resources. Obviously, in recent years that has proven to be incorrect. It has been shown that the watertable is falling in these areas, and there needs to be something done about it.

Let me be very clear that the allocation of water is not a federal issue. It is a state issue. It is a state allocation. There have been mistakes made over the years. There is no doubt about that. There are too many licences in New South Wales, going back to the days of Jack Beale, who used to give favours around the countryside by handing out a water licence. There was not enough water there to do it.

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

And Wal Murray.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

I have to disagree with the member for New England, because I was the minister and Wal Murray had no say.

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

You handed them out.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

We did not hand out any. The member for New England is trying to grandstand on this and play some politics. Let me put it in some perspective: he wants to stand Independent candidates in some of these seats. That is what it is about.

These issues are state issues. I wish the member for Parramatta had stayed and listened and got a little background on some of this. Have a look at milk quotas, which were bought and sold on the open market and were a property right as far as I am concerned. If we have a look at water that has been allocated, obviously a property with water is worth a lot more than a property without water. There is no doubt about that. It is a property right. When it comes down to the state, the state have refused to accept that there should be compensation for a property right. Why? They thought they might leave themselves open to litigation. So they fall back to the federal government and say: ‘You fix it. You do something about it.’ The state have to take some responsibility here. I agree with the member for O’Connor, who talked about just terms compensation. When in government in New South Wales we brought in just terms compensation, but this government—

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

Whose vote got you that?

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for New England lives on the dream that he once had the balance of power in New South Wales—the only time he was ever effective in a parliament, in all his years in politics! The fact is that the government are saying: ‘This is not property right. We’re not going to agree to a property right.’ If it was and there was compensation then it was tax deductible. It is as clear as that. If the member for New England and the member for Parramatta have any influence at all—and they say they have influence—they should talk to the state government about some of this. If the member for Gwydir had not stood up and looked for compensation for these people who were losing their water rights, there would be no compensation. The state government was dragged screaming and yelling to the fact that they had to match it—that is, the $55 million that was put on the table. That is where the compensation came from.

The real issue here is the taxation angle. I once headed up the House of Representatives Standing Committee on Environment and Heritage in the previous parliament. We did a study on catchment management. The bipartisan opinion was that if people have to have some interference in their property rights in the general good, in the good of the community, then the community have to compensate those people for that. I stand by that. The community have to compensate them for that. There is no argument about that. We did it for milk and we did it for sugar. I see no reason why we cannot have legislation in this parliament that allows this to be a tax deduction. I see no reason why it cannot be that way. As I said, the member for Gwydir, despite the fact that he is being attacked by the member for New England, stood up and said that these people were entitled to compensation. We have to now support that. I say to the government: have a look at milk, have a look at sugar and have a look at the way we dealt with those. The fact is that compensation payments were given to those industries because they had been disturbed by an act of the parliament. They should be tax deductible and they should be treated as capitalisation. (Time expired)

Peter Lindsay (Herbert, Liberal Party) Share this | Link to this | Hansard source

Order! The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.