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

My question is to the Prime Minister and relates to statements made by the him at the Finley RSL Club on 26 October concerning water entitlement holders. Prime Minister, do you recall saying:

I think the most important thing in relation to water entitlements is for there to be a sense of justice for people who have paid good money for water and then have that allocation arbitrarily taken back without compensation. That is not something the Federal Government would do.

Prime Minister, given this statement and others made in this House, could you update the House on what the federal government is doing regarding the as yet unresolved taxation issues on compensation for groundwater users in New South Wales? When will the federal government move to ensure that these people get justice for giving up water for the environmental good of the nation?

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

I thank the member for New England for his question. What has happened in relation to those groundwater entitlements is that the federal government has provided money under the general umbrella of structural adjustment. The actual compensation is something that falls upon the withdrawing level of government, and the withdrawing level of government, as the member will know, is the state government. At the moment, the negotiation that is taking place is about the taxation status of the payments. There is no argument about the willingness of the federal government to help in structural adjustment. The argument is that—

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

Mr Windsor interjecting

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

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

You were part of it.

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

Order! The Chief Opposition Whip!

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

Something in the order of 95 per cent—

Roger Price (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

Mr Price interjecting

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

The Chief Opposition Whip is warned.

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

of the financial burden of exceptional circumstances is borne, rightly, by the federal government, and we don’t complain, but it is about time the New South Wales government did their bit. It is about time the New South Wales government stopped charging people in New South Wales for water they do not have. I can understand them, in a drought, cutting the allocation, but it is unconscionable, it is unfair and it is unjust that they should cut somebody’s allocation without compensating.

Tanya Plibersek (Sydney, Australian Labor Party, Shadow Minister for Childcare) Share this | Link to this | Hansard source

Ms Plibersek interjecting

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

The member for Sydney is on very thin ice.