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

In question time today the Prime Minister answered a question in relation to payment of compensation to groundwater users in six valleys across New South Wales. I think we saw a quite blatant admission today—it is quite disturbing actually, given that the Prime Minister is trying to engage the trust of water entitlement holders and irrigators et cetera across the nation in terms of the 10-point plan that he is attempting to put in place—of a breach of trust with groundwater users within the six valleys that I have referred to in New South Wales.

The Prime Minister confirmed today in question time that the intergovernmental agreement signed by the Commonwealth and the New South Wales government under the hand of the Australian Government Solicitor:

... had been structured and made in an environment where they were not intended to provide compensation for any perceived loss to farmers. In those circumstances they fell to be taxed as income.

This admission today verifies the various statements that I have been making for quite some time. The signatory to this intergovernmental agreement—which took place back in 2005 under the hand of the Australian Government Solicitor—the Prime Minister, knew that the irrigators concerned would be taxed when that document was put in place.

To see that sort of behaviour openly admitted to by the Prime Minister when he is trying to establish trust with other irrigators across the nation, I think is quite disgraceful. I alleged today that the Prime Minister had misrepresented himself and actually misled the parliament in question time. He danced around that particular issue but he also demonstrated that he misled the parliament again today.

In fact, there are five instances in terms of confirmation of the determination of the compensation payments. There are three letters from the Prime Minister, two to me and one to the Narrabri council. The minister for revenue at the time, Mal Brough, the current Minister for Revenue and Assistant Treasurer, Peter Dutton, and Helen Georgopoulos, a senior adviser in the Prime Minister’s own office, have all made statements over a period of time—19 December 2005, 8 June 2006, and through that period—that they believed that the adjustment assistant payments are a ‘matter for determination by the Australian tax office, consistent with existing law’. In a letter to me the Prime Minister said:

All grants under the Water Smart Australia programme are treated in a manner that is consistent with tax law. I am advised that assistance payments are generally assessable income for taxation purposes, subject to the provisions of the Income Tax Assessment Act (1997). For the sake of equity and consistency the government will not the altering these arrangements.

The government has gone into a deal with the New South Wales government knowing full well, but not informing the water entitlement holders through the tax office, that they could be taxed 47 per cent on the compensation payable for giving up their legal entitlements for the greater good of the community and for the sustainability of the resource. I think it was a clear admission by the Prime Minister today that he has breached faith with those six valley groundwater users and that there is a need now for a tax ruling. If we are to get serious about addressing the natural resource issues in this country, there has to be compensation. The Prime Minister actually says in the document:

... if we are ever going to settle this water thing, we will have to take back entitlements and people will be entitled to some compensation.

The other issue that has come out of question time today is that the Prime Minister is actually flagging compulsory acquisition of entitlements and not voluntary relinquishment, as has been discussed by Malcolm Turnbull and others. ‘We will have to take back entitlements,’ the Prime Minister said in question time today. I say to the Prime Minister: if past legislation demands that any future compensation arrangements be treated in terms of the capital gains provisions, and not under the Income Tax Act, as is the current case— (Time expired)