Full Day Hansard Transcript (Legislative Council, 17 June 1997, Corrected Copy)

The President (The Hon. Max Frederick Willis) took the chair at 2.30 p.m.

The President offered the Prayers.

Bill read a third time.

Petitions praying against the increased tax on poker machines in registered clubs, received from the Hon R. T. M. Bull, the Hon. Patricia Forsythe, the Hon. M. J. Gallacher, the Hon. D. J. Gay, the Hon. Dr Marlene Goldsmith, the Hon. J. P. Hannaford, the Hon. J. H. Jobling, the Hon. M. R. Kersten, the Hon. D. F. Moppett, the Hon. J. F. Ryan and the Hon. J. M. Samios.

The Hon. M. R. EGAN (Treasurer, Minister for Energy, Minister for State and Regional Development, Minister Assisting the Premier, and Vice-President of the Executive Council) [2.43 p.m.]: I move:

That these bills be now read a second time.

The Hon. J. P. HANNAFORD (Leader of the Opposition) [2.43 p.m.]: Before the House are these seven appropriation bills. It has been the practice for the decade that I have been a member of Parliament for this Chamber to have a take-note debate on the budget once it is presented in the other House; and then, when the appropriation bills come before this Chamber, not to have a further detailed debate on them. I support that practice and agree that as a matter of principle it should be adhered to. The exception is when a bill is believed to be objectionable and the Opposition intends to vote against it or to move amendments to it. Any such debate should be limited to the specific purpose that is being pursued: to address the provisions that are considered offensive, or to ask the House to take an urgent decision on the objectionable bill.

The second reading debate should not be used as an opportunity to engage in a traditional full budget debate. Constitutionally, as clearly confirmed in advice to the Parliament, this House does not have the power to reject or amend appropriation bills. That applies to the Appropriation Bill, the Appropriation (Parliament) Bill, the Appropriation (Special Offices) Bill and the Appropriation (1996-97 Budget Variations) Bill. However, bills that seek to raise new taxes are in a totally different position. The Electricity Supply Amendment Bill, the Accommodation Levy Bill and the State Revenue Legislation Amendment Bill all generate new taxes in New South Wales.

Prior to the 1995 elections the Labor Party gave a clear commitment to the people of this State that it would not introduce any new taxes or increase taxes. That commitment has been broken by the Carr Labor Government on numerous occasions, but in this budget it has been broken in a most outrageous way. The Carr Labor Government seeks to introduce a totally new tax, the accommodation levy tax, or Carr’s bed tax. In addition, the Carr Government has imposed the totally new electricity supply levy tax. Further, by the State Revenue Legislation Amendment Bill, the Government proposes to increase a large number of taxes, the details of which I shall come to in a moment.

The Accommodation Levy Bill is particularly outrageous and totally negative legislation. As part of its bid for the 2000 Olympics the bid committee had secured from the hotel industry of this State a commitment not to take advantage of a successful
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bid and exploit accommodation prices. In fact, knowing that the spotlight would be on Sydney and New South Wales, the hotel industry gave a commitment to contain accommodation prices so that affordable accommodation would be available to the largest possible number of people in the world. The commitment that our hotel industry would not exploit the Olympic Games to its individual profit was an important element of the bid. That commitment has been maintained by the hotel industry.

The first institution to seek to exploit the Games to its own profit is the New South Wales Government; the bed tax is clearly an exploitation of the Olympics for the purposes of the State’s revenue, by which the Government seeks to raise $60-odd million. Ernst and Young has made an economic impact assessment of the bed tax, and no doubt most, if not all, honourable members would have received a copy of the Ernst and Young report. I think it is worthwhile to put on record the key findings from the Ernest and Young research into the effects of the proposed bed tax on the economy of New South Wales. The report states:

There has been a total decrease in gross State product per annum in 1997 dollars excluding the effects of lost investment on GSP. It is estimated at $166.5 million in a stabilised year. A stabilised year is defined as a year in which all hotels can choose whether to absorb the tax or pass it on to their guests. Currently it is estimated that there are at least $99.9 million of fixed contracts where the tax cannot be passed on to guests. The visitors that will be affected by the tax are: residents of New South Wales, 27 per cent; residents of Australia excluding New South Wales, 26.7 per cent; and international visitors, 46.3 per cent, a total of 100 per cent. The total bed tax that will be collected per year in 1997 dollars from existing hotels is estimated at $64.4 million. This figure does not allow for any expansion of available accommodation or increase in occupancy rates or room rates in the relevant areas. It is therefore expected that bed tax collections will increase in future years. This figure does not take into account the loss of State revenues, for example, payroll tax, that will result from the introduction of the bed tax.

The proposed 10 per cent bed tax will be borne by the guests at 8 per cent and the hotel at 2 per cent in a stabilised year. In the first year, and to a lesser extent the second year, the percentage borne by the hotel owners will be higher owing to the existence of the $99.9 million of contracts referred to in the first point.

The reduction in demand for Sydney CBD hotel rooms will have a direct flow-on effect in terms of fewer trips to the Blue Mountains; for example, fewer taxi rides, fewer restaurant meals, et cetera. Sydney CBD hotel guests’ expenditure is significantly greater than the average expenditure. We have estimated the reduction in total expenditure other than on rooms at $60.8 million per annum. The indirect economic impact arising from the reduction in the re-spending within the New South Wales economy is estimated at $69.1 million per annum. The economic impact is not expected to have a uniform effect. For example, conference delegates and visitors from emerging markets, for example, Taiwan and Korea, are very price sensitive. Conversely, visitors who are in Sydney on business and who choose to stay at a four or five star hotel are considerably less price sensitive.

A recent survey by JLW Transact indicated that investment of $825 million was being reconsidered as a result of the bed tax and that projects amounting to $210 million had been terminated. We have not estimated the negative economic impact on New South Wales or the effect on jobs arising from any deferred or cancelled investment. The economic impact of $166.5 million per annum will have an effect in terms of jobs lost. The total number of full-time equivalent employees in the affected hotels is currently 9,369. We estimate that at least 2.6 per cent of those or 243 full-time effective jobs will be lost. In addition, the flow-on effect in tourism and other industries will cause the loss of an additional 939 full-time effective jobs, giving a total loss of 1,182 full-time effective jobs.

The Opposition opposes the bed tax because it will result in a loss of revenue equal to three times the amount it will generate. It is totally irresponsible for a Government to introduce a bed tax that will have a deleterious effect on the State economy; and it is the height of irresponsibility for the Government to pursue this tax. The Government has promoted the tax as an impost on the rich and on tourists, but it will have a direct impact on the residents of New South Wales. The bed tax will impact not only on the central business district today but on the whole of New South Wales tomorrow. The Opposition considers the tax to be such a retrograde measure that it has given a commitment to repeal the legislation upon its return to government after the election on 27 March 1999. As emphasised by the Ernst and Young figures, the negative impact on the State’s economy is far too great to justify the retention of the tax.

Negotiations have been taking place on the legislation between honourable members in this House. Reverend the Hon. F. J. Nile has given notice that he will move that the bill be referred to a general purpose committee. That will enable the Ernst and Young study and the points raised by the affected industries to be independently assessed and reported upon by the committee. Because of the Government’s election promise of no new taxes, and the devastating effect the tax will have on the people of New South Wales, the bill should be referred to, and examined by, a general purpose committee. The committee should be given a reasonable time to take evidence from all affected parties; and I am confident it will show that Treasury’s decision to impose the bed tax was made without the benefit of the assessment impact study that is now available.

No doubt the committee will find that the Government did not take advice from other agencies and that Treasury at no time analysed its devastating impact on the community. Neither the Treasurer, the Cabinet nor the Government were informed about its
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devastating impact upon the economy of New South Wales. When that information is available it will be incumbent upon the House to reject the tax and to require the Government to reanalyse the approach that should be taken if it is still committed to pursuing such a tax. For that reason the Opposition will support the motion foreshadowed by Reverend the Hon. F. J. Nile. The Opposition believes that the committee should be given a reasonable period to complete its inquiries, but that it should report to the House by 1 September.

The second taxation bill that is equally offensive is the Electricity Supply Amendment Bill. The Government has virtuously tried to deregulate and encourage competition in electricity generation. As a result of those measures a number of significant savings have been achieved over the past couple of years and businesses have been able to negotiate better prices for electricity. The industry has acknowledged that. However, the industry having negotiated better prices and become more internationally competitive, the Government now believes it should deprive the industry of that competitive advantage by imposing a tax that will reap $100 million - thereby taking away all the benefits achieved through deregulation and the competition advantage drive.

It is the height of hypocrisy for the Minister and the Government to claim they have driven down prices in the electricity industry and to then impose a tax on distributors that will drive up prices. One company in the western Sydney area of which I am aware, which employed 500 people, had been losing approximately $500,000 a year. It was on-sold to a Victorian company. As a result of the electricity reforms, which have had a significant impact on the aluminium industry, the company became profitable and it seemed that it would survive. It decided to remain in New South Wales.

The Hon. M. R. Egan: Which firm is that?

The Hon. J. P. HANNAFORD: I will give the Minister the information privately. Representatives of a number of companies have outlined to me the impact the legislation will have on them. Those companies, because they are both nationally and internationally competitive with Victorian and Queensland companies, are reluctant to allow their names to be used and to identify the impact on them of the legislation as that will affect their competitiveness. I believe that in the next 12 months a great deal more will be heard about the firm to which I have referred, because as a direct result of the proposed tax it will go back into the red.

Representatives of the company have indicated to me that there is no way it could again become profitable as it has already re-formed itself completely and cannot recover. The company operates in another State and will have to close its New South Wales operations and consolidate its industries. The closing down of that one business alone will lead to the loss of 500 jobs. I am told that similar losses will be replicated right across the State. A number of mines will be significantly affected. The two mines in Broken Hill will suffer a significant impact as a result of the Minister’s decision. I would like to hear the Minister try to explain to the mine employees why the competitive advantage of the mines and their jobs are being put at risk.

The Hon. M. R. Egan: The reductions are much larger than the tax increase.

The Hon. J. P. HANNAFORD: At least the Minister acknowledges that he has decided to impose the tax because of the reductions achieved by the companies. He has decided that the State should reap the benefits of electricity reform by taxing the distributors and taking some of the profits. So much for the Robin Hood budget! He is Robin, and he is robbin’ people in this State of jobs as a direct result of the budget. I could continue to list the large number of companies in the Hunter Valley, the Illawarra and Western Sydney that will be significantly affected by the Minister’s decision to expropriate $100 million from the distributors, thus forcing up prices. Those companies will not be the only ones affected. As the electricity industry becomes more competitive, more companies will be affected. Today it may be only the large companies that are affected, but tomorrow it will be the whole of manufacturing industry.

The bill clearly provides that the Minister will have to have the power to extend the operation of the legislation and to increase the size of the levy. The Government has adopted a particular approach and it can wear the consequences of it. However, the Opposition does not believe that the passage of legislation such as this is in the interests of New South Wales and of industry in New South Wales. The Government should make itself aware of the impact of the legislation. The Government has received no advice whatsoever on the impact of the legislation upon these major employers. The legislation should be referred to the General Purposes Standing Committee because I understand that provided the committee meets in closed session the companies to which I have referred will be prepared to put information on the record.

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The Government will then understand that the academic decision was driven by the Treasurer. He lost on some of the other measures he proposed in his original round of budget deliberations and had to come up with these types of taxes. The Treasurer should accept that the impact of these taxes on employment in New South Wales will be far more devastating than the benefit he hopes to derive by taking these moneys out of the State’s economy. The Opposition finds two parts of the State Revenue Legislation Amendment Bill totally objectionable and reprehensible. The first is the proposal to impose a land tax levy on private homes. One thing that seems to have been consistent in the taxation laws of this country has been the protection of a person’s private home from the effect of land tax.

The first government to depart from that principle was the last Labor Government in Victoria, which imposed a land tax levy similar to that proposed in the bill on private homes with a value of more than $1 million. The words were exactly the same. Almost the same set of words was written for Cain and Kirner as has been written for Egan and Carr. It was claimed to be a tax on the rich; hospitals, schools and police stations must remain open and the rich should pay for the benefits of the poor. Originally the levy applied to private homes worth more than $1 million. As a result of changes driven by successive Labor governments, the value of private homes subject to the levy is now approximately $200,000. That is exactly what will happen in New South Wales if the Government is allowed to impose this tax. The coalition has given a commitment to the people of New South Wales that under no circumstances should private homes be the subject of such a tax. No private residence should be subject to such tax.

Finally I want to refer to the outrageous 30 per cent increase in tax on poker machine revenue. The club industry has made, and continues to make, an outstanding contribution to New South Wales communities. It has made a significant contribution to community activities. Yet less than six months after a major confrontation about changes in relativities in the liquor and club industries and after the impact of all the changes during the past two years in those industries the Government has proposed a 30 per cent increase in tax on clubs. It is no wonder that the club industry has gone into open revolt right across New South Wales. The increased tax will not only affect the ability of clubs to sustain their support for community organisations; it will also undermine the viable operation of a number of clubs. If the Government is allowed to get away with this impost the large clubs may suffer today but the small clubs tomorrow will suffer tomorrow.

Petitions signed by in excess of 40,000 people have been presented to the Parliament today. That is only the trickle before the flood of petitions that the Parliament will receive indicating the outrage of club members and those they support. The Government has sought to rob the poor to sustain its political future. The Carr-Egan Government has pursued a number of budget options such as the $55 million education payment - $50 per child, to be made next February - to try to bolster its political future. That type of cynical political exercise will be rejected by the people of New South Wales, who will remember that the Government sought to rip them off in a political vote-buying exercise. The cynicism of politicians and governments is well recognised by the people and they reject it. The Government will be rejected by the people of New South Wales on 27 March 1999 because taxes such as those presented in these bills will be remembered by the people of New South Wales.

The Opposition has given a commitment to the club movement, which I now restate, that it will repeal this legislation on its return to the Treasury benches on 27 March 1999. It is unusual for revenue bills to be so strenuously opposed in the Parliament. It is a long time since so many revenue bills have been so stridently opposed by both the Opposition and the community. That opposition clearly indicates that the Government’s judgment and its budget are totally awry, and that the Treasurer’s management of the Treasury and the finances of this State is completely out of control. Although the Treasurer may well be condemned by factions of his own party for his attempt to salvage his economic mismanagement by privatising the electricity industry, he will be condemned by the whole of the community for the financial mismanagement that has led to these vicious taxes, which have been imposed in breach of the Government’s commitment to the people of New South Wales.

The Opposition has made a commitment to repeal the taxes, and it stands by that commitment. I understand that proposals from some of the crossbenchers will come before the House that may or may not have arisen out of deals with the Government. I give a clear commitment that the Opposition is not prepared to support those sorts of measures. I recall that the Treasurer commented that a good government does not give in to blackmail. One thing is certain: New South Wales does not have a good government. The Government’s action on these taxes clearly emphasises that it has given in to blackmail.

The Hon. R. T. M. BULL (Deputy Leader of the Opposition) [3.14 p.m.]: I join with the Leader
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of the Opposition in speaking vehemently against the increase in tax on poker machines in registered clubs. No strategy underlies this year’s budget. How could the Government come up at the last minute with these extraordinary ideas on taxation without consulting the Minister for Tourism, the Minister for Gaming and Racing, or any other Cabinet Ministers for that matter? The Government will rue the day the Treasurer cooked up these crazy ideas with his Treasury colleagues. Several of these taxation measures will come back and bite the Australian Labor Party very hard indeed. For some reason, the Treasurer and some of his colleagues do not understand the ramifications of these taxes.

The Leader of the Opposition spoke at length about the bed tax. I will not dwell on that, except to say that it is a new tax, and the Carr Government was elected on the promise that it would not introduce or increase taxes. Yet, without a second thought and without Cabinet having considered the matter, the first goods and services tax in New South Wales has now been imposed. The Treasurer’s Federal Labor colleagues vehemently oppose such a tax, yet the New South Wales Labor Government will gladly impose a GST on hoteliers in the Sydney central business district and on those who use the beds in their hotels. Does the Treasurer understand who sleeps in Sydney CBD accommodation? Does he know that 31 per cent of the people who use accommodation in the Sydney CBD come from New South Wales? Obviously he does not.

Does he know that the second largest group that uses accommodation in the Sydney CBD is from Victoria? Does he understand that the people he is penalising are not wealthy tourists from overseas but the people from country and regional New South Wales, from places like Temora, where the Hon. Elisabeth Kirkby chooses to reside? She should go back to Temora and explain why she supports the bed tax and why she will not support the move by the Opposition to stop the increase on club poker machine tax. She has no integrity at all when she tries to speak for country and regional people in New South Wales. The House will hear from her later on. She has no integrity at all.

The Hon. I. M. Macdonald: On a point of order. The Deputy Leader of the Opposition should be addressing the Chair and not slinging insults directly at the Hon. Elisabeth Kirkby.

The DEPUTY-PRESIDENT (The Hon. D. J. Gay): Order! There is no point of order.

The Hon. Elisabeth Kirkby: On a point of order. I ask the Deputy Leader of the Opposition to withdraw the remark that I have no integrity. I seek an apology.

The Hon. R. T. M. BULL: On the point of order. The point that I made was that the honourable member has no integrity in representing country and regional people of New South Wales, and the record will prove that that is what I said. If that issue is the subject of the withdrawal, I will withdraw that, but I will not withdraw the simple statement that the honourable member has no integrity.

The Hon. I. M. Macdonald: On the point of order. That is unsatisfactory. If that sort of withdrawal is permitted, the House would become a shambles. The Deputy Leader of the Opposition should be directed to withdraw unreservedly.

The DEPUTY-PRESIDENT: Order! There is no point of order.

The Hon. Virginia Chadwick: On a point of order. The honourable member who takes exception to the remark of another member should defend herself; it is not for another member to act as umpire.

The DEPUTY-PRESIDENT: Order! It is for the Chair to make that decision.

The Hon. Elisabeth Kirkby: On the point of order. I am certain that the record will show that when the Deputy Leader of the Opposition stated that I had no integrity, it was at the end of his remarks. It had nothing to do with my right to represent rural dwellers or country people of New South Wales. It was a gratuitous insult, and I seek to have it withdrawn unreservedly.

The Hon. R. T. M. BULL: I withdraw it. Members of the Government and the crossbenchers should understand that the bed tax is a tax on country and regional people who visit Sydney. Approximately 31 per cent of those who will be affected by it come from Temora, Narrandera, Wagga Wagga, Coffs Harbour and from all over New South Wales. Honourable members will approve the tax if they do not support attempts by the Opposition to defeat it. The bed tax is an extraordinary decision of the Treasurer. It was made out of the blue, without any consultation at all with the Minister for Tourism or, I assume, the Treasurer’s other Cabinet colleagues. Yet the Treasurer is happy to wear all the opprobrium that has been heaped upon the Government, and will be heaped on the Government for the next two years. He will wear it - so will Brian Langton, Richard Face and all other Government members who simply
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do not understand the tax. The Treasurer’s smiles and his body language during my remarks indicate that he has no intention of trying to understand it.

The increase in poker machine tax and the bed tax are clearly taxes on jobs. In the past couple of months the Labor Government in New South Wales has made a great deal of noise in the city and Hunter media about the withdrawal of BHP from the Hunter region, the 2,500 jobs that will be lost and the money the Government intends to spend in the region. Richard Face, who assists the Premier on Hunter development, is doing somersaults with a pike trying to work out what he will do about it. Everyone is having meetings about it and everyone, including the Opposition, is concerned about it. So why on earth would the Government increase tax on poker machines and impose a bed tax that will result in the loss of well in excess of 2,500 jobs in New South Wales? It is more than a little extraordinary! The key issue in this debate is jobs. It is about the Penrith Panthers club, the Rich River Golf Club at Moama and every other club that will be affected by the tax and will therefore not have money to spend in their own areas.

The Hon. M. R. Egan: Which club was that?

The Hon. R. T. M. BULL: The Rich River Golf Club. I will come to that later. This debate is about local clubs giving less money to the community. I accept the criticism by the Government that not all of the $700 million that is given to community activities every year is in the form of handouts. The vast majority of it is invested in building and construction, but does the construction industry not create jobs? If there is a construction job at the Narrandera Ex-servicemen’s Club, jobs are created in the town. Local builders provide jobs for subcontractors and fitters, and the local chap who sells carpet will supply the new carpet for the floor. All of the money is reinvested in the local communities. The Government intends to take out more than $64 million. It is more than $64 million because the Treasurer based his figures on the wrong year; I hope he has spoken to Treasury officials about that. It is a great deal more than $64 million or $78 million in one year; it is over $120 million, but I am sure the Treasurer knew that. Approximately $120 million will be removed from little local economies such as Tooleybuc, Wentworth, Lightning Ridge, the Tweed and the Hunter - the area the Government is very concerned about. All of these areas will suffer from job losses.

[Interruption]

The Hon. Dr Meredith Burgmann should listen for a little while and not interrupt. She should just keep to her little left-wing faction group. She should not interrupt what would otherwise be a good debate.

The Hon. M. R. Egan: You should apologise to the Hon. Patricia Staunton.

The Hon. R. T. M. BULL: I am happy to apologise to the Hon. Patricia Staunton. If she continues to mix with the Hon. Dr Meredith Burgmann and the Hon. Ann Symonds, I will not be surprised if she has joined the left wing. This debate is about jobs in small communities. The Labor Party used to represent jobs, labourers and employees, but now it could not care less about jobs.

[Interruption]

The Hon. Dr Meredith Burgmann does not represent anyone except the left wing. She plots in little packs and huddles. She plots against the good schemes that the Treasurer comes up with from time to time - although that is not what has happened on this occasion. She is always plotting. She should talk to the members of registered clubs. She should go back to Orange, a town she visited a few weeks ago, and talk to the people there about the effect this tax will have on the Orange community. If she does not she will have no authority to speak about anything. In fact, in the left-wing faction she would not be able to speak about anything.

This increase in poker machine tax is all about jobs. It is all about money staying in local communities and suburbs. The tax will result in a cut in services to members of the registered clubs, a cut of up to 10,000 jobs, a cut in sponsorship of sporting bodies, a cut in entertainment, a cut in free hall hire to the community and a cut in future construction projects. These cuts will not only adversely affect hospitals and charities, sporting teams and club members, they will also affect numerous ancillary industries, for instance, tourism industry operators, construction companies, uniform distributors, et cetera. The Government seeks to impose this tax burden on one of the largest employment sectors of the economy, the registered clubs industry. We have been bleeding for two months about the loss of 2,500 jobs in the Hunter because of the closure of BHP, yet the Government could not care less about the loss of these 10,000 jobs from the registered clubs industry.

Taxing this sector of the economy will effectively create greater costs and will force clubs to cut back on costs in other areas, which means they will have no choice but to lower employment numbers. The 30 per cent tax slug will draw in revenue for the Government from an industry that is
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already operating on skinny margins. The industry will somehow have to decrease its costs. It cannot raise membership fees or the price of food or beverages, not only because that will defeat the purpose of the clubs, but, more significantly, because business cannot simply raise prices in the present low-inflation environment. That would be business suicide.

If clubs cannot increase their prices they will have to slash costs somewhere else, and the most expensive component of variable costs in any business is employment. The extra money that clubs will be taxed will go to the Government rather than directly back into the local communities. A smaller proportion of money from clubs will go back into their communities, so those communities will be worse off because they will be receiving less money. Areas such as Marrickville, Penrith and South Sydney will suffer the most because they will receive a less than proportionate distribution of money spent in the clubs in those areas.

Districts with bigger clubs receive less and will support areas with smaller clubs. That is inequitable. A couple of personal visits to the local club will enable one to understand the issue. It is a pity that some members of the Government, particularly members of the upper House who are busy plotting on the backbench, have not have taken the time to visit their local clubs. I have visited a number of clubs and know of their importance to members of the local communities. The local club is a sanctuary for the community and its visitors. It provides a place for people, especially the aged, to congregate. There would be no incentives for aged pensioners to leave their homes if there were no local clubs. Many pensioners would remain cocooned in their burrows in a state of decay and loneliness. Local clubs are therapeutic.

The Hon. Dr Meredith Burgmann: Say that again! Is this the same speech?

The Hon. R. T. M. BULL: Does the Hon. Dr Meredith Burgmann understand how important registered clubs are to the aged in our community?

The Hon. Dr Meredith Burgmann: I thought you were talking about rabbits.

The Hon. R. T. M. BULL: I do not think the honourable member understands. She regards this issue as frivolous and funny. Clubs, which organise interactive games such as bingo, are a public gathering point. They are welcoming and provide entertainment and inexpensive and well-balanced meals. The money that is spent at clubs goes back into the community and is used to sponsor junior and senior sporting teams. Clubs also provide meals on wheels and the like. The club movement is unique. What other organisation provides such facilities for the community? One has only to visit large retirement areas on the north coast to realise the benefit to retirees of registered clubs. Clubs are their life support; they enable social interaction with other people. Some aged people would have nothing and would remain lonely if registered clubs did not provide cheap meals, games, entertainment and other activities.

I deal now with some of the issues involving individual clubs. What understanding of this issue do members of the Australian Labor Party have? Do they realise that of the 27 clubs in Sydney, Newcastle, the central coast and Wollongong that face a tax increase of over $1 million per annum as a result of the New South Wales budget, 23, or 85 per cent, are located in Labor Party electorates; 3, or 12 per cent, are located in coalition electorates; and one is located in an electorate held by an Independent. Of the 32 clubs in Newcastle, the central coast and Wollongong, which face a tax increase of up to $1.5 million per annum as a result of the New South Wales budget, 31 are located in Labor Party electorates and one is located in a coalition electorate. Over 80 per cent of all clubs which face a tax increase of over $20,000 per annum are located in Labor Party electorates. There is a concentration of affected clubs in marginal Labor Party electorates, including Gladesville, Parramatta and Badgerys Creek.

A tax on poker machine revenue is a tax on one of the main leisure activities of the average Labor Party voter. Clubs provide employment and services in economically depressed areas of New South Wales, particularly western Sydney, the Illawarra and Newcastle. The Premier pledged $10 million for Newcastle in the wake of the closure of BHP’s steel operations in that city. The new poker machine tax will cost Newcastle clubs and clubs on the central coast close to $10 million. Is Mr Carr giving with one hand and taking away with the other? Obviously he is. Members of the Australian Labor Party have no understanding of this issue. They do not care and do not want to know, because they believe that the Carr-led Labor Government will be re-elected regardless of the damage it inflicts on local electorates and communities. The Opposition has news for the Government.

I respond now to some of the remarks made by the Treasurer regarding Penrith Panthers club, which the Treasurer seems to take some delight in talking about. Does the Treasurer know the
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difference between gross revenue and profit? If he does not, it should be a cause for concern considering he is in charge of the State’s finances. If he does know the difference, why does he keep using a definition that every businessman and businesswoman knows is wrong? He has claimed repeatedly that in 1996 the Penrith Panthers made a $38 million profit from poker machines. That so-called profit was really gross revenue out of which the Penrith Panthers paid more than $9 million in poker machine tax. In addition, wages, promotions, leases on machines, power costs, interest and many other expenses had to be paid. In 1996 the Penrith Panthers made a final profit of $4.4 million. If the new rate of 30 per cent had been in place in 1996 that club’s final profit would have been about $500,000.

Since 1984 the Penrith Panthers club has paid more than $60 million in poker machine tax alone. In the same period it made total profits of $12.9 million and donated more than $5 million to community organisations, not including donations to junior and senior rugby league. This year, before the new tax rate was announced, without consultation or warning, the club was committed to additional building projects which saw its borrowings increase to $70 million. After the announcement the club shelved other building plans totalling $14 million. The Treasurer, the Government and members of the Australian Labor Party do not understand. They are generating a great deal of misinformation about the club movement and about Penrith Panthers. How many members of the Government know that sporting teams comprising 60,000 young men and women receive donations from Penrith Panthers every year? I think that is a pretty good effort.

The Penrith Panthers club might be the biggest club and it might make the biggest profit but it services a very big area. People in the western suburbs of Sydney have a lot to thank Penrith Panthers for. The 60,000 young men and women who benefit from sporting donations and the mothers and fathers of those young men and women will be outraged at the Government’s decision to increase poker machine tax. All honourable members would be aware of the announcement the club made yesterday that 70 organisations would no longer receive donations. What is the member for Penrith saying and doing about this matter? She does not know anything about this issue and does not care. Has she talked to people in the community about this matter? I doubt it! This Labor Government does not care and does not want to know either. What other impositions will clubs have to face as a result of this tax? Gladesville Returned Services League club, which is situated in a Labor electorate, will no longer be able to donate $10,000 to war widows and grant $65,000 to youth clubs. It will also have to reduce sports grants by $40,000. Lismore RSL club, which is out in the bush -

The Hon. M. R. Kersten: Members of the Labor Party are useless. They only go out there once a year.

The Hon. R. T. M. BULL: They are absolutely useless! They are too busy plotting against the Treasurer and the people running the Government. The poor old left-wing has nothing to do but plot. Why do members of the Government not talk to people in the clubs? Lismore RSL club anticipates a withdrawal of $5,000 in local sponsorships, $3,000 in donations to local charities and - wait for it! - 12 jobs at the club are threatened. Unemployment on the north coast is already high enough. The Wagga Wagga RSL Club anticipates withdrawing a grant of $40,000 to RSL retirement villages, funding of $40,000 to local sporting groups and charitable donations of $10,000. The jobs of 50 club employees are threatened. The Government’s attitude is: that is only 50 jobs; it is not 2,500 jobs; we are not talking about jobs in Newcastle, we are only talking about Wagga Wagga; don’t worry about it. The Oak Flats Bowling Club will be forced to withdraw grants of $300,000 to local charities and local sponsorship grants of $700,000, and has threatened to dismiss 28 staff.

The City of Bankstown RSL Community Club has threatened to put off 40 staff. The Illawarra Leagues Club threatens to dismiss 23 staff. The Hornsby RSL Club has threatened to dismiss 120 staff. The Albury Commercial Club anticipates withdrawing donations of $80,000. The Mulwala Services Club will be forced to withdraw community donations of $370,000 and threatens to dismiss 30 staff. Coffs Harbour Ex-Services Club has threatened to put off 60 staff. Lithgow Workmen’s Club - a club in which I should have thought the Labor Party had a particular interest - has threatened to dismiss 110 staff. The member for Bathurst has endorsed this move of the Labor Government, which will force 110 people out of work. Richmond Ex-Servicemen’s Club threatens to dismiss 140 staff.

The Hon. Dr B. P. V. Pezzutti: What is happening at Lismore Workers Club?

The Hon. R. T. M. BULL: I will mention them all eventually. Newcastle Workers Club anticipates withdrawing a grant of $100,000 to the Newcastle Knights rugby league team and donations to local charities of $20,000. It has threatened to put off 45 staff. That is the last thing Newcastle needs.
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And so it goes on. The Merimbula-Imlay Bowling Club - a club in one of our southern tourist destinations - threatens to dismiss 84 staff. The Cooma Ex-Serviceman’s Club has withdrawn grants of $60,000 to sporting clubs, $3,500 to Legacy, $2,000 to the RSL club, $2,000 to the Yeltamhee hostel and $4,000 to the Cooma Country Festival. I could refer to many other clubs that will be be affected by this extraordinary decision of the Government to impose an outrageous tax on the mothers, fathers and children of this State. I have in my possession a letter addressed to Mr Mick Clough, the member for Bathurst, from the Village United Rugby League Football Club. Mick Clough has been well and truly branded as Gunna - he is always "gunna" resign, but he just cannot quite do it. The letter states:

As secretary of villages united R.L.F.C. I would like to take the time to explain who we are & what competition we play in -

he obviously does not know -

Some years ago the merging interests of locals from Rockley & Perthville decided to enter a side in the MIDWEST RUGBY LEAGUE competition also known as group ten 2nd division but we prefer to be called M.W.R.L. The current comp is as follows.
Carcoar
Kandos Rylstone
Gulgong
Dunedoo
Cargo
Portland
Wallerawang
Lithgow Bears
Villages united
Not so long ago this group had 16 clubs in 1994. Those lost through rising costs are:
Blackheath
Mudgee . . .
Bathurst Charleston’s
C.S.U. Mitchell
Ophir Knights from Orange
Bathurst Mozzies
Orange Old Boys

As you can see Mr Clough our competition is no group ten & we cannot compete with group ten clubs, we at villages survive from the sponsorship of group ten clubs like the Bathurst Leagues Club which help us purchase our playing jumpers from their kind sponsorship.
Without them we cannot survive & for that reason we at Villages cannot & will not support the STATE GOVERNMENT’S POKER MACHINE TAX OF 33 %.
To our lifeline, if this is the case we will end up like the creatures in JURASSIC PARK (FOSSILS) like teams of Cullen Bullen, Spring Hill, Rockley, to name a few. Mr Clough we are pleading for our future & need your help. REPEAL this TAX.

What did Mick Clough do? Nothing.

The Hon. M. R. Kersten: He was gunna, though.

The Hon. R. T. M. BULL: That is right, he was gunna. I have also a letter written by Murray Downs Golf and Country Club to Mr Small, the local member, which states:

In relation to our telephone conversation regarding the proposed increase in Poker Machine Tax in the new State Budget.

We would appreciate it if you would convey to the Shadow Minister . . . the impact this increase will have on Murray Downs and all the clubs along the Murray. This will be devastating.

As you are already aware with the introduction of gaming in Victoria, poker machine revenue has decreased dramatically and now with this increase in tax it will make it nearly impossible to survive.

In particular Murray Downs is already in Receivership and trying extremely hard to trade our way out of the our situation and have to this extent cut our expenditure to the point where, to make up another $300,000 would be impossible.

I know there is at least another 10 clubs along the Murray who are in a similar situation, where this tax will be the final nail in the coffin.

I implore you to plead our situation to your party as to the effect that this tax will have on the whole community.

The Murray Downs Golf and Country Club is already in receivership, trying extremely hard to trade its way out of the situation. That club will be hit with another $300,000. Can the Leader of the House approve of this tax under these circumstances? Is this what he wants to achieve? I do not think that he knows where Murray Downs is. This club is typical of other clubs along the Murray, which have already been hit extraordinarily hard by the introduction of poker machines into Victoria. This additional tax will have a debilitating, and ultimately terminal, effect on a number of clubs. The Harbord Diggers, a very successful club, has donated more than $1 million to the Manly Hospital. I would have thought such generosity was worthy of recognition by the Government. Such a donation has saved the Government the cost of a couple of CT scanners.

The Hon. M. J. Gallacher: And how has it rewarded them?

The Hon. R. T. M. BULL: The Government has rewarded the club and others like it with this huge increase in tax, an extra $800,000 in tax. Thank you very much, Mr Egan! The Government has said, "We acknowledge your receipt from the CT scanners. Here is your account for an extra $800,000." The Manly-Warringah Rugby League Club Ltd, which is a very successful club on the
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peninsula, has been financially supporting 17 subclubs, including bridge, camera, chess, cricket, dance, euchre, fishing, men’s and ladies golf, squash, theatrical, tennis, toastmasters, indoor sports, snooker, darts, bowls and table tennis. The Manly club has advised:

Each year Manly Leagues also offers six secondary school scholarships, three technical college scholarships and six tertiary scholarships. The candidates have impeccable credentials with TER’s as high as 100 . . .

One of the biggest attractions on the Peninsula is Rugby League and the Leagues Club’s original charter emphasises the propagation of Rugby League. As a result of Murdoch trying to highjack the game, the Manly-Warringah Rugby League Football Club, like other ARL football clubs, was forced into a position of competing for player services at inflated prices and naturally the costs of operating a football side have escalated accordingly. Such costs are contracted and when the Leagues Club looks at re-distributing its funds to pay additional tax, it is not as simple as reducing football grants in the short term.

The club already owes almost $8 million and will have to pay approximately $865,000 extra tax per year because of this increase. I thank my colleague the Hon. R. B. Rowland Smith for advising me of the situation at Orange Ex-Servicemen’s Club. The proposed increase in poker machine tax will cost that club an extra $449,000 in the full financial year. Members of the Labor Party just returned from a visit to Orange. Obviously they did not go to the ex-servicemen’s club. Interest on building loans amounts to $295,000 in one year. The 1996 profit of $2 million would reduce to $1.2 million, or a 60 per cent decrease over the year. Principal repayments on the loan account are a further $456,000 per year, so the club would have its cash flow reduced by $1.2 million, or 60 per cent.

That club’s donations to charitable and community organisations are quite dramatic, as one would expect of a very good club, one of the most successful in the central west. It donated $10,000 to the Orange 150th year celebrations, $17,500 to TAFE for equipment, $10,000 to the Orange Base Hospital for equipment purchase, $1,400 for musical scholarships, and $2,000 for highs school scholarships. It made donations also to school libraries, Careflight, and Legacy. The club donated $17,500 for community fund raising. It also contributed $3,000 to the Anson Street School for the Disabled, as well as $8,500 to the Police-Citizens Youth Club. All of those substantial donations will be put at risk by this tax. A letter from a Newcastle firm, H. W. Frost Equipment Pty Ltd, stated:

Our company, based in Newcastle, was established in 1885, and is one of only a hand full of privately owned 5th generation companies still actively trading in Newcastle. Our company, who over the years has grown to now provide employment for some 60 families, provides services to the building, security and catering industries, and our coverage extends to the whole of New South Wales . . .

Since your announcement of these changes, we have been advised by our clients and industry associates of immediate halts to works in progress and proposed works which total in excess of 30 million dollars locally.

That is $30 million being spent locally in Newcastle by just one business. This so-called sympathetic Government is not worried about Newcastle and employment prospects there. It is not concerned about the workers shed by BHP. It is not concerned that $30 million contributed to the Newcastle economy by this one Newcastle company will be put at risk. Cordukes, another very successful building company, stated:

The club industry directly generates approximately $600,000,000 worth of building works a year in New South Wales, in the form of extensions, renovations and new buildings. A further sum which is spent on preventative and repair maintenance of their premises and amenities substantially increases this figure and the number employed both directly and indirectly.

As a result of this tax clubs will be reconsidering whether or not to go ahead with proposed building extensions. This legislation that proposes to increase taxes puts at risk $600 million worth of building activity. I should have thought that a Treasurer interested in employment levels, maintenance and creation of jobs, and the generation of business in New South Wales would not have to go to California, Japan or anywhere else in an endeavour to generate jobs; he could save jobs by not threatening $600 million worth of building works. It is a disgrace that the Australian Labor Party would jeopardise $600 million worth of building works in New South Wales because of this stupid tax.

The Singleton Returned Servicemen’s Club Limited is one of the unlucky clubs. It commenced a $1.5 million building program the day before the increase in poker machine tax was announced. The club has a debt of $2.4 million on the Alroy Park complex. What hope do small clubs like the Singleton club have of surviving, let alone expanding? For the year ended 30 June 1996 that club spent more than $70,000 on local charities. For the first 10 months of the current year it has contributed $52,000 to local charities. I repeat, what hope have clubs such as the Singleton Returned Servicemen’s Club Limited of surviving? That is a very important club to the town of Singleton. It supports local charities and community organisations by spending money in the town.

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I now refer to the Tweed area, an extremely important part of this State. This area takes Newcastle head-on in the tourism market. It is this State’s bulwark in the tourism market against the Gold Coast and the predators to our north. Over the past seven years clubs in the Tweed have made the following contributions to the local economy and to the State Government: payments in wages to employees, $275 million; payments of State government taxes, $165 million; donations to charitable organisations, $2.7 million; and provision of sporting facilities for members and visitors, $91 million. The 14 clubs in the Tweed Valley encompass the Murwillumbah, Tweed Heads, Kingscliff and Cabarita regions adjacent to the Queensland border. The Tweed Valley already has a 17 per cent unemployment rate, which is double the State average, and youth unemployment of more than 30 per cent. But the Labor Party would close that industry down.

The bulwark of tourism in New South Wales is trying to win hard-earned tourist dollars in competition with Queensland’s Gold Coast, yet our sympathetic Labor Government could not care less. Two events in recent times have had an enormous impact on the trade of the Tweed clubs: the opening of Jupiter’s casino and the introduction of poker machines into clubs and hotels in Queensland. The south-east corner of Queensland now has 15,000 poker machines in casinos, clubs and hotels, and legislation has been passed to further increase the number of machines allowed in licensed premises. The decrease in trade impacts adversely on the amount of combined total tax that the Tweed clubs have returned to the State Treasury. I hope honourable members are listening to this important point.

Since 1992, when Queensland introduced gaming into clubs and hotels, the amount of taxes paid by the Tweed clubs has declined by 21 per cent, from $23 million to $18 million. I stress that the Tweed clubs gain 75 per cent of their revenue from interstate and international visitors. This interstate revenue is paid back to State Treasury via poker machine tax and liquor licence fees. When three clubs closed in the Tweed, more than 70 per cent of the revenue spent at those clubs went over the border to Queensland, lost forever to New South Wales. The Tweed clubs will be placed under extreme hardship should this increase in tax be passed by Parliament. The increase in tax will cost the Tweed clubs an additional $5 million, with the tax moving from 22.5 per cent to 30 per cent, and many clubs will not be able to absorb this increase.

The combined 1996 profit of all Tweed clubs was only $2.4 million, so that increase in tax of $5 million will impact on the combined result in a direct loss of more than $2.5 million. In a region of such fierce competition and reliance on the club industry for business, this can only result in severe hardship for all the clubs of the Tweed, the employees of the clubs who will lose their jobs and for the local businesses that rely on the clubs for their existence. The estimated loss in the Tweed from this tax will be 2,000 jobs. I repeat, that is in an area that has 30 per cent of its youth unemployed. That is an utter disgrace for a government that talks about jobs and economic industry in New South Wales. The Carr Labor Government could not care less.

It will also mean that the State Government, which has been provided with so much revenue from the Tweed clubs, will have to find the lost revenue elsewhere because the club industry will be devastated. I refer now to the Rich River Golf Club, which seemed to attract the attention of the Treasurer when I mentioned it earlier. The Rich River Golf Club will be required to pay an additional $307,000 tax each year. This will force it to close the Moama Sports Club, a subsidiary club that is the key social, meeting and changing venue for sporting associations that run the local football, netball, harness racing, bike riding, cricket and soccer activities. The club is also responsible for maintaining the fields and facilities for these sports. That cost will now have to be met by the local council and community. The golf club employs 141 staff, a large number of whom will be facing a reduction in hours or retrenchment.

Pursuant to sessional orders business interrupted.

The Hon. JENNIFER GARDINER: My question without notice is directed to the Treasurer. Is it a fact that the coveted role of advising the special committee chaired by former Australian Labor Party chairman, Mr Bob Hogg, given to Deutsche Morgan Grenfell, was not put out to tender? What selection process did the Minister use to choose the adviser to this committee? How much are New South Wales taxpayers paying for the services of Deutsche Morgan Grenfell? Is Deutsche Morgan Grenfell to be paid a success fee if the
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privatisation of the New South Wales electricity industry goes ahead?

The Hon. M. R. EGAN: I have to admit that I am not aware of the process or procedures by which Deutsche Morgan Grenfell was appointed, but I will ascertain the details.

The Hon. JENNIFER GARDINER: I ask a supplementary question. When the Minister ascertains the details of that arrangement will he give a guarantee that the ongoing advisory consultancy positions associated with the privatisation process will also be put out to tender?

The Hon. M. R. EGAN: My understanding is that that would certainly be the case. There is no reason why Deutsche Morgan Grenfell, having been given the job of advising the Hogg committee, would necessarily automatically receive any other work from the Government, should work be necessary with any subsequent privatisation.

The Hon. FRANCA ARENA: I address my question without notice to the Minister for Community Services, Minister for Aged Services, and Minister for Disability Services. Will the Minister advise the House of the features of the proposed new juvenile justice centre at Dubbo?

The Hon. R. D. DYER: I am pleased to advise the House that progress on the new 30-bed juvenile justice centre on the outskirts of Dubbo is proceeding according to schedule. Last Thursday I had the pleasure of visiting Dubbo to inspect the site, where preliminary construction work is under way. I also examined in detail the plans for the centre, which were provided by the Department of Public Works and Services. The unveiling of the plans was also an opportunity for the people involved in juvenile justice, community services and other related areas to see in detail what the new centre will look like.

The $7.5 million Dubbo juvenile justice centre will be in the centre of a 16.5 hectare site about four kilometres from Dubbo. The centre will be enclosed by a five-metre high expanded metal mesh perimeter fence with a roll drop drum. This will provide a suitable degree of security for the centre, and all staff will be fully trained in security awareness. Other security factors will include controlled detainee movement, modern surveillance and communication equipment, and separate processing and control areas for detainees and visitors. There will be two main areas on the site in a series of linked buildings.

First, there will be two accommodation pods, each containing single and twin bedroom accommodation for detainees on control orders or on remand. They will have common areas for dining and recreational activities, a kitchenette and a laundrette. These accommodation pods are designed to allow individual case management and a variation in the management of young people at the centre. This is important because the mix of detainees at the centre may at any one time include young people of both sexes, people awaiting a court hearing as well as those on control orders, people from different cultural backgrounds, and young people with behavioural problems or who may be at risk of self-harm.

The other main area of the centre will be the administration unit, which will contain a public reception and administration area, processing areas, classrooms, a library, vocation training workshops, a kitchen, medical and professional rooms, and visiting rooms. The Department of Juvenile Justice has had ongoing consultation with the Aboriginal community about the design and construction of the centre. As honourable members are aware, the design and physical conditions of some juvenile justice centres were criticised late last year by the New South Wales Ombudsman, Ms Irene Moss. At the time I described her report as a blueprint for reform. I believe the design of the new juvenile justice centre at Dubbo is the way of the future in providing safe and secure facilities for detaining young offenders, and detaining them much nearer to where they live, namely, in the western region of the State in this case, without having to transport them many hundreds of kilometres to juvenile detention centres in Sydney, Newcastle, Wollongong or the central coast. The new centre provides the means to protect both the community and detainees, as well as effective rehabilitation programs for young people who have offended and are sentenced to a period of detention.

The Hon. PATRICIA FORSYTHE: My question without notice is directed to the Minister for Community Services, Minister for Aged Services, and Minister for Disability Services. Do 14 high-support need people have to be moved out of a licensed boarding house in the Blue Mountains on Friday? Is no accommodation available for them other than in large institutions? Did a meeting this
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morning of the Department of Community Services and the Ageing and Disability Department discuss the placement of these people in either Rydalmere or Stockton? If so, what funding is available for this? How can the Minister possibly justify locating these people in large institutions four years after the commencement of the Disability Services Act? Is the Minister letting these people down?

The Hon. R. D. DYER: I am aware of the decision by the licensed manager of Weroona to advise the Ageing and Disability Department that he needs to move 14 residents out of the facility. Mr Maurice Cooper, the licensed manager, has made a commercial decision not to comply with the proposed new conditions of his licence as directed and determined by the Ageing and Disability Department. The 14 residents in question have high-support needs and will have to be found other appropriate accommodation. The Department of Community Services clearly has a duty-of-care obligation to people with a disability who need accommodation. I can assure the House that when it becomes necessary, the department will arrange for appropriate accommodation for these people. I am advised that the Ageing and Disability Department will maintain contact with the Department of Community Services to obtain the best possible outcome for the residents at Weroona.

The Hon. PATRICIA FORSYTHE: I ask the Minister a supplementary question. Will it become appropriate on Friday, and does he have appropriate accommodation available on Friday?

The Hon. R. D. DYER: It is by no means without precedent that a boarding house owner decides to close premises, and this is one such occasion. The proprietor in this case is Mr Maurice Cooper, who was also the proprietor of the Hall for Children.

The Hon. Patricia Forsythe: That is not the issue.

The Hon. R. D. DYER: What is at issue is that Mr Cooper has decided on commercial grounds not to continue to provide this facility. That decision was made recently and, as I have said, the two departments are making arrangements for the relocation of the residents. No residents have slept in bus shelters as a result of a boarding house closure. The Hon. Patricia Forsythe ought to be very careful about her remarks because the record of coalition governments on such matters is appalling. The Hon. Patricia Forsythe had the effrontery yesterday to ask me a question about the Watagan Centre. When her party was in government it allowed residents there to rot; but I provided millions of dollars to relocate them in the community. That initiative has been so successful that those people are now functioning at a higher level than was previously the case. Some of them are functioning at such a high level that they do not even need supported accommodation; they can live in the community with limited support.

The Hon. Patricia Forsythe: Go and ask the service providers.

The Hon. R. D. DYER: The Hon. Patricia Forsythe has no shame. When the coalition was in government she was prepared to allow those 150-plus people to just rot in Carynia Oaks. I have the proud record of having relocated those people into a community setting, and they are much better placed and much better cared for than ever before. I will not be lectured by the likes of the Hon. Patricia Forsythe, who did not care two hoots about these people when she was in government.

The Hon. J. KALDIS: My question is directed to the Minister for Community Services, Minister for Aged Services, and Minister for Disability Services. Will the Minister provide the House with details of the new usage policy for seniors centres?

The Hon. R. D. DYER: I acknowledge the varied and important roles that seniors centres have played for many years in the lives of older people. Throughout the decades seniors centres have served primarily as a meeting place for older people to exchange information, participate in activities and share in each other’s lives. The need for a seniors centres usage policy became apparent some time ago. While many seniors centres were playing a vital part in providing activities and services for older people, many other centres were suffering a decline in patronage. For example, many centres were open only for short periods during the day, provided a limited range of activities and did not cater to the needs of older people. The catalyst for change to expand the usefulness and relevance of seniors centres was the shift in funding arrangements.

In 1985 the Home and Community Care Act replaced the States Grants (Home Care) Act and seniors centres, as part of their funding agreement, were required to comply with the new Act. Seniors centres must provide activities and services which cater for the needs of all older people - the frail
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aged and the active, well aged - and people with disabilities and their carers. Last week I had the pleasure of launching the booklet containing the new policy statement entitled "Seniors Centres: Part of Our History, Part of Our Future". This part of the policy statement says it all:

Senior citizens’ centres should be centres from which all older people can access a range of services and activities appropriate to their needs, interests and abilities. Facilities available in senior citizens’ centres should be efficiently utilised to their full capacity. Priority of use should be given to well and frail older people, people with a disability and their carers.

The booklet provides councils and seniors centres with some strategies for implementing this policy. The booklet outlines the types of activities and services which could be offered at a centre. It talks about the importance of encouraging more people to use the centres, especially people from ethnic cultural backgrounds. The booklet also canvasses physical access, opening hours, transport, management and local government support. I am proud to report that the policy statement was produced by a broad-based committee representing all levels of government, people from seniors centres and clubs, the ethnic community and other groups which represent the interests of older people. The booklet is an important step in promoting the health and wellbeing of all older people. It is about maximising the use of seniors centres, encouraging older people from a wide and diverse background to access the services available and ensuring that those services are appropriate for a diverse population.

The Hon. VIRGINIA CHADWICK: My question without notice is to the Attorney General, representing the Minister for Police. Is it a fact that the Government will support the Crimes Amendment (Child Punishment) Bill when it is introduced by the Hon. A. G. Corbett?

The Hon. J. W. SHAW: I am not sure why the Hon. Virginia Chadwick has directed this question to me as the Minister representing the Minister for Police. In due course, and no doubt after hearing all the relevant information put in debate, the Government will make a policy decision and announce it at the appropriate time.

The Hon. VIRGINIA CHADWICK: I ask a supplementary question. Is it to be understood from the Attorney’s response to the House that a determination has not yet been made by the Government to support the Hon. A. G. Corbett’s bill?

The Hon. J. W. SHAW: The parliamentary Australian Labor Party has not made any decision on the matter.

The Hon. B. H. VAUGHAN: I direct my question without notice to the Attorney General. Will he inform the House about the Government’s progress in introducing computer technology in the State’s courts?

The Hon. J. W. SHAW: The advancements that the Government has made and will make in the next couple of years on information technology in the court system will result in substantial progress. I pay tribute to the officers of the Attorney General’s Department for their detailed technical and competent work in this respect. The department has 150 courts which are connected with court registry application systems. Most of the systems and equipment are nearly 10 years old and do not provide the functionality and efficiencies expected of today’s computer systems. Many of the medium to smaller courts have relied on manual systems for most of their registry operations. Receipt books and typewriters are still in use at many of these courts. This situation has been addressed, firstly, by providing these courts with some basic tools - personal computers, printers and access to a suite of electronic forms - and, secondly, by developing an information technology strategic plan to identify the priority information technology projects.

In the past year 150 personal computers and 100 laser printers have been provided to 85 local courts. Additionally, a successful pilot at Sutherland Local Court of court registry support technologies identified substantial productivity savings and has resulted in the provision of similar installations at Campbelltown, Newcastle, Parramatta and Queanbeyan local courts. The technology consists of personal computers with terminal emulation, office automation software, e-mail facilities, access to a suite of more than 100 electronic forms - for example for family law, apprehended and domestic violence orders, transcripts, bails, warrants and community service orders - and the installation of local area networks and wide area network access. The electronic forms are now in use at 58 courts and the court registry technology is to be installed in five other major courts this financial year.

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The new systems and infrastructure will allow the courts to provide a more efficient, equitable and professional service and will allow for new and innovative client services such as electronic lodgment, data exchange and the use of the Internet. The separation of the courts administration system and infrastructure projects will allow the department to continue to address the legacy of computer under-resourcing in the courts while the courts administration system strategy is being implemented. The Government’s argument, and it is valid, is that we have made a new and fresh start on information technology in the courts to try to bring them into the 1990s. Some of the former Government’s policies and plans have had to be revised and fundamentally reconsidered because they were flawed.

The courts administration system replaces a proposal by the former Department of Courts Administration for a case management system for which $24 million was approved by the former Government in January 1995. An independent review of this proposal in 1996 by KPMG Consulting found that the scale and complexity of the project posed unmanageable risks and impeded the early delivery of benefits. It recommended the separation of the applications and infrastructure efforts into the courts administration system and infrastructure projects that the department is pursuing today. As established in the Sutherland court pilot project, the department has already obtained significant productivity benefits from early investment in infrastructure.

The justice agencies data exchange project is another initiative that will provide significant benefits to the courts and court users. It is a joint project of seven justice agencies to provide electronic exchange of common data. The project has been funded since 1995 and although it is a joint agency project the capital funding is allocated to, and managed by, the Attorney General’s Department. I think the record of achievement in relation to technology in the courts will be significant. I hope to give regular reports to the House about the achievements and progress in the provision of services to litigants, the court system and members of the public.

The Hon. ELISABETH KIRKBY: My question without notice is directed to the Treasurer, Minister for Energy, Minister for State and Regional Development, Minister Assisting the Premier, and Vice-President of the Executive Council. Is the Minister aware that from 1 July, State and Territory governments will have jurisdiction over the planning requirements for installing telecommunications infrastructure, such as new mobile phone towers and pay television cabling? Is the Minister further aware that this means that in 14 days time each State and Territory Government will have to have in place telecommunications-specific planning regulations? Will the Minister inform the House what the Government has done already and whether it has made any decisions, prepared any legislation, or consulted the carriers - Telstra Corporation Ltd, Optus Communications and Vodafone Pty Ltd - or State-based local government association and environment groups? If not, when are these consultations likely to take place? When is relevant legislation likely to be introduced?

The Hon. M. R. EGAN: I am aware that in recent times the Commonwealth Government has decided to dump this issue onto the States and Territories because it has become too much of a hot potato for it to handle. Having said that, I am sure that my colleague the Minister for Urban Affairs and Planning would have the matter well in hand, but I admit that I am not aware of any of the details. I will refer the question to the Minister and obtain a detailed response.

The Hon. D. J. GAY: My question without notice is directed to the Attorney General, representing the Minister for Local Government. Is the Minister aware that Councillor David Marshall lodged a complaint concerning the pecuniary interest of a fellow councillor with the Department of Local Government on 24 April 1996? Is he further aware that Councillor Marshall followed up his original complaint on 6 December 1996 and on 1 May 1997? Why has the Minister taken no action on this serious complaint? When will the Minister instruct his department to act on it?

The Hon. J. W. SHAW: I am unaware of any complaints or matters lodged by Mr Marshall with the Department of Local Government. I will refer the question to the Minister for Local Government and obtain a response.

The Hon. DOROTHY ISAKSEN: Did the Treasurer receive a communication today from the President of the Australian Olympic Committee, Mr John Coates?

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The Hon. M. R. EGAN: Today I received what I regard to be an astounding piece of correspondence from Mr John Coates. It is on the letterhead of the Australian Olympic Committee and is addressed to me in my capacity as Treasurer of New South Wales. It states:

Dear Mr Egan

In a press conference yesterday you stated that I am "a Director of a company that runs a big city hotel". You then proceeded to say that I have a conflict of interest.

These statements were published by ATN 7 and ABC 2 in their main news bulletins last night - as was your intention.

I am of the view that the imputations arising out of your above statement are defamatory of me and I have accordingly instructed my solicitors to issue proceedings against you for the recovery of damages, including aggravated and exemplary damages.

The purpose of this letter is to advise you as follows:

1. if you wish to mitigate the damage you have caused me, you may care to publish a full and complete retraction and apology; and

2. if you republish your defamatory comments, then I will rely upon such republications as further support for my claim for aggravated and exemplary damages.

Yours faithfully

JOHN D COATES

This is a most incredible letter. I do not know who Mr Coates thinks I am, but I am certainly not going to be intimidated or silenced by correspondence or threats such as this. My genuine understanding is that Mr Coates is associated with the tourism industry and hotel interests - and, what is more, hotel interests in the Sydney central business district. I pointed that out yesterday. I read in this morning’s Sydney Morning Herald that the Southern Cross Hotel, which Mr Coates is associated with, has not yet signed up with the Sydney Organising Committee for the Olympic Games. I pointed out yesterday that Mr Coates obviously, with his professional and business interests, has an association with the hotel and tourism industries. No doubt, he would have a view about the bed tax that he might not otherwise have if he were purely and simply the President of the AOC and/or a member of SOCOG. I do not believe that I have made any factual error. What I have pointed out is a matter of public interest. I want to tell Mr Coates - and anyone else who might be interested - that I do not buckle to intimidation or standover tactics.

The Hon. Dr B. P. V. PEZZUTTI: My question without notice is directed to you, Mr President. Could you advise the cost to The Legislature of the litigation in the matter Egan v Willis and Cahill arising from the Government’s response to the House’s demand to table in the House documents relating to the showground redevelopment? Secondly, following Mr Egan’s announcement yesterday that the Government had appealed the case to the High Court, can you estimate the additional cost to The Legislature of the High Court appeal? Thirdly, has there been any supplementation to the Legislative Council’s budget for the legal costs already incurred? Finally, do you expect supplementation to cover the High Court appeal costs?

The PRESIDENT: I am sure that the Hon. Dr B. P. V. Pezzutti would be aware that his question contravenes a ruling that I have given previously that questions relating to the domestic affairs of the Parliament should be placed on notice. This question should have been asked in the relevant estimates committee, but as the committee has not yet reported to the House I will make an exception to my ruling and answer the question as best I can. Legal costs incurred to date amount to $125,000. Those costs have been met from The Legislature’s vote, that is, other than the Legislative Council vote, which would not have those funds.

It is estimated that the cost to the Legislative Council of the High Court appeal will be in the vicinity of $80,000, which will be incurred in the financial year 1997-98. I do not anticipate there will be a sufficient surplus in the Legislative Council budget to meet those costs. In relation to supplementation, to date no supplementation has been sought by the Treasurer for the costs incurred by The Legislature. Whilst the Legislative Council will not have, in my estimation, sufficient funds to meet the estimated $80,000 costs of the High Court appeal, it would not be practical to seek supplementation unless there were insufficient funds at the end of the financial year in the overall budget of The Legislature to meet those costs. In summary, the total cost to The Legislature to date and estimated will be in excess of $205,000.

The Hon. ANN SYMONDS: Will the Attorney General, representing the Minister for Local Government, advise the House of the new appointments made to the Local Government Grants Commission?

The Hon. J. W. SHAW: I am pleased with the appointments to the Local Government Grants Commission announced by my colleague the Minister for Local Government. As members of this
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House will know, the commission is charged with the responsibility for making recommendations on the allocation of over $390 million in Commonwealth grants to New South Wales.

The Hon. D. J. Gay: Jobs for the girls!

The Hon. J. W. SHAW: I hear interjections that seem impliedly critical of the fact that two women have been appointed to these positions. That objection by the Opposition is extraordinary. Two senior women from local government in New South Wales have been appointed, and they are estimable appointments. Councillor Barbara Armitage, the Mayor of Waverley, has been appointed as chair of the grants commission. She is the longest serving female mayor in New South Wales, having been mayor of Waverley for the past 10 years. She is also a serving member of the Premier’s Crime Prevention Council and an accredited mediator with the Community Justice Centre, a formidable candidate on any analysis. Also appointed as a member of the commission was Pat Dixon, Deputy Mayor of Armidale, who is currently the Chief Executive Officer of the Armidale District Service Incorporated. She has also held a wide range of positions, representing the Aboriginal community, with a number of State and local government bodies. She is also a member of the Minister’s local government reform task force.

In addition to those appointments Emeritus Professor Maurice Daly has been reappointed as a member of the commission. This morning on radio the Hon. D. J. Gay characterised these appointments as jobs for the Labor lasses. I suppose he was using a quaint Scottish term - and I do not object to that - but there seems to be an implied criticism of the fact that two women have been appointed. Those two women are senior respected members of the local government community in New South Wales. They bring skills to the commission that will benefit every council in the State. One wonders whether the same acerbic criticism would have been made if two men had been appointed.

Reverend the Hon. F. J. Nile: Two lads!

The Hon. J. W. SHAW: Two lads. The fact is that these appointments assist to address gender imbalance in significant statutory appointments in this State. I had always thought of the Hon. D. J. Gay as a new-age Nat. I think he has applied that term to himself, and for that reason I find it all the more surprising and enigmatic that he has articulated these criticisms, which undermine the standing of the Opposition in the local government community. I am absolutely confident that in the local government community, irrespective of party politics, these appointments will be applauded, respected and regarded as appropriate.

Reverend the Hon. F. J. NILE: Is the Attorney General, representing the Minister for Police, aware of the civil claim lodged in the Supreme Court of New South Wales on 29 May alleging a series of sexual assaults upon the plaintiff, who was aged eight years at the time, naming one of the defendants as a Mr John Marsden? Is that the same John Marsden who was a member of the New South Wales Police Board? Were these alleged assaults brought to the attention of the Royal Commission into the New South Wales Police Service? Are these matters subject to further police investigation?

The Hon. J. W. SHAW: I had been informed that a civil action generally of the nature described by the honourable member had been brought in the Supreme Court against Mr Marsden. That is my general understanding of the matter. Obviously the matter is sub judice, and it would be appropriate for all members to be circumspect about any comments they make about it. The matter may obviously need to be determined by the court. Whether those matters were in any way referred to or drawn to the attention of the royal commission I do not know, and I do not know whether they are the subject of any further consideration by the police.

The Hon. Dr MEREDITH BURGMANN: Will the Attorney General, and Minister for Industrial Relations inform the House about the implementation of the Street report into the conciliation of disputed workers compensation claims?

The Hon. J. W. SHAW: There has been a significant development in the processing of workers compensation claims in New South Wales. In December 1995 I asked Sir Laurence Street to examine the dispute resolution mechanisms in the workers compensation system and to develop a constructive and effective model of conciliation for the New South Wales WorkCover scheme. The need for such a model had arisen in debate about the WorkCover scheme, which had been for some years under significant cost pressures because of the inaction of the previous Government. As I discussed with various stakeholders the areas in which the
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scheme could be improved, a constant complaint that emerged was that a large number of cases were being settled on the steps of the Compensation Court.

It appeared that litigation had become the first resort to resolving any conflict, with hearings set and court time allocated before the parties actually met to negotiate a mutually acceptable outcome. That culture was not only placing a burden on the judicial system and costing WorkCover unnecessary legal fees, but, more importantly, it was dragging out the claims of genuinely injured workers, causing delays in accessing their benefits and getting about the business of seeking rehabilitation and returning to meaningful employment. In response to those concerns I referred that vexed issue to Sir Laurence, a former Chief Justice of New South Wales with a great understanding of not only the judicial process but also alternative methods of dispute resolution.

Some wanted the removal of lawyers from the system altogether, but Sir Laurence chose a more balanced model that retains a worker’s right to legal representation while facilitating the settlement of disputes before litigation is commenced. That model has now been brought to life, and I was pleased to officially open the Department of Industrial Relations premises earlier this month. The service is primarily designed to be a fast, economic and user-friendly forum for dealing with disputes before court action is initiated. It will be compulsory for disputes arising from new claims to be referred by the applicant to the new service prior to filing in the Compensation Court. Claims will then be screened by conciliators to determine whether it is appropriate for the dispute to be returned to the insurer for review, referred for conciliation, or for the applicant to be allowed to proceed to filing at the court without further delay. That will enable parties to have their claims dealt with in the most appropriate manner at the earliest possible time.

When it is determined there is a reasonable prospect that a dispute can be settled, it will be referred to a conference-based conciliation. Importantly, parties will have as a right an entitlement to representation by a legal practitioner or other agent, such as a representative of their union, at this conference. To ensure that disputes are dealt with quickly and cheaply the new service will operate within stringent time constraints. For example, in the case of claims for weekly benefits the service has only 21 days to resolve the matter before the applicant is able to file at the court. Whilst that places some pressure on the conciliation process, it also ensures that the worker is not subject to undue delays in having his or her matter dealt with at conciliation.

I emphasise Sir Laurence’s comments that changes in culture were a necessary requirement of successful conciliation. Sir Laurence said that such a cultural change would include "a combination of goodwill, encouragement, incentive, promotion, education and, in the last resort, sanction". I respectfully endorse those sentiments. From the limited number of cases processed by the conciliation service to date I am able to say that the parties appear to be embracing the new system constructively and in good faith. The Government is confident that the model of conciliation being piloted will deliver fair outcomes for all participants, whilst achieving significant savings in both time and resources.

The Hon. C. J. S. LYNN: What, in the opinion of the Treasurer, is the definition of "revenue" and "profit"?

The Hon. M. R. EGAN: The Hon. C. J. S. Lynn should read the two dictionaries that are in the Chamber. The first is the Concise Oxford Dictionary and the second is the Macquarie Concise Dictionary. I have upstairs a spare copy of the Concise English Oxford Dictionary if the honourable member would like it.

The Hon. C. J. S. LYNN: I ask a supplementary question. When the Treasurer told this House yesterday that the Penrith Panthers club takes $40 million from its poker machines, was he referring to the $40 million take-out in terms of revenue or profit? Is the Treasurer aware that Penrith Panthers made an overall profit of $4.4 million in 1996, out of which it supports its junior and senior rugby league and provides $850,000 to the local community? Is the Treasurer aware that this Government’s increased tax on poker machines will exact $4.1 million of that $4.4 million profit? Will the Treasurer apologise for his outrageous attack on the Penrith Panthers, a club of which I am a member?

The Hon. M. R. EGAN: Yesterday I referred to the proceeds from the Penrith Panthers poker machines as being $40 million. As I pointed out yesterday, that is not the money that people put into the machines. That is the money that the Penrith
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Panthers took out of the machines after the punters had taken their winnings. That $40 million is that club’s poker machine profit.

The Hon. FRANCA ARENA: Will the Treasurer and Leader of the House inform honourable members whether a question asked earlier by the Hon. Dr B. P. V. Pezzutti and the reply given by the President were a payback for the extravagant travelling expenses recently incurred by The Legislature?

The Hon. M. R. EGAN: I did not hear all of the question asked by the Hon. Franca Arena, which I gather was addressed to me, but I am sure that the Hon. Dr B. P. V. Pezzutti would have had no such thing in mind.

The Hon. Dr MARLENE GOLDSMITH: My question without notice is directed to the Attorney General, representing the Minister for Police. Is it a fact that on 1 January 1996 the Wentworthville police patrol inherited Northmead, Winston Hills and Old Toongabbie, effectively doubling its patrol? Is it also a fact that, despite the doubling of the size of the Wentworthville patrol, it still has only one patrol car and no extra police? Is the Minister aware that since February 1996 crime in the Wentworthville patrol has almost doubled and has nearly tripled since March 1995 when the Carr Government came into power in New South Wales? Will the Government give a commitment to improve resources in the Wentworthville patrol, which desperately needs more police and certainly needs more than one patrol car?

The Hon. J. W. SHAW: The honourable member’s question is a detailed one about the allocation of resources by the police in the Wentworthville area. It is not unsurprising that I do not have those details, at least to the degree of particularity that would be desirable, in my mind. I propose to refer the honourable member’s question to the Minister for Police and obtain a response in due course.

The Hon. I. COHEN: My question is directed to the Attorney General, representing the Minister for Corrective Services. Has the Department of Community Services been using biometric scanning on visitors to maximum security prisons for at least six months? Was the Privacy Committee consulted prior to the implementation of that technology? If not, why not? If the technology is in use, has the department drafted and issued approved regulations which govern its use? If the technology has been introduced, will the Minister explain the reason for its introduction?

The Hon. J. W. SHAW: I have no hesitation about undertaking to ask the Hon. Bob Debus whether that technology is in use and, if so what the privacy implications are. I undertake to obtain a reply to that question as expeditiously as I can.

The Hon. M. R. KERSTEN: I draw the attention of the Attorney General, representing the Minister for Land and Water Conservation, to circular No. 97/14 dated 12 May 1997 from the Director-General of the Department of Land and Water Conservation. Are members of the senior management of that department leaving because they have been instructed to make changes or to institute actions which cannot be justified under existing Acts or regulations and which would not stand up to challenges in law?

The Hon. J. W. SHAW: Without having any detailed information to respond to that question, I have the utmost faith and confidence in my colleague the Hon. Kim Yeadon administering that department not only in accordance with law but in accordance with proper principle. Having said that, I am happy to undertake to refer the question to the Minister for Land and Water Conservation and obtain his response.

The Hon. ELAINE NILE: Is the Treasurer, representing the Minister for Transport, aware of a tragic accident that occurred on the night of Tuesday, 4 June? A Queensland couple in a four-wheel drive vehicle crashed into a wheat train at a level crossing north of Moree. Their vehicle was jammed between the last and second-last wagons of the 40-car train until the train reached a bridge over the Gwydir River at which time the vehicle hit a pylon and was knocked free. Is the Minister aware that the police involved said that the driver probably never saw the black wagons on the level crossing, which was guarded only by a give-way sign. The police are quoted as saying that the driver would
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have just been following the road. Will the Government install warning lights at all railway crossings, especially country crossings, to alert car and truck drivers at night?

The Hon. M. R. EGAN: I was not aware of the accident to which the honourable member refers. It sounds as though it was a terrible accident. I was not aware that there were any level crossings without proper barriers or signage. However, I will refer the matter to my colleague the Minister for Transport.

The Hon. J. M. SAMIOS: My question without notice is directed to the Treasurer. To appease the Labor Left over the privatisation of the New South Wales electricity industry has the Treasurer given an undertaking to any of the unions to acquire shares in a float of any part of the New South Wales electricity industry using their superannuation funds?

The Hon. M. R. EGAN: Many criticisms, allegations, charges and complaints can be laid against me, but appeasement is not one of them - particularly appeasement of the Left. I have never in my life appeased the Left. When I was very young and silly, I was once a member of the Left, but I have never appeased the Left. I certainly have not given any union an assurance that its superannuation fund would be able to buy shares in any utility that might be sold. But, obviously, a union’s superannuation fund, like any other superannuation fund, would be free to make a bid for any utility or asset that was for sale. I expect that if it was the best and highest bidder, it would buy.

The Hon. FRANCA ARENA: My question without notice is directed to the Treasurer. The House is well aware of how successful the Government has been in attracting international investment and regional headquarters to the metropolitan areas of New South Wales. Will he inform the House how successful the Government has been in non-metropolitan areas?

The Hon. M. R. EGAN: In April this year the Government set for New South Wales an ambitious goal: to overtake Singapore as the location for multinational regional headquarters by the year 2005. During a visit to Umina last week -

The Hon. J. H. Jobling: Umina is a real regional country centre.

The Hon. M. R. EGAN: Umina is on the central coast. You drive into Gosford, and it is down near Woy Woy and Ettalong on the southern part of the central coast.

The Hon. J. P. Hannaford: We used to own a house there.

The Hon. M. R. EGAN: I have never been wealthy enough to own a house anywhere other than the one I live in and pay off.

The Hon. Dr B. P. V. Pezzutti: Is that country New South Wales?

The Hon. M. R. EGAN: No, it is regional New South Wales. It is a lovely spot. Last week at a function held in a restaurant at Umina I spoke to a group of about 120 central coast people. The restaurant, which was called the Water’s Edge restaurant or a similar name, was right on the beach.

The Hon. J. F. Ryan: Marie Andrews’ electorate.

The Hon. M. R. EGAN: Marie Andrews’ electorate. I was able to tell them that in March this year I had also been in California and I went to Santa Monica beach. Umina leaves Santa Monica for dead. Santa Monica beach is the pits when one compares it with all the great beaches along the whole of the New South Wales coast. As I said, I was at Umina last week, but it was difficult to see the beach as it was at night. At the dinner I was pleased to be able to announce that the Government had just taken a significant step towards achieving the target to which I referred earlier. Manpower Personnel Services has decided to locate its Australian national support centre in Gosford and its Asia-Pacific regional headquarters in Sydney. That announcement means 50 new jobs for New South Wales within the next 18 months, 25 of which will be on the central coast. Manpower’s United States parent company -

[Interruption]

The Hon. M. R. EGAN: The Hon. Dr B. P. V. Pezzutti giggles and cackles as usual, but Manpower Incorporated is the world’s largest non-government employer. Its sales last year reached US$7.5 billion. In Australasia the company has already invested more than $15 million and recorded a phenomenal growth rate of 400 per cent during the last 12 months. Manpower’s new central coast operations will house the company’s database, payroll and accounts divisions. Last night in Gosford the company launched its Australasian 24-hour client support centre. It is interesting to note the reasons
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given by Manpower for choosing Sydney and Gosford as its new home. Those reasons include the quality of the local workforce, the availability of reasonably priced land, the pro-active attitude of the New South Wales Government, our competitive telecommunications networks and, most importantly, the stability of our workforce.

That is an increasingly important factor for international firms that want to establish an Asia-Pacific regional base. They find in many other locations, including Singapore, Hong Kong and Malaysia that the turnover rate - or, as the Americans charmingly call it, the churn rate - in other locations is between 30 per cent in Singapore and, as one company informed me, 80 per cent in New York. They find that Australian employees are loyal and committed, and will not run across the road to join an opposing employer who offers them an extra $2 a week. They get loyalty from the Australian work force. So the stability of a local work force is a serious issue for international companies looking to expand their operations in the Asia-Pacific region.

In addition to Manpower’s activities on the central coast, the company will also establish its regional headquarters in Sydney. In so doing the company joins a long and impressive list of international firms such as Digital, Statestreet, Towers, Perrin and American Express, which have all experienced the benefit of doing business in New South Wales. Since March 1995 the Government has successfully attracted over 70 regional headquarters to New South Wales. That has been worth more than $2 billion in new investment and has created more than 5,400 new jobs.

The central coast is already one of Australia’s fastest growing regions; the population is expected to increase by 21 per cent to 318,000 by the year 2021. The announcement by Manpower represents another great kick along for the local area. Manpower will join 22 other companies, such as Albany International, Bayer Australia, Master Foods, Sanitarium and Wella, who have chosen the central coast as the location for their corporate headquarters or manufacturing facilities over the last two years. Mr President, if you have not been to Umina recently, you should make a point of going there very soon.

The Hon. C. J. S. LYNN: Can the Treasurer confirm that a timetable has been prepared for the sale of the distributor EnergyAustralia? Will the Treasurer sell EnergyAustralia within the next 18 months? Have underwriters been approached?

The Hon. M. R. EGAN: I think the Hon. C. J. S. Lynn asked me that question yesterday.

The Hon. C. J. S. Lynn: No, I asked a different question. I asked about Pacific Power.

The Hon. M. R. EGAN: No timetable has been set for anything. I am told that yesterday the Hon. C. J. S. Lynn asked me the same question in relation to Pacific Power. Today he has asked the question in relation to EnergyAustralia. So that he has a decent question for each of the next nine days of sittings, I assure him that the same answer applies to Integral Energy, NorthPower, Advance Energy, Great Southern Energy, the Snowy Mountains Hydro-electric Authority, Delta and Macquarie Generation.

The Hon. C. J. S. LYNN: I ask a supplementary question. Treasurer, in view of the answer you have just given, can we believe you this time, or is this just another Eganism?

The PRESIDENT: Order! Have members any other questions?

The Hon. ELISABETH KIRKBY: My question without notice is directed to the Minister representing the Minister for the Environment. In view of the continuing controversy over the future of the Day of Mourning site in Elizabeth Street, now occupied by the Cyprus Hellene club, has the Minister for the Environment come to a decision on this matter? Is the Minister still considering the matter, as indicated in her letter to the National Aboriginal History and Heritage Council of 30 April 1997? Is it the intention of the Minister to declare the site an Aboriginal place, as indicated by Geraldine O’Brien’s article on Saturday, 26 April, in the Sydney Morning Herald? Can there be a speedy resolution of this matter, to ensure the future of this important landmark for the Aboriginal people of Australia?

The Hon. J. W. SHAW: Knowing something of the site and its history, I have taken an interest in it. I would be more than happy to refer the question to my colleague and obtain a reply.

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The Hon. M. R. EGAN: If honourable members have further questions, I suggest they place them on notice.

The Hon. J. W. SHAW: On 22 May the Hon. D. J. Gay asked a question concerning the appointment of an administrator to Gunning Shire Council. I have now been supplied with the following answer:

In August 1996 the Department of Local Government commenced a management overview of the Gunning Shire Council to assess its overall performance in relation to management, financial and operational matters. The Department’s final report was issued in March. The report raised concerns with aspects of Council’s management particularly in relation to finances and non compliance with statutory responsibilities. Twelve recommendations were made to the Council aimed at improving its performance.

The Council responded to me on 23 April 1997 of the actions it has taken, or proposes to take, in respect of the report’s findings and recommendations. Generally the Council has accepted the recommendations and is taking action to improve its operations in areas where the Department has identified deficiencies. The Department is assessing closely the Council’s implementation of the recommendations in the report.

The removal of a council from office and the appointment of an administrator is essentially a suspension of locally elected democratic government. Consequently, such a step is rightly regarded as one which should only be taken when it has been clearly established that the removal of a council is justified in the public interest. In view of the actions that have been taken in respect of the Gunning Shire Council since mid 1996 I do not consider that the removal of the Council and the appointment of an administrator is warranted at this time.

The Hon. J. W. SHAW: On 15 May the Hon. C. J. S. Lynn asked a question regarding high occupancy costs for small retailers in regional shopping centres. I have now been supplied with the following response:

I have now had an opportunity to consider the Report referred to by the Honourable Member. The Report advocates amendments to the Retail Leases Act 1994, legislation introduced by the previous Liberal-National Party Government. That Act is administered by my colleague the Hon. M. R. Egan, MLC, in his capacity as Minister for State and Regional Development

I have been advised by the Retail Traders’ Association of New South Wales that it has discussed this issue with Mr Egan and the Parliamentary Secretary for Small Business, Ms Sandra Nori, MP. While I will certainly consider this matter as it relates to trusts, future questions concerning the issues raised by the Retail Traders’ Association should be addressed to the Hon. M. R. Egan, MLC.

The Hon. J. W. SHAW: On 13 May Reverend the Hon. F. J. Nile asked a question about persons driving under the influence of drugs. I have now been supplied with the following answer:

I am advised by the Deputy Commissioner, Specialist Operations that persons observed driving under the influence of drugs other than alcohol will be arrested and charged. Section 5AA of the Traffic Act, 1909 empowers Police to arrest drivers who they believe are under the influence of drugs and transport them to a hospital for the purpose of supplying blood and urine samples for drug analysis.

Since December 1987, the New South Wales Police Service has processed approximately three thousand five hundred (3,500) drug samples of which eighty five percent (85%) were positive to one or more drugs other than alcohol. Of the samples analysed over this period, approximately seventy percent (70%) indicated the presence of cannabis.

The Hon. J. W. SHAW: On 13 May the Hon. Franca Arena asked a question concerning police appeals. I have now been supplied with the following answer:

I have nothing further to add to the Attorney’s answer given in the House.

The Hon. M. R. EGAN: On 13 May the Hon. J. M. Samios asked me a question without notice regarding the immigration museum proposal. The Premier has provided the following response:

The Ministry for the Arts last year appointed consultants to develop a comprehensive policy statement on the place of multicultural arts in New South Wales. The consultants were commissioned to prepare a multicultural arts policy statement and examine a range of issues and options in relation to establishing a Museum of Immigration.

A report has been drafted and submitted to the Ministry. Further work is proceeding on the policy statement. Once this work is completed the options regarding the Museum will be examined.

The Government is committed to developing programs to enable communities to maintain their cultural traditions and express their identity for themselves and for visitors.

The Hon. M. R. EGAN: On 13 May the Hon. R. S. L. Jones asked me a question without notice regarding the Colonial State Bank. I provide the following response:

In circumstances where an amount is received after a loan has been written-off in the bank’s books, then the Government is

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entitled to receive the proceeds. There is an established procedure in place to capture such amounts.

It is important to distinguish between indemnified and non indemnified loans. The Government’s liability only extends to those loans in existence as at the sale date of 31 December 1994 and to which an indemnity has been continuously claimed. Business written subsequent to that date is the responsibility of the bank’s new owner.

By way of further background, before the bank can write-off an indemnified loan, it must be approved by the Indemnified Loans Committee. This committee comprises an independent chairman, two representatives of the Government and two bank appointees.

The net loss on an account by account basis after applying any specific provisions and receipts following enforcement actions, can then be claimed as to 90 per cent under the loan loss indemnity provided by the Government.

The recent listing of the shares in Colonial Limited does not impact upon the provisions of the loan loss indemnity, nor future recoveries, if any.

Based upon Treasury’s latest estimates, post the sale date of December 1994, a total of $205 million will ultimately be required to extinguish the loan loss liability.

The indemnified loan portfolio is by far and away the most significant risk to which the Government is exposed.

As at 30 April 1997 loans still indemnified amounted to $609 million which included a non accrual component of $390 million. Since 1 January 1996, the bank has been paying the Government a quarterly fee of 0.50 per cent per annum of the average amount for each quarter of loans covered under the indemnity.

It must be remembered that these are loans written prior to the sale of the bank, when under Government ownership.

Until such time the bank seeks approval from the Indemnified Loan Committee to write-off a loan or remove it from the indemnity, it remains on the books of the bank.

As previously mentioned, all the bank’s existing loans, whether good or bad, were indemnified by the Government for a period of three years from 31 December 1994. Only those loans deemed to be non-accrual will continue to be indemnified post 31 December 1997.

As a consequence of the quantum of non-performing loans, the former Government agreed to reimburse the bank for the costs of managing and funding these problem loans until they were realised or they became performing. Since the sale date the Government has paid out over $71 million in reimbursement claims. In the Budget 1997-98, Treasury has estimated this cost to be approximately $18 million.

The Hon. M. R. EGAN: On 13 May the Hon. I. Cohen asked me a question without notice regarding taxidriver safety. The Minister for Transport has provided the following response:

The timetable for the installation of vehicle tracking devices in Sydney taxis is 1st July, 1997. The taxi industry has given assurances that this requirement will be met and the Department of Transport will be enforcing it from that date. Driver protection screens are to be compulsorily introduced for the first time in Australia. This has meant that there has been a need to develop and test a product that will ensure safety for passengers and drivers. It will not be practical to enforce the originally set 1st July 1997 date for installation, however, once there is an approved product the Government will insist on the quickest possible implementation schedule.

The Hon. M. R. EGAN: On 14 May the Hon. Elisabeth Kirkby asked me a question without notice regarding the Committee on the Office of the Ombudsman and the Police Integrity Commission. The Premier has provided the following response:

The recommendations contained in the report propose a number of administrative and legislature changes which are designed to increase the effectiveness of the Protected Disclosures Act. The Premier has sought advice from the authorities primarily affected by the report. That advice will be carefully considered in finalising the Government’s response to the recommendations. It will also be necessary for the Government to consider the recommendations which have been made by the Royal Commission into the NSW Police Service which may have implications for the protections of disclosures made by police officers.

The Hon. M. R. EGAN: On 14 May the Hon. I. Cohen asked me a question without notice regarding the Cook Trig Headland. The Minister for Urban Affairs and Planning has provided the following response:

Last year the Minister for Urban Affairs and Planning approved recommendations made by the Heritage Council. The outcome of the decision will be the protection of the Cook Trigonometrical Station as a heritage item under the Ku-ring-gai Local Environmental Plan. The draft plan, in addition to identifying the station as a heritage item, will also modify the area of the site which can be built upon. This modification will minimise the impact of any development upon the site, including the impacts upon species listed on the Schedules of the Threatened Species Conservation Act 1995. To support this action, the Director-General of the Department of Urban Affairs and Planning has directed the Council to undertake a local environmental study.

The environmental and heritage value of the site, and not the issue of economics, has been the principle behind these initiatives.

The Hon. M. R. EGAN: On 14 May the Hon. D. F. Moppett asked me a question without notice
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regarding central west road speed limits. The Minister for Roads has provided the following response:

The RTA applies speed limits to roads so that speed of travel is compatible with roadside development, road conditions and the use of those roads by pedestrians. Speed limits are determined by radar surveys, consultation with the police and on those occasions where it is appropriate, with local councils and the community. The aim is to provide as safe an environment as practicable for all road users.

The present speed limits along the highway reflect the wide variety of road geometries and conditions in the areas through which the road passes.

The RTA has no proposal to decrease the speed limit on the highway generally. In fact, there is every likelihood that some speed limits will be increased as roadworks are completed and the highway improved.

The Hon. M. R. EGAN: On 20 May the Hon. Elisabeth Kirkby asked me a question without notice regarding electoral redistribution. The Premier has provided the following response:

The Government is aware that as at 1 March 1997, 40 of the electoral districts within the State were malapportioned in terms of section 28A of the Constitution Act 1902.

The Government is currently considering the timetable for the redistribution.

The Hon. M. R. EGAN: On 27 May the Hon. R. S. L. Jones asked me a question without notice regarding the East Circular Quay development. The Minister for Urban Affairs and Planning has provided the following response:

Several proposals for a tower at the southern end of East Circular Quay were considered as part of the Urban Design Competition in 1992. These towers ranged in height from 56-70 storeys and were found to be unsatisfactory in terms of their dominance over the Opera House, relationship to Circular Quay and the CBD to the south and overshadowing of the Botanic Gardens. The Design Principles of the site were finally adopted by the Central Sydney Planning Committee in August 1992.

With regard to a recent tower proposal put forward by Mr Brice, the Government is prepared to consider alternative options to the East Circular Quay development if a compromise could be found that did not involve expenditure of public money.

The Hon. M. R. EGAN: On 29 May the Hon. Elaine Nile asked me a question without notice regarding green and golden frogs. The Minister for the Olympics has provided the following response:

The Government has not betrayed the green and gold frogs at the Homebush Olympic site, as stated by Green Games Watch 2000.

As indicated by the Minister for the Olympics, the Hon. Michael Knight, MP, in his media interview on 28 May 1997, tunnels which have been constructed for the frogs to pass under roads do not lead into any car park. Rather the tunnels to which Green Games Watch 2000 refer lead under Hill Road to an area of parkland adjacent to a car park. This parking area will be fenced off from the parkland with frog proof fencing to prevent frogs from gaining access to the car park.

The OCA holds two National Parks and Wildlife Service Licences under the Threatened Species Conservation Act 1995. These licences require the OCA to protect critical habitat of threatened species, populations and ecological communities that are endangered. The OCA’s obligations under these licences are to protect the frogs; protect their habitat; and migratory paths. There are no provisions under the licences for translocating the frogs from the Homebush Bay site.

The Hon. M. R. EGAN: On 16 June the Hon. R. S. L. Jones asked me a question without notice regarding Byron shire development. The Minister for Urban Affairs and Planning has provided the following response:

The Local Environment Plan that the Hon. Richard Jones refers to has been sent back to the Byron Shire Council after anomalies detected by the Director General of the Department of Urban Affairs and Planning. This information was conveyed to the Hon. Ian Cohen last week.

Questions without notice concluded.

The Hon. J. W. Shaw tabled a list detailing all legislation unproclaimed as at 6 June 1997.

Debate resumed from 16 June.

The Hon. ELISABETH KIRKBY [5.03 p.m.]: In 1961 Senator John F. Kennedy made a speech at the White House which included these words:

. . . when we got into office, the thing that surprised me most was to find that things were just as bad as we’d been saying they were.

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In 1997, after I have looked at this year’s budget, those words describe my own feelings exactly. This budget has been described by the Treasurer as a "true Labor budget", a budget that looked after the battlers. I wish I could agree with that view. All I can see is those disadvantaged people who are not being looked after - and they are the people who were not looked after last year, or the year before, or the year before that. I refer, of course, to the aged and to the intellectually disabled and particularly the ageing parents who have saved this State many hundreds of millions of dollars by choosing to look after their intellectually disabled and brain injured children at home. Many of those children are now middle-aged.

I know that the Treasurer will cry, "It is not my fault. The Commonwealth Government has cut funding." To a degree, I have some sympathy for him in that regard; I know that all the States have been treated very shabbily by the Federal Treasurer. But New South Wales in particular has the largest population, and ours is the State that has the most widely dispersed population. New South Wales, with 800,000 square kilometres, does not have the advantage of a large population in a small geographical area, such as Victoria has in its 228,000 square kilometres. New South Wales does not even have the advantage of South Australia, where a small population is dispersed along a coastal fringe of a large State that is 85 per cent desert.

In New South Wales the Government has to provide services to Boggabilla and to Cowra, to Broken Hill and to Parramatta, something that Treasury bureaucrats in Canberra conveniently forget. Unfortunately, we have bean counters in New South Wales Treasury who forget this also. That is why I am so critical of this year’s budget. I accept the financial constraints placed on the Treasurer by cuts in Federal funding and by his own crusade to cut the State debt. I support some of the methods he is employing to raise revenue. I can see nothing wrong with a bed tax. Indeed, if convention organisers find that the costs of a conference in the Sydney central business district are now too high, maybe they will turn to the alternative conference facilities offered in Wollongong, Newcastle, Coffs Harbour, Port Stephens, Maramanong, or in Manly, Brighton-Le-Sands and Parramatta.

If the conference is expected to be so large that the only possible venue is Darling Harbour, then the bed tax will be absorbed without too much difficulty. I think it is proper to place on record the fact that many countries have bed taxes. I have in my possession a long list of overseas cities in which bed taxes are imposed. Indeed, some cities have not only a bed tax but a city tax and a State tax. Among those cities listed is Barcelona, which has hosted the Olympic Games. The list includes also Los Angeles, where there is a 14 per cent bed tax, a city which also held the Olympic Games. London has a bed tax of 17.5 per cent. There are bed taxes in Istanbul, Johannesburg and Kuala Lumpur, which next year is to host the Commonwealth Games. The list is too long to read in full, and I seek leave to have it incorporated in Hansard.

Leave granted.
______

City Effective Tax
Tax Rate $US
(%)

Amsterdam 11.00 88.24
Athens 10.16 69.14
Auckland 12.50 72.79
Bangkok 7.00 39.17
Barcelona 7.00 39.36
Beijing 16.09 60.84
Bombay 20.00 85.55
Boston 9.70 58.62
Brussels 6.00 0.51
Buenos Aires 21.00 160.36
Cairo 19.05 96.08
Chicago 14.90 89.01
Copenhagen 25.00 188.06
Delhi 20.00 78.42
Frankfurt 15.00 117.62
Geneva 6.50 63.93
Helsinki 6.00 40.32
Hong Kong 5.00 47.69
Honolulu 10.17 60.65
Istanbul 15.00 29.62
Jakarta 10.00 62.42
Johannesburg 14.99 45.58
Kuala Lumpur 15.00 69.29
London 17.50 148.87
Los Angeles 14.00 72.21
Madrid 7.00 52.51
Manila 10.50 78.76
Mexico City 18.00 53.99
Miami 12.50 42.73
Montreal 13.50 41.39
Munich 15.00 89.06
Nairobi 15.00 131.71
New York 15.13 64.28
Osaka 6.00 48.84
Paris 6.00 66.93
Prague 22.31 164.35
Rio de Janeiro 7.78 38.53
Rome 10.00 66.26
San Francisco 14.00 72.88
Santiago 8.00 118.58
Sao Paulo 7.78 38.53
Seoul 10.00 64.23
Singapore 4.00 32.33
Stockholm 12.00 88.23
Sydney 2.00 12.98
Taipei 5.00 38.83
Tel Aviv 17.00 55.02
Tokyo 6.00 69.85
Toronto 12.35 41.77
Vancouver 17.70 55.28
Vienna 23.18 196.69
Zurich 6.71 52.59
______

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The Hon. ELISABETH KIRKBY: A recent article in the Economist about the convention business in the United States stated:

Conventions and trade shows are big business for Chicago. The "event industry" pumps $5 billion a year into the local economy, including $50 million in taxes. The city is second only to Las Vegas in the number of convention visitors it gets, and after a four-year expansion costing $675 million McCormick Place offers the biggest exhibition space in the western hemisphere . . .

That is a new and expensive convention centre in Chicago. The article continued:

Convention centres can bolster shrinking tax bases. Even better, they provide the kind of revenue politicians like best: taxes paid by people who vote somewhere else. (Chicago conventioneers pay taxes on their transport, food and hotel rooms.) In 1989, only three cities had trade and convention facilities of more than 500,000 square feet. By 1998, there will be 23 . . .

Successful convention destinations need plenty of hotel rooms and a good transport system.

Nothing in the article suggests that the imposition of a bed tax in Chicago has cut down the number of conventions being held there. Of course, climatically Chicago is a much less attractive place than Sydney; in the winter it is a bitterly cold and miserable city and in the height of summer it can be extremely hot - far hotter than it could ever be in Sydney. Despite that, Chicago is the number one convention city in the United States. Therefore, I am not sympathetic to the extremely heated comments advanced earlier today in this Chamber, in particular, by the Leader of the Opposition and the Deputy Leader of the Opposition.

One must remember that conference expenses are tax deductible. In most cases the costs of delegates attending conferences are borne by the industries and businesses interested in the theme of the conference. If one is paying $150 for a hotel room - and it would be difficult at present to obtain a room in Sydney in a five-star hotel for $150 - the additional $15 tax payment would be equivalent to three cups of coffee or three beers. I also support the proposed increase in land tax as announced by the Treasurer. However, I part company with the him in regard to the way the additional revenue from the increased taxes will be spent. I remind honourable members of the words of John Maynard Keynes, who in 1926 said:

The important thing for Government is not to do things which individuals are doing already, and to do them a little better or a little worse, but to do those things which at present are not done at all.

Since then the Government has begun to do something to assist the underprivileged. However, in New South Wales, community services are still not a priority for either the Labor Party or for the coalition. The Standing Committee on Social Issues, of which I am proud to be a member, is currently investigating conditions in hostels and nursing homes in New South Wales. So far investigations reveal disturbing situations. Because of the growing shortage of supported accommodation for the intellectually disabled many young adults with intellectual disabilities are living in nursing homes with the frail aged. The chair of the Council for Intellectual Disability in New South Wales gave evidence to the Standing Committee on Social Issues about a 13-year-old disabled girl in Tweed Heads, who was one of 992 young people with disabilities lying in nursing homes designed for the frail aged. Currently 2,200 disabled people in New South Wales live in the care of ageing parents.

Time and again this problem has been brought to the attention of governments - the former administration as well as this Government - but the expenditure on supported accommodation is still inadequate. What is worse, in order to accommodate funding cuts, brain-damaged adults, frail aged and dementia patients are living together in the same complexes. They share activities, common room facilities and recreation areas. Honourable members will remember that I have asked questions of the Minister for Community Services about the appalling situation of the intellectually disabled at Watagan Lodge, Cooranbong. That facility is being closed at long last. Though some of the clients have been moved into independent supported accommodation, others are to be moved to vacant accommodation in the grounds of Allandale, outside Cessnock. These accommodation blocks were built originally to form a psychiatric hospital. They are now being used as State nursing home accommodation.

In Cooranbong clients were within walking distance of shops and buses and therefore had a degree of independence. Allandale is too far away from Cessnock to allow clients the same freedom of movement. What is worse, I have discovered that some of the most severely and intellectually disabled will be sent to Stockton. Honourable members who are familiar with the hospital at Stockton will know that this facility is for the most severely, physically disabled people in the Hunter. Those are the tragic people who need total care because their disability does not permit them to do anything for themselves. They need constant physical care and attention. This was not the case for those who were living in Watagan Lodge - people I knew when I lived in Cooranbong and saw frequently walking around the local shopping centre.

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The budget allocation is not sufficient to expand the accommodation to meet the needs of those who require it. Budget Paper No. 2, program 4.3.5, page 4-67, states with some pride that 300 units have been made available to people with disabilities but there are still 2,200 people living with ageing parents. The $4 million that has been allocated will not meet the demand, and that is the reason that the Council for Intellectual Disability is so concerned. The money allocated will not meet the need. I reiterate the comments of Keynes: government should do those things which at present are not done at all. The Minister and his director-general are aware of the projected needs because they have the figures. The Council for Intellectual Disability, the Council of Social Service of New South Wales - NCOSS - and all the support groups continuously lobby the Minister for Community Services for funds, and have done so for years. They lobbied the Leader of the Opposition and the Hon. Virginia Chadwick when they were responsible for the community services portfolio, but nothing was done by them.

I welcome the statement by the Treasurer that spending on community services will be increased by $63.2 million. Regrettably, this represents only a 3.2 per cent increase in real terms after inflation is taken into account. As I said earlier, year after year concerned members of this House raise these problems; I am quite certain that concerned members of the Labor Party raise these matters in caucus and concerned members of the coalition may very well raise them through backbench committees. Despite that, no substantial change has been made in the funds allocated to these needy areas.

I hope that the $75 million allocation in the budget for State nursing homes will now permit frail aged and dementia patients to be housed separately. Above all, I hope that brain-damaged clients can be put in specialist accommodation that will give them increased opportunities for rehabilitation and the possibility of a return to a more independent life rather than have to remain under institutionalised care. I was surprised to read in the budget that West Wyalong Hospital is to be redeveloped at a cost of $6.4 million at a time when staffing cuts are being made at Temora and District Hospital. Staff at Temora hospital are to be transferred to Wagga Wagga Base Hospital or made redundant. Regrettably, the scheme that was in place during the hospital waiting list reduction program to encourage surgeons to travel to Temora to perform less complex operations closer to patients’ homes has been abandoned. Even simple operations will now take place in Wagga Wagga Base Hospital, although a substantial sum of money was spent last year to upgrade the operating theatre of Temora hospital.

When I questioned the area health manager about the abandonment of the scheme I was informed that because of earnings lost during the time it takes surgeons to travel from Wagga Wagga to Temora they will not travel to Temora. Yet the surgeons willingly travelled during the waiting list reduction program. I cannot believe that after further consultation and coordination the scheme could not continue. Is the abandonment of the scheme a savings measure introduced by the chief executive officer of the Greater Murray Health Service to contain the overrun at Wagga Wagga Base Hospital? If so, it does not line up with the Treasurer’s boast that increased funding on health will go to under-resourced areas. I point out to the House that if the surgeons will not travel from Wagga Wagga Base Hospital to Temora, which is a distance of under 100 kilometres, they certainly will not travel from Wagga Wagga Base Hospital to West Wyalong, a distance of over 200 kilometres.

I raised this issue with the Minister for Health during the estimates committee hearings. He was extremely sanguine and said that he was certain that doctors would practise in rural areas. I wish the Minister luck, because I doubt that doctors will go to rural areas. Doctors may be encouraged to come to West Wyalong if the Lake Cowal goldmine project is allowed to go ahead. If areas as remote as Lake Cowal and West Wyalong have a project of that size, the mine owners might entice doctors to practise in their regions, and the expansion of West Wyalong Hospital will become of value. I am as critical as many other commentators about the allocation of $50 a year per child to assist poorer families with the purchase of books, uniforms and school shoes. On 18 May 1997 the Sunday Telegraph noted:

If it was directed at struggling families, why do rich families get it also? Why wasn’t it linked to some form of means tested Commonwealth payment to young families? It is all a bit unconvincing.

I would have been much happier if the money had gone to the schools so that children from struggling families could seek access to the money. There are too many loopholes in the Government’s scheme. If a family is struggling with a multitude of bills, that money may be used to pay off the more urgent bills. The money may be swallowed up by parents who are addicted either to alcohol or gambling. One thing is certain: with the proliferation of poker machines and the proposed linking of poker machines in clubs, hotels and TAB outlets, more people will become addicted to poker machine gambling. Research indicates that more women than men are poker machine addicts.

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About 10 days ago I held a farewell party for my former research assistant Nina Blackwell, who left to take up a position as a political adviser to a member of the Federal Parliament. I took the leftover party food to the Matthew Talbot Hostel on my way home - as I have done on previous occasions - and it was accepted with gratitude. Whilst there, I talked to the supervisor on duty, who explained that the majority of residents at Matthew Talbot Hostel are addicted to gambling; not as it was in the old days when the majority were addicted to alcohol or other drugs. He also said that he had been informed by field workers that it was far more difficult to overcome a gambling addiction than it was an addiction to alcohol or cigarettes. So the Government is not doing the people of this State any favours by increasing avenues for gambling. That is one of the reasons I support the imposition of the increased tax on poker machine revenue.

I have received a considerable amount of correspondence from people begging me not to support the increase in the poker machine tax. I would be more impressed by the correspondence if it had not been masterminded by the Registered Clubs Association. Many of the letters were written under club letterheads and were not individually signed by club members. Many do not contain an address or a name. They have signatures scrawled across the bottoms of them. Those who signed the petitions were more open and honest than those who were told by the clubs to sign a scrawled signature - and I am certain that the clubs paid the postage. Petitions contain printed names and addresses. I am not impressed by such correspondence. I was angered by the tragic, personal letters that I received from women who are employed in the clubs, perhaps as bar attendants, kitchenhands or cleaners - woman who have had fear put into them by club managers.

They have been told to write to members of Parliament, particularly crossbench members, because if the increased tax goes through they will be sacked. Those letters were most distressing. The tax on poker machine revenue in this State is lower than in any other State. Why are the clubs complaining? Even with an increase in the poker machine tax they will not be taxed as heavily as clubs in other States are taxed on poker machine revenue. They are putting fear into the minds of women who are employed by them and they are allowing the women to believe that they are in danger of losing their jobs. That is a form of blackmail. I also believe that the letters that I have received - literally hundreds - are another form of blackmail, which is why I do not intend to take any notice of them; I believe that they are the same as anonymous letters.

The Treasurer, in his budget, announced the proposed expenditure of $1.8 million on public transport and $61 million for the public transport infrastructure improvement program. However, the proposal to compensate the M2 owners if the tolls do not realise the revenue expected by the consortium that constructed the tollway does not show a strong commitment to public transport. What is worse is the Government’s total inability to provide adequate public transport for the Rouse Hill development. In my book this is a disgrace. It does not seem to have dawned on the Government that Rouse Hill will develop into a city the size of Canberra. Now is the time to start planning for the future transport needs of a city of that size - when it is in the planning stages, not when the people are already living there, not seven or eight years down the track when the existing and proposed roads are clogged with cars and no land is available, except at great cost, for light rail or heavy rail.

Many forums have been held about the Rouse Hill development. Forums, organised by local government, have been held in The Hills district, attended by town planners, local government officials, representatives of the Roads and Traffic Authority and representatives of the Minister for Urban Affairs and Planning. I too have attended those forums. It appears to me that, whatever some of those planners are saying, they are not taking into account the fact that the Rouse Hill development is proceeding very quickly and the transport needs are not being addressed. I believed that it would be proper to write a letter to the chairman of the Standing Committee on Public Works to ask whether he could take on board a reference about the transport needs of the development at Rouse Hill.

The chairman wrote me a courteous letter in reply, but it was a letter of refusal. Apparently, the provision of airconditioning in demountable schools in areas of New South Wales where the summer temperature rises to the extent that airconditioning is desired is a more urgent priority than the transport needs of a city the size of Canberra. I think this is the wrong priority. I realise that in the far west of New South Wales children in demountable classrooms have a hard time, particularly in February and March when the temperature is high. However, I believe that bigger problems will arise for the Government if the transport needs of Rouse Hill are not addressed. I am concerned about the impact of the Rouse Hill development, not only because of the increased use of motor vehicles but also because of the impact of the increased levels of pollution and the additional photochemical smog within the Sydney Basin. The Government’s lack of vision is implicit in the capital program - $1.1 billion for roads against $348 million for rail.

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It makes no sense for the State Rail Authority to continue to fiddle with the timetables, which makes rail the least preferred option, when we have to spend increasing amounts of money on roads. For example, previously on Monday to Friday a train left Central Station at 4.45 p.m. and arrived at Cootamundra at 9.45 p.m. On Thursdays or Fridays, this was an ideal train for me to go home on, along with all the other Riverina politicians and people who had been in Sydney on business. The timetable has been changed and the train now leaves Central Station at 8.30 p.m. and arrives at Cootamundra at 1.00 a.m. It is now more convenient for people from Wagga Wagga, Cootamundra, Harden and Yass to travel to Sydney by air, even if they have to drive to Wagga Wagga first, because they do not get home in the middle of the night.

The new timetable does not suit business people or pensioners - in fact, it is difficult to imagine whom it suits. In an attempt to restructure passenger services the State Rail Authority and CityRail have tinkered with timetables and made them less user friendly. The new CityRail timetable has resulted in chaos, the dismissal of several senior railway managers and the return of David Hill. What did supremo Hill do? He returned to the old timetables, with a consequent improvement in services, but the new train timetables - or the reversion to the old timetables - have not been matched by a change in bus timetables. Bus operators have said that it will take them three months to get their timetables in line with the railway timetables. All that supremo Hill has done is go back to the old timetables, so why cannot the bus companies do the same? They say that that is impossible. I do not know how much this has cost taxpayers. I had hoped to find that out during the estimates committees but unfortunately I was unable to do so.

I have studied the budget papers and I have been intrigued to discover that the post-sale costs of the State Bank, which was masterminded by the Treasurer - who insisted that the sale was essential - were in excess of $200 million. It cost us $200 million to sell the State Bank - but we spend only $75 million on nursing homes. I wonder whether the Treasurer’s much publicised proposal to sell off our electricity generators and supply authorities will have the same result? Has the Treasurer estimated what the post-sale costs will be if his courageous decision to sell off our electricity assets eventuates? It is a courageous decision in the Sir Humphrey’s sense of the word.

I am not surprised that the Treasurer did not include the sale in this year’s budget, because then it could never have been described as a Labor budget. Indeed, the anomalies in this budget become more glaring every time I read the Treasurer’s Budget Speech. An amount of $6.4 million has been allocated for investigation work into child abuse. What a pity it could not have been $11 million. Why could not the $4.5 million allocated to the police for modern self-loading weapons have been abandoned? How could modern weapons for police help children at risk of abuse, particularly when only $4 million has been allocated in 1997-98 for foster care and residential care services for children at risk? Why not $8 million in 1997-98 to put more money into looking after children at risk? Forget about the new weapons.

Earlier I mentioned the public transport system, but there is another anomaly: $1.24 billion has been allocated for roadworks, and $1.27 billion for rail. Surely in the long term it would be better in every way to concentrate on rail for both passengers and freight. Expenditure of $2.5 billion might just bring back the excellent rail service our forebears enjoyed in New South Wales over 100 years ago. Rail maintenance, particularly for freight, is infinitely cheaper than road maintenance, a fact that is conveniently forgotten. If we are ever to counter the pollution caused by road transport, particularly the reliance on private transport, efficient public transport - whether by rail, bus or ferry - is a must. At the moment we cannot even guarantee the efficiency of late-night transport between Sydney and Gosford; a simple connection between Gosford and Hornsby.

The Government might say that the recent stranding of passengers at Hornsby was a one-off occurrence, but a proliferation of such one-off occurrences - whether due to track maintenance, signal failure, timetable glitches or human inefficiency - means that the average citizen no longer trusts public transport. It is still easier, cheaper and more convenient to drive oneself. This is most probably the last budget speech I shall make in this Parliament, and recently I reread with some wry amusement my first budget speech, which I made in 1981. So little has changed since then, so little in budget measures outside New South Wales. I would like to take honourable members back to what I said on 24 November 1981. My first speech in this Parliament was on that year’s budget. I said:

Yet in his printed Budget Speech, the Premier stated that no primary or junior secondary class need exceed thirty pupils and no senior secondary class need exceed twenty-five pupils. With a class size of thirty, if face-to-face release was 20 per cent, stated by the Premier in his Budget to be a high priority matter, 4 000 extra teachers would be required for infants and primary schools alone. In secondary schools, to achieve a

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pupil-to-teacher ratio of 25:1, 2 000 extra teachers would be required. Yet there will be a net increase of only 120 teachers to be employed in the financial year 1981-82; a band-aid measure. How can we accept this situation, knowing as we do the tragic problem of youth unemployment in this State? We have seen only a few weeks ago, the disturbance among young people in the western suburbs of Sydney. We know there are now more than 15 000 homeless young people in Sydney’s Kings Cross. No one in this Chamber can condone the life society has forced upon them. We have not been elected to blame them, to mouth platitudes about the breakdown of society - surely we are here to devise policies that will make alternatives possible; to create conditions that give the young people of this State hope for the future.

Where are we now, in 1997? I continued, and again this is even more ironic:

The federal Treasurer, the Hon. J. W. Howard, stated in his Budget Speech that "interest rates have risen because the total demand for money in the community has exceeded its availability". The policies the Government of this State is trying to implement depend to a large extent on the Loan Council. The Loan Council declined to approve funds requested by New South Wales in 1981. There are reasons for this, which are not purely party political. In 1980, the Commonwealth paid out of our taxes $5.835 million just on interest payments to service the debts of the New South Wales Government. In sinking fund payments, the Commonwealth paid out $37.608 million between 1978 and 1980. This year, it will pay $13.765 million. The New South Wales Government is receiving from the Commonwealth taxpayer $472.761 million for the larger authorities’ programmes.

The Loan Council no longer exists; it was dismantled during the time of the Hawke administration. But it is interesting to compare what I said in 1981 with what many people may be wondering now about electricity. I said:

The Electricity Commission has floated a public loan to raise between $950 million and $1 billion, the sum of money that will be needed to complete the power stations at Eraring and Bayswater, and to commence building the Mount Piper power station. A recent statement that power station development could be in the hands of private companies which would then lease the operating facilities to the Electricity Commission will not alter the inflationary pressures implicit in such borrowing. The money will still have to be borrowed overseas; it will still affect the national capital account; it will still affect our balance of payments. The end result means that a State Authority will be indebted to some private company and the terms of the leasing arrangement will have to permit that company to recoup the capital cost. The ramifications of such a scheme are too complex to be discussed today, but inevitably it will be the citizens of this State who will bear those costs, almost certainly in higher charges for domestic power, while the price of power to industry remains secret - a concept that is strangely part of life in New South Wales. In the United States of America, the cost of providing power to industry is in the public domain. Even in Victoria, the tariff to all consumers is advertised in the press. The rate for domestic consumers, the rate for commercial consumers, the rate for light industry, and the rate for heavy industry, are clearly laid out for any citizen to read.

I really begin to wonder what has changed. We are in the same situation. Our schools still have too few teachers. Children are still in classes that are too large. We are still trying to come to terms with how we pay for electricity generation. Yet, outside the world has changed beyond belief. According to the Minister for Education and Training all schools in New South Wales are now on the Internet. I am not sure how that will happen in country areas, whatever the Minister may believe, because it involves more than his putting computers in schools. In the past 24 hours the Minister announced that another 5,000 computers for schools, but unless service providers for access to the Internet are available, schools in country areas will not be able to access the Internet. Unless the local exchange has been converted to a digital exchange, schools will not be able to access the Internet unless they pay for an STD call. Has the Minister factored that into his budget for New South Wales schools? I do not think so.

All honourable members are linked by fax and, if they wish, they can be linked by e-mail to many government instrumentalities. Along with hundreds of thousands of citizens we have mobile phones. We can get world news 24-hours a day, either by satellite or by cable. Previously complex surgery such as joint and hip replacements, heart bypass and cornea implants can now take days instead of weeks. Sixteen years ago organ transplants were rarely, if ever, performed. Multiple resonance imaging, which can save individuals and the State millions of dollars by showing how many surgical procedures can be avoided, was not generally available in 1981.

Much has changed since I, the first woman from a minor party, was elected to this Parliament in 1981. Scientific advances have been adopted in New South Wales and some have been the work of Australian scientists and researchers. Australia leads the world in AIDS research, in microsurgery and, in particular, neonatal surgery. But to repeat statements I made in 1981, as I did just now, I despair that in so many other areas so little progress has been made. I refer particularly to the care of the intellectually disabled, the aged, the underprivileged and those who are penalised from birth - those who are born into disadvantaged families whose parents have no stable employment, who may have turned to drugs, including legal drugs such as alcohol and tobacco, to relieve their depression. Many others are addicted to gambling, reinforcing the belief that Australians will bet on anything, even two flies climbing up a wall. Of course, the New South Wales Government helps to feed their addiction.

I have left the plight of the first Australians to the end of my list of the neglected, not because I believe that their plight is not desperate - I do - but because it is far more important than the problems
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faced by any other section of the community. It is so overwhelming that we cannot continue to ignore it. A politician - regrettably, a woman politician from another State, the most backward State in Australia in global terms - whose name I never mention because she has already gained far too much publicity, recently stated that welfare should be based on need, not race. I say to her: to treat equally those who are unequal perpetuates inequality. I also say to her: to suggest that the church has no place in politics is an outmoded concept - outmoded by at least 100 years.

Ever since the Industrial Revolution and the first mass migration to the cities nearly 200 years ago all churches of whatever denomination have been involved in social work, in caring for the underprivileged and in fighting social inequality. Elizabeth Fry was a Quaker who worked for prison reform. The evangelist Earl of Shaftesbury - the seventh earl, if the Treasurer wants to attack the British aristocracy - introduced the Coal Mines Act 1842, which prohibited underground employment of women and children. Pastor Niemollar, the German Lutheran who protested against Nazi totalitarianism, was imprisoned from 1937 to 1945 in Hitler’s concentration camps. Abraham Lincoln, another devout Christian who led the United States through the Civil War, said this of "the monstrous injustice of slavery":

If the Negro is a Man, why then my ancient faith teaches me that ‘all men are created equal’ and that there can be no moral right in connection with one man’s making a slave of another.

It might interest honourable members to know that this speech - which was made by Abraham Lincoln at Springfield on 16 October 1855, in appalling weather conditions we are told - lasted four hours. The Baptist minister Martin Luther King continued the fight for civil rights into the 1950s and 1960s. I do not have to tell any honourable member about the amazing oratory of Martin Luther King. To read his words brings tears to the eyes. Even repeating snatches of his address in 1963 in Washington is difficult as every one of his words is charged with emotion. Martin Luther King said:

I have a dream that one day in the State of Alabama, whose governor’s lips are presently dripping with the words of interposition and nullification, will be transformed into a situation where little black boys and black girls will be able to join hands with little white boys and white girls and walk together as sisters and brothers.

When all God’s children, black men and white men, Jews and Gentiles, Protestants and Catholics, will be able to join hands and sing in the words of the old Negro spiritual: ‘Free at last, free at last, thank God Almighty, we are free at last’.

Before honourable members ask why I am talking about the end of slavery and the racial divisions of another country, I will explain. I am sure that this will be the last speech in which I can legitimately stray from the object of the bill. As I looked through the Treasurer’s Budget Speech I realised that not one sentence in it is devoted to the Aborigines of New South Wales. They might be covered to a degree in community service allocations, health allocations or education allocations, but although we have a Minister for Aboriginal Affairs, his portfolio responsibilities are obviously not a priority for the Treasurer and they were not mentioned in the Treasurer’s speech - and this at a time when wildly exaggerated claims are being made by the Federal Minister for Aboriginal Affairs.

Funding to the Aboriginal and Torres Strait Islander Commission and other programs designed to assist Aborigines in Australia is being cut. The report of the Human Rights Commission identified that the dispossession of Aborigines was not a phenomenon of the late nineteenth century; that it continued into the 1950s, the 1960s and the 1970s with devastating results. When the Prime Minister condemns the black armband view of history it is time to speak. There is no need to demoralise all white Australians for their behaviour or indifference 50 years ago, or even 30 years ago, but at least we could apologise. One of the important monuments in New South Wales, the hall on Elizabeth Street where Aborigines began their fight for emancipation in 1938, could be granted to them as a heritage site. The silent vigil commemorating the granting of the vote in 1967, which was held outside this Parliament on 27 May, was led by another group of committed Christians, the Society of Friends. Yet when we debate this budget, pipelines, electricity generators, freeways and road tolls appear to be the priorities.

We can give the police extra powers to deal with so-called street violence. We can spend tens of millions of dollars on the Olympics. But we forget the victims, the oppressed, the underclass that now exists in urban Australia. There is money for more gaols and more juvenile detention centres, but there is no money for support systems, health and housing needs and assisted education to enable all the underprivileged, not only Aborigines, to shed the shackles of poverty. For 16 years I have made these statements and talked about priorities. I have visited gaols and juvenile detention centres, and I have visited the Aboriginal communities in Moree, Taree, Baryulgil, Grafton, Brewarrina and Redfern.

I have studied youth violence, juvenile justice and youth suicide. But in a year when it is more important than ever to combat the divisive ignorance
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of the Federal member for Oxley, who is pandering to populist greed and self-interest, New South Wales is set on a path of economic rationalism without counting the cost in human terms. I have spoken at length in this debate, and I do not apologise for that. My words are only a faint reflection of the great orator reformers. I am not an Abraham Lincoln or a Martin Luther King, a John F. Kennedy or a Nelson Mandela. My words can only echo those who have stirred and inspired me and who sustain me as I sit in this Chamber. I will conclude my contribution by reading two further quotes. At the end of my maiden speech in 1981 I said:

I have often been asked, "Why are you an Australian Democrat?" In the past I gave many reasons. Recently I found another reason, and I can assure honourable members it is not the reason given so often by my federal leader.

At that time my Federal leader was the Hon. Don Chipp -

It is a reason found in a hymn written by James Russel Lowell, an American poet, writer and diplomat, who attacked slavery. He was an early admirer of Abraham Lincoln. James Lowell succeeded Longfellow to the chair of modern languages at Harvard University and was the founding editor of the Atlantic Monthly. All his life he spoke out fearlessly for democracy. The last verse of his hymn, I believe, is as important to Australian Democrats in 1981 to American abolitionists in the 1850's:

They are slaves who fear to speak,
For the fallen and the weak;
They are slaves who will not choose
Hatred, scoffing and abuse,
Rather than in silence shrink,
From the truth they needs must think;
They are slaves who dare not be
In the right with two or three.

I still believe, as I did in 1981, that I am in the right now with 11. In 1981 the Australian Democrats were two or three; there are now 11 Democrat members of Parliament. I also bring certain other words to the attention of the House, particularly because today, in another place, notice was given of a motion containing an apology to the Aboriginal people of New South Wales. This House has not had notice of a similar motion, but in a debate on private members’ day the Hon. I. M. Macdonald touched on the plight of the Aborigines. I would like to bring to the attention of honourable members the words of Chief Seattle, who in January 1855 agreed to lead the Suquamish and allied tribes into a reservation in the State of Washington. Chief Seattle had converted to Christianity. He wanted to believe that the reservations would protect the traditions of his people. Yet he also foresaw the tragic future of his people. He too was a great orator. These were his words 142 years ago:

. . . and when the last Red Man shall have perished from the earth and his memory among the white men shall have become a myth, these shores will swarm with the invisible dead of my tribe, and when your children’s children shall think themselves alone in the fields, upon the highway, or in the silence of the pathless woods, they will not be alone.

In all earth there is no place dedicated to solitude. At night, when the streets of your cities and villages will be silent and you think them deserted, they will throng with the returning hosts that once filled and still love this beautiful land. The white man will never be alone. Let him be just and deal kindly with my people for the dead are not powerless - Dead, did I say? There is no death. Only a change of worlds.

Those words should inspire us in New South Wales in 1997 because I believe we are entering a dangerously divisive period in our history. The gap between the haves and the have-nots is widening and simplistic populism is feeding fear, greed and ignorance. It is the insidious evil of this populism that we have to fight. It is a fight that we must win if we are to become a united nation.

The Hon. D. F. MOPPETT [6.06 p.m.]: It has been a pleasure to listen to the speech of the Hon. Elisabeth Kirkby. She indicated to the House that her speech was one of particular significance, and that significance was not lost on me or my colleague the Hon. Virginia Chadwick, who came down from her office especially to hear what the Hon. Elisabeth Kirkby had to say. It was a privilege to hear her deliver such a thought- provoking speech. I am sure many of my colleagues will read the speech and join with me in commending the Hon. Elisabeth Kirkby for the sincere views she has put forward. She made comparisons with great orators of these and earlier times, and was humble enough to say that she believed she was not in the same category.

I remind the Hon. Elisabeth Kirkby of a quotation that I have always kept close to me. I have never been very good at accurately attributing it, but I understand it was from a speech of either Admiral Nimitz or Admiral Halsey, the two great American Second World War leaders. They were both larger-than-life heroes to whom the world was looking to produce the sorts of freedoms the Hon. Elisabeth Kirkby spoke about. With typical American pragmatism one or other of them said, "There are no great people, there are only occasions to which ordinary people rise." Although the Hon. Elisabeth Kirkby may not be remembered for as long as Abraham Lincoln and some of the others she mentioned, she has risen to great occasions, and to that extent she has distinguished herself as a great person. Many members of this House, including me, consider ourselves privileged to have known her and to have served with her. With those few remarks,
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which were somewhat impromptu and unexpected because I did not realise that the House was to hear such a significant speech, I turn to the appropriation bills.

I turn, momentarily at least, to the philosophical. One often hears the expression "promises, promises". Those words are inevitably the currency of political exponents, of people who are in the business of trying to inspire us and to sell hope to the community. But it is terrible to reflect how, in recent times, the currency of promises has been devalued. I suppose it is inevitable that the promises that I remember are those made by Labor leaders in recent years that have so disappointed the nation, promises such as "No child will live in poverty by the year 2000" and "These tax reductions will be L-A-W, law." However, the promise that is relevant to this debate is the promise by the Carr Government that there would be no new taxes and no increased taxes. Like the great epic story, that promise has certainly gone with the wind.

I hope the Treasurer will not mind me saying that the worst of it is that he is certainly no Clark Gable, but he could have coined that wonderful expression of Rhett Butler, "Frankly, my dear, I don’t give a damn." The Treasurer seems to have approached these promises as if he had no responsibility for making them. Honourable members should listen to the alienated protestors outside the Parliament who are legitimately objecting to the bed tax. They are protesting on a cold and wintry night, a little like circumstances in which Abraham Lincoln spoke at Springfield. I hope they will not stay out there for four hours, but they have braved the elements because they object to the way in which this bed tax has been introduced. My warning to them is that they should get back to their hotels and screw the beds down, because the way the Government is going it will pinch the sheets, and the next thing to go from these hotels will be the mattresses. The Government has an insatiable appetite for revenue. It will turn to any measure, and recklessly cast aside any undertaking that it has made.

The Hon. E. M. Obeid: What a great performance!

The Hon. D. F. MOPPETT: I never thought I would have to endure the taunt that I am overacting. Other members of my party have spoke at length about this matter, but I want to say how much I admired the contribution of the Deputy Leader of the Opposition. He was fired by passion and concern for country people and for a number of interest groups whose concerns he so eruditely expressed. I join with him in those sentiments. I take this opportunity to express my concern also for the impact that these taxes will have on our community. I am not only concerned about the bed tax. If it were only the bed tax, I suppose somehow or other the Opposition would come to terms with that. But sweeping measures have been introduced to hopefully fill the revenue gaps of this Government, which has been unable to fulfil its promise to maintain a tight ship.

In a low inflation regime continual revenue raising to maintain programs is not necessary. However, the Government has resorted to the easy option of simply adding to the tax burden of the community. I am reminded of "Les Miserables" and the innkeeper, Thenardier. What a master of the house he was - a nip here, a tuck there, a little bit out of someone’s pocket when they were a little inebriated or whatever. That is how he ran his business. That is how New South Wales is being run now - a little nip here, a little tuck there, and a coin pinched off someone who seems to be asleep at the time. But honourable members on this side are arousing the people of New South Wales.

I can assure honourable members on the Government side that these transgressions will not be forgotten. This budget will be remembered as a watershed budget. It will be the point from which the Labor Government is seen to be in an irretrievable position. I know that one cannot always take notice of public opinion polls. When a government sets about a reform agenda it is probably true that for some months, in terms of the two-party preferred voting intention, the Government will be lagging behind. But the Carr Labor Government has now been wallowing in disfavour for nearly two years. How on earth can it make a comeback from a situation like that when all it can say is that it needs more of the public’s money?

I have mentioned the bed tax and the club tax. I wonder how much more can be said about them. Speakers have concentrated on some of the major clubs, like the Panthers club at Penrith, but the plea I make is for the small bush clubs that are the core of social activity in their communities. I am deeply concerned about the future of those clubs. The Hon. Elisabeth Kirkby almost needed a bag trolley to transport the correspondence she brought into this Chamber from all those clubs that are protesting about the increased poker machine tax, but the impact of that tax is almost lost when one looks at
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the matter in globo. It is a matter of getting down to individual communities and individual people who have been the beneficiaries of the benevolence of the clubs in the past. There has now been a major shifting of the goalposts.

The increased poker machine tax is not an isolated incident; it is part of a significant restructure of the whole of the club industry vis-a-vis the hotel industry about which the clubs are now complaining. Charges are now being introduced in the electricity industry. I am absolutely astounded at the ingenuity of the Treasurer. On the one hand, he delivers a budget requiring substantial payments by electricity authorities. Honourable members remember the debate when those bodies were corporatised, but they never thought for one moment that around the corner would suddenly appear a program of privatisation of the whole electricity industry, a measure that has virtually rendered the framework of the budget null and void. Is the Government carefully trying to thread its way through demands on the one hand and availability of resources on the other, or is the Government determined to take one last opportunity to sell the major assets of the State in preparation for a spending binge in the 18 months leading up to the next election?

The people of New South Wales are extremely cynical about the alleged savings to be made from corporatisation of the electricity industry because those savings have not materialised for the average householder. They are cynical about the drawback of money measures contained in the appropriation bills now being debated. The people are cynical about the reversion to land tax as a major source of government revenue for this State. I know that many opposite have said that this measure requires those who can afford to pay to make a contribution to the welfare of the State. They excuse the measure to bring householders within the purview of land tax provisions by saying that this tax will apply only to those whose properties are valued at more than $1 million. But, once that threshold is set, and once the undertaking that people will not pay land tax on their primary site of residence is broken, where will it end? The threshold may be $1 million this year, $500,000 next time there is a revenue pinch, or even $250,000 at some later stage.

I am delighted to say that as far as my party is concerned, it will ensure when returned to office that there is a return to the basic principle that land tax is not an appropriate tax to impose on householders who are living in their own homes. That measure will be repealed when the time comes. The imposition on vehicle taxes in an area of heavy taxation is counterproductive. Many members of this House have sought to further discourage the use of motor vehicles, but increasing motor vehicle tax is not the way to do it. Many people in the State of New South Wales, and I am one of them, simply could not carry out the normal functions of life without the use of a motor vehicle. Motor vehicles that use dirt roads and those that are used extensively for small commercial and social contacts incur additional costs.

It is onerous to have to pay increased stamp duty every time there is a revenue crisis. That should be deplored by all country people and should also be a matter of concern for city dwellers. Another little tuck has been added to insurance that will result in another $56 million being taken from ordinary policyholders as a contribution to the failure of this Government to properly manage its affairs. I acknowledge that the parking levy was introduced by the former Government, but like so many of these matters the initial concept is that they will remain at a low level and will not have a major impact. However, as soon as any pressure is applied, they are increased.

A number of the other revenue measures that have been introduced have not received a great deal of attention. On many occasions I have spoken of the problems of the New South Wales timber industry. It is ironic that at a time when the timber industry across Australia, and particularly in New South Wales, is wallowing in the deepest of troughs as a result of the recession in the building industry, the royalty charge is to be hiked by 30 per cent. The supply resource to the hardwood milling industry and the quality of that resource is being reduced. Anyone who knows anything about the industry knows that the quality of logs from areas available for logging is being reduced because of the pressure on those areas and because so much of the resource has been locked up in deferred forest areas and national parks. The industry is overheated.

In addition to all of that, this year the average royalty charge has been hiked 30 per cent. That measure will spread-eagle our timber industry and leave the way open for Victorian and Tasmanian mills to move in and fill the gap. Despite the Government entering into five-year contracts to supply logs to various mills, the quality of logs has deteriorated. Recently someone from Taree with a great deal of experience in the sawmilling industry told me that he had seen a load of logs that comprised 58 trunks. Old pictures from forestry activities depict one, two or three logs being carted, but with modern transport equipment one could
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expect the average load size of commercial millable logs to be 10 or 12 logs. The so-called logs that are being cut now are basically little sticks, and I forecast a very rocky future indeed for the hardwood milling industry in New South Wales.

The Hon. Jan Burnswoods: What an indictment of State Forests over the years!

The Hon. D. F. MOPPETT: I do not think it has anything to do with the management of forests over many years; it is a result of measures taken over the past three years. An example that should be of concern to all Government members is that the construction authority for the Olympic Games put out a tender for tallowwood flooring. Undoubtedly it was for a basketball court or a playing surface because tallowwood is regarded as the best possible resource for that purpose. Tallowwood was unprocurable from the areas available for logging in New South Wales. Yet there are vast stands of tallowwood in various conservation reserve areas in New South Wales. I believe the Government is cutting off its nose to spite its face by indulging in these exercises, and that is a great shame.

Public debate is raging at present about the level of private health insurance. The Minister for Health, the Hon. Dr Andrew Refshauge, has blamed many of his problems on the declining level of private health insurance, which has thrown many people back into the public health system. However, he is not prepared to admit that the New South Wales Government has added another little nip to the health insurance levy. It has increased and another $15 million will be raked off those with private health insurance. Railway access charges are a major problem.

The Hon. E. M. Obeid: We have not proposed anything for regional Australia.

The Hon. D. F. MOPPETT: I will move to regional development in a moment. The small hidden increases are of immense significance. Many Government members would have received representations about the steep rise in the cost of second-hand dealers’ and pawnbrokers’ licences. They have increased from $30-odd to $325. Wherever one looks the Government has raised taxes and has obtained extra revenue here and imposed extra taxes there. The net effect will be that the people of New South Wales have lost confidence in the Government and its economic strategies. That is particularly disappointing because the Opposition understood that the long parliamentary recess was necessary so that the Treasurer could get the budget right.

It was almost as though the Government was a fleet waiting in the harbour for a refit. The Opposition expected that the Government would emerge prepared for battle and that it would be able to defend its position. What has happened since then? The Minister for Transport is now virtually in tow. David Hill has been recalled and Michael Knight has taken over some aspect of the portfolio of the Minister for Transport. He is virtually a Minister sine cura, and that is an indictment of the Government. The Hon. Jan Burnswoods has been following developments in the Department of Fisheries and its ministry with almost obsessive attention. She will be as alarmed as I am to realise that the ministry is now just a smoking hole.

The Hon. R. D. Dyer: I thought you were obsessed with fish.

The Hon. D. F. MOPPETT: Absolutely not! Talking about fishing matters is but one of the many duties I have in this House. I am concerned that a senior member of the Premier’s staff, Col Gellatly, has been asked to get to the root cause of why the industry is totally opposed to the Minister’s moves and to try to restore confidence between the industry and the Minister. As a result of the parliamentary inquiry, consultants have been appointed to examine the department. It is hoped that the consultants will make recommendations and suggest changes so that when the report is brought down in September the Minister will be able to say that he anticipated those recommendations and changes and they have already been put into place.

One does not need to be a genius to realise that none of that would have happened without the continuous badgering from this Chamber and without the inquiry by the Standing Committee on State Development. The mining industry is also in total disarray. Apart from the Lake Cowal project, which on many occasions has been debated in this House, the Discovery 2000 project has been winding down. I have spoken about that matter before. I have expressed the Opposition’s alarm that the original $40,000 program was cut back and it is now pottering along in a desultory way, without having any real bite or drive from the Minister. That is a tragedy.

Debate adjourned on motion by the Hon. D. F. Moppett.

[The Deputy-President (The Hon. Ann Symonds) left the chair at 6.30 p.m. The House resumed at 8 p.m.]

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Bills received and, by leave, read a first time.

Suspension of standing orders agreed to.

Debate resumed from an earlier hour.

The Hon. R. T. M. BULL (Deputy Leader of the Opposition) [8.04 p.m.]: Earlier I was drawing my remarks to a conclusion. I referred to the impact of this iniquitous tax increase on registered clubs across New South Wales and on community organisations which have been well supported by a number of registered clubs in the past. I referred to the Rich River Golf Club at Moama and Moama Bowling Club. I received a letter from the Avalon Beach RSL Club regarding the financial impact of the tax increase on the club. In 1996 the club reported a net profit of $39,939. When one applies the proposed tax increase to the duty paid last year, one finds that there would be a reduction in profits of $77,898, which means that the club would go from a profit position of approximately $40,000 to a loss position of $36,000. This iniquitous tax will result in a loss of jobs and a reduction in funding to local community organisation. It will halt any present or proposed development plans of many clubs.

The review of the Avalon Beach RSL Club’s operations suggests job losses if trading is unprofitable. The planning for a proposed $2 million renovation will be postponed indefinitely. In 1996 the club provided financial support of $34,000 to the local community. On-the-job training provided to local schoolchildren will also have to be reviewed. I received a letter also from SuperiorFit Australia Pty Ltd, which, as I am sure that the Treasurer would know, is a well-performed decentralised industry in Albury - one of the better parts of New South Wales. The letter states:

It is with concern that we write to you and ask your support in stopping the Carr Governments planned increase in Poker Machine Tax.

SuperiorFit Australia are uniform designers and manufacturers and as part of the T.D. Noone Group of Companies are celebrating our fiftieth year in business this year.

SuperiorFit Australia is not a shop front organisation, we currently employ thirty-eight staff including sales offices in Sydney and Melbourne. We do not import garments nor do we use outworkers, all items comprising a uniform are manufactured by ourselves in our plant in Albury.

Presently we supply uniforms to one hundred and fifteen registered clubs in New South Wales.

The impact on the profit level of clubs should this legislation be passed will undoubtably have a direct impact on our sales and in turn our employment levels.

That is just another example of the impact of this stupid tax increase, which the Carr Labor Government has imposed on New South Wales. One cannot get too much farther away from the central business district of Sydney than Lightning Ridge. The Lighting Ridge and District Bowling Club Secretary Manager, Ian Woodcock, wrote:

It will mean an end to community based expenditures, donations and sponsorships in Lightning Ridge and Walgett. The club spends between $150,000 and $200,000 per year on donations, sponsorships and other community needs. Where we showed a profit of $520,000 last year before tax we will actually show a loss somewhere in the vicinity of $250,000.

Members who have been to Lightning Ridge - the Hon. D. F. Moppett, the Hon. M. R. Kersten and many other country members - would know that the club is a very important facility for the town. The club is the centre of many activities in Lightning Ridge. This tax increase will tear the heart out of the club and the Lightning Ridge community. It is a disgrace. It is a demonstration of how the tax will impact on small rural communities, such as Lightning Ridge. A letter I received from the secretary manager of the Port Kembla Golf Club Ltd states:

I am writing to voice my concern and total opposition to the proposed new Poker Machine Tax which will affect many Registered Clubs. Clubs are non-profit organisations and provide a great deal of support to many community groups. The increase in the Poker Machine Tax will certainly affect the amount of support able to be given.

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Poker machine revenue to the NSW government is 50% more than the total tax of club gaming revenue collected by the Victorian, South Australian and Queensland governments combined. Also, in NSW our machines are purchased at $12,500 per machine -

it is more than that now -

so the tax rate should be lower than that of Victoria and Queensland as the NSW government has been saved the expense of purchasing the machines which is the sum of $800 million for the 64,157 machines.

That gives the lie to the comparison made by the Treasurer between the position in New South Wales and that in other States. As honourable members who are informed about this issue would know, it is not a matter of comparing apples with apples; it is a matter of comparing apples with oranges. Merlot Constructions Pty Ltd, specialist builders to registered clubs, believes that it has lost $75 million because of shelved building projects. All this affects jobs. How many jobs are we talking about? Merlot Constructions has just lost $75 million in building projects. Honourable members will recall that earlier I referred to a suggestion by another construction company that clubs in New South Wales had construction projects totalling $600 million, of which Merlot’s share is $75 million. How many jobs will be affected? The Australian Labor Party could not care less about these jobs. Not one member of the Australian Labor Party has participated in this debate. One can only conclude that they are all embarrassed by the efforts of their Treasurer and Government. The Minister for Community Services is also embarrassed about this decision.

The Hon. R. D. Dyer: You are wrong.

The Hon. R. T. M. BULL: The Minister is not embarrassed at all.

The Hon. R. D. Dyer: The Treasurer is a member of the Australian Labor Party.

The Hon. R. T. M. BULL: I am very pleased to hear that. The Minister for Community Services is a member of the Australian Labor Party and, more important, he is a member of the Cabinet, which made all these extraordinary decisions. They will come home to roost in a few years time when the Government seeks an endorsement of its policies and re-election. I also received a letter from the Moama Bowling Club Ltd - I feel for the clubs on the southern boarder of New South Wales - which stated:

Moama Bowling Club Limited is extremely concerned with the poker machine tax increase being imposed by the Carr government.

The letter continued:

Moama Bowling Club works hard to support the community of Echuca and Moama with many donations each year to sporting organisations, charities, schools, and tourism. Specific donations include donations to the local hospital of $250,000, the Jacana Green Retirement Village which is independent to and of Moama Bowling Club Limited, $2.6M and Lions Club of Moama $83,000 for aged care housing.

The Moama Bowling Club’s facilities are used free of charge by many organisations including: Moama Primary School - presentation evening, St Andrew’s Uniting Church - Annual Heather Debutante Ball (400 people), local high schools - Presentation Evenings, Rock Eisteddfod Rehearsals and other events and St Joseph’s College - Annual College Production.

Through State, Australian and Overseas events held by the Club, the wider community benefits through spending on accommodation, food, petrol and tourism generally.

The Moama Bowling Club has been selected to host the Women’s World Bowls in the year 2000. This event involves 32 nations and should the proposed tax be imposed we may well not be able to conduct the event thus having a detrimental effect on the local community.

The letter includes an attachment entitled "Poker Machine Tax/Donation Comparison Year Ended 28/2/97", which shows that in 1987 the poker machine tax was $332,000; in 1997 the tax is $1.7 million. In 1987 donations totalled $9,000; in 1997 the donations amounted to $41,000. Obviously, the Moama Bowling Club supports its local community magnificently, as do all clubs in country towns. This iniquitous tax increase will have an impact on the small community of Moama, which is 80 kilometres south of Deniliquin. I said earlier that the Treasurer obviously had no underlying budget strategy. He has put together a grab bag of promises, proposals and projects that he wanted to see in this year’s budget. However, he found that he was more than $100 million short of funds. Without consulting his Ministers - particularly the Minister for Gaming and Racing and the Minister for Tourism - he came up with these bright ideas, which will have an enormous impact on jobs in New South Wales.

The Treasurer is also the Minister for State and Regional Development. What a damning indictment of a Minister who is responsible for economic development and jobs in New South Wales to suddenly wipe out 10,000 jobs by increasing the poker machine tax. The Government has had a lot to say about the 2,500 jobs that were lost in Newcastle as a result of the closure of BHP operations - and so it should have had a lot to say - but what about the 10,000 jobs that will be lost as a result of this decision? The Government can do something about this, but it will not. It will stand by its high bound position on this issue and tough it
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out. Well I have got news for the Government: toughing it out will not work on this occasion. The Government may be successful in getting these increases through the House tonight, but by doing so it will be haunted by its decision for the next two years.

The Australian Democrats in the Senate and in the Legislative Council of New South Wales do what their former leader, Don Chipp, was fond of saying about governments - and what their present leader, Cheryl Kernot, often repeats - that is, they keep the bastards honest. I ask the Australian Democrats on this occasion: when did they last keep this Government honest? Will they keep the Government honest on this issue? I suspect not. Their whole reason for survival - their position in the Legislative Council and in the Senate - is to keep governments honest. They are not living up to their name, to their credo. This is an important issue for the Australian Democrats to consider. This legislation will have an enormous impact on the economy of New South Wales, on jobs, on rural communities and regional areas, and the Australian Democrats will not keep the Government honest. I ask them to reconsider this matter.

I say to the members on the crossbenches in this place: you are elected to this place with enormous responsibility; a responsibility to monitor all legislation and decisions of government and to keep the Government honest, just as the Democrats do. I conclude by using cricket parlance, "When in doubt, not out." However, on this occasion, I suggest that if one is in doubt, one should at least consider sending the matter to the committee that Reverend the Hon. F. J. Nile will propose, so that the community and industry can have another week to consider the proposals. Then maybe some doubts will be overcome.

The Hon. ELISABETH KIRKBY [8.20 p.m.]: On some occasions I do not contribute to debate in this place with a great deal of pleasure; this is one of those occasions. I have been under attack in this House this afternoon, and particularly in the past few minutes, from the Deputy Leader of the Opposition, who saw fit to mention the Hon. Don Chipp and his well-known reference to "keeping the bastards honest". The Deputy Leader of the Opposition seems to have forgotten that when the Hon. Don Chipp made that statement the media asked him, "Which bastards?" Don Chipp replied, "Those on both sides of the House." So far as these measures are concerned the Opposition has exaggerated, overemphasised and provided much false information.

What bastards - to use the phraseology of the Deputy Leader of the Opposition, who quoted my former leader, the Hon. Don Chipp - am I to keep honest? Is it those on the government benches or those on the Opposition benches? Earlier today I was quite surprised by the level of rhetoric emanating from the Opposition. There was a lot of sound and fury. The extremely strident tones adopted by the Leader of the Opposition and later by the Deputy Leader of the Opposition suggest that they were of the view that if they shouted louder and more vehemently than the Treasurer their arguments would be regarded as having more weight.

The Hon. Dr B. P. V. Pezzutti: But you weren’t listening to them anyway. You have already made a judgment about them.

The Hon. ELISABETH KIRKBY: I sat here listening the entire time, and I was personally insulted by the Deputy Leader of the Opposition. I demanded that he withdraw the remarks he made about me.

The Hon. J. H. Jobling: It was robust debate.

The Hon. ELISABETH KIRKBY: One can have robust debate without being insulting.

The Hon. J. H. Jobling: It wasn’t insulting.

The Hon. ELISABETH KIRKBY: All we have heard from the Opposition today is a mass of sound and fury or, to use the Shakespearean phrase, sound and fury, signifying nothing. If there is to be sound and fury, I will contribute some sound and fury of my own. How can the Opposition criticise the Government for having broken election promises when it knows perfectly well that the compelling reason that forced the Government of New South Wales into increasing taxes was a broken promise of the Federal Liberal Government, which cut back funding to this State to such a degree that the State is unable to survive without increasing State taxes? I find that level of hypocrisy very difficult to accept. There has been reference to broken promises on taxation. In the past 48 hours the Prime Minister held a summit about taxation.

The Hon. Patricia Forsythe: It was not a summit. It was in the party meeting.

The Hon. ELISABETH KIRKBY: It was in a party meeting, but it was widely publicised and it was convened because all his strategies are failing.

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The Hon. Patricia Forsythe: He has not broken his promise.

The Hon. ELISABETH KIRKBY: How do we know he is not breaking his promise? On television this morning he was discussing the possibility of the Federal Government introducing a goods and services tax. Initially he said that a coalition government under his leadership, if elected - unlike the leadership of Dr John Hewson - would never introduce a GST. The Opposition is not white. If the Opposition is going to talk about broken promises of a Labor Government in New South Wales, will it please stop throwing stones, because we all know what they say about people in glasshouses.

The Hon. Patricia Forsythe: But he hasn’t broken a promise.

The Hon. ELISABETH KIRKBY: He has broken promises on many other issues. The Appropriation Bill will enable the Government of New South Wales to impose bed taxes, poker machine taxes, an electricity tariff and land taxes. When the Labor Party was elected in 1995 I do not believe that any members of this Government or Cabinet believed it would be necessary to impose these taxes, even if they believed it was necessary to reduce the State deficit. But following the election of a coalition Government in Canberra, which cut funding to this State in a most dramatic manner, this Government was forced to introduce State taxes. The only way that could be done was by the measures being debated tonight. Let me explain to the House my views on the proposed bed tax, which I support. Many other countries have a similar tax. Earlier tonight in my budget speech I incorporated in Hansard a list of all the cities that have a bed tax. The list included three countries which have hosted the Olympic Games.

The Hon. Patricia Forsythe: But none of them were in Australia, were they?

The Hon. ELISABETH KIRKBY: That has nothing whatsoever to do with it. Many other countries have a bed tax, even India. Earlier this year I was in the south of India on a Commonwealth Parliamentary Association study tour. Every hotel I stayed in imposed a bed tax. It did not matter if, as a visiting member of Parliament, I got a government rate for the room, when I walked out of that room and went down to the desk to pay my bill I saw, in addition to the quoted rate for the room, reference to a bed tax. What is so strange about that? Why would Indian, American and European businessmen coming to Australia find a bed tax strange?

It must be remembered that accommodation charges are a legitimate tax deduction in Australia - and perhaps in many other countries - if they are incurred in the course of business activities. Earlier today the Deputy Leader of the Opposition attacked me by saying that I did not realise who I was penalising. He said that I was not penalising tourists but that I was penalising businessmen from other parts of New South Wales and Australia and country visitors to Sydney. When businessmen travel to Sydney from Queensland, Victoria, Tasmania and South Australia their expenses, which are business expenses, are a tax deduction to them or to their firms. The Deputy Leader of the Opposition also made an extraordinarily offensive remark which, admittedly, he later withdrew under pressure. He said that I did not understand rural New South Wales and that I had no right to believe that I represented rural New South Wales. He said that I would be imposing this iniquitous tax on country people who come to Sydney.

It ought to be made perfectly clear that I know what people in my part of rural New South Wales do - people in Temora, Wagga Wagga, West Wyalong and Cootamundra. When they come to Sydney, generally they do not stay at the Regent, the Continental, the Ritz or the Sheraton. On a special occasion they might; or their children might have a two-night honeymoon at such a hotel. But the wedding budget would not be blown out if for a two-night stay at a hotel charging $300 a night they had to pay an additional $60. The bride’s wedding dress would probably cost 10 times that. If a farmer receives a good wool cheque he might bring his wife to Sydney and have a second honeymoon at such a hotel. But, by and large, when country people come to Sydney they mostly stay at Manly or Bondi because they want to spend their holiday in Sydney at the beach.

There are good hotels in Manly and in Bondi; there is a good hotel in Coogee that is owned by Japanese interests, and there is a nice Novotel hotel on the shores of Botany Bay. So country people can have an extremely comfortable holiday without being hit by this impost. International business travellers will be able to claim a tax deduction in their country. I do not know whether the Opposition is totally behind the Federal Government at the moment, but I believe that the majority of Australians can take comfort in this tax. The New South Wales Government has clawed back some of the revenue that the Commonwealth Government has taken from the States. That revenue will be used to pay for urgently needed services. The Howard Government shed no tears when it slashed $600 million from the States at the last Council of
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Australian Governments, 40 per cent of which was taken from New South Wales.

As I said earlier, international holiday-makers are used to paying additional taxes. Perhaps the Tourism Council of Australia should promote the fact that, whilst there may be a bed tax in the Sydney central business district, people are not expected to tip 15 per cent of the bill; though if visitors did so out of habit I am sure restaurant staff would not decline the tip. The big difference between Australia, Europe and the United States is that tipping is obligatory in Europe and the United States, but as yet it is not in Australia. There have been claims that tour operators cannot pass on price rises after a contract has been signed, but those claims are yet to be proved. Contracts commonly have a clause to the effect that prices are subject to change without notice.

I venture to suggest that European Community law and Japanese law would most likely exempt increased charges imposed on an operator due to legislative changes by a recognised government. However, if that is not true for contracts already signed by Japanese inbound tour operators, the Treasurer made it clear that they will receive an indemnifying payment to enable them to fulfil the terms of contracts they entered into in good faith. The Treasurer is willing to make that payment and indemnify them. It has been said that the convention industry will be ruined and that the world as we know it will come to an end. Earlier today I explained chapter and verse what has happened in Chicago. Although that city has a bed tax, a city tax, a State tax and a federal tax, its convention industry, which is the second largest in the United States, has not been affected.

It might become more expensive to hold a convention in the Sydney central business district, but would it not be a good idea to look at this new tax as an economic instrument that will encourage the convention industry to hold its conferences in regional New South Wales? Coffs Harbour, which has an international standard airport, not to mention high unemployment, has three big hotels, one of which I understand was completed some years ago but only recently opened its doors. It has been standing nearly empty. If organisations find it too expensive to hold their conventions in Sydney, regional employment could be created if they went to Coffs Harbour, Port Stephens or Wollongong, where there is also a convention hotel.

The Hon. Patricia Forsythe: If you wanted to hold a convention in Wollongong you would have to do so in the car park, because the hotel function rooms are not big enough.

The Hon. ELISABETH KIRKBY: The Hon. Patricia Forsythe said that organisations wanting to hold conventions in Wollongong could hold them only in the hotel car park. What a ridiculous statement! I have attended a convention at the hotel in Wollongong. Admittedly it will not house the number of people that could be housed in the Darling Harbour Convention Centre, but many smaller conventions would not attract the number of visitors that would attend the Darling Harbour Convention Centre. I know what it costs to attend conferences at the Darling Harbour Convention Centre because I receive conference invitations every day of the week, just as I am sure other members do. If the registration fee for a convention is $2,000, which is the bottom end of the market, I cannot believe that the operator has not done a deal with the hotel. The hotels in Sydney have discount rates, and they have a multitude of ways to attract conventions.

The Hon. M. R. Kersten: What about all the small shires associations and other small organisations?

The Hon. ELISABETH KIRKBY: Small shires associations are not likely to hold a conference at Darling Harbour.

The Hon. M. R. Kersten: The Shires Association of New South Wales held one in the Wentworth Hotel only three weeks ago.

The Hon. ELISABETH KIRKBY: I am sorry that the Hon. M. R. Kersten has made that remark. He knows as well as I do that the expenses of every single delegate to that convention were paid for by local government.

The Hon. M. R. Kersten: By the ratepayers, yes.

The Hon. ELISABETH KIRKBY: By the shire or city ratepayers. The ratepayers’ beef in country areas is that they are always paying for their councillors to go off to conventions. It is not the individuals who are paying for the conventions, it is the ratepayers. The Deputy Leader of the Opposition said that country people will be slugged, and he attacked me quite viciously on that issue. As I said earlier, many country people stay in Manly or in the eastern suburbs. Although they enjoy coming to Sydney, I think they prefer to be able to look out over the sea. For them it is a combination of
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bringing the kids to the seaside and being close to the city. For someone who lives in the bush that is what is good about coming to Sydney.

The Tourism Council of Australia wanted the State Government to introduce the departure tax, but when the tax was introduced people went wild. They said that the departure tax would ruin tourism and that no more tourists would visit Sydney. But since the introduction of that tax, tourism to Australia has steadily increased. In my speech on the budget I referred to the numerous letters I received from hotel employees which consisted of form letters on the letterhead of the hotel, each bearing a scrawled signature. The hotel asked the employees not to identify themselves or give an address. As I said earlier, at least the petitions presented by the Opposition bore the names and addresses of all those who signed them. I received a number of similar form letters from clubs. Subsequently, only about 24 hours ago I received information about the competition between the club and hotel industries. An article in the Newcastle Herald of 13 June under the headline "380 jobs in $20m Wests ‘resort’ plan" stated:

. . . a $20 million expansion of the Western Suburbs Leagues Club that will create an extra 180 jobs at the club and about 200 positions during construction.

Wests will be transferred into a "resort-style" club and motel, specifically aimed at attracting the weekend leisure market.

The expansion will include:

•Increasing the number of rooms of the 4½-star Wests Executive Inn from 57 to 140.

•A 38-metre heated swimming pool for Wests Executive Inn.

•Three new function rooms with conference facilities.

•A food court with seating for about 1,000 people . . .

•Enhanced gaming facilities with 50% more floor area . . .

The Western Suburbs Leagues Club in Newcastle made that announcement on 13 June, at a time when it well knew that an increase in poker machine tax was to be introduced. That tax increase has not prevented the club from spending $20 million to create a new resort hotel and convention complex. Do members of the Opposition suggest that the leagues clubs are bleeding?

The Hon. Patricia Forsythe: They do not have a bed tax.

The Hon. ELISABETH KIRKBY: The Hon. Patricia Forsythe said that the leagues clubs do not have a bed tax. Some of those conventions could now be held in Newcastle instead of Sydney, and that will help Newcastle at a time when it is wondering what will happen as a result of the closure of BHP. The tax affects only the central business district, and therefore it should be a bonus for all centres outside the CBD. I do not agree with the argument that thousands of jobs will be lost and that the clubs will no longer invest and will go bankrupt. I have received not only that pile of letters today, which are mainly anonymous, but also submissions from some of the major leagues clubs in this State. A submission from Penrith Panthers that it was going bankrupt caused me to feel extremely cynical. Does that club think I came down in the last shower? Why would Penrith Panthers go bankrupt? It is just a childish submission that deserves to be treated with contempt. Because of what Mr John Coates is doing, today I received a large submission which included a document from the Inbound Tourism Organisation of Australia Ltd. Dealing with the bed tax survey results, the submission states:

Following is a summary of the comments made:

Australian College for Seniors Inc
"We have contracts extending forward to September 1998 which involve approximately 4000 bed nights in Sydney for seniors `over 55's’ from the United States. These contracts cannot be varied and the ACFS, a not for profit association, will have to bear the brunt of these increases. Due to the nature of our association we work within very small margins and therefore will be seriously affected by the imposing of this scurrilous bed tax. If we are unable to absorb the impost the only real alternative is to divert our business away from Sydney. The alternatives we will have to consider are Auckland or Melbourne".

As a senior I have lectured on many occasions to the Australian College of Seniors, mainly about political events in Australia. To the best of my knowledge, the Australian College of Seniors has held its conference outside the Sydney central business district. In fact, those conferences mostly have been held off Parramatta Road in a Travelodge hotel. Conferences were held during university vacations, and some of the seniors were accommodated very cheaply in the residential colleges of the University of Sydney. So I simply cannot understand why the Inbound Tourism Organisation of Australia believes that the Australian College of Seniors will suffer from the imposition of this bed tax in the Sydney CBD. I think it is foolish of that organisation to introduce that particular group of tourists into the equation, because it is not a relevant issue. I received a briefing note dated 12 June from the Australian Hotels Association of New South Wales, which stated:

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It is now clear that the State Government has no real understanding of the industry. Hotel occupancy rates in Sydney are already faltering. During April, occupancy was down by 6.5% for 4 star properties, when compared with the same period in 1996, while occupancy rates for 5 star hotels declined by 8% over the previous year. These findings are based on an Australian Hotels Association survey of its members.

What the association does not say in its briefing note is that since October last year the rate for a standard five-star hotel room in Sydney has been raised from $286 per night to $320 per night. The hotels themselves have raised those rates. Those increases had nothing to do with the State Government or the bed tax. It is my opinion that the hotels raised those rates now in order to seemingly abide by an agreement they made with the Government not to put up the rates closer to the Olympics. I would not be surprised if one has to pay $320 a night for a room in the Inter-Continental, the Regent, the Renaissance, the Hyatt or the Ritz, which have gone from $286 to $320. If their occupancy rates have fallen, maybe they should look at their own actions. Perhaps the reason their occupancy rates are falling at this time is that people coming to Australia do not wish to stay in hotels that charge that amount.

It is perfectly true that in another briefing document from the Australian Hotels Association entitled "Accommodation Levy Bill 1997, briefing for Legislative Council" the association itself says that "occupancy in 5 star CBD hotels was down from 82.4% in April 1996 to 75.6% in 1997. For 4 star CBD hotels it was down from 86.3% in April 1996 to 80.8% in April 1997". I am sure that is absolutely true. The Australian Hotels Association tells me it is true. But why did the hotels raise their rates last year? Earlier this afternoon the Deputy Leader of the Opposition attacked me and asked whether I realised that I would be penalising the people I was supposed to represent, the rural dwellers, the people of Temora, if I supported this bed tax. He suggested that I had no integrity because I could not properly represent them because they were -

The Hon. D. J. Gay: Your argument had no integrity at all.

The Hon. ELISABETH KIRKBY: I will not challenge the Hon. D. J. Gay to repeat that remark, but if he does so I will take a point of order. I know the people whom I represent. I know the people of Temora. The number of times they stay in a five-star hotel is very limited. If they receive a miraculous wool cheque, maybe they will stay in such a hotel as a special luxury but, by and large, normally when they come to Sydney they do not stay in five-star hotels in the CBD.

The Hon. D. J. Gay: All the hotels will have the tax. You did not read the bill.

The Hon. ELISABETH KIRKBY: Only those in the Sydney CBD will have it. Hotels in Manly, Bondi, Coogee and Parramatta will not.

The Hon. Virginia Chadwick: What about youth hostels?

The Hon. ELISABETH KIRKBY: Youth hostels will be exempt from this tax, as the honourable member will learn later in this debate. I think that exemption is most proper. It is a matter that my colleague the Hon. R. S. L. Jones and I have discussed with the Treasurer, and he has already circulated an amendment to that effect. Another letter that I find very interesting is dated 26 May from the Board of Airline Representatives of Australia about the proposed 10 per cent bed tax. That organisation sent me a photostat copy of a letter it sent to the Premier. It said it represents 49 airlines flying to, from and within Australia, 24 of which will be adversely affected by the introduction of the 10 per cent bed tax. The letter stated:

As you are aware, international airlines are large consumers of hotel rooms. Some airlines occupy 51 rooms per night for the airline and technical staff. The tax increase in the cost of a room has added $404,000 per annum to the cost of operating to Sydney for one of our members. Of the 49 members, 24 are affected by the bed tax.

The organisation says that to introduce a tax that adds considerably to the cost of operations in this city is "indicative of a lack of sensitivity to an industry which produces abundant income and job creation in the State of New South Wales". What do these airlines do when their staff and pilots go to Los Angeles, Hawaii, Paris, Rome, London, Singapore, Kuala Lumpur, Tokyo and other overseas cities? Of course, they must pay a bed tax on their accommodation. The airlines factor that cost into their fares, and they will factor the proposed increase in charges - if, of course, the airlines insist on putting their staff in hotels in the Sydney CBD. There are hotels near Sydney airport. Their staff can stay at the Airport Hilton.

The Hon. Patricia Forsythe: Are the staff then to pay the price of a taxi to go into the city?

The Hon. ELISABETH KIRKBY: They can stay at other hotels around the airport. The Hon. Patricia Forsythe suggests that airline staff will have to pay taxi fares to the city. What does the
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honourable member think happens when staff are accommodated in Tokyo, Paris and New York, where the airports are much further away from the central business district than our airport is from Sydney?

The Hon. Virginia Chadwick: What happened to conferences in New York?

The Hon. Patricia Forsythe: They put them in the CBD.

The Hon. ELISABETH KIRKBY: Then they pay a bed tax. If staff are to be so totally disadvantaged, they can be given a few taxi dockets if that means that money will be saved from the bed tax. I am beginning to lose my temper about this issue. I have tried to keep my temper all afternoon but these interjections and objections to this tax are positively puerile. I can think of no other word to describe them. As we are debating all the levies in the package brought forward by the Treasurer, I turn now to the increased tax on club gaming machines. The majority of the enormous pile of letters that I tabled previously came from people complaining about the increased tax on poker machine profits.

Great play has been made of the claim that this increased tax will mean the end of the club movement as we know it because clubs will be so greatly disadvantaged. Yet it has always been possible for clubs that give to charity to claim a rebate from the Government. I was fascinated to discover only about a month ago that only 12 clubs in New South Wales claim that rebate; 1,429 clubs have never claimed the rebate. The club in the town in which I live, Temora Ex-Services Memorial Club Ltd, gives a great deal to charity in that town and I know exactly what those charities are. I was pleased that the Treasurer included that club in his press release about the 12 heroes of the club movement. I know exactly what the club has given to the community: it has given to the nursing home, the hostel and sporting organisations, and it has provided a bus for community services.

The generosity of the club has now been recognised. Earlier today an Opposition member referred to Harbord Diggers Memorial Club, but that club has already applied for and been given an exemption. It will continue to receive that exemption so long as it gives to registered and recognised charities. Other clubs that are exempt are the City of Sydney RSL Club, Illawarra Catholic Club, North Ryde RSL Community Club Ltd, City Tattersalls Club, Liverpool Catholic Club Ltd, Maroubra Seals Sports and Community Club Ltd, Mortdale RSL Club Co-operative Ltd, Lane Cove Club Ltd, Group 7 Leagues Club Ltd and the Narooma Golf Club Ltd.

Temora Ex-Services Memorial Club Ltd is a small club and if it can claim the exemption, why can the other 1,429 clubs not do the same? The answer I was given is that the exemption is too restrictive and too difficult to apply for. These big clubs are building mausoleums, motels and shopping centres; they are entering big business ventures. According to some Opposition members, some clubs are in debt to banks because of large extensions. If they can afford that type of expansion, I cannot believe that their board of management, auditors, accountants or solicitors do not have the wit to fill out an application for an exemption because of the money they give to charity.

Let me talk briefly about the increased tax on club gaming machines in New South Wales. Today I was attacked in a letter to a central coast newspaper. The letter said that I did not know what I was talking about when I responded to the statement by the paper that clubs pay income tax. Clubs pay income tax on that part of their income that is not derived from members. If they do not have to pay tax on income that is derived from members, the clubs have an incentive to sign on people as members as soon as they walk through the door. When I visit a club, sign the register and am given a chit as a visitor, how could the club know what I spend? The club does not know what I put into the poker machines if I am inclined to gamble; the club does not know how much I spend at the bar or on meals. The part of a club’s income that is not derived from members can never be assessed.

Central Coast Leagues Club has claimed that clubs were the fourth largest taxpayers in New South Wales. However, clubs as a group pay less tax than businesses, households, retailers and the Real Estate Institute of New South Wales. Rates of tax applied to club gaming machines are less than the rate applied to many other forms of gambling. More than 70 per cent is taken by the State in tax on lotteries; 52 per cent from the TAB; 30 per cent from the casino; and 37 per cent is anticipated on the tables. Club gaming machines pay only 21.5 per cent tax. That is less than any other form of gambling in New South Wales.

It was also suggested to me that comparable rates of tax in Queensland and Victoria are higher because the government operator buys the machines. That argument implies that New South Wales clubs have higher costs associated with financing and operating the machines than their interstate counterparts. However, from 1 July the Queensland
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Government will not buy any more machines. Clubs will have the option to buy the current machines at the written-down value, but the tax rates will not be affected. In Victoria only two operators own machines. They are also responsible for the maintenance of those machines and are then liable for the tax.

The final remark made to me, and to which I have replied through the same newspaper, is that poker machine revenue in New South Wales is 50 per cent more than that collected by Victoria, South Australia and Queensland combined. However, no-one has sought to explain that the number of machines operated by clubs is less in those other States. New South Wales does not limit the number of machines a club may operate. In Victoria the limit is a maximum of 105 machines; in South Australia the maximum is 40 machines and in Queensland the maximum is 250. The top 40 clubs in New South Wales operate 300 machines each. That means, of course, that they will generate more profit and more tax. Perhaps the club operators would prefer to operate in Queensland, South Australia or Victoria. Earlier the Deputy Leader of the Opposition sought to compare like with like - oranges with oranges, apples with apples. But the specious arguments being put forward by the clubs in New South Wales cannot be substantiated. I support the increased poker machine tax and the bed tax.

Reverend the Hon. F. J. NILE [9.10 p.m.]: Call to Australia is concerned about certain aspects of the appropriation bills, particularly the imposition of new State taxes. I wish to make our position clear because it has been said that crossbench members should not try to amend or defeat budget bills. The point I seek to make is that on 22 March 1995 the Premier on behalf of the Government made the specific promise that during the Government’s four-year term, which does not finish until 1999, it would not introduce new taxes or increase taxes. A press release issued by the then Leader of the Opposition, Bob Carr, dated 22 March 1995 stated:

State Labor Leader, Mr Bob Carr, said the cost of State Labor’s additional commitments had been reviewed at an average $298 million a year by one of Australia’s leading accounting firms.

Mr Carr said that is why State Labor can credibly go to the electorate with an emphatic commitment: no new taxes and no tax increases.

It was not merely a commitment; it was an emphatic commitment. Mr Carr went on to boast that Labor's budget and financial policies had been carefully drafted and that there would be no shocks and no increases in taxation. The Government has no mandate for the imposition of these taxes, particularly the 10 per cent bed tax and the dramatic 33.33 per cent increase in the tax on poker machines in registered clubs. Therefore, no legitimate claim can be made that the crossbench members should support the budget. The promises of Mr Carr are virtually worthless because they have been broken not only by these bills but by other tax increases since the Labor Government was elected in 1995. For example, on 18 June 1996 the Carr Government announced increases in payroll, motor vehicle and land tax, as well as stamp duty, totalling $540 million. I do not know how Mr Carr and the Treasurer, having misled the public of New South Wales, can sleep at night.

The people of New South Wales know the results of the disasters in South Australia and Victoria, where high-taxing Labor Governments sent the States bankrupt to the extent of billions of dollars. Dramatic action had to be taken by new governments to try to balance their budgets. I believe that prior to the 1995 election there was a real concern that the Carr Government would go down the same path as those left-wing Labor governments in South Australia and Victoria. That is why Mr Carr went out of his way to keep promising that there would be no new taxes and no tax increases. The voters cannot be blamed for believing those ALP promises. But it should be acknowledged that the ALP could only persuade its own hard-core voters to vote for it because it received only 47 per cent of the vote. So the Carr Government was and is a minority government which was elected by only 47 per cent of the people.

Although Mr Carr promised that there would be no new taxes and no tax increases, the electorate was suspicious as to whether Mr Carr could be trusted. Some people did, and they have now found that their trust was misplaced, particularly the ordinary working men and women who work in the hotel industry as receptionists and administrators or in catering and food supply. Their jobs are now at risk because the hotels may have to lay off staff because of the 10 per cent bed tax. In the same way, ordinary workers in registered clubs trusted the Labor Government and they now find that their jobs are also at risk.

Some speakers in the debate, including the Hon. Elisabeth Kirkby, painted a picture of the tax being imposed on wealthy people and wealthy hotels. But the people who will be hurt are not wealthy: they work in hotels and clubs or are members of the hundreds of organisations - such as the St Vincent de Paul Society and clubs providing
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sporting activities for boys and girls - that look to the clubs to provide charitable grants from their surplus moneys. All of that funding is now at risk. The ordinary people will be hurt by these taxes. That should be put into perspective. The Labor Government has no mandate to increase taxes or to impose new taxes.

The Hon. Elaine Nile and I certainly do not feel compelled to vote in support of these new taxes. This morning we met with Mr Coates, the executive officer of the Australian Olympic Committee, who presented a great deal of information to us. He and the International Olympic Committee are so concerned about the bed tax that he virtually guaranteed that if my amendment to refer these taxes to a committee is successful, the International Olympic Committee will fly people from the United States to give evidence to the committee about the damage this 10 per cent bed will cause. That is how serious it is. The motto of the Sydney Olympic Games 2000 is the Olympic friendly games.

Mr Carr and the Treasurer, by their heavy-handed action, have turned the Olympic friendly games into the Olympic war games. They have changed the atmosphere from one of cooperation and consensus to one of confrontation and threat to the financial basis of the Olympic Games. The concept of the Sydney Olympic Games is not to hit the taxpayers of this State but to have corporate bodies and sponsors contribute. The funding of the Olympic Games has been carefully worked out. It is delicately balanced so that minimum pressure is placed on ordinary people and the State will not be left with a huge debt. In fact, it is hoped that there will be a surplus. Mr Coates has convinced me - obviously he has not convinced the Treasurer - that it is all at risk. The sponsors are now holding back and will not make corporate donations to the funding of the Olympic Games because there is no guarantee of hotel accommodation.

What did Mr Carr do when the possibility was raised that the sponsorships would fall through? What did he do when the Australian Hotels Association and the various other groups indicated that they could not sign the agreement to fix the prices at a certain level and set aside allocated accommodation for all the people involved in the Olympic Games, the corporate groups, the sponsors and so on? Instead of saying, "I think this is serious. I had better go and have a talk with these people and cool the situation down, pour oil on troubled waters", he acts like Hitler, like the Gestapo, and says, "I will confiscate the hotel rooms. I will march into the Hilton Hotel and the Wentworth Hotel with my storm-troopers and confiscate hotel rooms." I do not know whether that is legal, but it is an amazing threat that Mr Carr has made to the hotel industry. It is certainly not the way to achieve cooperation and it is a long way from the concept of Olympic friendly games. As I said, they have changed into the Olympic war games.

I urge the Hon. R. S. L. Jones, who thinks for himself and stands on his own two feet, to exercise his conscience, even though the Treasurer is probably leaning on him now, and concede that with the latest information the situation is so serious as to warrant the setting up of an inquiry. I urge the other crossbench members to give the inquiry equally serious consideration. Such an inquiry will not stop the budget. The committee will report back by next Wednesday. I believe that solutions can be found to the bed tax problem and to the problem caused by the increased poker machine tax. We need to talk over the table, to hear evidence and to listen to people present their cases.

Why am I saying that? What is the Treasurer’s response to the voluminous amount of material that has been produced, including the extensive document entitled "Bed Tax: The Case Against" from the Tourism Council of Australia and the financial document entitled "The Bed Tax Economic Impact Study, June 1996" by Ernst and Young? He says, "They are phoney, I do not believe them, they are not true." The Treasurer has a responsibility to put up or shut up; he must face questions. The people behind these documents should present their evidence and be cross-examined about whether their facts and figures are correct. If the Treasurer is honest and decent he will say, "I was wrong. I admit that the facts presented are correct. Therefore, over the next week we will review the two taxes and move amendments to the bills."

The Treasurer and the Premier have obviously closed their minds. I have said to some of those who have spoken to me that the situation in this Parliament is strange. We have heard the Japanese say that people do not like to lose face. I believe that in this case the Treasurer and the Premier will not admit that they are wrong. The Treasurer does not want to lose face. He has said that it does not matter what evidence is put before him, he will not back down. It then becomes a case of "I do not want to lose face. I do not want to eat humble pie. I will therefore let the clubs and the Olympic Games suffer. They can all go to hell because I will not weaken." All I want is a search for the truth. Let us be objective, examine the facts and attempt to come to some agreement. Being a little naive, I thought it would be possible to refer the bills relating to the
Page 10314
controversial matters to one of the general purpose standing committees that were established recently. The recent estimates committees were conducted through these five committees. I have proposed an amendment, which I shall now move. I move:

That the question be amended by inserting at the end:

"with the exception of the Accommodation Levy Bill and State Revenue Legislation Amendment Bill.

2. That the Accommodation Levy Bill and State Revenue Legislation Amendment Bill be referred to General Purpose Standing Committee No. 1 for inquiry and report, with specific reference to:

(a) the proposed accommodation levy;

(b) the proposed increases to the rate of land tax;

(c) the proposed imposition of land tax on land that is used as the principal place of residence by the owner of the land and that has land value of not less than $1 million; and

(d) the proposed increase from 22.5 per cent to 30 per cent of the duty payable on those profits from approved gaming devices kept by registered clubs in excess of $1 million in a duty period.

3. That the Committee report by 25 June 1997.

Some members have said that they do not believe it is possible for a committee to conduct an inquiry in such a short time. However, I am a member of the Standing Committee on Law and Justice, which was asked, about a year ago, to examine the mandatory life sentence legislation. The committee held public hearings and produced an excellent report within two weeks. Some committees spend six months or 12 months on extensive investigations but, in this case, the general purpose standing committee could ask the main stakeholders to give evidence under oath and face cross-examination. They could present their cases. I have worked out a possible timetable. As the House is sitting the timetable tries to reduce the disruption to the House because of the absence of members. I seek leave to have the timetable incorporated in Hansard.

Leave granted.
______

Tuesday 17th June, 1997 - 5.00 pm to 6.00 pm (Members’ Room)
Committee Meeting to discuss Timetable, Procedures, Staff, Public Hearings, Venues, Report etc.

Wednesday 18th June, 1997
Public Hearing - 9.00 am to 10.30 am. Witnesses from Registered Clubs Association and Ernst and Young Pty Ltd etc.

Thursday 19th June, 1997
Public Hearing - 9.00 am to 10.30 am. Witnesses from Charity and Children’s Sports’ Groups etc affected by 33_% increased Poker Machine Tax, eg St. Vincent De Paul.
Public Hearing - 1.15 pm to 2.15 pm. Witnesses from five Trade Unions affected by 33_% increased Poker Machine Taxes and selected Clubs, eg Revesby Workers’ Club.

Friday 20th June, 1997
Public Hearing 9.00 am to 10.30 am. Witnesses from Australian Hotel Association re 10% Bed Tax.
Public Hearing 1.15 pm to 2.15 pm. Witnesses from Tourism Council of Australia re 10% Bed Tax, Australian Olympic Committee, etc.

Monday 23rd June, 1997
Public Hearing 9.00 am to 10.30 am. Witnesses from NSW Department of Tourism and NSW Treasurer re 10% Bed Tax.

Tuesday 24th June, 1997 9.00 am to 10.30 am
Reserved for Public Hearings re Land Tax, Committee Meetings, Draft Report.

Wednesday 25th June, 1997 9.00 am to 10.30 am
Committee Meeting to finalise Report and Recommendations for presentation to the NSW Legislative Council at 2.30 pm, Wednesday 25th June, 1997.

______

Reverend the Hon. F. J. NILE: My amendment is based on reality and possibility. For example, the committee could sit during the evening until 10.30 p.m. or midnight; during lunch hours; and during early mornings, from 9 a.m to perhaps 12 noon or 10.30 am. The committee could hear witnesses from the Registered Clubs Association and from Ernst and Young, which provided the report on the economic impact of the bed tax. They could tell the committee how they carried out the economic survey. The committee could hear witnesses from the charities and children’s sports groups and from the five trade unions that are effected by this 33.33 per cent increase in the poker machine tax, in other words, the five trade unions that have lobbied us and told us they are unhappy with this tax because it will mean that their members may lose their jobs. I suggest that representative of some of the clubs from the Labor heartland could give evidence, for example, Revesby Workers’ Club Ltd and other clubs.

The committee could hear the evidence of witnesses from the Australian Hotel Association, the Tourism Council of Australia, the Australian Olympic Committee and others who are experts and are aware of the impact of the 10 per cent bed tax. The committee could hear the evidence of witnesses
Page 10315
from the Department of Tourism. I understand that the officers of that department are not in favour of the tax but they will not speak up because they are public servants and could speak up only if they were summonsed before a committee of this House. I believe that we could hear that evidence, put it together and produce a brief report by next Wednesday, a report that would cover the issues and, most important of all, contain recommendations. We would ask the various groups, the Australian Hotel Association and the registered clubs, for their suggestions. We would try to find common ground. For argument’s sake, much of the information that I have received has convinced me that the Government has miscalculated the tax increase.

The Government is hoping that the tax on poker machines will bring in $74 million a year, but the information I have received from the Registered Clubs Association is that the Government underestimated the figure and that an increase of 33.33 per cent will bring in more like $140 million. If that can be shown, and I believe it is a simple mathematical procedure, the inquiry could recommend that the tax rate on poker machine profits be cut from 33.33 per cent to 15 per cent. I am not sure what the response of the clubs would be to that suggestion, but they may say, "We can live with that. We can cope with that." Some honourable members, particularly the Hon. Elisabeth Kirkby, have been sarcastic about the wealth of clubs. No-one is denying that clubs have built huge premises and so on - I am very much aware of that - but many have overextended and borrowed millions of dollars to develop their premises further.

The board of a club may well have decided to borrow a certain amount from a bank. In doing so the board would have calculated the club’s expenses down to a fine edge and then worked out a repayment schedule based on that calculation. Clubs in that position now find the Government saying, "Forget all your financial planning. You have to find an amount of money equal to a 33.33 per cent increase on poker machine profits." Bank contracts have been signed to repay so much every month or every year. Clubs have suggested that they are not able to find this additional revenue; the money is not available. Perhaps the clubs are at fault, but I understand that some have entered into loan arrangements for a five-year period. Loans are not like house mortgage loans over 25 years. Some clubs repay loans of $25 million in five years. They carefully work out their income, profits and the money they give to charitable groups so that they can cope with the necessary repayments. It is important that the poker machine tax be reduced. I believe it is economically possible to cut it in half to 15 per cent.

I shall now deal with the so-called bed tax. I can almost picture what happened. The Government said to Treasury, "We need some more income. What are the options to raise money? How can we raise money? Tell us." Treasury officials, who have no responsibility to the taxpayers, said, "You can raise money in various ways. A tax on this and a tax on that." Treasury put 10 or 20 ideas to the Treasurer, who looked at them and said, "The bed tax sounds interesting. I will have that one and I will have this one." In my opinion that is the depth of planning and thinking that went into the introduction of these taxes. The Government has incorporated the taxes in the budget, but it did not consult in relation to them, nor did it give any thought to what impact they might have on the community.

I have been advised - and I believe correctly - by the Treasurer that some hotel chains sign two- or three-year contracts with travel agents in the United States, Japan and the United Kingdom. The contracts contain guaranteed charges for rooms, in other words a fixed rate for accommodation. Even though some people may think that hotels make huge profits, often their profit margin is only 10 per cent or 15 per cent. Hotels, particularly those locked into contracts with travel agents for accommodation, have not budgeted or planned for a sudden 10 per cent decrease in their income. The Government has suggested that it might examine hotels locked into contracts with overseas travel companies to determine what other arrangements can be made.

A committee of inquiry could investigate other ways of achieving the same tax revenue. The Government could still get its $75 million from the poker machine tax and $64 million from the accommodation tax, but by a different formula that reduces the economic pressure on clubs and hotels. Instead of a 10 per cent bed tax, a 5 per cent tax could be levied on all hotels and motels across the State. One of the objections of the Treasurer to that suggestion is that it would involve taxing ordinary Australian families staying in motels. Perhaps Treasury could work out a 5 per cent tax on three-star, four-star and five-star hotels only, which are not normally used by ordinary mothers and fathers taking their children on a holiday. It is possible, in my view, to devise a means to reduce the effect of these two very negative and harmful taxes. The most significant criticism, especially of the hotel tax, is that the whole atmosphere of the planning for the Olympic Games has changed.

Page 10316

I understand that hotels contributed $1 million to the bid that was instrumental in Sydney winning the right to host the Olympic Games. I know Mr Fahey jumped and shouted for joy when Sydney won the bid - and we are all very proud of that fact - but many people had to work together to achieve the win. Had these taxes been mooted prior to the bid, we could have kissed any opportunity of winning the bid goodbye because the Olympic Games committee would have said, "Don’t send the games to Sydney. They cannot get along together, let alone with the international community." Sydney’s bid would have been lost. I understand that these problems have caused some Olympic officials to wonder whether they made a mistake in giving Sydney the bid. I do not know whether any city has had the Olympics taken from it; Sydney may be the first if Mr Carr and the Treasurer continue in this manner.

The Olympic organising committee may decide to shift the Olympics to Beijing, which Sydney just pipped in the bid for the Games. I understand Sydney won the bid by the smallest of margins. I certainly do not suggest, nor would I support, a change of venue, and I would not be to blame if such a decision were made. Mr Carr and the Treasurer, however, would be to blame for continuing with this bull-headed approach to a most sensitive issue that affects the Olympic Games. I have asked organisations that will be hurt by these increased taxes and new taxes to write to me. Like other members, I have received an enormous number of submissions and letters about the proposed bed tax and the increased poker machine tax. These two issues have certainly alienated the Government from the community.

I know how politics work, and I am sure that the Opposition, despite its objections, would be quite happy for the legislation to pass through this Chamber. The Opposition knows that these new taxes sound the death knell for the Labor Government. The bell is ringing tonight, and that is why the Opposition is not terribly worried. The Opposition does not agree in principle with the taxes, but it is saying, "Let the Labor Party do it. Let it destroy itself. Let it alienate one million club members. Let it alienate all the employees who work in the clubs. Let it alienate all hotel employees. Let it alienate all the charities that get donations from clubs. Let it alienate all the sporting groups that get donations. These people are all voters. Many of them are in the heartland of the Labor Party and at the next election they will show how they feel." We have all seen the newspaper advertisements advising that the National Party and the Liberal Party make the firm promise to registered clubs that the increased poker machine tax will be repealed when the coalition is elected to government on Saturday, 27 March, 1999.

I believe that registered clubs would be prepared to fund the coalition at the next election to help it win office. Why should they not? If they will have to continue to pay $74 million in tax to a Labor government, why should they not give $5 million towards a fighting fund to assist the coalition to win the election? It would cost the registered clubs only $5 million and result in a saving of $69 million. I do not know whether that will happen, but I suggest it would be a great temptation to the club movement. Registered clubs could say, "We will support those political parties that have an interest in us, will work with us and will not place an extra burden on us." I have had sent to me a number of heart-rending letters. Other members have received circular-type letters, but I have received letters that have been addressed only to me. I received a letter dated 10 June 1997 from the Mucopolysaccharide and Related Diseases Society Australia Ltd, which stated:

I am . . . writing to voice my objection to the proposed increase of poker machine taxes.

We are a National Parent Support group for children suffering with very rare, genetic, progressively degenerative and terminal diseases. Most children die an agonising death before their mid teens. Currently, affected children require continuous medical management and treatment which includes extensive surgical procedures, para-medical services, special education, respite care and other community support services. The annual cost of these services to the Australian Community has been estimated to be $100,000 per child.

This is the punch line:

Over the past few years we have found it extremely difficult to raise funds to support our members, as the larger companies in Australia do not seem to be sponsoring charities as they once were and Governments are cutting back help in all areas. One of our constant sources of funds and support though has been through the various clubs in NSW and Australia.

The Government and companies have cut their donations but registered clubs have continued their donations - up until now. The letter concluded:

Therefore, we strongly oppose this tax increase as we are certain it will affect not only our children but many other people involved in similar organizations and who rely on these clubs for most of their support.

That is a serious matter. On 22 May 1997 the University of Sydney Melanoma Foundation wrote to me in the following terms:

Page 10317

Dear Rev. Nile

The members of the Illawarra Branch of the Melanoma Foundation would like to express our concern at the recent tax levied at clubs.

Each year this committee holds a Charity Race Day, and we rely heavily on the support of the Registered Clubs in our area to support this day.

Should this tax be levied, the clubs have forewarned us that their charity budget will be non-existent.

The charity budget will not be halved or quartered; it will be non-existent. The letter continued:

Over the past four years our committee has raised in excess of $50,000.00 for the Melanoma Foundation to be spent on research. This cancer is on the increase, and statistics show it will be the most common cancer by the year 2005.

Further research is therefore essential, and funds are needed to further educate our community of the dangers of this disease.

Danielle Smith
Secretary
22 May 1997.

On 23 May 1997 the Arthritis Foundation of New South Wales wrote to me in the following terms:

Dear Reverend Nile

For several years now our fund-raising efforts have been supported by two of the local licensed registered clubs. They have now informed us that they will no longer be able to support us due to the new tax imposed on poker machine revenue.

The letter concluded:

We ask you to please strongly represent to the Parliament that the raising of this tax will disadvantage so many organisations that its effect will be felt right through the voting community, from the parents of young children and the organisations that the children are involved in to the elderly and the organisations which they support. Please don’t let the community suffer by denying them the much appreciated support of the local licensed registered clubs.

I have received also a letter dated 30 May from Echuca Regional Health, which comprises a hospital, regional community health centres, a nursing home and a village hostel. The organisation is dependent upon donations. The letter states:

In recent years, the Moama Bowling Club, in particular, donated $225,000 towards the cost of our ageing and outmoded X-ray equipment.

These grants that the Government should be making are being made by registered clubs in their areas. All honourable members are concerned about the dangers facing young people because of the use of illegal drugs such as marijuana and heroin. Wingecarribee Blue Light Inc., which arranges activities for young people, has also written to me. Its letter states:

To enable us to do this we are dependent upon various major groups for sponsorship. Their sponsorship is used to reduce initial costs for functions we conduct. The Mittagong R.S.L. Club is one such sponsor. At present their sponsorship equates to approximately $425.00 per month. If you multiply this by the number of functions we hold per annum the amount is $4250.00.

Those donations make it possible for Wingecarribee Blue Light - which is associated with the local police-citizens youth club - and like organisations to conduct such activities. All honourable members are concerned about the increase in the number of young people on the streets. I have received a letter dated 29 May 1997 from Youth Off the Streets Inc., which stated:

Y.O.T.S. Inc. works with chronically homeless youth `hard core’ street kids - kids who have been horrendously abused. We contribute to provide services without any Government support.

It comes to agencies like us, as a tragic blow that the Government will not provide financial support to us BUT now is also attacking the people who help us so much.

We, OUR KIDS, rely on the good will of Clubs such as the Mittagong RSL. Through the proposed Poker Machine Tax charities are the ones most cruelly hit . . .

Father Chris Riley
Director

I have selected only a few letters to present to honourable members tonight. I have already referred to what I believe is the most tragic of the proposed increases - the bed tax. Who would have expected to read the following headline on today’s front page of the Sydney Morning Herald: "Olympic uproar: now Carr says he’ll grab hotel beds". Accompanying the headline is a photograph of the Olympics executive officer, Mr John Coates, who claims that $500 million in sponsorship is at risk. Surely the Government is concerned about headlines such as that. If the Government does not care, members on the crossbenches do. Members on the crossbenches are supposed to be the watchdogs of this place. They are supposed to ensure that justice prevails. Both sides of politics get wrapped up in their own programs. Members on the crossbenches can be more objective about such issues. Today I received a copy of the chief executive officer’s report - Mr Coates’ report. I cannot remember whether the document is confidential, but I shall table it.

The Hon. M. R. Egan: That is a disgrace if it is a confidential SOCOG document.

Page 10318

Reverend the Hon. F. J. NILE: I do not know whether it is confidential. Mr Coates presented this document to me. The document, which has been forwarded to the executive committee of the International Olympic Committee and the Association of Summer Olympic International Federations, states under the reference "Accommodation - Bed Tax":

By early June we were becoming increasingly concerned about the implications for SOCOG’s accommodation program of the position taken by the hotel industry in response to the bed tax introduced in the NSW Government’s Budget. At the time the industry suspended negotiations with us on rooms we had signed some 8,300 and another 6,300 were in the final stage of negotiation. These negotiations have since been on hold. (Our total obligations - Host City Contract, contracts with sponsors and rights holders, plus other likely requirements - are some 25,000 rooms compared with the total potential supply, calculated at 80 per cent of the available stock, of some 21,300 rooms. The gap is to be met by cruise ships and new construction).

The 10 per cent accommodation bed tax also applies to cruise ships. Cruise ships operators have said that they will simply anchor their ships somewhere else and thus avoid paying the tax. They will anchor in either Brisbane or Melbourne, or even go to Newcastle or Wollongong. I have it on good authority that three major hotel chains will not proceed with proposals to build in Sydney. Therefore, new constructions will cease.

The Hon. M. R. Egan: Will you incorporate the document in Hansard?

Reverend the Hon. F. J. NILE: I hope that legal action or defamation proceedings do not arise from the document, which is lengthy. If the Minister is happy for it to be included, I will seek the leave of the House to incorporate it in Hansard.

Leave granted.
______

1. IOC EXECUTIVE COMMITTEE AND ASOIF MEETINGS

These meetings were held in Monte Carlo from 19-22 May. SOCOG made presentations to both meetings, and to the joint meeting of the IOC Executive Committee and ASOIF at which a video summarising our preparations for the Games was also shown. Presenters included Michael Knight, John Coates and Ian Armstrong. The presentation to the Executive Committee covered our organisation and preparations for the Games generally, as well as a couple of policy issues such as the seating or non-seating of athletes at the Opening Ceremony. The presentation to ASOIF focussed more particularly on sports issues, as well as being designed to make clear SOCOG’s determination to work in close partnership with the International xFederations.

The presentations were well received. In line with the conclusions reached by the Coordination Commission following its visit to Sydney, the IOC (and ASOIF) clearly consider that the project is on track. An important formal step was taken with the approval of the project budget by the Executive Committee. Looking ahead, it will be important that we be able to demonstrate during the next examination of Sydney (IOC Session in September, Coordination Commission in October) that we have made good on our promise to start tackling more aggressively the key operational issues involved in organising the Games.

Around the ASOIF Meeting, Bob Elphinston and his team conducted bilateral discussions with all the International Federations involved in the Sydney Olympics. It was a very useful effort, and will need to be on-going.

Following the meetings in Monte Carlo, I, Jim Sloman and John Quayle visited IOC Headquarters in Lausanne firstly as a courtesy and secondly to familiarise ourselves with the Organisation. Perhaps the key outcome was a good discussion with President Samaranch leading to his suggestion that we set a regular time to speak on the ‘phone each fortnight, a practice which I have commenced. I believe there is a great deal of merit in each new member of the senior management team, when travelling, making an opportunity for a short familiarisation visit to IOC Headquarters. I believe it is appreciated by the IOC and helps ensure the very close working relationship we will need with them across all divisions.

2. ACCOMMODATION - BED TAX

By early June we were becoming increasingly concerned about the implications for SOCOG’s accommodation program of the position taken by the hotel industry in response to the bed tax introduced in the NSW Government’s Budget. At the time the industry suspended negotiations with us on rooms we had signed some 8,300 and another 6,300 were in the final stage of negotiation. These negotiations have since been on hold. (Our total obligations - Host City Contract, contracts with sponsors and rights holders, plus other likely requirements - are some 25,000 rooms compared with the total potential supply, calculated at 80 percent of available stock, of some 21,300 rooms. The gap is to be met by cruise ships and new construction).

This delay in our efforts to sign up rooms was itself a problem, but we became especially concerned in response to rumours in the market that hotels were poised to sign rooms with others (attracted by premium prices being offered for Games time accommodation). Such a break out would clearly have the potential to escalate, with rooms then lost to us irretrievably. Given the tight margins indicated above this could pose a very real threat to our capability to live up to our Host City and other commitments.

In discussions with both the Government and hotel/tourism representatives we made the danger of this situation very clear and argued strongly the wider interest that all parties should have in ensuring that Sydney's capacity to host the Olympics was not called into question. The position I have taken is that the bed tax is a matter between the industry and the Government, not an issue on which SOCOG takes a position per se; we do however object to the use by the industry of one particular mechanism for prosecuting its argument with the Government, namely suspension of

Page 10319
negotiations over Olympic accommodation. We sought to encourage movement on the issue. The President is particularly active in governmental deliberations on the matter.

As at the time of writing, the situation is still in flux and I and the President will update the Board orally.

We have thought it necessary and prudent, however, to commission legal advice on several aspects of the implications for SOCOG. The advice (attached) is that, regarding existing contracts, SOCOG would not have a clear and reliable mechanism to avoid a claim for damages for breach of contract for a failure to provide rooms in the present circumstances. Regarding new contracts, the advice is that either SOCOG should vary the terms of its standard contract from an unconditional one to supply hotel rooms to an obligation to use its best endeavours; or wait until the impasse is resolved. In the case of existing contracts there is little prospect of SOCOG Directors being personally liable if the agreements were ultimately to be breached. But if a new contract were entered into when to the knowledge of SOCOG and its Directors there are real prospects that hotel rooms cannot be supplied, and in fact the position remains unchanged and SOCOG is unable to supply the rooms, a disappointed partner may claim that entering into an unconditional contract was misleading and deceptive conduct.

The overall advice is that the prudent course, in relation to agreements where the time for signature is close, is to disclose SOCOG's present position and then either qualify SOCOG's contractual obligations or defer signing. Obviously this carries very serious implications for sponsor confidence, for our ability to go on about the business of raising revenue, and for timely acquisition of VIK for the project.

______

Atanaskovic Hartnell
Lawyers - Corporate, Finance & Taxation

TO: Ms Suzanne Williams
Sydney Organising Committee for the Olympic Games
Sydney

FAX NO: 9297 2255

FROM: John Atanaskovic

DATE: 12 June 1997

CONTRACTUAL OBLIGATIONS ON SOCOG TO PROVIDE ACCOMMODATION

Please see the accompanying final letter of advice.

Regards

John Atanaskovic

encl

______

Atanaskovic Hartnell
Lawyers - Corporate, Finance & Taxation

12 June 1997

Mr Sandy Hollway
Chief Executive Officer
Sydney Organising Committee for the Olympic Games
Level 14
207 Kent Street
SYDNEY NSW 2000

Dear Mr Hollway

CONTRACTUAL OBLIGATIONS ON SOCOG TO PROVIDE ACCOMMODATION

SOCOG has previously entered into a number of contracts under which it has agreed to provide hotel accommodation to a number of third parties. A number of similar contracts with additional third parties are apparently under negotiation or ready for execution.

We are instructed that SOCOG has in recent times experienced difficulty in securing commitments from hotel operators for the provision of accommodation to SOCOG or at SOCOG's direction as required by these contracts. Apparently, this difficulty results in part from the announcement by the New South Wales Government of the proposed imposition of a hotel "bed tax", and what appears to be consequential action by hotel operators of a collective nature in part against SOCOG.

We are further instructed that, without these difficulties, SOCOG would have expected ultimately to commit to provide about 25,000 rooms for the IOC, AOC, etc, service suppliers such as NBC, and others such as sponsors. Firm contracts with hotel operators for the supply of rooms to SOCOG or at SOCOG's direction have apparently so far been signed for about 8,000 rooms.

1. Contractual Provisions

We have seen a standard form of "Team Millennium Olympic Partner Agreement" (the "Precedent"), and we assume that both relevant existing contracts and relevant contracts being negotiated or awaiting signature are in the form of the Precedent so far as is relevant.

The Precedent is a form of contract between SOCOG and a sponsor, described as a "Partner". Under the Precedent, SOCOG grants to the Partner marketing, licensing and other rights. Included in the "rights and opportunities" granted to the Partner by SOCOG under clause 3.1 of the Precedent are those set out in Appendix A1.

Appendix A1 lists a number of marketing, licence and other rights, including that set out at paragraph 4 of that appendix as follows:

"4. The right, at Partner's cost, to a comprehensive hospitality package on the occasion of the Games to include access, as determined by SOCOG, to hotel rooms, tickets and other hospitality opportunities as defined in Appendix E."

Appendix E is headed "Hospitality Package at the Games". Paragraph 1.1 of Appendix E reads:

"1.1 SOCOG shall make available to Partner, and Partner shall rent at its expense, up to one hundred (100) double/twin rooms in the Sydney area in 4 or 5 star hotels or other mutually agreeable accommodation for the period beginning two (2) nights prior to the Opening Ceremony of the Games and ending on the

Page 10320
second morning after the Closing Ceremony of the Games (the "Olympic Period"). SOCOG shall designate the hotel or hotels in consultation with the Partner."

Paragraph 1.3 of Appendix E reads:

"1.3 In the event of the number of rooms set forth in paragraph 1.1 above being less than the total number required by the Partner, SOCOG shall provide all reasonable assistance in helping Partner to satisfy its requirements, at no cost to SOCOG."

Paragraph 1.7 of Appendix E reads:

"1.7 All agreements with hotels for the reservation of rooms shall be entered into by SOCOG on behalf of Partner. However, upon allocation of a hotel to Partner, a supplemental agreement may be entered into between Partner and the hotel in relation to banqueting space, meeting rooms, food and beverage requirements and the like. SOCOG shall give Partner reasonable assistance to facilitate Partner's negotiations in that regard."

Paragraph 1.8 of Appendix E sets out the payment schedule in respect of the amounts due under hotel agreements entered into by SOCOG with hotels: the Partner must pay 20% in the second half of 1998, 40% on 1 March 2000 and 40% on 1 June 2000.

2. Obligations under Contracts in Precedent Form Already Executed by SOCOG

Where agreements in the form of the Precedent have been executed, SOCOG is obliged to provide, or arrange the provision of, the hotel rooms committed under paragraph 4 of Appendix A1 and paragraph 1.1 of Appendix E. If SOCOG does not provide the hotel accommodation, prima facie, it will be in breach of the agreement and liable in damages to the Partner. Subject to what appears below, the Precedent appears to contain no limitation on types of liability on the part of SOCOG for a breach of this type, so claims for damages for consequential loss could be expected, as well as for any additional costs of alternative accommodation and transport resulting from the breach. The damages for which SOCOG could be liable are determined by the common law rules of calculating contractual damages. Basically, these are (i) damages which are a natural or usual consequence of the breach in question, and (ii) damages which were in contemplation of the parties when the contract was made. The more that SOCOG at the time of contracting knows about the business of the Partner, how the Partner intends to employ the accommodation to be procured by SOCOG and the possible consequences for the Partner of SOCOG failing to provide the accommodation, the greater the scope of the damages included in the category described in paragraph (ii) above.

We note the following specific points in relation to the provisions of the Precedent:

•Although paragraph 4 of Appendix A1 speaks of SOCOG providing a comprehensive accommodation package including access to hotel rooms, tickets, etc as defined in Appendix E "as determined by SOCOG", Appendix E refers to a specified number of rooms of a specified standard. Presumably, therefore, the determination to be made by SOCOG referred to in paragraph 4 relates to the tickets and other matters mentioned in the paragraph or the identity of the hotel(s) designated by SOCOG under paragraph 1.1 of Appendix E, etc, rather than whether the rooms are to be procured.

•Paragraph 1.1 of Appendix E refers to SOCOG making available to Partner "up to" a specified number of rooms of the specified standard. Arguably SOCOG's determination under paragraph 4 might include the exact number of rooms to be made available. Although we are troubled by the intended effect of the words "up to", we incline to the view that, for the commercial efficacy of the contract, in the first instance SOCOG's obligation is to provide the specified number of rooms, and the words "up to" are intended to cater for the fact that the Precedent contemplates the number being reduced by later agreement between the parties. We would not think that SOCOG could credibly argue that the inclusion of the words "up to" means that SOCOG could elude providing any rooms at all (or even a reasonable number of rooms).

•Paragraph 4 refers to rooms being provided "at Partners' cost" and paragraph 1.1 refers to Partner renting rooms "at its expense". Further, paragraph 1.7 of Appendix E reads in part that "all agreements with hotels for the reservation of rooms shall be entered into by SOCOG on behalf of Partner". Arguably, therefore, in order to overcome at least some of its present inability to secure rooms, SOCOG might enter into reservation commitments with hotels at premium (or even "prohibitive") rates, and merely pass the cost of doing so on to Partner. Alternatively, SOCOG might argue that by reason of provisions of the Precedent just referred to, any extra cost incurred by Partner in overcoming any breach of contract by SOCOG in failing to procure rooms for Partner cannot effectively be claimed by Partner as damages. We prefer the view, however, that SOCOG's obligation to procure rooms includes an obligation to procure the rooms at reasonable rates, allowances being made for factors such as the fact that rooms will be in short supply during the period of the Games but that SOCOG has had the opportunity from at least the time the contract with the Partner was entered into to secure commitments to it from hotel operators to supply the relevant rooms.

•Clause 13 of the Precedent is a force majeure provision which excuses a party to the agreement from liability as a consequence of delays in performing obligations caused by "fires, floods, accidents, riots, explosions, wars, hostilities, acts of government, customs barriers or taxes, export or import regulations, import surcharges or other causes of a like or different character beyond the control of the party". Any strike or other industrial action is "for the avoidance of doubt" explicitly excluded by the clause from the force majeure category. If SOCOG cannot provide hotel rooms because hotel owners refuse to let the rooms to SOCOG, in our view this would not constitute an "act of government", even if the refusal to let rooms is a consequence of an act of government such as the imposition of a bed tax. The immediate cause of SOCOG's breach would be SOCOG's failure to secure the rooms, not the motivation of hotel operators for the refusal to let rooms to SOCOG. Arguably, if SOCOG is the subject of a collective boycott on the part of hotel operators, this is a cause "beyond the control of" SOCOG and is a "force majeure cause" as referred to in clause 13.1 of the Precedent, despite the fact that it is not specifically referred to in that clause, since "force majeure causes" may be of "a like or different character" to those specifically mentioned in clause 13. There is no assurance, however, that a court would find to this effect if the matter were presented to it. The reasons for the lack of assurance include the following:

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(i) Arguably, SOCOG could have acted to avoid the boycott in some way, either by acting earlier or in overcoming the boycott after it came into effect. Conceivably the latter could include SOCOG agreeing to pay higher room rates than might otherwise have been paid by it or other methods of breaking the solidarity of hotel operators. These other methods might include taking action under the Trade Practices Act and related legislation (see below).

(ii) One would have thought that collective action by employees involving a "strike or other industrial action" would have fallen within the character of a cause "beyond the control of" SOCOG, but such a cause is expressly stated "for the avoidance of doubt" not to be a "force majeure cause". Given the use of the words "for the avoidance of doubt", it might be argued that as the parties to the contract did not contemplate concerted action by employees as being within the ordinary meaning of the term "causes . . . beyond the control of [a] party", collective action by hotel operators is similarly not included within that term.

Further, clause 13 is in any event not clear as to its effect where more than a delay in performance is involved, or where the delay is for more than 28 days (and in the present case when such delay in performance actually commences). Since it focuses on excusing a party from liability from delay, it may not be of assistance in the present case even if there is a force majeure cause (as contemplated by the Precedent) for SOCOG's failure to procure the specified number of rooms.

In any dispute with a Partner, SOCOG would obviously press as hard as possible the interpretation that a bed tax leading to a refusal to supply is either an "act of government" or another "force majeure cause" within clause 13, and that any delay is for less than 28 days commencing on the first day of the Games period (thus arguably effectively excusing SOCOG from procuring room at all). For the purposes of this opinion, however, it is enough for us to make the point that clause 13 of the Precedent does not provide SOCOG with a clear and reliable mechanism to avoid a claim for damages for breach of contract for a failure to provide rooms in the present circumstances.

The breach would not, in our view, generally entitle the Partner to terminate the agreement under clause 11.13 of the Precedent. That clause allows either party to terminate an agreement in the form of the Precedent in the event of the other party's "failure to observe or perform any of its material obligations". What is "material" is not defined, and the value of the accommodation package relative to the value of the whole contract will vary from agreement to agreement, but it is doubtful that failure to supply hotel rooms would constitute a breach of a material obligation. Nonetheless, a Partner could seek to argue the point if likely failure to supply became known.

Similarly, in our view the failure by SOCOG to be able to procure rooms in accordance with the terms of the Precedent would not constitute a breach by SOCOG entitling the Partner to terminate the agreement at general law or an event which frustrates the agreement at general law (with the effect that the agreement is automatically terminated and neither party can enforce it). Again, the inability of SOCOG to procure the supply of rooms does not appear to us to go to the core of the contract recorded in the terms of the Precedent. There appear to be other material benefits to the Partner flowing from the contract which appear to constitute its essence, and the provision of rooms appears to be more in the nature of a collateral benefit. While SOCOG may be the victim of a boycott, this does not necessarily mean that the Partner cannot procure hotel rooms itself or in some other way, at least if it has sufficient notice of SOCOG's difficulties.

Further, the very existence of clause 13 of the Precedent tends to suggest against any such inability constituting a frustration event (the first step in determining whether frustration has occurred being always to construe the contract so as to determine whether the relevant event so significantly changes the nature of outstanding contractual rights from what the parties could reasonably have contemplated at the time of its execution).

3. Contracts in Precedent Form not yet Executed

We understand that at present negotiations between SOCOG and hotel operators in Sydney for further hotel rooms to be committed by hotel operators to SOCOG are at an impasse. Hotel operators are apparently refusing to commit to provide hotel rooms to SOCOG.

It may be the general belief that the impasse with hotel operators will be resolved before Partners are required to commit to their accommodation preferences, but we understand from you that unless and until that resolution occurs SOCOG will be unable to perform its contractual obligations for all Partners under contracts signed and proposed to be signed in the form of the Precedent, and that it is difficult to predict with confidence whether, how and when resolution will occur. We also understand that the consequences of the current impasse are likely to become more pressing as time goes on and other parties possibly make bookings with hotel operators for the Games period.

The obvious advice in respect of additional agreements in the form of the Precedent proposed to be executed is that, unless there is a reasonable confidence on the part of SOCOG directors that SOCOG will be able by no later than the Games period (or if required at an earlier time, the earlier time) to procure provision of rooms it is already committed to procure as well as additional rooms required under such additional agreements, either:

•the terms of the Precedent should be varied (eg to reduce SOCOG's obligation from an unconditional one to supply hotel rooms to an obligation to use its best endeavours to do so, or to amend the terms of clause 13 of the Precedent (the force majeure provision) so that it plainly operates to cover the current impasse); or

•SOCOG should defer execution until the impasse is resolved or resolution is in reasonable prospect.

To do neither, but instead to execute contracts in the present form of Appendix E, would appear to leave SOCOG exposed if in due course it proves unable to provide the specified numbers of hotel rooms. (We mention in this regard that we do not have instructions on the likely impact the failure to sign up further sponsors as Partners in the near future will have on SOCOG under other agreements entered into by it, for example with the IOC, or generally.)

4. Position of SOCOG Directors

Contracts in the form of the Precedent are made between SOCOG and a Partner. Directors individually are not parties to the contract.

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A director of a company can only be sued by a third party in relation to a breach of a contract between the company and the third party in a limited number of circumstances. Examples include circumstances where the company entered into the contract when the company was insolvent, or where the company was guilty of misleading or deceptive behaviour and the director was involved in the behaviour.

SOCOG is not a company incorporated under the Corporations Law (or predecessor laws), but it is a statutory corporation able to sue and to be sued - sections 4 and 6 of the SOCOG Act. The regime applicable to companies is, however, a broad guide to what laws may apply in relation to SOCOG and its directors. Section 9 of the Act provides that the primary objective of SOCOG is to organise and stage the Games. According to the section, in carrying out this primary objective and exercising its functions SOCOG must "act in a financially sound and responsible manner" and "have regard to the limits of the financial resources available to it and the State for the purposes of the Games" and "use its best endeavours to avoid the creation of debts and liabilities . . . that will extend or are likely to extend beyond the time which SOCOG must be wound up". Section 24(2) of the Act provides that "a director must exercise the degree of care and diligence that a reasonable person in a like position in a corporation would exercise in SOCOG's circumstances". Section 24(5) provides that "if a person contravenes any of the provisions of . . . section [24] SOCOG may recover from that person . . . if SOCOG has suffered loss or damage as a result of the act or omission - an amount equal to the amount or value of the loss or damage".

Assuming that existing agreements in the form of the Precedent were when entered into reasonable for SOCOG to enter into (ie that SOCOG already had commitments from hotel operators for both the number of hotel rooms covered by those agreements and other commitments for hotel rooms SOCOG was then bound to provide, or that SOCOG had at that time at least reasonable prospects of obtaining such commitments), there is little prospect of SOCOG directors being personally liable if such existing agreements are ultimately breached because SOCOG is ultimately unable to supply all of the hotel rooms required by such agreements (unless such breach results from action taken now which should not be taken because of the current impasse). The liability under contracts already entered into in the form of the Precedent is SOCOG's liability, not the liability of its directors.

In the current circumstances, however, the situation is likely to be different with agreements not yet executed. If a contract to procure supply of hotel rooms is entered into when to the knowledge of SOCOG and its directors there are real prospects that the supply of hotel rooms cannot be procured by SOCOG, a disappointed Partner may claim that entering into an unconditional contract in those circumstances was misleading and deceptive conduct. Depending on the actual facts of the case, a Partner might also claim that specific assurances were received from one or more individual directors. This is a situation where directors could be joined in a action against SOCOG.

Further, if SOCOG is liable for damages to a Partner under a contract in the form of the Precedent which is hereafter entered into, it may well be that SOCOG will be entitled to recover from its directors under section 24(5) of the SOCOG Act the amount of any damages for breach of contract payable to the Partner by SOCOG. It is possible that there may also be other legal bases on which SOCOG may claim such damages from its directors. (While current SOCOG directors may not be inclined readily to take action against other current SOCOG directors, subsequent SOCOG directors, to the extent there are any appointed, may not be so inclined.)

We should mention that neither section 60 of the SOCOG Act, nor SOCOG's directors and officers liability insurance (assuming that it is in the usual terms), provides protection, indemnity or cover where the basis of a claim against a director is action involving a want of good faith/wilful breach of section 24(2) of the SOCOG Act. In the event the directors were ever made parties to an action arising from failure by SOCOG to perform a contractual obligation which SOCOG knew at the time of executing the contract it was unlikely to be able to perform, it is unlikely that the SOCOG directors could maintain that they acted "in good faith". This only underlines that the prudent course, in relation to agreements where the time for signature is close, is to disclose SOCOG's present position and then either qualify SOCOG's contractual obligations or defer signing the agreement, and that if the facts are as we understand them, SOCOG directors should seriously consider taking this course.

The question of whether directors of a statutory corporation acted "in good faith" in carrying out their duties was the subject of a recent case determined by the Full Court of the Supreme Court of South Australia in Barrett & Ors v State of South Australia and State Bank of South Australia (November 1994). The State Bank sued its directors for losses incurred by it as a result of a contract entered into by the Bank with a third party. The question in the case was whether it was possible for a director to not act "in good faith" where he acted honestly and without bad faith. It was determined in the case that "good faith" not only requires that a person act honestly but may well also require that the director exercise the caution and diligence to be expected of an honest person of ordinary prudence. The court determined that the statutory concept of "good faith" which the legislation in that case required called for more than "honest ineptitude". In the present case, to enter into a contract which there was little prospect of SOCOG being able to perform would amount to more than mere "honest ineptitude". At minimum, it would amount to recklessness, and fairly plainly would fall outside the scope of conduct which might properly be described as being conduct "in good faith".

5. Possible Trade Practices Act Claims by SOCOG against Hotel Operators

Put briefly, the Trade Practices Act and related existing State legislation makes illegal concerted action by competitive suppliers of similar goods or services which amounts to a boycott of a particular person or class of persons pursuant to an arrangement between those suppliers. The requirements of the relevant provisions of the Trade Practices Act (section 4B and section 45) are technical and we do not have full instructions from you on the actions currently being taken by hotel operators having an impact on SOCOG. On the face of it, however, it may be arguable that SOCOG would have claims against hotel operators for their current collective actions directed in part against SOCOG. These provisions were successfully employed against the Australian Stock Exchange and the Australian Rugby League and ARL football clubs in ASX Operations Pty Limited v Pont Data Australia Pty Limited (1990) 27 FLR 460 and News Ltd v Australian Rugby Football League Limited (1996) 21 ACSR 635, respectively.

Fairly plainly, if SOCOG were to take precipitate legal action against hotel operators, this would hardly improve the relationships currently existing between SOCOG and hotel

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operators. On the other hand, it may be that after receiving further instructions from you, an opinion could be provided by us or counsel to the effect that SOCOG had rights to seek injunctions against hotel operators and/or perhaps even damages against them (either now or at some later time) for breach or prospective breach of the relevant provisions of the legislation now being considered. Such an opinion may be of assistance in persuading hotel operators that, whatever arguments they may have with the State Government over the announced bed tax, collective action by them having an impact against SOCOG of the type examined above is illegal and should therefore cease forthwith.

Bearing in mind that we are not in a position as yet to come to a concluded view on the matter, and the fact that litigation
is inherently risky in terms of result (as the early stages of the News v ARL case demonstrate), we would not have thought that the possible existence of trade practices claims against hotel operators should, at least at this point, change SOCOG's approach on whether it should enter into any further contracts with sponsors and, if so, the terms of those contracts.

Please let us known if you need a more detailed avcice on any of the matters canvassed in this letter, or if you wish us to examine SOCOG's possible trade practices claims mentioned above.

Yours faithfully

Atanaskovic Hartnell

______

These impacts on SOCOG’s negotiating and supply position must be viewed in context of SOCOG’s contractual obligations and current progress:

•Contractual obligations 25,000 rooms to be serviced by existing hotels, new hotels and ships.
•Current status of hotel negotiations is shown below:

STAR RATING	TOTAL POTENTIAL SUPPLY		ROOMS SIGNEDPERCENTAGE SIGNED
5* hotels		3,938	2,20256%
4* hotels		6,993	3,22646%
3* hotels		8,788	2,47028%
2* hotels		1,268	37730%
1* hotels		252	3213%
TOTAL		21,239	8,307

NB: Total potential supply is less 20% of available hotels and airline crew commitments

•At the time of the announcement of the tax, 6,300 rooms were in the final stage of negotiation. These negotiations are now on hold.

______

The following table reflects sponsorship revenue status for the Games Budget, as at 30 April, 1997.

Sponsor Category	Games Budget	Agreements Signed	Agreements Reached (not signed)	Agreements Still to be Reached	Forecast Final Revenue
	$M	$M	$M	$M	$M
Top Sponsors	199.3	89.3	73.4	36.6	199.3
Local Sponsors	684.2	186.4	214.5	283.3	684.2
Total	883.5	275.7	287.9	319.9	883.5

______

Page 10324

Reverend the Hon. F. J. NILE: Portion of the document states:

This delay in our efforts to sign up rooms was itself a problem, but we became especially concerned in response to rumours in the market that hotels were poised to sign rooms with others (attracted by premium prices being offered for Games time accommodation). Such a break out would clearly have the potential to escalate, with rooms then lost to us irretrievably. Given the tight margins indicated above this could pose a very real threat to our capability to live up to our Host City and other commitments.

In discussions with both the Government and hotel/tourism representatives we made the danger of this situation very clear and argued strongly the wider interest that all parties should have in ensuring that Sydney’s capacity to host the Olympics was not called into question. The position I have taken is that the bed tax is a matter between the industry and the Government, not an issue on which SOCOG takes a position per se; we do however object to the use by the industry of one particular mechanism for prosecuting its argument with the Government, namely suspension of negotiations over Olympic accommodation. We sought to encourage movement on the issue. The President is particularly active in governmental deliberations on the matter.

At the time of writing, the situation is still in flux and I and the President will update the Board orally.

The last portion of the document states:

The overall advice is that the prudent course, in relation to agreements where the time for signature is close, is to disclose SOCOG’s present position and then either qualify SOCOG’s contractual obligations or defer signing. Obviously this carries very serious implications for sponsor confidence, for our ability to go on about the business of raising revenue, and for timely acquisition of VIK for the project.

I have just quoted from the first two pages of the document. This is obviously a serious matter. The media has also reported on it. A headline in the Daily Telegraph of 16 June stated "Sponsors to miss Games beds, tickets". A headline at page 45 of today’s Australian Financial Review states "Bed tax row escalates into crisis". Apparently the Treasurer does not believe there is a crisis. Sadly, some members of the crossbench also do not believe there is a crisis. They are prepared to follow the Government like sheep and to give in to the Government’s arm twisting, or whatever it is that the Government has done to gain their support. A headline in today’s Daily Telegraph states "We’ll seize Games beds Carr warns". A headline in today’s Australian states "Carr threatens to grab hotel rooms".

This is a most serious situation. I know that the Labor Party plays rough games with its various branches, and I know that there has been a lot of branch stacking and other things going on within the Labor Party - we know that it plays very hard, if not even brutally - but that is not the way to play the Olympic Games; that is not the way to ensure that the Olympic Games succeed in this city. Labor Party bully-boy tactics cannot be used with the Olympic Games; they are too important. I know that the Greens and other groups are probably happy to have the Olympic Games scrapped and that they have no patriotic feeling for the Olympic Games. I do, and I feel very proud that we will host the Olympic Games. I am concerned that these moves have threatened the whole spirit of cooperation and turned the Olympic friendly games into the Olympic war games. I urge the Government, even at this late stage, to support my motion to refer the matter to the general purpose standing committees, to allow a little breathing space and commonsense to prevail to enable a solution to be found, particularly to the problem of the new 10 per cent bed tax and the 33.33 per cent increase in poker machine tax.

The Hon. J. S. TINGLE [9.56 p.m.]: I wish to speak to the appropriation bills and to totally and vehemently oppose the new and increased taxes contained in them. We should not be having this debate at all; none of this should be happening. The core question that I want to ask is: why are any of these taxes necessary? Can any of them be justified? The answer is no. The new and increased taxes in these bills are a breach of clearly given election promises - whether the Hon. Elisabeth Kirkby understands that or not. The Treasurer says we need the money for hospitals and schools. That might be right. But how far will the revenue from these taxes go in this direction? Did they really have to be levied now, and at this level? Was there an urgent, pressing and compelling need for this extra money to be made available? Or was there a hole in the budget? Did the Treasury suddenly realise that here were some fat tax apples waiting to be harvested, and it just could not help itself? In any event, these are punitive taxes on limited sections of the community which produce no concomitant benefit.

The bed tax - correctly called an accommodation levy - is essentially a services tax. We are told the Federal Treasurer has told his troops to go forth and multiply and prepare the way for a goods and services tax. He need not have bothered. The State Treasurer has already prepared the way by introducing a tax - the accommodation levy - which sets a precedent for goods and services taxes to be applied in other areas. The Treasurer has out-Costello’d Peter. He has beaten him to his own GST. Essentially, this is a tax in the Hewson mould. Essentially it is a precedent for goods and services taxes in other areas. If - not if, but when - the Government gets away with this, it will behold a vast new cornucopia, a horn overflowing with potential new taxes. What will be the next goods or
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the next service to feel the pinch of a goods or services tax? We await, trembling with anticipation!

The most remarkable thing about the bed tax is that it has a high chance of being spectacularly self-defeating. I am told by contacts in the tourist and airline industry that the easy solution to the bed tax is for them to simply book their clients into hotels immediately around the fringe of the central business district, close to the area affected but not in it. Perfectly good hotels which are not affected by this bed tax will reap the benefits of increased patronage from it, without having to pay tax for that. The only people who will have to use the CBD hotels are the several thousand overseas and local tourists who have already booked their holidays and paid for them in advance. Many tours of this kind are booked and paid for 12 months ahead. Those people are caught.

But how long does the Government think it will take tour operators and airline operators to withdraw patronage from the CBD hotels? And when they do, where will the tax revenue from those hotels come from? Hotels which lost that patronage will have much less capacity to pay the tax. The Hon. Elisabeth Kirkby thinks this will help to develop the convention business in country areas. She said that this will encourage people to go outside Sydney to hold their conventions. Can honourable members envisage plane loads of eager conventioners from Europe, Japan and America arriving at Sydney airport and jumping on to an aeroplane to go to their convention at the Tibooburra Hilton? I think not.

This is a pointless tax, even before one gets to the catastrophic brawl that has developed over the Olympics and the agonies SOCOG is going through. I do not care that overseas cities have a bed tax. This is Australia, and we are at the end of a long, expensive trip from other parts of the world. But, like it or lump it, it seems that we are stuck with the bed tax. And so are the masses of hotel employees who have been outside this Parliament tonight, standing in the wind and the rain, asking for our help. Do they not count at all? If there is one real growth area being assisted by State and Federal governments it is unemployment. It defeats me that a government would bring in a tax that it knows will have the result of costing jobs, at a time when this country has an unemployment problem and it should be trying to find jobs, not to lose them.

I move on to the next issue, the increase by one-third in the tax on the gross profit from poker machines. This is equally puzzling. It is equally a bolt from the clear blue sky. It has been claimed that the club industry does not pay its way, that it does not pay income tax. It has been claimed that the club industry has problems and is short of money only because it has built taj mahals all over the place. Piffle! Clubs already pay the 22.5 per cent poker machine profit tax. They pay payroll tax. They pay liquor tax. They pay company tax. They pay local rates. The club industry is one of the main tax-paying groups in this State, and it more than carries its weight.

Why has the club industry been singled out for a discriminatory and selective tax, as the hotel industry in the CBD also has been singled out for a singular and discriminatory tax? Could it be because Treasury discovered an unexpected hole in the budget that it had to plug by seeking out new and different taxes? Heaven forfend! Is that why this tax came out of nowhere, without consultation and without warning? Were the CBD hotels and the clubs just sitting there, easy targets for a revenue grab? The defective thinking behind the increased poker machine tax is appalling. These clubs are not, as the Government seems to think, giant commercial enterprises making huge profits. There might be one or two big clubs that are profitable, but by far the greater number are smaller clubs, which are the only social centres in many country towns

Clubs are essentially cooperative enterprises which belong to their members. They exist for the benefit of their members, and they are required to meet the needs of those members before anything else. And the effect of this tax on those members - very much the little people of this State - will be great. More than 8,000 jobs are likely to be lost. In a community such as the one I live in, Port Macquarie, one club alone - Westport Bowling Club - has already laid off 12 of its staff of 45, and has closed some facilities, and it will have to cut out the cheap subsidised meals it offers to the elderly population of the town.

The Government assures us that these clubs are merely window-dressing when they talk about staff cuts and all the rest of it, and cry poor-mouth. This is not true. These cuts, these job losses are real. They have happened and they are happening yet again, and they are hurting vulnerable people. The Treasurer tells us that 70 per cent of the clubs in this State, about a thousand of them, will not be caught by the increase in tax. But more than 400 will be caught. The simple 80:20 rule is that 20 per cent of the clubs make 80 per cent of the profits. Mathematics tell us that this measure is catching many of the wrong clubs.

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The Government has failed to distinguish between the taj mahals and the ordinary little social centre clubs, and it has set the threshold for the payment of this tax increase much too low. A million dollars sounds like a lot of money, but that figure is the gross profit, out of which clubs must pay all the taxes I listed. The net profit, the profit left over after that, is the only substantial revenue that most of these clubs receive in a year, and from that they must pay salaries, running costs, repairs, maintenance, and their substantial support programs for local charities, sporting groups and community projects, many of which were listed by the Deputy Leader of the Opposition.

The threshold is far too low. If we must have a threshold, it would be much more reasonable if it were set at around $2.5 million, which, on my survey of clubs, seems to be the median profit level. That threshold would immunise most of the medium and smaller clubs which would be most severely affected by this tax. But my understanding is that the Government will not even consider increasing that threshold, because that would throw the whole calculation on the revenue bills out of kilter. In any event, we should not have a threshold because we should not have the tax.

In the budget debate I listed the huge donations made by many clubs to groups such as the Ambulance Service, sporting groups and community projects. I do not need to go over that ground again. Anyway, it appears that this is a lost argument. A majority of my colleagues on the crossbench will vote with the Government. I can only imagine what deals might have been done to change the minds of some crossbenchers who had formerly indicated serious reservations about these taxes. But that rollover is on their consciences, and so be it. They will have to live with that.

Now, with their support, the budget provisions for the pointless bed tax, the damaging increased poker machine tax and the incredible land tax grab will succeed. Those imposts might well succeed - for now. But they have generated immense anger and resentment in the hotel industry, which contributes so much, through tourism, to this State. The club movement, as I have said, is made up of a lot of very ordinary little people. A great many people, not wealthy, have been unexpectedly caught by the extension of land tax to residential properties with a land value of $1 million or more. People might have bought those properties decades ago, on the values of those days, and have seen the value balloon out with today’s prices. Here, for the first time, we have a land tax on the family home. That is a shameful turnaround.

This is a tax that might well be impossible for many self-funded retirees and pensioners, who, because their home and land have appreciated in value, are assets rich but money poor. All of those people - all of them, in clubs, hotels and homes - are greatly hurt by these taxes, for little reason and for doubtful benefit. They will not forget this. They will not forgive. When I come to think of it, I am not too sure why the Opposition is making such a fuss about these tax measures, because it seems to me that with these tax grabs, with these unnecessary and punitive imposts, the Government has just handed the Opposition the March 1999 election on a platter.

The Hon. VIRGINIA CHADWICK [10.06 p.m.]: I refer to a press release dated 11 September 1995:

Minister for Tourism Repeats Earlier Statements "no bed tax".

Minister for Tourism Brian Langton reiterated his earlier statements, saying that the New South Wales State Government has no plans to introduce "a bed tax". "The State Government will not introduce a bed tax," Mr Langton said.

Mr Langton rejected a report in the Sydney Sunday newspaper saying that the State Government was considering a 5% bed tax on hotels and motels. "On numerous occasions, in public and private meetings with tourism industry representatives, I have expressed my long-held opposition to a bed tax," Mr Langton said.

I read that press release because the one person who has been so marginalised, who has been such an irrelevant part of the equation in this debate, is the Minister for Tourism. He is a total irrelevancy in this debate.

The Hon. Dr B. P. V. Pezzutti: Name him.

The Hon. VIRGINIA CHADWICK: His name is "Mr Langton said". Mr Langton is a total irrelevancy in all of this. As to this bed tax, we have an argument with our Treasurer the Hon. Michael Egan. We have an argument with our Premier, Mr Bob Carr. Although I am not altogether too sure, I have a sneaking suspicion that we might not have an argument with the Minister for the Olympics, Mr Knight, who is extraordinarily loyal. However, the person who is totally irrelevant in this entire equation is the Minister who should be totally responsible for it, "Mr Langton said", the Minister who used to be Minister for Tourism but now is not Minister for anything.

The Hon. J. F. Ryan: Dead man walking!

The Hon. VIRGINIA CHADWICK: Dead man walking, absolutely! If we had had a decent
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Minister for Tourism, a Minister prepared to stand up for the tourism industry, we would never have had this fiasco and tragedy in our tourism industry today. I spoke at some length and in detail on this matter in the budget debate, and I will not reiterate those comments, but I will make some further comment because the bill has now been introduced. The crossbenchers, who are clearly more powerful than either the Government or the Opposition on this matter, inform me that they will move amendments in Committee to which the Government will agree. This legislation applies to hotels, motels and bed and breakfast establishments in the designated CBD. Previous discussion referred to rich, five-star establishments in the CBD, and honourable members opposite, particularly those from the Left, are concerned about the little fellow and the little gal.

The Hon. Dr Meredith Burgmann: Where are the bed and breakfasts?

The Hon. VIRGINIA CHADWICK: I have no idea. It is the Government’s legislation, so you tell me.

The Hon. Dr Meredith Burgmann: Is it in the CBD?

The Hon. VIRGINIA CHADWICK: It is Government legislation, so she should know about it. She is a member of the House of review; she should know about the bed and breakfast establishments and where they are. She is running for preselection for a House of review and tonight she wined and dined her potential preselection voters instead of listening to the debate. The legislation also applies to a holiday flat. Does that mean that anyone who owns a flat or unit in the designated area and hopes to rent it out during the Olympics will now be caught by the 10 per cent tax? Surely no member of the Labor Party would have a negatively geared apartment in the CBD - shock, horror! Surely not in their wildest dreams would honourable members opposite have thought to rent out a unit in the CBD during the Olympics. But if they did, they will now be caught by the 10 per cent tax.

The Hon. Dr Meredith Burgmann: The only people with units in the CBD are Government members.

The Hon. VIRGINIA CHADWICK: The Government said the legislation applied to big, five-star hotels in the CBD that could supposedly afford the tax. Serviced apartments also are covered by the legislation, as are guest houses and backpacker hostels. How dare the Labor Party, particularly those in the left wing, introduce a tax on backpacker hostels and youth hostels. Government members are creeps; the Government will allow a member on the crossbench to move an amendment to correct its own inequitable legislation and then graciously accept the amendment so that the crossbench appears to have had a win. That is pathetic.

The Hon. Dr B. P. V. Pezzutti: What about the YWCA. It is also caught by it?

The Hon. VIRGINIA CHADWICK: Of course, the YWCA, the new hostel down at Central, is also caught in this legislation. But the Government should not worry because it will graciously accept amendments from the crossbenchers to correct its own legislation. I asked the Attorney General about that in question time today, but he said he does not know about it. Even anyone stupid enough to board a cruise vessel that docks in Sydney Harbour will be rapaciously grabbed by the Government, because the cruise ship industry is also caught up by the legislation. There are simply not enough beds in Sydney to cope with the Olympic Games and the strategy to provide the necessary number of beds was not to distort the industry in terms of bricks and mortar but to use cruise ships.

If the cruise ship industry decides it will not play ball and will not bring ships to Sydney during the Olympic Games, there will be an accommodation crisis. This incredible problem has arisen because of the ignorance and greed of the Government, which did not seek the industry’s advice about this tax. I have heard the Premier say on countless sickening occasions that he thinks the industry needs to pay something towards the Olympic Games. I refer him to Budget Paper No. 3, Volume 2, which shows that the industry already contributes more than $7 million in goods and kind to New South Wales. It already contributes more than enough, but if the Government wanted more, it should have consulted the industry and asked whether it could make a further contribution. But the Government did not consult the industry, Tourism New South Wales or even the Minister for Tourism.

On budget day the Minister sat in the other House and learned, at the same time as everyone else, that the Government intended to increase the bed tax. What an ignominious way to treat a Minister and an industry. The industry does not have faith in the Minister or the Government, and quite frankly I do not blame it. I have spoken previously in the budget debate about the impact the bed tax will have on international, interstate and domestic travellers. Ample evidence has been made available
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to all honourable members and I urge them to read the material sent to them from airline representatives, tour groups and those who believe this tax applies only in the CBD. They should ask themselves what tourists and conference or convention people who visit Sydney do with their time. They travel on the harbour, ride in taxis, eat in restaurants, and visit the Blue Mountains and other places.

No-one should foolishly believe that this bill applies only to five-star hotels in the CBD. Anyone who does has a closed mind, and has not read the material that is readily available or stopped to consider what people do when they stay at a hotel or attend a convention elsewhere. With regard to bed occupancies, we are already disadvantaged for a number of reasons. The Australian dollar is stronger, the dreadful witch from Ipswich is having an effect in other areas of the world, and there are other reasons to explain the decrease in numbers. Already this legislation has had an incredible impact. The 10 per cent bed tax will not be taken off the top; in many cases it will remove the profit margin for a number of enterprises in the city and beyond. One should consider the Government’s credibility and how it tells lies, because this peculiar tax is geographic specific and industry specific.

That is weird for any sort of tax. It is madness for hotel proprietors to consider they are all right because the tax will only be imposed in the central business district. With any government there is a creep and in this Government there is the biggest creep of all. In fact, they are a pack of creeps. It will be the central business district today, New South Wales tomorrow. This is a huge problem that will badly affect one of our most important industries. I could not let the moment pass without speaking of my other love: education and training. If honourable members went outside tonight and braved the rain they would have seen nice young people from the hotel industry. It is a young, hard, service industry full of young people who these days are well trained to international standards, and we should be proud of that.

Over the past five or six years there has been a deliberate push in quality international standard training in this State through private enterprise, TAFE and school education. Whether in hotels, restaurants or any form of hospitality service industry in this State, I regard our training, standards and service as second to none, and we should be proud of it. What message is now being given to those young people? I come from Newcastle and everyone there thinks it is a tragedy that in 1999 2,500 BHP employees will lose their jobs. That is a tragedy, but who gives a damn?

The Hon. Dr Meredith Burgmann: Not the Federal Liberal Government, that’s for sure.

The Hon. VIRGINIA CHADWICK: Over 12 months ago the Treasurer and Bob Carr were briefed about what was happening at BHP and they did not give a damn until the press announcement. The Treasurer still does not give a damn about this service industry which will lose thousands of jobs in Sydney and areas beyond. One in nine people in Australia is employed in this industry, it is the growth industry in Australia, yet the Government is doing its utmost to destroy it. I totally oppose this tax.

The PRESIDENT: Order! I warn people in the public gallery that they are not permitted to applaud or to make any comment.

The Hon. PATRICIA FORSYTHE [10.22 p.m.]: Last night in his speech on the budget the Hon. E. M. Obeid provided absolute proof, if we needed any, of the Government’s promises and commitments. He was talking about taxes and the budget, and I said, "But your Government said no tax increases and no new taxes," to which he replied, "That is very true." And indeed it is true. The Government came to power with a clear mandate: no tax increases, no new taxes. It does not have the permission of the people of New South Wales to introduce these taxes. It is taking from the people of New South Wales without their permission. It is stealing from the people of New South Wales. It is stealing jobs from our young people, it is stealing from community services, and it is stealing from people’s homes. It is a Government without shame and it is letting down the community of New South Wales.

I do not want to speak for long tonight but a few points need to be put on the record. Last year I was privileged, as I acknowledged to the Government, to attend Atlanta for the fortnight of the Olympic Games and Paralympics. I was delighted to meet many Americans there who gave me a number of messages. They were particularly keen to point out how much they loved being at the Olympics and the Paralympics and how much they would love to come to Sydney for the 2000 Olympics and Paralympics. But overwhelmingly, whether on buses and trains or at the games, the people I met said to me over and over again, "But we hear that Sydney is an expensive city."

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If that is the impression of the people of Atlanta, I assume it is the widespread impression of people not only in the United States but throughout many parts of the world who do not travel overseas regularly but would love to join us for the Olympics. If they believe that this is an expensive city now, one can only begin to imagine what they are thinking as they add up the dollar signs of the extra 10 per cent bed tax. I listened tonight to the illogical argument of the Hon. Elisabeth Kirkby that people do not have to stay in the central business district, that they could stay in Manly, Bondi or in the vicinity of the airport. The Hon. Dr Meredith Burgmann said they could stay in Glebe. Frankly, we could not house a mere fraction of the people who want to come to Sydney not only for the Olympics but at any other time in the hotels in Manly, Bondi, the airport vicinity, Glebe or many other suburbs. That is an illogical argument.

Much of our key accommodation is in the city. That is where our hotels and jobs are located and where our young people are trained. One need only look at the many fine hotels in the city and the excellent training given to many young people, as mentioned by the Hon. Virginia Chadwick. If hotels have to start cutting services, if it is a question of what is the margin and whether they will be able to continue to provide expertise in hotel management training. As a parent of older teenagers, I know that they and many of their friends, particularly university students, look to hotels and restaurants in the city as places where they can get a job to sustain their life. That employment opportunity is at risk because of the actions of this Government. I can put no finer point on it than that.

The tax is about our young people and their jobs; but it is also about the reputation of this city and, indeed, of this Government. It now has a reputation of a government with no mandate, which ignores its own promises and has no honour. I turn briefly to the increased poker machine tax and its effect on clubs. So much has been made of the community efforts of our clubs. For years the point we have so often overlooked or taken for granted is that local clubs serve local communities and understand local needs. Club donations to local communities are not made from a centralised fund that determines how the money should be distributed. The clubs make donations at the local level because they know what is needed in their local communities.

The last thing we want is more money so that the Government can put up a Labor whiteboard that shows which community facilities in which marginal seats will benefit from its largesse. We want the involvement of community organisations servicing local communities. Minutes ago the Hon. Dr Meredith Burgmann said to my colleague the Hon. Virginia Chadwick that this Government cared more about Newcastle than the Federal Government does. I wish to put on record the work and effort of the Newcastle Leagues Club. Like my colleague the Hon. Virginia Chadwick I am from Newcastle. I know this club well; it is almost adjacent to my high school. In a letter to the Leader of the Opposition the club stated:

The increase in tax will mean us having to look at many areas to see if we can cut back costs . . . We have done some renovations in the last twelve months and we were looking maybe to do more in 1998 -

In other words, to provide jobs in the local community -

but these plans will now have to be reconsidered because of the new tax.

The Newcastle Leagues Club identifies local charities to which it donates. For example, it donates to sporting clubs, the Salvation Army, the St Vincent de Paul Society, the Royal Blind Society, the John Hunter Hospital, the bishop’s winter appeal, the Deaf Society of New South Wales, the New South Wales Society for Crippled Children, the Life Without Barriers Foundation, the Epilepsy Association of New South Wales and the New South Wales Cancer Council. The records of any club in the State would reveal the same sort of list. Clubs are an integral part of local communities. We should be proud of the work and efforts of our clubs. Reverend the Hon. F. J. Nile referred to the support that the youth off the streets project has had from many clubs in New South Wales.

I know a great deal about the work of the project. It receives support not only from clubs, but also from organisations such as Rotary. I can inform the House that the project does not receive funds from the Government. That is the point. Local communities have determined that there is a need. This project has received fine support from clubs, organisations and the New South Wales Property Foundation, but not from the Government. Given the Government’s record, how can the Opposition rely on it to appropriately distribute funds across New South Wales to all of the organisations that the clubs have been able to support? That is the reason the Opposition is so opposed to this increase.

The Opposition knows that the Government will take from local communities, but that it will not give back to them. The Government will give back to the marginal electorates and to the electorates
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where it thinks it has support. It will not be based on the needs of local communities. The Opposition strongly opposes the tax on clubs because it takes away from clubs an opportunity to give to local communities and to make them feel part of local communities. In conclusion I should like to quote from a letter from Youth on the Peninsula Incorporated, a central coast organisation. I note that one of its honorary patrons is Frank Walker. I wonder what he thinks about the tax? The letter states:

Youth on the Peninsula Inc. would like to strongly object to the introduction of an extra poker machine tax on registered clubs in New South Wales.

YOTP are a voluntary group who work at providing facilities, entertainment, training and many programmes for young people who live on the Woy Woy Peninsula. We currently receive 90% of our funding . . . from the Ettalong Beach Memorial Club . . .

The central coast has a high need for community services, and those needs will be now jeopardised by these taxes. Nothing I have heard in the debate from Government or crossbench members has justified these taxes. Jobs, community projects and homes are at risk. For those reason the taxes should be opposed. The amendment proposed by Reverend the Hon. F. J. Nile should be supported as it will give all groups in the community an opportunity to have their say and to put their concerns on the record. To date, the Government has not heard the message that has been powerfully given to it in petitions and letters and by people protesting in the streets. The Government will not hear; it must be made to listen.

The Hon. J. F. RYAN [10.34 p.m.]: The first thing I want to say about the appropriation bills is something I have said before and something that many of my colleagues have said. However, it is something that the few Labor members who have bothered to listen to the debate must never forget: the Carr Government came to office with 48 per cent of the vote on the pledge of no increases in taxes and no new taxes.

[Interruption]

The Hon. I. Cohen may well laugh. He is supposed to be in this place to keep the bastards honest. That is allegedly the motto of those on the crossbench. I was surprised by the speech of the Hon. Elisabeth Kirkby. Where is the motivation of members of the crossbench to keep the Government honest? Surely the root of keeping a government honest is saying that a government that has made a pledge in writing and in blood publicly, frequently, and openly to steal office from the former Government should be held accountable to the promise it made not to introduce new taxes and not to increase taxes. What has the Government done? It increased taxes on cigarettes and it has increased stamp duty and payroll tax. It even converted the common garbage can into a new tax collection agency. Having promised to link section 29 levies to new initiatives in waste management, it grabbed another $20 million for the taxation coffers.

In this budget the Government increased land tax, introduced a bed tax and proposed increases in tax on what the Treasurer calls poker machine profits. The Government cannot be trusted; it will not be trusted; it can never be trusted. One only has to refer to the press release of the Minister for Tourism which the Hon. Virginia Chadwick read, in which he told the community that he did not believe in a bed tax and he promised that the Government would not introduce one. That is all gone now. I am told that Government members are frequently told in the party room, "Do not worry, you guys do not understand, we are doing it right." Whenever Bob Carr makes a commitment of any kind in the next 12 months and during the 1999 election campaign, the community will come to the collusion that he is not to be trusted, that he is just a liar. Indeed, he is a complete liar.

The Hon. Virginia Chadwick: He is here!

The Hon. J. F. RYAN: I am pleased that the Hon. A. G. Corbett has turned up to hear some of this debate.

The Hon. Virginia Chadwick: He might explain why he ratted.

The Hon. J. F. RYAN: I am looking forward to hearing his explanation of what deal he has done with the Government. I understand that a deal has been done.

The Hon. A. G. Corbett: There has been no deal.

The Hon. J. F. RYAN: I bet there is no deal! What is the bet that within the next two weeks time in the House will be devoted to the consideration of one private member’s bill, the bill the Hon. A. G. Corbett gave notice of today. This bloke will get special attention for his bill, which no-one in the community supports, because he has sold himself out to the Government. After telling the community that he is concerned about the effects of the bed tax and concerned about what would happen in relation to the poker machine tax, he has done a deal. He
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should not try to deny that he has done a deal; he will be the only bloke given an opportunity to have a private member’s bill dealt with.

The Hon. Virginia Chadwick: I bet he is a friend of Richo’s!

The Hon. J. F. RYAN: Yes, whatever it takes. The bottom line is that we cannot trust the Hon. A. G. Corbett. I support everything that has been said by the Hon. Virginia Chadwick and my other colleagues in relation to the bed tax. I do not need to elaborate on that. Members of the public can take for granted that I support and stand behind them in their opposition to the bed tax if for no other reason than it represents a lie on the part of the Treasurer. He has introduced new taxes into the community, having received enormous amounts of extra revenue merely by the accident of increased activity in the community.

I want the Treasurer to explain to us why - having received $500 million in extra fines, stamp duties and other revenues and having saved $200 million a year in interest and having got an extra $700 million in revenue - he wants another $150 million in taxes that he promised not to introduce. I have asked the Treasurer that question many times in this Chamber, but he will not give me an answer. The reason he will not give an answer is that he tells lies. He lied to the community to get his job and he will continue to lie. This tax will cost jobs, and four jobs that will go as a result of the tax are the jobs of the Treasurer, the Attorney General, the Minister for Community Services and Mr Carr. They will not have their jobs because the community will no longer trust them.

The Treasurer had the gall to tell this House that Penrith Panthers makes $40 million in profit. He does not seem to understand, or refuses to understand that included in that $38 million gross revenue - it is not gross profit; it is gross revenue - is $9 million in tax. By what sort of distorted logic does the Treasurer include taxation liability as part of profit? How can electricity expenses be regarded as part of profit? How can wages, salaries, promotion costs and mortgage payments be part of profit? The truth is that Penrith Panthers makes $4.5 million a year surplus after it has paid its expenses. Nearly $1 million of that is given to community organisations. This year it gave $100,000 to the Nepean children’s hospital. Penrith Panthers pledged to give $100,000 to that hospital next year and in the following years. But Penrith Panthers has announced that it is now gone. If the Hon. A. G. Corbett has a commitment to children, what about the children who will use the neonatal unit?

The Hon. A. G. Corbett: Wait for it.

The Hon. J. F. RYAN: The Hon. A. G. Corbett says, "Wait for it." He is asking us to wait for the announcement by the Treasurer of some special deal struck with the Government that will give clubs the opportunity to donate money and have some of it rebated, a certain part of the tax being set aside for rebates. The honourable member does not understand that the clubs do not have any money to give away in the first place to get the rebate. All the money will be gone. The worst feature of the increased poker machine tax and many of the other taxes is that it is a sellout by members opposite of the constituency they usually consider to be their own.

Earlier today I presented 12,240 signatures gathered from people in western Sydney against the increased tax on poker machines. I was unable to present a further 1,745 signatures because they had not been prepared in the way that is normally acceptable to the House. If any member wants to examine the document I am holding in my hand, which was prepared by people from the Mount Pritchard community club, it is perfectly obvious that those who signed the document were protesting against the poker machine tax. It is obvious that although the petition does not appear on every page, that is what they intended. It is an interesting exercise to take any page of this petition and read the suburbs where the petitioners live: Fairfield, Fairfield West, Busby, Sadleir, Mount Pritchard, Ashcroft, Hinchinbrook, Toongabbie and Greystanes. They hardly places where the residents would vote for my party.

I suspect that at least 70 or 80 per cent of the 1,700 people who signed this document against the Government’s tax vote faithfully for the Labor Party, or did. Among the 12,000 signatures I presented were 3,000 signatures gathered at Panthers of people who came from addresses like Kingswood, Emu Plains, Penrith, Jamisontown and so on. They are also people who, by and large, support the Labor Party. They will not at the next election. I can promise the Treasurer that as a result of the introduction of this tax and the cutting of benefits in the Penrith area the Labor Party is likely to lose one, if not two, electorates in the outer western metropolitan suburbs of Sydney that Labor Party members hold by only very narrow margins.

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I am fed up with the arrogant way in which the Treasurer has dismissed complaints from Penrith Panthers by somehow referring to it as a rich club that does not deserve support. Penrith Panthers provides entertainment for people who normally vote for the Labor Party, people who do not have a lot of money and people who look for cost-effective opportunities for recreation and entertainment. They cannot afford to pay $125 for a ticket to the ballet at the Opera House, but they can afford $15 to see the Radiators at the Evan Theatre. If the Treasurer keeps squeezing the club it will not grow and entertainment it provides will not be available to ordinary people. The availability of venues in Campbelltown has become so critical that a shotgun wedding cannot even be held because it takes 18 months to find somewhere to hold the wedding once it has been announced. Facilities such as meeting rooms, function halls and things of that nature -

The Hon. Dr Meredith Burgmann: Don’t be so patronising!

The Hon. J. F. RYAN: In what way am I being patronising? The honourable member has completely lost it. Obviously she does not go to Campbelltown too often. The honourable member does not get the joke because she is a joke. That is the problem. The point I am making is that clubs, whether it be Panthers, the Campbelltown Catholic Club or the Mount Pritchard Community Club, provide cost-effective facilities and affordable entertainment for ordinary families. They also subsidise one of the other great pleasures for people who live in places like western Sydney, that is, weekend sport. I do not know of a sporting organisation in western Sydney with which I have been associated that does not receive some subsidy or support from clubs such as Penrith Panthers, the Mount Pritchard Community Club, the Campbelltown Catholic Club, the Campbelltown RSL or the Camden RSL. All those clubs support groups like under-8 baseball, soccer and so on.

These are the children of the people who usually vote for the Labor Party, but it will not take them long to understand that the Labor Party’s dollar-guzzling activities and increasing taxes on their community clubs will cost them their recreation and support for their sporting facilities. Nothing the Treasurer does will change their perception of him or the Government. By March 1999 people will not believe the Government, they will not trust the Government and they will not forgive the Government for taking these sorts of facilities from them. It gives me great pleasure to oppose these taxes. It surprises me that honourable members opposite want to use these measures to put their constituents to the sword. If they do I promise them that their constituents will change and they will hurt the Labor Party with their vote at the next election. The Labor Party will have no-one but itself to blame for its stupidity.

I thank members of the crossbenches who oppose these taxes, because they are doing something about keeping the Government honest. I ask other members of the crossbenches to examine their consciences and ask themselves whether they should allow a Government that has promised not to introduce new taxes or to increase taxes to do so without at least the decency of some sort of public inquiry at which people can make submissions, and explain to the Government how these taxes will hurt them. What possible argument is there against holding up the legislation for a week to allow people to have their say? We are living in a democracy. This is Australia, not Bosnia. It is a place where public participation in the law-making process is welcomed. What possible decent argument is there against a week’s delay except that the crossbenchers want to fall into line either because some deal has been made or because they do not believe it is necessary to keep the Government honest. Members on the crossbenches should at least give consideration to a little open scrutiny of the Government to keep it honest. If they do not vote against these taxes they should at least support the proposal to have them examined by a committee. That will enable people to come before the committee, to make submissions and to have their voices heard.

The Hon. M. R. KERSTEN [10.50 p.m.]: In this debate the House has heard a great deal about how the increased poker machine tax will affect clubs in metropolitan areas, particularly around Sydney, but I would like to present a perspective from a little further afield. I am talking about as far afield as one can get in the west: Broken Hill. What do these taxes mean to the Musicians Club in Broken Hill, a club that has just committed itself to a $6 million redevelopment? Mr Peter Clarke, the secretary-manager of that club, must feel awfully sick - and why wouldn’t he? The Musicians Club has just committed itself to a major refurbishment of its premises, a move that has been applauded by everyone in Broken Hill because everyone will all benefit from it.

Mr Clarke has been informed that this tax will cost the club about $170,000 a year. He has been placed in the most unpleasant position that any manager could be placed in: he may have to dispense with the services of some of his staff. At least five or six people in Broken Hill will lose their
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livelihood because of this tax. No-one could dispute that in the last few years Broken Hill has suffered some dreadful times. Broken Hill, a proud mining town for many years, has contributed a great deal to the coffers of this State. The mining companies once employed a work force of 5,000 people, that that has been reduced to 700. I have had discussions with the manager of the Barrier Social Democratic Club, a name which might have some poignancy for Government members, and an equally gloomy picture has been painted by that club.

[Interruption]

The Hon. Dr Meredith Burgmann does not know what she is talking about. I was rather hoping that she would interject as it gives me an opportunity to tell her what the honourable member for Bathurst, Mick Clough, said about her. He said that the Hon. Dr Meredith Burgmann was entirely useless, totally irrelevant and has absolutely no conception of what people in the bush are going through. The Hon. Dr Meredith Burgmann has been described as entirely useless because of her lack of electoral work. She is probably the most irrelevant dork in this place.

The Hon. Dr Meredith Burgmann: He did not say that.

The Hon. M. R. KERSTEN: He did not; I did. The honourable member for Bathurst and the Minister for Agriculture said she is entirely useless.

[Interruption]

The Hon. Dr Meredith Burgmann is fond of using the word "ratting". It is obvious that she does not know history. She knows nothing about this area. She would probably visit Broken Hill only once in a blue moon, yet she has the hide to throw accusations at me. She knows nothing about the history of her own party.

The Hon. Dr Meredith Burgmann: Why did you rat?

The Hon. M. R. KERSTEN: I have never ratted. I have never done anything that I am ashamed of. The Hon. Dr Meredith Burgmann, as a matter of conscience, should take lessons in history. I am proud of the fact that I was a union boss in Broken Hill. Those ideals are dear to my heart. The Hon. Dr Meredith Burgmann is so silly that she does not know the history of her own party. If she took some lessons, she might learn something. Despite what the irrelevant Hon. Dr Meredith dork Burgmann wants to say, she has absolutely no conception of what she is talking about. I am sure that the Hon. Dr Meredith Burgmann would be interested in the Barrier Social Democratic Club. It has done a magnificent job in Broken Hill. Over the past five years it has turned a desert into a unique oasis. What was once a wasteland has been turned into one of the most unique golf courses in the world through heavy subsidisation by that club. That facility is now in jeopardy. It borrowed in excess of $1 million to create this wonderful facility.

[Interruption]

The Hon. Dr Meredith Burgmann should come and have a look at this facility. I will take her for a game of golf and I guarantee that I will beat her. This wonderful facility that has been created in Broken Hill is a credit to the Barrier Social Democratic Club and everyone else who has been involved in it. The club and all its members are about to be bludgeoned by a tax increase that will severely jeopardise the future development of that club. The manager of the Legion Club, the other club in Broken Hill, has expressed reservations about the tax increase. During the past 12 years the Legion Club has enjoyed considerable growth. In that time its work force has grown from eight to 30 people. That is a phenomenal achievement in a place like Broken Hill that has suffered the misfortunes of being a one-industry town. Honourable members would be aware that the mining industry is a terminal industry; it is not like the rural industry. Ore does not grow back once it is removed from the ground.

The Hon. Jan Burnswoods: Go on!

The Hon. M. R. KERSTEN: I thought honourable members might not have known that.

The Hon. Dr Meredith Burgmann: This is the most fascinating speech I have ever heard.

The Hon. M. R. KERSTEN: If the Hon. Dr. Meredith Burgmann does not like what I have to say, she can leave. The Legion Club is an excellent example of sound management.

The Hon. Dr Meredith Burgmann: Five minutes!

The Hon. M. R. KERSTEN: The Hon. Dr Meredith Burgmann has again interjected. What useless comment does she want to make now?

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The Hon. Dr Meredith Burgmann: This is the most irrelevant contribution I have ever heard.

The Hon. M. R. KERSTEN: The interjection of the Hon. Dr Meredith Burgmann is now on the record. The achievement of the Legion Club is remarkable in a town that has a proud history. The club has done a number of magnificent things over the years. The tax increase will result in a considerable decrease in its income and it might restrict the future growth of the club. Less money means less growth. For decades the city of Broken Hill has enjoyed the benefits that these clubs have been providing. The clubs in Broken Hill are the cornerstone of its society. Government members who have been described by their own Ministers and members as useless and irrelevant are supporting the imposition of this tax increase on clubs. This Government came into office on a platform of no new taxes.

The Hon. C. J. S. Lynn: You cannot trust spivs.

The Hon. M. R. KERSTEN: We cannot trust them. Many articles have appeared in Broken Hill newspapers about the effect this tax increase will have on the whole Broken Hill community. Representatives of the Musicians Club have publicly stated that the community should act now and protest against the planned introduction of the increased poker machine tax before it is too late. What does the Hon. Dr Meredith Burgmann have to say about that? Nothing! I will not labour the point. Other honourable members have referred to the effect that this tax will have. There can be no doubt that this insidious tax will have an effect on people in areas that Government members claim to have represented for so many years. Government members have conned these people, and have been conning them for years. The Government will now leave those people in the lurch in more ways than one. I suspect that by 1999 Broken Hill will be forgotten because Government members will no longer need its support. Broken Hill’s days are over; the party is over. Goodbye, Broken Hill! Broken Hill will be wiped off and consigned to history. That is a sad state of affairs.

The Hon. M. J. GALLACHER [11.00 p.m.]: I wish to place on the record my observations of the potential impact of the proposed poker machine tax increase. Yesterday I visited Albury, which is a country town on the border of New South Wales and Victoria, to observe first-hand what was happening in an area with which I was not very familiar but which has been directly affected by the impact of an improved Victorian economy. I appreciated the opportunity also to see what was happening in Albury following the introduction of poker machines into the State of Victoria. During my visit I spoke with a number of representatives from local clubs in Albury. I noted that clubs in Albury have been severely affected by the aggressive behaviour of the Victorian club industry - behaviour that it is more than entitled to exhibit. The Government’s action in pursuing the tax increase in New South Wales will have a severe impact upon the local economy. More importantly, the tax increase will have an even greater impact upon the local community. Members of the Opposition have been trying to drive home that point in this debate. But, for whatever reason, it seems to have fallen on deaf ears so far as members of the crossbench are concerned.

Clearly, speaking to the Government about this proposed legislation is a complete waste of time. However, it is important that members of the crossbench understand exactly what is happening. With the exception of the Hon. J. S. Tingle, the crossbench comprises people who simply would not frequent clubs on a regular basis. Surprisingly, Reverend the Hon. F. J. Nile and the Hon. Elaine Nile support the club movement on this proposed increase.

Over many years Call to Australia has been strong in its condemnation of gambling in New South Wales and the effect of alcohol upon the family unit and the fabric of our society. But Reverend the Hon. F. J. Nile and the Hon. Elaine Nile recognise the important role that clubs play in our community, and they have given due credit to that role and are supportive of clubs irrespective of the other negative aspects of the club industry. Yesterday I met with a number of directors of clubs, including the Albury Sailors, Soldiers and Airmen’s Club Ltd, the Commercial Club Albury Ltd, the North Albury Sports Club Ltd, the Albury Golf Club Ltd, the Howlong Country Club and Bowling Club and the Lavington Sports Club Ltd. Not so long ago the Lavington Sports Club Ltd was in dire financial circumstances. In 1994-95 the club suffered a loss of $143,000.

The Hon. D. J. Gay: Was it as bad as the club that the Treasurer sent broke - the Cronulla workers club?

The Hon. M. J. GALLACHER: I have not had a chance to look at the matter referred to by the Hon. D. J. Gay. A number of other clubs surround the Cronulla workers club. Obviously the club was in a position to carry on its work within the local community. In relation to the Lavington Sports
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Club - a club that primarily focuses its attention on the provision of sporting facilities for the people of regional and country New South Wales - it is important that its efforts do not go unnoticed. Last year, after some fine work by the directors of the club, the club made a profit of $10,000. This impost by the State Government will cost that club - which is just getting itself back on the road to recovery - in excess of $185,000.

The reality is that it is unlikely that the Lavington Sports Club will survive 12 to 18 months under this increase in taxation. It is not the role of members of this House to simply rally around and talk about getting behind the clubs. The Opposition is looking at more than just the clubs; it is looking at the network of organisations that survive in the community as a result of the work of the club industry. The Lavington Sports Club is no different from any of the other clubs that honourable members have heard about within the context of this debate.

In the last three years, despite the financial situation being experienced by the Lavington Sports Club, the club has donated more than $75,000 to one organisation, that is, the sudden infant death syndrome organisation. It has not made donations to any financially rich organisation that is making a fortune. I am sure that every member of this House would be totally supportive of the sudden infant death syndrome organisation. In the last three years that organisation has received $75,000 from a club that in 1994-95 suffered a loss of $143,000. The Lavington Sports Club is fair dinkum about putting money back into the community. I shame the Hon. A. G. Corbett because of, his continuing fraud of being interested in children. His party is A Better Future For Our Children.

The Hon. D. J. Gay: There will be no jobs for them.

The Hon. M. J. GALLACHER: That is so. The SIDS organisation actually gives them a chance at life. What the Hon. A. G. Corbett has done in agreeing to accept this legislation is absolutely disgusting. As his reward for falling into line it will be only a matter of time before he presents a private member’s bill. The Lavington Sports Club donates to other organisations that are also involved with children. In the period from 1994 to 1996 the club donated more than $38,000 to Camp Quality, an organisation that is well known in New South Wales for providing an opportunity for kids suffering from serious forms of cancer and leukemia to enjoy a reasonable quality of life - $38,000 stripped away by the State Government!

It is clear that the Lavington Sports Club will be unlikely to survive the tax. But it will not simply be the club that folds; more than 80 employees of this organisation will lose their livelihoods. In a town such as Albury, which has a relatively high unemployment level, another 80 people on the unemployment queues will have a devastating effect on the region’s economy. When I visited Albury I spoke to a representative from the Ampol Road Pantry organisation, an organisation that is moving out of Albury. As a result another 30 people will be unemployed. The roll is continuing in these country towns. The Hon. Elisabeth Kirkby is obviously out of touch. Probably the best thing to emerge from today’s debate was the comment by the Hon. Elisabeth Kirkby that her speech today was likely to be her last budget speech. Quite a resounding cheer was heard on the twelfth floor when those words were uttered by her. Let the next 12 months roll on, and quickly.

Another organisation in Albury to feel the impact of the tax increase will be Howlong Country Club. I will not list all the organisations to which that club donates, but the list is quite extensive. I mention a few so that they may weigh on the conscience of the Hon. A. G. Corbett while he is sitting up in his room contemplating when he will introduce his private member’s bill. Some of the organisations that receive donations from the Howlong club include Riding for the Disabled, the Juvenile Diabetes Organisation, and an institution which I suggest is well known to Government members and some members on the crossbenches: the Institute for the Blind. The Government and some crossbench members have failed to see the facts as they have been laid out for them.

About 10 days ago I attended a business breakfast in Sydney at which the guest speaker was the Victorian Minister for Tourism, Louise Asher. Her opening comments still ring clear in my ears, and most certainly will reverberate around the business community in this city. She thanked the Premier of New South Wales for the fantastic work he had done for the Victorian economy over the past two years. She then proceeded to detail how the Victorian economy had recovered remarkably well over the last two years, not only because of the work being done by the Victorian Liberal Government but also because of what had been done here in New South Wales that has allowed this State to grind to a halt. Louise Asher detailed a number of aspects in which Victoria will overrun New South Wales.

I was interested to hear the Hon. Elisabeth Kirkby talking earlier about conventions moving to
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country areas of New South Wales. Quite obviously the only conventions she has been attending in recent times are democrat conventions, for if she had been involved with the large organisations that conduct conventions in New South Wales she would know that they are seriously looking to Victoria, which can now offer a cheaper product. That is what business is about - getting a quality product at a cheaper price. For conventions, considerable cost savings can be offered by Victoria, which has climbed from position three on the list of preferred locations for conventions in Australia to number two, outstripping Queensland. Louise Asher put on record that it is only a matter of time before Victoria surpasses New South Wales. I have no doubt that this bed tax will have a devastating effect on conventions being held in this State.

I conclude with just a few remarks about the central coast. It is my primary focus as a member of this Legislative Council to achieve an improved quality of service for members of the central coast community. Let it be on the record that the March 1999 elections cannot come quickly enough for the Opposition. For me, a member with responsibilities for the central coast, those elections cannot come fast enough. The people of The Entrance look forward to voting on Grant McBride’s performance. He has said to the club industry in The Entrance a lot of nice things about getting behind that industry and doing what he can. The fact is that he has done nothing. He has guaranteed that he will not be the member for The Entrance after the next State election. He will lose badly in that seat.

In The Entrance, one club alone has 29,000 members - two-thirds of the total population of one seat for New South Wales Parliament. People will ensure they vote, and they will vote against Grant McBride. Similarly, the member for Wyong, Paul Crittenden, is scared for his future. He has been doing his utmost to get around the clubs. Unfortunately for him, the gig is up. He too will join Marie Andrews, the member for Peats, following the 27 March 1999 election, outside the Commonwealth Employment Service looking for another job.

The Hon. ELAINE NILE [11.13 p.m.]: I wish to put on record my opposition to these new taxes. The 10 per cent bed tax is seriously sabotaging the Sydney Olympic Games. The 33.3 per cent increase in taxes on registered club poker machines is to be deplored. I wish to make my speech short and to the point, and to that end I seek leave to table two important reports which the Treasurer has either misread or not read at all. They are the bed tax economic impact study of June 1997, by Ernst and Young, and a report entitled "The bed tax, the case against" prepared by Mr Bruce Baird, the Managing Director of the Tourism Council Australia.

Leave granted.

This afternoon’s media coverage of this issue was quite unethical. I believe channels 2, 9 and 10 carried stories that the crossbenchers were now supporting the Government’s bed tax. That is completely untrue. One of those statements was made even after the media people concerned were present in a media room when Reverend the Hon. F. J. Nile expressed opposition to the tax. The media coverage showed him getting up from the table, with a voice-over stating that the crossbenchers were supporting the bed tax. The Treasurer knows that Call to Australia is not supporting his taxes. Though that is common knowledge, the media coverage suggests otherwise. That being untrue, the Irish in me surfaced. I got on the telephone to each one of those channels and told them of our position. They said, "What does it matter?" I said, "It does matter, because already we have had people ringing us, saying we have gone back on our word." We in Call to Australia do not go back on our word.

The Hon. D. J. Gay: You could not be bought?

The Hon. ELAINE NILE: We definitely could not be bought. At the media conference, attended by the Hon. R. S. L. Jones and the Hon. A. G. Corbett, the Hon. R. S. L. Jones said, "Sorry, Fred, we’re not supporting you." Notwithstanding that statement, the media coverage suggested that all crossbenchers were supporting the Government on the issue.

The Hon. Dr B. P. V. Pezzutti: Did the Hon. A. G. Corbett give an indication of his position at that meeting?

The Hon. ELAINE NILE: Yes. I think he was with the Hon. R. S. L. Jones, or was it the Hon. I. Cohen?

The Hon. I. Cohen: Yes.

The Hon. ELAINE NILE: The Hon. I. Cohen came on later in the media coverage, which inferred that Call to Australia and the Hon. J. S. Tingle were supporting the Government. Naturally, the Hon. J. S. Tingle was upset about that as well. I felt betrayed. I am concerned, after speaking with the Treasurer, that on Thursday, which is private members day, one hour will be allocated for the Hon. A. G.
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Corbett whereas other crossbenchers who were present in the media room will be ignored. There really has to be something behind this. The Government ran with the bill that was introduced by the Hon. A. G. Corbett on caning in independent schools. Now the Government has his support for this measure. Tonight the media focused on the caning bill and completely ignored the bed tax. I do not believe the media realises what the issue of caning is all about. Child abuse is different from smacking a child. The damage that the Government’s taxes are causing the club industry in this State is in parallel with the damage caused by the measures it is introducing against the parents of this State. I hope the parents of this State rise up and tell the Government that they do not want the Government taking away their rights.

The Hon. M. R. Egan: No parent should be allowed to belt a child about the head.

The Hon. ELAINE NILE: The Treasurer is drawing too long a bow, as he did on the previous bill. I will not entertain his comments further. I merely record how unethical the media are when reporting the news. Their code of ethics is a bit of a joke. I return to the bed tax and my personal experience with Sovereign Inn near the Mater Misericordiae Hospital. Just a short distance away is another motel which is outside the Sydney CBD. The Sovereign Inn lowers its rates for families of people undergoing surgery in the mater hospital. This tax will really hurt the Sovereign Inn, which does a lot of good. The motel just a few seconds away, being outside the CBD, will not have to pay the bed tax. The Treasurer must have a heart somewhere. He will hurt people that he should be looking after.

The Hon. M. R. Egan: They offer concessional rates to people attending patients in hospital -

The Hon. Dr B. P. V. Pezzutti: Where is that provided for in the legislation?

The Hon. M. R. Egan: - you tell them to come and see me.

The Hon. ELAINE NILE: They should not have to come and see the Treasurer. We have stayed in the motel when we have wished to be close by when a near one has been in the Mater for treatment.

The Hon. D. J. Gay: What about other places that look after country people?

The Hon. ELAINE NILE: Exactly. Mr Keith Kerr, Executive Director of the Registered Clubs Association of New South Wales released a document, headed "NSW Treasurer Hits Rock Bottom To Justify Tax Hike For Clubs In Budget", which stated:

In a move which has astounded Clubs throughout NSW, the Treasurer, the Hon. Michael Egan MP, has launched a mean-spirited and misleading attack against the Club Movement, suggesting it provides minimal support for the community and is "as mean as Scrooge" when it comes to donating profits to welfare, charity and community groups . . .

With one comment he has managed to insult over 1527 Clubs in NSW and 15,000 Club Directors who work in a voluntary capacity and approve donations to hundreds of community groups, charities, sporting associations, and emergency service organisations every year . . .

To suggest that the number of rebates received reflect the number of donations made by Clubs is incorrect and totally misrepresents the amount of funds re-invested into the community by the Clubs of NSW.

I do not believe that the Hon. A. G. Corbett has read this letter. It continued:

"Everybody knows this except for, it seems, the Treasurer of this State," Mr Kerr added.

Just a few examples of donations which do not qualify under the rebate scheme include:

* $1.4 million to maintain 15 sporting fields, provide uniforms and insurance for 3,500 children in junior sporting teams from South Sydney Juniors Club;

* $100,000 for ante-natal baby equipment for Nepean Hospital from Penrith Rugby Leagues Club;

* $125,000 to the local Surf Life Saving Club from Maroubra Seals Sports Club;

* $100,000 to the Newcastle Knights from the Newcastle Workers Club;

* $61,000 for a courtesy bus for aged members from the Ashfield Catholic Club;

* $30,000 for a disadvantaged children’s Christmas party from Guildford Leagues Club;

* $55,000 for a child minding centre from Club Phoenix.

And there are many others. For the information of the Hon. A. G. Corbett, children receive benefits from clubs. Therefore, I support the motion to refer these taxes to the general purpose committees. If the Treasurer supports the motion also, he will be better thought of by the people of New South Wales. The various groups are ready to present their cases and the community should be able to hear their
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arguments. The Treasurer can then answer the matters raised, if he wishes. He has nothing to lose.

The Hon. Dr B. P. V. Pezzutti: Yes, he does.

The Hon. ELAINE NILE: If he supports the motion, people will see that he is transparent, honest and open.

The Hon. Dr MARLENE GOLDSMITH [11.23 p.m.]: I join my colleagues in expressing anger at the betrayal of the people of New South Wales, particularly the battlers, by the introduction of new taxes by the Carr Government in its budget and in these bills. The proposed bed tax and increased poker machine tax will hit the poorer people of New South Wales.

The Hon. Jan Burnswoods: The bed tax? Come on!

The Hon. Dr MARLENE GOLDSMITH: The Hon. Jan Burnswoods obviously is not aware of the fact that those who work in the industry often are engaged in entry level jobs and are young people. Perhaps the Hon. Jan Burnswoods does not care about the youth unemployment levels in this State but others do. I certainly do. The increased poker machine tax is a betrayal of the working classes, which have traditionally been associated with the club movement in this State. I can recall my father telling me stories after World War II about how he was involved in helping to develop an RSL club in his area. In many areas there were few places where people could socialise unless they were sufficiently wealthy to be involved in private clubs and organisations. Much of the club movement, and certainly the RSL movement, was developed following World War II because men returning from the war who wanted to continue their camaraderie sought places where they could socialise. It was very much a community-based, grassroots movement.

My father was first involved with a club operating from an old quonset hut, as many did - and this is how the club movement began. It has now grown to be a large and important part of the social fabric and infrastructure of this State. It meets the needs of many people. It is not a for-profit industry; it provides services to the community, ploughing its so-called profits back into the community. I doubt that people will any longer sleep easily in their beds at night following the interesting comments today by the Treasurer. He clearly does not understand the difference between revenue and profit. He assumes that every dollar that comes into a club is a dollar of profit. He does not realise that expenses have to be deducted. This is the man who is running the Treasury of New South Wales, and that is a major cause for concern.

The Hon. R. S. L. Jones: He is not actually running the Treasury. He is the Treasurer.

The Hon. Dr MARLENE GOLDSMITH: The Hon. R. S. L. Jones makes an interesting point. He is the Treasurer and he does not exactly run the Treasury although, theoretically, he is in charge of the Treasury - I should correct myself. I presented to the Parliament today a petition containing more than 8,000 signatures from people around New South Wales begging the Government not to continue with the poker machine tax. Many of my colleagues also presented similar petitions. So the Parliament has received petitions from many thousands of people in a desperate, last minute attempt to convince Government and crossbench members to listen to community concerns. This is the latest salvo in the campaign by the Registered Clubs Association of New South Wales to change the tax. On 4 June more than 5,000 club industry representatives, members, beneficiaries and supporters marched on Parliament House to protest the tax increase.

On that occasion Mr Keith Kerr, Executive Director of the Registered Clubs Association of New South Wales, said that the club movement was already the fourth largest taxpayer in New South Wales and did not have the capacity to pay the increase without jobs, community support and building programs being severely affected. Unfortunately, these would be the first things to be sacrificed to fund the tax. Mr Kerr said that the Treasurer, the Hon. Michael Egan, is attempting to justify the tax increase by stating that the money will be used for hospitals and schools. Clubs already donate millions of dollars each year to hospitals, schools and hundreds of other worthwhile organisations without taking a percentage cut first. This increased poker machine tax is not just a tax on clubs; it is a tax on the New South Wales community.

Mr Kerr said that a survey of clubs affected by the new taxation structure showed that it is estimated that clubs will be forced to review the positions of 8,649 staff members and to reduce donations, sponsorships and support for community programs by more than $78 million. In addition hundreds of building and refurbishment programs will either be cancelled or put on hold, according to the Registered Clubs Association’s submission on the May 1997 budget. The submission relates to the increase in the tax rate on club poker machine revenue and lists club after club and the many worthwhile community causes to which they
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contribute. The genuine profit of the club movement, as opposed to its revenue, is ploughed back into the local community. The submission shows how much the club movement puts back into the community. I seek leave to table a document entitled "The Registered Clubs Association Submission on the May 1997 Budget" so that it can become a public document available to the people of New South Wales.

Leave granted.

I was pleased today to present a petition against the poker machine tax, and I state my strong objection to it. This is a tax on the charities and community groups of New South Wales who are the beneficiaries of the profits of the clubs. It is also a tax on employment in clubs. Far fewer jobs will be available in the club industry as a result of this tax. But it is obvious that the Labor Government does not care at all about people who work at entry level jobs in industries such as the club industry. The other tax that I will refer to this evening is the accommodation levy, which is an absolute outrage. Again it is a tax on jobs, especially the jobs of young people and the working class.

Ernst and Young undertook a study, which the Hon. Elaine Nile tabled, of the economic impact of the bed tax on the New South Wales economy. Some of the results of that research were that the tax would cause a decrease in the gross State product of $166.5 million per annum, and a total loss, both direct and indirect, of 1,182 full-time equivalent jobs, mainly youth jobs - in a State that has high youth unemployment, I remind the Treasurer. Investment of $825 million is now being re-evaluated, projects valued at $210 million have been terminated, and there has been a 10 per cent reduction in the number of tourists coming to Sydney. In addition, many bookings have been cancelled in the tourism industry up to and including the Olympic Games. Tourist ships will no longer dock in Sydney but will sail to other Australian cities. Sydney will miss out on that tourist income; and it is accepted that cruise ship passengers tend to be substantial spenders.

The Northern Territory is the only State or Territory with an accommodation levy. It imposes a 5 per cent tax across the Territory that is used specifically for tourism marketing. In New South Wales the proposed tax is 10 per cent, and it will be taken from the tourism industry. That is at a time when the occupancy rate in five-star central business district hotels is down from 82.4 per cent in April last year to 75.6 per cent this year, and in four-star CBD hotels is down from 86.3 per cent in April last year to 80.8 per cent in April this year. As my colleague the Hon. Virginia Chadwick remarked, we have already seen a substantial decline in tourism revenue in hotels. This tax will be a further substantial blow to our tourism industry. Sydney is already considered to be one of the most expensive cities in the world in which to stay, and this extra impost will make it even more so.

The Australian Bureau of Statistics June 1997 figures show an overall decline of tourists from all Asian countries. The growth rate of Japanese tourists into Australia has currently slowed to the lowest level in the previous five years and it is forecast that the bed tax will cause a further 20 per cent drop in the number of Japanese visiting Sydney. The tax will put Sydney’s $1 billion conference business at a disadvantage. Already we have heard many reports of cancellation of conferences as a result of the bed tax because quotes for such conferences are uneconomic and uncompetitive. The hotel industry is also affected by the energy levy, the car park levy, land tax and the new insurance group duty. According to the Australian Hotels Association, this has effectively increased by 125 per cent the taxes paid by the hotel industry to the State Government. This is from a Government that promised when it came to power that there would be no new taxes. So much for reading their lips.

The Australian Hotels Association concluded from those statistics that it is clear that the State Government has no real understanding of the industry. That is an understatement. In recent years we have had reason to be proud of our tourism industry in New South Wales, especially under the leadership of the Hon. Virginia Chadwick. Tourism marketing campaigns were remarkably successful. Tourism was a major growth industry and a major generator of employment, particularly for young people. However, we have now come to a different pass, as the figures I cited show. I was recently at a briefing at which the Hon. Louise Asher, the Victorian Minister for Tourism, expressed her personal gratitude to the Premier of New South Wales for his contribution to tourism in Victoria. She should also extend her gratitude to the Treasurer, the Hon. Michael Egan.

In other words, the State Government is literally working to make things better for Victoria, not for New South Wales. If we needed an example of that, the performance of the Minister for Tourism at the recent general purpose standing committee was the final straw. As a member of that committee I asked the Hon. Brian Langton, the Minister for Tourism, questions about the impact of the bed tax on tourism, but he refused to answer, arguing that it was a matter for the Treasurer because it was a part of the budget. The Minister had already answered
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questions about the bed tax in the other place, so this was a new rule that he had made up for the committee. When we consider that this is the single most important issue impacting on his portfolio and the enormous effect it is having on the tourism industries in this State, his refusal to answer those questions was the ultimate Pontius Pilate act. It made a mockery of the whole committee process.

My coalition colleague the Hon. Helen Sham-Ho and I realised that there was no purpose in seeking to ask further questions, because the committee had been turned into a sham by a Minister who refused to answer the most important questions relating to his portfolio. We left the committee, though not without a certain amount of concern about the seriousness of our actions. But that was the only way we could express our anger at the way the people of New South Wales and particularly the tourism industry were being treated by that Minister and this Government.

Today deals have been done with the minor parties - we have seen desperate wheeling and dealing in the corridors - and they are the last straw. The Government is determined to get this legislation through the House, and it does not care who gets hurt in the process. All that the people of New South Wales can do is wait until March 1999, when every member of a club in New South Wales, everyone who is affected by the bed tax, everyone who is fed up to the teeth with the continuing betrayal of promises by the Carr Government, will have an opportunity to get even.

The Hon. Dr B. P. V. Pezzutti: To get Egan.

The Hon. Dr MARLENE GOLDSMITH: Yes, to get Egan - but it goes much further than that. The Government is incompetent. It is not just a betrayer of everything that it said it stood for - these broken promises are the latest in a long line of broken promises - it is also a betrayer of the State; and the sooner it goes the better.

The Hon. Dr B. P. V. PEZZUTTI [11.41 p.m.]: I rise with enthusiasm to participate in this debate. During the March 1995 election campaign the Premier delivered a killer punch: no new taxes and no increased taxes. While I was still reeling from that one he said that he would halve hospital wasting lists. I said, "My goodness! How is he going to do all this? An extra $256 million for health to halve waiting lists?" He said that there would be no new taxes but that there would be increased health funding. He then said that he would take the toll off the M5. I thought, "That is going to cost him a lot of money. How is he going to keep all those promises?" I thought to myself, "He cannot do it." And then I thought to myself, "There must be some hollow logs that we do not know about," and we have discovered that there are some hollow logs.

I thought, "They will have to privatise a thing or two. They will have to sell off a few assets." But the Government said that it would not do that - that there would be no privatisation. I thought, "Perhaps God is on their side and it will rain money." I was deceived, and the people of New South Wales were deceived. This tax increase is a real beauty. As the Hon. Virginia Chadwick said, Brian Langton was always screaming that the coalition was going to introduce a bed tax - which we were not - and he always said that he was not going to do it. As recently as a couple of weeks ago, he said that he would not do it. He got a big surprise, didn’t he? The Minister for Gaming and Racing got the biggest surprise of all time - he did not know about the poker machine tax, as the Deputy Leader of the Opposition explained earlier.

The Government thinks the hotel industry is a milch cow, but that is now a fading dream. We came into government in 1988 after the bicentenary celebrations: Sydney was the site of one of the biggest celebrations in Australia’s history and tourism was booming. However, by October 1988 the hotels were on their knees because the tourists had gone away. We were starting to pay for the celebrations and for Darling Harbour and trying to get the Government back on its feet. The Royal Australasian College of Physicians and the Canadian College of Physicians and Surgeons met in Sydney and some 8,000 doctors came to town for the first big conference at Darling Harbour. The doctors and their families were in Sydney for two weeks - some for three weeks - and they saved about five of the major hotels from going belly up. So marginal is the profitability of these expensive hotels that that was what was needed.

The Gay and Lesbian Mardi Gras and the doctors’ conference were the only boosts that the hotel industry had in 1988; they saved it. The Hon. Elisabeth Kirkby stood here tonight dressed for the mardi gras in her multicoloured suit with the glitter and sequins. The bed tax will destroy the Gay and Lesbian Mardi Gras; it will end up in Melbourne. The Victorian Minister for Tourism - a very capable lady who previously was an adviser to the former Minister for Health, Peter Collins - was in Sydney last week for a breakfast with Michael Photios. She is running a pink plan for Melbourne and she thinks she is going to take our mardi gras to Melbourne to join the Moomba Festival - and at this rate she will probably succeed. At last count, the best estimate I
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had for the accommodation input of last year’s Gay and Lesbian Mardi Gras in Sydney was something like $40 million or $45 million - a huge boost for what is basically a parade for a couple of days.

I am amazed that the Government needs so much money. We managed pretty well with much less money: we had the lowest hospital waiting lists in the world; we had a public transport system that people could rely on; we had good roads; we had services that operated; we had people in work. This Government cannot manage - it just spends, spends, spends, and then it taxes, taxes, taxes. That is the Labor way; it is the only thing it knows. It leaves behind its debts and extremely bad services. It says it got a shock from the Federal Government, and the Hon. Elisabeth Kirkby swallowed that hook, line and sinker. Savings had to be made by all the States to pay for the profligacy of the Hawke and Keating Governments - a $10 billion black hole.

At the election campaign we were told the budget would be balanced. What happened in New South Wales? The Government has been blaming the small contribution that it lost from the Federal Government - $250 million. The State Government has already recouped that because interest rates have dropped to an historic low - they are the lowest they have ever been. It is paying less interest than it has ever paid and it is reaping that benefit. The Government says that it needs more money. Well, it could save money by reducing the inflated salaries that it is paying members of the Sydney Organising Committee for the Olympic Games. Mr Knight should look at the SOCOG figures.

Do people realise that four people on SOCOG are paid between $350,000 and $400,000 a year, that five people are paid more than $300,000, that eight people are paid more than $200,000, and that 51 people are paid more than $100,000? There must be some way to reduce those enormously inflated salaries. The staff of SOCOG will be the only people who are able to afford to stay in hotels in Sydney. It is a shambles. It is about time someone took control. Last week Mr Knight said he does not know how he is going to pay for the Olympics - he has no idea where he is with his budget. What a joke! The Government has no idea. It does not know how to manage, and it does not care - it just taxes more. Tonight we have had dirty deals done dirt cheap with the better future for my superannuation party? It is a joke! He is the most unpleasant person in the Parliament.

The Hon. R. D. Dyer: You are a grub for saying that.

The Hon. Dr B. P. V. PEZZUTTI: What? What? What?

The Hon. R. D. Dyer: How many more times are you going to say "What"?

The Hon. Dr B. P. V. PEZZUTTI: The bill applies to the YWCA, small private hotels and serviced apartments. The economic impact study by Ernst and Young listed a number of hotels, but it did not include a hotel quite near my unit in Ultimo, the Glasgow Arms, which is a very fine boutique hotel. It operates in a marginal area of the industry: relatively expensive, but high quality. It will suffer. The Henry Lawson, which is in a similar area, will also suffer. But most importantly I think of country people who come by train or aeroplane to Sydney to access health services around the Prince of Wales, St Vincent’s, Prince Alfred and Royal North Shore hospitals, which are the closest public teaching hospitals to central Sydney. They cannot go to Westmead Hospital because it is too far, they cannot go to St George Hospital because it is too far, so they are treated in the inner city.

The Hon. Jan Burnswoods: A lot of trains stop at Parramatta.

The Hon. Dr B. P. V. PEZZUTTI: If you are a country person, try getting from the airport to Parramatta by public transport.

The Hon. Jan Burnswoods: A lot of people travel to the west by train and get off at Parramatta.

The Hon. Dr B. P. V. PEZZUTTI: If they come from the north coast they travel down the north shore line and go to Strathfield and on to Central. Places like St Vincent’s Hospital have established a medihotel to allow patients to try to save costs. Patients come to Sydney from the country, stay at the medihotel at reasonable cost and attend St Vincent’s for their tests, and that reduces the cost of health services. But those costs will rise. The Treasurer said, "Tell me about patients who have health services and I will reduce their costs." I am telling him now. At the moment the central business district map extends only as far as Paddington, but soon it will creep out to Randwick, and then Coogee, and then it will include all the places in which people can stay at reasonable cost.

Not all the hotel accommodation in Sydney is highly expensive; some of it is very moderate. But an increase of 10 per cent will make central business district accommodation uncompetitive for country people. Tonight I spoke to some of the staff from
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the Landmark hotel who were demonstrating in the street outside Parliament in the rain. The Landmark would be considered a highly expensive, luxurious hotel, but it provides good value for money. It struggles to maintain its occupancy rate by active promotion and employing excellent staff who work as a team to provide an efficient and warm hotel for people to visit.

The children’s hospital at Westmead, which the Liberal Government built, cost $340 million. That was about the same figure that the Chinese paid to the Japanese owners for the Sheraton on the Park. The Japanese paid $450 million to build the hotel, including the purchase of the land. How could a hotel cost $450 million when we built the children’s hospital for $350 million? The land could not cost more than $40 million, so it is a very expensive piece of infrastructure, and, like all expensive and high-tech infrastructure, it requires service and maintenance, which cannot be cheap. How could that money ever be recouped? Under its previous owners the top six storeys of the Sheraton on the Park, then called the Park Lane, were empty; they had never been opened because the occupancy rates of Sydney hotels are very marginal at best. The receivers had been called in, even at $350 million. Many more hotels in Sydney would cost the same amount of money, as the Hon. E. M. Obeid knows.

The Hon. E. M. Obeid: Do you know the current occupancy rate for the Sheraton on the Park?

The Hon. Dr B. P. V. PEZZUTTI: No, I do not.

The Hon. E. M. Obeid: It is 92 per cent.

The Hon. Dr B. P. V. PEZZUTTI: Is that for all the storeys? Is the whole hotel opened?

The Hon. E. M. Obeid: The whole hotel is opened.

The Hon. Dr B. P. V. PEZZUTTI: They have done a much better job than when it was the Park Lane.

The Hon. E. M. Obeid: It has no cancellations.

The Hon. Dr B. P. V. PEZZUTTI: I hope it continues that way. The bill has inclusions and exclusions; for example, hospitals are neither included nor excluded. I will be interested to know whether rooms rented to people who come to stay with relatives in some of our public and private hospitals will be affected by the bed tax. Will they be classified as hostels or serviced apartments? The imposition of a bed tax on such accommodation would increase the cost of having a relative in hospital and be an added burden to people when they are suffering most. The bill does not apply to the medihotel at St Vincent’s Hospital. I have sought advice from some of my colleagues, and I wonder whether bathhouses in town that offer residential accommodation by the hour, the day or the week will be affected by the tax. The Commissioner of Taxation is mentioned in the legislation; I did not even know New South Wales had a commissioner. I wonder whether he will poke his nose around some places in the central business district marked on the map. I am sure that many people will be interested in the ramifications of the legislation.

[Interruption]

The Hon. Franca Arena should have paid a residential tax tonight, but she is just resting. I am sure the Hon. R. S. L. Jones put his 10 per cent on the Treasurer’s desk. An article in the American Express magazine of May 1997 about Australia’s international competitiveness makes this point:

Australian tourism is significantly less competitive now than it was in 1994. The 10% "bed tax" proposed for Australia’s main gateway, Sydney, implies an even less competitive outlook for 1998. Sydney - and, less so, Australia will lose market share as a result.

Under the heading "Sydney Accommodation Jobs and the 10% Sydney Bed Tax" it states:

Based on the latest available Australian Bureau of Statistics data, the Sydney region has seen a net loss of nearly 580 jobs in the accommodation industry in the year to the December quarter 1996.

The largest jobs loss has been for hotels and motels, collectively employing nearly 680 fewer people in the December quarter of 1996 compared with the same quarter a year earlier.

Short-term caravan parks also reduced employment by nearly 40 people, offset by a similar increase in visitor hostel employment.

Employment in holiday units, flats and houses increased by about 100 persons.

The introduction from 1 September of a 10% bed tax on Sydney accommodation establishments, based on initial Access Economics analysis, is likely to exacerbate the picture, directly causing accommodation employment losses of up to 750-1000 in the accommodation industry alone, as well as wider adverse effects.

That is an estimate from American Express, which recently moved its regional headquarters to Sydney after assessing a whole range of things, including the cost of accommodation and the ease of attracting
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staff. But when its regional executives come to Sydney, they will have to be accommodated in Parramatta if they are to make a reasonable saving. One other matter is important. A letter from the Board of Airline Representatives of Australia Inc. states:

The Board of Airline Representatives of Australia Inc . . . represents 49 member airlines flying to, from and within Australia, 24 of which will be adversely affected by the introduction of a 10% bed tax.

As you are aware, international airlines are large consumers of hotel rooms. Some airlines occupy 51 rooms per night for the Airline and Technical staff. The 10% increase in the cost of a room has added $404,216.00 per annum to the cost of operating to Sydney for one of our members.

The letter also states:

Of the 49 airline members of BARA, 24 are affected by the bed tax which adds well in excess of $2.5 million dollars to the cost of operating to Sydney . . .

Each weekly 747 aircraft operating to Sydney is worth $22M per annum and 640 jobs to the New South Wales economy. Put another way, each 747 aircraft not operating to Sydney is a loss of $22M and 640 jobs to the New South Wales economy.

Airline industries are high-volume, low-profit, low-margin operations. Any change to their infrastructure costs, such as the cost of accommodating staff, makes a big difference to their profitability. They have to ensure that they make a profit, otherwise they will go broke.

The Hon. E. M. Obeid: Are you reading your speech?

The Hon. Dr B. P. V. PEZZUTTI: No. Reference has been made to developers repositioning themselves and building more accommodation for visitors to the Olympic Games. I have a letter written by Wolfie Pizem, the operator of Restaurants of The Rocks Pty Ltd, which I am sure the Hon. E. M. Obeid frequents. The letter states:

I have been in business for over 35 years surviving many recessions and have never experienced such concerns from my fellow colleagues regarding the state of the economy today.

* They are concerned that their businesses are hardly surviving.

* They are concerned about the uncertainty of the economy and at the same time being pressured to accept the various continuing changes to taxes and industrial laws.

* They are concerned about the hotel and tourist industry with the 10% hotel bed tax. Although it is only a pittance where certain members of parliament are concerned, it still adds to their problems.

Wolfie Pizem, an important and significant person in this industry, is concerned about the bed tax. The Treasurer referred to the fact that many other countries have a goods and services tax and a value added tax. However, he failed to mention that many countries in Europe have a lower VAT for hotel accommodation than other VAT rates.

Reverend the Hon. F. J. Nile: And lower income tax.

The Hon. Dr B. P. V. PEZZUTTI: They have that too, but they do not have payroll tax. The reason, unlike the Treasurer’s reason, is to encourage tourism. They might have a VAT -

The Hon. B. H. Vaughan: It is 17 per cent in England, is it not?

The Hon. Dr B. P. V. PEZZUTTI: But the hotel accommodation rate is not necessarily the same.

The Hon. B. H. Vaughan: The same as what?

The Hon. Dr B. P. V. PEZZUTTI: As the 17 per cent VAT in some European countries. The VAT rate is actually lowered for hotel accommodation.

The Hon. B. H. Vaughan: I thought you were talking about England.

The Hon. Dr B. P. V. PEZZUTTI: I was talking about Europe, which is not only England. The senior manager for taxation services for Deloittes said that so far as he is aware the only city that levied a bed tax on its business travellers was New York. I strongly suggest that the Premier and Treasurer should study the New York experience which led to a virtual boycott on conferences and conventions. It brought New York to its knees. It had to remove the tax that had been imposed. How do the economic giants who fashioned this big, bold Labor budget expect our hotels to respond? Should this 10 per cent tax be absorbed? Should there be a 10 per cent increase in prices? In reality the response will probably be a mix of both. I do not believe that either will be good for the hotel industry or for Sydney.

The Hon. B. H. Vaughan: How long has he been speaking?

The Hon. R. D. Dyer: Far too long!

The Hon. Dr B. P. V. PEZZUTTI: I have been speaking for exactly five minutes. We have a
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long way to go. There are five more speakers. Government members should sit back and enjoy it or they will go mad. They will probably do both.

The Hon. B. H. Vaughan: Another half hour of you would do the job.

The Hon. Dr B. P. V. PEZZUTTI: I will keep going; I have no problem with that. There has been a lot of talk about the need to revive the income tax mix in Australia. There has been talk about introducing a GST. If the bed tax survives only to be followed by the introduction of a GST of, say, 12 per cent, that would be added to the bed tax of 10 per cent, which represents a 22 per cent tax increase. Hotels which collect these taxes do not keep any of the proceeds. None of these taxes are returned to industry, which is what happens in the Northern Territory and in other countries.

The Government could have received 4 per cent or 5 per cent of those taxes and returned it to industry for tourism promotion. It could then have reaped the benefits of tourists visiting Australia. But that is not what the Government is doing. Will this 10 per cent bed tax have to be removed? What will replace that tax if that is what occurs? The Government has not thought through these issues. It certainly did not ask its tourism operators and it did not consult with anyone before imposing this tax. It did not even tell the Minister what it was going to do. It was a shot from the blue.

Reverend the Hon. F. J. Nile: Not even the tourism department.

The Hon. Dr B. P. V. PEZZUTTI: It did not even tell the tourism department. The Government did not know how much it would make as a result of this tax. It did not work out how much it would receive. It did not work out the economics of its proposal. The Treasurer and the Minister for Community Services, who are in the Chamber, do not know and do not care how much the Government will receive as a result of this tax. The Treasurer does not care what happens to the industry. Many young people, such as university students, work part time in hotels to survive and pay their way through university. My children are doing the same thing. What will happen to them? Hotels are expected to pay award rates, but staff in many European and American hotels who receive very low wages survive only because of the generous tipping regime enforced upon visitors.

The Hon. B. H. Vaughan and the Hon. Dr Meredith Burgmann would know what I am talking about. They know that, when they visit places such as this, they are forced to tip hotel staff because they are very poorly paid. Bellhops survive because they get $1 or $2 when they take bags up to visitors’ rooms. Hotels in Australia are forced to pay their staff award rates - liveable wages. That is the right thing to do. Hotel staff might get the odd tip, but visitors to those hotels should not feel obliged to give staff a tip because they are paid at an award rate. We know that they are getting a decent salary. Those people will no longer receive a salary as there will be no jobs for them.

The Hon. D. F. Moppett: Business executives will have to doss down in the street the way the Government is going.

The Hon. Dr B. P. V. PEZZUTTI: Homeless businessmen! Australia might soon be like Tokyo and provide holes in the walls for businessmen. I can see it now.

[Interruption]

The Parliamentary Remuneration Tribunal handed down its report today. Country members of Parliament are entitled to the generous allocation of $145 a night. After the introduction of this 10 per cent tax how many hotels in Sydney will be able to provide accommodation at $145 a night? I belong to the Royal Automobile Club, which will be hit by this tax. The City Tattersalls Club and the Commercial Travellers Club, which is across the road - a club at which many country members stay - will also be affected by the imposition of this tax. I do not know what the Commercial Travellers Club charges, but the 10 per cent tax will result in a charge of more than $145 for a room at night. The Treasurer will have to consider a suggestion by the Parliamentary Remuneration Tribunal that rates for country members should be increased as they should not be expected to pay more than $145 a night to stay in reasonable, secure and well-lit accommodation. The Treasurer has not faced that issue. He has not thought about it and does not care about it.

I will speak briefly about the increase in tax for clubs as I covered the matter fairly succinctly in my contribution to the budget debate. I am concerned about what is happening in Lismore. For example, recently the Lismore RSL Club underwent a major expansion to Goonellabah to provide reasonable services to the growing part of Lismore. The Lismore and District Workers Club has expanded to Lismore Heights to take over the old bowling club, which was going downhill. The workers club saved the bowling club for the benefit of the elderly people in Lismore. The club has been
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renovated and improved, and its profits have now increased because of a better clientele. But the investments have to be recouped. Investments are usually assessed to be recouped over a number of years. The Lismore and District Workers Club certainly got a surprise when suddenly the poker machine tax was dramatically increased.

The assistant manager of the Lismore RSL Club rang me to say that he thought that he and five or six of his staff were likely to be dismissed. They include long-term staff and a large number of students from the regional university who were employed to do part-time work. The Lismore district has the highest unemployment in Australia, and the few opportunities that people of the district have to work are in the service industry. The service industry can no longer support them. That means services for local people will be reduced. My son played baseball for the Lismore Workers Club, and they strongly supported the baseball clubs, juvenile soccer, juvenile rugby league and juvenile netball. The poker machine tax increase will mean that much of that funding will have to be withdrawn.

The poker machine tax increase will mean that people on average weekly earnings will have to pay more for their children to have those opportunities, or the children will miss out on the opportunities. Their coaches, the coaching schools, the tennis professionals, who from time to time help to train the children, will all disappear because the first priority is the survival of the club. In years to come when they have paid off these taxes, they may be able to afford to return to supporting children’s sport. If the Treasurer said he had increased the funding for sport, we would understand. But he has not; he has reduced it. If he said he had introduced funding for transport, we would understand. But he has not; he has taken $200 million from trains.

The Hon. D. F. Moppett: He sleeps with one ghost.

The Hon. Dr B. P. V. PEZZUTTI: Exactly. The clubs on the Tweed and in Murwillumbah are big clubs. However, those clubs remain at the forefront of the market by continually reinvesting in themselves and providing high-quality services because they now face huge competition from across the border in Queensland that they never had before. Busloads of visitors do not come down from Queensland any more unless those clubs put on quality accommodation, services and shows. Those clubs cannot now afford to provide those services at that marginal cost. Of course they pay more for cigarettes and petrol. They pay more payroll and land tax, which has been increased from 1.6 per cent to 1.7 per cent. The payroll tax is unchanged. The clubs of that area pay all these taxes, which are increased all the time. How can they compete with Queensland, where the electricity is cheaper, the taxes are non-existent or cheaper, and the financial institutions duty tax is non-existent?

The only profitable operation of those clubs are their poker machines, and those profits are decreasing. As they decrease taxation will decrease. The Minister for Community Services will not have the money to spend that he needs, and the Treasurer, who did not give the Minister as much money as he could have this year, will not give him as much as he needs. I am distressed by the impact on country people and on country kids, and I am more than distressed about what will happen when country people come to Sydney, as they have to, to access health services. I cannot express how opposed I am to both taxes.

The Hon. J. M. SAMIOS [12.40 a.m.]: I express concern about the bed tax, the increased poker machine tax and the land tax that the Government proposes to introduce in the appropriation bills. Sydney, as an international city and the most cosmopolitan city in Australia, is undergoing an Olympic-led recovery of an economy that is subject to some considerable challenge. Sydney is undergoing an economic recovery because of the money going into Olympic projects in Homebush. That investment in turn has brought with it the confidence to construct hotels in the CBD and the Sydney Basin. As progress is being made in that regard, the Government has seen fit to introduce a number of taxes, particularly the bed tax, that will discourage the initiative that was taken in relation to the construction of the hotels. That is an unfortunate scenario, because the flow of funds from overseas for the construction of a number of the hotels in the CBD was providing jobs.

The greatest crisis facing this country at present is high unemployment, which is presently at a level of nearly 9 per cent. The role played by the Sydney Basin in boosting the economy is pivotal to the rest of Australia. As I said earlier, we are now confronted with a bed tax and a lack of confidence emanating from the fact that the Government is unable to keep promises. I will not dwell at length on what has already been said about the Government’s promise prior to coming to office that there would be no new or increased taxes. The Government had no mandate to impose new taxes. Its promise has been breached, which is now causing a lack of confidence in economic projects in New South Wales.

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The extension of land tax, the hotel bed tax and increases in poker machine tax are all prejudicial to confidence in New South Wales. The poker machine tax will specifically affect clubs, most of which benefit their surrounding communities. To my knowledge the role played by ethnic clubs in our multicultural society has not been mentioned thus far. As honourable members will be aware, the Australian population is composed of 246 ethnic groups, who speak more than 100 languages and practise in excess of 80 religions. Ethnic clubs have played an important role in underpinning the social cohesion of our multicultural society by providing recreational, sporting and social facilities for their members. Their survival and success are important in promoting Sydney as a cosmopolitan centre and as the host for the 2000 Olympic Games. There are a plethora of such flagships and honourable members are aware of a number of them. They include the King Tomislav Croatian Club Ltd, an important Croatian club; the Fogolar Furlan Sydney Ltd Social Club, of which the Hon. Dr B. P. V. Pezzutti is an honorary member; the Marconi Club; the Cyprus Hellene Club; the Cyprus Community of New South Wales Club. They are but a few of the important ethnic clubs in the Sydney basin.

The Hon. D. J. Gay: There is also the Concordia Club.

The Hon. J. M. SAMIOS: Yes, the Concordia Club, which is a German club. The cash flows of those clubs will be prejudiced as a result of the proposed poker machine tax. I also want to mention the stamp duty and land tax proposals introduced in the State Revenue Legislation Further Amendment Bill, simply for the purpose of stating that in this case the stamp duty amendments relate to shareholdings in various companies. They deal with takeovers that have been completed under schemes of arrangement, whereby agreement for ownership of the company is being organised between the shareholders and others. The amendment to the State Revenue Legislation Further Amendment Bill is necessary and, together with amendments to the Land Tax Management Act, provides for necessary housekeeping. In conclusion, I express my concern and distress at the fact that the Government has lost credibility as a result of a commitment it made prior to coming to office that it would not increase taxes. By so doing it has lost the confidence of the business world, to the detriment of the people of New South Wales.

The Hon. C. J. S. LYNN [12.24 a.m.]: I speak against the imposition of these taxes. I recall some of the promises that were made before Labor came to office. Those promises were categoric: they were not "may be" or "might be".

The Hon. D. J. Gay: You did not believe them, did you?

The Hon. C. J. S. LYNN: No, but enough people believed them to get Labor across the line. One of the first promises made was an unequivocal promise to lift the tolls on the M4 and M5.

The Hon. D. J. Gay: That was a lie.

The Hon. C. J. S. LYNN: It was a straight lie. The Government realised the impact that its broken promise had on the Lindsay by-election and came up with what is nothing more than a Cashback con. It is slugging the motorists of western Sydney.

The Hon. D. J. Gay: Those who have small business registration do not get their money back. All the small business people who use those motorways will suffer.

The Hon. C. J. S. LYNN: That is right, it is hitting small business people who have to spend a lot of money travelling to and from the western and south-western suburbs. The promise to halve hospital waiting lists was even more unequivocal than the promise about the tolls, because it was written in blood.

The Hon. D. J. Gay: They have not got blood.

The Hon. C. J. S. LYNN: Obviously if they did have it would be equivalent to the old invisible ink, because it dried up pretty quickly. A proper audit would show that those hospital waiting lists have blown out further than they were when Labor came to office. If the Government had a conscience it would resign over the issue of the motorway tolls. That was another promise that the Government could not honour. There was also the issue of privatisation. Labor assured the voters that the Government would not go ahead with privatisation but honourable members now know what will happen in regard to that. Hundreds of broken promises have been catalogued by the coalition.

One promise recently broken was the promise that Labor would not introduce any new taxes. Many people voted Labor because they believed that promise and believed they could plan with a little security. Those people have now been hit hard. The issue about land tax that concerns me is the attempt
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by the Government to create division within the Australian community. The Government has said that people who live on the north shore of Sydney are rich and that it will slug them because nothing those people can do in their voting patterns will impact on Labor. The Keating Government had a similar theory during its 13 years in office. It was not interested in the Australian community; it was interested in winning 51 per cent of the vote and damn the rest. That is a great tragedy. It is characteristic of new Labor; it certainly was not characteristic of old Labor.

I recall having to organise a trip around Australia on a mission to raise funds for cancer research. I had a meeting with every shire president and every mayor in every town I visited. They were all committed to the task. It is easy to get people committed to something as deserving as cancer research. They were all great people and when I returned, which was well before I became involved in politics, I was struck by the fact that the people I had had discussions with around Australia would have come from the total spectrum of politics.

I have no doubt that they would have included Liberal, Labor, Democrat and Independent voters. We could have taken those shire presidents and swapped them around. The shire president from Cairns could have been located in Launceston, the shire president from Launceston could have been located in Perth, the shire president from Perth could have been located in Alice Springs and so forth. That could have been done in this country without a hiccup because Australia is a nation with a sense of core values. If one tried to do that on such a scale in Europe it would start a third world war; in America it would cause a second civil war. However, it could be done in Australia because we all subscribe to the same core values. The Keating Government tried to create division, to turn Australian against Australian. That is the underlying message of this budget, which suggests that those who live on the north shore are rich silvertails and will be slugged accordingly. One man wrote to me and said:

My grandfather . . . bought a property in Rose Bay just before he left to tend the sick in France during the First World War. Rose Bay had just opened up as a future suburb. The fine old house they built on his return has been in our family ever since and has served as a "Mecca" for our large family ever since.

My brother . . . has lived here in the lower section of the property for years, and my husband Andrew . . . and I brought up our 4 children here; both my parents and grandparents died on the property surrounded by their families, the sort of caring human behaviour which is not only preferable but which costs the State nothing!

The Government’s proposed heavy tax "on simply living in one’s own home" will mean that these 2 distinguished men, one who has given his life as a totally dedicated and unique Australian educator, and the other, who has given (for almost no money) more to the planning of the City of Sydney than almost any other living person, will have their retirement and old age completely ruined through desperate worry and upheaval.

It is hard to imagine how a contemporary government in this day and age could treat "a not so small" section of its constituent in such a stupid, short-sighted and barbarous fashion. I can only hope that this so called "wealth tax" will never see the light of day.

Another wrote to me and said that the land tax is inequitable, that it is not consistent with a government that is supposed to be concerned about social justice; it is not linked with the ability to pay; it causes hurt, anxiety, hardship and loss - this from a government that is supposed to care. It is not linked with services rendered, or cost to government. It makes life harder for many who live in rental accommodation, many of whom are poor, because it pushes up rents and reduces rental options. It discourages investment in rental accommodation, making rental accommodation poor value for money.

The enormous and capricious jumps in land tax make planning for the future difficult. The increases have a far-reaching and insidious negative pressure on the environment because landowners cannot afford to hold undeveloped or underdeveloped property. Land tax is based on best possible use. The more special a place is, be it built or natural, the worse the pressure, so we are losing our special places in cities, towns, country and coast. Land tax is a significant factor in the destruction of our heritage through development and it could result in further cost to government. The writer goes on to give further examples. Another writer stated:

Our family home currently has a land valuation of $1.4 million, and this, under Labor’s definition, would be pure silvertail, which will attract a $7,400 land tax bill. This will be in addition to the high $3,750 we already contribute in council rates, well in excess of the average household or unit apartment dweller in our area. Our family of six - three children at university and one still at school - bought our house some 10 years ago by going into huge debt. Debt or mortgages are not even a consideration in this tax. There was no old money, nor family money, nor inheritance. It was earned through sheer hard work by both my wife and I. This cynical tax really makes you wonder whether to achieve is worthwhile any longer. Our house is not a business. It derives no income. Neither interest payments, rates nor this proposed land tax are tax deductible.

This writer stated:

This proposed land tax on our family home will require us to earn $15,000 per annum more just to pay this impost.

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The author went on to state:

Both my wife and I need to work more than full-time, 50 to 60 hours per week each, to afford to service our borrowings and maintain our family as it is. We cannot possibly pay almost 25% of our income, our labour, towards paying this tax at the next valuation increase.

Further on in the letter the author stated:

This brings me to the most objectionable, unfair aspect of this new tax, and clear proof of discrimination against the family home. Apartments and penthouses are being sold and purchased for up to $5.5 million each around Sydney, well in excess of my family’s home’s market value. However, none of these will be caught in this land tax trap as the land tax is spread over all the apartments in a development, with none reaching the $1 million threshold at which this impost starts.

If that is true, it proves beyond doubt that this Government has not thought this tax through. The letter concluded:

After all, no-one has asked or put to the people of this State if they are in favour of the introduction of a brand new tax on their home, even if at this stage they may not be affected.

Those people seek our support to oppose the tax. Another person wrote and said:

My situation is that my parents bought our property in 1938 when values were low and no-one wished to live so far out of Sydney. The property has been the family’s major asset and my mother, who turns 97 this year, has lived in it continuously. I returned here with my family some 29 years ago to assist with the financial burden of the high rates etc which my mother could ill afford and to raise our family . . .

The enormous increase in valuation of our home is not our doing. Although it is undeniable that one looks rich on paper, this only becomes the case if one sells, which was not our intention. The removal of the exemption appears to place an annual after income tax liability on us of almost $40,000 coming from a NIL base. To meet this, by definition one needs to earn some $80,000 above one’s current earnings, which I see little prospect of achieving, and considerably exceeds my present personal earned income.

We . . . simply do not have the income to pay this impost and so must sell up and move. The whole matter is causing enormous stress to long-term residents, many of whom are retirees or close to that stage.

The writer went on to list a number of alternatives, but requested that we seek to maintain the exemptions on all owner occupied primary residences, thus removing the discrimination and inequity envisaged. Obviously, many others have written to honourable members telling stories of hardship resulting from the imposition of this land tax, a tax that the Government promised not to impose. The poker machine tax is yet another tax that has not been thought through. I am sure the impact of it has not been fully assessed. The Australian Hotels Association, in a letter to me, raised a number of key points disclosed by research which it had conducted. The letter stated:

The tax will cost New South Wales and Australia jobs and business. Ernst and Young have independently estimated the economic impact at $166 million in lost business and a loss of 1,182 jobs for Sydney and New South Wales.

Bearing in mind the problems we have had over the years related to unemployment, and particularly the high levels of youth unemployment, in many areas the only hope is that job opportunities will be created through tourism. The people of this State should be looking forward to the Olympics Games with great anticipation. There should be a sense of great excitement at the opportunities the Games present. However, I feel there is developing in the community a feeling that perhaps we have blown it. When people see that this tax will cause a loss of jobs, that it will cause pubs and clubs to put off staff, that is a bad message being sent out to the people of this State. That will cause a loss of confidence.

I received a letter from the Youth Hostels Association stating that its preferred option is that the Government withdraw its proposal. It states however that if the Government persists with its proposal and is able to gain majority support for it in the upper House, the only alternative open to the association is to seek exemption. The association enclosed a letter that it said it had sent to the Treasurer, Mr Egan, setting out its case against the tax and including an application for exemption. I also have a letter from the Treasurer, who wrote to the Vaucluse branch in January this year and stated that there would be no increase in land tax on land valued at more than $500,000. That letter was signed on behalf of the Treasurer to allay people’s fears.

The Hon. Patricia Forsythe: They say one thing and do something else.

The Hon. C. J. S. LYNN: How can the Government be trusted when it writes things like that to allay people’s fears? I was advised today of a new show that is coming to Sydney. This poster appears to refer to Carr. It reads "Trust me - Liar Liar". I recommend that all honourable members see that show, because the star appears to be Bob Carr, and the best supporting actor the Treasurer. I attended a meeting in the Illawarra region a couple of weeks ago at which the local Labor Party member spoke out against the tax. He said he had to support it because he was an old Labor man, that he would argue the case in caucus but when the numbers were done he would have to go along with
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the Government. The honourable member for Bulli also spoke out about it and tried to soften the blow.

The old Labor people no longer run the show; they do not have a say. I was at the Bathurst Leagues Club on Saturday and my mate who was with me said, "This club will be gone when you come back, because it is $4 million in debt and simply cannot afford to pay a tax like this." The local member, Mr Mick Clough, told the association of rural fire fighters that he believed the member for Blue Mountains, Mr Debus, should be the Treasurer because at least he has a heart.

I have spoken previously about the impact of the tax on the Western Suburbs Leagues Club, Campbelltown Catholic Club, Ingleburn RSL Club, Campbelltown RSL Club, Camden RSL Club and Camden Bowling Club. These clubs are the heart of the community. They are operated by people from the community for the community. They know where the community needs are. They make allocations to youth welfare, youth sport and youth education. They provide cheap meals and good entertainment for the elderly. They support Meals on Wheels, the Smith Family, the St Vincent de Paul Society and local welfare.

The Hon. Patricia Forsythe: People that the Government cannot provide for.

The Hon. C. J. S. LYNN: It is not that it cannot provide for them; it will not provide for them. The Government will not even give the people of Campbelltown a local member.

The Hon. J. H. Jobling: It will have to find it once they kill all this money off.

The Hon. C. J. S. LYNN: It will not find it. People will go hungry, they will miss out on their cheap meals and entertainment, and children will no longer be able to play sport.

The Hon. J. H. Jobling: The people will remember at the next election.

The Hon. C. J. S. LYNN: They will remember all right. They will remember that they have been abandoned and deserted by the Labor Party. They do not have the income or the opportunity to follow their local member to the north shore. They have to stay where they are and put up with a lack of resources. They do not trust spivvy bureaucrats in Macquarie Street to look after their welfare. These people are going to miss out. Clubs have already issued press releases about the impact of the tax on local communities.

The Opposition should be rejoicing, because this tax is probably the straw that will break the camel’s back in regard to the credibility of the Government. This tax will probably ensure that the coalition will be running the Olympics in 1999 and 2000 because the Government abandoned its constituents in the west and in rural areas, and tried to put welfare in the hands of bureaucrats rather than leave it where it has been successfully handled - in the community. The people will remember that the Labor Party abandoned its heartland and they will vote the coalition in to government. The coalition will make a promise to the people and will keep that promise: it will repeal these taxes when it wins government. That will put the community in charge again and will ensure that the tax is not targeted against any particular interest groups. I and my colleagues oppose this iniquitous tax.

The Hon. R. S. L. JONES [12.45 a.m.]: At an estimates committee hearing in October 1995 I proposed a bed tax and the Minister, Brian Langton, said it would be a disaster. I proposed a 2 per cent bed tax which, in my estimation, would have raised $30 million to pay for tourism in New South Wales. The bed tax would have removed the taxpayer subsidisation of tourism. I did not propose a 10 per cent tax; I thought that may have been excessive. My reasons for supporting the bed tax have not changed since 1995. A bed tax would contribute to the enormous cost of maintaining and improving Sydney to make it one of the most popular tourist destinations in the world.

At a time when the Government is spending hundreds of millions of dollars on Olympic infrastructure, it is logical that some of this huge cost be offset by the visitors who will ultimately benefit. A bed tax is widely used by leading tourist destinations to successfully raise revenue. The Tourism Council of Australia’s own research shows that Chicago, Los Angeles, Berlin, Vienna, Munich, Dublin, Stockholm and Rome all tax hotel accommodation at a rate equal to or greater than 10 per cent. In many of those countries income from tourism is crucial.

Italy has a 10 per cent tax on hotel accommodation, yet in 1994 managed to host 51.8 million visitors, and it depends on an annual tourist revenue of more than $25 billion. Spain currently has a 7 per cent tax on hotel accommodation, yet
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manages to accommodate about 60 million visitors each year and also depends heavily on tourism receipts of more than $25 billion. Since the announcement of the bed tax I have been inundated with faxes and letters from the hotel and tourist industry imploring me to oppose the bed tax. I expressed concern about the problem with advance bookings and received a letter from the Treasurer on 4 June informing me of a meeting he had with the Australian Hotels Association concerning advance bookings and informing me that these contracts amounted to $99 million and that the Government would give a rebate of approximately $10 million on those advance bookings.

I have no doubt that the tourism industry even in the central business district will not only survive but will continue to grow and prosper regardless of the bed tax. The Treasurer said on radio this morning and at other times that the bed prices in the CBD have increased from $155 in 1994 to $212 in 1996. That is a 36.77 per cent increase in two years. There has been a considerable increase in the actual cost of accommodation in the city of Sydney, but there has been no outcry that it would destroy the tourism industry, mainly because those increases were imposed by the industry and not by government. Some of the comments made by accountants in the tourism industry are spurious.

I note that the comments about the tourism industry thriving are shared by Raymond Capdevila, the Managing Director of the hotel management company Accor Asia Pacific, who is quoted in the Sydney Morning Herald as having said that the bed tax would not have a material effect on AAP’s earnings. Whilst I have no serious reservations about the principle of a bed tax, I sound a clear warning: the tourism industry is a vital lifeline for the Australian and New South Wales economies. Across Australia tourism generates $14.75 billion in taxes, accounts for one in nine jobs and generates $16 billion of investment in capital. New South Wales has $2.6 million international visitors each year and countless more domestic visitors. The industry must be treated with respect by any government.

I am concerned that the tourism industry was not consulted or warned about the bed tax. It was as unaware of the bed tax as the Minister for Tourism appeared to be. Perhaps the industry felt assured because the Government continually denied the bed tax. Unfortunately, that assurance was not well founded. Better consultation and earlier warnings would have allowed the tourism industry to plan better for the tax. This may have avoided the cancellation of Stamford Caltex House and the Signatronia Jamieson Street Hotel development proposals or may have reduced the huge stock exchange losses suffered by tourism companies the day after the bed tax was announced.

Though I welcome the Treasurer’s undertaking not to charge accommodation tax on long-term contracts where the hotel would be unable to pass on the tax, I find it hard to understand why the Treasurer was only aware of the contractual agreements after the bed tax was announced. He or Treasury should have known that the tourism industry takes bookings up to two years in advance and so must plan well into the future. Any genuine difficulties should have been foreseen if there had been adequate consultation with and sufficient warning given to the industry. Though we shall lose investment as a result of the tax, it will mean that existing hotels eventually will be better off because they will be able to charge higher room rates, which will adversely affect visitors.

The Hon. Patricia Forsythe: That does not make the hotels better off.

The Hon. R. S. L. JONES: Existing hotels will be better off because they will be making more money. We may not have the necessary number of hotels for the Olympics so there will be an accommodation crisis. I express concern also that youth hostels and backpacker accommodation are affected by the bill. I have received letters from the New South Wales Backpacker Operators Association, complete with its booklet of backpacker accommodation in New South Wales, half a dozen being up in the Byron Bay area and one in my own street in Manly. The association is concerned that the bill includes small operations, with some loss to the illegal sector, with which the association is battling.

I received also a letter from Julian Ledger, Executive Officer of the Youth Hostel Association New South Wales Inc., who also expressed concern about illegal hostels. Therefore, I asked the Parliamentary Counsel to draft an amendment to exclude from the bill establishments covered by both associations. Even though the Minister had given an undertaking to do this, I shall move an amendment to specifically exclude that from the legislation. Though I support a tax on luxury hotel accommodation, I do not support the same tax applying to the cheapest backpacker accommodation.

In an effort to tax extravagance the Government has inadvertently taxed frugality. Backpackers make an underrated economic contribution to tourism revenue. In 1996 approximately 240,000 backpackers visited
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Australia, spending on average $3,842, four times as much as package tourists, who spend $1,007. In the same year backpackers contributed $884 million to the Australian economy, representing 10 per cent of all tourism spending. As 80 per cent of backpackers visit Sydney, much of this spending has contributed to the New South Wales economy. This money stays in Australia whereas much of the money from prepackaged holidays remains overseas in Japan, Singapore and the United States of America.

Indeed, of the 40-odd hotels in the central business district, two-thirds are overseas owned and all profits from those hotels are sent back overseas to Singapore, China, America and Malaysia. At least some of that money will be captured for the benefit of the people of New South Wales who are funding the facilities that visitors enjoy. This may well lead to a significant increase in the amount of money actually remaining in New South Wales. Though backpackers make a significant contribution to tourism revenue, only one-quarter of their budget is spent on accommodation, which is proportionately less than other tourists. They are extremely sensitive to accommodation costs and are prepared to spend time and effort seeking out the cheapest accommodation.

The DEPUTY-PRESIDENT (The Hon. Helen Sham-Ho.): Order! I remind the Hon. Patricia Staunton that reading a newspaper in the House is not acceptable. It is disorderly behaviour.

The Hon. R. S. L. JONES: The average tariff for a backpacker was only $15.27. In many cases the tax raised from a luxury hotel will be greater than the entire cost of the youth hostel room. The sensitivity of backpackers to accommodation costs is such that on 3 May the Youth Hostels Association board of directors spent hours agonising over a $1 increase for its central hostel in Sydney. A $1 increase may seem trivial but the cost of hostel accommodation in central Sydney is already one-third more than it is in the rest of Sydney and in other capital