The President (The Hon. Dr Meredith Burgmann) took the chair at 2.30 p.m.

The President offered the Prayers.

The PRESIDENT: I acknowledge that we are meeting on Eora land.

Assent to the following bills reported:

Constitution Amendment Bill
Courts Legislation Amendment Bill
State Emergency and Rescue Management Amendment Bill
Administrative Decisions Tribunal Legislation Amendment Bill
Intoxicated Persons Amendment Bill
Legal Profession Amendment (Complaints and Discipline) Bill
Supreme Court Amendment (Referral of Proceedings) Bill
Veterinary Surgeons Amendment Bill
Transport Administration Amendment (Parramatta Rail Link) Bill

Bills received.

Leave granted for procedural matters to be dealt with on one motion without formality.

Motion by the Hon. M. R. Egan agreed to:

That these bills be read a first time and printed, that standing orders be suspended on contingent notice for remaining stages, and that the second reading of the bills stand as orders of the day for a later hour of the sitting.

Bills read a first time.

Message received from the Legislative Assembly agreeing to the Legislative Council's amendments.

The PRESIDENT: I report the receipt of the following message from the Legislative Assembly:

Madam PRESIDENT

The Legislative Assembly having had under consideration the Legislative Council's message of 8 June 2000 acquaints the Legislative Council that it has this day agreed to the following resolution—

That, in accordance with the provisions of section 146 of the Administrative Decisions Tribunal Act 1997, the Committee on the Office of the Ombudsman and the Police Integrity Commission, as an existing joint committee, inquire into and report on the jurisdiction and operation of the Administrative Decisions Tribunal as required under the Act.

Legislative Assembly J. H. Murray
8 June 2000 Speaker

The Hon. Carmel Tebbutt tabled the following reports:

Report of the Wine Grapes Marketing Board for the year ended 31 December 1999.
Report on the Review of the Firearms Act 1996 conducted in accordance with the Act, dated 19 June 2000.

Ordered to be printed.

Petition praying that construction of a women's prison at Windsor be abandoned, that funds be channelled into research to assist girls, adolescent and adult women at risk of offending, and that social programs on crime prevention be introduced, received from the Hon. R. S. L. Jones.

The Hon. R. D. Dyer, as Chairman, tabled report No. 13 of the committee, entitled "Review of the exercise of the functions of the Motor Accidents Authority and the Motor Accidents Council—First Report", dated June 2000.

Ordered to be printed.

The Hon. R. D. DYER [2.41 p.m.]: I move:

That the House take note of the report.

Debated adjourned on motion by the Hon. R. D. Dyer.

The PRESIDENT: I announce the death on 6 June 2000 of the Hon. Stanley Louis Mowbray Eskell, aged 82 years, a former member of this House. On behalf of the House I have extended to his family the deep sympathy of the Legislative Council in the loss sustained. I ask members and officers to stand as a mark of respect.

Members and officers stood in their places.

The Hon. J. W. SHAW (Attorney General, and Minister for Industrial Relations) [2.42 p.m.]: I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

I am pleased to introduce the Crimes Legislation Amendment Bill 2000. The bill contains a package of reforms designed to both enhance the criminal laws of the State and remedy minor anomalies that presently exist. This bill continues the Government’s commitment to providing a responsive and effective criminal justice system. I turn now to the provisions of the bill. Schedule 1 to the bill amends the Crimes Act 1900. The first significant amendment revises the law with respect to the geographical reach of criminal offences punishable in this State. This amendment will ensure that the State's laws can and will apply to events that occur in this State and to events elsewhere which have an effect in this State.

The provisions are in line with those recommended by the Model Criminal Code Officers Committee of the Standing Committee of Attorney’s-General and are intended to overcome the limitations placed on the operation of the existing provisions in recent cases, such as Catanzariti’s case, 1995. The part does not affect special provisions made with respect to the geographical reach of criminal offences, already included in the Crimes Act such as: section 45(2), prohibition of female genital mutilation; section 66EA, persistent sexual abuse of a child; section 93IG, offences relating to contamination of goods; and sections 178BA (3) and 178BB (2), misuse of public property by public officials outside this State. The amendments are to be inserted in a new part 1A of the Act.

The schedule also contains other amendments consequent on the new part 1A. New sections 230A to 203C are important provisions introducing new offences in New South Wales. They create separate offences of sabotage and threatened sabotage. The sabotage offence would criminalise the activities of a person or persons whose conduct causes damage to a public facility, who intended to cause that damage and who intended by that conduct to cause extensive destruction of the public facility or any part of it, and/or major economic loss.

Sabotage refers to damage to public facilities, with the intent to cause that damage and to cause extensive destruction of property or major economic loss. Public facilities are defined widely, and include government facilities, public infrastructure facilities, public transport facilities and public places. It is expected that Australia will sign the United Nations Convention on the Suppression of Terrorist Bombing later this year. The provisions draw directly from the United Nations convention’s formulations and definitions and are designed so that the laws of New South Wales are compatible with that treaty. They also accord with provisions prepared for the Commonwealth and the Standing Committee of Attorney’s-General by the Model Criminal Code Officers Committee.

That committee, under the chairmanship of Judge Howie, QC, of the New South Wales District Court is to be commended for its efforts over the last decade to modernise and rationalise the nation’s criminal laws. It is not intended that the new offence of sabotage would apply to any but the most gross or serious behaviour akin to terrorism. Existing provisions in sections 194 to 200 of the Crimes Act 1900 are adequate to deal with other crimes against property, as are other existing offences such as riot and affray and those dealing with contamination of goods. These provisions can be found in parts 3A and 3B of the Crimes Act.

The Summary Offences Act also contains provisions prohibiting violent disorder, regulating public assemblies, and giving police powers to "move on" people, if they are obstructing others or causing them fear. The schedule also repeals section 353 of the Act. This section is out of date and is no longer used. Its repeal removes an archaic provision from the Crimes Act. The repeal of the section does not affect the general powers of arrest of police officers and private individuals conferred by the Act. Schedule 2 amends the Children (Criminal Proceedings) Act 1987. The expression "serious indictable offence" is replaced with the term "serious children’s indictable offence" to avoid confusion with the expression "serious indictable offence" defined differently in the Crimes Act 1900 and the Interpretation Act 1987.

Recommendation 6.11 of the Drug Summit states in part that "the Children’s Court be given comparable diversionary powers to the Drug Court." The proposed amendments build on the work of the Drug Summit and ensure that the Children’s Court has available to it sentencing options introduced to adult courts with the passage last year of the Crimes (Sentencing Procedure) Act 1999. Section 33 of the Children (Criminal Proceedings) Act provides sentencing options for the Children’s Court. This bill amends the section to extend the sentencing options of the Children’s Court to include the deferral of the imposition of a penalty for the purposes of rehabilitation, Griffiths bonds, and for other purposes. This sentencing option is similar to that available with respect to adult offenders under section 11 of the Crimes (Sentencing Procedure) Act 1999.

Sections 33 is amended and a new section 41A introduced into the Act to extend the sentencing options of the Children’s Court to include the suspension of an order for detention in a juvenile detention centre, subject to compliance with a good behaviour bond. This sentencing option is similar to that available with respect to adult offenders under section 12 of the Crimes (Sentencing Procedure) Act 1999. Schedule 2 also inserts a new section 50B into the Act to facilitate the use of drug rehabilitation programs for child offenders. The provision is similar to section 31 of the Drug Court Act 1998 which applies to adult drug offenders involved in rehabilitation programs. Schedule 2 also contains provisions of a savings and transitional nature.

Schedule 3 amends the Crimes (Sentencing Procedure) Act 1999 and clarifies a number of matters arising from the enactment in 1999 of new sentencing legislation. They follow extensive discussion with judicial officers and the legal profession across the State by the Criminal Law Review Division of the Attorney General’s Department. The schedule amends section 4 of the Act to clarify the penalty applicable for common law offences and other offences for which a penalty is not specifically provided. Section 4 (2) (a) of the Act at present provides that a penalty of imprisonment for five years may be imposed if no penalty for the offence is provided by or under an Act. That provision replaced section 440 of the Crimes Act 1900, which applied only to statutory offences. In the case of common law offences, a range of penalties are be applicable under the law for offences formerly classified as common law misdemeanours or felonies.

Section 4 is being amended to make it clear that the replacement provision continues to apply only to statutory offences and does not affect the penalty for the remaining common law offences. The amendment does not affect the provisions retained in the Crimes Act 1900 that ensure that a penalty of 25 years is applicable for common law or other offences formerly punishable by death, section 431, or for common law or other offences, other than murder and certain narcotics offences, formerly punishable by life imprisonment, section 431A. Section 10 of the Act provides that a good behaviour bond may be imposed under that section when the court finds the offender guilty of the offence but, because of the character of the offender, the trivial nature of the offence and other matters, does not proceed to conviction and the imposition of a penalty, former section 556A of the Crimes Act 1900. The section does not limit the period of any good behaviour bond that may be imposed. At present, section 9 authorises the imposition of a good behaviour bond not exceeding five years as an alternative to a sentence of imprisonment.

Section 12 also authorises the imposition of a good behaviour bond when a sentence of imprisonment is suspended not exceeding the term of the sentence, but not in any case exceeding two years. In view of the less serious nature of offences for which a good behaviour bond may be imposed under section 10, including those for which a fine only may be imposed, the amendment of section 10 limits the maximum term of a good behaviour bond under that section to two years. Section 11 of the Act is amended to ensure that the sentencing option of deferral of sentence for the purposes of rehabilitation, Griffiths bonds, or for other purposes that is available on conviction is also available where the court finds the person guilty of the offence but determines not to proceed to a conviction.

Section 12 of the Act is amended to ensure that when a court suspends a sentence of imprisonment following a decision not to make a home detention order, any non-parole period previously set ceases to have effect. Section 12 (3) generally provides that when a sentence is suspended the court is not required to set a non-parole period for the sentence, but such a period is to be set under section 99 should a breach of the good behaviour bond during the suspension result in the removal of the suspension of the sentence. The schedule amends section 25 of the Act, which relates to the prohibition on the imposition of penalties on absent offenders, to make it clear that an absent offender to whom the section applies is an offender who is absent from the court at the time of the imposition of the penalty concerned, rather than at any earlier time when the offender was convicted.

Section 51 of the Act is amended so as to ensure that the power of a court to impose conditions of parole in relation to supervision are the same as the power of the Parole Board to impose such conditions under the Crimes (Administration of Sentences) Act 1999. Schedule 4 makes consequential amendments to the Criminal Procedure Act 1986. Schedule 5 amends the Criminal Appeal Act 1912. The amendment clarifies the provisions relating to appeals to the Court of Criminal Appeal involving sentences imposed on persons convicted or found guilty of offences. The amendment ensures that the right of appeal is not affected because of any delay in the sentence caused by the need to obtain assessment reports or otherwise, for example, for consideration of home detention orders, or as a result of resentencing, for example, following the breach of a good behaviour bond.

Schedule 6 amends the Listening Devices Act 1984. The amendment ensures that the Act applies to a device that makes a sound recording of a private conversation even though the device also films the conversation, that is, a video camera, or also tracks the movements of a person, that is, a tracking device with an audio component. Schedule 7 amends the Search Warrants Act 1985. Section 5 of the Act defines an indictable offence, with respect to which a search warrant may be issued, to include an act or omission that if done or omitted in New South Wales would constitute an offence punishable on indictment. Section 24A of the Act provides for ministerial arrangements with other States and Territories for things seized under a search warrant issued under this Act that may be relevant to an offence against a law of the State or Territory to be transmitted to that State or Territory. The amendment removes any doubt that may arise that the Act does not in fact authorise the issue of search warrants for extra-territorial offences.

Schedule 8 amends the Victims Rights Act 1996. The amendment ensures that the Victims of Crime Bureau, a branch of the Attorney General’s Department that is established by the Act with functions with respect to the support of victims of crime, may also exercise those functions to support the immediate family of missing persons. The bill contains constructive and worthwhile reforms which will improve the New South Wales justice system. I commend the bill to the House.

The Hon. J. M. SAMIOS [2.42 p.m.]: The Crimes Legislation Amendment Bill makes various amendments to legislation relating to the administration of criminal law in New South Wales. In summary, the bill will, first, introduce the offence of sabotage and the offence of threatened sabotage. Second, the bill will amend the Crimes Act 1900 to ensure that an offence is able to be prosecuted inside New South Wales if acts directed against persons or property in New South Wales are committed outside the State. Third, the bill will amend the Search Warrants Act 1985 to include a clear and expressed power to issue search warrants for interstate indictable offences. Fourth, the bill will amend the Children (Criminal Proceedings) Act 1987 to allow for suspended sentences and Griffiths bonds and to facilitate the operation of the Youth Drug Court.

Fifth, the bill will amend section 10 of the Victims Rights Act 1996 to enable the Victims of Crime Bureau to establish a missing persons section. Sixth, the bill will amend the Listening Devices Act 1984 to include devices which are capable of both sound recording and visual recording-transmitting position. Seventh, the bill will repeal section 353 of the Crimes Act 1900, which obligates individuals to arrest anyone offering to sell or give them stolen property. Eighth, the bill will make miscellaneous amendments to the Crimes (Sentencing Procedure) Act 1999. The bill will create a new offence of sabotage in time for the Sydney 2000 Olympic Games and will provide for offences committed outside New South Wales that affect New South Wales to be tried in a New South Wales court. The bill extends the range of sentencing options for children, including the extension of the Youth Drug Court. The Opposition has consulted with the New South Wales Law Society in relation to this matter. The Opposition supports the bill.

Reverend the Hon. F. J. NILE [2.45 p.m.]: The Christian Democratic Party supports the Crimes Legislation Amendment Bill, which will make various reforms and changes to criminal law and procedure to implement government policy, remove anomalies and simply improve criminal law. Most of the changes to sentencing law are procedural and involve no substantive policy matters. These changes have come about as a result of discussions with judges, magistrates and the legal profession. The criminal laws of this State must be amended to avoid any ambiguity. The bill deals with a number of matters, in particular, the introduction of a new offence, the offence of sabotage and the offence of threatened sabotage.

I question why such an offence was not included in the law in the past. However, such an offence might have been included in Federal law. One would have thought that there was a possibility of sabotage during World War I and World War II when Australia was as at war with other nations. Nevertheless, these provisions have now been included in State legislation. We support those provisions, particularly if they strengthen security arrangements for the Olympic Games. The Christian Democratic Party is pleased to be able to support the bill.

The Hon. Dr A. CHESTERFIELD-EVANS: [2.47 p.m.]: The Australian Democrats agree that it is necessary to introduce legislation to prevent the act of sabotage—a matter that has been discussed before in this Chamber. The act of sabotage may be rendered more likely because of the staging of the Olympic Games. As the crime of sabotage is a serious crime, serious penalties should be imposed. The Australian Democrats are prepared to support amendments to be moved in Committee by the Greens, which we believe will implement appropriate safeguards.

The Hon. HELEN SHAM-HO [2.47 p.m.]: I support the Crimes Legislation Amendment Bill, which seeks to make a number of miscellaneous amendments to the Crimes Act 1900 and other crimes legislation. I do not propose to speak about all the proposed amendments; I intend to focus my remarks on one aspect of the bill—schedule 2, or the amendment to the Children (Criminal Proceedings) Act 1987. In general terms this amendment will extend the sentencing options of the Children's Court to include the suspension or deferral of sentences for the purposes of rehabilitation, or to suspend an order for detention in a juvenile detention centre subject to compliance with a good behaviour bond. In addition, schedule 2 to the Crimes Legislation Amendment Bill seeks to facilitate the use of drug rehabilitation programs for child offenders and the operation of the Youth Drug Court.

I welcome the Government's extension of sentencing options for juvenile offenders. I commend the Attorney General for these reforms. I am sure that most honourable members are aware that the dramatic increase in the State's prison population over the last decade is a major social problem. In 1900-91 the full-time inmate population in New South Wales correctional centres averaged at 5,002. By April 2000 that figure had increased to 7,442. The Australian Institute of Criminology, in its October 1999 paper "Imprisonment in Australia: Trends in Prison Populations and Imprisonment Rates 1982-98", highlights that between 1982 and 1998 New South Wales recorded the largest growth in imprisonment rates of any Australian State. It is my view that incarceration is often a counterproductive way of dealing with crime, particularly for youth.

The Law Society of New South Wales recently found that young people who suffer through poverty, childhood neglect and abuse, discrimination, educational difficulties and drug and alcohol abuse are at a high risk of being drawn into the crime cycle. These issues have a major impact on criminal activity in our society, and they must be addressed if a long-term reduction in both the youth crime rate and prison population is to be achieved. Given that the overwhelming majority of juvenile crime is not of a serious nature, I believe that rehabilitation and good behaviour bonds are worthwhile alternatives to full-time custody for young offenders.

Statistical patterns have shown that juvenile offending is not violent in nature, is usually directed at property and is not organised per se. It is also relevant to note that juvenile recidivism is not a problem of epidemic proportions. A study of repeat offending by juveniles in New South Wales indicates that juvenile crime is very transient, with the majority of juvenile offenders desisting from crime after their first court appearance. More specifically, the study found that seven out of 10 juvenile offenders did not reappear before the Children's Court on a second proven criminal matter. Of the 30 per cent of offenders who did reoffend, around half return to court only once.

We cannot overlook the financial costs of incarceration or full-time custody. Last year the Government announced the construction of three new gaols in New South Wales over the next three years at a cost of approximately $114 million. Construction of these gaols received continued funding of $10.6 million in this year's budget. I have already spoken about this during debate on the budget. The rationale behind the construction of these new gaols is that approximately 400 prison beds will be required by June 2003. Each prisoner costs upward of $100 per day to clothe, house, guard and feed.

I am also of the opinion that prisons do not rehabilitate offenders, particularly juvenile delinquents. Given the company that a juvenile will keep in juvenile detention centres, it is highly likely that a youth who has spent time in full-time custody will reoffend. One United States study has found that the chances of prisoners being rearrested within two years of release were equal to their chances of arrest at the time of admission. On this view, it seems that the more serious the penalty the juvenile offender receives for the first offence, the higher the rate of recidivism.

Research into crime prevention, mostly from the United States, has indicated that the most successful programs for young offenders involve helping young people to resolve problems that contribute to their offending behaviour, involving the young people's families in working on family problems that contribute to offending, and improving social skills. On a more practical level, rehabilitation must include helping young people to develop work skills that can lead to further training opportunities, qualifications and jobs, and assisting young people to establish and strengthen relationships with people who can become role models and mentors.

Finally, I publicly voice my support for the use of drug rehabilitation programs for juvenile offenders and the operation of the Youth Drug Court. The 1999 New South Wales Drug Summit examined drug offences closely and how they are currently treated by the law. The Summit heard evidence and received submissions about the actual and potential impact of drug abuse and addiction on the commission of other offences, finding that 85 per cent of juveniles in detention were affected by drugs and/or alcohol at the time of committing the offences that led to them being in custody. Drugs are a major cause of criminal activity in today's society, and this problem needs to be addressed if an overall reduction in juvenile crime is to be achieved. Therefore, I am pleased to support the Government's informed and timely changes to the criminal justice system in New South Wales. I commend the Government for this reform and I commend the bill to the House.

Ms LEE RHIANNON [2.53 p.m.]: The Greens have a considerable interest in the Crimes Legislation Amendment Bill. As we know, the Government came to office on a law and order agenda so obviously there is a need to closely scrutinise legislation such as this. We need to be alert to hidden agendas. Having looked at it closely, we hope it contains no hidden agendas. We know that is one of the tricks of the trade in preparing legislation that comes before the House. Indeed, some aspects of the bill we welcome. The aspects I am referring to are the measures that cover the Children's Court. Anything that provides and extends options so that when decisions are made about the future of children who have broken the law the court has an option to defer sentencing and extend rehabilitation outside some form of detention is a positive step. Those measures in the bill are welcome.

The Greens have some concern about the offence of sabotage. Obviously, the Government needs to take measures to safeguard society against sabotage, but we need to be careful that people who are engaged in certain actions do not get caught up inadvertently in this new offence, which carries a heavy sentence of imprisonment. Relatively harmless and benign activities could fall within the scope of this bill. The Greens accept that that is not the intention of the bill, but nevertheless wish to amend it to clarify the legal situation. We appeal to the Government to closely scrutinise our amendment because we believe it helps to tighten up this legislation and gives the necessary safeguards to all members of our society.

As the bill stands there is potential for the offence of sabotage to be established in certain relatively harmless situations and thereby result in a penalty grossly disproportionate to the activity. In Committee we will speak further to our amendment, which contains some interesting points and, we believe, can strengthen the bill. We trust the bill does not have another agenda, and we certainly welcome the important aspects about extending the options for the Children's Court.

The Hon. I. COHEN [2.57 p.m.]: I support a number of the issues Ms Lee Rhiannon raised on behalf of the Greens. This is certainly a bill of interest to the Greens. The Greens and other members of the House have a tradition of supporting and working with non-violent protests in the community, both in city and country areas. The Greens very strongly support any bill that deals with offences involve the threat of sabotage. As well, this bill provides various options for the Children's Court to keep children out of the legal system—something the Greens have always strongly advocated.

However, concern was raised by Ms Lee Rhiannon, and it is a concern I share, about people attending public protests. I have seen protests misconstrued, and peaceful, non-violent protesters can get caught up with accusations of sabotage being levelled against them. In my experience this occurred as far back as Terania Creek in 1979—a rainforest issue in the north of New South Wales—where some damage occurred to machinery and a building was burned down. It also happened during the Franklin River blockade and on many other occasions. History has shown that on a number of these occasions it was disgruntled workers having a go at their bosses under the guise of the conservation action. Nevertheless, the situation can occur and I think the Greens amendment that will be brought forward in Committee will give that added protection of proving extensive damage to property and major economic loss.

In some situations it is claimed that adverse publicity can cause major economic loss, which is a subjective test. There is great concern that people who are exercising a legitimate role in a democracy to protest in a non-violent manner could get caught up in an extraneous legal confrontation that could be used, even vindictively in certain circumstances, by organisations that have a lot of economic and political clout. With those remarks, the Greens are happy to see this bill go forward, with certain reservations.

The Hon. J. W. SHAW (Attorney General, and Minister for Industrial Relations) [3.00 p.m.], in reply: I thank honourable members for their contributions to the debate. The Crimes Legislation Amendment Bill enacts new provisions in the Crimes Act for the offences of sabotage and threatening sabotage, with significant penalties for what are undoubtedly significant crimes. For an act of sabotage it is essential that extensive destruction of property is occasioned. I note that the Greens intend to move an amendment in Committee to link extensive damage to economic loss and require that both be present to constitute an offence of sabotage. Concerns that juveniles who attack phone booths, for example, would be charged under the proposed offence would be unfounded. That is a property offence which is already covered in the Crimes Act.

An offence of sabotage will only be made out when a person causes damage to a public facility and intended to cause that damage, and intended by that conduct to cause extensive destruction of property or major economic loss. Only deliberate acts aimed at destroying significant public facilities or creating extensive economic loss are covered. The intention of the perpetrator is also a crucial element. Other aspects of this bill are aimed at clarifying the law. The Government has moved to ensure that the Search Warrants Act is clear that interstate requests for warrants can be executed. The Listening Devices Act is clarified to include the audio component of a video device.

The amendment to the Victims Rights Act ensures that the Victims of Crime Bureau will facilitate the co-ordination of support services to families and friends of missing people. This initiative is in response to an identified need for these families and friends to receive proper support and information when someone they care about goes missing. The role is a new and discrete function for the bureau, which was established in 1997 and is, I am informed, highly regarded for its work to promote services to the victims of crime. This new function builds on the skills and expertise in the Victims of Crime Bureau to link government and non-government agencies in New South Wales. I commend the bill to the House.

Motion agreed to.

Bill read a second time.

Clauses 1 to 3 agreed to.

Schedule 1

Ms LEE RHIANNON [3.03 p.m.], by leave: I move Greens amendments Nos 1 and 2 in globo:

No. 1 Page 7, schedule 1 [8], proposed section 203B, line 25. Omit "or". Insert instead "and".

No. 2 Page 8, schedule 1 [8], proposed section 203C, line 7. Omit "or". Insert instead "and".

These amendments, which omit the word "or" and insert the word "and", are straightforward. The Greens believe that that change will avoid the problem of people inadvertently being caught up in various actions and being charged with the serious offence of sabotage, which carries a maximum penalty of 25 years imprisonment. The rationale for these amendments is to ensure that certain actions or situations do not lead to the problem I have just identified. The new offence of sabotage is clearly aimed at people who deliberately cause large-scale destruction or carry out what are referred to these days as terrorist type activities.

Often people are mistakenly charged with offences in which they had no intention of becoming involved. These amendments would safeguard against that happening. At the moment people periodically engage in non-violent actions. In an earlier contribution my colleague the Hon. I. Cohen referred to the protests to save the rainforests and Franklin Dam. People involved in those protests got caught up in all the confusion. These amendments would prevent people from being charged and sentenced to an inappropriate degree. When people engage in non-violent protests and police believe they need to take action, the necessary legislation will be in place to safeguard those people. We believe that by simply changing those two words we can ensure that the problem will not arise. It would be undesirable to gaol people for crimes that they had no intention of committing and in which they were not involved.

The Hon. I. COHEN [3.06 p.m.]: I support the amendments moved by Ms Lee Rhiannon. Over the years I have been involved in several non-violent protests going back to the early rainforest campaigns and the Franklin Dam campaign. It may be argued that such protests can cause major economic loss, and it is important to acknowledge that often the path of democracy is not necessarily the cheapest path and that there is a cost to individual corporations, government agencies and the Government when people undertake action, often in the public interest, to protect significant environments and ecosystems against destruction that would otherwise go ahead unchallenged. In terms of non-violent protests, I have seen industry suffer on many occasions. However, it must be acknowledged that that cost is part and parcel of the cost of maintaining democracy in the community.

These amendments would link extensive damage to property with major economic loss. They would provide a slightly stronger hurdle that must be overcome before action can be taken against demonstrators, who certainly have nothing to do with what amount to acts of sabotage. Overall, Australia is free from acts of sabotage, partly because there are no large-scale terrorist activities and partly because people have the right to protest in our society. Putting those two criteria together will give a significant degree of protection to protesters, who do not have a great deal of political experience and who are often young and idealistic. I am thankful that they are still protesting. These amendments would make it imperative for both of those concepts to be proven before any action can be taken against protesters.

Reverend the Hon. F. J. NILE [3.09 p.m.]: I have some concerns about the amendments. In many cases, what is a minor act of sabotage, such as destroying a powerline, which may not involve extensive destruction to property—

The Hon. I. Cohen: Destroying a powerline is not a minor act of sabotage.

Reverend the Hon. F. J. NILE: That is why it is necessary to distinguish between "major economic loss" and "extensive destruction of property". The destruction of a powerline could mean, for example, the unavailability of power for the Olympic Games main stadium, factories and so on. It may be only a minor destruction of property but it may cause a major economic loss. As the Hon. I. Cohen said, the bill has nothing whatsoever to do with non-violent, peaceful protests.

The Hon. I. COHEN [3.10 p.m.]: I would like to correct a comment made by Reverend the Hon. F. J. Nile. As a Green I consider the destruction of a powerline in any way to be major industrial sabotage; it is not a minor event. We are talking about situations where a person might let down a tyre on a police vehicle or an industrial vehicle, or something of that nature. We want to ensure that this does not involve people in a criminal or legal situation. An act of sabotage against a major utility, as referred to by Reverend the Hon. F. J. Nile, is not considered to be a minor act of sabotage.

The Hon. J. W. SHAW (Attorney General, and Minister for Industrial Relations) [3.11 p.m.]: I appreciate the motivation of those supporting the amendments and understand the point that they are making. However, the Government believes that the amendments are unnecessary. We take the view that large-scale demonstrations, rallies, minor vandalism and similar acts do not constitute sabotage or actions akin to terrorism within the drafting of this legislation. I appreciate the concern of those moving the amendments, but the Government cannot accept them; we regard them as essentially unnecessary.

The Government takes the view that even large protests or rallies which disrupt traffic or cause traffic delays and some inconvenience for the populace will not be construed as fulfilling the requirements of clause 203B or clause 203C. When we look at the bill as a whole, we can see that such offences would not be made out. With regard to clause 203B, first, the action must be conduct causing damage to a public facility; second, there must be an intent to cause that damage; and third, the conduct must be intended to cause either extensive destruction of property or major economic loss. Even if some economic loss were suffered by the community, the first and second elements of intent are extremely unlikely to ever be made out in the case of, for example, a rally. With regard to clause 203C, there must be a threat, an intent to cause fear that the threat will be carried out and that it will cause extensive destruction of property or major economic loss. Once again, a number of thresholds need to be crossed before the offence is proven.

Whilst the Law Society wrote to me recently requesting the change reflected in these amendments, the society has since indicated to my officers that the submission was made on the basis of the Model Criminal Code Discussion Paper on Damage in Computer Offences draft, which is significantly different. I would have understood the amendment in that context. However, this is a well-considered bill, which has addressed any concerns that the drafting would capture small-time property damage offences. We simply do not believe that it would do so. The Government believes that the clause should stand as part of the bill and that the amendments should not be acceded to.

The Hon. J. M. SAMIOS [3.14 p.m.]: The Opposition opposes the amendments, notes the Government's comments in relation to them, and supports the Government's attitude.

Amendments negatived.

Schedule agreed to.

Schedules 2 to 8 agreed to.

Title agreed to.

Bill reported from Committee without amendment and passed through remaining stages.

The Hon. CARMEL TEBBUTT (Minister for Juvenile Justice, Minister Assisting the Premier on Youth, and Minister Assisting the Minister for the Environment) [3.17 p.m.]: I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

This bill responds to recommendation 111 of the Wood royal commission paedophile inquiry and realises a key commitment in "Protecting Our Children", the Carr Government’s 1999 child protection policy. The Carr Government has a proud child protection record. It has pursued this agenda with the support of the people of New South Wales.

We have passed the Children and Young Persons (Care and Protection) Act 1998, which will ensure all government agencies work together in responding to child abuse. We have established the Child Protection Enforcement Agency [CPEA] in the New South Wales Police Service, which has been recognised by the Federal Bureau of Investigation as a world leader in investigating child abuse. We have introduced joint police-Department of Community Services investigations of child abuse matters and provided for the out of court audio and video recording of child abuse victims’ statements, reducing the traumatic impact child abuse investigations and legal proceedings may have on child abuse victims and their families.

In 1998 the Carr Government introduced three Acts that acknowledge the recidivist nature of paedophile offending. These Acts impose certain restrictions on child sex offenders after their release from prison into the community. This bill is the latest brick in the wall that the Carr Government is building around our most vulnerable—children—protecting them from abuse and exploitation. It sends out a clear message—the abuse of our children will not be tolerated and all possible steps will be taken to prevent, investigate and prosecute this terrible crime.

All child sex offender registration schemes require child sex offenders in the community to inform government agencies, usually police, of changes to certain personal details. There are currently over 60 such schemes worldwide. Child sex offender registration schemes recognise that many child sex offenders, when released into the community, may pose a further risk to child safety. Studies of child sex offender behaviour show a high rate of recidivism, which is even more alarming, given the low rate of reporting of child sex offences.

Currently all American States have registration schemes, as do most Canadian provinces. The United Kingdom Sex Offender Act 1997 established a registration scheme in the United Kingdom. Child sex offender registration schemes have received some consideration in Australia. Queensland has a limited registration scheme, where courts, in certain circumstances, may order that sex offenders report their name and address details to police.

In 1997, the Wood royal commission recommended that consideration be given to the introduction of a system for the compulsory registration with police of all convicted child sex offenders, to be accompanied by requirements for the notification of changes of name and address, and for the verification of the register.
The royal commission supported the registration scheme being developed along the lines of the United Kingdom Sex Offenders Act 1997. It did not support the Megan’s law approach adopted in the United States of America, where registration information is frequently available to the public.

This bill also realises the commitment made in the Carr Government’s Protecting Our Children policy. It will increase, and improve the accuracy of, police child sex offender intelligence; assist in the investigation and prosecution of child sex offences committed by recidivist offenders; provide a deterrent to reoffending; assist police from New South Wales and other jurisdictions in monitoring high risk child sex offenders. assist in the management of child sex offenders in the community; provide child abuse victims and their families with an increased sense of security; assist police to enforce the Child Protection (Prohibited Employment) Act 1998 and Crimes Legislation Amendment (Child Sexual Offences) Act 1998.

Superintendent John Heslop, the commander of the Child Protection Enforcement Agency, has stated the introduction of a child sex offender registration system will mean the CPEA and local police will be able to gather previously unavailable intelligence. He states, “If the CPEA and local police have knowledge of the whereabouts of convicted sex offenders, they are better prepared to prevent child sex abuse”.

However, the bill should not be regarded as a child protection cure-all. Whilst it may deter some recidivist offending, it will not prevent everybody who has been convicted of a child sex offence from ever abusing another child. It is a sad fact that many child sex offenders offend compulsively and will reoffend—indeed that is the premise that underpins the bill. The bill will make a difference. It will make children safer. But it is only one of a number of child protection tools and its capabilities must not be overexaggerated. The bill establishes the first full child sex offender registration scheme in Australia, which will serve as a role model for other States and Territories.

I will now outline the key provisions of the bill. Clause 3 of the bill contains a number of important definitions. One of the most important definitions is “child”, which means any person under the age of 18. This is consistent with the Child Protection (Prohibited Employment) Act and Commission for Children and Young People Act. The offences that attract registration, known as “registrable offences”, are broken down into class 1 and class 2 offences. The most serious offences, being child murder offences and offences involving sexual intercourse with a child, are categorised as class 1 offences.

A number of child sex offender registration schemes also extend to child murder. The Government sees a clear need for this position to be adopted in New South Wales. Some child murders have an underlying sexual motivation, but there may be conviction for a sexual offence. There is no more dangerous or despicable sex offender than one that murders his victim. There is a high rate of recidivism amongst such offenders, with United States research showing 53 per cent of offenders who abduct and murder a child have committed previous violent and sexual crimes against children.

I will now outline the class 2 offences covered by the bill. Like the three 1998 Acts impacting on post-release child sex offenders, the bill extends to indecency offences against children carrying a maximum penalty of imprisonment for 12 months or more. As with those Acts, the bill extends to the possession and publication of child pornography, as there are established links between such offences and indecent and sexual offences against children. The bill also extends to child prostitution offences, other than those committed by a child prostitute.

The bill also reflects research that demonstrates a link between child kidnappings and child sex offending. The New South Wales Judicial Commission’s study of sentencing trends for kidnapping offences shows that persons convicted of kidnapping offences are convicted for concurrent sexual and indecent assaults more frequently than any other offence. These figures are even more alarming, as in some kidnappings the victim escapes before he or she can be abused or the abuse is not reported or proved.

Like a number of United States schemes, the bill extends to the kidnapping of children. The bill does not, however, seek to cover complicated custody and access matters that are better resolved through the family court. Registration in those cases will not help the children, their family, or the police. Accordingly, the bill excludes kidnappings where the kidnapper has had a previous care relationship with the child. Those who attempt, conspire or incite the commission of a registrable offence will also be required to register.

I will now outline one of the most important provisions of the bill. The registration provisions will extend to offences committed outside New South Wales that, if committed in New South Wales, would be a registrable offence. Research has shown that paedophiles are often highly mobile. The New South Wales scheme will be compromised if offenders from other jurisdictions who move into New South Wales cannot be registered. This will also allow the registration of New South Wales residents who commit registrable offences whilst in other jurisdictions—for example, child sex tourism offences under the Commonwealth Crimes Act.

I will now explain the definition of “registrable person”. Most persons who are found guilty of registrable offences will be registrable persons, and therefore subject to the provisions of the bill. However, there are some exceptions. A person will not be required to register if his or her conviction has been quashed or set aside by a court. Also, there will be exceptional cases where a registrable offence has been proved, but the court dismisses the charge under section 10 of the Crimes (Sentencing Procedure) Act 1999. The court has made a clear decision that persons in this category do not pose a significant risk to child safety.

The bill will also exclude first time class 2 offenders who receive a fine or unsupervised good behaviour bond. As these offenders are less serious than class 1 offenders, there is no demonstration of actual recidivism, and the court is satisfied that such offenders are not of sufficient risk to the community to warrant any supervision after sentencing. The bill also recognises that juvenile child sex offenders should be treated differently to adults. This is consistent with the approach taken in the United Kingdom, and by other registration schemes. The bill also requires the registration of persons who are still under some form of correctional or parole supervision at the time the legislation commences. The judicial and correctional systems recognise these “existing controlled persons” still pose a risk.

Division 1 of part 2 of the bill establishes mechanisms by which registrable persons, and agencies responsible for supervising them, are made aware of the obligations of those persons to report changes in relevant personal information to police. The division provides for three levels of offender notification: first, the courts; second, the supervising agency—generally the Department of Corrective Services, the Department of Juvenile Justice, or New South Wales Health; and third, the New South Wales Police Service. These bodies will keep a record that they have notified the offender of their reporting obligations.

Clause 9 details the relevant personal information that registrable persons must provide to police. If registrable offenders fail to provide this information accurately or within the prescribed period they can be gaoled for up to two years and/or fined $11,000. Registrable persons must advise police of their name and any other names by which they have previously been known. This is consistent with a number of United States registration schemes, and recognises that persons with a criminal history frequently operate under assumed names, or change their name by deed poll, to avoid police or community attention.

Registrable persons must also provide information on places they regularly reside or, where they are transient, the localities in which they are generally found. This allows police to better monitor such offenders and investigate offences in areas near where the offender lives. Registrable persons must also provide information on where they work, the name of their employer, and the nature of their employment. The bill also requires registrable persons to provide information on the make, model, colour and registration number of any vehicle they own, or regularly drive. This reflects United States research that finds many child sex offenders offend in or from their vehicles.

Clause 10 specifies when registration information is to be provided. Registrable persons are required to register within 28 days of sentencing or release into the community, whichever is later. Offenders entering New South Wales from other jurisdictions will also have 28 days to register. Registrable persons who are under some form of correctional supervision at the time of commencement, will have 90 days from the time of commencement to register. Subsequent changes of relevant personal information must be reported within 14 days.

Clause 11 corrects a defect in the United Kingdom scheme identified by British police. In the United Kingdom, offenders who are charged for failure to report, claim they have only just returned to the jurisdiction and are therefore not required to report for a number of days. It is often difficult to verify the truth of this. In order to prevent this excuse, registrable persons must inform police of absences from New South Wales before they go. As a number of offenders will live in border regions, or will travel interstate for short periods. only intended interstate absences of 28 days or more must be notified. All overseas trips must be reported, irrespective of length. This will also assist in the investigation of child sex tourism offences.

Registration information is to be provided personally to a police station in the offender’s locality. This will ensure local police are made aware of the offender’s presence in their community, better convey to the offender that police are aware of them, ensure registration information is correctly provided and reduce disputes as to whether information was or was not provided. Registration information may only be received by sworn police officers, given the sensitivity of that information. Police will provide an acknowledgment of registration so the offender can prove they complied with their obligations.

Clause 12 contains special reporting provisions for children and persons with a disability. Clause 13 contains modified reporting provisions for registrable persons who are, or have been, protected witnesses under the witness protection program. Consistent with the Witness Protection Act 1995, the Ombudsman is given a specific review role in this area. Clause 14 sets out the length of time a registrable person is required to report to police. The registration period runs from sentencing or release into the community, whichever is later.

Class 2 offenders have a base registration period of eight years for a single offence, class 1 offenders have a 10-year period. Where repeat offending is demonstrated to a level of criminal proof, the registration period will be extended by 150 per cent. This approach is consistent with a number of registration schemes in the United States.

If an offender on the register for a class 1 offence subsequently commits another such offence, he or she will be registered for life. Clause 16 provides this may be appealed to the administrative decisions tribunal after 15 years, in the same manner the application of the Child Protection (Prohibited Employment) Act may be appealed. The tribunal is only to order an exemption from lifetime registration if it is satisfied the offender does not pose a risk to child safety.

The extended and lifetime registration provisions are key components of the bill. They recognise that offenders who have demonstrated recidivist behaviour pose a greater risk to child safety and should be monitored for longer. Clause 14 also provides that the reporting period cannot be less than a period of licence or parole. This means those extreme high risk offenders released on lifetime parole under truth in sentencing legislation, such as Mr Lewthwaite, will be registered for life with no appeal.

Clause 14 also recognises the differences between juvenile and adult sex offending. It provides that registration periods for juveniles are halved and juveniles cannot be registered for life. Clause 15 provides that a person does not have to register whilst outside New South Wales. It also stops the clock on registration periods when a registrable person is placed in full-time custody.

Division 4 of part 2 requires the Commissioner of Police to establish and maintain a register of offenders, on which relevant information will be stored. This will be provided for on a secure part of the service’s computer-operated police system. In order to ensure that police exercise their powers appropriately, the Act will be scrutinised by the Ombudsman in its first two years of operation. The bill provides the Ombudsman with wide powers to investigate any aspect of the registration system. The Ombudsman will provide the Minister with a report on the registration scheme as soon as possible after the two-year monitoring phase.

Schedule 1 to the bill provides for the cognate amendment of the Child Protection (Prohibited Employment) Act and Commission for Children and Young People Act. Those amendments enable a person’s placement on the register to be considered in employment screening and prohibiting a person from working in child-related employment. The provisions of schedule 1 ensure that the registration scheme fits seamlessly with other legislation applying to child sex offenders released into the community.

The Megan’s law approach adopted in the United States of America highlights the problems associated with community notification. A number of American States are now moving away from community notification. In some parts of the world, local community groups may be given details on child sex offenders who live in their areas. Once information on child sex offenders is released to a small number of people, it is difficult to prevent it being spread throughout the community. This is particularly the case in small or isolated communities.

Available research suggests community notification does not reduce recidivism amongst child sex offenders. Indeed, there are strong concerns that community notification may increase the risks of recidivism, thereby exposing children to additional danger. The case of Sydney Cooke, a high profile sex offender in the United Kingdom, highlighted the dangers of vigilantism that may arise from community notification. The police station where Mr Cooke was believed to be hiding for protection was surrounded by a mob of rioters for two days. Over 50 police officers were injured in this incident.

Vigilantism is not only a danger to child sex offenders, people mistaken for child sex offenders, and members of the public who are caught up in lawless behaviour; it is also a danger to children as it simply drives paedophiles underground. Community notification reduces compliance with registration schemes as child sex offenders will avoid registering if they believe information about them will be made public.

Superintendent Chris Gould, who is responsible for the child sex offender register in the United Kingdom, recently visited New South Wales to advise Commissioner Ryan and other senior police on child sex offender registration and notification issues. He advised that paedophiles will simply run the risk of being prosecuted for failure to register and move and change their names without notifying police, if they are threatened with community notification. He advises that compliance with registration is less than 10 per cent in some areas of the United States of America, which contrasts with the 97 per cent compliance rate in the United Kingdom.

Community notification not only means the community loses track of child sex offenders, it means police also lose track of them. The cost to police of tracking them down is enormous. The cost to child safety is even greater. Community notification also makes offenders move more frequently, destabilising their lives and making it less likely that they will be able to rehabilitate. Victims groups, such as VOCAL, have previously expressed concern that community notification may cause stress to the offender which leads to him or her reoffending.

Community notification is likely to create a false sense of security in the community, with the community focusing on the dangers posed by a specific offender, rather than the dangers posed by other offenders in the area who the community are unaware of. The vigilance of children and their families is best maintained if they are educated about the dangers of general situations, such as getting into a car with a stranger.

The recent public debate about CRIMENET, the private Internet service that posts criminal record information on the web, also highlights the dangers of publicly releasing child sex offender information. That release may be used to argue that a trial should be aborted, or it may be pleaded as a mitigating factor in respect of the commission of an offence. Community notification should not be allowed to be used to get child sex offenders off the hook, or to receive more lenient sentences.

One of the greatest drawbacks of community notification is that it may cause further harm to a victim of abuse. It is a sad fact that much of the child abuse in our society is committed within the family unit—the public identification of an offender may also identify the victim, causing him or her additional humiliation and hurt. Victims groups such as VOCAL oppose community notification, for all of the above reasons. They, like this Government, want a scheme that will work. This will only work if convicted child sex offenders register! It is bad for victims, bad for offenders, bad for the community, and bad for law enforcement and child protection agencies.

The Government has put forward a bill that offers significant additional protection to children. It has done so after conducting extensive research into paedophile offending and the registration schemes of other jurisdictions. I commend the bill to the House.

The Hon. M. J. GALLACHER (Leader of the Opposition) [3.17 p.m.]: The Opposition supports the Child Protection (Offenders Registration) Bill. The objects of the bill are to require persons who have been found guilty of certain offences against children to keep the Commissioner of Police informed as to where they live and work and what motor vehicles they drive, and to make consequential amendments to certain Acts. The bill stems from recommendation 111 of the Royal Commission into the New South Wales Police Service paedophile inquiry, concerning compulsory registration by police of all convicted child sex offenders.

The bill follows the United Kingdom model, which provides for notification to police rather than to the public, as occurs in many American States under the Megan's law arrangements. The Leader of the Opposition in another place has indicated that the notification should be wider than simply the Commissioner of Police, particularly in circumstances in which the commissioner believes that should happen. We reserve the right to revisit this issue should it become necessary following the operation of the legislation. The Opposition notes that the Ombudsman will review the Act in due course, and it is supportive of such a measure.

Victims and their families should remain at the forefront of legislators' minds when considering any legislation that may impact upon their lives or the lives of loved ones. It is regrettable that sometimes State government authorities do not protect victims and their families from offenders who choose to live within their immediate neighbourhood. I am sure all honourable members would agree that no victim of childhood sexual assault, particularly an offence committed by a stranger, should have to suffer the trauma of having his or her attacker living next door or around the corner. Unfortunately, this cannot be ruled out with failure to notify and failure to cross-reference the particulars and details across government agencies. The Opposition will move quickly to consider amendments to the legislation if it becomes necessary upon its implementation.

The Opposition places on record the strongest reservations about an open Megan's law approach, particularly given the strong recommendations by the royal commission. However, members of the Opposition believe that the bill should be passed in its current form, without amendment. The United Kingdom precedents we are following are not infallible. This system needs to be monitored to balance the rights of victims and the responsibilities of offenders. They are the issues that we will watch as the legislation is implemented. The bill results from a royal commission recommendation. As I indicated earlier, together with my colleague the shadow Minister in the other place, the Opposition supports the bill as it stands, but we will vigilantly watch its implementation and await reports by the Ombudsman with great interest.

The Hon. HELEN SHAM-HO [3.20 p.m.]: I support the Child Protection (Offenders Registration) Bill, which seeks to introduce a system of mandatory registration of all persons convicted of offences involving children, including sex offences, murder, indecent assault, pornography, prostitution and kidnapping. Under the bill, those convicted of such offences are required to notify police of changes of name, address, employment and car registration, with this information then forming part of a national database available only to police.

The proposed legislation seeks to implement recommendations made by the Wood royal commission, as already alluded to by the Leader of the Opposition, as well as to address increasing community concerns about child sex offenders who are released from custody. I am sure all honourable members remember the community outrage which followed the release of John Lewthwaite last year, who was paroled after 25 years for the stabbing murder of five-year-old Nicole Hanns. Nevertheless, an issue such as this requires the careful balancing of two competing interests—the community's right to know on the one hand, and an individual's right to privacy and a life that is free from persecution on the other. It is my belief that this proposed legislation strikes the appropriate balance.

Sodomising, abusing, mutilating and murdering children are crimes which represent a fundamental lack of respect for the most vulnerable members of our society. Crimes against children also create long-term damage, not only to the children themselves but to their families and society. For that reason I firmly believe that those who commit offences against children should automatically lose some of the rights that citizenship engenders. Paedophilia, in particular, is a crime of a peculiar nature. According to a Queensland inquiry into sexual offences involving children and related matters, paedophiles are driven by a strong compulsion to seek children. They actually hunt for them.

Given that most paedophiles are single men, they are not tied to one place by the demands of home and family and are often constantly on the move. In fact, many paedophiles have been found to dedicate much of their lives to infiltrating their way into places and occupations where they will have ready contact with children. This is where schedule 1 to the bill comes in. That section authorises approved agencies under the Child Protection (Prohibited Employment) Act 1988 and the Commission for Children and Young People Act 1998 to check, for employment purposes, whether a person with whom they have or may have dealings has a history of interfering with children.

It is also relevant to note the high rates of recidivism among child sex offenders. A range of international studies has put re-offending rates for sexual offenders at between 15 and 45 per cent. One Canadian study that was conducted in 1988 found that the re-offending rates over a 10-year period for untreated offenders who had molested non-familial children was 42.9 per cent. For offenders who had received treatment, the rate dropped considerably, but it was still 17.9 per cent for those who had molested girls and 13.3 per cent for those who had molested boys. It is not surprising then that many people in the community feel that they should have a right to know if a convicted child molester comes to live amongst them.

Interestingly enough, the mandatory registration of sex offenders does seem to have a deterrent effect. Research by the English Chief Inspector of Probation in 1998 indicates that post-release supervision of sex offenders significantly reduces their rate of re-offending. The report on this research states that about 93 per cent of offenders in the sample showed no evidence of being re-convicted for sexual or other violent offences during the course of supervision. There appear to be two different models or methods for dealing with the registration and notification of convicted sex offenders. The Leader of the Opposition has already alluded to that. For example, the United States of America has opted for a public registration-notification model.

In 1994 the New Jersey Legislature, responding to public pressure created by the murder of seven-year-old Megan Kanka by a neighbour with two previous convictions for sex offences, passed legislation providing for the registration of released sex offenders and community notification of their presence within the community. Under the New Jersey statute, which has come to be known as Megan's law, county prosecutors classify released sex offenders according to their risk status; that is, for a low-risk offender, only law enforcement agencies within the community into which the offender is to be released are provided with warnings. For a moderate risk offender, school and community organisations must also be notified, and for a high-risk offender, notice by distributing fliers and mailings is to be given to the entire community in addition to notice to law enforcement agencies and school and community organisations. Most American States have followed this lead.

In contrast, the United Kingdom has opted for a more limited approach. Under part 1 of the Sex Offenders Act 1997, prescribed categories of sex offenders are required to notify the police of their name and home address within 14 days of conviction. Subsequent changes of name and address must also be notified within 14 days, and persons subject to the legislation must also advise police of any address in the United Kingdom where a person has stayed for a period or periods totalling 14 days in any 12 months. While the Act makes no reference to the disclosure of notified information, guidelines issued by the Home Office in August 1997 recommended that communities only be notified of the presence of sex offenders in exceptional circumstances and a decision to name an offender must be "justified on the basis of the likelihood of the harm which non-disclosure might otherwise cause".

A modified version of America's Megan's law already exists in Queensland. Under the Queensland law, serious sex offenders are required to report their whereabouts to police within 48 hours after being released from prison. Information about the person may then be released at the discretion of the Attorney General to people in the community who are deemed to have a legitimate interest. In its final report on the paedophile inquiry issued in August 1997, the Royal Commission into the New South Wales Police Service rejected the introduction of legislation providing for registration and community notification along the lines of the Megan's law approach. Instead, the commission supported "a more controlled and co-ordinated system for the storage and release upon a needs basis of information concerning convicted or suspected paedophiles".

I believe that the Child Protection (Offenders Registration) Bill successfully implements this particular recommendation. It is not like Megan's law, which requires police to inform residents within a five-kilometre radius of paedophiles living in their neighbourhood. Rather, the bill proposes the adoption of guidelines of the type adopted by police in Britain, that is, the release of warnings on a case-by-case basis and in response to a genuine threat. I support this approach for a number of reasons. The problem with measures such as Megan's law, or paedophile databases which enable people to find out who their neighbours are, is that they can encourage parents to believe that if they know who to avoid, their children will be safe. This is not quite the case. But in actual fact, parents will only ever know who and where a small percentage of paedophiles are located.

Another factor to remember is that most child sexual abuse is committed by people who are known to the child, not necessarily strangers. I believe that the most effective way for parents to protect their children is to apply general principles of care and safety at all times—for example, by walking children to and from school and teaching them never to speak to strangers. I understand that many people see the legislation as an infringement of sex-offenders' civil liberties and also as detrimental to their rehabilitation and integration back into society. However, given that the proposed legislation provides not for a general public notification system but for a system that notifies the affected community groups only, t the bill strikes a fair and equitable balance between competing interests. I commend the bill to the House.

The Hon. I. COHEN [3.30 p.m.]: The Child Protection (Offenders Registration) Bill establishes a system for registering persons convicted of violent crimes against children. The legislation is based on the assumption that when offenders are monitored there is less opportunity for them to commit crime. If the Government could show that registration results in reduced incidences of such crimes against children, the Greens would be strongly supportive of the bill. Certainly the Greens would welcome an effective means of lowering the rate of any sort of violent, and therefore horrendous, crime against children, be it paedophilia or whatever. But there is no evidence, nor did Mr Whelan say in his second reading speech, that fewer crimes have occurred in countries that have introduced these schemes. Mr Whelan said that the provisions in this bill will make children safer, but he did not say how it will do so, or how it will assist the rehabilitation of offenders.

The bill may result in offenders being more likely to commit crime because it reinforces the idea that these offenders are recidivists. One has to put forward the concept that there is a better chance of rehabilitation if the offender participates in the community. Even though the bill does not allow for community notification of offenders—something that is generally referred to as Megan's law, as mentioned by the Hon. Helen Sham-Ho—it is still an infringement of civil liberties. The Greens are concerned that information may become public and lead to the type of vigilantism that was experienced in the matter of Mr Lewthwaite. Whilst I abhor the crime that that individual and others have committed, there still needs to be recognition that the judicial system hands down sentences and that once a person has finished his sentence he needs to be given an opportunity to merge back into the community.

The Greens ask the Government to establish a clear process to ensure that paedophile registration information is not made public. The Greens also ask for more programs to address the causes of such terrible crimes. It has clearly been seen that a tough law and order agenda is not a solution to the problem of child abuse. As was mentioned by the Hon. Helen Sham-Ho, such crimes are usually committed by someone well known to the child—in fact, by family members or close family friends. As has been mentioned, it is clear that paedophiles move around the community from place to place, and it can be argued that if such restrictions are put on them they will become more secretive in their movements than they are at the present time.

It is absolutely essential that children and families have adequate protection when a convicted paedophile lives in their immediate vicinity, but there needs to be some balance. The simple law and order reaction that somehow absolves the Government from responsibility is not appropriate in the view of the Greens. On 20 June Mr John North, the President of the Law Society of New South Wales, said in a letter to the Attorney General and Minister for Police:

1. It is particular concern to the Criminal Law Committee that reporting obligations will be imposed on people participating in the Pre-trial diversion of Offenders Program. In the Committee's view, their inclusion is against the whole philosophy of the Pre-trial Diversion of Offenders Act 1985:

• these people have pleaded guilty but have not been sentenced;
• they are first offenders; and
• they are being treated under supervision
The Committee submits that it is inappropriate for such people to be subject to the requirements imposed on "registrable persons" and urges the amendment of the legislation accordingly.

2. The definition of "class 2 offence" will have the effect of imposing significant reporting conditions on, for example, a 16 year old, who has been convicted in the Children's Court of having sexual intercourse with another child (which may well have been consensual).

The Committee urges that further consideration be given to the possible impact of this legislation on all the people who will be required to comply with the extensive reporting obligations.

Certainly the Greens support moves that will lead to the greater protection of children. The Greens view this legislation as being appropriate in many ways but sound a note of caution that whilst we are looking to protect children in the community, the law makers should not simply respond in a way that is not necessarily effective. We want effective means to deal with this horrendous problem, whose perpetrators, by their very nature, tend to be recidivistic. There needs to be constructive ways for society to deal with it, but notification is not necessarily the most effective way to go.

The Hon. Dr P. WONG [3.35 p.m.]: I support the Child Protection (Offenders Registration) Bill. The Wood royal commission inquiry into paedophilia recommended that convicted paedophiles should be placed on a separate yet secured registration list which would be used strictly with the goal of child protection. Many recommendations came out of the exhaustive and successful inquiry and this recommendation is now being implemented by amendment to the child protection legislation. This bill has been developed after a comprehensive research of legislative options not only in Australia but also internationally. The bill was developed in consultation with key organisations and agencies that deal with child protection. I believe that a balance has been reached between on the one hand the rights of children and the community to be protected against paedophilia, and on the other hand the civic entitlements of paedophiles to live and possibly rehabilitate themselves once they have been convicted of this terrible crime and have served time.

I am satisfied that this registration scheme will be simply used by authorised persons who deal with sexual or other offences. This bill will enable the police and child protection agencies to develop more effective plans of child protection. It would be very important for the appropriate agencies and authorised persons within them to be aware at all times where paedophiles live, and where there is any potential for them to cause risk to children. This is not a "Megan's law"—which to a large extent is a controversial proposal being examined in New South Wales and overseas which relates to the establishment of paedophile directories that are available to all. This legislation in no way enables victimisation of convicted paedophiles by persons or public authorities. Penalties and monitoring procedures are established by this bill to protect against misuse of powers under this bill. The bill is an addition to the existing child protection system, which, amongst other things, requires thorough checks of whether people have a history of sexual or other offences against children before they are employed in positions where they come in contact with children. This bill has the full support of the Commissioner for Children and Young People, and I fully endorsed it.

Reverend the Hon. F. J. NILE [3.38 p.m.]: The Christian Democratic Party is pleased to support the Child Protection (Offenders Registration) Bill, which requires that convicted child sex offenders, described as paedophiles, and other specified serious offenders against children must inform police of changes to certain personal information. This legislation builds on previous Acts passed by this Parliament. In 1998 the Parliament passed three Acts that recognised the post-release dangers posed by people who commit sexual or other offences against children. They are the Child Protection (Prohibited Employment) Act, the Commission for Children and Young People Act and the Crimes Legislation Amendment (Child Sexual Offences) Act.

Recent studies have shown that it is almost impossible to cure child sex offenders, who have been found to have a high rate of recidivism. Having been convicted and served a sentence, child sex offenders still pose a further risk to children with whom they may be able to make contact. The first child sex offender registration scheme, requiring offenders to inform police of their names and addresses, was introduced in California in the 1940s. By 1996 all States in the United States of America and a number of Canadian provinces had introduced registration systems. The United Kingdom followed in 1997.

As honourable members are aware, there has been a great deal of controversy about what has become known as Megan's law. Some American States have paedophile directories, to which all parents have access, giving them knowledge that will enable them to take even more care than a normal parent would to protect their children. It is a tragedy if a child sex offender, once released, re-offends against another child. We can understand the anger of parents when that occurs in circumstances where they have no knowledge about the offender's previous behaviour, offences and convictions.

A case in point occurred at Kiama, where I live. A convicted paedophile was released from prison and took another name. I am not sure whether that change was effected through the Registrar of Births, Deaths and Marriages. Within a very short time that person was successful in applying to become a part-time music teacher in a local primary school. One can imagine the anger of the parents and the principal when it was revealed how they had been deceived by that individual. A convicted paedophile can also change his appearance: for instance, by growing a beard. These people can change their names and their appearance in an attempt to be taken as completely different persons.

This bill acknowledges that offenders who have a sexual attraction to children are very cunning and deceptive and are even skilled liars. In recent years, in a number of cases these individuals have got into positions in which they can have contact with children, whether as a teacher, a scout leader or even a priest. Two priests set up a seminary for novices not far out of Sydney. The seminary was closed down by the Catholic Church when it became aware that those priests had set up the operation for the sole purpose of gaining access to young boys. That shows how methodical paedophiles can be.

A few years ago I was listening to a late-night program on the ABC—which in itself was a disgrace—in which some paedophiles were interviewed. The paedophiles described their activities and how deceptive they were in reaching out to gain access to young boys. One person even boasted that he had made love to a single mother for nearly 12 months with the sole purpose of gaining access to her young son. The paedophile said that he would eventually win the mother's trust and finally be allowed to take the boy to the zoo and on other outings. The mother had not the slightest knowledge that it was not she who was the centre of attraction but in fact her small son. That is why we need this kind of legislation.

I have great sympathy with Megan's law in the United States of America. If we have further examples of sexual abuse of children the Government may have to consider that law as an option so that parents have the knowledge that it provides. I have previously raised the change of names. This bill requires a number of classes of offender to provide to police information about change of names, address, employment and motor vehicle information upon their release into the community. Those classes cover child murderers, offenders who sexually assault a child, who indecently assault a child, or who kidnap a child, persons found guilty of possessing or publishing child pornography, and persons found guilty of child prostitution offences, other than child prostitutes.

The Government should consider this process whereby offenders adopt false names. I suggest that the Government consider supplying the names of convicted paedophiles to the Registrar of Births, Deaths and Marriages so the registrar can check name change applications against the list of convicted paedophiles, which I think would be quite an easy process, and inform the police where appropriate. Certainly, the Registrar of Births, Deaths and Marriages should have the information to enable a cross-reference to be made to check whether an applicant is a convicted paedophile, and decide whether to approve a change of name. I urge the Government to perhaps consider framing regulations for that purpose.

We are pleased to support this bill. We would like to put on the record our congratulations to the Hon. Deirdre Grusovin in the other place on her persistence in ensuring the conduct of an inquiry into paedophile activity in this State by including such an inquiry in the terms of reference for the Wood royal commission. That is the reason we now have a greater deal of knowledge about paedophile activities—activities that would not have been made public had it not been for the efforts of that honourable member. That did result in some criticism of the Hon. Deirdre Grusovin and other honourable members, but, as a result of the information that the Wood royal commission was able to obtain, the Government has been able to gradually introduce legislation to fill a gap in the legislative framework of this State. We are please to support the bill.

Ms LEE RHIANNON [3.46 p.m.]: I support the comments made by my colleague Mr Ian Cohen. Whilst we in this place would have universal agreement on the safeguarding of children from violent crimes, unfortunately this bill will make only a limited contribution to that objective. In some cases offenders will commit further crimes. Reinforcement of the idea that child sex offenders are recidivists implies that their behaviour will be repeated. Obviously, that is the basis of the definition. So often, when we set out such scenarios based on the expectation of re-offending, people go on to repeat offences. That is why the Greens are concerned about the way in which the legislation is presently constructed. The Greens believe it is most important always to put in place opportunities for rehabilitation. Such rehabilitation within sections of our community has been shown to work. It is a measure that we should always pursue.

The other reason why the Greens have considerable concern about this legislation was touched on by the Minister in the second reading speech he delivered in the other place. The Minister said that fewer crimes had occurred in countries that had introduced these types of schemes. The Minister said also that the bill will make children safer. But he did not tell us how that will happen. Nor has he given concrete evidence of the difference that the introduction of these types of systems has made in other countries. Therefore we believe that there is still no proof to back up this legislation, which will remove the rights of many people and will have limited scope in achieving its objective of reducing violent crime against children.

The Hon. CARMEL TEBBUTT (Minister for Juvenile Justice, Minister Assisting the Premier on Youth, and Minister Assisting the Minister for the Environment) [3.50 p.m.], in reply: I thank the Leader of the Opposition, the Hon. Helen Sham-Ho, the Hon. I. Cohen, the Hon. Dr P. Wong, Reverend the Hon. F. J. Nile and Ms Lee Rhiannon for their contribution to the debate on and their support for the Child Protection (Offenders Registration) Bill. The bill amounts to a competent and carefully considered improvement of our child protection laws. It has been developed having regard to the successes and failures of over 60 similar schemes in other jurisdictions.

As already noted, the bill complements a suite of existing government initiatives for the protection of children. It is based on a recommendation of the Wood royal commission and it is designed to serve a number of purposes. First, it will improve the accuracy of police child sex offender intelligence. Second, it will assist in the investigation and prosecution of child sex offences committed by recidivist offenders. Third, it will assist police from New South Wales and other jurisdictions in monitoring high-risk child sex offenders as well as assisting in the management of child sex offenders in the community. Fourth, it will reduce the opportunities for, and provide a deterrent to, re-offending. Fifth, it will provide child abuse victims and their families with an increased sense of security. Finally, it will assist police in enforcing the Child Protection (Prohibited Employment) Act 1998 and the Crimes Legislation Amendment (Child Sexual Offences) Act 1998.

I do not intend to respond in detail to all the comments made by honourable members in the debate, given that the majority of honourable members were supportive of the bill. However, I believe I should respond to some comments by the Hon. I. Cohen relating to the pretrial diversion of offenders. The Pre-Trial Diversion of Offenders Act 1985 establishes a New South Wales health program to treat and rehabilitate persons who commit sex offences against their children or the children of their partners. It is an unfortunate fact that many child sex offences are committed by a member of the child's family or a de facto partner of a child's parent. It would be folly to assume that a person who is prepared to sexually assault his own children would not assault other children.

The research of Jean Able, who conducted self-reporting child sex offender studies, found that 65.8 per cent of offenders who committed a sex offence within a family also committed an offence outside the family. Under the Pre-Trial Diversion of Offenders Act the Director of Public Prosecutions will determine whether an offender is suitable for the program. The offender's suitability will then be assessed by the director of the program. The offender must plead guilty before he or she participates in the program. An offender must then consent to participate in the program for up to two years and comply with all reasonable directions made by the director of the program. If the offender completes the program no further prosecuting or sentencing will occur.

The director of the program, Dr Dale Tolday, has been involved in developing a registration model. He has advised that registration is consistent with the goals of the program and in getting offenders to accept responsibility for their actions. He has agreed that it is appropriate for program participants to be subject to registration. As there is no formal sentencing of persons who participate in the program the bill allows an offender to undertake to participate in the program as a sentence within the meaning of the bill. As I have said, the bill, which toughens the Government's response to paedophiles, forms a central plank in the Government's commitment to make New South Wales safe. I commend the bill to the House.

Motion agreed to.

Bill read a second time and passed through remaining stages.

The Hon. J. J. DELLA BOSCA (Special Minister of State, Assistant Treasurer, Minister Assisting the Premier on Public Sector Management, and Minister Assisting the Premier for the Central Coast) [3.54 p.m.]: I move:

That this bill be now read a second time.

I seek leave to incorporate the second reading speech in Hansard.

Leave granted.

The Workplace Injury Management and Workers Compensation Act 1998 provides for the introduction of private underwriting of workers compensation insurance from 1 October 2000. Provision for private underwriting was one of the reforms recommended by the Grellman inquiry. The bill before the House proposes to defer the commencement of private underwriting of workers compensation insurance for a further period. This deferral is necessary to protect employers from immediate and sharp increases in premiums. The House will be aware that private underwriting of workers compensation was initially due to commence on 1 October 1999. On the recommendation of the Workers Compensation Advisory Council, the legislation was amended in June 1999 to defer private underwriting until 1 October 2000. This was done for the specific purpose of enabling the development of further initiatives to ensure that the costs of the new scheme do not put an inappropriate burden on business. Extensive work was carried out in developing such proposals. Reform proposals have been put forward for consideration in that time. However, the New South Wales Government has not been satisfied that the proposals put forward are adequate.

There remains a need for further scheme reform. While the reform package progressed in 1998 has reduced the cost of the current managed fund scheme from 3.2 per cent of wages to 2.95 per cent, these reforms appear to have reached their full potential and costs appear to have stabilised. The scheme now has a current underlying cost of 2.97 per cent. Premiums have been held at 2.8 per cent, pre-GST. However this shortfall is contributing to an increase in the scheme deficit which now stands at $1.8 billion as calculated on 31 December 1999, projected to rise to $2 billion at 30 June 2000. The Government is concerned that performance across a number of claims and injury management measures has fallen well short of expectations. It is in this context of a need for further cost containment that the impact of the implementation of private underwriting on 1 October 2000 must be considered.

Clearly the new premiums that insurers would have to charge under the private scheme would render many small to medium size enterprises non-viable. The insurance industry will be obliged to charge premiums that fully funded scheme cost. Additionally, the industry had indicated that it proposed to set premiums using the Australian and New Zealand Industry Classification system [ANZSIC] as a basis for tariff classification. No mechanisms currently exist to mitigate the effects resulting from the removal of cross subsidies in the current scheme. In terms of average premium rates, the rate under a privately underwritten scheme would rise to approximately 3.5 per cent of wages, compared to the current 2.8 per cent. These estimates do not take the effect of the GST or the need to address the deficit into account. Further work is needed to achieve the Government’s price objectives in this area.

The New South Wales Government has consulted with insurance industry representatives about these issues, but has not been satisfied that all the key outstanding transitional issues have been resolved. While there may be some benefits from private underwriting of workers compensation insurance, the Government’s main concern with the transition to private underwriting is to ensure that a substantial majority of employers are not worse off under the new scheme and fair benefits to workers remain a priority. To date, insurers have not provided sufficient guarantees that this will occur. It is in this context that a further deferral is proposed. Discussions with stakeholders have highlighted a general expectation that the Government will develop an overall strategy to address current scheme cost problems.
The key issues that need to be addressed include: the need to maintain premiums at an affordable level; the need to address the scheme deficit; improved injury management processes to improve return to work outcomes. Consultation will take place with insurers regarding transitional arrangements as part of a move to private underwriting and the achievement of government objectives on price. If insurers can meet expected performance targets, private underwriting could then proceed on a more secure basis. I commend the bill to the House.

The Hon. M. J. GALLACHER (Leader of the Opposition) [3.55 p.m.]: On behalf of the Opposition I speak to the Workplace Injury Management and Workers Compensation Amendment (Private Insurance) Bill. I assure all honourable members that the business community will rue the day that this significant piece of legislation is passed. At the end of the day they are the people who will be affected by this Government's inability to grasp an issue for which it has had responsibility since 1995: workers compensation. A few days ago honourable members were privileged to hear a ministerial statement on workers compensation by the Special Minister of State. We need look only at the body of that ministerial statement to gain an insight into where this Government is going.

The Government does not know where it is going. It is fumbling around in the dark, looking for an exit, looking for a door, looking for a friend to assist it out of the malaise in which it finds itself in relation to workers compensation. Workers compensation is a huge issue for the New South Wales business community and employees in this State. They want in place a system that will protect them; a system that will provide a safety net. They do not want the Minister to treat the workers compensation issue in the reckless and ruthless way he treated compulsory third party motor vehicle insurance, by slashing benefits. Heaven help anyone who is the victim of a motor vehicle accident.

Is it any wonder that employers in this State are concerned about this Minister's ability to bring about a proper resolution to this problem? Employers are not satisfied that this Minister will deliver on his promises. He makes promises that he does not fulfil and he then embarks on completely different deals. We saw that happening at the weekend when he doublecrossed his faction in relation to Jennie George. Members of the Right were not happy when he doublecrossed his faction. Members of the Labor Party do not forgive double-crossers. He doublecrossed his faction in order to become the national President of the Labor Party. He did a deal with the Left behind the backs of the Right, who supported him. Is it any wonder that workers and employers in this community have little confidence in this Minister's promises? He does not understand what is occurring in relation to workers compensation in this State.

This afternoon we find ourselves in a grave situation. The Government has given us a blank sheet of paper in relation to workers compensation. This Government has no idea where it is going. The council of elders—people from the insurance industry as well as employers—assisted the Government in trying to get together a plan. The former Minister responsible for this legislation fought hard to try to reform it, but he could not resolve these issues. The much-heralded response of the Government was that the Special Minister of State would fix these problems. We were told that everything was in hand; that discussions were under way; and that a plan would be put forward. We saw that plan in the ministerial statement—it was a blank piece of paper.

It is of grave concern to the Opposition that at a time when the business community is calling for respite in relation to workers compensation the Minister simply washes his hands of all the proposals and says, "We are going back to the drawing board. We hope that one day we can resolve these problems." Rest assured the Opposition will be alert to any lag between now and the date of final resolution that results in an increase in the tail, as it is often called. We like to refer to it as the tail, because it is a case of the tail wagging the dog. It is of great concern to the workers and the employers of the State that the deficit has blown out dramatically in a very short time. It is certainly a most significant blow-out in unfunded liability for workers compensation—something I am sure all honourable members will be interested to hear about as this debate proceeds this afternoon.

We need only to look at what has transpired in this debate to get an understanding of how the Government has little in the way of answers to address the concerns we have continued to place on the record regarding workers compensation. A little over 12 months ago unfunded liability for workers compensation was in the vicinity of $1.6 billion—a very sobering figure. In recent times we have been told by the Special Minister of State that that figure has blown out to $2 billion. I ask honourable members to consider what has been put forward in this debate so far. That is a $400 million increase in the unfunded liability of workers compensation in 12 months! In 12 months that figure has blown out by $400 million!

Pursuant to sessional orders business interrupted.

The Hon. M. J. GALLACHER: My question without notice is to the Treasurer, Minister for State Development, and Vice-President of the Executive Council. Is the Treasurer aware of claims by the State secretary of the construction division of the Construction, Forestry, Mining and Energy Union [CFMEU], Andrew Ferguson, that thousands of building workers—in fact, he claims it is up to 25 per cent of the industry—will lose their jobs despite the Government's post-Olympics public works program? What is the Government doing to address this issue?

The Hon. M. R. EGAN: No, I am not aware of the statement by Mr Ferguson.

The Hon. A. B. MANSON: My question without notice is to the Minister for Mineral Resources, and Minister for Fisheries. Given the high value of Australia's diamond imports, what is the Government doing to encourage exploration?

The Hon. E. M. OBEID: The Hon. A. B. Manson has asked a very important question. In the past financial year, Australia imported nearly $162 million worth of diamonds. They were used as gemstones and for industrial purposes. Until the start of the Argyle diamond operation in Western Australia in the early 1980s, New South Wales produced more diamonds than any other Australian State. Unfortunately, much has changed since then. Current diamond production in New South Wales is virtually non-existent. The historic Copeton to Bingara mine in the New England region ceased production in the 1920s. In its heyday, between 1872 and 1922, diamond mines in the area produced more than 200,000 carats.

Thanks to new technology and the Carr Government's commitment to regional New South Wales, this State may again become a major diamond producer. The Carr Government is committed to developing our State's mineral resources for the benefit of the whole community. The Carr Government is encouraging mineral exploration and has provided $30 million for the Discovery 2000 program to stimulate investment and exploration. Rimfire is one company that is directly benefiting from research generated by the Carr Government. I was pleased to read a report in the Age newspaper of 13 June to the effect that Rimfire is now targeting diamond exploration in the Bingara area. The article stated:

The Diamond hunt is coming along nicely and is focusing on the Nareena Bulls-eye anomaly—

of course, Nareena is in the State's north-east—

that Rimfire picked up from geophysical data released last year, by the NSW Department of Mineral Resources, under its Discovery 2000 initiative.

The Hon. Dr B. P. V. Pezzutti: A very good program!

The Hon. E. M. OBEID: I can assure honourable members it is a good program and it will continue to be a good program. In 1998 more than 35,000 kilometres of aerial surveys were carried out by my department in the Peel area west of Bingara. Encouraging results have also been found in other regions, especially near Brewarrina, White Cliffs and in the central highlands. The information obtained from Discovery 2000's research is now available to mine companies such as Rimfire who wish to explore for diamonds, gemstones and other minerals in New South Wales. As a result of the Government's commitment to mineral development, gold and diamond exploration in the Bingara area has reached a new high.

The Hon. Jennifer Gardiner: It is pronounced Bingara!

The Hon. E. M. OBEID: Is that the best members opposite can do? They sit here like a mob of goons, correcting names. I am glad they know the proper pronunciation of the names, because the people in those places do not know honourable members opposite. They do not even visit those places. As a matter of fact, the greatest attendance at the National Party convention on the weekend was the demonstrators. They had 10 times the number of National Party delegates. Members opposite ought to go out and win the hearts of some of the people in New South Wales.

The Hon. D. J. Gay: The Hon. Janelle Saffin can get a run at our conference; she can't get one at yours.

The Hon. E. M. OBEID: I think the honourable member ought to look at his leadership, his Federal leadership. As I was saying, the total area covered by exploration licences for diamonds has increased more than five times since our information was released. Exploration licences have increased from 610 square kilometres in late 1998 to 3,225 square kilometres this month. The interest of Rimfire and other exploration companies is a direct result of the new geophysical survey information released by the Government under its Discovery 2000 initiative. I am optimistic current levels of applications for exploration licences for diamonds in and around the Peel survey area will continue.

The Hon. D. J. GAY: My question without notice is to the Treasurer. Does the Treasurer agree with my estimation of a possible $200 million loss from the State-owned energy corporation, Integral Energy? Is the Treasurer aware that the new chief executive of Integral Energy, Richard Powis, told an estimates committee hearing yesterday that he did not dispute that figure? Does this mean that the Treasurer and his shareholding ministerial colleague beside him, together with the Minister for Energy, have failed in their duty to oversee and manage the commercial operations of Integral Energy? In light of Mr Powis' statement yesterday and the Treasurer's own admission that Integral Energy has been potentially mismanaged in the past, will the Government now reconsider the oversight of State-owned corporations so that taxpayers of the State do not lose any more money—which, in the case of Integral Energy, is already $60 million in excess of the Government's shortfall of $140 million?

The Hon. M. R. EGAN: I point out to the House that Integral Energy has made a profit every year since it was established. I do not have the figures before me but my recollection is that Integral Energy has so far returned to the New South Wales taxpayer dividends and tax equivalents of some $270 million.

The Hon. D. J. Gay: It has not made a profit; it has returned a dividend.

The Hon. M. R. EGAN: No, it has made a profit. As I understand it, some $270 million of dividends and tax equivalents have been paid to the New South Wales taxpayer.

The Hon. D. J. Gay: Do you disagree with the figure I have suggested?

The Hon. M. R. EGAN: I think you suggested it made a loss of $200 million.

The Hon. D. J. Gay: No, I said it lost $200 million under its previous management.

The Hon. M. R. EGAN: It certainly lost a significant amount in energy trading, but it will still return a profit. There is quite a difference between a firm that produces a profit, albeit a smaller profit than it otherwise should have, and a firm that incurs a loss.

[Interruption]

Members opposite no longer call themselves members of the Coalition. On the weekend they were told not to describe themselves as members of the Coalition.

The Hon. M. J. Gallacher: How many times has Integral Energy come to you and you have had to bail it out?

The Hon. M. R. EGAN: Integral Energy has never required bailing out by the Government.

The Hon. M. J. Gallacher: Never?

The Hon. M. R. EGAN: Never.

The Hon. M. J. Gallacher: It has never come to you to get out of the red?

The Hon. M. R. EGAN: Never.

The Hon. D. J. Gay: No. It had to go to Treasury to get an extra overdraft.

The Hon. M. R. EGAN: All the utilities operate on an overdraft. That is always the case and it will always be the case. However, I concede that Integral Energy has lost a significant amount from its electricity trading. However, it is still making a profit, and the projections I have seen indicate that it will continue to make a profit. In view of the difficulties Integral Energy has experienced, honourable members will be aware that it now has a completely new board of directors, a new chairman and a new chief executive.

The Hon. D. J. Gay: But it still has the same shareholding Ministers.

The Hon. M. R. EGAN: That is what shareholders do. When a board of a company is not performing and delivering the results the shareholders want, sensible shareholders get a new board. And that is what we have done.

The Hon. J. S. TINGLE: My question without notice is directed to the Treasurer, representing the Minister for Police. Has the Minister heard of an incident in Britain late last week in which two shots were fired on the Royal train while the Queen was sleeping on board? Is he aware that the shots, which harmed nobody, were fired when a Royal Protection Officer's pistol discharged accidentally? Given that this was a Glock semiautomatic pistol, similar to those issued to New South Wales police, and given accidents reported in several countries, including Australia, involving police handling of these firearms, is the Minister satisfied as to the level of safety of these guns?

Does the Minister recall that when they were first proposed for New South Wales police I warned, in this House, that they were not fitted with a conventional safety catch and could be exceptionally dangerous, even in the hands of a properly trained user? In the light of this, will the Minister review the adequacy of the three days basic training—the only training—given to officers issued with these pistols? Will he consider ongoing safety training to ensure that officers are fully competent in the use of the Glock? Will he seek a report on the dangers posed by these pistols to both police officers and the public?

The Hon. M. R. EGAN: I regret to say that I have never been on a Royal train.

The Hon. Jennifer Gardiner: And you are never likely to either.

The Hon. M. R. EGAN: That is probably the case, although I have travelled in the commissioner's carriage. In 1985 or 1986 I travelled in the commissioner's carriage from Murwillumbah to Sydney. I do not know whether it is still in existence.

The Hon. Dr B. P. V. Pezzutti: Who were you with?

The Hon. M. R. EGAN: I was with the then transport Minister Barrie Unsworth and the then head of the Department of Transport, Mr Gordon Messiter.

The Hon. R. T. M. Bull: Why don't you extend the line to Tweed Heads?

The Hon. M. R. EGAN: That is a good question. I will think about that over the coming years. As I said, I have not been on a Royal train. I am sorry to hear that on two occasions a Glock pistol accidentally discharged. I must admit that until the Hon. J. S. Tingle asked me about Glock pistols and other things a couple of weeks ago I had never heard of a Glock pistol. I do not regard myself as an expert.

The Hon. Dr B. P. V. Pezzutti: You paid for them!

The Hon. M. R. EGAN: I pay for lots of things on which I am not an expert. I would not know a Glock pistol if I fell over one. I am sure my colleague the Minister for Police is an expert on the matter, and I will refer the Hon. J. S. Tingle's question to him and get an expert answer as soon as possible.

The Hon. JAN BURNSWOODS: My question is directed to the Minister for Juvenile Justice, Minister Assisting the Premier on Youth, and Minister Assisting the Minister for the Environment. What has been done at Kariong to address the recommendations in the Ombudsman's report?

The Hon. CARMEL TEBBUTT: I thank the honourable member for her important question, which gives me an opportunity to update the House on progress with reforms at Kariong. No doubt Kariong Juvenile Justice Centre has occupied quite a bit of the time of the House in one way or another. Honourable members will recall that earlier this year the Ombudsman published a report into Kariong. That report contained a total of 66 recommendations. Last month the Department of Juvenile Justice provided a detailed interim response to those recommendations. I am pleased to report that action is already under way to implement 45 of the recommendations.

Since the disturbances in March and April last year there have been major improvements at the centre, including $3.25 million spent on upgrading accommodation and security at the centre. The Ombudsman specifically highlighted the need for improved training for staff and a greater variety of detainee programs. The department has introduced expanded induction training for all senior youth workers. Virtually all Kariong staff have received specialist training in the restraint of difficult clients. This course focuses on negotiation rather than just a physical response. A new course in drug awareness training has been developed with TAFE and introduced to improve the capacity of staff to understand and deal with clients with a history of drug use. Staff have been trained in the department's client protection policy and practices.

With regard to detainee programs, the program in the education and training unit has been enhanced, and currently a greater portion of Kariong detainees are enrolled in these courses than was previously the case. A local education and training committee has been established to develop the centre's programs and to liaise with providers such as TAFE. An Aboriginal case worker has been appointed to assist in the implementation of culturally appropriate case plans for Aboriginal detainees. Aboriginal elders from the local community recently visited Kariong and have been invited to contribute to its programs for Aboriginal youth.

A number of other initiatives have been commenced across the department since the Kariong disturbances and in response to the Ombudsman's report. A new unit is being established within the central office of the department to deal more expeditiously with staff disciplinary investigations. More stringent pre-employment screening of staff is being planned. A system of quality reviews of juvenile justice centres has been introduced to monitor the progressive implementation of newly established national standards for juvenile custodial facilities. Additional funding has been provided to improve training across the department.

I do not underestimate the need for change outlined in the Ombudsman's report. The department has been working extremely hard to improve the environment at Kariong for both staff and detainees. However, it must be noted that the Ombudsman's report clearly identified that a small group of staff at Kariong seemed reluctant or unwilling to change the culture of the institution. Cultural change is most difficult to achieve in an institution such as Kariong and it will take some time. It is most unfortunate that the Opposition spokeswoman seems to want to be a vehicle for every disgruntled individual opposed to the changes being made at Kariong. Time and again the Hon. Patricia Forsythe has used this House to air allegations that inevitably come from the same source—an anonymous letter. She has not asked a single question about Kariong this session. Instead, on 2 June this year she tabled yet another anonymous letter allegedly written by a Kariong worker making a series of allegations against other staff and management.

Of course, I have referred this letter to the department for a detailed review, as is proper. However, I express again my concern about the use of anonymous letters to undermine the reform process at Kariong. As I have said before, if people have things to say they should be prepared to put their names to their letters. The department has already advised me of significant errors and inaccuracies in this letter. I was pleased, a week after the honourable member tabled the anonymous letter, to receive a letter from Reverend Di Langham, a chaplain at Kariong. It might be instructive for honourable members to hear what Reverend Di Langham had to say about what is happening at Kariong, in sharp contrast to the matters raised by the Hon. Patricia Forsythe in the anonymous letter she tabled. Reverend Di Langham said:

I was very disappointed with the document that was read in Parliament this week. There were a number of statements made that are not the truth and a number of people mentioned without knowledge or consideration of the true facts or circumstances let alone their feelings.

I have worked at the Centre for the last two years. I was present during the major disturbances in 1999 and also for the minor disturbance this year. I know personally the people mentioned in the document and feel that the accusations are unjust. I have been at this Centre during four management teams; some good and some not so good.

I would have to say that the atmosphere in the Centre amongst detainees is the calmest and most productive I have seen.

Reverend Di Langham went on to say:

The worker who wrote this letter is very bitter and unfair.

Reverend Langham also referred to the criticisms of the new manager at Kariong, Mr Steve Wilson. She said:

Steve Wilson has only been manager of Kariong and in his role for the last month. I was pleased to see that at his first meeting, he involved everyone including detainees, in working out strategies for getting Kariong into some semblance of order. He was very open about his intentions and I was sceptical. After witnessing the change in the climate of the Centre, I have since changed my mind. I support him wholeheartedly in his efforts and am excited for the future.

The letter that the Hon. Patricia Forsythe tabled in this House was an attack on a number of staff at Kariong from a person who did not even have the courage to put her name forward. It is shameful that the Hon. Patricia Forsythe is prepared to reward such cowardice. I suggest to her that in future she advise her anonymous informants of the provisions of the Protected Disclosures Act rather than rush to repeat unsubstantiated and malicious allegations that only undermine the reform process at Kariong and its staff, who are committed to making the cultural change that the Ombudsman has said is so necessary.

The Hon. Dr P. WONG: I ask the Treasurer, representing the Minister for Police, a question without notice relating to the delay in responding to community reports of criminal activity. As reported on page 5 of today's Sydney Morning Herald, there is a great discrepancy between police crime figures and the actual numbers of reported crimes, especially in Roseville and Cabramatta. For example, in May the police in Cabramatta counted nine crimes while locals reported 85 break-ins, amongst other crimes. The delay in responding to reports of crimes is believed to be the major reason for the discrepancy in figures. Is the Government aware of this issue? What has the Government done to improve the situation? How does the Government propose to handle the possible blow-out in criminal activity during the Olympics, given the reported cut of 35 per cent in police numbers?

The Hon. M. R. EGAN: I must admit I have not read the article that appears on page 5 of today's Sydney Morning Herald. However, I will refer the honourable member's question to my colleague the Minister for Police and obtain a response as soon as possible.

The Hon. PATRICIA FORSYTHE: My question without notice is directed to the Minister for Juvenile Justice. Is it a fact that five of the six women at Kariong Juvenile Justice Centre who in June 1998 complained to the Director-General of the Department of Juvenile Justice about harassment, victimisation and discrimination, leading to the Shier-Sherlock report, have suffered either nervous breakdowns or stress-related illnesses? Have two of those women had their claims rejected by the GIO? If so, what action has the department taken, if any, to support the women? Given that the Ombudsman's report also highlighted these issues of harassment and discrimination, what action has the department taken specifically to resolve these issues, which were highlighted first in the Shier-Sherlock report and then in the Ombudsman's report?

The Hon. CARMEL TEBBUTT: The Hon. Patricia Forsythe refers to an issue that occurred as long ago as June 1998, some time before I became the Minister for Juvenile Justice. It is my understanding that the Shier-Sherlock report that the honourable member referred to was instigated by the Director-General of the Department of Juvenile Justice in response to the allegations referred to by the honourable member, which were raised by a number of women who worked at the Kariong Juvenile Justice Centre. The department carried out a number of disciplinary inquiries related to the actions of a number of staff referred to in the Shier-Sherlock report, and a number of staff had disciplinary charges laid against them. The director-general met and counselled some 12 other staff members as a result of that report.

I have already outlined to the House a number of measures that have been put in place as a result of the Ombudsman's inquiry. The department has also revised and implemented a new harassment-free workplace policy and grievance procedure policy in an attempt to prevent a recurrence of the problems identified in the Shier-Sherlock report.

The Hon. PATRICIA FORSYTHE: I ask a supplementary question. Is it a fact that the insurance company GIO has written to the Department of Juvenile Justice advising that it will not accept liability for any more stress claims from staff at the Kariong Juvenile Justice Centre, because the GIO believes that these are industrial matters and not workers compensation matters?

The Hon. CARMEL TEBBUTT: As I outlined in response to a question at the estimates committee hearing, workers compensation within the Department of Juvenile Justice is an issue of concern for both the department and me. There is no doubt that in any service provision, department or agency, particularly one such as juvenile justice, which is working with detainees who have difficult and complex behavioural problems, one expects the number of stress-related claims to be higher than in other agencies. However, it is a concern within the department, and the department has taken a range of actions to address and improve the management of workers compensation claims and the department's occupational health and safety record, including the establishment of an occupational health and safety unit within the Department of Juvenile Justice.

I am not able to comment on the individual letters that the department has received. However, I and the department take very seriously the goal of improving the health and safety record of the department and putting in place appropriate policies and procedures that both support staff in the very difficult job they do and also provide for the most expeditious management of workers compensation claims that is possible.

The Hon. A. B. KELLY: My question is addressed to the Minister for Mineral Resources, and Minister for Fisheries. What effect will the proposed Clarence River management plan have on this important North Coast estuary?

The Hon. E. M. OBEID: I thank my colleague the Hon. A. B. Kelly, the convener of Country Labor, for his most important question and his continued interest in country New South Wales. Approximately 120 fishers hold licences to fish in the Clarence River, which is one of our most important estuarine fisheries. Its annual catch is greater than the combined harvest of all other estuaries. This multimillion dollar industry creates local jobs and supports local businesses. In 1998, $4.3 million worth of fish was harvested from this area. In the same year, the Clarence River trawlers harvested 220 tonnes of prawns, worth $1.2 million, from this estuary.

The Carr Government is committed to ensuring the sustainability of our valuable fish resources for the benefit of the whole community. That is why we have worked with the community and stakeholders to develop a comprehensive management plan for the Clarence River estuary prawn trawl fishery. The estuary prawn trawl management advisory committee and the Clarence River estuary prawn trawl subcommittee also contributed to this plan.

The new strategy limits the number of operators and the type of gear they can use. It requires the fishery to be closed for at least four months each year. The sustainability of the fishery will be closely monitored under this plan, and management strategies will be automatically reviewed if prawn harvests fail. The plan requires by-catch reduction devices to be used by trawlers, to help fish escape from prawn trawl nets. The Clarence River estuary prawn trawl subcommittee also made a number of recommendations, including more flexible arrangements for the replacement of boats and clear definitions for the use of by-catch reduction devices.

The Clarence River industry members strongly supported this management plan and recommendations at a port meeting last April. The New South Wales Government is now working with industry to develop opening and closing times for this seasonal fishery. I personally thank the Clarence River fishers for actively working with the Carr Government to ensure the long-term sustainability of this valuable estuary. Better management, research and compliance are key features of this important Carr Government initiative, which will help better protect valuable fish stocks in the Clarence River.

The Hon. P. J. BREEN: My question without notice is directed to the Minister for Mineral Resources, representing the Minister for Fair Trading. Is the Minister aware of the implications of a decision of Justice Emmett in the Federal Court on 15 June, in which the judge ruled that the Heritage Retirement Village at Padstow has failed in its claims under the Trade Practices Act against the operator of the village, Overton Investments Pty Ltd?

Will the Minister inform the House whether legal expenses of approximately $1.3 million have been paid to Overton Investments Pty Ltd by the Government on behalf of residents of the village? If these expenses have been paid, will the Government seek reimbursement on behalf of the residents of the retirement village, given that Overton has already levied the expenses against the residents' monthly outgoings? Will the Government provide an answer to this question before 28 June, as Overton has sold its interest in the retirement village and intends to vacate the premises by that date?

The Hon. E. M. OBEID: I thank the Hon. P. J. Breen for his very important question. I am well aware of his keen interest in this issue. I will convey the question to my colleague in the other House and seek an answer within an appropriate time.

The Hon. JENNIFER GARDINER: My question is directed to the Minister for Mineral Resources, and Minister for Fisheries. Further to his imposition of a $350 annual contribution on each aquaculture permit holder, he is no doubt aware that meetings of many aquaculturalists were held last weekend. What is his reaction to the resolutions carried by aquaculture associations putting their foot down and stating that they will stall the making of any such payment until there has been proper consultation with their industry? Does he understand the anger of many people in this emerging industry at the way in which the introduction of this new charge is being implemented? Will he accede to the industry's request to have the introduction of the charge deferred until there has been appropriate consultation?

The Hon. E. M. OBEID: Madam President—

The Hon. D. J. Gay: Oh, he has notes for this one.

The Hon. E. M. OBEID: Is the Deputy Leader of the Opposition trying to help the Hon. Jennifer Gardiner? She needs a lot of help.

The Hon. D. J. Gay: I am trying to help you.

The Hon. E. M. OBEID: I thought that the Hon. C. J. S. Lynn did the honourable thing.

The Hon. M. R. Egan: He stood down. He knows his limitations.

The Hon. E. M. OBEID: He knows when he should stand down. I commend him for that.

The Hon. C. J. S. Lynn: You do not know when to shut up.

The Hon. E. M. OBEID: It is one more supporter for his leader.

The Hon. C. J. S. Lynn: Get back to the script.

The Hon. E. M. OBEID: We all knew that the Hon. C. J. S. Lynn was about to be demoted, but he gave in first to help his leader. That is most commendable. The only trouble is that the Hon. Jennifer Gardiner does not know when to quit.

The Hon. D. J. Gay: She at least knows where Bingara is.

The PRESIDENT: Order! The Minister may proceed.

The Hon. E. M. OBEID: The Hon. Jennifer Gardiner does not know when to quit. This Government currently spends $6.1 million each year on aquaculture. An independent report by the Centre for International Economics [CIE] has recommended—

The Hon. D. J. Gay: You always sound better when you read something interesting that somebody else has written.

The Hon. E. M. OBEID: The Deputy Leader of the Opposition should just listen as he might learn something.

The Hon. D. J. Gay: You sound best when you read something that someone else wrote.

The Hon. E. M. OBEID: Does the Deputy Leader of the Opposition not recognise that his party is out of touch with people, not only inland but also on the coast? If the honourable member would only listen, he might learn a little bit and convey that to his colleagues. An independent report by the Centre for International Economics has recommended that the Government recover $3.6 million per year from the industry. The report was circulated to the entire aquaculture industry for comment. After considering the industry's views and the current state of the aquaculture industry, I have deferred the implementation of the cost recovery framework for five years. That will give the industry time to prepare for any changes.

The report has been referred to the newly established Advisory Council on Aquaculture, which will be asked to work with New South Wales Fisheries on a cost recovery framework. The council is made up of aquaculture experts from a broad cross-section of the industry who can advise me on the costs and services attributable to the aquaculture industry. In the meantime, it is not unreasonable that each aquaculture permit holder should help to recover some of the costs incurred by the Government. I have proposed that an annual fee of $350 be paid by each permit holder and most aquaculture transaction charges be adjusted to reflect a fair cost to industry. The proposed fee is a flat fee which does not differ according to the size of a farm; it applies to all permit holders equally.

The Hon. Dr B. P. V. Pezzutti: Do you get to keep the money?

The Hon. E. M. OBEID: For the benefit of the Hon. Dr B. P. V. Pezzutti, the answer is no. The money goes into a fund, but the Treasurer has been good enough to accept a moratorium on cost recovery for five years. The revised charges represent only 14 per cent of the $3.6 million that the CIE experts have said the industry should pay. I previously heard suggestions that there should be a permit fee that is proportional to the size of each fish farm. This is what the Hon. Jennifer Gardiner, supported by the Deputy Leader of the Opposition, is saying.

To even consider imposing such a charge, extensive consultation would need to take place across the entire industry. In any event, I have decided not to impose any additional charges based on area during the next five years while the cost recovery framework is being developed. All annual contribution and transaction charges will be placed in the aquaculture trust fund. I will consult the Advisory Council on Aquaculture on policies and priorities for expenditure from the fund. I will also present members of the council with a draft expenditure budget for the council's consideration. I need to consider any advice that the council may give about the nature of services provided to industry.

The Carr Labor Government continues its commitment to supporting aquaculture by not only spending $4.6 million out of consolidated revenue but also by implementing an enhancement over the next three years of $3 million to continue the fine research that is being undertaken in the aquaculture industry. This Government is committed to supporting jobs in regional New South Wales. It is not too much to ask the industry to recover 14 per cent of the costs that consolidated revenue meets, through the budget, for that industry each year. Recreational fishers will supply about a third of the costs recovered and commercial fishers will also supply under a third.

The Hon. D. J. Gay: So it is 33 per cent now.

The Hon. E. M. OBEID: No doubt. Commercial fishers already pay a third of cost recovery.

The Hon. D. J. Gay: Not 14 per cent?

The Hon. E. M. OBEID: No. If the honourable member had been listening he would know that aquaculture pays at the rate of 14 per cent, which is frozen for five years.

The Hon. D. J. Gay: Cost recovery!

The Hon. E. M. OBEID: Cost recovery of the $3.6 million that consolidated revenue pays on the aquaculture industry's behalf. This Government continues to support the aquaculture industry. I suggest that the Hon. Jennifer Gardiner should get her facts right. A moratorium has been imposed upon cost recovery. The independent review undertaken by CIE recommended that the Government recover nearly $1 million per year over a three-year period, which means that over three years we would recover the whole $2.6 million. In recognition of this Government's support for aquaculture, it has frozen cost recovery to the value of $400,000 per year for the next five years. That is this Government's commitment to developing the industry.

The Hon. D. J. Gay: You are into cost recovery. You are doing it.

The Hon. E. M. OBEID: If the Deputy Leader of the Opposition misconstrues that information and suggests that recovery of 14 per cent is too much, he is letting down the stakeholders. I suggest that he has got it all wrong and that what he is saying is not the way to develop the aquaculture industry.

The Hon. J. R. JOHNSON: My question without notice is directed to the Treasurer, Minister for State Development, and Vice-President of the Executive Council. Will he update the House on the success that the Hunter region has had in maximising and supporting the economic benefits arising from the Olympic Games?

The Hon. M. R. EGAN: The Hon. J. R. Johnson has a very keen interest in the Hunter, and I thank him for an important question.

The Hon. Dr B. P. V. Pezzutti: No, the Tweed is Johnno's interest.

The Hon. M. R. EGAN: Yes, he has an interest in the Tweed. In fact, there are not too many areas of New South Wales of which the Hon. J. R. Johnson does not have a very intimate knowledge. He has been to most parts of the State not only once but on numerous occasions.

The Hon. Dr A. Chesterfield-Evans: Making him go on tour is a good idea.

The Hon. M. R. EGAN: I am inclined to invite the Hon. Dr A. Chesterfield-Evans to repeat an interjection that he made earlier, because I am never quite sure of the point he is making with his interjections.

The Hon. Dr A. Chesterfield-Evans: I was wondering whether the improvement to the economy in the Hunter will go towards fixing the $140 million deficit from the Games.

The Hon. M. R. EGAN: I do not think that any contribution from the Hunter will make an appreciable difference to the additional $140 million that this Government is putting into an Olympic Games contingency fund.

The Hon. Dr A. Chesterfield-Evans: That is what I suspected.

The Hon. M. R. EGAN: I would have thought that point was obvious. I am not quite sure what point the Hon. Dr A. Chesterfield-Evans is making. One of the fascinations of my life is to try to understand the points that the Hon. Dr A. Chesterfield-Evans makes. For a long time I thought there was something wrong with me. Finally the penny dropped and I realised that the fault was not with me at all.

In a little under 90 days the Sydney Games will open at Homebush Bay and they will be an outstanding success for which the Australian Democrats, including the Hon. Dr A. Chesterfield-Evans, will no doubt try to take the credit. On the back of the exciting build-up to the Games new sporting and economic opportunities continue to emerge across New South Wales. The Hunter region in particular has been extremely adept at making the most of Olympic-related business opportunities. I am told that the region has so far won more than $139 million in Olympic business contracts, creating an estimated 693 new jobs locally. It is also having great success in attracting some of the world's finest athletes to train in the Hunter. Recently the region secured a big win when it announced that the Chinese Olympic gymnastics team will use the Hunter as its pre-Games training base. The Chinese team includes some of the best gymnasts in the world.

The Hon. Dr B. P. V. Pezzutti: Not as good as Australia.

The Hon. M. R. EGAN: I regret to say that one of the sports in which we do not compare as well with China as we do in other sports is gymnastics. I know that this year we will certainly have a super-duper swimming team. A few weeks ago I was thinking that in all of the men's freestyle events, excluding the 50 metres—that is, from 100 metres to 1,500 metres men's freestyle—Australia could possibly win gold, silver and bronze, until someone reminded me that these days nations are only allowed to enter two in the swimming.

The Hon. D. J. Gay: It might have been your thought that brought that about.

The Hon. M. R. EGAN: No, apparently it emanated from our success at the Melbourne Olympics.

The Hon. D. J. Gay: You should have kept that thought to yourself. You have revealed that you did not watch the selection trials. If you had watched the selection trials you would have known that!

The Hon. M. R. EGAN: I went to the selection trials.

The Hon. D. J. Gay: You were obviously not listening.

The Hon. M. R. EGAN: No, I was not listening. There is no commentary at the trials. You have got to stay at home and watch the television to hear the commentary.

The Hon. Patricia Forsythe: I bet you were watching the big screen!

The Hon. M. R. EGAN: Yes, I was watching the big screen, and I was watching that fabulous line, which I think they use to cheat a bit. A swimmer would be up to the line until about five metres from the finish and all of a sudden the line would rush forward. There will be many occasions during the Games when our swimmers will be way out in front of that line. It did occur to me that our strength in freestyle is so strong that if we were allowed to enter more than two swimmers in an event we would sweep the field in a number of events from the 100 metres to the 1,500 metres, as we did in Melbourne. Apparently it was because of our success in Melbourne that that rule was imposed. It is a rule that is not imposed in any other sports, I am told, which is most unfair. That should be fixed before the Games, but I am sure it is too late.

The Hon. Dr A. Chesterfield-Evans: Tell us about the Hunter, Michael!

The Hon. M. R. EGAN: I will. But another story occurred to me. In the Melbourne Olympics, Australia not only won gold, silver and bronze in the women's 100 metres freestyle with Dawn Fraser, Lorraine Crapp and Faith Leech but, as you would imagine, we also won the women's 4 x 100 metres freestyle event. I never knew who the fourth swimmer was. But I found out that it was a 14 or 15 year-old girl by the name of Sandra Morgan. Some years ago I read a newspaper article, which stated that she was overwhelmed by the fact that she had won an Olympic gold medal, it was too much for her, and she did not tell anyone about it. Many years later she married and had a family, and they discovered some years later that she was an Olympic gold medallist. I certainly hope that someone ensures that she is there to see the 4 x 100 metres women's freestyle. She lives at Bonnet Bay.

The Hon. J. F. Ryan: Perhaps you could give us your view on sharkskin suits while you are at it!

The Hon. M. R. EGAN: Actually I do have a question; it is a Dorothy Dixer about Animal Logic, which explains why Ian Thorpe and the seals appear to be swimming in the same pool. Animal Logic is that fabulous Australian technology showcase company based at Fox Studios which produced many of the effects for The Matrix and won an Academy award for it. Animal Logic helped produce the advertisement with Ian Thorpe racing the seals.

The Hon. D. J. Gay: Does Bob Ellis write for them as well?

The Hon. M. R. EGAN: He certainly does not write for me. I am told that in the Hunter so far well over $139 million in Olympic business contracts will create an estimated 693 new jobs locally. The Chinese team includes some of the best gymnasts in the world and its 35 members will train in the Hunter for approximately three weeks prior to the Games. This announcement will undoubtedly raise the profile of the Hunter's athletic and gymnastic facilities and will assist in attracting other teams in the lead-up to the Olympic and Paralympic Games. I also understand the gymnasts have been approached to stage a display for local schoolchildren, which will certainly be a great treat for young persons, schoolchildren or aspiring athletes in the Hunter.

The Chinese team chose the Hunter as its pre-Games training base following detailed negotiations between the Hunter Olympic business task force and Chinese Olympic officials during the past 12 months. To date the task force has succeeded in attracting more than 430 Olympic athletes to the Hunter, with the economic benefit to the region estimated at more than $7 million. But I do not think the benefit can be measured by ascribing monetary value.

The Hon. Dr B. P. V. Pezzutti: That is the only way you can do it!

The Hon. M. R. EGAN: No, that is not true. I am a Treasurer with a heart and a soul.

The Hon. J. H. Jobling: It is just that nobody can find them.

The Hon. M. R. EGAN: No, not all.

The Hon. D. J. Gay: Have a look behind you!

The Hon. M. R. EGAN: No, I think members of the Government were just horrified at the suggestion from members opposite that I was only interested in things monetary. I welcome the decision of the Chinese gymnastic team. I congratulate the Hunter and the Olympic business task force on its success. I look forward to seeing the Chinese gymnasts perform during the Olympics and unless they are competing in a final against Australian gymnasts, I wish them all the very best.

The Hon. Dr A. CHESTERFIELD-EVANS: My question is directed to the Special Minister of State, representing the Minister for Agriculture, and Minister for Land and Water Conservation. Considering that the Department of Land and Water Conservation has asked ground water irrigators around the Namoi River to rationalise their water use between 70 and 80 per cent, why has the Minister committed to supply the proposed Gunnedah charcoal factory with 55 megalitres per annum? How can the Minister licence so much water from the already over-committed Namoi River without an environmental impact statement?

The Hon. J. J. DELLA BOSCA: The Hon. Dr A. Chesterfield-Evans has been kind enough to provide me with a copy of his very good question, but I have not been supplied with the answer. It surprises me that the Hon. Dr A. Chesterfield-Evans is concerned about the amount of water that we are dealing with. I have been representing the Government in the Snowy negotiations and this is a comparatively small amount of water in the scale of things, as members opposite concede, by the looks on their faces. Nonetheless, it is a valid question and I will ascertain a full and proper answer from the Minister.

The Hon. Dr B. P. V. PEZZUTTI: My question is directed to the Treasurer with a heart, Michael the munificent.

The Hon. M. R. Egan: I like that.

The Hon. Dr B. P. V. PEZZUTTI: I thought you would. On 31 May, in answer to your question to me in relation to petrol tax subsidies you said:

Until the arrangement expires on 30 June that revenue will be treated as State taxation revenue. Notwithstanding the fact that we will not have that revenue after 30 June, we will maintain the $36 million subsidy to the northern zones.

Will the Treasurer still make good that commitment regardless of the actions of the Beattie Government in Queensland?

The Hon. M. R. EGAN: We will certainly be making that subsidy available to the northern zones—but I would have thought more because of the actions of the Beattie Government, which has decided not to remove its subsidy.

The Hon. D. J. Gay: But no-one is sure whether it has given up.

The Hon. M. R. EGAN: I think the Hon. Dr. B. P. V. Pezzutti is a bit out of date. He was obviously at the National Party convention.

The Hon. D. J. Gay: Don't be silly!

The Hon. M. R. EGAN: He wasn't?

The Hon. D. J. Gay: No.

The Hon. Dr B. P. V. Pezzutti: Not invited.

The Hon. M. R. EGAN: Well, he should have been invited. You could not have done worse than have the Hon. Dr. B. P. V. Pezzutti there. I have never in my life seen an own goal scored like that one. No doubt you were all up there trying to help old Larry Anthony hold the seat at the next election. All you did was ensure that he has got no hope of winning the seat! Fancy doing that to a young bloke who has just been put into the ministry and has been struggling to hold the seat against the Country Labor onslaught.

The Hon. Dr B. P. V. Pezzutti: Point of order: This is a very important question for the people of the North Coast. I fail to see the relevance of the Minister's diatribe to the very important issue that I have raised.

The Hon. M. R. EGAN: I was merely suggesting that the Hon. Dr. B. P. V. Pezzutti did not know what he was talking about, because the petrol subsidy will remain in the northern zones for as long as Queensland continues to subsidise petrol prices.

The Hon. D. J. Gay: And what if it does not?

The Hon. M. R. EGAN: It would be quite ridiculous for a line called the Queensland-New South Wales border to go between a service station on one side and a service station on the other, where one has a subsidy and the other does not. What would happen is that motorists would simply drive over the border to buy their petrol.

The PRESIDENT: Order! There is no point of order. I have previously warned members not to use a point of order to make an argument. It is traditional in this House for Ministers to reply in the way they see fit, so the Minister can proceed.

The Hon. M. R. EGAN: The other aspect of the honourable member's question that perplexed me was his suggestion that I had asked him a question. I reject that proposition entirely.

The Hon. Dr B. P. V. PEZZUTTI: I ask a supplementary question. Would it be original, under those circumstances, for Queensland to have a higher tax level than New South Wales for anything? And would it not be a wonderful gift to the people of the North Coast under those circumstances?

The Hon. M. R. EGAN: Could you work that one out?

The Hon. J. J. Della Bosca: No.

The Hon. Dr B. P. V. Pezzutti: I will rephrase it.

The PRESIDENT: Would you like the Hon. Dr. B. P. V. Pezzutti to rephrase the question?

The Hon. M. R. EGAN: I would like him to sort himself out.

The Hon. Dr B. P. V. PEZZUTTI: Would it be a first for this Government to have lower taxation on this side of the border than on the other side?

The Hon. M. R. EGAN: I think the Hon. Dr. B. P. V. Pezzutti is a bit confused about the petrol tax subsidy.

The Hon. Dr B. P. V. Pezzutti: Not at all.

The Hon. M. R. EGAN: Queensland is subsidising theirs.

The Hon. D. J. Gay: So, if Beattie takes it away again, what will happen?

The Hon. M. R. EGAN: The Hon. Dr. B. P. V. Pezzutti is suggesting that if Queensland removes its subsidy, so that its petrol prices are in line with the rest of Australia, the northern zone should be the only zone in Australia to have petrol subsidies, and people from Queensland would come down to buy their petrol in Tweed Heads.

The Hon. Dr B. P. V. Pezzutti: How original!

The Hon. M. R. EGAN: So all of the taxpayers throughout the rest of New South Wales would be subsidising Queensland motorists.

The Hon. D. J. Gay: So that is a yes, you would remove the subsidy?

The Hon. M. R. EGAN: It is, in any event, a hypothetical situation.

The Hon. J. HATZISTERGOS: My question without notice is for the Attorney General, and Minister for Industrial Relations. What is being done to provide specialist legal interpreters for women from non-English speaking backgrounds?

The Hon. J. W. SHAW: In 1998 the chief executives of the Attorney General's Department of New South Wales and the Ethnic Affairs Commission of New South Wales signed a memorandum of understanding to establish a specialist training program on legal issues for Ethnic Affairs Commission interpreters. The memorandum of understanding arose out of recommendations of the "Quarter Way to Equal" report of March 1996. That report contained a number of recommendations for improving access to court services for women from non-English speaking backgrounds. Those recommendations included funding and developing a training program in legal issues for a specialist group of interpreters.

Following the signing of the memorandum of understanding, a joint Ethnic Affairs Commission and Attorney General's Department working party was established to appoint a training provider to develop and deliver such a course. During the 1999-2000 financial year the working party oversaw the process to award a tender for the provision of the specialist training program on legal issues. The tender was awarded to the University of Western Sydney. The training will be delivered to approximately 450 Ethnic Affairs Commission interpreters over a three-year period. The program will commence in the next financial year.

The training program, to be delivered by the university, aims to provide: interpreters with specialist training in jurisprudential issues such as the basic tenets of the adversarial legal system, including the court and tribunal structure in New South Wales; an approved awareness of legal language; information on court procedures, and the role of police and prosecutors in court procedures; information on issues for clients; information on courtroom technology; ethics and ethical standards for interpreters; and hands-on experience in legal interpreting skills and practice. In providing the training to accredited interpreters, the Ethnic Affairs Commission and the Attorney General's Department will be delivering the outcomes agreed in the memorandum of understanding, that is, to improve the quality of interpreter services provided to the New South Wales court system. This is an important step in ensuring that people from non-English speaking backgrounds have better access to the court system and to justice in general.

The Hon. I. COHEN: I ask the Special Minister of State, representing the Minister for Land and Water Conservation, a question without notice. Can the Minister clarify the circumstances regarding the Byron Bay Community Centre and the land which was, in 1895, dedicated as a Mechanics Institute, which today has a building on it that is regarded by many to have heritage value? Is the Minister aware that it is proposed to demolish the Byron Bay Community Centre to allow for a new building for commercial activities, assisted by a Federal Government grant of Federation Fund money? Given that there appear to be anomalies with the certificate of title to the land and the appointment of trustees by the Minister, can the Minister provide clarification to assist in resolving an issue of great community concern?

The Hon. M. R. EGAN: I thank the Hon. I. Cohen for his question, but I did not hear the first part of it. He was asking me the question in my capacity as representing whom?

The Hon. I. Cohen: It was actually addressed to the Special Minister of State, representing the Minister for Land and Water Conservation.

The Hon. M. R. EGAN: I do apologise; I thought you had asked the question of me. I will take up the question with the Minister for Land and Water Conservation, and I will ask the Special Minister of State to assist me in doing that. We might end up with two answers, which I am sure will be very good ones.

The Hon. I. Cohen: With an answer in double time?

The Hon. M. R. EGAN: An answer in double time? I am not sure that either the Special Minister of State or I would actually get anywhere in double time; we are both getting a bit past it now—although he was a great athlete in his day. I remember seeing him on the football field.

The Hon. C. J. S. LYNN: My question without notice is directed to the Attorney General, and Minister for Industrial Relations.

The Hon. M. R. Egan: I was waiting for you to ask me a question.

The Hon. C. J. S. LYNN: I would like to congratulate the Treasurer. I was speaking recently to Mrs Townes, who told me that SOCOG has given approval for the son of Ched Townes, the blind climber who recently died on Mount Everest, to carry the Olympic torch in Ched's memory, and I congratulate him for that; the news was well received in Penrith. However, my question is to the Attorney General. Is the Attorney General currently considering options for changes to the public sector appeals process to achieve the $950,000 reduction in the budget of the Department of Industrial Relations? If so, what are those options?

The Hon. J. W. SHAW: There has been an ongoing process of reconsidering the public sector appeals process. I do not think any radical or drastic changes are called for, but a process of revision is being undertaken to determine whether, for example, some of the tribunals might be consolidated, or whether the appeals process could be streamlined. I will keep the House informed of any ideas that emerge from that review process. I do not think anyone needs to be excited about drastic changes to that process. I believe in the existence of independent appeals scrutiny for disciplinary decisions and promotional decisions, although I think appeals relating to promotional decisions can be quite informal, non-legalistic and quick. If there is capacity for streamlining the appeals system we will investigate it.

The Hon. R. D. DYER: I ask the Attorney General, and Minister for Industrial Relations a question without notice. I preface my question by stating that I am reliably informed that two large fines have recently been imposed against companies for breaches of the Occupational Health and Safety Act. Will the Minister inform the House of the reasons for those fines?

The Hon. J. W. SHAW: I think the honourable member is contemplating a case in which an electrical company was fined $50,000 for breaches of the Occupational Health and Safety Act on 6 June. That incident resulted in a 21-year-old apprentice electrician receiving burns to 80 per cent of his body. The apprentice, who was employed by Duff Brothers Pty Ltd, trading as Ric Electrics, was working at the New South Wales Police Academy in Goulburn on 1 December 1997. In the course of installing electrical equipment to a switchboard at the premises the man's metal measuring tape came into contact with a live circuit, and he received flash burns to 80 per cent of his body. The company pleaded guilty in the Industrial Relations Commission in court session to failing to ensure the health, safety and welfare of its employees, and particularly the injured man.

I understand from the judgment that, in spite of the company's comprehensive system of workplace training, it was said that the apprentice had not been adequately supervised while working near live electrical currents. The company had failed to ensure that the electrical switchboard was de-energised before measurements were carried out. The company had also neglected to properly instruct the injured worker about the correct safety procedures for working close to live electrical equipment. However, following the incident, the judge noted that the company had successfully facilitated the rehabilitation of the injured apprentice and his return to suitable employment. Her Honour further noted that the new role for this worker was one of quality and responsibility. She described the company as an outstanding employer and said that those factors should mitigate the penalty.

Another judgment, which is also comprehended in the honourable member's question, is the judgment of the Industrial Relations Commission in court session, also handed down on 6 June, in which a fine of $65,000 was imposed on the construction company Genner Constructions Pty Ltd, which was contracted to extend a road shoulder to create an entrance into a new residential subdivision near Bowral. The court heard that on 13 September one of the company's employees was kneeling on the road nailing down items to stop them blowing away in a high wind. He was run over by the driver of a vehicle who was leaving the site after delivering road base. I commend that judgment to honourable members because it was acknowledged that, following the incident, the company undertook a thorough review of its occupational health and safety procedures, which included supervising and training workers.

It is, of course, commendable that a company convicted of an offence under the Occupational Health and Safety Act should undertake a review of its procedures ex post facto. Of course, one would hope that more companies are encouraged to look at the matter prior to these regrettable incidents occurring, as part of the educational and promotional program we have undertaken in New South Wales over the last year or so, spurred on by the report of the Standing Committee on Law and Justice that urged this process. I hope there is a high level of consciousness about workplace safety in New South Wales in years to come.

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

The Hon. CARMEL TEBBUTT: On 26 May the Hon. M. I. Jones asked me a question regarding feral cats. I have obtained an answer to his question from the Minister for the Environment, which is in the following terms:

Cats are a major threat to wildlife and have been linked to the extinction of a number of small to medium sized mammals and ground nesting birds. The success of cat control programs is limited because cats are extremely difficult to control. There are no poison baits registered for control of cats, and trapping in bushland areas is relatively ineffective. Opportunistic shooting is undertaken in rural areas, but this is not possible in urban areas, and shooting is not an effective method of control.

Local government authorities have had limited success in using box traps to reduce feral cat numbers in some inner urban areas. Major advances in the management of cats will depend on innovative research breakthroughs such as the use of a cat-specific toxin and the use of scent and sonic devices used in conjunction with trapping. The continual dumping of unwanted cats hampers any efforts to reduce cat numbers. Extensive education programs by local councils following the introduction of the Companion Animals Act 1998 is beginning to have a positive impact on the number of domestic cats entering protected areas.

Predation of native fauna by the feral cat has been listed as a key threatening process under the Threatened Species Conservation Act 1995. The National Parks and Wildlife Service, in conjunction with other major stakeholders, will be preparing a statewide threat abatement plan for feral cats. The objective of the plan will be to identify species most at risk from cat predation and localities where the benefits of control will be greatest.

Questions without notice concluded.

Debate resumed from an earlier hour.

The Hon. M. J. GALLACHER (5.04 p.m.]: I continue my contribution to this erstwhile debate about workers compensation in New South Wales. The Minister asked me earlier whether I had any notes. I ask the Minister whether he has any plan. It is obvious that he does not. I have notes but he does not have a plan. He does not know what to do about the ballooning workers compensation debt. It is not good enough for him to say, "Trust me. I am an honest broker. I will come back to you with a few answers." It is not good enough for the people of New South Wales and it is not good enough for every workplace in this State. Are we to trust a Minister who doublecrossed the right wing of his party last Saturday when he dealt with the Federal electorate of Throsby in such an underhanded way? Madam President, I am sure you support everything I am saying about that matter. However, I will not labour the point.

The Minister knows that he has been exposed. He has been doing a bit of horse trading on the side—something for which his factional colleagues will look upon him with disdain. The Minister's ministerial statement was a little longer than an earlier speech. We were told, "You will get something. You will get a significant plan." The ministerial statement lacked any plan or foresight. The Government simply puts everything off until the never-never. We hope that in this Workplace Injury Management and Workers Compensation Amendment (Private Insurance) Bill we will get more than what was promised by the Minister for the Environment in his second reading speech in the other place. We thought that the Special Minister of State was prepared to debate these issues. However, he was happy simply to allow debate in the other place. A number of significant questions have arisen as a result of the Minister's second reading speech in the other place. For example, he said:

The Government is concerned that performance across a number of claims and injury management measures has fallen well short of expectations.

We have not been told why that has occurred. Does the Government believe in openness and accountability in relation to injury management in New South Wales? No, it does not. It simply introduces legislation and hopes that no-one will ask questions. No doubt the Minister in the other place or the member of his staff who wrote his speech should have seen this discrepancy. However, the Minister did not elect to clarify exactly why performance across a number of claims has fallen well short of expectations.

Why did this Government, upon recognising six months ago that there was a problem, fail to take immediate steps to rectify the problem? It simply allowed this malaise to continue for a further six months. In that time we saw a $200 million increase in workers compensation unfunded liabilities while the Government concealed from the business community and this Parliament the fact that it could not control what was occurring with respect to workers compensation. It said nothing about the issue, even though it knew that that debt was increasing. The Government has not explained why performance has fallen well short of expectation. Is it because of this Government's mismanagement? Is it because some other party involved in the process failed to live up to its obligations? Who is responsible for this failure? There were further revelations in the speech of the Minister in the other place. He said:

Clearly, the new premiums that insurance would have to charge under the private scheme would render many small to medium size enterprises non-viable.

When did this bolt of lightning hit the Minister and his Government? When did they establish that they had significant problems? First there was a revelation that the Government's introduced reforms to workers compensation were not working, but that is a separate issue as the reforms related to injury management. On the other hand, there is a recognition now that the proposed new premium scales that were to be introduced shortly would have been an absolute disaster for every small- or medium-sized enterprise in New South Wales. The Minister in another place said the reforms, "would render many small- to medium-sized enterprises non-viable," but only recently, as a result of talking to someone in this Chamber, we found that we are talking about not tens, not hundreds, not even thousands but tens of thousands of small or medium-size enterprises which, by the Government's own admission, would be rendered non-viable.

It is of real concern that the Government has left matters until this point. The Government recognises that its reforms have not worked but it has allowed things to drift for six months. Fortunately, at the end, it worked out that the premium scale it was looking at introducing would send many small to medium-size enterprises to the wall. One needs to ask what has it been doing in the interim and what is it doing now. The Minister has not contributed to this debate. He simply rested on the speech given in another place on 7 June. He has not contributed any further to show his expertise and knowledge of what is occurring with workers compensation.

One need only look at some of the little chestnuts that were spelled out in the contributions during question time and in a ministerial statement. One way the Government is looking at recouping the $2 billion, on top of the increased premium it is considering, is a levy on all businesses in the State, irrespective of whether those businesses adopt best practice or worst practice occupational health and safety or workers compensation procedures. If we are talking about 350,000 businesses paying off $2 billion, we are talking about a significant financial cost to these businesses in a very short period. The Minister assures us that one of the things being considered is a levy introduced over a period of time. Of course, that works on the basis that the Government can control the deficit, which continues to escalate at $400 million per annum. The business community will be forever laden with a levy, on top of an escalation in premiums, that will send many businesses to the wall.

The Opposition has been committed to the process of private underwriting of workers compensation. It is clearly unacceptable for the Government to introduce legislation containing no more than 17 lines. Each of those 17 lines will cost in the vicinity of $117 million. The Government says it wants to put off private underwriting indefinitely; that it does not have a plan, but that we should trust it and one day it will come back with a proposal. Of course, we know that this delay will cost employers dearly and that it will cost employees in the long term. If a business has a readjustment of $200,000 on last year's payments—as one business on the far North Coast did following a recent discussion with me—it cannot factor that into past sales. Businesses cannot call their customers from the previous year and say that have been hit with a readjustment of $200,000 from last year, and ask them to contribute; they have to factor that into their budgets for the next year or the next couple of years. Therefore, they will be looking at areas where they can reduce costs, and employment will be one.

At the end of the day we are talking about the Government's inability to come to grips with what is occurring with workers compensation and the ongoing implications of workers compensation for employment in the State. This is significant legislation. I had hoped the Minister would come to this place with a far more positive outlook for workers compensation.

I have looked at the ministerial statement the Minister made, and clearly there was no plan. Again I make this point: the proposal was for the Government to clear the blackboard, start again and come forward with some outcomes. The Opposition is prepared to work with the Government on this issue, as, I suspect, are members of the crossbench, but it is extremely important that Parliament does not take its eyes off the ball for one moment. To that effect, I foreshadow that in Committee I will move an amendment to the bill to put in place a report-back procedure so that the Minister must advise Parliament on or before 9 October 2000 of the Government's proposals to reduce premiums for insurance policies within the meaning of the Workplace Injury Management and Workers Compensation Act 1998 to achieve an average risk premium of not less than 2 per cent of wages by 1 July 2003.

This is not a big ask. We want a degree of accountability. This amendment will ensure that the Minister gives this place an undertaking that he will report back on or before 9 October with a program that all of us can look at so we can be assured that the Government has its head around what is happening with workers compensation. We want to see a program, and we want to see it on or before 9 October. Of course, that coincides, within a very short period of time, with the date originally set aside for the private underwriting of workers compensation: 1 October. This amendment will show the business community, the insurance community and employees of this State that Parliament is serious about ensuring there be a level of accountability; and that we will not let the matter drift on until the end of the year and into 2001 but that the Government must report back to Parliament with its workers compensation proposals.

The Hon. Dr A. CHESTERFIELD-EVANS [5.18 p.m.]: This bill effectively delays the handover of the New South Wales workers compensation scheme to the private sector. The reason for this delay is that the fund is still in deficit, and I am sure the Leader of the Opposition is correct that the deficit has blown out by another $200 million—which, it might be said, is a slower rise in the deficit than before. I would like to believe that this is due to the wonderful rehabilitation provisions that I spoke in favour of.

I refer honourable members to my speech of 2 July 1998. Remarkably, what I said then is apposite today. Of the eight questions I asked, only one has had anything like an answer. The Minister may address that in his speech in reply, but I am not hopeful. One sad aspect about the drop in the deficit or unfunded liability, as it is more correctly described, is that it has been funded largely by reductions in settlements to injured workers. As such, it has come out of the hide of the most vulnerable.

The Hon. M. J. Gallacher: Computations.

The Hon. Dr A. CHESTERFIELD-EVANS: Yes, computations. The most vulnerable have received very little money for their injuries. Indeed, they have received much less money than was budgeted for in the deficit and which they were expected to receive. I do not think that reflects much credit on the Government and the private underwriters managing the scheme, if that is the word. I think the private underwriters manage a series of procedures as subcontractors.

The Hon. M. J. Gallacher: They manage funds.

The Hon. Dr A. CHESTERFIELD-EVANS: They manage funds as subcontractors for WorkCover, and they are paid on contracts that are procedural rather than by results. That is the problem in terms of claims management. Private insurers have been paid fairly large commissions on these derisory settlements, which is quite worrying in terms of what the Government should be doing for workers. As I said, the rate of increase of the unfunded liabilities has slowed down somewhat; the unfunded liabilities are increasing less rapidly; and certainly, the scheme could not yet be handed to the private insurers. I acknowledge the interjection of the Hon. I. M. Macdonald that they have cut back on doctors' fees. It might be said that this is a retrograde step, but not because I think doctors should get rich from these schemes. Many doctors will not touch workers compensation patients because of the hassles.

People on workers compensation—and I can speak with great feeling as I treated people on workers compensation—are happy and grateful; they get better and go home. However, doctors who treat workers compensation patients face the possibility of litigation and being grilled by a Queens Counsel at any time in the next seven or eight years when the case comes up for discussion. At that time, potentially, several lawyers try to show that the doctor is the biggest fool and rip-off merchant in the world, whose incompetence resulted in most of the disability. This grilling can occur at any time, and interferes with a doctor's practice. Alternatively, even if there is no interference, the doctor may take the day off to go to court only to find that the case is settled on the steps of the courthouse and the doctor loses a day's working time and income.

If honourable members think doctors find it an attractive proposition to treat patients on workers compensation without a premium attached to their fee they are living in fairyland. Of course, if the fee paid to doctors is cut, a subcategory of doctors will do the work for a lower fee. If that happens the standard of medicine may drop, and that is a great danger. If the cost of the medical treatment is considered as a fraction of the cost, it is squeezing part of the scheme that is not cost effective in terms of reducing the deficit. Indeed, it is reducing the standard of medicine and the patients' benefits at a time when they are most vulnerable and in most need of quality treatment. One factor that cuts the cost of workers compensation is people getting better quickly, and anything that stops the optimum treatment is entirely counterproductive. As I have said in a number of speeches on the subject of workers compensation, the delays inherent in the way contracts between WorkCover and the insurers—they manage the scheme as subcontractors—are written are responsible for a huge proportion of the costs.

I attended a dinner at which I was sitting, coincidentally, with a fund manager of one large insurance company with a less than excellent reputation in terms of what it does to workers. I asked this fund manager, "Why does it take four weeks to reply to any letter I write? Why does it take four weeks to get a scan approved? When I have approval for a scan, why does it take four weeks to get an appointment with a specialist approved? Why does it take four weeks when the specialist writes to the insurance company saying that the patient needs the surgery I said the patient needed on day one, three months ago, before the scan was authorised, before the appointment with the consultant was organised, before the procedure recommended by the consultant was organised? Why does each of those steps take four weeks, with the result that the patient waits three months for disc surgery that I said on day one was necessary?

The fund manager said, "It is all WorkCover's fault." I said, "Why? Surely you can act competently?" He said, "We are paid to reply within a month so it is not economic for us to even open the letters until just before the end of four weeks. We don't open the letters, which is why you don't get an answer, because we are maximising our profits." That shows that the contracts are badly written. That shows how private insurers, who working on a fee-for-function basis rather than a fee-for-results basis, are managing the scheme. That is the level of management we get from WorkCover and that is why the deficit blows out, people are sick for so long, and no-one is belling the cat with regard to how the insurance function is being addressed.

Certainly, if this sounds like a case for privatisation, all one could say is that private underwriters are providing these management services—if that is the word—and could, if they so choose, manage the scheme competently. The extra cost to the private underwriters would be minimal. The reduction in deficit would be expedited and under this legislation the scheme could be handed to the private underwriters for nothing. As I pointed out in my speech on 2 July 1998, self-insurers are managing the scheme for 30 per cent or 40 per cent less than the current premium. If that result were achieved in the broader context, the premium income, which is about $1 billion, would return about $300 million to $400 million. Perhaps that is unrealistic because self-insurers have built-in advantages over a person managing a claim in an office located a distance from the source of the injury, but it may be a target to aim for. Managing within the 2.8 per cent premium should be possible if it were competently done. It is disappointing that most of the improvement in the deficit has resulted from lower settlements rather than early claims management. This bill is necessary to postpone the handover of the scheme until the huge budgeted deficit is reduced.

Honourable members will recall that section 174 of the 1998 Act provided that if there was a deficit at the time of handover it shall be funded by a levy on employers. Employers will be less than delighted to be given a huge levy to fund that deficit. So the handover will be postponed further. All I can hope—and I have not seen the figures, but I will watch them with great interest—is that WorkCover will get its act together to manage the claims better, stop these ridiculous contracts which allow insurance component to rip off large amounts of money without delivering the goods, and deliver a better deal so that administrative waste and time losses as a result of poor service to injured workers are not simply driving up the costs. We will need to continue to pass legislation to postpone the handover until the poor management of WorkCover and the insurance industry is addressed, because I believe that is where the real problem lies.

Reverend the Hon. F. J. NILE [5.29 p.m.]: The Christian Democratic Party supports the Workplace Injury Management and Workers Compensation Amendment (Private Insurance) Bill. We understand that the Government faces a serious dilemma. If the Government had allowed the original bill to proceed, private underwriting would have commenced on 1 October 1999. However, following concerns about the cost of the scheme it was deferred until 1 October 2000. The bill will postpone the commencement of private underwriting indefinitely. The question could be asked: In view of the two postponements, why has the Government not been able to get WorkCover into a solid financial position so that it could be transferred to the private underwriting insurance companies?

I understand that the Special Minister of State regards this as a priority issue. He is the troubleshooter who had to work out a solution for the Motor Accidents Scheme, which also had a blow-out in costs that would have resulted in very high premiums and required some drastic surgery. A similar situation seems to have occurred with regard to victims compensation, which has also had a blow-out in costs. However, obviously no premiums are involved with victims compensation. The Government faces a difficult dilemma, not only in trying to provide fairness and justice for everyone in the community but also in ensuring the scheme's economic viability. With regard to the reform package, the Minister for the Environment, Minister for Emergency Services, Minister for Corrective Services, and Minister Assisting the Premier on the Arts in the other place said in his second reading speech:

While the reform package which was progressed in 1998 has reduced the cost of the current managed fund scheme from 3.2 per cent of wages to 2.95 per cent, these reforms appear to have reached their full potential and costs appear to have stabilised. The scheme now has a current underlying cost of 2.97 per cent. Premiums have been held at 2.8 per cent, that is, prior to the goods and services tax [GST]. However, this shortfall is contributing to an increase in the scheme deficit which now stands at $1.8 billion as calculated on 31 December 1999 and is projected to rise to $2 billion at 30 June 2000.

Obviously, the WorkCover scheme is in a very serious situation and requires major surgery. It seems that, unfortunately, the solution may be to reduce the cost of the scheme, review matters in which accident claims can be made, and perhaps introduce a cap on levels of payment. As the Minister said recently in his ministerial statement to this House, there is now a greater sense of urgency in getting injured workers through the rehabilitation programs and back to work, even if an injured worker is placed in a position in the company that is different from the position held prior to his or her accident. That person may still have a disability associated with his or her limbs which may require the person to work in another position in the company or perhaps to perform light duties.

I recently heard of a truck driver who injured a foot in an accident three years ago whilst driving a heavy vehicle. He has been under WorkCover all that time. Such lengthy periods seem to be exorbitant. If it is not possible to return such a person to his or her former occupation or trade because of the injuries suffered, there should be a way to assist that person to find employment in another area that does not require the skills affected by the accident, for example, an administrative position. That summarises the problem that the Government faces. As the Government has rightly said, if private underwriting had gone ahead small and medium-size businesses would have suffered big premium increases because of the removal of cross-subsidies. If private underwriting had not been deferred, and cross-subsidies removed immediately, a substantial number of employers would have received large premium increases and obviously there would have been an enormous outcry in the community.

As I have said, the Government faces a difficult dilemma and will need all the help it can get from both sides of the House to find a solution. It is very easy to make these issues a political football and seek to score points from the Government. However, I believe that even if the Coalition were in government it would face a similar dilemma. It is a matter of not making this issue a political football and finding the best possible solution, for the benefit of both workers who may experience accidents and employers in trying to meet the premiums. The Christian Democratic Party supports the bill.

Ms LEE RHIANNON [5.36 p.m.]: The Greens do not oppose the bill. However, we believe it reflects a major problem with the Government's handling of workers compensation. While there has been a drop in the rate of the deficit, we must remember that that is occurring because there has been a reduction in workers compensation settlements. We must also remember the human side of what happens when people do not receive the payouts they are expecting. The result is incredible hardship for some people. Often marriages and relationships break down. Indeed, people have been known to commit suicide or simply become extremely depressed about the situation. It is worrying that people should attempt to find a solution in that way.

With less money available for injuries, it means that people are receiving less compensation than they had expected. That is not an unexpected situation. In the past the Greens have expressed real concerns about the privatisation of workers compensation. The problems with WorkCover have been known for a long time. Indeed, a former member of this place, the Hon. Elisabeth Kirkby, went to great lengths to demonstrate the problems with the WorkCover scheme. As long ago as the early 1990s she warned of the considerable problems that were occurring under the scheme.

The Greens will not support the Coalition's amendment. The comments of the Leader of the Opposition in this House did not instil confidence in the Greens that the Coalition is even aware of the problems with the scheme, let alone have any solutions—other than to get worried about the difficulties that business would face and how far the scheme is from being handed over to business. The Greens do not oppose the bill but wish to underline the problems that privatisation introduces when it is brought into areas such as this.

The Hon. I. M. MACDONALD (Parliamentary Secretary) [5.38 p.m.], in reply: The Government recognises the importance of maintaining premiums at an affordable level for employers in New South Wales. It is for this reason that the Government has maintained premiums at an average rate of 2.8 per cent of wages—a pre-goods and services tax [GST] price—for a number of years. The potential impact on premiums of a transition to private underwriting, particularly the removal of cross-subsidisation, has been recognised by the Government. It is for this reason that the Government has decided to defer private underwriting for a further period. As the Special Minister of State, Assistant Treasurer, Minister Assisting the Premier on Public Sector Management, and Minister Assisting the Premier for the Central Coast has stated in the House on a number of occasions, particularly during a major speech made two weeks ago, the Government's strategy has been to achieve long-term and sustainable scheme reform. Processes are currently being put in place to prepare a comprehensive reform package to ensure that premiums are reduced while at the same time ensuring that those in need receive appropriate compensation.

In the contribution to the debate the Leader of the Opposition foreshadowed an amendment which he will be move in Committee. For the benefit of honourable members, I will comment on that proposal. The amendments proposed by the Leader of the Opposition would require the Government to report on strategies to achieve sustainable premiums in less than four months. That may appear to some people to be an attractive proposition, but in fact insurance reform is a very difficult field and consultation will take somewhat longer than that. Consultation needs to occur with key stakeholders. The Government needs to talk to a wide range of groups, including employers, employees, insurers, the medical profession and the legal profession. Detailed work needs to be done to ensure that a robust reform strategy is developed.

This House is faced with a clear choice. It can have a hastily thrown together package of reforms which will not achieve lasting scheme reform. Alternatively, it can allow the Government's process—which I have already announced and to which the Minister has already referred—to proceed so that a carefully thought out reform package can be developed. The amendment that the Leader of the Opposition is seeking to move also proposes to set a target for premiums. The 2 per cent target which is proposed by the amendment is arbitrary and has no regard to either the level of benefits or the rate of injury of workers. What must be made clear is that the premiums reflect the risk to injured workers and that the amount paid partially reflects the number of injured workers in this State. If the number of injured workers does not change, the only way in which the 2 per cent target can be reached within the Opposition's timetable is to cut benefits that are available to injured workers—and by significant amounts. The Government does not support that approach.

Other more sophisticated and, I am sure, humane ways to reduce premiums exist. A comprehensive package of reforms is required and is currently being developed. Rather than just focusing on benefits, other areas need to be considered including, first, employer compliance with the obligation to hold insurance; second, insurers and employers' procedures for ensuring an early return to work and for managing workplace injuries; and, third, strategies to reduce the incidence of workplace injuries. Development of such a package takes time and should not be subject to an arbitrarily imposed deadline.

During the contribution to the debate made by the Hon. Dr A. Chesterfield-Evans, a number of issues facing the scheme were highlighted, including the level of commutations under the current scheme. I am also concerned about that issue, particularly its impact on return-to-work outcomes. WorkCover is examining this issue, and I will ensure that the honourable member is informed of developments. Having made those comments, I commend the bill to the House.

Motion agreed to.

Bill read a second time.

Clauses 1 to 4 agreed to.

New Clause 5

The Hon. M. J. GALLACHER (Leader of the Opposition) [5.44 p.m.]: I move:

No. 1 Page 2. Insert after line 13:

5 Minister to advise Parliament regarding premiums

The Minister must advise Parliament on or before 9 October 2000 of the Government’s proposals to reduce premiums for policies of insurance (within the meaning of the Workplace Injury Management and Workers Compensation Act 1998) to achieve an average risk premium of not less than 2% of wages by 1 July 2003.

I listened very closely to the comments made by our honourable colleague opposite the Hon. I. M. Macdonald in respect of insertion of this amendment. It is not designed to be a draconian measure to try to lock in the Government in relation to workers compensation. An examination of the amendment will show a couple of key terms in the proposal. One is that the Minister must advise the Parliament on or before 9 October 2000 "of the Government's proposals". Basically in accordance with the Government's own original legislation which provided for commencement on 1 October, the amendment merely asks that on or before 9 October at least the Government have the decency to come back to this Parliament with its proposals.

At the very least that should be done in the form of a ministerial statement explaining to the Chamber exactly which stage the Government has reached in its reform program. The amendment does not state that the Government should or must come back to this Chamber with other legislative framework for debate. It merely asks for proposals so that all honourable members in this Chamber will be cognisant of where the Government is going on workers compensation and so that, at the end of the day, honourable members do not find themselves in the situation six months or 12 months from now in which the legislation suddenly appears before them—legislation in which they simply have not been involved at the basic or grassroots level—as this Government embarks upon a reform proposal.

Reverend the Hon. F. J. Nile is 100 per cent correct when he states that honourable members on both sides of this Chamber want to get legislation right. That is true—we all do. For honourable members outside the Government to get it right, it is important for them to work with the Government from the very outset to ensure that the final construction of legislation reflects where the Government wants to go. The suggestion made by the Hon. I. M. Macdonald that the amendment has been designed as a means by which the Opposition demands a hotchpotch of legislative reform that has been manufactured to suit the conservative side of politics is quite false.

The Hon. D. J. Gay: That is what we are getting anyway.

The Hon. M. J. GALLACHER: We are not even getting that. We are not getting anything at all. What the Opposition seeks is a level of accountability whereby the Government has the decency to come back and explain to the Parliament the direction in which the Government is heading. The amendment does not stipulate that the Minister has to have the scheme finalised by 9 October. The amendment does not even set a date. How fair the Opposition is! The amendment does not even set a date by which the scheme must be presented to the Parliament—such as within a year, two years or even three years. Nothing like that is contained in the amendment. It simply seeks to have members of the Opposition included—after all, we are also interested in workers compensation—so that they can have an understanding of where the Minister sees workers compensation going, and to ensure that all honourable members work together to make the Government's objective happen.

The other point made by the Hon. I. M. Macdonald was in relation to the 2 per cent target. If the Government can get an average risk premium of less than 2 per cent, then go for it! The Government will have the Opposition's support provided that the percentage is applied equitably. What the Opposition is after is fairness in respect of where the Government is going with workers compensation. The amendment reads:

"to achieve an average risk premium of not less than 2% of wages".

The Opposition is not locking in the Government. We are simply saying that if 2 per cent is a fairly important figure to achieve for parliamentarians on both sides of the Chamber in order to make workers compensation a realistic proposition for this State, so be it.

If the Government can come back with a proposal on or before 9 October that drives down the average risk premiums by 2 per cent, fantastic! Let us have a look it. The date in the Opposition's amendment is just an indication. It will benefit employees and employers. The Opposition does not want a proposal put forward by the Construction, Forestry, Mining and Energy Union [CFMEU] to give it a separate workers compensation scheme that will impact only on those who are building homes in the cottage industry. I am not talking about builders; I am talking about owners who are having homes built. They are the ones upon whom the proposal by the CFMEU will impact the greatest. The Opposition does not want that sort of approach by this Government. The Opposition asks the Government to recognise that this is a partnership between all members of this Chamber to ensure that the final proposition in respect of workers compensation has the support of both sides and that the Opposition has an understanding of where the Government wants to go from the very outset.

Reverend the Hon. F. J. NILE [5.50 p.m.]: The Government has been forced to postpone the introduction of this legislation to an undisclosed date. There have been two target dates but now there is no date. The Opposition's amendment incorporates a timetable to enable the Government to come up with a proposal by 9 October. I assume that could possibly be in the form of a ministerial statement to the House. The target date proposed by the amendment is 1 July 2003, but in early 2001 the Government could produce a draft discussion paper containing proposals. The date chosen as the target date is obviously after the next State election, which will give the Government a lot of scope and flexibility.

There does appear to be a parallel between this proposal and what the Special Minister of State proposed when he was set a target of reducing the motor accident premiums by $100. It has the same feeling about it, in that it provides an incentive to come up with proposals on about the date when there would have been a major change of the WorkCover scheme to involve private insurance companies. The amendment is not draconian at all.

The Hon. J. J. DELLA BOSCA (Special Minister of State, Assistant Treasurer, Minister Assisting the Premier on Public Sector Management, and Minister Assisting the Premier for the Central Coast) [5.33 p.m.]: The need to minimise the impact of workers compensation premiums on employers has been long recognised by the Government. It has been specifically recognised by the Government for a couple of years now. It is for that reason the Government has maintained premiums at the pre-goods and services tax [GST] average rate of 2.8 per cent of wages for a number of years. The Government has already announced that a similar rate pre-GST will be maintained for 2000-01 premiums. However, the Government recognises that there is a need for long-term scheme reform. A detailed announcement has already been made on the matters that need to be addressed. None of them are small or cursory matters. They are all significant culture changes as well as significant administrative and other changes to various critical aspects of the scheme.

An expert group will be established and will make recommendations on how best to implement some aspects of the reform. A range of matters needs to be addressed. The Government recognises that premiums need to remain affordable. However, other issues also need to be considered in the scheme's reform. Insurers, employees and employers need to work towards better return to work rates and improved injury management processes which are critical not only to the scheme's deficit but to maintaining reasonable premiums. We also need to address the scheme's deficit. The Government is committed to addressing these problems and has in place a strategy to do that. To ensure that the appropriate and lasting scheme reforms are developed, the Government needs time to develop and implement a robust package of changes. The setting of an arbitrary time frame which will significantly hamper the development of an appropriate reform package will also result in reduced consultation rather than enhanced consultation.

I am mystified by the contribution of Reverend the Hon. F. J. Nile, specifically the parallel drawn with the provisions of the motor accidents compensation scheme and its associated reforms. I am not exactly sure why that amused the Leader of the Opposition. I hasten to add that there is not a very strong parallel at all. I think Reverend the Hon. F. J. Nile is talking about the provision which took away the so-called freedom of insurers to price or introduce a specific provision about the average $100 reduction in average premiums at the time. That is actually quite a different provision to the one proposed by the Leader of the Opposition, which is, as he said, about a report back. This is a purely politically directed amendment.

The Hon. M. J. Gallacher: So you don't believe in accountability to the Parliament?

The Hon. J. J. DELLA BOSCA: I believe in accountability. The Leader of the Opposition will be sick of hearing about workers compensation. He will also be very tired of being consulted because I will consult with him about everything. If the Leader of the Opposition has a plan I want to hear it. He said he has a plan and that he wants to contribute.

The Hon. D. J. Gay: You have got one!

The Hon. J. J. DELLA BOSCA: I have a plan but it is work in progress. I am sure the Leader of the Opposition and Reverend the Hon. F. J. Nile will contribute to the plan that is work in progress outside and inside this Chamber. We will develop a scheme that will greatly enhance the critical outcomes in workers compensation and workers compensation premiums, the deficit and injury management issues. The Government will not support the Opposition's amendment. The Government is concerned and confused by the desire of Reverend the Hon. F. J. Nile to support it. The Government has indicated an absolute commitment to fully consult on all stages of workers compensation.

If the specifics of the amendment are reviewed it requires a report within four months as to an average premium amount not less than 2 per cent. The Hon. I. M. Macdonald has already argued the sorts of changes that would be required if one were to throw together a hotchpotch of changes in a four-month time frame in order to deliver a 2 per cent reduction in premium. I do not think employees or employers would benefit from that scheme. The Motor Accidents Authority premium cap at $330 outlined in the legislation during the reform process was designed to benefit motorists or the key groups serviced by the system. In the workers compensation package the key interest groups are the injured workers, not the employers. Employers are obliged by law and by social convention to make a contribution to the insurance of workers for their injuries. That is another way in which the analogy used by Reverend the Hon. F. J. Nile, with respect, is not appropriate when looking at the veracity of the amendment moved by the Opposition.

Question—That the amendment be agreed to—put.

The Committee divided.

Mrs Forsythe Mr Gallacher Miss Gardiner Mr Gay Mr Harwin

Mr M. I. Jones Mr Lynn Mrs Nile Revd Nile Mr Ryan

Mr Samios Tellers, Mr Bull Mr Jobling

Mr Breen Dr Burgmann Ms Burnswoods Dr Chesterfield-Evans Mr Cohen Mr Corbett Mr Della Bosca Mr Dyer

Mr Johnson Mr R. S. L. Jones Mr Macdonald Mr Obeid Mr Oldfield Ms Rhiannon Mrs Sham-Ho Mr Shaw

Ms Tebbutt Mr Tingle Mr Tsang Dr Wong Tellers, Mr Manson Mr Primrose

Mr Hannaford	Mr Egan
Mr Moppett	Mr Hatzistergos
Dr Pezzutti	Ms Saffin

Question resolved in the negative.

Amendment negatived.

New clause negatived.

Schedules 1 and 2 agreed to.

Title agreed to.

Bill reported from Committee without amendment and passed through remaining stages.

The Hon. J. J. DELLA BOSCA (Special Minister of State, Assistant Treasurer, Minister Assisting the Premier on Public Sector Management, and Minister Assisting the Premier for the Central Coast) [6.08 p.m.]: I move:

That this bill be now read a second time.

As a second reading speech on the bill has already been delivered by the Minister in the other Chamber, I seek leave to have it incorporated in Hansard.

Leave granted.

The primary purpose of this bill is to implement the Government’s commitments under the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations—the agreement—and other GST related changes to State legislation. Under the agreement the Commonwealth, States and Territories have undertaken to attach the agreement to a suitable piece of legislation and to use their best endeavours to ensure their legislation complies with the agreement. Clause 4 of the bill implements that commitment. A copy of the agreement is attached as schedule 1 of the bill.

States have also undertaken in the agreement to legislate to enable State entities to pay the GST in respect of transactions that would otherwise be outside the scope of the GST. This is designed to ensure that State entities will be treated the same as any other entity under the GST legislation. Clause 5 of the bill will enable State entities to make GST equivalent payments where necessary to honour this commitment. Local government is not covered by this clause. However, administrative arrangements are to be put in place to ensure local government will pay GST or equivalent payments where appropriate.

Under division 81 of the Commonwealth’s GST legislation a determination will be issued by the Federal Treasurer listing the taxes, fees and charges that will not be subject to the GST. Some of the fees and charges imposed by the Commonwealth, State and Territory will not be listed in this determination. For these fees and charges, GST will need to be added. However, many of these fees and charges are set by regulation. To amend them all individually would be a cumbersome process. Clause 6 of the bill enables fees and charges that are not exempt from the GST either because of division 81 or the exemptions contained in division 38 for certain health services, education services, child care services and water, sewerage and drainage services, to be increased to take account of the tax.

This authorisation is subject to the fee increase complying with the guidelines issued by the Australian Competition and Consumer Commission in relation to cost savings. This means agencies that will need to increase a fee or charge to take account of the GST will also be required to reduce regulatory fees and charges to reflect any cost savings achieved as a result of associated tax changes. Where a good or service is partly funded by the budget and partly by a regulated fee or charge, cost savings are to be passed on to the fee in proportion to the level of funding provided by the fee.

Many fees and charges in this State are indexed to the consumer price index [CPI]. As I have just indicated, a number of these fees and charges will also be subject to the GST. The GST is expected to push up the CPI in 2000-01. To index fees by the GST-affected CPI could result in the fee being affected twice by the GST. Consequently, the Government has decided that, when fees are indexed using the CPI, the CPI will be discounted to remove the effect of the GST. Indexation this year uses the CPI for 1999-2000. Clearly, this CPI index will not be affected by the GST. Clause 7 of the bill implements this policy.

Under the agreement, States and Territories have also agreed to abolish a number of their taxes. Specifically, States and Territories undertook to abolish "bed taxes" from 1 July 2000, financial institutions duty from 1 July 2001 and marketable securities duty on securities traded on a recognised exchange from 1 July 2001. New South Wales has already legislated to abolish the accommodation levy from 1 July 2000. Schedule 9 of this bill abolishes financial institutions duty from 1 July 2001 and part 1 of schedule 2 abolishes marketable securities duty on securities such as shares traded on a recognised stock exchange from 1 July 2001.

The Federal Government’s GST legislation will apply to the net revenue of gambling operations. This is the total amount spent by gamblers on bets less prizes paid to gamblers. States and Territories have agreed to take into account the fact that the GST will also apply to gambling. The New South Wales Government is to take a two-step approach to this issue. First, the Government will reduce the rates of taxation for the following: gaming machines operated in hotels; gaming machines operated in registered clubs; gaming machines and table gaming at Star City casino; TAB Limited totalisator operations; Keno games; and New South Wales Lotteries products. Schedule 4 of this bill amends the Liquor Act 1982 to reduce the rate of State tax on hotel gaming machines to account for the GST.

Schedule 7 of this bill amends the Public Lotteries Act 1996 to reduce the rate of tax on lotteries to account for the GST. It will also enable the State tax on lotteries to be levied on net revenues—the same basis as the GST—rather than on the total turnover, as is presently the case. The existing provisions allowing for the calculation of duty on the basis of subscriptions will, however, be retained. Schedule 8 of this bill amends the Registered Clubs Act 1976 to reduce rates of duty on poker machines in registered clubs. Because it is not possible to effect a full GST offset by adjusting State tax rates, registered clubs still will pay more in total tax—including the GST—under the revised State tax structure than they do currently.

While the State Government is not obliged under the intergovernmental agreement to provide additional assistance to clubs to offset this increased tax burden, the Government recognises that this burden could cause financial difficulties for a number of clubs in the short-to-medium term. Therefore, the Government announced in the budget papers that it would provide registered clubs with transitional assistance payments. To avoid ongoing administrative costs, these payments will take the form of a single payment to each club representing the estimated present value of additional tax liabilities to 30 June 2004 based on each club's gaming profits for the assessment year to 30 November 1999. A discount rate of 8.2 per cent will be used. The budget papers estimated that these payments will total $68.3 million.

Schedule 10 of this bill amends the Totalisator Act 1997 to reduce the rate of taxation of TAB Limited to take account of the effect of the GST. Bookmakers will be reimbursed the amount of GST paid on their fixed-odds betting operations, both racing and sports betting. This reimbursement will not exceed the State tax payment by bookmakers. A tax rate adjustment is not possible because bookmakers are currently taxed on a turnover basis and it is not possible to make a reasonably accurate adjustment to the tax to take account of the GST. Small race clubs that operate non-TAB totalisators and that currently receive a full rebate of State tax will receive GST transitional assistance in the form of a single payment representing the present value of GST tax liabilities to 2004 based on totalisator profits for the year to 30 June 1999. A discount rate of 8.2 per cent will be used. It is estimated that these payments will total about $100,000.

The rate of taxation of Keno is set out in the licence agreement with the game’s operators. This agreement will be amended to reduce the rate of taxation to take account of the impact of the GST. The rate of tax on casino gaming operations is also set out in the licence rather than in legislation. The rate of tax on gaming machines in the casino will be reduced from 22.5 per cent to 13.41 per cent. The marginal tax rate on tables will be reduced such that the minimum tax rate is reduced from 20 per cent to 10.91 per cent and the maximum rate is reduced from 45 per cent to 35.91 per cent. The amount of GST paid on the casino's international high roller program will be reimbursed. A tax rate adjustment was not possible in this case due to the fact that the casino pays a fixed non-refundable amount of $6 million each year on the first $60 million in high roller revenue.

In addition to giving effect to initiatives required by the agreement and the gambling tax adjustments I have just outlined, the bill implements a number of other GST-related changes to State legislation. Generally, stamp duty is a tax on purchasers, while the GST is a tax on suppliers. As a result, the GST and stamp duty are able to be calculated separately. Hire of goods duty is an exception, however. For reasons of compliance and administration, all States and Territories impose hire of goods duty on the hirer rather than the customer. As a result, the GST and hire of goods duty will apply simultaneously to the same tax base, resulting in each tax applying to the other. In the absence of action by the State or the Federal Government this would result in a "cascading" of tax and an increased overall tax burden on the hire of goods.

The States and Territories requested the Federal Government to take action at a national level to resolve this problem, as they had done in the case of insurance, where the same problem arose. The Federal Government refused to act on this request. As a result, the New South Wales Government has decided to take action to eliminate the cascading of hire of goods duty and GST for hirers in New South Wales by amending the Duties Act to exclude any GST payable by the hirer from the tax base when calculating hire of goods duty. This initiative is contained in part 2 of schedule 2 of the bill.

People with disabilities who purchase a new motor vehicle currently receive a sales tax exemption from the Federal Government. This Government amended the Duties Act to give a concession to people with disabilities so that where a motor vehicle is purchased free of sales tax, duty will only be charged on the actual price paid, not the full price including notional sales tax. The Federal Government’s GST legislation provides that people with disabilities will be able to purchase motor vehicles GST-free. To maintain the concession introduced by this Government, part 2 of schedule 2 of this bill amends the Duties Act to provide that, where a motor vehicle is purchased GST-free, stamp duty will not be payable on the notional GST.

Under the GST legislation, the Federal Government has imposed GST on all pre-paid funerals purchased after 1 December 1999 where the funeral is supplied on or after 1 July 2000. The GST collected in respect of pre-paid funerals purchased after 1 December 1999 and still to be supplied on 1 July 2000 is required to be paid by funeral fund directors when they complete their first GST return after 1 July 2000. The Funeral Funds Act currently requires that all moneys received for a pre-paid funeral must be deposited into a trust account. This is to ensure the money paid in advance for funerals is kept safe until the funeral needs to be provided. Schedule 3 of this bill amends the Funeral Funds Act 1979 to enable funeral fund directors to meet their obligations under the Federal Government’s GST legislation without disturbing the existing consumer protection provided by the Act.

The Federal Government’s GST legislation will apply to supplies of labour under labour hire contracts. The definition of "wages" in the Pay-roll Tax Act 1971 will, unless amended, apply payroll tax to the total amount under the contract, not just the wages paid. To maintain the principle that payroll tax only applies to the wages actually paid, schedule 5 of this bill amends the Pay-roll Tax Act 1971 to exclude any amount representing GST from the amount subject to payroll tax.

When the States and Territories imposed business franchise fees on petroleum and diesel products, New South Wales did not impose a tax on diesel for off-road use. With the loss of these taxes, the Commonwealth imposed "safety net" surcharges on its taxes and returned the money to the States and Territories. For constitutional reasons, the Commonwealth could not exempt diesel for off-road use from its surcharge. As a result, the State Government provided subsidies to avoid an increase in the price of diesel for off-road use.

With the introduction of the GST, States and Territories will no longer receive the "safety net" payments from the Commonwealth, as the Commonwealth will no longer impose surcharges on its taxes on tobacco, alcohol and petroleum products on behalf of the States and Territories. This means the States will no longer be required to pay subsidies to off-road diesel users. Schedule 6 of the bill abolishes these subsidies. the subsidies currently paid by the Government for on-road use of petroleum products and diesel in Northern New South Wales will not be abolished by this bill. Those subsidies will remain while ever Queensland provides subsidies for on-road use of petroleum and diesel products.

The GST will apply to the rent paid on commercial premises. Retail leases in New South Wales are controlled by the Retail Leases Act 1994. The legislation is aimed at ensuring that all parties are fully aware of their obligations under a lease so that conflicts can be avoided. Section 18 of the Act restricts changes to base rent in any 12-month period. Schedule 9 of this bill amends the Retail Leases Act to ensure that clauses inserted into leases to enable landlords of commercial premises to pass their GST liability on to commercial tenants are effective. This will ensure that where landlords and tenants have attempted to deal with the impact of the GST will be able to rely on those clauses.

The bill also amends the definition of "outgoings" in the Act to include the GST. In many cases leases require the tenant to reimburse the landlord for outgoings, which often include taxes. There is some uncertainty in the industry as to whether the GST is included in the current definition of "outgoings". This provision will clarify the position. Some retail leases base rent on the level of sales, or turnover. There is uncertainty as to whether, in assessing liability for turnover rent, turnover is to be assessed on a GST inclusive or exclusive basis. To clarify the situation, schedule 9 of the bill amends the Retail Leases Act to provide that the GST is to be excluded when calculating turnover to assess liability for turnover rent.

This bill also contains a number of provisions that address the impact of GST legislation on workers compensation insurance arrangements. The most significant amendments address the compliance problems that arise for small to medium businesses. Under the Commonwealth’s GST legislation, employers are liable to pay 10 per cent GST on claim settlements if they do not notify their workers compensation insurer of their entitlement to an input tax credit under the GST legislation. On a claim totalling $1 million, the GST liability could be as high as $100,000 if the entitlement to an input tax credit is not notified by the employer to the insurer. Such a liability could put many small to medium enterprises out of business.

The practical issues involved in complying with GST legislation for business are well known. The New South Wales Government is concerned that the requirement to notify an input tax credit entitlement for workers compensation insurance purposes could be overlooked, particularly given the automatic policy renewal process provided for under workers compensation legislation. The bill addresses this problem. Schedule 12 will amend the Workers Compensation Act 1987 so that the New South Wales WorkCover Authority will be appointed as the agent and attorney of employers for the purposes of providing notification under the insurance provisions of GST legislation. The authority will be able to act on behalf of those employers that do not provide notice under the Commonwealth legislation. The provisions do not stop employers providing notification to the insurer of their own volition. It simply ensures that where an employer has omitted to do so they will not run the risk of a crippling tax liability emerging.

The bill also clarifies the scope of the statutory insurance policy under the Workers Compensation Act 1987. In some cases, employers may elect to retain liability on claim settlements by understating the extent of their input tax credit entitlement. To avoid any doubt as to whether such costs are passed on to the managed fund scheme, the bill clarifies that the statutory insurance policy does not cover these liabilities. This does not prevent employers obtaining separate insurance for these amounts if they choose. The remaining provisions of the bill relating to workers compensation legislation are amendments which will minimise the impacts of GST. These include regulation-making powers in respect of the Dust Diseases Board and the Sporting Injuries Commission to enable changes required as a result of the GST legislation to be made. I commend this bill to the House.

The Hon. J. F. RYAN [6.08 p.m.]: The Opposition supports the bill, but will make a few points in response to comments that the Treasurer has made in the past few days with regard to the implementation of the goods and services tax, particularly as it affects New South Wales taxation. The bill basically will implement the deal that has been struck between the Commonwealth and the States with regard to the introduction of tax reform from 1 July this year. Government members, of course, have been inclined at every opportunity to state their opposition to various aspects of the GST.

I simply say that the Opposition has the same view as that of the Commonwealth Government: that the whole purpose of tax reform is to create a better economic climate in our country; that it is about putting the national interests first; and that it is not the sum of tiny little parts, but the sum of the whole, in a package that is meant ultimately to improve the economic circumstances of every Australian. It is designed to produce economic growth in the this country, resulting in people receiving more in their pay packets, with more people being employed through the creation of jobs and a better business climate. All political parties, even the Labor Party, recognise that our country sorely needs changes to our taxation policies. This time last year Barry Jones was reported in the Age as saying:

It's odd that a Kit Kat is subject to wholesale sales tax and a ballpoint pen is, and tickets to the Opera are not. It seems that there are some anomalies that have to be looked at very seriously.

This tax package is about looking at those anomalies. The Special Minister of State was sent on a special mission to ensure that the Federal Opposition, under the leadership of Kim Beazley, did not get in the way of the implementation of the GST. The Special Minister of State is reported in the Australian as saying to journalist Glenn Milne:

Kim's bogged down in the marshes on the GST. They think they're making headway, but they've become obsessed with the minutiae.

Evidently the Premier sent the Special Minister of State to Canberra to ensure that the Federal Labor Party did not get in the way. Of course, the Labor Party got in the way. Many of the problems that the Labor Party is complaining about in relation to the GST originated from the fact that the Labor Party blocked the GST in the Senate. It was necessary for the whole package to be reconfigured to rescue some of it. One of the results was that the GST was taken off certain food items. A report produced by the intergovernmental conference—which made certain recommendations which resulted in the introduction of this bill—pointed out that, had the exemption not been taken off basic food items, it was possible that New South Wales and other States would have experienced real growth from the tax take of the GST from the year 2003. Now, as a result of changes to the tax, New South Wales will not see any growth in the tax take from the GST until the year 2006-07.

All the revenue from the GST goes to the States. New South Wales gets its share. So there is no reason for any Labor Party representative in this place to criticise the Howard Government's tax reform. This bill does not contain an important provision: the State Government had an opportunity to fix an anomaly with regard to how the GST would impact on stamp duty. The stamp duty take in New South Wales will increase as it will be imposed on the price of products after the GST has been imposed. The Labor Party in New South Wales will not only collect all the GST; in certain circumstances it will tax the GST when stamp duty is applied. When the GST is added to insurance policies and new houses and stamp duty has to be paid, the State Government will benefit from a tax on a tax.

New South Wales is already in receipt of enormous tax revenue. However, the Government cannot brag in this regard as it has imposed a host of new taxes and charges. This Government has imposed a bed tax, which will now go because of the GST. It has increased prices for dog and cat licences. The Government has introduced a septic tank tax and a land tax on residential homes. It has increased payroll tax on superannuation, increased national parks entry fees, and doubled car parking levies and extended their application in other places. The Government has imposed a tax on electricity and introduced a sports betting tax, a stamp duty on intellectual property, new fishing taxes, and coastal fishing taxes. It has introduced a host of other taxes, including a tax on poker machines, health insurance levies, and general insurance duty.

The Hon. J. J. Della Bosca: We didn't say "never ever".

The Hon. J. F. RYAN: Court fees have gone up, motor vehicle registration fees have increased, driver's licence fees have increased at more than the rate of the consumer price index, and water rates have been increased. The Government has increased the level of dividends that it gets from Sydney Water. Waste disposal charges have been increased and, as a result of that increase, dividends have been returned to consolidated revenue. A host of development fees have been increased, for example, hospital charges, workers compensation premiums and stamp duty collections. Last year the State Government gained an extra $700 million in stamp duty, which it did not budget on receiving. There have been increases in the rates of land tax, taxes on taxi fares, and the price of freedom of information applications.

The Carr Government does not have clean hands on the taxation issue. It is the biggest taxing State in the Commonwealth. It has increased a host of taxes across the board in this State. Frankly, this Government has nothing to brag about. The Special Minister of State said a few moments ago, "Never ever." John Howard told the public that he was going to introduce this tax. This Government campaigned against John Howard at the last election because it opposed the tax. The people of Australia elected the Howard Government on the basis of this tax. The Special Minister of State said that the Federal Government's mandate should be respected. During estimates committee hearings the Treasurer made a number of allegations with regard to the decision to remove the tax subsidy on low alcohol beer.

I must confess that I am not a heavy drinker, so to some extent the tax on low alcohol beer is something of an academic issue. I drink such a small quantity of beer that I prefer to drink full alcohol beer and to have one glass rather than several. The tax on low alcohol beer was intended to be a road safety measure. It was intended to encourage those who drive to drink less full alcohol beer. It was introduced in an attempt to save people's lives. The Carr Government decided to play crass and gross politics by threatening to withdraw the subsidy on low alcohol beer.

As I understand it, the Government has already withdrawn it. Every other State in the Commonwealth has recognised that, because revenues from the abolished taxes are fully subsidised and recompensed to the States—guaranteed by the Commonwealth as a result of the intergovernmental agreement on which this legislation is based—New South Wales will lose no money whatsoever as a result of the abolition of the excise on low alcohol beer. The Government still has the funds with which to retain the subsidy. But it has decided, for crass political purposes, to withdraw the subsidy. I will quote at length from a letter written to the New South Wales Treasurer by the Federal Treasurer, in which he responds fully to all the allegations that have been made.

The Hon. J. J. Della Bosca: How did you get it?

The Hon. J. F. RYAN: The letter, which was given to me by the Federal Treasurer, is a public document. The Commonwealth Government is not about secrecy, unlike the Carr Government. I thought it would have been reasonable for the Carr Government to table this letter. The Federal Treasurer states in the letter:

The GST revenue and budget balancing assistance … the States and Territories will receive, provides funds to continue existing subsidy arrangements in their entirety. Any attempt to take revenue which funds these subsidies while abolishing the subsidies themselves is an attempt to take a financial windfall at the expense of public health. Moreover, the Commonwealth considers that a decision by any State or Territory Government to remove their subsidies for low alcohol beer to be at odds with the basis of the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations (IGA).

Under the IGA, States and Territories are compensated for the loss of revenue replacement payments for alcohol. As you know, the revenue replacement payments returned the uniform 15 per cent WST surcharge the Commonwealth put in place after the High Court decision in Ha and Lim v NSW and Walter Hammond & Associates v NSW in 1997. A single WST surcharge rate was applied to both full and low strength beer to ensure that all States and Territories were fully compensated for the loss of BFF revenue, reflecting varying BFF rates across jurisdictions. If the surcharge had not been applied to low alcohol beer, then some States would have been undercompensated, particularly Queensland where the full BFF applied to all beer. When the revenue replacement payments were introduced, the States and Territories indicated that they would retain an amount from the Commonwealth payments equal to forecast BFF collections under the then applicable fees. The balance—or excess revenues—would be refunded to manufacturers or wholesalers in order to avoid as far as possible price increases for consumers. The result was to retain the situation where there had been differential State treatment to reduce the cost of light beer vis-à-vis full strength beer.
At no stage in formulating the IGA did the States and Territories canvass an intention to remove their low alcohol subsidies. If they had, they would not have been compensated for the full revenue replacement but the revenue replacement less the subsidy saving.

There could not be a clearer statement from the Federal Treasurer. He has said—and this has never been denied by the Treasurer of New South Wales—that New South Wales has been fully compensated to continue that subsidy. If the New South Wales Government withdraws that subsidy, it is gaining a potential windfall and that financial windfall will be paid for by the lives of people on the State's roads as a result of people not using the safer alternative and drinking low-alcohol beer.

The Special Minister of State should be very concerned about this because of his portfolio responsibilities. First, he should applaud and support any initiative that encourages the reduction of people's intake of alcohol. Second, as the Minister responsible for the motor accidents scheme in New South Wales, he should equally be an advocate for the continuation of the subsidy on low-alcohol beer to ensure that there is a reduction in the number of accidents on our roads. Finally, as the Minister responsible for workplace safety in the State, he would know that many workers consume alcohol during their lunch break. Obviously it would be beneficial if they consumed low-alcohol beer. It is a good initiative, it is a good subsidy, to maintain workplace safety.

I would advise workers operating machinery not to consume any alcohol during their lunch break. But if they do so, it is far better that they choose the cheaper and more attractive alternative of low-alcohol beer. The withdrawal of the subsidy in New South Wales puts at risk road safety, workplace safety, and other initiatives that the Government has in place to counter and reduce the health impacts of the consumption of alcohol. On 8 June the Federal Treasurer pointed out in a press release:

NSW is now isolated in its attempt to gain a financial windfall at the expense of public health by pocketing the revenue it receives to fund low alcohol beer subsidies.

He also said:

NSW is now the only State acting in bad faith by attempting to withdraw the subsidy and pocket the money at the expense of public health. NSW should now fall into line with all the other States and maintain its subsidies.

I urge the Government to heed that advice. We need another bill in this House or an initiative from the Government to ensure that there is no risk to the subsidy on low-alcohol beer. It is not an issue that should be the subject of partisan political comment. It should not be the subject of crass politics. For my part, as a member of the Opposition, I am perfectly prepared to forget that the whole issue occurred if the Government restores the subsidy, because I believe it would be in the interests of the people of New South Wales for it to do so.

The Government is fully compensated by the Commonwealth Government to do this. In an estimates committee hearing in this Chamber, at which I was present, the Treasurer said that the Commonwealth Government had indicated that an amount was set aside in its budget to continue that subsidy. It has honoured that commitment, despite the mischievous nonsense that has been perpetrated by the New South Wales Treasurer. The Commonwealth Government continues that subsidy in the form of payments to New South Wales to compensate for the loss of other taxes as a result of the intergovernmental agreement that has been drawn up to implement the GST. Naturally the Opposition supports the bill. We have a couple of concerns with regard to the way the Government is reacting in other places, but every measure in this bill is worthwhile, and we commend it to the House.

The Hon. Dr A. CHESTERFIELD-EVANS [6.25 p.m.]: This bill implements the GST at a State level. It effectively implements the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations, as it is called. That document is signed by the Commonwealth and all the States as the basis for the changes in the taxation system of Australia that were negotiated between the Prime Minister and the Leader of the Australian Democrats, Meg Lees. Part 2 of the Commonwealth-State reform measures provides:

The Commonwealth will legislate to provide all the revenue from the GST to the States and Territories.

This guarantees the States an income that is totally inflation-proof in the sense that it relates to activity in the economy. At last the State has a solid basis for financing its spending. This is the greatest gift the States could ever have. They do not have to go cap in hand year after year to the Commonwealth. They have a tax that will probably grow more rapidly than income tax and, strangely, they are ungrateful for that. I think that says a lot about partisan politics rather than economics. They know they will get an increased share of revenue and a guaranteed flow, but they are too churlish to acknowledge it. I cannot believe that the State Government's economics are that bad. I know that sometimes I believe bad things about the Government, but I do not believe its economics are so bad that it does not know it will be much better off financially under this new arrangement. The agreement states, at point 10, Transitional Arrangements:

In each of the transitional years following the introduction of the GST, the Commonwealth guarantees that the budgetary position of each individual State and Territory will be no worse off than it would have been had the reforms set out in the agreement not been implemented.

So the States are guaranteed to get all the revenue and they are guaranteed that they cannot be worse off. They are immensely better off, but one would not think so. Whenever the Treasurer is asked a question that in any way relates to the GST, he says that the States will get less money for seven years, after which they will go ahead. He does not wish to acknowledge that all GST revenue—for example, the 10 per cent on fares, for which he blames the Federal Government—will come straight back to him. That is a lovely way of getting revenue, placing the blame for it elsewhere, and putting it quietly in one's back pocket. What a clever little trick! The Treasurer does not acknowledge when the Australian business numbers show 20 per cent more businesses than expected, which is likely to lead to more revenue. He does not acknowledge that revenue was 20 per cent higher than expected in New Zealand.

That means that the period of seven years, which is the pessimistic prediction he keeps coming back to, is likely to be reduced because increased revenue is likely to flow back and the State will have a lot more money than expected. The line of the Australian Labor Party [ALP] that it will be seven years before it gets the money back is simply nonsense, and Labor members know it. Ironically, before the last election—and I have this from within the ALP—the ALP decided that it would not have a serious tax policy; its policy would be "We are anti GST." The ALP would not be specific on where it would get the money. It was willing to acknowledge privately what Paul Keating had acknowledged when he was Treasurer: that a GST was needed.

The Hon. J. J. Della Bosca: That's not true.

The Hon. Dr A. CHESTERFIELD-EVANS: Paul Keating acknowledged that major tax changes were needed to make the system more equitable. Of course, that proved unpopular. Hawke—or old jelly back, as he was referred to by one well-known ALP backbencher—

The Hon. J. J. Della Bosca: He was one of the greatest Prime Ministers Australia has ever had.

The Hon. Dr A. CHESTERFIELD-EVANS: At that time the Federal Labor Government did not have the courage to introduce a GST so it was suggested by John Howard. In fact, as Beazley went into the election—

The Hon. J. J. Della Bosca: It wasn't. It was a different tax. It was an ordinary tax, not a GST.

The Hon. Dr A. CHESTERFIELD-EVANS: The ALP did not have the courage to have a serious tax policy. The Australian Democrats were looking at what should be done about the tax system. We had a policy if Labor won the election or if Mr Howard won the election. Our policy if Mr Howard won the election ran to 16 pages, but our policy if Labor won the election was only seven pages, because Labor had not been specific and it was impossible to comment on its non-policy. Labor did not have the guts to produce a policy. Its policy was glib convenience: it would be anti GST, and it would work out later what it would do. That was Labor's policy. Later I will talk about what the actual position was and what tax changes were made by the Australian Democrats.

[The Deputy-President (The Hon. H. S. Tsang) left the chair at 6.33 p.m. The House resumed at 8.00 p.m.]

The Hon. Dr A. CHESTERFIELD-EVANS: Earlier I promised that I would speak about the position taken by the Australian Democrats on the GST part of the new tax system and what was promised. This bill enacts the State's component of the new tax system. One of the misconceptions is that the Australian Democrats broke a commitment not to bring in the GST component. That is a complete nonsense that has been fanned, I believe, by the Labor Party, which wants simplistic answers but is unwilling to do the policy work itself. The position of the Australian Democrats on tax was stated before the last Federal election in a document entitled "Fairer Tax System, More Jobs—The Australian Democrats Taxation Policy Response", dated 18 September 1998. It is a very detailed document, 39 pages long. At the conclusion of my contribution I will seek leave to table the document, but I wish to read portions of it. The document reads:

Australia needs tax reform. Our income tax system is creaking, with a heavy burden on low income earners, and payment of tax becoming virtually optional for many wealthy Australians. Our indirect tax system is also outmoded and inefficient, with nearly half of all sales taxes falling on business inputs and exports, and with heavy tax on limited, "low-growth" basket of goods.

Our taxation system as it stands is also failing to pay for the services that Australians need. Australia is one of the lowest taxed countries in the OECD. Yet, Australia's citizens expect Governments to provide a world class, quality infrastructure, health, education and other services. Our creaking tax system is failing to provide adequate revenue to do this, and substantial reform is needed to ensure that our generation pays its way.

The Australian Democrats have long recognised the need for wide ranging tax reform. We have engaged in a full debate within our party on the best way forward, as well as trying to broaden out the national debate beyond the issue of a GST.

This document reflects the result of extensive work within the party and extensive consultation with business, welfare and church groups. The document is in three parts. Part A provides an overview of the Democrats' general approach to taxation, with an exposition on our contention that Australia's current tax is inadequate, and a presentation of the case for reform on both the direct and indirect side of the taxation equation.

Part B is the Democrats' policy response to the Coalition's tax policy. Part C is the Democrats' policy response to the Labor tax package. This approach reflects our realistic recognition that the Democrats, in the balance of power role, cannot set the entire tax agenda. Rather, we will have to respond to the present package. But we claim a right to put forward a series of proposals to modify the package as set out by the ALP and the Coalition. We also claim a right to reject both packages as they fail to meet our benchmark tests, they provide adequate revenue to fund the level of services demanded by the Australian people, they are economically affordable, they are fair, and they create conditions that lead to the creation of jobs. The Australian Democrats' response to both packages is clearly outlined in the document. It is this position that we took to the Australian people on 3 October.

Part A of the document speaks about the basic principles for taxation, why Australia's revenue base is not adequate to deliver services, the case for income tax reform, and the case for direct and indirect tax reform. Part B refers to the Australian Democrats' response to the Coalition tax package, which extends over 16 pages. The response to Labor's tax package is considerably shorter, only seven pages long—basically because Labor did not have a serious tax package to take to the election. As I said earlier, Labor's tax package was largely that it did not want the GST; it had an anti-GST policy. Part B sets out the Democrats' response to the Coalition's tax package in the following terms:

The Coalition's tax package is unacceptable in its present form. Unless it is substantially amended, the Democrats will not support it.

Problems with the package include:

• It makes the indirect tax system more regressive by taxing more food than under the existing WST [wholesale sales tax] system;

• It provides inadequate compensation for low income earners affected by the GST;

• It contains tax cuts which overwhelmingly favour high income earners and which are largely paid for by raiding the surplus rather than broadening the base;

• It fails to properly address the worst tax loopholes in the income tax system, particularly those that benefit the wealthy;

• It provides inconsistent treatment of export industries such as tourism; and

• It does not pay for itself, relying on raiding surpluses which may or may not exist to the tune of $27 billion in its first four years.

Having said that, the Coalition package has a number of very significant positives:

• It broadens the available sources of tax revenue;

• It provides a comprehensive overhaul of indirect taxes with the potential for significant economic benefits to Australian business, jobs and investment in the longer term;

• It contains a number of important base broadening and equity measures on the income tax side;

• It radically overhauls the collection of business income, substantially addressing long-held concerns that the Democrats and small business have about provisional tax;

• It provides a restructuring of the income tax scales with long overdue reviews of thresholds and rates; and

• It significantly reforms family payments and assistance, with real benefits for families regardless of income source.
The Democrats believe that the Coalition's tax package can and must be significantly amended to be made fairer. The following amendments will be non-negotiable (detail of all these areas follows):

• Taking the GST off food;

• Taking the GST off books;

• Restructuring the tax cuts to reduce the benefits to high income earners;

• Recalculating the compensation needed for different "cameos" of households to ensure that compensation is genuinely fully adequate with a generous cushion as a margin for error;

• Restructuring the new tax concessions on diesel and petrol;

• Reducing the drain on the Budget surplus by broadening the attack on tax loopholes.

The Australian Democrats also wanted the following issues placed on the table during negotiations: taking the GST off tourism packages sold offshore; carefully reviewing the definitions of health, education and charitable activities to ensure that they are as broad as possible; tighter targeting of family assistance to maximise benefits for low income families by reducing benefits for higher income families; introducing a rebate of payroll tax for firms prepared to take on new employees; reducing the claw-back on unemployment benefits for employees who take on casual and part-time work; reducing the very high effective marginal tax rates faced by graduates on low incomes; not proceeding with the extended rebate for private health insurance; restoring the full 150 per cent research and development tax concession; and maintaining direct Federal funding of local government but with a fixed percentage of income tax collections. I list those matters to provide further details on the points I have already made.

After the election the Australian Democrats held the balance of power and, as clearly stated before the election, pursued their objective. Many lies have been told—particularly by the Australian Labor Party—about the Democrats promising to totally reject the GST, but in fact that was not at all true. Through the negotiation of a policy known as "A fairer, greener tax system—delivered", the following exclusions from the GST were obtained. The purchase of food, other than in restaurants and as takeaway, were exempted. Health exemptions were broadened to include natural therapies. Education exemptions were broadened to include adult education. Charities were given the widest zero rating in any Organisation for Economic Co-operation and Development [OECD] country. Child care and aged care services and local government were included in the negotiations. Rents and financial services were to be input taxed. To take the pressure off country motorists, diesel rebates were arranged for regional areas and some revenue was to be directed towards decreasing pollution in cities.

As a result of those negotiations, a $400 million greenhouse gas abatement program was established and $198 million over three years was to be allocated to encourage remote communities to replace diesel-based power generators. In addition, $16 million over three years was provided to promote commercialisation of renewable energy sources. The European diesel standard was introduced earlier than planned to ensure that the purchase of new plant resulted in reduced pollution. Local government retained funding by direct grants. Assistance for homeless people worth $15 million was arranged through the Supported Accommodation Assistance Scheme. Although not all books will be exempt from GST, 41 per cent of books sold to universities, schools, libraries and businesses will be exempt from GST. In addition, a package worth $240 million, which represents one-third of the cost of making books GST-free, will reduce the price of books and encourage the purchase of Australian-made books by Australian writers.

An exemption on health products worth $86 million was also negotiated. As I mentioned earlier, education and charities remain exempt from GST. Inbound tourism packages will be exempt from GST but overseas tourism packages will not be exempt. Self-funded retirees will receive compensation and families that have been disadvantaged by the parental means test in the common youth allowance will also receive additional income. Low income earners have been compensated by changes in the tax threshold and also by changes in marginal tax rates. The Australian Democrats forced a huge number of changes in the GST package in the interests of fairness. As a result of enactment of this legislation, the States will benefit immensely from an increasing and inflation-proof apportionment of revenue which will be unencumbered by Federal interference which will become a reality.

In case someone wants the facts as opposed to foolish rhetoric from the Government on what has been achieved by the Australian Democrats in negotiating a better tax deal for New South Wales and Australia as a nation, I seek leave to table the document entitled "Fairer Tax System, More Jobs—The Australian Democrats Taxation Policy Response", dated 18 September 1998, and the document entitled "A fairer, greener tax system—delivered", which is an analysis of the changes that were achieved by Meg Lees for the Australian Democrats after negotiation with the Howard Government.

Leave granted.

Documents tabled.

The Hon. J. J. DELLA BOSCA (Special Minister of State, Assistant Treasurer, Minister Assisting the Premier on Public Sector Management, and Minister Assisting the Premier for the Central Coast) [8.15 p.m.], in reply: I thank honourable members for their contribution to the debate. I feel an irresistible temptation to respond to a number of matters, and I will do so, but I will not test the patience of the House by labouring too long. I assume that when the Hon. Dr A. Chesterfield-Evans made his comments during the debate they were intended to elicit a response from the Government, so I will turn to him first. It is complete nonsense to suggest that Federal Labor did not have a tax policy during the most recent Federal election, and I think the honourable member knows that. The honourable member also well knows that Kim Beazley presented a comprehensive plan for a tax credit system which was both fair and tailored to the needs of people who needed taxation relief.

Given the claim by the Australian Democrats to being the conscience of politics and social justice, I find it extraordinary that in spite of the innovative nature of Labor's tax proposition—regardless of its currency in the context of the most recent Federal election—and given the importance of Labor's innovative taxation policy as an anti-poverty trap measure, which would supplement existing social justice and welfare schemes, a member of the Australian Democrats, the Hon. Dr A. Chesterfield-Evans, should allege that Labor did not have a tax policy worth taking seriously. Perhaps members of the Australian Democrats did not take the tax policy of the Australian Labor Party seriously; but if that is the case, they did so at great peril to themselves and their rather nebulous and somewhat incredible but oft-quoted claim to be the conscience of national politics.

Labor's tax credit system was aimed at lower and middle income working families. It was designed to provide approximately 1.6 million one-parent and two-parent families with a tax credit, including 1.43 million two-parent families with children and 165,000 sole-parent families. It was aimed at substantially reducing the income tax burden on those families—families that were being hardest hit, as it became evident, by the most serious cuts in the history of post-war federation to health, education and the new era of child care. The tax credit system would have addressed the problem of high effective marginal tax rates that are experienced by families earning relatively low incomes, that is, below $35,000 a year. Labor's tax credit would have reduced the high effective marginal tax rates experienced by a one-child family in receipt of an income of less than $30,000 by 10¢ in the dollar. Labor's extended family allowance payment would have reduced the high effective marginal tax rate by a further 15¢ in the dollar.

Those tax credits were designed to assist families who were making the transition from welfare to work, which is a critical component of the modern social policy. The current Federal Government struggled to follow through and provide various options to assist families making that transition. After the most recent Federal election—the one that the Hon. Dr A. Chesterfield-Evans and the Australian Democrats choose to ignore—the Australian Labor Party sought to reward families and parents who are making the transition from welfare to work and produced a policy that was designed to assist parents to re-enter the work force rather than penalise them for doing so. In many respects, the taxation system still penalises the people who are making that transition and, regardless of the imposition of the GST—the so-called new tax system—will continue to do so.

It all relates back to what I regard as a critical point about the new taxing system. Most important—again largely in response to the comments of the Hon. Dr A. Chesterfield-Evans about the bill rather than in relation to the substantive balance of the debate—the tax credit system would have delivered a benefit to low and middle income families through the tax system rather than primarily through the social security system. As we know, a critical area of public microeconomic reform remains the need to develop a better relationship between the income tax system and the various taxing, welfare and social support systems.

For the benefit of the House and for the public record I correct the furphy peddled earlier by the Hon. Dr A. Chesterfield-Evans that Labor went to the last election without a credible income tax or, indeed, general tax policy. In the end it does not matter what sort of proposal the Australian Democrats claim they had with regard to reform of the tax system; they have lined up with the Coalition to support the GST, a tax which remains the unfairest tax system of all. I will correct another furphy, from the point of view of the historical record, in respect of the contribution to debate by the Hon. Dr A. Chesterfield-Evans. I do not think his view was supported by the Coalition but it may have been supported by the Hon. J. F. Ryan. It may be that he had his own reasons for doing so. The GST as proposed by this Government, either in its current form or the pre-Democrats mangled form, is not the same as a C-tax proposition. It never was the same as a C-tax proposition, the so-called option C from the Tax Summit in the early 1980s that so often is regarded as some kind of an indication of support for the GST by the former Labor Prime Minister Paul Keating—or even when he was Treasurer in the Hawke Government. That is not so. It is an historical furphy which I will quickly deal with.

It is a matter of public information, a verifiable and historical fact, that a C-tax is a broadly based consumption tax. It is a world away, administratively, functionally and operationally, from a GST. Admittedly, it does not raise as much revenue as a GST. I concede that point. A C-tax is about the real job of indirect tax reform which was flattening out the wholesale and retail tax system, something which the Labor Government subsequently took on and substantially achieved.

The Hon. J. F. Ryan: No, you didn't! You had three rates of tax, including a 33 per cent tax on toothpaste!

The Hon. J. J. DELLA BOSCA: You had your go. The Hon. J. F. Ryan is hastily defending the GST yet again—something his party will suffer for.

The Hon. J. F. Ryan: No, you are defending the old wholesale sales tax—a 33 per cent tax on toothpaste, orange juice, ice cream and soap powder. The battlers paid all of that, too.

The Hon. J. J. DELLA BOSCA: No, I made the point that the C-tax debate was about repairing faults in the wholesale and retail sales tax systems. If I might continue with my remarks; it is very difficult with this clatter. The key and significant real tax reforms, the ones that really affected the way the economy worked—capital tax reform, fringe benefits tax reform, company tax reform, including the massive cut in the real effective rate of company tax that put Australian companies on a globally competitive basis—were all things taken on by a much-maligned Treasury of Paul Keating at the time. They were the real tax reform achievements, the really substantial things that actually made a difference to the competitiveness of the economy—not the nonsense peddled around the traps as tax reform by the expensive advertising campaigns we see now.

Picture this: The Commonwealth Government is applying the GST to the post-excise price of petrol and alcohol—a tax on a tax. Not only is it applying a tax on a tax, the excise rates are linked to the consumer price index [CPI] and the Commonwealth has said it will use the full GST whammy CPI when it next adjusts excise rates. That commutes in 2001 to a CPI of approximately 6 per cent. This is the economically sensible approach of the introduction of a GST. As this bill sets out, New South Wales will discount the CPI for the GST impact. Any CPI-linked government charges will rise by the GST-free tax rate of approximately 3 per cent, a very responsible action by this Government. Not only is the Federal Coalition levying a tax on a tax, it is levying a tax on a super-inflated tax. It is amusing tonight to see the Coalition defending the indefensible: a tax on a super-inflated tax and a tax on just about everything else to boot. In relation to stamp duties, the New South Wales Government is taking the same approach as every other State: it is continuing the current policy in levying stamp duty on the purchase of a house on the post-Commonwealth tax price. It is as simple as that.

In relation to the new tax system—the so-called "a new tax system", or ANTS—as I said, the GST and the introduction of a GST is not a defensible proposition. Although it has been alleged to the contrary, the Government has consistently respected the fact that the Commonwealth Government has a mandate to introduce this new system. Our officers have co-operated in the introduction of the new tax system and have been as positive as possible in a circumstance where they are forced to implement a tax when this Government does not agree with the broad philosophy underlying it or the economic wisdom or lack of wisdom behind it. The Hon. Dr A. Chesterfield-Evans should not suggest that this Government has done nothing. It has been reasonable and co-operative with respect to the many aspects of this new tax system which are an impingement on and a breach of faith with the people of New South Wales and the Commonwealth of Australia.

The caravan rolls on; the dogs are barking. A member of the National Party is in the House. In reality that is another example going back to the never-never when the Commonwealth Government said specifically that people paying domestic rents would not be subject to the GST. Quite simply that has been proven to be untrue in the case of permanent caravan park residents. Those people have unexpectedly risen and embarked upon a grassroots campaign to make the Government honest and true to its word, but they have not been successful in getting some kind of relief from the Commonwealth Government. They are not getting any help or sympathy from the barbecued chicken Coalition, the GST Democrats who persist in what I think will be proved to be one of the great frauds against the Australian body politic—the introduction of the GST disguised as tax reform. It is nothing more than a tax designed not to confront any of the real social issues, substantial tax reform issues either from an economic or social point of view, but simply designed to fulfil what seems to be the pernicious obsession of a Prime Minister, driven by accounting principles, rather than concerns for public policy. I commend the bill to the House.

Motion agreed to.

Bill read a second time and passed through remaining stages.

The Hon. J. J. DELLA BOSCA (Special Minister of State, Assistant Treasurer, Minister Assisting the Premier on Public Sector Management, and Minister Assisting the Premier for the Central Coast), on behalf of the Hon. M. R. Egan [8.28 p.m.]: I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The Public Authorities (Financial Arrangements) Act 1987, commonly referred to as the PAFA Act, provides a legislative framework for the regulation of the investment, borrowing and financial risk management functions of public sector agencies in New South Wales. Under the PAFA Act, the Treasurer is given responsibility for exercising a central supervisory role in respect of the investment and liability management activities of agencies to ensure that the New South Wales public sector's financial risks and exposures are properly and prudently managed. During 1999 the Auditor-General conducted a review of agencies' compliance with financial legislation, including the PAFA Act. The results of this review were detailed in the New South Wales Auditor-General's report to Parliament for 1999, Volume 2. The report highlighted a number of issues regarding the existing legislation. This bill addresses these issues.

The main areas for amendment, identified by both Treasury and the Auditor-General, are the Act's requirement for a clearer statement of purpose and a need to apply to all New South Wales public authorities. The definitions within the Act require consistency so that an agency's authority is consistent for all purposes. The Act as amended will provide the sole source of legal power for agencies to enter into arrangements covered by its terms. As well, all types of financial arrangements that agencies may enter into, including joint venture arrangements, will be covered by the amendment.

The PAFA Act will be extended to apply to all general government agencies, public trading enterprises and public financial enterprises, covering all departments and statutory authorities. As well, any controlled entities of such departments or authorities will also be included. It is considered necessary to include government departments within the PAFA Act to properly capture the full range of financial liabilities that can be incurred. In the past, some individual government departments, or divisions thereof, or their Ministers have been included in a schedule for specific purposes. Some departments run commercial operations, while some statutory authorities are effectively run by the department to which they report. However, for effective control, all agencies should be subject to a consistent set of provisions. There is also a need for controlled entities of departments and authorities to be included within the scope of the PAFA Act.

Because a controlled entity may be a company incorporated under the Corporations Law, it could well have legal powers that exceed those of the agency which controls it. To achieve complete coverage of all New South Wales public sector agencies and their controlled entities, it is proposed that the definition of "authority" under the PAFA Act be linked to the bodies defined under the Public Finance and Audit Act 1983. Agencies are subject to audit by the Auditor-General on the basis that their operations have impact on New South Wales State accounts. As a corollary, such agencies should have their ability to incur financial obligations controlled and monitored by the Treasurer, who is ultimately responsible for the financial management of the State.

These amendments will ensure the complete coverage of all New South Wales public sector agencies. This includes all general government agencies, public trading enterprises and public financial enterprises, irrespective of whether the agency is a statutory authority or government department, and applies to all controlled entities of agencies. It is acknowledged that particular agencies, which have not previously been covered by the PAFA Act, may have legitimate reasons for having differing powers than those under the PAFA Act. In seeking to have all agencies covered by the PAFA Act, provisions will be enacted to enable the Treasurer to grant to specific authorities particular amendments and modifications of the provisions to suit individual circumstances.

The Treasurer will be able to determine specific exemptions for particular agencies when considered appropriate. By allowing the Treasurer to grant such modifications, circumstances of individual agencies can be catered for while retaining the control and monitoring functions of the Treasurer in relation to all agencies. A transitional period is provided for agencies currently not within the scope of the PAFA Act to have sufficient time to adapt to the new requirements. The purpose of the PAFA Act is to operate as controlling legislation in respect of agencies' ability to enter into financial accommodation, financial adjustments, and joint financing arrangements, investments and any other form of financial arrangements. By requiring all agencies to effect such arrangements within the parameters of the Act, controls can be put in place to allow the Treasurer to assess and monitor the financial risks being incurred by New South Wales.

The intention of the PAFA Act is to be the sole source of legal authority in respect of authorities covered by it. These amendments will ensure the PAFA Act is the sole source of legal power that allows New South Wales public sector agencies to enter into financial arrangements. The PAFA Act will then take precedence over other Acts to ensure no agencies are omitted from its coverage. A provision is included providing for the PAFA Act only to be overridden when future legislation expressly excludes the operation of the PAFA Act. This will remove interpretative difficulties which could otherwise arise in relation to legislation setting up new agencies. These amendments also provide for consequential amendments to other relevant legislation.

There is also a need for a consistent definition of "authority" for the purposes of the PAFA Act. Each of the four main types of financial management activities, that is, investment, borrowing, derivatives and joint financing, has a separate definition of the authorities covered. Thus, authorities may be covered by certain parts of the PAFA Act and not others. The definition of authority will be standardised. Agencies will be defined as "authorities" for all purposes of the PAFA Act. These amendments will simplify the process for new agencies to be covered by the PAFA Act, as and when they are created.

Another issue with the current coverage of the PAFA Act is the need for interpretative provisions to assist in clarifying the application of particular sections of the PAFA Act. These provisions will be included in an introductory section to the Act. Some authorities have power to enter into joint ventures without the need for approval of the Treasurer, because the particular arrangements do not come within the PAFA Act, or the agencies' own enabling legislation provides for the arrangements. By entering into joint ventures with the private sector, an agency can expose the State to contingent liabilities. It is appropriate that such arrangements only be entered where the Treasurer is satisfied as to the allocation of risks in relation to the transaction. These amendments expand the types of financial arrangements covered by the PAFA Act to provide that all agencies must obtain the Treasurer's approval to enter into joint ventures.

In 1999 the Health Administration Act 1982 was amended to allow advances from the Department of Health to Area Health Services to be excluded from the coverage of the PAFA Act. From a liability management perspective there is no need for approval of cash flows between agencies in the same Ministerial Portfolio. This provision has now been extended to all agencies. The above amendments take effect from the date of proclamation, with provision for a transitional period whereby agencies currently not within the scope of the PAFA Act will have sufficient time to adapt to the new requirements.

In summary, this bill will strengthen the prudential requirements of the New South Wales public sector. It will extend the coverage of the Public Authorities (Financial Arrangements) Act 1987 to all New South Wales State public sector agencies, including any controlled entities of such bodies, and clarify the Act's operation in conjunction with other legislation. This will ensure that all agencies require the Treasurer's and, in appropriate cases, Executive Council approval before they can borrow, deal in derivatives, enter into joint financing arrangements, joint ventures or make investments. I commend the bill to the House.

The Hon. J. F. RYAN [8.29 p.m.]: The Opposition supports the bill, which is relatively simple in its intent. It responds to recommendations in volume 2 of the Auditor-General's Report of last year in which the Auditor-General commented on a series of different rules that seem to apply to government departments with regard to joint ventures and borrowing. I do not remember the exact details of some of the complaints, but I recall that the Auditor-General drew attention to the fact that area health services had entered into arrangements with the Department of Health which were described as loans.

The area health services were incurring increasing levels of debt to fund what appeared to be their normal, everyday services, including the operation of hospitals and health facilities within this State. On many occasions the Opposition has drawn attention to the fact that that is a totally inappropriate way to fund health services. The Department of Health ought to exercise more control over those matters. But, additionally, the legitimate health needs of the community ought not be funded by borrowings. It is not possible to tell patients in many circumstances—for example, during winter—simply to go home. Area health services ought to be given sufficient funds in order to carry out their duties in respect of hospitals.

The Auditor-General believed that legislation should have been introduced to ensure that the rules and guidelines that apply for borrowing ought to be the same right across the public sector. This legislation largely seeks to do that. Honourable members who examine the bill will find that most of its provisions relate to definitions of different types of public authorities. Essentially, the bill provides that any public authority that wishes to enter into a joint venture or borrowing arrangement must first obtain approval from the Treasurer. Normally, borrowings for public authorities are arranged by the organisation within Treasury known as TCorp, and they are organised in an aggregated form because that proves to be the most efficient way to carry out those arrangements.

The Government obviously is able to use its corporate clout to obtain more generous rates of interest and is able to manage a debt portfolio in a more efficient way to ensure that new loans are not inappropriately raised. It is also able to ensure that funds that various government agencies sometimes hold for a period of time without using them are appropriately used, sometimes to fund loans, without necessarily having to go into the marketplace in order to make those borrowings. TCorp, as I recall, is an organisation that was set up originally in the term of the Greiner Government. It is an organisation that has proven to be spectacularly good in funding these sorts of short-term requirements of governments. In many instances TCorp's activities have proven to be profitable. Naturally, the Opposition supports this sort of supervision by the Government over the borrowings of public authorities to ensure that those borrowings and these joint ventures are conducted in the most efficient way.
The only other thing that the Opposition would say generally in regard to the Public Finance and Audit Act is that this is but one small part of a general package, to which the Opposition looks forward, whereby financial arrangements for all government authorities, and the budget itself, are to be reviewed by the Government. This is a process that has been taking a significant length of time. Mr Deputy-President, you chair a committee that currently is overviewing that process to some extent and is likely to report to the Government at some time in the future. Hopefully, that will result in an overall reform of the Public Finance and Audit Act. In the interim, this bill is one step to financial reform with regard to borrowings. The Opposition supports the bill, which is largely a machinery matter that should not involve any particular controversy.

The Hon. J. J. DELLA BOSCA (Special Minister of State, Assistant Treasurer, Minister Assisting the Premier on Public Sector Management, and Minister Assisting the Premier for the Central Coast) [8.34 p.m.], in reply: I thank the Opposition for the positive things it said about Government supervision. Obviously, Opposition members have a great deal of trust in me and the Treasurer. I commend the bill to the House.

Motion agreed to.

Bill read a second time and passed through remaining stages.

The Hon. J. W. SHAW (Attorney General, and Minister for Industrial Relations) [8.36 p.m.]: I move:

That this bill be now read a second time.

The purpose of the bill is to introduce a regime for carrying out forensic procedures on suspects, serious indictable offenders and volunteers to provide for the use and destruction of material derived from those procedures, and to set out rules for placing and matching profiles derived from forensic material on a national DNA database. In 1995 the Government introduced legislation to enable police to take samples of blood, saliva and hair from a person in lawful custody.

This was an interim measure in response to the decision of the New South Wales Court of Appeal of 29 May 1995 in the unreported case of Fernando v Commissioner of Police. In that case, the Court of Appeal held that section 353A of the Crimes Act 1900, although authorising medical examinations, did not authorise the taking of blood samples from accused persons without their consent. The 1995 amendment was limited to taking blood, saliva and hair samples from persons in lawful custody without their consent pending the release of the Model Criminal Code Officers Committee report on forensic procedures and the proposed national DNA database.

The Model Criminal Code Officers Committee of the Standing Committee of Attorneys-General circulated drafts of a Model Forensic Procedures Bill for comment in 1994. Sixty-eight submissions were received in response to the bill. In July 1995, the majority of the Standing Committee of Attorneys-General endorsed the 1995 Model Forensic Procedures Bill and forwarded a proposal to establish a national DNA database to the Australasian Police Ministers Council. A discussion paper titled "Model Forensic Procedures Bill and the Proposed National DNA Database" was released in May 1999 following consultation with the Office of the Commonwealth Privacy Commissioner and the Police Commissioners Working Group.

Extensive background research and consultation has been undertaken to bring this bill before the House and the Government is pleased that the bill reflects the valuable work of numerous officers and experts. In February this year, after further submissions were received in response to the discussion paper, a final report and model bill, setting out a comprehensive legislative regime dealing with forensic procedures and the DNA database, were released.

This bill is largely based on the model provisions developed by the Model Criminal Code Officers Committee. It has been adapted to ensure that New South Wales law enforcement agencies have access to the best possible scheme for the carrying out of forensic procedures and the use of the material derived from those procedures to investigate crime. The bill sets out the procedures that may be carried out on suspects, offenders and volunteers. A procedure is categorised as either an intimate forensic procedure, a non-intimate forensic procedures or a buccal swab, that is, a swab of saliva taken from the person’s mouth.

It is important to note that the bill covers not just procedures that produce material containing a person's DNA but other forensic procedures, such as the taking of photographs and scrapings from under a fingernail. A buccal swab or an intimate forensic procedure, for example, the taking of a blood sample, may only be carried out on a person suspected of a prescribed offence defined as an indictable offence or any other offence prescribed by regulation. I emphasise at this stage that no other offences will be prescribed by regulation in the first 18 months of the operation of the Act in order to monitor the impact of the legislation on crime solving and police operations. A forensic procedure may be carried out under the legislation either with the suspect's informed consent by order of a senior police officer or by court order.

Unlike the 1995 amendments, this bill covers suspects who are not necessarily under arrest and in lawful custody. The purpose of this is to allow procedures to be carried out without having to arrest those persons under suspicion in order to bring them within the scope of the provisions. This is because DNA testing and other forensic material have the potential to eliminate an innocent person from suspicion and free up the police to focus on other suspects. The extension of the provisions to suspects is also consistent with the model bill, Commonwealth legislation and legislation in Victoria and South Australia. The bill sets out a number of safeguards to ensure that the rights of suspects, offenders and volunteers are balanced against the need for police to have adequate and effective law enforcement powers.

First, the bill contains special provisions relating to children and incapable persons. A child or incapable person cannot be asked to consent to a forensic procedure. A forensic procedure, no matter how unintrusive, may only be carried out on a child or incapable person with the court's authorisation. An incapable person is defined in clause 3 of the bill as an adult who is incapable of understanding the general nature and effect of a forensic procedure, or who is incapable of indicating whether or not he or she consents to a forensic procedure being carried out. In addition to the requirement to seek a court order in respect of children and incapable persons, the bill provides further safeguards for such suspects.

An interview friend, such as a parent, guardian or legal practitioner, must be present at the hearing of an application for a court order and must, if reasonably practicable, be present when a forensic procedure is carried out. Second, there are similar safeguards relating to Aboriginal and Torres Strait Islander suspects. An Aboriginal or Torres Strait Islander suspect must not be asked to consent to a forensic procedure until after a representative of an Aboriginal legal aid organisation has been notified, unless the suspect has waived this right or has engaged another legal practitioner. An interview friend must be present when an Aboriginal or Torres Strait Islander is asked to consent to a forensic procedure during the hearing of an application for a court order and, if reasonably practicable, when a forensic procedure is carried out.

The bill, therefore, takes into account the special needs of the more vulnerable members of our community and makes provision to protect their interests. In addition, the bill sets out various safeguards that apply across the board. All suspects asked to consent to a forensic procedure must be given information about the procedure including its purpose, the offence to which it relates, the suspect's right to refuse consent and the consequences of this refusal, and the use to which any DNA profile derived from forensic material may be put. Suspects are also to be given a reasonable opportunity to communicate or attempt to communicate with a legal practitioner. If a suspect not under arrest does not consent to a forensic procedure, regardless of the type of procedure sought, a court order is required before the procedure is undertaken.

If a suspect under arrest does not consent, a non-intimate procedure may be authorised by a senior police officer or a buccal swab or intimate procedure may be ordered by a court. Before requesting consent to a forensic procedure, a police officer must be satisfied that the suspect is not a child or incapable person, that there are reasonable grounds to believe that the procedure might produce evidence tending to confirm or disprove that the suspect committed an offence, and that the request for consent is justified in all the circumstances. For example, if the police arrest a suspect for a sexual assault offence, provided the suspect is not a child or incapable person, they may ask the suspect to consent to a buccal swab. If the suspect does not consent, a senior police officer may authorise the taking of a hair root sample which, like a buccal swab, contains DNA material that may be matched against material left at the crime scene.

The senior police officer would have to be satisfied that there are reasonable grounds to believe that the sample might produce evidence tending to incriminate or exculpate the suspect and that carrying out the procedure without consent is justified in all the circumstances. Alternatively, the police may seek an order from the court to take a buccal swab. In this case, the court would similarly have to be satisfied that there are reasonable grounds to believe that the sample might produce evidence tending to incriminate or exculpate the suspect, and that carrying out the procedure is justified in all the circumstances. It is important to emphasise that the senior police officer's ability to order a non-intimate forensic procedure in the absence of consent applies only to suspects who are under arrest. Non-consensual procedures, no matter how unintrusive, may only be carried out on suspects who are not under arrest by court order.

Part 7 of the bill provides for the testing of serious indictable offenders serving sentences in New South Wales correctional centres, whether convicted before or after the legislation comes into force. A serious indictable offender is defined as a person convicted of an offence carrying a maximum penalty of five or more years imprisonment. This includes homicide, sexual assault offences and various offences in the nature of robbery and theft. The rationale for targeting serious indictable offenders is the likelihood that they have committed or will commit other offences. As stated by the Model Criminal Code Officers Committee in its discussion paper, this approach is based on the view that, if a person is convicted of a serious offence, it is reasonable for society to expect that the person be required to give samples to assist with the detection of a repeat offence.

Not only may providing the sample deter an offender from committing further crime; it may assist in clearing up previously unsolved crime. A forensic procedure may be carried out on a serious indictable offender either with the offender's informed consent or by order of a senior police officer or a magistrate. As for suspects, children and incapable offenders are not capable of giving informed consent and any procedure carried out on such offenders must first be authorised by a court. All other serious indictable offenders must be given information about the procedure, including its purpose, the way in which it will be carried out, the offender's right to refuse consent to the procedure, and the consequences of this refusal, and that a profile derived from forensic material may be placed on the DNA database. If a serious indictable offender does not consent to a procedure, a senior police officer may authorise the taking of a hair root sample. Alternatively, the police may seek a court order authorising a buccal swab or a blood sample.

Part 8 of the bill provides for the carrying out of forensic procedures on volunteers. A forensic procedure may be carried out on a volunteer other than a child or incapable person with the volunteer's informed consent. A forensic procedure may be carried out on a volunteer who is a child or incapable person either with the informed consent of a parent or guardian or by court order, unless the child or incapable person resists undergoing the procedure. The bill sets out certain safeguards in relation to carrying out forensic procedures on volunteers. For example, the police must inform the volunteer of various matters, including the way in which the procedure will be carried out, the use to which the material derived from a forensic sample may be put, and that the volunteer is under no obligation to undergo the procedure. To be valid, the volunteer's consent to undergo a forensic procedure must be given in the presence of an independent person and the consent form must be witnessed by a person not involved in the investigation of an offence.

These safeguards are necessary to ensure that volunteers have confidence in providing samples for DNA analysis. The carrying out of forensic procedures, whether in relation to suspects, serious offender or volunteers, is governed by legislative requirements to ensure that the procedures are carried out safely and with respect for a person's physical integrity. The bill sets out who may carry out a procedure, depending on what it is. For example, a buccal swab may be taken by an appropriately qualified person, whereas a dental impression may only be taken by a doctor, dentist or dental technician.

A medical practitioner or dentist of the person's choice may be present during the carrying out of certain procedures such as the taking of blood samples. If practicable, most intimate forensic procedures are to be carried out by a person of the same sex as the suspect, serious offender or volunteer. Children have the option of choosing the sex of the person carrying out the forensic procedure on them. Clause 48 of the bill clearly states that the legislation does not authorise the carrying out of a forensic procedure in a cruel, inhuman or degrading manner.

The significance of these various provisions and safeguards becomes evident when one considers the rules regarding the admissibility of evidence obtained from the carrying out of a forensic procedure. This evidence will generally be inadmissible in proceedings against a person if the police fail to comply with the requirements under the legislation. There are exceptions, for instance, where the court finds that the desirability of admitting the evidence outweighs the undesirability of admitting improperly obtained evidence. It is clearly stated that the probative value of the evidence in itself does not justify the admission of improperly obtained evidence.

Members may note that some of the requirements contained in the bill are qualified by the phrase "if practicable". I would like to point out that the burden of proof lies on the prosecution to prove on the balance of probabilities that it was not practicable to do something which was required to be done if practicable. The bill provides for the destruction of forensic material obtained from a person who is acquitted or whose conviction is quashed. It also ensures that forensic material taken from a suspect is to be destroyed if proceedings against the suspect have not commenced within 12 months of the material being taken, unless a court is satisfied that there are special reasons for extending the 12-month period or where there is an outstanding warrant against the suspect.
Provisions regulating the recording, retention and use of information obtained from forensic procedures on the DNA database system are set out in part 11 of the bill. There are specific provisions for the permissible matching of DNA profiles against indexes contained in the database. For example, DNA profiles taken from suspects and offenders may be matched against the crime scene index, which contains profiles taken from unsolved crime scenes. By contrast, DNA profiles taken from volunteers for limited purposes may be matched only against the crime scene in respect of which the volunteer has freely provided his or her DNA.

Part 11 also creates offences relating to the supply and use of forensic material. The offences of unlawfully supplying forensic material, improperly accessing information stored on the DNA database and improperly matching profiles attract maximum penalties of two years imprisonment or an $11,000 fine or both. Clearly, it is in the interests of law enforcement agencies to exercise their powers under the legislation reasonably, judiciously and lawfully.

The bill specifically provides for the Ombudsman to monitor the exercise of police powers under the legislation for a period of 18 months and to prepare a report after that period to be tabled in each House of Parliament. In addition, the legislation is to be reviewed after 18 months following the date of assent to determine whether its policy objectives remain valid and whether its terms remain appropriate for securing those objectives. The Government is committed to clearing up crime and will use this legislation to provide law enforcement agencies with a valuable investigative tool to assist in this process.

The bill confirms the Government's commitment to addressing crime and improving the operation of the criminal justice system in New South Wales. It will enable law enforcement agencies to identify or exclude suspects by comparing forensic material taken from them with material found at crime scenes. It will link seemingly unrelated crimes by comparing DNA profiles found at different crime scenes. Furthermore, it will allow for the targeting of crimes that have historically had low clearance rates using only traditional methods of investigation.

This is not to say that the bill constitutes a cure-all. Linking a sample of a person's DNA to a sample found at a crime scene does not necessarily prove guilt; nor does it necessarily prove that the person was present at a crime scene. The popular viewpoint is that forensic evidence is infallible and that if a DNA match has been made, then the culprit has been found and a conviction will follow. This is an oversimplification. DNA testing produces a statistical probability. Care must be taken, not only in handling and analysing samples, but in presenting statistical evidence to a jury. For example, the United Kingdom Court of Appeal in R v Doheny; R v Adams [1997] 1 Cr App R 369 held that it is wrong to confuse the match probability, say, one in a million, with the likelihood ratio, such as that the chances of a person other than the defendant leaving the crime scene are one in a million.

The admissibility of forensic evidence will be a matter for the courts to decide and the weight to be given to evidence obtained by the exercise of powers under the bill is a question for the trier of fact in each case. Forensic evidence will generally form only one part of the evidence in a case and the jury will need to consider all the items of evidence in order to determine whether or not the case against the defendant has been proved. Nevertheless, the bill provides police with an effective investigative tool and, in detecting crime, will assist in deterring offenders from re-offending, thereby making the community safer. I commend the bill to the House.

Debate adjourned on motion by the Hon. J. W. Shaw.

The Hon. J. J. DELLA BOSCA (Special Minister of State, Assistant Treasurer, Minister Assisting the Premier on Public Sector Management, and Minister Assisting the Premier for the Central Coast) [8.56 p.m.]: I move:

That this bill be now read a second time.

A lengthy speech has already been delivered in the other place. I seek leave to incorporate that speech in Hansard.

Leave granted.

It is with considerable reluctance that I introduce this bill It effectively repeals legislation which has, for more than 68 years, in one form or other, had a significant impact on regulating the conduct of the New South Wales dairy industry. It repeals legislation which was introduced by a Labor Government back in 1932 under the premiership of Mr J. T. Lang. Since then, the dairy industry has evolved considerably.
Years ago the quality of milk was so poor that milk delivered of a morning was unfit for consumption by evening. As a result, twice-daily milk deliveries became commonplace. But supplies of fresh milk were also often a problem during these early years. In late 1939, due to severe drought conditions, milk in the major metropolitan markets had to be rationed. Then, in the autumn and early winter of each succeeding year up until 1949, the milk-producing districts of the then "milk zone" were unable to meet consumer demand—and rationing of milk had to be imposed in varying degrees of severity.

By February 1943, the margin between supply and demand had increased to such an extent—enhanced by the needs of the armed forces—that a rationing plan had to be introduced which ensured preference to essential requirements and vulnerable groups within the community. Fortunately the dairy industry has come a long way since those times. It has now evolved into an industry which is frequently held up as an example of world's best practice. This is due in no small part to the various regulatory systems under which it has operated since those early days. But now we are at the end of an era, and it is not by choice that I move to deregulate the dairy industry today.

I move this legislation because of market forces in Victoria and the pressure put on us by the Federal Government. Victoria is producing cheaper milk than New South Wales and has voted to deregulate. Under the current system, if left unchanged, we would not be able to compete with Victorian prices, and before long we would see cheap Victorian milk flooding north across the State border. We have also been told by the Federal Government that the $1.74 billion adjustment package will only be made available if all States deregulate their dairy industries by 1 July 2000.

If farm gate prices are going to drop in New South Wales—and they will have to once Victoria deregulates—then it is extremely important that dairy farmers in New South Wales have access to that $1.74 billion industry adjustment package. I will explain further about that package in a while. But suffice to say for now, the only way we can secure that package is by deregulating our dairy industry. So you see, we have no choice here in New South Wales. We have to deregulate our dairy industry whether we like it or not.

My concerns about dairy deregulation have been well documented on a number of occasions. But let us not forget where the forces of dairy deregulation in New South Wales were first unleashed. They came in the passage of the Dairy Industry (Amendment) Act 1993—which was introduced by the former Coalition Government and commenced on 17 December 1993. The amendments made by this Act had a significant impact on the distribution sector of the New South Wales market milk industry. When they came into effect on 1 July 1998 the New South Wales Dairy Corporation—which is now the Dairy Division of Safe Food Production New South Wales—ceased to set prices for market milk from the point of packaging onwards.

The changes also meant that milk vendors—distributors—in New South Wales were no longer issued with authorised trading areas, or zones, which in turn meant that the State's milk processors also no longer had specified trading areas. Marketplace deregulation has also enabled a number of the larger supermarket chains to enter into milk supply and pricing contracts direct with milk processors. Price margins also began to shift. New South Wales milk processors were forced to reduce their packaged milk price to the major supermarkets in order to fend off competition from at least one major Victorian processor. New South Wales dairy farmers were also forced to accept a 3.31¢ per litre reduction in the regulated farm gate price they received for their market milk.

As I have said, these changes were set in train by the former Coalition Government. Compare its approach to that of the Carr Labor Government. Let me remind the House of the following facts. A review of the New South Wales Dairy Industry Act 1979 was initiated in March 1997 in accordance with the Competition Principles Agreement, endorsed by all members of the Council of Australian Governments in April 1995. The national competition policy [NCP] review only concentrated on those sections of the Act which related to pricing at the farm gate, including supply management, health and safety issues and industry services. It also included the role of Milk Marketing (New South Wales) Pty Ltd and its funding arrangements. The review did not incorporate arrangements beyond the farm gate because these had already been deregulated by the former Coalition Government.

The 1997 review featured extensive consultation with a large number of interested groups and individuals and it considered more than 450 separate submissions. After the review group presented its final report to me, Premier Bob Carr and I were pleased to announce in May 1998 that the New South Wales Government had agreed to extend the regulated milk supply management and farm gate pricing arrangements for a further five years, until 2003. That decision was subject to two clauses, however, and enabled the State Government to revisit the regulations before 2003 if the Federal Government withheld competition payments, or market factors had an adverse impact on the industry’s stability prior to 2003. This decision was widely welcomed by the industry and dairy farmers were assured of their future for a little longer.

Everything changed when Victoria underwent a national competition policy review of its own. Unfortunately, this review resulted in the then Kennett Government announcing that it would totally deregulate the Victorian dairy industry from 1 July 2000. Many people had feared for some time that the Victorian dairy industry had a strong preference for total deregulation. With the additional knowledge that the domestic market support scheme would cease on 30 June 2000, many industry leaders in New South Wales believed that market forces in Victoria would make it near impossible to maintain any form of regulated system in New South Wales after 1 July.

The domestic market support scheme is a Federal scheme, administered by the Australian Dairy Corporation. The current arrangements are derived from the Kerin and Crean plans, which were introduced in 1986 and 1992 respectively. The scheme involves two levies on industry. One is paid by farmers—until the end of this month—on all milk consumed domestically as drinking milk. The other is paid by dairy product manufacturers on all milk used in the production of finished products for domestic sale. Milk utilised to produce product for export is exempt from the levies.

The money raised from these two industry levies is placed in the Domestic Market Support Fund, which is administered by the Australian Dairy Corporation. This money, in turn, is used to make domestic market support payments to farmers who supply milk for the manufacture of dairy products. Because of the much larger volumes of milk produced in Victoria for the manufacture of dairy products, Victorian farmers are net beneficiaries of the scheme, whereas New South Wales farmers contribute more to the scheme than they receive in return. The scheme is legislated to end on 30 June 2000.

At around the time of the Kennett decision, and realising the flow-on effects this would have on the other States, the Australian Dairy Industry Council began discussions with the Federal Government. The aim of these discussions was to obtain some form of support which would enable the Australian dairy industry to adjust to the effects of deregulation nationally. These discussions culminated in an announcement by the Federal Government on 28 September 1999 that it supported a national dairy deregulation adjustment package—so long as all States and Territories agreed to deregulate their farm gate pricing arrangements from 1 July 2000. I emphasise that point again: so long as all States and Territories agreed to deregulate their farm gate pricing arrangements from 1 July 2000.

The package that has been developed is valued at around $1.74 billion. It is the largest agricultural adjustment package in Australia’s history. It is to be funded by a retail levy on all drinking milk of 11¢ per litre over the next eight years. New South Wales dairy farmers will be entitled to $337 million of that package, an average of $192,000 per farmer. The average consumer in New South Wales—noting that the money is officially coming from the retail levy on fresh milk—will be funding $506 million of the total package.

This package was a significant achievement by the Australian Dairy Industry Council and it is now seen as an important package for dairy farmers in New South Wales. It now also has been added to thanks to lobbying by the Queensland and New South Wales governments at the last Agriculture and Resource Management Council of Australia and New Zealand [ARMCANZ] meeting in March this year. The additional package amounts to $45 million across the nation and is for regional assistance. I have yet to receive full details of how that regional package will be distributed or utilised.

Soon after that there were other developments on the political scene. Soon after the Australian Diary Council negotiated the $1.74 billion adjustment package—minus the regional package at that stage—there were political changes afoot in Victoria. Soon after the Kennett Government announced it would support dairy deregulation in Victoria, the Coalition in that State was defeated at the polls. The newly elected Bracks Labor Government then honoured a pre-election commitment and conducted a plebiscite of all Victorian dairy farmers to determine their attitude to deregulation.

Out of this plebiscite came the following result: 89 per cent of farmers in Victoria who voted, voted in favour of a move to deregulate their industry and receive their share of the adjustment package. The new Minister for Agriculture, the Hon. Keith Hamilton, then informed other agriculture Ministers from around Australia at an ARMCANZ meeting on 3 March that he expected the Victorian dairy industry to push for deregulation with or without the $1.74 billion adjustment package.

Following on from that, the Dairy Farmers Association of New South Wales conducted a series of meetings across this State to determine the views of our own dairy farmers. Of those diary farmers who attended and voted, and in light of the situation in Victoria, 65 per cent voted in favour of accepting deregulation and the industry adjustment package. Many industry leaders accept that total deregulation in Victoria would seriously undermine any attempts by New South Wales to continue operating within a regulated system.

Accordingly, the New South Wales Dairy Farmers Association determined that it was preferable that the process be managed, rather than attempting to pick up the pieces after deregulation had occurred. The Dairy Farmers Association [DFA] has been very open about its intentions in relation to deregulation. Winston Watts, the Executive Director of the DFA, when he spoke to ABC radio’s Country Hour program on 1 May, said:

We have made it very clear we have asked the State Government to deregulate against its wishes, but if we wanted to get that other big scheme [i.e. the adjustment package] we had to ask them to deregulate.

There is no State secret here. The DFA asked the State Government to deregulate so that they could secure the $1.74 billion adjustment package for their dairy farmers. The adjustment package will hopefully allow some reprieve for farmers wishing to remain in the industry. It may help them make the necessary adjustments to enable them to remain viable. It should also enable those wishing to leave the industry to do so.

The DFA has estimated that about 500 to 600 of the 1,800 dairy farmers in New South Wales would leave the industry in the event of deregulation—the majority of these in the coastal areas of New South Wales. This estimate was made in the DFA's submission to the NCP review back in 1997. This projection was made at a time when no consideration had been given to any form of adjustment package to assist farmers in moving to a deregulated environment. With the $1.74 billion adjustment package, it is possible that even more dairy farmers will leave the industry rather than stay to restructure their business. And they will leave taking their share of the adjustment package with them.

There is no doubt that along with dairy farmers go dairy-related jobs. In this case, the DFA has estimated we could see about 6,000 job losses resulting from a loss in dairy farm income. Any reduction in milk production will clearly impact on the companies currently processing and manufacturing this milk. Lower throughput will increase the unit cost of manufacturing milk and will place considerable pressure on the viability of some of the State's manufacturing plants.

However, a reduction in milk production will not occur automatically. Total dairy farm numbers are certainly expected to decrease following deregulation but those farmers remaining in the industry are likely to significantly increase herd numbers in an attempt to maintain farm profitability. They will subsequently produce larger volumes of milk—but only as long as some form of price premium is maintained for market milk supplies. The current regulated price for market milk, as set by the New South Wales Government, is about 53¢ a litre. If the price of market milk falls to the equivalent of current manufacturing milk prices—and recent reports indicate that some processors are offering farmers just 27¢ a litre for their market milk—then it is highly likely that total farm production will also decline.

This sort of pricing squeeze from the processing companies will force many, many dairy farmers out of business. Dairy farmers in New South Wales simply cannot sustain their operations with such low farm gate margins. Country Labor has had some direct representations on this matter and approached me two weeks ago with the idea of a floor price for market milk. I believe a floor price is a very valid and very possible way forward. But it can only be implemented nationwide if it is to have any effect.

I therefore wrote to the Federal agriculture Minister, Warren Truss, two weeks ago asking him to give urgent consideration to a floor price for Australian dairy farmers, and also asking him to ensure that such a floor price would not jeopardise the dairy farmers' access to the adjustment package. I have yet to hear back from the Minister on this issue.

The New South Wales Opposition, meanwhile, does not support a floor price for dairy farmers. In an urgency debate in this House only yesterday National Party and Liberal Party members voted against the idea en masse. The urgent motion called on the Federal Government to implement a national floor price for market milk to enable dairy farmers to remain viable. The Federal Government has the legislative power to implement such a floor price. But the New South Wales Opposition—for some unfathomable reason—did not see fit to support the motion. In fact, the New South Wales Opposition has done little to help the dairy industry during this whole process in the lead-up to deregulation.

The Opposition's Federal counterparts in Canberra have forced all States to deregulate, saying that they would otherwise lose the adjustment package. Where was the State Opposition on this issue? Certainly I have seen no evidence of members opposite lobbying their Federal colleagues to change this onerous condition of the package. Now they even oppose a floor price for dairy farmers. Their only contribution so far has been to suggest an $80 million package, funded by New South Wales taxpayers, on top of the $1.74 billion adjustment package.

The amount of $80 million might sound like a nice, healthy round number. But, in reality, for our 1,800 dairy farmers in New South Wales, the total breaks down to about $40,000 per farmer. An average dairy farmer will lose twice that amount in the first year of deregulation. Let me just quote some figures which have been provided to me by the dairy division of Safe Food. The average dairy farmer has about 118 cows on a 175 hectare property and produces about 708,000 litres of milk a year. The percentage of his or her market milk production is 45.3 per cent and the percentage of manufacturing milk production is 54.7 per cent. Gross income is $267,337, from which farmers have to cover overheads and other business costs.

If these processors squeeze down the price of market milk from the current 53¢ a litre, farmers will face massive losses. For example, if the market milk price drops to 40¢ a litre the farmer will lose $43,779 a year from his income. If the price drops to 35¢ a litre then the dairy farmer will lose $59,815 a year. If the price drops to 30¢ a litre the farmer will lose $75,851 a year. If the price drops to 27¢ a litre—as some processors are currently offering—then dairy farmers will lose a massive $85,473 a year.

So the National Party proposal really has no weight in this situation. Members of the National Party want taxpayers to provide a short-term handout but they will not support a more practical, long-term solution such as a floor price. I might also remind the House at this point that the DFA has maintained it will not be asking for an additional compensation package from the State Government. I quote again from the ABC Country Hour program of 1 May when Winston Watts said:

The DFA has made it very clear it is not going to the State Government and asking for a double-dip on the compensation issue.

Mr Reg Smith, the President of the New South Wales Dairy Farmers Association, tells me he wants to put a proposal to me which may provide some form of structural adjustment assistance to dairy farmers in New South Wales. I am keen to hear what he says in this regard. I have invited him to come over to me and discuss the issue, and have given him an undertaking that I will see what I can do to help dairy farmers in this regard.

I have also established—as most people here will already know—a Farm Gate Deregulation Fund. This has been set up in conjunction with the dairy industry and is being financed from the regulated milk price structure. By 30 June the fund will have raised about $1.7 million which will primarily be used to pay for the services of rural counsellors. These counsellors will assist dairy farmers and their families who may experience social or financial problems as a result of deregulation. I believe this is a valuable addition to the monetary assistance which the adjustment package is providing. It is ensuring that dairy farming families receive practical, on-the-ground advice during the upcoming time of change and uncertainty.

Moving on, it is important to point out that dairy farming has already begun to move from the traditional coastal areas to more inland areas where land is generally less expensive. This trend is likely to accelerate with total deregulation of the industry. Alternatives to dairying in those coastal areas are generally not regarded as suitable for income-generating operations which are comparable to dairying. Beef production, for example, requires much larger areas of land, and the cost of acquiring this additional land generally rules out beef production as a dairying alternative. Horticulture, grain growing, and other crops require specific types of soils and climate—not often found in dairying areas. So again these are not suitable industries for our dairy farmers to move into.

Patterns will change too, such as fodder needs for larger dairy herds, and water needs for dairy farmers moving into other industries. So yes, our dairy farmers will face many changes over the next few months. I would like to be able to say that the New South Wales Government can prevent those changes, but reality tells us that we cannot. The Australian Constitution tells us that we cannot. Victorian milk could flood over the New South Wales border from 1 July regardless of whether or not we retain regulations in this State. But that has not stopped us exploring all legal avenues which may have enabled us to prevent that influx.

Only last week we received legal advice on behalf of the Australian Milk Producers Association. This legal advice suggested that we could alter the current quota system which would open up New South Wales quotas to other States while still protecting the New South Wales market. Unfortunately, our own legal advice—from Bob Ellicott QC—tells us that this would be unconstitutional. Our advice stated that the proposal put forward by the Australian Milk Producers Association breached section 92 of the constitution—which guarantees free trade between States. We cannot therefore depend on this proposal, courageous and encouraging as it did sound at the time.

The contents of this bill, the Dairy Industry Bill 2000, have been debated at length over many months with all sectors of the New South Wales dairy industry. Many in the industry reluctantly support the bill because of its inextricable link with the $1.74 billion adjustment package. I would now, therefore, like to move on to the very important area of food safety within the dairy industry.

The maintenance of high standards of food safety is essential in all industries. In the case of the dairy industry, it played an important role in the NCP review, where it was found to pass the so-called ‘net public benefit test’. Under the provisions of the Food Production Safety Act 1998, the Dairy Division of Safe Food has the ongoing responsibility of regulating the handling of milk and dairy products in New South Wales in order to ensure their safety for human consumption. Now, however, a key issue arising from dairy deregulation is the removal of current price-setting provisions and how the Dairy Division of Safe Food will fund its ongoing activities in this area.

Amendments contained in this Dairy Industry Bill which relate to the Food Production (Safety) Act 1998, require Safe Food to fund its future activities through the collection of licence and audit fees from all sectors of the industry. However, the Dairy Industry Bill also enables the Governor, by way of proclamation, to give effect to the former vesting provisions of the Dairy Industry Act 1979. This provision of vesting will only be available until 31 December 2000, however. After that date the provision will automatically be repealed. This will ensure that the Dairy Division of Safe Food has sufficient funding available to it in the short term, before alternative funding sources can be secured.

The Food Production (Safety) Act 1998 also requires Safe Food to consult with the relevant industry, or sector of industry, in relation to the operation of any food safety scheme. In the case of the Dairy Division of Safe Food, the relevant industry consultative body is the New South Wales Dairy Industry Conference, a body currently constituted under the Dairy Industry Act 1979. Under the provisions of the Dairy Industry Bill, the New South Wales Dairy Industry Conference will remain as the forum through which the industry can provide its views to me on dairy issues within Safe Food. The industry can also consult with Safe Food on food safety schemes relating to the dairy industry.

The Dairy Industry Bill also makes further consequential amendments to the Food Production (Safety) Act 1998, including amendments relating to the composition of the Food Production Advisory Committee and other matters such as the formation or participation by Safe Food of private subsidiary corporations. In conclusion, I say again that it is with considerable reluctance that I present the Dairy Industry Bill. But the passage of this bill will at least ensure that all New South Wales dairy farmers can access the $1.74 billion industry adjustment package. This package will return the average New South Wales dairy farmer approximately $192,000. Some will receive more, some will receive less. I accordingly commend the bill to the House.

The Hon. I. COHEN [8.56 p.m.]: It is with a degree of sadness that I speak to the Dairy Industry Bill. As part of our culture we rely heavily on the dairy industry. It goes back to our school days and to the free delivery of milk to schools. Those things are very important to the people of New South Wales. I am part of a green movement that has also been very critical of the use of land by the farming community but, living in the country myself and having a lot to do with rural issues and involving myself with the rural community over a period, I have gained a new appreciation of what is needed to keep farming communities in rural areas in a position to survive. We have seen several attacks on the farming community, and the moves to deregulate this industry will have a significant impact. This bill is a symbol of everything that is destroying the quality of life for people of New South Wales. It is not a complicated bill, but this one little bill will have disastrous consequences.

Every morning in the fertile coastal valleys of New South Wales an event takes place which may not happen this time next year. Around 5.00 a.m. the cows come in for milking. Dairy farming is not an easy job. The hours are long and the work is hard. Most of the farms are still run by families who are not being represented by the industry bodies that claim to represent them. They are certainly not being represented by the main political parties, who listen only to the big end of town. My research adviser, Carla Sperling, comes from the Illawarra area, where there are a lot of dairy farms. She has a keen and special interest in this matter. Jan Barham, who is also a researcher for me, now lives on the North Coast and she comes from a dairy farming family. It is interesting to see how wide the culture spreads throughout the community. Some people have been involved in the industry for generations. The dairy industry is important, both for the quality of the product developed and the culture in towns in the coastal areas.

Deregulation of the dairy industry started with Jeff Kennett. It has now been embraced by the Federal Government, and in the next few days the future of the New South Wales dairy industry will be decided by the New South Wales Parliament. This decision will affect more than just the dairy industry. If legislation to deregulate the industry is passed by the Parliament the milk processors and the supermarkets will benefit, but the rest of us will lose. We will lose at least half the dairy farms in New South Wales, which will become financially unviable. The land once occupied by those farms, which is some of the most productive agricultural land in the State, will then be put under enormous development pressure.

We will lose milk produced by pasture-fed cows. Milk will mostly be produced by cows confined to huge sheds and fed antibiotics to keep them healthy. We will lose a reasonably priced product. A litre of milk is now cheaper than a litre of water or a litre of soft drink. With deregulation, although the price paid to farmers will drop, the price paid by consumers is likely to rise. I turn now to the type of farming that has been undertaken for generations in the community. The quality of the product is of great interest to consumers both in Australia and overseas. Indeed, a short time ago I issued a press release which stated, "Clean green cheese please". That sounds absurd, but what will be lost with deregulation of the industry is the niche marketing potential of the small, quality industries that exist at present.

With factory farming a high level of antibiotics is pumped into beasts living in relatively inhumane conditions. That is an important point, and the Greens take that issue seriously. At least pasture-fed cows are given a reasonable quality of life while they are producing milk for an industry that is reaping profits from them. Certainly, cows confined to huge sheds and fed antibiotics have an unnatural existence. Not only is that an environmental disaster, which I shall refer to later, but it is also an animal rights issue. As far as the Greens are concerned, it is also a move away from ethical farming. This issue affects us all. It is an environmental issue.

I have seen a number of large-scale farms. Indeed, I was present during a raid on a place called Hen Home, which was a massive battery chicken establishment far removed from natural farming practices. Similar types of battery or commercial intensive farming practices are extremely cruel. They are unnatural and leave the animals in a much less healthy condition. Once again it is an alienation from the natural relationship of man and beast to produce a quality product. The large-scale farms, which will be necessary for financial survival in a deregulated industry, will be mostly located away from the coast on land that is not suited to dairying. Inland rivers, which are already under enormous stress, will be subject to further pollution as a result of intensive farming practices. The environment will not cope with the pollution and irrigation which feedlot dairies will cause.

The Greens are concerned about moving away from the niche opportunity that exists in Australia in terms of producing quantity and quality natural products, particularly in coastal areas of New South Wales. Those areas produce a commodity with a world-class reputation in terms of export potential to Europe. If we do not take the opportunity to protect our primary industries, whether it be the forestry industry or the dairy industry, we will lose a wonderful resource and the potential export of that resource to Europe. The wholesale bottom line use of our forest resources was that once it is lost it is gone forever, and the same can be said about a deregulated dairy industry. Indeed, we are looking at clear felling the dairy industry, which will affect many people in the farming community and in rural towns, which are already suffering a great deal.

Apart from that, it is also a health issue for city people. No parents would prefer their child's milk to be produced by cows fed antibiotics. It is a huge economic issue for rural communities. The industry is an important part of the economy of many towns up and down the coast. From Nowra to Wauchope, regional communities which depend on the industry will be damaged by deregulation. The big political parties are claiming that the so-called rescue package is the answer. They are threatening that if New South Wales does not deregulate, farmers will miss out on compensation. That is simply a bullying tactic. The alternative plan being proposed by the farmers is a viable solution which could provide real social, economic and environmental benefits. As part of the plan, a sustainable, clean, green marketing strategy could be developed.

Farmers could be encouraged to produce organic, non-genetically modified milk. The European dairy market has been affected by dioxin contamination scares, mad cow disease and nuclear fallout from the Chernobyl reactor. There is an insane amount of disruption in the European farming sector. That means that the potential for exporting clean produce from Australia is astronomical, and we must take advantage of that potential because these products could be very successful in future in the European context. The possible triple bottom line result is not understood by the unimaginative economic rationalists who advocate deregulation. It would produce healthier, less costly milk for city people. It would result in a more secure future for regional communities that rely on dairying. It would certainly be better for the environment.

The only loss would be the one the big political parties care about: short-term supermarket profits. It is up to the people to let their representatives know that there are more important things in life than the balance sheets of supermarkets. There is still time for the people of New South Wales to make known their views about dairy deregulation. The people have a choice about this issue. Dairy deregulation is not inevitable. Farmers are starting to question the leadership of their industry. If city people, who are the consumers of the product, become aware of these issues parliamentarians can be convinced to reject deregulation and the campaign can be won. The thing that most annoys me about this bill is that no-one has a good word to say about it. So why deregulate?

Not one reason has been provided as to why the farm gate milk price needs to be deregulated. Not one positive thing is predicted to happen as a result of the passage of this bill through the House. It will certainly not benefit the consumer. After the first stage of deregulation the price of milk to the consumer increased, although the price paid to farmers remained the same. Although everyone recognises the damage that deregulation will cause, the only argument in favour of the bill is that it is a fact of life so let us get on with it. An example of this strange logic is an internal memorandum written by the Chairman of Dairy Farmers, Mr Ian Langdon, who said:

I urge all members of this House to acknowledge the absurdity of this argument. We were not elected to act like lemmings jumping off the cliff simply because everyone else is doing it and there doesn't seem to be any alternative. We were elected to this place to represent the people of New South Wales and to make decisions which are in their best interests.

This issue cuts across the political divisions which are so often apparent in this place. I call on all honourable members of this House, particularly members such as me who are based in regional areas that rely on dairy farming, to rethink this issue. It is not too late to put the pressure on the Victorian and Federal governments to retain a regulatory framework. This is the only solution. The amendments proposed by the National Party, if passed, would simply add an extra bandaid on top of the Federal Government's bandaid. Certainly, the Greens are very concerned about this bill. In a letter dated 8 June addressed to the district chairmen of Dairy Farmers, Ian Langdon wrote:

As you know, Dairy Farmers did not support deregulation (for all the reasons that are currently causing suppliers their anxiety) but it is a fact of life and we must all make business decisions based on real life, not speculation … Deregulation is now too far advanced to be stoppable and is, regrettably, a fact of life. Our business decisions must be based on ways to work successfully within the circumstances which deregulation brings with it.

A sad state of affairs, with very significant social implications, has developed. It certainly cuts to the heart of the needs of rural communities, particularly the infrastructure of rural communities, small towns and farming areas along the coast of New South Wales, and will not be of assistance in the long term. It is understood that deregulation of the dairy industry has been foreshadowed for many years and it was a promise of the past Labor Federal Government to work this issue through. However, as we move into a new century and develop a different perspective on the importance of the quality of our produce, in particular our milk—and there is nothing more basic than the supply of milk to the marketplace—we need to change our attitudes and recognise that other things are more important than the supply of milk on a mass scale to the supermarkets, whether they are in Australia or around the world, and that we are dealing with the community. For those reasons the Greens condemn the bill.

The Hon. A. B. KELLY [9.11 p.m.]: I support the Government's Dairy Industry Bill, which deregulates the dairy industry, but I do so reluctantly. I believe it is possibly making the best of a bad lot. To some degree I warm to the comments of the Hon. I. Cohen, in that the Federal Government perhaps could have come up with a much better solution than the solution it has come up with. No-one seems to have the magic answer. The Minister for Agriculture called for the Federal Government to institute a floor price right across Australia, but that was rejected by the Federal Government. The Minister also wrote to Warren Truss to ask that the implementation of the scheme be delayed for some months, to allow time to come up with a better solution, a better package, or a better way so that so many farmers would not lose their livelihoods.

However, that also was rejected. I suppose there are valid reasons for that: for example, the Dairy Corporation staff will be made redundant on 30 June. They have not applied for Australian business numbers [ABNs]; they do not have the farmers' ABNs. I suppose that if the deregulation of the dairy industry was not supported, all hell would break loose. However, that does not help the dairy farmers, who have been used to getting something of the order of 53¢ a litre over the last few years. New South Wales dairy farmers have consistently received the highest price for their milk, while at the same time New South Wales consumers have paid the lowest price for their milk. Effectively, that has meant that the processors and the supermarkets in New South Wales have had the leanest margins of any other State in Australia.

But it has meant that New South Wales has had an efficient scheme, and dairy farmers have received a reasonable return for their investment. Most dairy farmers in New South Wales make a reasonable income, but they consistently pour that money back into their own communities; they rarely take any of it off the farm. They usually pour it back into a fairly capital-intensive and labour-intensive industry, but they pour it back into their local communities. It has been suggested that up to 50 per cent of dairy farmers in New South Wales, Queensland and Victoria will lose their income and will have to leave the industry after dairy deregulation, as well as 600 or 800 of the 1,400 employees in New South Wales. If that happens, it will cause an enormous amount of trouble to those communities, not only the dairy farmers.

I now turn to what is likely to happen after deregulation of the dairy industry. As I have said, currently dairy farmers receive about 53¢ a litre for their milk, the highest amount of any State. In 1998 dairy farmers received about 50¢ a litre for their milk, and consumers paid $1.16 a litre. That meant that dairy farmers were receiving almost 50 per cent of the retail price of milk. What is likely to happen after dairy deregulation is that farmers are likely to receive about 27¢ a litre for their milk and consumers are likely to pay $1.38 a litre for their milk. In other words, the dairy farmers will receive about one-fifth of the amount that consumers will pay for their milk on a retail basis. That is a dramatic change from the 50 per cent that dairy farmers currently receive.

The floor price that was proposed by Country Labor and by the Minister for Agriculture was a stepped floor price, one that would ensure that the dairy farmers would continue to receive a reasonable amount for their milk. However, that floor price might last for only two or three years, then be stepped down, so that over a period of eight or nine years the floor price would drop back to nil, to give dairy farmers a chance to restructure. In the last couple of months I have spoken to many dairy farmers. Some of them have told me that they have borrowed up to $750,000 in the last year or two. How will they survive after dairy deregulation?

The Hon. I. Cohen: Won't Country Labor look after them?

The Hon. A. B. KELLY: We are trying. We have come up with a reasonable solution, but that was rejected by the Federal government.

The Hon. D. J. Gay: What was your reasonable solution?

The Hon. A. B. KELLY: The floor price. Let us talk about the floor price for a moment. Warren Truss suggested that it was a cruel hoax. I do not know why the Federal Government cannot introduce a floor price; Gough Whitlam did it for the woolgrowers years ago, and it was quite legal for him to do that. I do not know why the Federal National Party cannot introduce a floor price now that it is in power. You say that the Federal Government cannot control prices, yet the Australian Competition and Consumer Commission [ACCC] controls what caravan owners will have to pay with the GST. We cannot say that the Federal Government can do it for the woolgrowers on the one hand, but not for the dairy farmers on the other.

The Hon. D. J. Gay: Who was going to get the floor price?

The Hon. A. B. KELLY: The dairy farmers.

The Hon. D. J. Gay: Which dairy farmers?

The Hon. A. B. KELLY: The existing dairy farmers.

The Hon. D. J. Gay: How would you regulate that?

The Hon. A. B. KELLY: Let me explain the way in which dairy farmers will be paid. Dairy farmers are now being offered contracts—some have signed, and some have not—for 55 per cent of their 1998-99 market milk production at 37¢. They are being offered 24¢ for the other 45 per cent of their milk, which averages out at about 28.6 per cent. Most of the dairy farmers who intend to stay in the industry have said that they will make up the difference in the shortfall by boosting their production. They are being offered 14¢ a litre for milk over and above their 1998-99 market milk production. For 14¢ a litre they may as well pour the milk down the gutter. If the Federal Government can use those years to work out their contracts, why can it not use the same years to work out what floor price it will pay?

The Hon. D. J. Gay: Who is going to pay all this?

The Hon. A. B. KELLY: The Federal Government has put in the legislation that it will take 11¢ a litre from all the consumers for all the milk that is sold in the future. Why can it not introduce a floor price in the same legislation, as has been suggested? All the Federal government has said is that it does not have the power. It had the power to introduce a floor price for the woolgrowers, and it has the power to regulate for a whole host of other things, but it is not prepared to do it for the dairy farmers.

My problem with this $1.745 billion package—$45 million of which is funded by the Federal Government for business communities—is that it will collect approximately $520 million in New South Wales, but will deliver only $327 million back to the dairy farmers. In other words almost $200 million more funding will be collected in New South Wales than will be returned to its dairy farmers. Together with other moneys, that amount will go to the Victorian dairy farmers who will actually receive $400 million more than is collected in Victoria.

The Hon. D. J. Gay: New South Wales dairy farmers will receive more than the Victorian dairy farmers. You know that that is a dishonest argument.

The Hon. A. B. KELLY: If the honourable member will be patient, I will come to that matter.

The Hon. D. J. Gay: You would not have, if I had not brought up.

The Hon. A. B. KELLY: I will tell the honourable member the exact figure directly. That additional $400 million will come out of other States that will be subsidising Victorian dairy farmers, and that is a real problem. However, New South Wales dairy farmers will receive approximately $192,000 each. Because of the sheer weight of numbers in Victoria, the dairy farmers in that State will receive approximately half the compensation received by New South Wales dairy farmers. I notice that the Deputy Leader of the Opposition is not listening and has not heard what I have said. Although Victoria will receive $400 million more, Victorian dairy farmers will actually receive only half the amount received by dairy farmers in New South Wales. That poses an enigma for New South Wales dairy farmers, who are concerned about, in effect, subsidising the Victorian dairy farmers' attack on New South Wales markets.

I had hoped that there would have been a better solution than the deregulation of the dairy industry. The rot set in approximately five years ago when the milk vendors system was deregulated. Unfortunately, this Parliament has had a gun placed to its head, just as the Victorian, New South Wales and Queensland dairy farmers had a gun placed to their heads when they were asked to vote for the package. A gun was placed to their heads to accept the compensation package and deregulation. Their only alternative was to forgo the compensation package. This Parliament has exactly the same gun at its head, and that is why, reluctantly, I support the legislation.

The bill refers to the financial assistance that will be provided to dairy farmers as part of the restructuring package. I reiterate that the package is financed by a levy of 11¢ a litre that will be paid by New South Wales and other Australian consumers of milk over the next eight years. Consumers will fund that compensation package; it is not funded by the Federal Government. Australian dairy farmers will receive $1.36 billion through 32 quarterly payments. The program provides an option to enable dairy farmers to take their financial entitlement as an up-front payment rather than receive payments over eight years. That is an important part of the program because obviously many dairy farmers who concede that they will no longer be viable will take that option and sell their farm.

The New South Wales dairy industry has also produced a series of dairy industry assistance measures to provide for a program of advice and counselling for dairy farmers and their families as they face the effects of deregulation. These initiatives have been co-ordinated by a committee established specifically for that purpose which comprises representatives from the office of the Minister for Agriculture, the New South Wales Dairy Farmers association, New South Wales Agriculture, the Department of Land and Water Conservation, the dairy division of New South Wales Safe Food Production and New South Wales milk processing companies. Believe it or not, the program is called Dairy Do It. Within that program, there are three key areas of support.

The Dairy Assist part of the Dairy Do It program provides guidance on how to access the structural adjustment package. Several seminars have already been held as part of that program to ensure that dairy advisers throughout the State are adequately informed and are able to assist dairy farmers. Dairy Family aims to provide social support to dairy families as they come to grips with changes in the dairying environment as a result of deregulation. Dairy Check helps dairy farmers reassess their businesses and explores ways to review and improve dairying practices in preparation for and following on from deregulation. Overall, the Dairy Do It program is designed to provide services to minimise stress and anxiety which individuals and families may experience as a result of the impending dairy industry deregulation process.

Recently the suggestion has been made that the New South Wales Government should add to the Federal compensation package of $1.7 billion. That is a ridiculous suggestion. It is based on the fact that dairy farmers are now receiving much less than they were originally offered or much less than they thought they would be offered when the compensation package was being prepared. The suggestion is that dairy farmers will be offered approximately 27¢ a litre as opposed to 37¢ a litre and the National Party suggests that the New South Wales Government should contribute to the compensation package. What would happen after two months or three months when dairy farmers are offered—and I suspect this may well happen—approximately 24¢ a litre for their milk? Are the State and Federal Governments to be approached again? Obviously, the answer to that question is no.

The best course would have been to enable dairy farmers to remain in the industry. Dairy farmers do not want to be restructured out of the industry. They want to continue to operate their dairy farms. As the Hon. I. Cohen stated earlier, dairy farmers are among some of the hardest working farmers on earth. I had always thought that vegetable farmers were the hardest working farmers until one morning approximately 15 years ago when I was picking lettuce for the markets at 5 o'clock under floodlights. I had to get 300 cases of lettuce to the markets before 8 o'clock that morning and I was very pleased with myself and thinking that it was really great to be in the paddock and being the only person to be doing some work. Then I looked up the hill and saw that my next-door neighbour, a dairy farmer, had been hard at work for longer than I had been. That was the one day in the year when I was working very early in the morning and it made me appreciate that my next-door neighbour had to get up before dawn every day of his life. Cows do not have public holidays, so dairy farmers work seven days a week and do not have a break at Christmas.

Dairy farmers really are the most consistent and hardest working people. If I want to take a day off, I just do not sell the lettuce or I pick the crop the next day whereas dairy farmers have to pull on the wellingtons every day. I feel very sorry for people involved in the dairy industry throughout Australia and I feel very sorry for dairy farmers in Victoria because they have been sold a pup. I believe that dairy farmers in Victoria will actually be worse off or as badly off as dairy farmers in New South Wales and Queensland. When the dust settles after deregulation, up to 3,000 dairy farmers in Victoria will have lost their livelihoods. Already a Victorian dairy farmer is destined to receive half the amount that a New South Wales dairy farmer will receive for an equivalent quantity of milk and will simply not be able to survive on a reduced income.

As I stated at the outset, I very, very reluctantly support the bill. I had hoped that the dairy industry in this State would never have come to deregulation and restructuring and that somewhere along the line the Federal Government would have produced a package to solve the problem. State governments cannot solve the problem because of section 92 of the Constitution. Because the Kerin plan no longer exists, after 1 July as a result of deregulation Victorian dairy farmers will be able to sell their milk in New South Wales. I think Victorian milk is already being sold at 27¢ a litre in New South Wales but after 1 July, that will be done legally unless the Federal Government passes overarching legislation. There is nothing that a single State government can do to save dairy farmers in Australia. Having made those comments, as I stated earlier, I reluctantly support the bill.

The Hon. I. M. MACDONALD (Parliamentary Secretary) [9.30 p.m.]: I am sure that all honourable members in this Parliament are deeply concerned about the impact of the Dairy Industry Bill upon ordinary people in this community. The bill has to be debated and carried because it is the response to, and the only way out of, a national set of events which the Hon. A. B. Kelly explained and which I will endeavour to outline. It is the only way out because the Commonwealth Government has threatened that on 1 July, if this Parliament has not passed this bill, it will withdraw the dairy industry assistance package from dairy farmers across Australia. During the past year this has been one of the most distressing political and social events in this country.

The Deputy Leader of the Opposition, the Hon. Jennifer Gardiner and the Hon. R. S. L. Jones are no doubt very supportive of an expanding, healthy and strong dairy industry in this country, an industry that expanded from relatively low export figures in the early 1990s to more than $2 billion last year. That export drive has put large amounts of Australian product in the Asian market, in particular.

The Hon. R. S. L. Jones: Mainly from Victoria!

The Hon. I. M. MACDONALD: As the Hon. R. S. L. Jones said, mainly from Victoria. However, I know a number of New South Wales producers who are contributing to this national endeavour. The problems that we encounter with the dairy industry package and its impact upon ordinary farmers in this community means that we have no choice but to pass this bill through Parliament.

The Hon. R. S. L. Jones: We have a choice.

The Hon. I. M. MACDONALD: The Hon. R. S. L. Jones does not understand the purport of the bill. In effect, the Federal Government has said that if this legislation is not passed it will withdraw the package. It is important that we pass this legislation so that dairy farmers across Australia can have access to the $1.7 billion, plus the promised $45 million in regional assistance programs, the details of which the Deputy Leader of the Opposition is probably not aware, for structural adjustment programs. It is sad because this industry was working very well. It has been through the meat mincer during the past year and it has been turned upside down. All honourable members would be very apprehensive about the impact across the dairy industry. The Hon. A. B. Kelly and I are of the view that dairy farmers are certainly the hardest working and most industrious agricultural workers. Perhaps agricultural workers who endure the tropics in the Ord region, in northern Queensland or the Northern Territory have more difficult circumstances. But, generally, dairy farmers across Australia are the most diligent and hardworking of all farmers.

The trouble with dairy deregulation is that now the industry is prone to control by one element, or a couple of elements, particularly in Victoria. I am concerned that under deregulation there will be an increase in takeovers such as by Parmalat Foods Australia or other large multinational corporations. Squeezed out of the industry will be many thousands of small dairy farmers who have contributed so magnificently to the dairy fabric. To some degree I blame the dairy farmers associations because they embraced deregulation without knowing its impact upon the ordinary farmer. They should have known that, in the culture of Howard and Reith, if they put up the shibboleth of deregulation it would be adopted and run with as though it was their philosophy. In the climate of Canberra these days one cannot support deregulation without being bit on the tail. That is exactly what the dairy farmers have done.

Dairy farmer organisations of this country will have, in effect, destroyed the lives of thousands of families if this deregulation happens in the next six months. No-one else has done it. The organisations did it because they went along with the philosophies of deregulation of Howard and Reith. They gave them the ball. They said to them, "We would like you to do to us what you have done to every other regulated industry." Consequently, thousands of dairy farmers and their communities will be put out of business and will suffer regional degradation.

We have to support this bill because it is the only way that New South Wales dairy farmers will gain an average of $192,000. Surely that appeals to the Hon. R. S. L. Jones, who is always interested in the dollar and has been one of the more astute businessman in this Chamber during many years, certainly in the years that I have known him. The Hon. R. S. L. Jones would know the value of the proposed $336 million package to go to New South Wales farmers who have been sold out by the Federal Coalition, including the National Party, and by their dairy farmer organisations. In the end dairy farmers need us to pass this bill so that they can have some resources to resist the attack that will come across the border from Victoria. The attacks will be significant because Victoria controls 66 per cent of the national market power compared with the wonderful 14 per cent of New South Wales dairy community, who live in areas such as where the Hon. J. S. Tingle lives.

The attack will be in alliance with overseas international interests, who will have no concern about the ordinary dairy farmer in this country. It is all right at the last moment for the Deputy Leader of the Opposition to say that it is Labor's fault or anyone else's fault. Last year, when the Premier of Victoria, Steve Bracks, honoured an election commitment to have a plebiscite of Victorian dairy farmers on deregulation, the National Party in Victoria did nothing. It supported deregulation. It is clear cut that that is the very source of the problem with which we are confronted in New South Wales.

As everyone knows, the Queensland Nationals, the largest and strongest National Party in this country, even though it has been reduced to a hockey team, said that the blame rests squarely on the shoulders of the Victorian National Party. In the conduct of that ballot late last year the National Party of Victoria deserted the dairy farmers of Victoria and dairy farmers everywhere else. They rang the bell and threw the first blow. The Deputy Leader of the Opposition has his head in a document with a highlighter in his hand but he is avoiding the fact that the Victorian branch of his own party supported the "Yes" case in the referendum, which was carried by 89 per cent of dairy farmers in that State.

I will be very interested to hear the Deputy Leader of the Opposition explain what he might do about this horrendous situation created by the Victorian National Party, in league with the big milk producers in that State. The Australian Labor Party in Victoria at least gave the dairy farmers an opportunity to have their say, before 89 per cent of those farmers voted in favour of deregulation.

The Hon. A. B. Kelly: What did Ian Causley say today?

The Hon. I. M. MACDONALD: What did Ian Causley say today? I am sure the Deputy Leader of the Opposition is highlighting the comments of Ian Causley. The piece of paper he is burying his head in is probably a transcript of the AM program aired this morning, in which Ian Causley, the member for one of the Federal northern seats, made it very clear that the National Party shares some of the blame on this issue. The Hon. Jennifer Gardiner has her head buried in a document, which she is busily highlighting. I know why they have their heads buried in those documents: because they are trying to hide from the fact that they were complicit in what went on.

The Hon. Jennifer Gardiner: What did Bob Katter say today? He spoke about the Labor Party's train crash.

The Hon. I. M. MACDONALD: I am going to listen to Ian Causley. I played cricket with Ian Causley, and I know what a fine fellow he is. In the parliamentary eleven he was a dedicated straight-batter who played at everything bowled at him. He did not muck around. I have a transcript of what Ian Causley said this morning. The Deputy Leader of the Opposition still has his head buried in papers, trying to work out how he is going to handle this debate. I know that the Hon. Jennifer Gardiner would love to hear me read this. The program host said:

But one of the members most at risk is the member for Page, Ian Causley, who said that deregulation of the dairy industry could be a bigger issue for the National Party. He said that many dairy farmers, despite voting for deregulation, are likely to ditch the party because of it.

"People don't differentiate, they don't know the difference and, yes, we'll cop the blame," Mr Causley told ABC radio.

But I have a little bit more for the Hon. Jennifer Gardiner, the National Party member for Glebe:

"There's no doubt that there's worse to come. As the industry settles down, there will be a lot of people in all States that will leave dairying."

He was backed by Queensland National Party MP Bob Katter, who warned deregulation would be the worst disaster to hit regional Australia, wiping out up to 20,000 livelihoods.

This is from a man who lives in Mt Isa and would not know a dairy cow if he fell over one. He then went on to details about caravan parks. We will deal with that issue later. This is what was said by Ian Causley, who, as the Hon. R. S. L. Jones and others would recall, was a Minister in the Greiner and Fahey governments. Mr Fahey is still down in Canberra doing business as Finance Minister. Mr Greiner is still doing business, but in another area. Ian Causley said:

Dairy deregulation is looming as the next problem for the National Party.

He goes on to talk about the uproar about the GST applying to caravan sites. That member of the once great National Party, a well-respected cricketer of this Parliament, who between bouts of bad knees was not a bad batter, told ABC radio this morning that the dairy industry deregulation is a great problem facing the National Party. Honourable members, particularly crossbenchers, want to know where the problem lies. It lies not with the New South Wales National Party; we will forgive them at this point. It lies with their friends down south, members of the Victorian National Party who encouraged the yes vote on the deregulation question, which was democratically promised last year by the Premier of Victoria, Stephen Bracks. As a consequence, dairy farmers in New South Wales will lose their livelihoods.

The support for deregulation of the dairy industry in Victoria, in which support for the National Party was complicit, has seen Reith and Howard, that little group of deregulators who want to transform Australia and GST us out of existence, grab that concept and run with it. They said, "Dairy deregulation, we'll run with that! Not only that, we will charge a uniform 11¢ per litre across the board." They determined a levy of 11¢. As a result, the poor old New South Wales citizens and voters will have to pay $506 million. In return, the dairy farmers of New South Wales will get only $337 million. Indeed, $170 million of New South Wales consumers' money will head south to Victoria to look after the Mexicans in this issue. That is the reality.

I hope the Deputy Leader of the Opposition will finally absolve the sins of the National Party on this issue when he gets up in this Chamber, in front of the people of New South Wales, and apologises for his confreres south of the border, and also says that he is sorry. I know they have difficulty saying sorry on other issues, but maybe they can say sorry to their own constituency. I hope the honourable member says to the New South Wales dairy farmers that he is sorry that the National Party did not encourage rejection of the package right throughout the debate. This is a very sad situation.

The Hon. Jennifer Gardiner: Then stop smiling.

The Hon. I. M. MACDONALD: I am not smiling.

The Hon. Jennifer Gardiner: You are.

The Hon. I. M. MACDONALD: Listen, you bring a smile to my lips every time I see you, Jenny.

The Hon. D. J. Gay: You have an affinity with Jennies all over the place—Jennie George.

The Hon. I. M. MACDONALD: I am proud that Jennie George will be the member for Throsby, which has within it quite a few dairy farms. I am sure that, unlike the National Party, Jennie George will get in there and fight for the dairy farmers and their interests. We have to pass this bill not because we want to but because we have to. That is the bottom line. If we do not pass this bill, on 1 July the Commonwealth Government will abandon the dairy farmers of this State and every other State by withdrawing the $1.7 billion subsidy. In other words, the Prime Minister of this country, John Howard, is acting like George Speight; not only is he a look-alike with glasses, he is holding the dairy farmers of this State and every other State to ransom. He is telling this Parliament, the Western Australian Parliament, the Victorian Parliament and every other Parliament, "You pass this deregulation bill or no-one will get their share of the $1.7 billion." To me, that sounds like the three Fijian coups of May 1987, September 1987 and 2000 rolled into one.

The Federal Government is holding dairy farmers in this State and Australia hostage. John Howard, the George Speight of the Australian agricultural industry, is holding dairy farmers and this Parliament hostage. He said, "Accept my deregulation bill or you will not get your $1.7 billion." I feel sorry for the dairy farmers of this country. I urge all honourable members to support this bill so that at least dairy farmers benefit from some of that money and they are not abandoned by the Howard-Reith Government, in league with the Leader of the National Party, John Anderson.

I am afraid that John Anderson has abandoned the agricultural industry in New South Wales and Australia. The Federal Government sold off Telstra. John Anderson is a nice-looking Leader of the National Party. Before the election of George Souris and John Anderson the National Party never elected good-looking members as leader. It has now elected a couple of good-looking members and it is almost out of business. At the next election Country Labor will ensure at a Federal and State level that that the once great National Party, which has done nothing for dairy farmers in this crisis other than aid and abet the forces of economic rationalism, will go down the drain.

The Hon. D. J. GAY (Deputy Leader of the Opposition) [9.52 p.m.]: On behalf of the National Party I speak to the Dairy Industry Bill. Many people have been confused because of the statements and counterstatements that have been made, and the outright lies that have been told about the Dairy Industry Bill. I suspect that many people are even more confused after hearing the Hon. I. M. Macdonald's unbelievably outrageous speech tonight. I do not have to remind honourable members of the honourable member's last contribution to the adjournment debate in this House. He spoke in favour of Country Labor and about the entry of Jennie George into Federal Parliament. Jennie George has done more than any other person to destroy the great rural industries of this country.

Tonight the Hon. I. M. Macdonald asked members of the National Party to apologise for what happened in Victoria. I have apologised in this House for a number of things, but I find very strange the honourable member's suggestion that I should apologise for what happened in Victoria. I will quote from a letter dated 13 June which was written to the Federal Minister, Warren Truss. The letter states:

Dear Minister,

Progress Towards National Dairy Deregulation

I am writing to you to inform you of the progress made towards deregulation of the Victorian market milk arrangements. The dairy bill has passed through the Victorian Parliament without amendment and with the support of all parties and the Independents. The bill received royal assent on 6 June 2000.

The legislation provides for the deregulation of the market milk arrangements in Victoria, the establishment of the new Dairy Food Safety Authority to succeed the Victorian Dairy Industry Authority and the transfer of the residual assets of the VDIA to a new entity to be used for the benefit of the Victorian dairy industry and its communities.

These initiatives will be proclaimed in a number of stages to provide for a smooth transition to a deregulated environment. With respect to deregulation, it is the Victorian Government's intention to deregulate the market of milk arrangements as from 30 June 2000. At this time these provisions in the Dairy Industry Act 1992, which require market milk to be accepted by the VDIA and for the VDIA to set farm gate price, will be repealed.

To whom should I say sorry? Do honourable members believe that Jeff Kennett wrote this letter? The letter was signed by Keith Hamilton, MP, Minister for Agriculture—a Minister in the Bracks Government! Members of the Labor Party are asking members of the National Party to apologise for the actions of the Victorian Government. I did not ask Government members to mislead the House or to mislead dairy farmers. On Saturday Bob Horn stood on the back of a truck in the Tweed—

The Hon. A. B. Kelly: There must have been more Labor Party people up there than there were National Party people.

The Hon. D. J. GAY: More Labor Party representatives were in the Tweed at the weekend than have been outside the eastern suburbs in a decade. They missed their cappuccinos. The closest they got to milk was a flat white, and it showed. They made one huge mistake. They thought that they could mislead country people. They were desperate. Bob Horn stood on the back of a truck and said that the National Party introduced this legislation in the New South Wales Parliament. The Hon. I. M. Macdonald said tonight that he was speaking about legislation that had somehow come from the National Party. This legislation did not come from the National Party in this Parliament.

The Hon. I. M. Macdonald referred to George Speight. How dare someone who looks like the Hon. I. M. McDonald compare John Howard to George Speight! No-one in any parliament in this country looks more like George Speight than the Hon. I. M. Macdonald. Government members talk about members of the National Party trying to put the kybosh on them, and coming the heavy with them. The Hon. Richard Amery, Minister for Agriculture in the other place, said that unless this legislation goes through the Legislative Council without any Coalition amendment the Government will not support it.

Tonight the Hon. I. M. Macdonald said that members of the National Party were making these threats. What hypocrisy and dishonesty from members of so-called Country Labor! Last week the Hon. I. M. Macdonald was supporting Jennie George in this Parliament, but tonight he is misleading this House. The Hon. I. M. Macdonald is supporting someone who wanted to prevent dairy farmers in New South Wales from getting something extra from this State Government. This State Government is not being asked to put its hands into its pocket to provide any money for this package. This so-called Country Labor faction is the sham faction of the Labor Party.

The Hon. R. S. L. Jones: It is all being spent on the Olympics.

The Hon. D. J. GAY: Exactly. As the Hon. R. S. L. Jones said, all the money is being spent on the Olympics. This afternoon the Treasurer went to the press gallery, stood on the box behind the podium, looked over the microphone and said, quite casually, that the Government was providing an extra $160 million to help prop up the Olympics—an extra $160 million on top of the $700 million that has already been stolen from rural and regional New South Wales. That is what the Government is up to. The Hon. I. M. Macdonald would not take responsibility for the $200 million that his Government, through its mismanagement, ripped out of Integral Energy this year.

Members opposite do not realise that no government is being required to contribute any funding towards the Federal Government's package for dairy farmers. They forget that this Government expended a great deal of money to buy people out of the taxi industry. What utter hypocrisy! So far as I am concerned the Premier and the Treasurer are the Brothers Grimm of the dairy industry. They are putting together fractured fairytales about the dairy industry. Tomorrow, when we resume this debate, I will have a lot more to say on this topic. The Government will regret the fact that it tried to prevent us from getting an extra package for the dairy farmers of this State.

Debate adjourned on motion by the Hon. D. J. Gay.

The Hon. I. M. MACDONALD (Parliamentary Secretary) [10.00 p.m.]: I move:

That this House do now adjourn.

The Hon. M. I. JONES [10.00 p.m.]: I wish to speak about the Veterinary Surgeons Amendment Act. I have major concerns about the Act, which was passed two weeks ago. One may say that I should have raised these concerns at the time. I did not, but I have since received information that reveals a distinct lack of consultation within the industry and an Act that was passed without members of the Legislative Council having an appreciation of the full ramifications of it. I would like to raise the following issues: My concerns centre on the extensive powers given to the Veterinary Surgeons Investigating Committee in respect of potentially long suspensions of a veterinary surgeon's licence to practise.

Recently the Veterinary Surgeons Amendment Bill passed through this House without amendment. The second reading speech was tabled, and little discussion followed. However, on following up and revising the Act, prompted by public lobbying, I was dismayed by what has been passed. Veterinarians will be liable to suspension for 30 days, which can be extended to 60 days on application to the Administrative Decisions Tribunal, and then by further periods of 60 days on reapplication until the disciplinary matter has been heard and concluded. In the tabled speech be Special Minister of State said:

I acknowledge the strength of these powers, however they will only be available where serious professional misconduct has been alleged and where the investigating committee or the tribunal considers it appropriate in a particular case.

The bill enables the Veterinary Surgeons Investigating Committee to receive a complaint regarding a practitioner. Consider the position of a practitioner in the following hypothesis: A veterinarian is called upon to treat a condition in respect of which he or she has no experience, and the treatment is administered urgently and without possibility of referral—in remote areas that is quite a reasonable scenario; a complaint is then lodged with the Veterinary Surgeons Investigating Committee. The surgeon can be suspended while not guilty of an offence at law. Until the veterinarian can clear his or her name through the appeal process the suspension can be renewed and renewed until the appeal process is exhausted. This can be a long period and the practitioner can go broke. Therefore, the basis of Westminster law, that a person is innocent until proven guilty, is overwritten by this Act.

Consider also a practitioner who a conducts a contentious practice or advocates a point of view out of kilter with the establishment. The establishment, through the Veterinary Surgeons Board, which no longer enjoys government funding, can exercise its power under this Act and embark upon a single campaign to ruin the practitioner. This may be a small Act affecting few in society, but its implications are that Parliament can throw away centuries of precedent that a person is innocent until proven guilty by a court. The Magna Carta of the thirteenth century, while not specifically dealing with common man, was the foundation of that principle.

Why did the Government embark upon this draconian legislation which the Minister acknowledges is very powerful? Was it because of the fear of veterinary surgeons selling steroids to athletes at the Olympic Games? Perhaps. Far more likely is the Government's inability to obtain what it considers appropriate outcomes from court cases involving veterinary surgeons. I trust members of both Houses will take heed of this warning and I call upon the Government to revisit the Act with a view to its correction.

The Hon. I. COHEN [10.04 p.m.]: I wish to speak to an issue that has been raised in the other place by the Minister for Local Government, that is, Byron Shire Council. Over the years honourable members have heard about the goings-on in the small coastal shire on the far North Coast—sometimes praise, sometimes condemnation. The fate of Byron Shire Council is now in doubt, with the Director-General of the Department of Local Government issuing council with a three-month time frame to show improvement in its many areas of concern or be subject to a section 430 investigation under the Local Government Act.

Recent council elections resulted in community support for a majority of counsellors who espouse ecologically sustainable principles—in short, a green council. Perhaps that is what makes the Minister see red. Since I was elected in 1995 I have brought to the attention of this House some of the concerns of the Byron Shire Council. In the past representations have been made requesting inquiries into Byron Shire Council. The administration has been a great concern to the community for many years. In 1996 the Department of Local Government carried out a financial inquiry into Byron Shire Council and found that funds had been unlawfully transferred, but no action was taken. There was no action, just a recognition that past actions had left council with a debt in the vicinity of $6 million. Council has had to deal with that, and it is still doing so.

The community has suffered as a result, with insufficient funds being available for council to carry out what some would consider to be its core responsibilities, such as roads, but there has been no option. I add here that there has been little action by council to deliver revenue raising to assist in its financial woes. The general manager has not brought to council's attention opportunities for dealing with the debt other than taking out a loan and reducing expenditure—a very dry approach. The newly-elected council has just completed the very important task set down by the Act, to prepare its management plan for the next three years and its first budget. Council has not resolved to implement a rate increase beyond the rate-pegging limit set by the Minister. It has delivered a balanced budget with a differential rate for business with a higher differential for the town of Byron Bay, trying responsibly to share the cost of resource management.

Under the threat of an investigation, councillors are being tested to deliver a turn around in problems that have existed for some time and which may not necessarily be the fault of the elected representatives or be within their power to resolve. Poor Byron, people often say, so many pressures, so many knockers and so little help. Yet, what an asset to the State's community.

The Hon. D. J. Gay: And what a terrible council.

The Hon. I. COHEN: What absolute rubbish from the Deputy Leader of the Opposition. The State Government enjoys what Byron shire has to offer on a personal level and politically. Very soon the Olympic torch will make its way through Byron Bay and out to the most easterly point of Australia. I am aware that people are planning protests for this media circus. Byron is green, in so far as it has had for many years a community that appreciates the special environment, both ecologically and socially, and has put itself to work trying to protect that. It has done very well. The community has held off Club Med, McDonald's and, on occasions, even the State Government's ecologically unsustainable development.

Consider how it is for a community that has worked so hard to protect its home and has made what it has unique, only to become a prize that those with a commitment to making money try to develop for their own personal gain and to the detriment of the general community. They are then told that it is just progress, that tourism rules and if people want to develop they should be allowed to. This is why council has had so many legal cases, because it has tried to defend the community interest. Developers have sought to oppose decisions of the elected body that represents the community by taking it to court. I suggest the Minister for Local Government has a history lesson to learn in relation to Byron shire. He should look at the past, at the administration and consider where the State Government has been negligent.

On a positive note, Byron Shire Council last year received five awards for environmental excellence. I spoke in the House on this just recently. Byron shire has a desire to create a sustainable future. This is what governments crow about, and Byron is setting an example that has been recognised and for which it should be congratulated. The reality check is yes, Byron shire does have problems. Yes, it is in a less than satisfactory financial situation, but let us be clear why. Currently it does not have a landfill site and is transporting its waste to Queensland, but we should look at whose responsibility it is. The administration has not dealt with this appropriately. There are planning problems, with a backlog of 241 development applications. There is a sewage moratorium, but, as the Premier has noted, this is responsible when there is insufficient infrastructure to be able to approve development. The former Director-General of Planning sent Mr Sam Haddad to Byron to check the need for an upgrade, and that is going on with State's agencies involvement at present. There are problems, and no-one except the general manager appears to deny that.

I respectfully ask the House and the Government to consider the value of a Minister set on condemning a democratically-elected council that is acting to address the problems, when the State has not been there to offer assistance and support to an area that is under extreme pressure and the council is trying to serve its electorate responsibly. Byron is a very special place. The world recognises that. It is now considered to be the most popular tourist destination in the world for backpackers. There is increasing popularity on a domestic and international tourism level. It would be more beneficial for the State Government to support, rather than threaten, a newly-elected council and pay some attention to the problems that have been inherited and the lack of accountability and responsibility of the bureaucracy. [Time expired.]

The Hon. D. J. GAY (Deputy Leader of the Opposition) [10.09 p.m.]: On 2 February this year the Minister for Local Government, Harry Woods, dismissed the elected officials of Windouran Shire Council, based at Deniliquin, and appointed an administrator to control the affairs of that council. By way of background, Windouran is the smallest council in New South Wales with a ratepayer base of just 378 people. The Minister, in announcing his decision to sack that council, stated that a report had found that the council had no financial reserves, depending largely on government grants and contributions to fund minimal community services; the council had a minimum work force, ageing plant and deteriorating assets; the council's auditors, as independent reviewers of the financial statements, did not properly discharge their responsibilities to the community, and in some instances documents could be said to be misleading. It is worth noting that a subsequent inquiry into the conduct of the auditors Adams Keneally White found that they had executed their duties properly, and that there were no problems with their actions. That company of respected Wagga Wagga accountants is still waiting for an apology from the Minister.

I have tried to get the report into the company from the Department of Local Government under freedom of information provisions, but in typical bureaucratic style I have been stymied by excessive costs and red tape in the department and prevented from seeing that report. At the time of the dismissal it was said that Windouran council had a debt of more than $750,000—equivalent to almost $2,000 for every ratepayer in the shire. Since February I have been contacted by many concerned Windouran ratepayers who feel that the council has been made a scapegoat and who believe that the sacking is being used as a precursor to a forced amalgamation with neighbouring councils, many of which have already investigated the possibility and then withdrawn from merger talks. I shall detail to the House the concerns of one ratepayer expressed in a letter written to my office earlier this month. The letter stated:

The Minister made public statements that Windouran was hopelessly in debt, and had been mismanaged. The Councillors said that Windouran had no debt, and this was admitted by the Administrator on March 16th when he addressed a meeting of irate taxpayers in the Shire Chambers. The only criticism has been that the Council did not provide adequately for employee's leave and for the replacement of machinery.

As to the first, two employees were paid out before the administrator took over, and three more since then, still without debt being incurred. As to the second, Windouran is about the size of Sydney to Kiama to Bowral to Penrith, and has an income of about $1.4 million. Think how far that would go in the area just mentioned, and you will see why money has not been set aside for the purchase of new machinery.

We have a difference in policy. The Councillors believed it was necessary to keep roads open, as our Shire is almost totally primary production, and deal with other events as they occurred. The administrator, on the other hand, has made the building up of funds for leave and machinery his priority and is prepared to abandon road maintenance to accomplish this. As a ratepayer, I prefer the councillors' approach.

The letter goes on to detail rate increases of 15 per cent and higher water charges of up to 50 per cent that are being levied to try to raise some revenue in Windouran shire. To me as shadow Minister for Local Government and, indeed, to all the ratepayers of Windouran, this seems to be a case of overkill. The administrator of the council is also the Deputy Director-General of the Department of Local Government. While I am not besmirching the good name of Tim Rogers, who I think is an excellent member of the Senior Executive Service, I question the merits of sending the second in charge of a government department to run the State's smallest council. Either the department is so underresourced that it cannot find anyone else to do the job or the Minister has sent Mr Rogers there to clear the decks for a merger with a neighbouring council, which would be akin to a forced amalgamation. Windouran council will be under the control of an administrator until at least February next year. I will be monitoring the situation in the area with great interest. [Time expired.]

The Hon. JAN BURNSWOODS [10.14 p.m.]: In my speech tonight I will update the House on an adjournment speech I made in April in relation to the National Aboriginal Rugby League Association [NARLA] Carnival that was proposed to be held in Dubbo. On that occasion I expressed concern that Dubbo City Council had refused to allow the carnival to be held. I am pleased to note that since then a number of discussions involving a range of people have taken place to see whether the carnival can go ahead in October. A number of people, particularly the Mayor of Dubbo, Gerry Peacocke, expressed concerned that there might be a shortage of police in Dubbo during the carnival because police could be called to Sydney for the Olympics. Several people have made the point that during the successful carnival held in Dubbo last year there was little need for police because Aboriginal community liaison officers provided their own security and the fact that the previous carnival brought enormous financial benefits to Dubbo.

Since I spoke in April a number of things have happened. I was pleased to see many people get involved in discussions in Dubbo—the police, Dubbo city councillors, the event organisers and the Dubbo Chamber of Commerce and Industry. I pay tribute to Councillor Warren Mundine for his efforts in bringing together the various groups to see if a solution could be reached, and to the local member, Tony McGrane, who has been talking to a number of people.

The Hon. Jennifer Gardiner: What about Gerry Peacocke?

The Hon. JAN BURNSWOODS: Indeed, I pay tribute to Gerry Peacocke, who is perhaps a surprising late convert to the cause of reconciliation but a very welcome one, because in May he gave his support to the negotiations—although at that time he cast doubt on whether the carnival would take place. I was pleased to note that the Police Service issued a statement last week. Deputy Commissioner of Police Jeff Jarratt said that the New South Wales Police Service had been working towards a solution to ensure the carnival would go ahead with adequate security arrangements. The police have been examining ways of ensuring that adequate security can be provided to the NARLA carnival and at the same time ensure that Olympic security commitments are met. Deputy Commissioner Jarratt said:

After working through all the available options, the NSW Police Service has determined adequate police support will be provided by re-deployment and roster changes.

This will include police from the Orana Local Area Command and other Western Region Commands as well as contract security officers.

This will be supplemented by a number of Aboriginal Community Liaison Officers, as has occurred in previous years.

At this stage I understand that the matter is to be considered by Dubbo City Council, with the possibility that next week the council could discuss and carry a motion to rescind its previous refusal to hold the carnival and sanction the carnival. As a result of the efforts of local councillors, the local member, the two relevant ministers Andrew Refshauge and Paul Whelan, the police both locally and centrally, the organisers of the National Aboriginal Rugby League Association Carnival, and all those involved with the teams, their families and the officials, I hope that it will be possible for this great event to be held in Dubbo, thus bringing benefits to the region and overcoming the problem which I think was probably misconceived in the first place. I am sure other honourable members will join me in hoping that Dubbo council will consider this matter in the light of the police assurances and allow the carnival to go ahead in Dubbo in October.

Ms LEE RHIANNON [10.19 p.m.]: Today the main political game was not in the Coalition rooms—that is just a sad sideshow these days; the main act was with that thespian Treasurer, Mr Michael Egan. And, like any great actor, he knows that timing is everything. So it was not surprising that the Treasurer chose 1.30 p.m. today to make the announcement that the Olympic budget has blown out and that he was handing over an extra $140 million for the Games. With Chika charades dominating the headlines, the Treasurer and his good mate Michael Knight knew there would never be a better opportunity to hide their embarrassment that they have both again failed the people of New South Wales. Let us remember that just one month ago, on 23 May, the Treasurer in his Budget Speech stated:

With this budget all the Olympic and Paralympic costs are covered—every single cent. The Games are now paid for.

And there is more. Mr Egan went on to state:

The budget makes ample provision for all of the remaining Olympic-related expenses.

When the Treasurer confessed his latest mismanagement today, he provided the barest of details about why this $140 million has had to be provided and what this funds injection will be used for by SOCOG. Any other organisation or industry with such a huge budget blow-out would come under intense scrutiny. However, again we are left wondering what exactly is going on behind the scenes. Today the Treasurer told the crossbenchers that Treasury had approached SOCOG as early as February this year to discuss the budget, and that Olympics Minister, Michael Knight, had recently met with the Treasurer to discuss impending financial risks.

What is becoming increasingly clear is that SOCOG has not been in control of its own budget for a long time and that it is actually not capable of managing anything financial. We wonder whether it is capable of managing the Olympic Games. The Government must come clean about what is going on. It cannot continue to put more funds into a bottomless pit without any accountability. For example, what exactly is the revenue shortfall being talked about by the Government, and does this include a shortfall from ticket sales? The Council of Social Service of New South Wales has asked a number of timely questions about the Treasurer's announcement today. The director, Mr Gary Moore, has asked:

Why hasn't SOCOG further cut its spending? Why aren't the Australian Olympic Committee and the International Olympic Committee sharing the pain with the citizens of NSW?

Why isn't the Commonwealth Government, which is the main tax beneficiary of Sydney staging of the Olympics, chipping in a bit?

The Treasurer is indeed conning the people of New South Wales. Who can guarantee that Ministers Egan and Knight will not seek more of the State budget surplus to meet the SOCOG deficit, particularly if—

The Hon. I. M. Macdonald: Don't you like the Olympic Games?

Ms LEE RHIANNON: Yes, I do actually; I love sport. That is the reason I am raising this matter, which you fail to understand.

The Hon. I. M. Macdonald: Well, it could cost a bit more money. What is wrong with it costing a bit more money?

Ms LEE RHIANNON: Then why did the Treasurer make that statement a month ago? The Hon. I. M. Macdonald should learn to manage something and answer the questions. He wants to avoid the main issues. I will outline some of the ways in which that $140 million could be spent. It would halve the current waiting lists—which are up to five years—for public dental care in New South Wales. It would get 10,000 applicants off the public housing waiting list. It would deal with two-thirds of unallocated child protection cases within the Department of Community Services. And it would greatly help thousands of struggling families to send their children to school. We witnessed a very limp performance from the Treasurer today. I understand that the Treasurer lives in the South Sydney area. He might be interested to learn that there are rumours around Newtown that there is a new group called Egan and the Stalinists.

The Hon. I. M. Macdonald: You are the Stalinist in this Parliament. You are a member of the socialist party of Australia; that was the Stalinist party.

Ms LEE RHIANNON: The Hon. I. M. Macdonald interjects at an interesting time. He might inform the House of his good Maoist days and his trips promoting that cause. The double standards are rather tragic, trying to hide the mess that the right wing of the Labor Party is making of this State. We need to ensure that the Olympics go ahead without being a financial burden on the people of New South Wales. The Hon. I. M. Macdonald's grumbles do not hide anything.

The Hon. R. S. L. JONES [10.24 p.m.]: The Medical Advances Without Animals [MAWA] Trust is the first of its kind in Australia. Launched in February 2000, it will initially provide a grant in aid of up to $25,000 for medical research that does not use animals at any stage. After the trust's management committee has assessed applications in October, the inaugural recipient of the grant in aid will be announced. In addition to providing funds to assist in the development and use of non-animal methodologies in medical research, the trust will also support the training of new research scientists in these procedures in Australia and internationally. The money it provides will be an important incentive for researchers to use and develop alternatives to animals when conducting research.

The Australian Association for Humane Research Inc., which is the trustee of MAWA, has for 20 years had as one of its major goals the establishment of such a trust, and should be congratulated on its efforts to encourage the development of new and innovative means of conducting medical research. Why are government funding bodies not moving in a similar direction? The recent announcement of a massive increase in New South Wales Government funding for medical research, for example, made no mention of promoting non-animal alternatives. While the Australian code of practice for the care and use of animals for scientific purposes specifically requires "the development and use of techniques which replace animal use in scientific and teaching activities", there is no evidence whatsoever that this requirement is being met, or even addressed, by the Government or the research community.

The ethos of the MAWA trust is simple: solutions to human diseases will only come from the progressive replacement of animal experimentation with human-based research. Despite public perception of the value of animal experimentation in medical progress, its role has been grossly exaggerated and the two major killer diseases of mankind, cardiovascular disease and cancer, still remain largely unconquered. It is symbolic that the trust has been launched at the dawn of the new millennium: Now is the time to question the validity of using animals for research and move on. Such outdated matters as the use of laboratory animals persist, despite the spectacular technological advances in every other area of human endeavour.

Some specialist organisations overseas are already giving generous financial support for scientific research projects which do not involve animal use, and for the development of alternative technologies. Among these organisations I refer in particular to the Dr Hadwen Trust for Humane Research in England, which has recently supported research in such important areas as meningitis, Alzheimer's disease and cancer. None of this research involves the use of animals at any stage. The Dr Hadwen trust is also supporting seven postgraduate students under its Research Plus program, which trains students in the use of non-animal techniques.

It is with deep regret, and indeed with some embarrassment, that I believe Australia is lagging far behind many other countries in moving away from the archaic use of animals as models for humans and towards the exciting potential of these new technologies. Surely in the new millennium we should not be continuing to use nineteenth century technologies. So far as I am aware, no Australian organisation is specifically funding non-animal research, and the new MAWA Trust will fill this void.

Some of Australia's leading scientists and academics support the MAWA Trust. Those on MAWA's management committee include Dr Richard Burnet of the Royal Adelaide Hospital; Professor Stephen Leeder and Associate Professor Colin Harbour from the Faculty of Medicine, University Of Sydney; the Hon. Kevin Rozzoli, MP; Associate Professor Garry Scroop from the Department of Physiology, University of Adelaide; Ms Alison Turtle, Senior Lecturer in Psychology at the University of Sydney; and Ms Elizabeth Ahlston of the Australian Association for Humane Research.

The MAWA Trust needs donations from companies and funding from government. I urge all companies who are interested in the future success of medical research to give to the MAWA Trust. Donations, which are tax deductible, should be sent to the MAWA Trust, post office box 779 Darlinghurst, New South Wales, 1300, or donors can call (02) 93601144. In particular I urge the Minister for Health and the Minister for Agriculture to provide annual funding to the MAWA Trust to ensure that the New South Wales Government has an investment in the future of successful medical research in Australia. A truly responsible and forward-thinking government should encourage its research community to embrace change by providing financial incentives for it to do so, rather than simply maintain the status quo.

The Hon. J. J. DELLA BOSCA (Special Minister of State, Assistant Treasurer, Minister Assisting the Premier on Public Sector Management, and Minister Assisting the Premier for the Central Coast) [10.28 p.m.]: This morning I attended a memorial service for three National Parks and Wildlife Service officers who were tragically killed on 8 June at the Ku-ring-gai Chase National Park. Four other officers were seriously injured. We all admire our vast bushland areas, especially our national parks, but often we forget that dedicated people work to maintain them. As evidenced by this tragedy, at times that job is dangerous. No matter how much training, planning and skill are available, there are always risks associated with nature.

The management of national parks requires attention to be given to many management practices. This includes fire management, such as hazard reduction programs which seek to protect life and property. The tragic accident that occurred on 8 June involved a routine operation which was designed to protect the homes of residents in the township of Mount Ku-ring-gai. Its tragic outcome reminds us of the service that dedicated workers render for the sake of our community.

A sudden death or serious injury is always a shock—more so when it happens to people who are carrying out a task for the general benefit of the community at large. It reminds us that so many people each day take on tasks on our behalf that involve danger. The three deceased officers, Claire Deane, George Fitzsimmons and Eric Furlan, and the other four injured officers, Mark Cupit, Luke McSweeney, Natalie Saville and Jamie Shaw, were all determined, dedicated and committed to their work. Those who lost their lives had a record of service to the environment beyond their work with the National Parks And Wildlife Service. They had a love of the conservation of our natural and cultural heritage and were an example to their workmates.

I place on record the sincere sympathy of the Government for the families of all involved. Two of the fatally injured victims were my fellow residents from the Central Coast. George Fitzsimmons, a resident of Gorokan who perished in the fire, had devoted a lifetime to protecting and working with the environment. He had served as a firefighter since 1969 when he joined the Duffy's Forest Rural Fire Brigade. He was awarded the Bush Fire Council's 15 years long service medal in 1988 and the National Medal for Service in 1990. George Fitzsimmons had been involved with the huge fires of 1979, 1981 and 1984. When George Fitzsimmons joined the National Parks and Wildlife Service in 1988 as a park ranger, he continued working in fire suppression and prevention. I am told that his wealth of experience was readily shared with new members of the service. In his spare time he displayed a dedication to the environment and was involved with the whale rescue organisation.

On the critically injured list following the tragedy is Ourimbah man Mark Cupit, who has been with the National Parks and Wildlife Service since 1997. I understand he greatly enjoyed his job. He served as a field officer and was stationed at the north metropolitan region. His jobs had included sector boss, crew leader and tree feller. I wish him a full recovery from his injuries. The Premier has announced the establishment of a dedicated public fund to assist the victims of this tragedy. I have no doubt that the fund will be well supported.

I note the presence in the Chamber of the Deputy Leader of the Opposition, who has consented to the extension of time for the adjournment debate to enable me to place my remarks on the record. This morning he shared with me, other members of the Government and the Opposition, members of the judiciary, members of the fire services, members of the armed forces and representatives of all major denominations, and a broad cross-section of the community ranging from environmentalists to land users of all descriptions, the privilege of attending a very moving commemorative service at St Andrews Cathedral which engendered a moving and Australian-style sense of great spirit. Outside the cathedral I was struck by a strange sense of serenity as I moved among the groups of National Parks and Wildlife Service officers and Rural Fire Services officers as well as family members of the deceased persons, who were still grieving and mourning their loved ones. There was a sense of serenity and peace among all those who attended the memorial service.

I thank the House for its tolerance in allowing me to put these remarks on the record from my own point of view as well as on behalf of the Government. In commending today's commemorative service to the House, I emphasise the Government's appreciation of the Sydney Diocese of the Anglican Church for a very honourable liturgy which was dedicated to the victims and the enormity of their sacrifice.

The Hon. D. J. GAY (Deputy Leader of the Opposition) [10.33 p.m.], by leave: I speak briefly on behalf of the Opposition to support the comments made by the Special Minister of State, Assistant Treasurer, Minister Assisting the Premier on Public Sector Management, and Minister Assisting the Premier for the Central Coast and compliment him on his remarks about the victims of the bushfire who lived in the area in which he lives, and about the other victims. Certainly the thoughts of members of the Opposition are with those who lost their lives, those who are struggling in hospital and their families who are also suffering as a result of this tragic accident.

As the Special Minister of State said, today I attended with him the special memorial service at St Andrews. I concur with his comments. It was a very special service which created a feeling of serenity. I congratulate those responsible for organising the service, including those involved in protocol and the Ministry. It was a fine service. As I indicated earlier, members of the Opposition join with the Minister in expressing sincere sympathy, and concur with the other comments that he made.

Motion agreed to.