Thursday, 10 October 1985 Mr SPEAKER (Hon. Harry Jenkins) took the chair at 10 a.m., and read prayers. Mr SPEAKER —Yesterday the Deputy Leader of the Opposition, the honourable member for Menzies (Mr N. A. Brown), raised, as a matter of privilege, certain actions and attitudes in connection with the charging of fees under the Freedom of Information Act in respect of requests from members. I have given the matter careful consideration. Members will realise that, as members, they enjoy certain privileges and immunities; that is, some laws confer special rights or exempt them from certain obligations. The fact is, however, that these provisions are part of the law of the land. But, as I understand it, members do not enjoy any general or overriding exemption in respect of charges under the Freedom of Information Act. I understand rather that certain guidelines have been issues under the Act which outline circumstances in which charges in connection with requests from members may be remitted. Bearing in mind the fact that the Freedom of Information Act is an Act of the Parliament, and that guidelines have been issued to deal with this aspect of the operation of the Act, I can see no privilege or immunity which is being breached. A second aspect, however, arises from the well known definition of contempt. I refer to page 143 of volume 20 of May's Parliamentary Practice: Any act or omission which obstructs or impedes either House of Parliament in the performance of its functions, or which obstructs or impedes any Member or officer of such House in the discharge of his duty, or which has a tendency, directly or indirectly, to produce such results may be treated as a contempt even though there is no precedent of the offence. Later, at page 158, it is stated: Conduct not amounting to a direct attempt to influence a Member in the discharge of his duties, but having a tendency to impair his independence in the future performance of his duty, will also be treated as a breach of privilege. Whilst I understand that the Deputy Leader of the Opposition and perhaps other honourable members may feel that the failure to provide comprehensive exemptions from charges under this legislation may serve to impede them, I do not consider that the circumstances outlined by the Deputy Leader of the Opposition indicate any obstruction or impediment such as would be held to constitute a contempt, bearing in mind that the Parliament has passed a law on the matter, albeit in the broad, and has not made any special comprehensive exemptions in respect of members. I remind the House of the general reluctance to extend the ambit of privilege and contempt and the reluctance to resile from the principle that the House should exercise its penal jurisdiction as sparingly as possible and only when satisfied that to do so is essential in order to provide reasonable protection for the House, its members and others from substantial interference with their functions. I acknowledge the importance of this matter that has been raised and the good faith of the Deputy Leader in raising it, but my conclusion is that, on the information available, no prima facie case has been established. It would seem rather a matter of public policy which the honourable member may wish to pursue in other ways. Debate resumed from 9 October, on motion by Mr Hurford: That the Bill be now read a second time. Mr SPEAKER —I remind the House that it was agreed that a general debate would be held on this Bill, the Income Tax (Individuals) Bill, the Income Tax (Companies, Corporate Unit Trusts and Superannuation Funds) Bill and the Medicare Levy Bill. Mr MILDREN(Ballarat)(10.06) —In reviewing the purpose of the Bills before the House, I mention that by and large, as we realise and as my colleague the honourable member for Burke (Mr O'Keefe) indicated yesterday when speaking on this matter, there have been problems over a very lengthy period regarding people's compliance with the taxation laws of the land, in terms of both principles and fact. The Taxation Laws Amendment Bill (No. 2) 1985 contains a number of measures. Some of these are aimed at closing loopholes that result in unfairness in the tax payments system, a number of which enable deductions for specified purposes. I will mention a number of these as we go along. One loophole which had been enabling people to opt out of the system or at least minimise their tax responsibilties concerns non-leverage finance leases and similar arrangements. That measure which now stops the use of non-leverage finance leases and similar arrangements will, on the one hand, assist the Government in reducing the deficit-I am sure that all members of the House will approve of that goal-and, on the other hand, help the Government to redirect the responsibility for tax payments to where it ought to lie. One cannot help mentioning a number of very positive innovations in the Bill. The Minister for Local Government and Administrative Services (Mr Uren) has always been very concerned to ensure that local government be given its due place in the Australian governmental scheme of things. I think this measure is a credit to him and his diligence. The Government has over time indicated its concern to improve the place of local government. In fact, as honourable members are aware, at the recent somewhat lack-lustre Australian Constitutional Convention the Government, with the support of local government organisations throughout Australia, was concerned to ensure that some agreement was reached to include local government within the Constitution, in other words, to give it a formal status. It is unfortunate that, while there was such a great amount of support for this measure, the Liberal and National parties could not see fit to give it their support. Perhaps they do not quite understand the significance of the role of local government in Australia. Local government is poised to assume a more enhanced role, especially within the provision of community services. The Minister for Local Government and Administrative Services certainly believes that this is extremely desirable. He believes that local government provides a protection for citizens against the tendency towards undue centralisation of decision-making. So the provision in this Bill that amends the income tax law to allow candidates for local government elections and those for the Australian Capital Territory House of Assembly to deduct $1,000 for expenses incurred in election campaigns will be welcomed. This will have the result of enabling a number of people who could not otherwise present themselves for office to do so. I am sure many people will approve of this measure on those grounds alone. In other words, not only are we concerned to give local government this significant placement in the Constitution but also we wish to make it easier for as many citizens as possible to present themselves for public office. One of the ways of doing that, of course, is to ensure that they do not incur large expenses for their election campaigns. So by this small measure the Government has enhanced local government and reinforced the democratic process of government in this country. The Government also has taken measures necessary to protect the superannuation funds of employees by introducing statutory rules to ensure that not more than 10 per cent of the assets, measured at cost, of an employer-sponsored superannuation fund should consist of equities in or loans to the employer or associated persons or entities. We recognise the sad history of this. A great deal of concern has been expressed, sometimes without much action, unfortunately, as happened with the previous Government. Once again it is up to the Australian Labor Party to take these reformist measures on board. Mr Robert Brown —It always is. Mr MILDREN —It always is, as my colleague the honourable member for Charlton says. The Government has included special provisions to protect the viability of businesses where the system has been used otherwise. There will be something of a phasing-in process. This is a long overdue measure and one which is desired by the community. We have heard from a number of sources, including members of the Opposition, that capital gains taxes on investments should be seen as a form of superannuation for the investor. This is a good catch-cry, and one we hear a lot of in the community. Of course, it is simply a smoke-screen. Such a measure, if it were construed in this way, would perpetuate the unfair accrual of benefit at the expense of legitimate taxpayers. That should be self-evident, but for some it is either not self-evident or they want to make certain that people do not see it that way. It is not reasonable to confuse the two issues. A capital gain is what it means. Superannuation is what it means. It is possible, and has been possible for many years, for self-employed people to take up their own personal superannuation package. Many people have done this, rather than riding on the backs of other taxpayers, as some have been doing with capital gains. To date it has been possible for people to do that and also to take out a superannuation scheme. In other words, it is a form of double-dipping. This Bill increases the allowable deduction for personal superannuation schemes from $1,200 to $1,500. The Government recognises that this needs to be done and will encourage it. The Government has estimated that this measure will result in a cost to revenue of $14m in 1986-87 and $10m in 1987-88. Those who claim that a tax on capital gain is a penalty fail to look at the possibility of contributing to their own superannuation fund to provide security similar to that of people in other funds. When the Government introduced a tax on lump sum superannuation it intended that the cash limits to be taxed at the minimum rate of 15 per cent would be increased. In this Bill the Government has honoured that intention by increasing the sum to be taxed at 15 per cent from $50,000 to $55,000. One thing that must be said about this Government is that it does honour its undertakings. The Opposition has made considerable criticism of the Government's measure to exempt from income tax the income derived by racing clubs, particularly horse and greyhound clubs. This is aimed at removing an anomaly and is not particularly contentious. I am sure that clubs such as greyhound clubs, which largely are conducted by people of very average means, will be particularly appreciative. Opposition members probably have very little feeling for those people who patronise greyhound meetings. For many years it has been the sport of those who just could not afford to own a racehorse. At least they could own a dog and they take a great deal of interest in dogs. In other words, it is the battler's sport. What is often not recognised is that racing in all its forms, whether it be the gallops, harness racing or greyhound racing, represents an industry that generates many thousands of jobs in our community. The Government should be congratulated on assisting the industry in this way. I wish to make a few comments about Medicare. It was astonishing to listen to the honourable member for Page (Mr Ian Robinson) yesterday when he criticised the Government for continuing to assist those Australians who, for whatever reason, are required to live on social security benefits. That was absolutely astonishing. Obviously he has no real understanding of the conditions and circumstances that lead people to seek social security benefits. He spoke of the need for these people to use their ingenuity and not to rely upon government social security payments. Mrs Darling —That is unreal. Mr MILDREN —As my colleague the honourable member for Lilley said, that is quite unreal. I challenge the honourable member for Page to speak in that way to those people who have to survive on social security benefits in his electorate. He speaks for the inhabitants of fantasyland-those who occupy the Opposition benches in the Parliament. Perhaps he will ask the poor not to seek assistance from the Government but rather to eat cake instead. That has been said by similar sorts of people with similar mentalities in the past. The honourable member for Dobell (Mr Lee)-a very good member, I might say-indicated that the Government is increasing the maximum rebates of tax and the taxable income levels at which the rebates for social security recipients are to be shaded out. They are to be increased from 1 July 1985. The Government has introduced this measure to ensure that people who depend mainly or wholly on social security benefits will not have to pay tax. Without this measure, there is the likelihood that through fiscal drag these people would be drawn into a taxable bracket. That is something that the Government is concerned to ensure does not happen. This means that married beneficiaries will have the maximum rebate increased from $75 to $220 and no tax will be payable in 1985-86 on taxable incomes to $8,795. All other recipients will receive a maximum rebate of $170. That has been increased from $50. No tax will be payable on taxable incomes up to $5,275. I was surprised by the intensity of the Opposition's attack on the Medicare Levy Bill 1985. Honourable members opposite formed the Government that changed the original Medibank program five times in order to destroy it. For many decades the Labor Party was accused of being the hard line ideologues of this society. Mr Cohen —It is absurd. Mr MILDREN —As the Minister indicates, it is absurd. Mr Cohen —It is one of the most flexible parties we have ever seen. Mr MILDREN —Absolutely. The hard line ideologues appear to be those honourable members on the other side. It is an ideology of prejudice and privilege. They had the strange belief that there was something noble about a private health system that did not apply to the public provision of health care. The fact that at least two million people were not covered for health care during the years of the Liberal-National Party governments of the 1970s and early 1980s had no real significance to the dinosaurs who sit opposite. They thought that somehow or other those two million people were privileged to be able to live with a hospital and medical system that they could not afford. I wonder where some of these honourable members spend their hours. It cannot be in their electoral offices because they would have encountered the suffering of these people there. Opposition members are particularly proud of their attempts to return this system to the standards of the 1960s, but the Australian people will not cop that, and nor should they. I take great pleasure in taking part in this debate today because, once again, it makes me particularly proud to be part of this Government, which is a government of action, a government that is concerned to ensure that all Australians receive a fair go. I commend the Bills to the House. Mr COHEN(Robertson-Minister for Arts, Heritage and Environment)(10.21) —I thank honourable members for their contributions to the debate on these Bills, which cover various aspects of the taxation law. I am pleased that the measures, as wide ranging as they are, have the general support of Opposition members. Two issues raised during the course of debate warrant comment. First, the honourable member for Mackellar (Mr Carlton) raised what he called an anomaly in the imposition of Medicare levy because of the different amounts of levy payable by families that receive the same total combined taxable incomes in a year. However, it must be remembered that Medicare levy, like personal income tax, is imposed on the taxable income of an individual, not that of a family unit. The law also allows exemption from payment of the Medicare levy for those on low incomes. This exemption is initially determined by having regard to the individual's income for the year. Where the person also has responsibility for maintaining dependants-this includes married couples and sole parents-a higher exemption threshold is available having regard to the family income. This threshold increases if there are dependent children or students in the family. If the level of a person's taxable income or the combined incomes of his or her family exceed the levels at which the relieving provisions operate, the Medicare levy payable is determined on the person's own level of taxable income. Medicare levy is imposed on taxable incomes and, while ever we have an individual unit tax system, it will be extremely difficult to move to raising the levy on a family unit basis. As to the second matter, some concern was expressed that the superannuation loan-back rules might affect employees' ability to share in the success of the employer's business. In that regard, I note that the purpose of the rules is to protect employees who, in the event that an employer's business fails, stand to lose both their jobs and their superannuation benefits where there is excessive investment by their superannuation fund in the employer's business. While there may be some limitation on the extent to which an employer's success can reflect in the superannuation fund's earnings for the benefit of employees, the rules will also limit the extent to which an employer's lack of success-or failure-is reflected in the fund's earnings and thus in employee benefits. I note also that, in many cases, there are other avenues through which employees can share in an employer's success. I refer to schemes under which employees can directly-as against indirectly through superannuation funds-acquire shares in employer companies. Question resolved in the affirmative. Bill read a second time. The Bill. Mr COHEN(Robertson-Minister for Arts, Heritage and Environment)(10.24) —by leave-I move: (1) Clause 27, page 29, line 19, omit `of the present values'. (2) Clause 27, page 29, line 27, insert `of the payment portions' after `values'. These amendments are of a technical nature. Clause 27 of the Bill as introduced will insert provisions into the income tax law to treat certain non-leveraged finance leases and similar arrangements as if they were loan arrangements. Under those provisions, only the interest component of a lease payment will be assessable for income tax purposes to the owner of the property. That component will be calculated by reference to the single effective interest rate underlying the transaction. The amendments will correct a technical deficiency in the formula to be used to calculate the interest component and will ensure that the formula operates as intended. I commend the amendments to the Committee. Amendments agreed to. Bill, as amended, agreed to. Bill reported with amendments; report-by leave-adopted. Bill (on motion by Mr Cohen)-by leave-read a third time. Consideration resumed from 19 September, on motion by Mr Hurford: That the Bill be now read a second time. Question resolved in the affirmative. Bill read a second time. Leave granted for third reading to be moved forthwith. Bill (on motion by Mr Cohen) read a third time. Consideration resumed from 19 September, on motion by Mr Hurford: That the Bill be now read a second time. Question resolved in the affirmative. Bill read a second time. Leave granted for third reading to be moved forthwith. Bill (on motion by Mr Cohen) read a third time. Consideration resumed from 19 September, on motion by Mr Hurford: That the Bill be now read a second time. Question resolved in the affirmative. Bill read a second time. Leave granted for third reading to be moved forthwith. Bill (on motion by Mr Cohen) read a third time. Debate resumed from 8 October, on the following paper presented by Mr Young: Reform of the Australian Taxation System-Statement by the Treasurer dated September 1985, together with attachments. and on motion by Mr Cohen: That the House take note of the paper. Mr ROBERT BROWN(Charlton)(10.29) —The Government has given the Parliament the opportunity to consider in total the package of taxation proposals which the Treasurer (Mr Keating) in this chamber announced on 19 September. Of course, honourable members will have the opportunity to canvass the essential elements of that package and give consideration to those aspects of it which are of interest or concern to them. Presumably, giving the Parliament this general opportunity to examine the package should at the same time reduce the need for honourable members to consider, perhaps in greater detail, the essential features of particular legislative proposals which are introduced into this Parliament in order to give effect to the decisions which the Government has made and which the Treasurer expressed on behalf of the Government when he presented that total taxation package last month. I hope that will be the case and I hope the Opposition accepts it in that spirit. The changes are substantial, and quite clearly they will require a substantial volume of legislated material coming before the Parliament. That is particularly significant because the claim has been made, quite correctly and legitimately, by the Treasurer that these changes, which are included in that total taxation package, represent the most substantial taxation changes which have been brought before this Parliament and the nation in living memory. I had the opportunity to act as an observer in this chamber when the Taxation Summit was being conducted. Like a number of other members, I had the opportunity to see people who were representative of the broad expanse of thinking, of interest groups, organisations, authorities, structures and governments in Australia giving collective consideration to the important issues that were of concern in connection with the taxation system. That summit confirmed the concern and the belief that was widely held by many, including leading figures within the Government, the Prime Minister (Mr Hawke) and the Treasurer, that it would be extremely difficult to obtain unanimity and a common position from all sections of the Australian people in relation to taxation reform. Of course, the summit indicated that that concern, that belief, was well placed. Despite that belief, that understanding, the Prime Minister and the Treasurer quite correctly pursued that path. They gave the opportunity for all those people, all those representatives of various groups within the Australian community, to come together in this chamber and give consideration to the matters which were of concern. Arising from that, as we indicated before the summit was held, the final responsibility for putting together a package of changes to the taxation system rested where it should rightfully rest, and that was with the Government. The package which was finally announced by the Treasurer was the Government's response not only to its understanding of the inequities, inefficiencies and injustices of the present taxation system but also to its belief about the direction in which the taxation reform should proceed in Australia for the benefit of all Australians. It has been extremely well received in general. I will refer to just two editorials. One is from a major metropolitan daily, the Sydney Morning Herald, which on the following morning stated: As with all taxation reform, the losers from yesterday's tax measures will scream and the winners will remain silent. And yet the Government's package deserves broad community support. Nothwithstanding a number of unfortunate concessions to particular interest groups, it will substantially reduce tax avoidance and evasion while reducing the extraordinarily high marginal tax rates on middle and high incomes. Mr Cohen —An excellent editorial. Mr ROBERT BROWN —It was an excellent editorial. In fact, I am often impressed by the quality of the editorials that come from the Sydney Morning Herald. I now turn to a major provincial daily. I know that the honourable member for Robertson, the Minister for Arts, Heritage and Environment (Mr Cohen), who is at the table, is also very familiar with this major Australian provincial newspaper, the Newcastle Herald. Mr Cohen —A great newspaper. Mr ROBERT BROWN —It is a great newspaper. The editorial of the Newcastle Herald the following day stated: The tax reform legislation presented to Parliament yesterday was far milder than the package that the Treasurer, Mr Keating, failed to have adopted at the July taxation summit. Compared with Mr Keating's favoured Option C, with its 12 1/2 per cent no-exclusions turnover tax on goods and services, the latest measures are almost bland. The editorial goes on to say quite tellingly: Yet they live up to Mr Keating's assertion that they will bring in the most fundamental changes to the Australian taxation system in memory. They have done precisely that. This Government can take a great deal of pride in the initiative which it has shown in connection with taxation reform. One of the unfortunate realities of life is that for only a comparatively small proportion of the time that this nation has existed as a nation a democratic socialist government-an Australian Labor Party Government-has occupied benches on this side of the Parliament. That decision has been made by the Australian electorate according to its judgment and I have no argument with that except that I believe that on many occasions that judgment has been deficient. Had it been possible for an Australian Labor Party Government to be in place in this Parliament for a greater proportion of that time all of the abuses and misuses of this taxation system would not exist as they do now. All of the inequities and injustices would have been significantly minimised. Unfortunately, we have not had many opportunities during the time that has been available to us to do the sorts of things that a national government should do. During at least two major election campaigns when the Australian Labor Party, like its opponent, appealed for a mandate from the Australian people, it presented a policy which was adopted, accepted and endorsed. That provided us with a mandate to pursue the types of reforms within the Australian taxation system and wider in the Australian economy which would ensure that justice would be reintroduced, that inequities and abuses would be removed and that the misuse and contrivance of our economic system by conservative forces in Australian politics would not rule forever. We have done that and we will continue to do it. While we have the support of the Australian people to continue to make the magnificent achievements which we have made, we will continue to have the opportunity to work on their behalf and represent them as adequately and, in some cases, as magnificently as we have done. Our approach to the whole question of taxation reform has been, in the first place, to increase the penalties for those people, those authorities, those institutions, those businesses and those company boards that want to rort the system and take advantage of it in any way they can in order to reduce and minimise their own taxation responsibilities and in the process transfer the burden of paying greater taxation on to those people who cannot escape their taxation responsibilities. Of course, I refer specifically and emphatically to the ordinary wage and salary earners in Australia who are locked into the pay as you earn tax system. The first thing we did was to increase the penalties. That has been done. Increased penalties are now in place. Secondly, we asserted and legislated to ensure wherever we were able that where people are still sufficiently foolish or courageous to attempt to rort the system and take advantage of it, if they enter into artificial, contrived or blatant schemes and arrangements to reduce their taxation liability we will, whenever we have the opportunity-we need the support of the Senate-introduce retrospective legislation to ensure that those people will be brought to book from the time those artificial, contrived and blatant schemes are identified and we will go back to the time those schemes started to operate to pick up the tax that should have been paid, and would have been paid, had they not been able to get around the law through artificial schemes. We have not been able to get the support of the Senate in all of these matters. I have given examples of this before in connection with the bottom of the harbour legislation. We should have been picking up, on behalf of the Australian community, the national government and taxpayers of Australia, $570m. That sum was lost to the Treasury as a result of schemes which put companies on the bottom of the harbour and avoided taxation responsibilties. Everyone in this Parliament knows how much of that $570m we have picked up. We picked up not one cent. The people who can claim the credit for that are the conservatives on the Opposition benches who, when in government, were dragged screaming into this chamber to legislate against the tax avoiders and evaders. Those opposite here and in the Senate can claim the credit for that and have it rest on their consciences-if they can rest. In addition to the two approaches that we have taken, we have also knocked out some of the other artificial, contrived and blatant schemes. As a result of this Government's determination and legislative initiative we saw a shift in the emphasis within the tax avoidance and evasion industry to other areas where it was possible for those involved to avoid their responsibilities. In particular, they moved into tax shelters. I do not want to discredit all those people who quite legitimately have invested money in primary industries, which are among the great industries of Australia. They have been and are tremendously important. We all know that Australians today are drowning in a flood of avocados and macadamia nuts. They are practically surrounded by pine plantations. One of the essential reasons for this is the tax shelters that have been provided for primary production. Members of the Opposition know this as well as we do. If those tax benefits and concessions achieved the objectives set we would have no argument. They would have resulted in the development, expansion and encouragement of our primary producers. But they have been used as a means to avoid taxation responsibilities. I refer to tax shelters, not only in connection with primary production, but also in the film area. There are many other examples. We also know the way that fringe benefits have been abused. Of course, some fringe benefits are quite legitimate. We do not argue with that. We are not legislating against legitimate fringe benefits, only against those that have been abused and misused. For example, a fairly highly paid executive in Australia on a nominal salary of $60,000 has a real salary of about $100,000. Let us not lose sight of this. The other $40,000 consists of all types of fringe benefits-the school fees paid by the employer, the low interest personal and home loans, the free car, the overseas trips, the business club fees and gratuitous share issues. We can go on and on. All those benefits are untaxed. At that level of income, a person should pay 60 per cent in tax, on present marginal rates. That person is not paying tax at all. It is quite obvious that the Government had to confront these matters head on. They have gone on for too long. As the Treasurer said, all the ramps and rorts in the taxation system, the abuses, injustices and inequities that the overwhelming number of Australian people have tolerated ever since Federation, exist because of the short time that we have been in government. We are pursuing the opportunity that we have now been given to remove these rorts; and remove them we will. Madam DEPUTY SPEAKER(Mrs Child) — Order! The honourable member's time has expired. Mr CARLTON(Mackellar)(10.44) —We are invited to respond to the statement of the Treasurer (Mr Keating) of 19 September which was labelled `Reform of the Australian Taxation System'. We do not accept the description of reform that is applied to this package. It is a package of changes squeezed out at the fag end of a debilitating struggle between the Treasurer and a coalition of the Australian Labor Party's left wing and the Australian Council of Trade Unions. What began as a respectable direction of change which, although containing features objectionable to the Opposition, could honestly be labelled as a reform package-I refer to option C as described in the draft White Paper-has been reduced to a miserable assembly of changes possessing neither coherence nor economic rationality. The Treasurer's grab-bag of 19 September contains remnants of some of the worthwhile ingredients of his preferred option C but it has a heavy overlay of measures imposed by the ACTU Labor left alliance and further encumbered by the crude demands of the Australian Taxation Office, intent on simplifying its revenue gathering task regardless of the practical consequences for businesses and individuals. On behalf of the Opposition I move the following amendment to the motion that the House take note of the paper: That all words after `That' be omitted with a view to substituting the following words: `this House, whilst welcoming the promised relief of double taxation of dividends and the promised reductions in marginal taxation rates, believes that the tax package presented by the Treasurer falls well short of the fundamental and lasting reform of our taxation system so frequently promised by the Government, and more specifically- (1) condemns the proposed introduction of the new capitals gains tax; (2) notes that under the Government's proposals the share of revenue carried by personal income tax will continue to rise; (3) condemns the arbitrary nature of the attack on fringe benefits and entertainment expenses; (4) expresses grave concern over the effects on enterprise, investment and employment due to the additional cost burdens on business arising from the capital gains tax, the higher rate of company tax, the fringe benefits tax and the loss of deductions for legitimate entertaining expenses; (5) regrets the package will have an adverse and discriminatory impact upon rural Australia; (6) notes the particular discriminatory nature of the attack on the deductibility of farm losses against non-farm income, and (7) condemns the proposed foreign tax credit system as likely to discourage investment by Australian companies in our region.' The Opposition has taken a responsible position throughout the whole tax saga. We have made it clear, both before and after the election, during the uncertain progress of the Treasurer's tax cart down the bumpy road of ACTU and ALP politics, during the Taxation Summit and over this past couple of weeks, that we would support sensible reform measures. Let me remind honourable members of what we said before the last election. It is something of which the Prime Minister (Mr Hawke) would not want to remind honourable members opposite because in his policy speech for the 1983 election campaign he said: And here let me make one point so that even our opponents can understand it, and let me make it beyond all their powers of misrepresentation and distortion-there will be no new capital gains tax. Mr Coleman —Who said that? Mr CARLTON —The Prime Minister in his policy speech before the 1983 election. So much for that promise, and hence our reservations about many of the forward commitments made in the Treasurer's statement. Our 1984 election tax policy contained these essential elements: A commitment to cutting the cost of government, a shift away from income tax towards indirect taxes, a lowering of the high marginal rates of income tax, income splitting for families, tax rebates for child care expenses and a move towards the more equitable taxation of dividends as recommended by the Campbell Committee of Inquiry into the Australian Financial System. In addition to these reform measures, we also committed ourselves to opposing any new capital gains tax and to repealing such a tax should Labor introduce it. Despite many pressures from various interest groups and the temptation to act opportunistically we have stood by these principles. Where the Treasurer has put forward proposals in line with these principles we have supported him. Where he has deviated, we have opposed him. So what of the Treasurer's package of 19 September? Measured against the Treasurer's own criteria for tax reform, let alone against ours, it represents a major failure on the part of the Government and a big victory for the ACTU, the left wing of the Labor Party and the bureaucracy. Essentially it is an anti-entrepreneurial package. Failure to attack the problem of government spending over three Budgets and failure to move towards indirect taxes have meant that the Government has had to rely on mugging the business community to achieve any reduction in marginal tax rates. Where there has been a choice between inconvenience for bureaucrats and hardship for the entrepreneur, the Government has chosen hardship for the entrepreneur. The Taxation Office has found it difficult to distinguish between Mick Young-type lunches and genuine entertainment expenses; so to relieve the Taxation Office of this wearisome task the Government has wiped out all entertainment deductions, even for a few miserable savouries and drinks at a new product launch. That is very convenient for the Taxation Office but expensive for those who are trying to create the nation's wealth. Indeed, the confusion, the uncertainty and the downright unfairness of this proposal become more evident day by day. While small entrepreneurs serving lunches in restaurants are already beginning to close down, in-house lunches continue and lunches served at anything described as a seminar appear to be untouched. Yet the Treasurer continues to pour scorn on the plight of the restaurateur, the innocent victim of this bungled proposal. The Taxation Office has also found it difficult to determine what are legitimate fringe benefit deductions in the hands of employees. Again to relieve the Taxation Office of this wearisome task, the Government has decided to hand the job and the resulting approbrium over to the employers. That is very convenient for the Government and the Taxation Office, but it will have the effect, particularly as a result of trade union pressure, of adding significantly to payroll costs. It is a de facto payroll tax. It could double the extra cost to employers already to be imposed by the Government's so-called productivity deal with the ACTU under the accord. Also, the new substantiation requirements for deductible expenses will generate an avalanche of new paperwork, further adding to costs. Let me talk about the capital gains tax. The killing thing about the capital gains tax is its effect on entrepreneurial activity. It is those very capital gains that exceed the inflation rate because of the application of business acumen, creative talent and hard work-the very things we want to encourage to generate growth-that will be most hit by this tax and, of course, it will be levied at the top marginal rate. We need entrepreneurs in this country, we need economic growth, we need outstanding performance and we need the risk-takers. Therefore, we do not need a capital gains tax. We will oppose it, we will vote against it and we will repeal it. In line with our commitment to support elements of the package that we believe are sensible, we support the reduction in marginal tax rates. Setting the top marginal personal tax rate for individuals at the same level as the company tax rate will discourage tax avoidance. However, we also note the timescale over which these commitments are made and express some doubt as to whether changes in economic conditions over that period will enable those commitments to be met. After all, the top marginal rate is not to be reduced from its current level of 60 per cent to the then company rate of 49 per cent until 1 July 1987. Remembering the alacrity of the Prime Minister in abandoning solemn commitments only a week after the election in 1983 and remembering also the fragility of his promise not to introduce a capital gains tax, we have good grounds for being sceptical about this latest commitment. If honourable members think that a commitment from the Treasurer is more valuable than a commitment from the Prime Minister, let me remind them of the tax reform cart, of the Treasurer's passionate commitment to option C and the wheels that fell off the cart. July 1987 is a very long distance away. How steadfast will the commitment of this Government to taxpayers in the top bracket be in an election year? The other concern we have about the revised tax scales laid down so far in advance relates to the effect of bracket creep on the promised tax cuts for those on more modest incomes. Because of bracket creep-that is, the movement of taxpayers into higher tax brackets because of wage increases-1.6 million taxpayers will have moved out of the 29 per cent marginal tax bracket and into the 40 per cent bracket either by the time the new rates commence in July 1987 or by shortly thereafter. This exposes the fallacy of claiming tax reform without the advantage of a broadly based indirect tax to provide genuine and lasting reductions in personal income tax. Another aspect of the package of which we express qualified approval is the imputation system for dividends. When we were in government we began a move to reduce the double taxation of dividends, but this was snuffed out by the Hawke Government when it took office. We want to examine in greater detail the wide-reaching effects of this measure. In particular, we want to examine more closely the effects on companies and their shareholders in those many instances where the company is now paying less than the full company tax rate because of genuine deductions. We will also want to look at the effects on the capital markets both for private financing and for the operations of government. The detail of the legislation will be of great significance. We will need to examine it closely before determining our final attitude. I will not deal with the sales tax changes now, as we will be debating the Bills next week. Also, there are other aspects of the package that I just do not have time to deal with this morning. However, let me refer to an aspect of the package that is causing grave concern to rural industry; that is, the quarantining of farm losses. This proposal, which limits the amount of income earned off the farm which can be offset against farm losses, when added to the other aspects of the package such as the capital gains tax and the fringe benefits tax, is highly discriminatory in its effect on rural industries. Once again, the Government is bashing the farmer. A number of my Liberal and National Party colleagues will be taking this issue up in depth in this debate. Dr Theophanous —No genuine farmer is affected, and you know it. Mr CARLTON —If the honourable member wishes to listen to a number of speakers on this side of the House in this debate, he will understand in detail the practical effects on rural industries of this package of measures. I now turn to the proposal to introduce identity cards, to be called, in true Orwellian fashion, the Australia Card. It seems to be implied that it would be unpatriotic to be opposed to it. The Opposition has said that it will judge the final proposal as it emerges under three criteria: First, effectiveness in combating tax evasion and social security fraud; secondly, infringement of privacy; and, thirdly, cost benefit. On the last criterion alone, we note that almost $300m will have been spent before there is any return. Indeed, the whole system, on the Treasurer's figures, will give its first positive net return of a miserable $19m in the year 1989-90. What a fine introduction that will be to our third century of nationhood! We remain profoundly sceptical of this scheme and will be very interested to see the detail of it. The photograph having been removed, when will the signature perhaps also be removed? Finally, I turn to the proposed foreign tax credit scheme. Such a proposal was floated when we were in government, but we dropped it when we saw what great damage it would do to Australia's investments in nearby countries. We had hundreds of concerns put to us when we floated this proposition before, and we accepted the weight of those concerns. We are opposed to this measure because it will do grave damage to our business activities in the surrounding region. In summary, we regard the tax package not only as representing a failure to tackle the difficult problems of cutting government spending and moving towards greater reliance on indirect tax but also as anti-growth. It adds to the cost of doing business when we are already internationally uncompetitive and it inhibits entrepreneurial activity on which growth and employment depend. We do not know what the final shape of these packages will be in legislation. We will examine each one carefully as it comes. We will oppose the capital gains tax and we will treat the other measures on their merits as we see their final shape. We expect many changes in their shape as they go through public discussion and amendment by Caucus. Madam DEPUTY SPEAKER(Mrs Child) —Is the amendment seconded? Mr Blunt —I formally second the amendment and reserve my right to speak. Dr THEOPHANOUS(Calwell)(10.59) —We have just heard the biggest collection of humbug and hypocrisy to have been proposed in a debate and discussion of a serious economic issue. If this is the sort of quality that we are to get from the shadow Treasurer, heaven help this country. Not only will the people opposite never get into government, but democracy will be undermined by the fact that we do not even have an opposition that knows what it is talking about. Let me say something about what happened in this House three weeks ago. Three weeks ago, before the tax package was even released, a motion condemning the Government was moved by the Leader of the Opposition (Mr Howard). Of course when the package was brought down we saw the very glum faces of honourable members opposite. Why were they so glum? They were glum because the predictions we made about the taxation package were correct. The package is an historically significant and comprehensive package, as I said on the day prior to its announcement. Indeed, it is a package which will have an enormous impact on the shape of the economy of this country for many years to come. I mentioned the word `humbug'-a word I do not often use in this place. One sees that that word can be applied to the amendment moved by the Opposition. The Opposition's amendment in part states: expresses grave concern over the effects on enterprise, investment and employment due to the additional cost burdens on business arising from the capital gains tax, the higher rate of company tax, the fringe benefits tax and the loss of deductions for legitimate entertaining expenses; There is no mention at all of the enormous major concession to private enterprise which this taxation package gives. There is no mention of the historic concession for the imputation of dividends-the most significant structural change to this economy that has taken place for many years. There was no mention of that by the Opposition. The shadow Treasurer, the honourable member for Mackellar (Mr Carlton), mentioned it in a byline when he said that the Opposition agreed with some aspects of it, and he left it at that. He made no mention of the fact that for many years the Opposition when in government failed to implement such a policy. As a consequence, the Australian economy was distorted away from productive enterprise, and into what? Into speculation and property holdings. That happened for two reasons: Firstly, failure to implement the imputation; and secondly, failure to introduce a mild and generous capital gains tax. As a result of those two failures those opposite failed to steer the Australian economy towards a growth path. We heard the shadow Treasurer in his concluding comments dare to talk about growth when in fact the previous Government's record of growth in the seven years it was in government was appalling. Mr Robert Brown —They devastated the economy. Dr THEOPHANOUS —As the honourable member for Charlton says, they devastated the economy. Why is it that the Opposition totally fails to understand the significance of these tax changes and has not proposed anything that looks like a coherent alternative? If this taxation package can be described as historically significant, then the response of the Opposition so far to the challenge to put forward proposals which sound credible in relation to taxation reform can be described only as insignificant. The fact of the matter is that the Opposition cannot do that because it still does not understand how to operate a functioning capitalist economy. It believes in the fairytale theories of monetarists such as Milton Friedman. The Opposition believes in theories which when put into operation in the British nation devastated that economy and created social and economic disorder such as had never been seen before in that country. Given the growth of other economies, those theories have resulted in a massive increase in unemployment, massive social division and very substantial destruction of the industries of that country. Rather than learning from what happened in Britain, honourable members opposite seek to put to the Australian people the proposition that we should follow the same path. They are proposing that we return to the pre-Menzies days of economic thinking. When Sir Robert Menzies formed the Liberal Party of Australia in 1945 he made it perfectly clear that the tories and conservatives had learned some lessons from the past. He realised that it was not possible to operate a modern economy such as ours without an incomes policy, without a policy that gets to the guts of the matter-an incomes accord, or at least an incomes approach of some kind. What honourable members opposite fail to understand about the tax package is that it is totally consistent with the general strategy of the prices and incomes accord. That is the point. It is not simply an ad hoc set of measures put together in order to please any particular interest group. That is not what has happened. What has happened is that we have put together a set of measures that have been carefully thought out so that they are consistent with the incomes policy. We now have a taxation policy and an incomes policy working in harmony with one another. When has that ever happened in the history of Australia? When has it ever been the case that any government has produced such a coherent and comprehensive approach? What the tories on the other side totally fail to recognise is that they have to come up with some coherent alternative. What are honourable members opposite doing? They are talking about dropping the accord. Okay, if they want to drop the accord, that is fine. But what do they want to do? Do they want to totally deregulate the labour market and create a war in the jungle situation in industrial relations in a modern economy? It has been proved by history that that sort of approach does not work. It creates social disharmony and, in fact, creates circumstances which can destroy an economy rather than build on it. When will the Opposition recognise that Sir Robert Menzies was not wrong to change the previous laissez-faire policies and get down to the nitty gritty of working out a coherent alternative which involves an incomes approach and some regulation of the economy? Are they going to recognise that? Of course not. They have gone back to the crazy days of mouthing a few slogans about deregulation and talking about a model of the economy that is totally non-existent. The honourable member for Charlton, as a former teacher of economics, could tell us that such a model has never existed in the world. Rather than living in the modern Australia, honourable members opposite try to put forward models of industrial relations and of the economy which are totally ridiculous and incoherent. Let us look at the tax changes themselves. I mentioned the imputation issue. The fact is that imputation, far from being an attack on business interests, as was implied by the shadow Treasurer, is one of the greatest concessions ever made to business by any government. It will cost some $250m, and that amount probably will increase in future years. Yet we have the shadow Treasurer saying: `That is no good because, after all, you will be introducing a capital gains tax'. Let us look at what the capital gains tax will do. I put it to the House that this capital gains tax is the most moderate ever conceived by the mind of man. Who has ever heard of a capital gains tax that totally exempts all existing holdings? Can anyone point to another nation in the world that has a capital gains tax like that? Furthermore, the proposals in the White Paper to provide for a deeming of realised capital gains when inheritance takes place have been dropped as well. In addition, the capital gains tax will not be imposed on nominal gains but on real gains which means that inflation will be taken into account. How much more generous than that can we get? What else could the Opposition want in the form of a capital gains tax? It is extraordinary that the Opposition should oppose this proposal. They want to abolish it. All the Opposition wants to do is to put money into property and forget about productive enterprise. Is that the Opposition's idea of economic management? That is why manufacturing in this country went down during the regime of honourable members opposite. Capital gains tax has an important role to play in balancing resources in the economy and the Opposition knows that. Let us get away from this humbug and to the concrete reality of the matter. The concrete reality of the matter is that these proposals have been put together in order to achieve economic growth. That is what they have been put together to do. These proposals are not based on some outrageously socialist concept. They are based on the notion that if one does strengthen capital investment and capital accumulation in the way in which we are trying to do it-through the imputation system-that will be reinvested in productive enterprises to create employment. It is unfortunate that honourable members on this side of the House have to get up here and give basic economic lessons to the Opposition but the fact of the matter is that it is trying to put to the Australian people that there is something grossly anti-business about these proposals and that they are somehow grossly unfair to the richer sector of the economy. If that is what honourable members opposite think, they should look at the opinion of Kenneth Davidson in today's Age under the heading `Tax reforms favour the rich'. I do not entirely agree with the sentiment expressed there but I certainly agree that the bulk of the benefits of these taxation changes will go to that sector in the form of personal income tax cuts. The Government gave personal income tax cuts to the other sector last year. That is the point. We intend to give more tax cuts next year to that sector. We are trying to treat the different sectors of the economy fairly. What are honourable members opposite talking about when they get up here and say that the tax changes are contrary to entrepreneurship, to investment and to growth? The fact of the matter is that honourable members opposite do not understand how a capitalist economy operates. All they have is a myth in their minds about some laissez-faire system which has never existed in history and which certainly does not exist today. That is why all they do when they talk about the public sector, which has an important role to play in any modern mixed economy, is to attack the public sector, to try to dismantle it and to try to tear it apart. That is the idea honourable members opposite have in relation to economic management. We have heard grumbles about restaurants and the entertainment industry. It is unfortunate that there will be some reduction in expenditure and employment in this area in the short term. However, is the shadow Treasurer, the honourable member for Mackellar, suggesting that because someone somewhere is being employed as a consequence of a tax rort, one should continue with the tax rort? Is that the sort of logic he is putting forward? The fact of the matter is, as everyone in this country knows and understands, especially the ordinary working people who cannot claim entertainment expenses, there has been a rorting of the system. People have been going to lunches, dinners and all kinds of functions purely or almost entirely for social purposes and they have been claiming them as legitimate expenses. The Opposition is telling us that, because of the unfortunate situation in relation to the entertainment industry in the short term, we should agree to the continuation of the tax rort. Madam DEPUTY SPEAKER(Mrs Child) —Order! The honourable member's time has expired. Dr WATSON(Forde)(11.14) —I rise to speak on the statement of the Treasurer (Mr Keating) of 19 September 1985. Unlike the previous speaker, the honourable member for Calwell (Dr Theophanous), I would like to introduce some serious economic analysis into this debate. Whilst I would like to address many issues, I have decided to concentrate in the time available on just three aspects of that statement. Those aspects are the capital gains tax, the imputation of company tax and the implications of these proposals for superannuation. I will address these aspects in sequence. On 19 September the Treasurer announced the introduction of a capital gains tax. He introduced it with these words: The Government has decided to introduce a capital gains tax but, in the light of the public debate, to incorporate several major modifications to the proposal outlined in the White Paper in June. These changes address the concerns which have been expressed and will substantially reduce the impact of the tax and allow the community a lengthy period in which to adjust to its application. In particular, it has been decided that the tax will be in every sense prospective. That means it will only apply to gains on assets purchased or acquired after today. All assets already owned by taxpayers will be exempt from the tax when sold by them both in respect of gains accrued until now and all future gains. Later, in Attachment B on page 43 of his statement, the Treasurer said: The restriction of the tax to assets acquired after today . . . means that for most taxpayers the capital gains tax will have little or no impact. This is absolute nonsense. The Treasurer is either an economic illiterate, which his performance certainly indicates, or someone who is prone to bending the truth to suit his own purposes. The facts are that the imposition of a capital gains tax has impacted on everyone who owns an asset which is potentially subject to this tax. The price of an asset is determined by the current demand and supply and, just as importantly, the future expectations regarding the after tax return on the asset. Mr Robert Brown —Is that called speculation? Dr WATSON —No, it is called expectations. As an economist, the honourable member would know. The imposition of a capital gains tax on future purchases and the subsequent selling of these assets will drive down the after tax return and thus it must logically drive down the current value of the asset. Ask anyone whether he would pay the same price for a business purchased on 20 September as he would have been willing to pay on 18 September. The answer is no. People understand that to obtain the same after tax profit after 20 September means that they must pay less for the business. If people will not pay as much for a business after 20 September, who has felt the greatest impact of this capital gains tax? Obviously it is the current owners of the assets. They are the people who have suffered the losses. The Treasurer is trying to fool the average Australian that it is only future generations that will be affected. The truth is that the present owners of capital assets-the small business people and the farmers-are the people who are already the losers. Contrary to the incorrect assertion by the Treasurer, the majority of Australians owning assets not exempted from the capital gains tax have already been impacted upon by the imposition of it. While the points noted previously are important for the current holders of capital assets, it is perhaps the future negative implications which are even more critical to Australia's development. This tax will act to inhibit capital accumulation in Australia. This tax has been introduced at a time when net apparent capital inflow into Australia is falling. In 1984-85 the net capital inflow was some $700m less than it was in 1983-84. In July and August of this financial year there was a drop of some $500m compared with the same months in 1984. The imposition of a capital gains tax will inhibit entrepreneurs going into high risk businesses. This will particularly apply in instances where there is a low capital money base and where the predominant asset or the predominant future asset of the venture is goodwill. Goodwill will now be taxed in its entirety at the high marginal rates. This will affect a vast range of small manufacturing businesses, professional firms and, of course, firms in some of the new high technology areas. The discouragement of entrepreneurship or risk taking in these areas is diametrically opposed to Australia's long term interests. Eventually it will lead to lower rates of growth and thus lower relative standards of living, higher unemployment and the decline of Australia's international competitive position. I return to the second point, which seemed to concern the honourable member for Calwell-the imputation of company tax. One persistent criticism of the current tax system is that while it allows a service cost, namely, interest payments on debt capital, to be deducted for tax purposes, it does not allow the service cost of equity capital to be deducted. The implication of this criticism has always been that dividend payments and retained earnings should be treated in the same way as interest payments. The Treasurer has partly recognised this argument as valid and has allowed the full imputation of company income distributed as dividends to resident individual shareholders. However, the Treasurer has not been totally forthcoming with respect to the taxation changes. As usual, he has understated the taxation revenue implications. Previously, company profits were taxed and then dividends were taxed in the hands of shareholders. Any profits retained by the company and reinvested attracted no personal taxation-that is, no taxation when a shareholder sold his proportion of the now higher valued company. Under the new arrangements, company profits will be taxed. Profits distributed as dividends will be taxed in the hands of the company at the rate of $49 for every $51 distributed to shareholders. With a company this will be set against calculated company income tax by reference to company profits. But when shareholders receive the dividends, they will receive a tax credit for the tax paid by the company on the dividends. Noticeably, the same treatment will not be accorded to profits which are retained by the company. When shareholders sell the shares at a higher value because of the retained earnings which have already been taxed at the company tax rate, the shareholders will be caught by a capital gains tax at the full marginal tax rate. Instead of a double tax on dividends as in the past, we now have a double tax on retained earnings. The Treasurer's statement implicitly assumed that all profits would be distributed as dividends. This is neither likely nor in many cases prudent financial management. This is particularly the case for public companies. Under the new taxation proposals, the shareholders of those companies which retain earnings in the company will be at a taxation disadvantage. I now turn to the subject of superannuation, which is affected by the proposed changes to company taxation and a capital gains tax. Since the current Government assumed office in March 1983, it has made substantial changes to the taxation of superannuation. First, it introduced a 30 per cent tax on superannuation benefits accumulated after 1 July 1983. It did this partly because employee contributions to superannuation policies received taxation benefits in terms of deductibility of contributions up to $1,200 per annum, partly in order to stop double dipping and partly because of the preferred taxation status of superannuation companies. Secondly, earlier this year the Government removed the tax deductibility of employee superannuation payments. These contributions are now effectively after-tax contributions for all employees. We now see the third blow. It appears from a reading of the Treasurer's statement of 19 September that company dividends are to be taxed in the hands of companies and tax credits obtained by the shareholders. However, no mention is made of how a beneficiary of a mutual fund is to obtain such credits. Are the taxes paid by the original production company to be offset against the 30 per cent lump sum tax, or in the case of annuities against income tax payable on the annual annuity received? If so, how is this to work? At present it appears that an employee contributing to a superannuation fund will be making contributions having already paid personal tax. He will also be denied any tax credits on dividends received on his behalf by the mutual fund, which means that he will effectively be paying tax at the rate of 49c for every 51c of dividends received by the mutual fund on his behalf. Finally, when he receives his lump sum payment or when he receives any of his superannuation annuity he will pay further income tax. This is not a trivial point. Because of the size of the life assurance industry in Australia and the prevalence of superannuation schemes where employers and employees make contributions, this will affect millions of Australians and billions of dollars worth of dividends. I should perhaps say as an aside that a similar problem, although not exactly the same, arises with respect to dividends received by mutual funds in their non-superannuation fund areas. In those areas the effect will be to raise the average taxation being paid by these companies in effect from about 30c in the dollar, which roughly equates to the average tax paid by the taxpayer, and will move it closer to the 49c in the dollar which is the company rate of dividend. The world's greatest Treasurer is either purposely misleading the Australian community or is totally incompetent or totally incapable of understanding the implications of the measures that I have just outlined. This Treasurer has moved to eliminate double dipping on the part of taxpayers, but he has replaced it with double dipping by the Taxation Commissioner. For this latter action he deserves the condemnation not only of this Parliament but also of the Australian people. Mr BALDWIN(Sydney)(11.27) —Given the limited time allowed each speaker in this debate, I do not intend to go over in detail the merits of the specific proposals in the tax reform package announced by the Treasurer (Mr Keating) on 19 September; rather, I will make a number of comments on the broad thrust of the package considered in conjunction with earlier changes to the tax system made by the present Government. I will then discuss a number of ongoing concerns and perspectives for further change. As we all know, the Government's initial preferred option as set out in the tax White Paper was built around a broad based consumption tax. This was decisively rejected by a majority of the participants at the National Tax Summit held in July. The final proposal includes a rationalisation of the wholesale sales tax in such a way as to produce a small revenue gain. The centrepiece of the reform package announced on 19 September is a comprehensive attempt to repair and broaden the personal income tax base. For some time the notional progression shown in the personal income tax rate scale has been a fiction, with most of those on high incomes having access to a variety of tax minimisation avenues. There can be no doubt that the steps taken to close off these avenues are highly progressive in their incidence. I will not discuss specific measures as they have been covered ad nauseam in the debate leading up to the Tax Summit and after. Part of the burden of this assault on tax minimisation will be borne, in the first instance at least, by the corporate sector. This has served to justify the inclusion of a major concession to the corporate sector in the form of a full imputation system of company tax, only partly offset by an increase in the company tax rate. It will be some time before the measures achieve their full revenue potential. Nonetheless, we are to see marginal rate cuts introduced in two stages-on 1 September 1986 and 1 July 1987. The first stage is integrally linked to the Government's strategy to preserve the accord in the face of the recent dollar depreciation. These cuts will be of a considerably greater magnitude than would be provided by revenue from the income tax base broadening alone. The rest will come from returning to taxpayers the extra tax that would otherwise have been raised as a result of the effect of inflation on the income tax rate scales. What overall assessment are we to make of this package, so tortuously arrived at? There is little doubt that under the present system funds have been diverted from productive, employment-providing investment as a result of a system that made tax minimisation concerns paramount in many cases. I would add that that point is generally conceded by anybody who adheres to a rational economic analysis, and it is astonishing to hear speakers like the honourable member for Forde (Dr Watson) continuing to bemoan a capital gains tax which in its fifth year of operation will raise revenue of the order of $25m. To remove a major structural defect in the tax system over time is entirely justified, and one could not imagine a more phased, gradual achievement of that goal than has been done in this package. Some industries undoubtedly grew to greater proportions than would have been warranted were it not for the existence of tax rorts. The elimination of these distortions should yield significant efficiency gains to the economy in due course. As to the equity of the tax system, the base broadening measures in isolation are undoubtedly progressive in their effect. However, this picture changes somewhat when the new income tax rate structure is brought into the picture. An analysis of the distributional impact of the changes appears on the final two pages of the attachments to the Treasurer's statement. When the base broadening and rates scale changes are combined, the greatest gains, measured by increase in disposable income, will go to those with incomes around $30,000 per annum. Above this income level, the percentage gain in disposable income falls until a taxpayer at $100,000 suffers an actual loss of 1.6 per cent of disposable income. In other words, the changes are progressive in their impact from an income of $30,000 upwards. Taxpayers on lower incomes gain, but to a considerably lesser extent than taxpayers in the $30,000 per annum range. Madam Deputy Speaker, I seek leave to incorporate in Hansard the table which I referred to the former occupant of the chair. The table has been taken from the second last page of the attachments to the Treasurer's tax statement. Leave granted. The table read as follows- Table 1 NET GAINS AND CHANGES IN DISPOSABLE INCOME FOR SINGLE INCOME EARNER Taxpayer Not Affected by base-broadening measures Representative Taxpayer Comprehensive Income (a) Net Gain Change in Disposable Income Net Gain Change in Disposable Income ($ pa) ($/week) per cent ($/week) per cent 10,000... 3.40 2.0 3.40 2.0 12,500... 3.80 1.9 3.70 1.8 17,500... 4.90 1.8 4.40 1.6 19,500... 5.30 1.8 4.70 1.6 22,500... 8.70 2.7 5.80 1.7 27,500... 14.50 3.8 9.50 2.4 32,500... 22.00 (b)... 5.1 (b)...13.20 3.0 37,500... 31.10 (b)... 6.6 (b)...13.60 2.7 45,000... 46.90 (b)... 8.8 (b)...11.60 2.0 75,000... 110.20 (b)...14.5 (b)...15.60 1.7 100,000... 162.90 (b)...17.1 (b)...-20.70 -1.6 (a) Present taxable income plus income that will become taxable under the proposed base-broadening measures. (b) There are virtually no taxpayers at these income levels who would not be affected by the base-broadening measures. Mr BALDWIN —This picture improves somewhat when account is taken of measures that will impact on companies rather than directly on individuals. The table which I have incorporated does not take account of those measures which in the first instance will raise revenue from companies. That picture varies depending on the assumptions one makes about a company's ability to shift a tax burden either forward on to consumers or backwards on to labour and the way in which share holdings are distributed in the community as between individuals and large institutions. Nonetheless, if we take the impact on the corporate sector into account, the impact on progression starts to look a bit better than what is shown in the table. It is appropriate to consider these changes in conjunction with other rate scale adjustments since the change of government. In particular, the cutting of the bottom marginal rate from 30 per cent to 25 per cent in last year's Budget considerably enhanced the progression of the tax system. So the argument is that one has to consider the Government's changes to the tax and social security systems as a totality rather than focusing on the current package of tax changes in isolation. I have requested the Parliamentary Library to attempt an analysis that will take into account the effect on the progression of the tax system of all the changes since the present Government took office. Such an analysis might tell us some interesting things. An overall assessment should also look at the distributive impact of increases in various types of social security outlays over and above indexation since the change of government, including the anti-poverty trap measures announced in conjunction with the tax reform package. While I would have liked to see more done in this area-and I think if one takes a somewhat longer view over the past decade one can see that there has been a significant deterioration in real value of some of those payments and certainly a deterioration when compared with the updated Henderson poverty line-nonetheless, there is no doubt that these measures are very well targeted to the groups most in need. The Government has undoubtedly reversed an adverse trend since it took office. I have to say that I would have preferred to see a greater proportion of the benefits of tax reform distributed to low and middle income earners. This could have been achieved by structuring the marginal rate cuts differently and enlarging the outlays package targeted at poverty alleviation. I think there was plenty of scope to do more in those areas. A well designed anti-poverty package could have been somewhat larger than the $200m or so that is envisaged in the package as announced. As things stand, relief in the below $20,000 income range really only offsets the effect of inflation on the tax system for the next couple of years. I am referring there primarily to the increase in the threshold-from $4,595 to $5,100. The benefits accruing from tax reform itself are overwhelmingly delivered to those in the higher marginal rate brackets in a form not susceptible to rapid erosion by inflation. Slashing the top marginal rate from 60 per cent to 49 per cent is a concession that, by its very nature, is not subject to erosion by the effect of inflation whereas moving the tax-free threshold, which is the main form of assistance to low income earners, will, of course, very rapidly be wiped out by the action of inflation. There is no doubt that more could have been done to help low to middle income earners and that this would have been consistent with substantial marginal rate relief in the middle income range and a moving out of the 60 per cent marginal rate threshold. If one looks at the numbers, one will see that there is no question that what I have just said is accurate. If one projects forward to 1987-88, one can see that the abolition of the 60 per cent marginal rate is a very substantial concession. I believe that that in itself will have a revenue cost well in excess of $1 billion when one updates and takes account of inflation, fiscal drag, growth in the labour force and so on. Rather than doing that, I am suggesting that that threshold could have been moved out so as to stop people with comparatively modest incomes from getting into it. Notwithstanding these concerns, the tax reform package is a great step forward. Adjustment to the rate scale is politically a relatively simple matter by comparison with the measures needed to rid the income tax system of the major structural deficiencies that have made it susceptible to tax avoidance and evasion. In other words, I guess I am flagging here that I hope to see some further adjustment in the marginal rate scale that will restore a greater degree of progression. It needs to be stressed that continuous monitoring and review of the tax system will be needed to guard against the possibility of new avoidance and evasion avenues being developed. Already the tax avoidance industry has run advertisements in major newspapers boasting of its capacity to get around the new changes. There undoubtedly remain significant avenues for avoidance and evasion. One such area, partly tackled by the foreign tax credit scheme announced in the package, that will require a highly sophisticated approach is that of overseas avoidance and evasion. I quote from the paper delivered to the Tax Summit by Yuri Grbich, Professor of Law at the University of New South Wales and acknowledged as one of the leading experts in tax avoidance and evasion in this country, particularly the legal aspects: Good task force auditing strategies, the development of better intelligence and, more controversially, new legislative techniques against tax havens and transfer pricing promise handsome returns for resources. This involves a long term commitment to build up the quality and depth of advice and to revise the Act. The amounts involved are-and I emphasise- very large indeed but the problems are equally daunting. In another part of his interesting paper, Grbich argues that the existing institutions in the field-that is, the Taxation Office and the Treasury-may well be unsuited to the sort of task set out in the above quote. Grbich favours a new, more legally oriented, institution with the following characteristics. He states in his speech: It would tend to concentrate on long term initiatives, with some emphasis on large scale management initiatives, and leave most of the day to day administration of the tax system to the Tax Office. Its expertise would go considerably beyond the economic expertise of the economists who have traditionally dominated Treasury. I think those remarks are extremely significant and ought to be the subject of on-going consideration within the Parliament. The nature of the marginal rate changes also warrants placing the direct taxation of wealth back on the agenda for the medium term. The treatment of this issue in the recent debate was unfortunate. The White Paper discussion was perfunctory, presumably because there was seen to be little point in wasting too much effort on an option that had been virtually ruled out by the political leadership at the outset. It was also unfortunate that the perception developed that integrated inheritance and gift duties were a more viable form of direct taxation on wealth than a net wealth tax. I believe, for reasons that I could set out in more detail given time, that this perception was misguided. However, I just make the observation that, according to opinion polls, there is a far greater acceptance of a net wealth tax than of integrated death gift duties. The reasons for that probably stem from the unfavourable experience of the dual Commonwealth-State death tax regime that formerly applied. However, for a variety of reasons I think if we are going to look at the direct taxation of wealth, a net wealth tax is the right way to go. However, time does not permit me to go into that further. I conclude by observing that one of the main impediments to a rational consideration of such a tax is a lack of reliable data on wealth distribution in this country. Efforts are currently being made to remedy this matter. I welcome that and I hope that in the medium term we will be looking a lot more seriously at that question. Mr BLUNT(Richmond)(11.39) —This debate today is totally misnamed. According to the Government, this is a debate on reform of the Australian taxation system. It really should be titled a debate on the reduction, for part of the time, of marginal tax rates for individuals and the introduction of a series of new anti-business taxes. Let me address the matter of marginal tax rates. Some people believe the Government's publicity and are of the opinion that the burden on individual taxpayers through income tax has been reduced. It has been for some time, but not for any great length of time. Unfortunately, our Treasurer (Mr Keating), who has the mantle of the world's greatest Treasurer, has forgotten to index these marginal tax rates. According to his Budget Papers, we expect an increase in average weekly earnings and inflation of about 8 per cent per annum. I find it hard to believe that our Treasurer does not know of something called bracket creep. My calculations indicate that within two years, with 8 per cent inflation and taking account of bracket creep, the average Australian taxpayer will not be better off under these new tax scales but worse off. If one also considers the impact of the new taxes this Treasurer has introduced, the average Australian taxpayer will be a lot worse off. When one considers not only the direct impact of these new taxes but also the indirect effect-that is, the impact on inflation, because all these taxes will increase the cost of goods and services-the average Australian taxpayer will be a lot worse off. The Australian economy will be in for a new round of inflation. That vicious cycle, which so often accompanies Labor governments, that is, high inflation, high unemployment, low rates of growth and, these days, a declining value of the Australian dollar-- Dr Blewett —Ha, ha! Mr BLUNT —The Minister laughs. I refer him to the Whitlam period. Dr Blewett —Can I just refer you to the Fraser period? What about taking the last year of the Fraser Government? Double digit inflation, double digit unemployment. Mr BLUNT —Let us not digress too far from the debate. The greatest example in Australia's history of how not to manage an economy was Gough Whitlam's period in office. Let me address some of the more important issues contained in this package of new taxes. Let us look at the impact of the fringe benefits tax, which is a tax on employers. As I said, it will increase the cost of goods and services. I think our Treasurer has really been snowed by the equivalent of Sir Humphrey in his Department. This is totally unnecessary legislation. I quote from the Income Tax Assessment Act 1936, section 26(e), which states: the value to the taxpayer of all allowances, gratuities, compensations, benefits, bonuses and premiums allowed, given or granted to him in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by him, whether so allowed, given or granted in money, goods, land, meals, sustenance, the use of premises or quarters or otherwise . . . These things are subject to tax because under section 26(e) they are defined as income. The reality is that if the Australian Taxation Office was doing its job and using the provisions that already exist in the tax Act we would not need further amendments imposing new taxes on the employer. The reality is that the Treasurer cannot stand up to his Department and say to Sir Humphrey, or whoever it is in that Department: `I want you to enforce the law as it stands'. No, he has been snowed, like Jim Hacker. He has been told to go into the Parliament and argue for more law, more bureaucracy, more public servants, more cost, so that it is easier for the tax department. He has not even realised the consequences for Australian business of forcing employers to pay taxes in this way. I find it absolutely amazing that some honourable members on the other side talk about their concern for unemployment but are busy imposing a further tax, in the nature of a tax on employment, in this so-called reform of taxation. The reality is that employers have only a given amount of income. They have suddenly been confronted with an additional charge which they have to pay to the Government through this proposed tax on fringe benefits. What are their choices? Will they put up their prices? Of course they will do that. But their capacity to do that is limited by the shape of the demand curve for their product. What is their other option? They will start cutting costs. Where does an employer start cutting costs when he has an increased cost of employment? He starts looking at his employees. What will happen? The average employer will say: `I will have to keep my senior executive people, the management of my firm, the people who make this operation go, so I will have to wear the tax for them'. He will look at who else he employs. Perhaps he has some unskilled people, some less experienced people, some young people. He will say: `Let's cut the payroll bill there'. So more people, the people least able to compete in the labour force and get other jobs, will be put on the unemployment heap. This Government claims that it is concerned about unemployment and creating jobs. In this move the Treasurer has eliminated I do not know how many jobs, but probably thousands, because he has not thought through the reactions to this proposal. As another example of the Treasurer's thoughtlessness we look at this total ban on entertainment expenses. Even members of his own Government recognise the importance of entertainment expenses. In the next few weeks we will be treated to the spectacle of the $22,000 lunch at Ayers Rock. Mr Lloyd —How much? Mr BLUNT —A $22,000 lunch at Ayers Rock. I do not know why it is having a lunch of that magnitude if it does not feel that that is an integral part of the business that will take place there-that is, the giving away of Ayers Rock to a certain section of the Australian community. The reality is that entertainment expenses are a legitimate part of business transactions. On the Sunday program the Treasurer was asked whether his Department had done any calculations or studies on the likely employment consequences of banning entertainment expenses. Do you know what his answer was, Madam Deputy Speaker? He said: `No, we haven't done any studies on it'. I can tell him that this measure is already beginning to bite. Entertainment expenses are no longer deductible. Restaurants are beginning to lay off people. A thousand people were laid off in Melbourne the other day, and that will continue. The Treasurer trots out this spurious argument that the restaurant industry has been existing behind a tax shelter. Let me tell honourable members that entertainment expenses are deductible under section 51(1) of the Income Tax Assessment Act, as is every other legitimate business expense. The next thing the Treasurer will tell us is that we cannot deduct the cost of paper clips, paper, fuel for machines and such things because they are deductible under section 51(1), under a tax shelter. What a lot of arrant nonsense. The Treasurer seems committed to building a bigger and better bureaucracy. The substantiation provisions contained in the so-called reform package are absolutely horrific. They will create work. The Government will have to expand the storage provisions in the taxation offices just so they can file everybody's tax returns. What about the wholesale taxes? The Treasurer has introduced a reclassification of wholesale taxes, an extension of wholesale taxes. He made the statement on Thursday night, and in some of the regional offices of the Taxation Office on Friday morning officers who had to advise people responsible for collecting this tax on behalf of the Government were rushing out and buying newspapers, trying to work out what the obligations were. The Treasurer had not even managed to get the detailed advice through to the officers of the Taxation Office. I wonder what sort of administrative competence that is. Mr Lloyd —It sounds like a cosmetic operation to me, following that advertisement yesterday. Mr BLUNT —My friend reminds me of the cosmetic operation. The Treasurer has a reputation for being suave and urbane, but I notice that he is looking after his toiletries. They are all to be taxed at the 20 per cent rate while the tax rate on cosmetics and toiletry requirements for females is 30 per cent. I would love to be a fly on the wall in the Cabinet room when Senator Susan Ryan makes some comments about that. The other matter that is really important is the proposal of the Treasurer to quarantine farm losses. On the one hand he is limiting the ability of people involved in primary industry to offset losses incurred in that activity against income from other sources. On the other hand, he is busy encouraging group tax positions for the corporate sector of the economy. The reality is that this Treasurer is anti-farmer. He does not realise that a lot of agricultural pursuits, particularly in the orchard industry, require a long term investment. It is up to seven or eight years before one gets any sort of return out of many orchard investments. There is a need to seek some sort of tax relief and amelioration or that sort of investment will not go on. Earlier in this debate the honourable member for Charlton (Mr Robert Brown) talked about the veritable flood of macadamia nuts and avocadoes. I am amazed that the honourable member does not even recognise that avacadoes are in short supply. They are an export crop. We have tremendous potential for exporting them to Asia and America. The honourable member is obviously unaware of the parlous state of our balance of payments and the level of the Australian dollar. If he was concerned about Australia's position in the world economy he would be in favour of any proposal which encouraged the development of export industries. Agriculture, particularly the orchard section, is one of our few industries which have any potential to increase exports. In the limited time available to me I would like to draw the House's attention to an absolute anomaly that this Government has introduced into property investment. From 17 July this Government has banned negative gearing on property investment. That means that one cannot pay more interest than the rent one receives on a property, notwithstanding that over a period it is possible to reduce the mortgage, and therefore the interest payment, and reverse the situation. As a so-called sop, the Government has introduced from 17 July a depreciation provision of 4 per cent on property the construction of which commenced after 17 July. What about the vast stock of property in Australia which was built prior to 17 July? It is not eligible for negative gearing; it is not eligible for depreciation. That means the only buyer for that sort of property is an owner-occupier. No investor seeking to rent the property would purchase it unless its value was substantially discounted. Consequently rents are likely to rise and the values of certain classes of property are likely to drop like a rock. A colleague of the Treasurer in the Australian Labor Party, the Minister for Youth and Community Services in the New South Wales Government, is absolutely terrified of the consequences of what his colleagues in Canberra are doing to rental values in Sydney. Already there is something like a one per cent vacancy rate in the Sydney rental market and rents are rising rapidly every week. Coupled with this Treasurer's capital gains tax, his prohibition on negative gearing and the limitation of the depreciation provision to property commenced after 17 July 1985, he will put more and more pressure on rental values. We will see an increase in rents, we will see a simultaneous drop in the value of certain classes of property and, because of the structure of this capital gains tax, we will see excessive investment in housing in Australia. The final point I would like to make concerns the proposed identity card. Opinion polls in Australia indicate that most Australians support the proposal for an ID card, but the reality is that they support the proposal for an ID card on the basis that it will do something about social security fraud. A decision has been taken not to have a photograph on the ID card, which is known as the Australia Card. There was a very conspicuous omission from the Treasurer's statement-that is, an estimate of the social security overpayment and fraud savings that would accrue from the introduction of this card. But there was a very conspicuous estimate of the extra tax that would be collected. The reality is that the Australia Card is a fraud; it is nothing more than a tax card. I was told in discussions with officers of the Department of Social Security-I find this amazing-that the Department will not rely on the Australia Card as a source of identification for clients. The reason it will not rely on the card is that it does not have any confidence in the integrity of this proposal. I find it absolutely amazing that this Government will spend millions of dollars on introducing an ID card without a photograph, that the Department of Social Security will not rely upon it, that it will not be used by the Australian Electoral Office for compiling electoral rolls and that it will not have any direct link with the Australian Taxation Office. Yet the Government will spend an immense amount of money on it. I think it is one of the worst ideas I have ever heard. A much simpler way of collecting tax would be to introduce a national taxation file system. Instead of the State by State system of tax files that we have at present, this Government and the Treasurer would be much better off directing the Taxation Office's attention to coming up with a national tax file number which could be used by employers and employees alike in recording payments in the nature of wages and salaries to people for casual work. Madam DEPUTY SPEAKER(Mrs Darling) —Order! The honourable member's time has elapsed. Ms JAKOBSEN(Cowan)(11.55) —I rise to address the subject of the reform of the Australian taxation system. The Government's tax reform package is a major achievement indeed, despite the protestations of the Opposition. It is the outcome of an unprecedented process of consultation, not the least of which was the National Taxation Summit. Admittedly the tax summit was a difficult exercise for the Government to undertake because it involved consultation with so many varied groups of people. Nevertheless I believe that it was a valuable exercise and I am sure the Government believes that, too. This tax reform package is, to a large extent, the result of that consultation with the Australian people and their representatives. Simply put, the Government's plan to reform the tax system in Australia is to broaden the direct tax base by cracking down on tax shelters, taxing fringe benefits and very gently-I emphasise the words `very gently'-taxing capital gains to help fund tax cuts for those taxpayers who, for so long, have suffered high marginal tax rates. These measures have brought forward some opposition from select vested interest groups. I will not name any honourable members opposite. However, the majority of the ordinary working people, who comprise the bulk of taxpayers in this country, have heralded these reforms as being fair and long overdue. I can speak from my experience of having consulted with constituents in my area. They certainly herald these changes. Very few of them have benefited from the free lunch or any of the other little perks and lurks that were available to some people under the previous tax system. The money collected from those not previously paying the appropriate amount of tax will help fund reductions in marginal tax rates and benefit all income earners who to date have been conscientiously paying full tax on their weekly earnings. The demise of the free lunch, which I have just mentioned, and entertainment expenses as a taxable deduction may cause, and probably has caused, some concern to some people and some industries, as is obvious from recent newspaper articles. However, this measure was necessary because of the difficulty in determining what was a genuine business entertainment expense and what was not. Like many other aspects of the taxation system, it was the abuse of this deduction that necessitated its removal. As the Treasurer (Mr Keating) recently pointed out, meals associated with legitimate conferences and conventions will still be deductible. But people will no longer be able to claim meals and entertainment expenses for reciprocal lunches with colleagues, friends and family and those sorts of occasions when business people choose to discuss aspects of their work over a meal in a restaurant. However, many will still follow this practice because of time constraints and the need to eat somewhere at some time. Mr Tim Fischer —Like here. Ms JAKOBSEN —Exactly. People will now simply reorganise their arrangements for paying the restaurant bill; that is, they will decide to pay for themselves only-they will go dutch as it is called-or reciprocate where regular dining is a feature of their relationship with the person they are meeting. Few amongst the majority of taxpayers in Australia have had access to either business lunches or entertainment deductions. Nevertheless, they have been footing the bill, at least in part. This situation could not be permitted to continue unchecked. Some fringe benefits are undoubtedly necessary to a person's job and pursuit of income. Many have been fought for as part of industry awards. However, many more have been granted as non-cash benefits purely for the purpose of avoiding taxation. Therefore, the Government has decided, quite rightly, that employers should pay the tax on most fringe benefits which are extended to employees. Under these circumstances, employers and employees will be able to discuss the relative merits of specific fringe benefit arrangements and the consequences of their possible renegotiation. The Government's tax package also includes the provision of quarterly provisional tax, to commerce from 1987-88. This ought to reduce the stress on the money market-as is well known to honourable members on both sides of the House-at particular times of the year. When fully implemented, four instalments will be payable. This is an important reform and one which many people in the community have accepted. The simplification of the wholesale rate structure from four scales to three is another important reform. In passing, I would like to reject the method and nature of the approach by the cosmetics lobby to Federal members of parliament. It is a particularly tasteless attempt to create artificial divisions in the Parliament and the community-not to mention between men and women. Mr Tim Fischer —Are you sending yours back? Ms JAKOBSEN —Of course I will send mine back. Many women-I include myself-do not view the items selected by that cosmetics lobby as necessities. However, that is not the reason I reject the approach. Most members of parliament would be offended to think that a $30 package of cosmetics could change their views on an issue of principle. I hasten to add that there probably are areas within the wholesale tax allocation that need further review. I am sure that the Treasurer would agree. However, those items chosen by the cosmetics lobby in its endeavour are not necessarily essential items. Therefore they ought not, just for the sake of it, be put into the lower tax bracket. The Government in this package has undertaken far-reaching and substantial tax reforms. It has addressed the recognised need to reduce marginal tax rates, to curtail tax avoidance and evasion and to restore fairness to the taxation system. It has also recognised the need to gear our tax system to encourage economic growth and to provide greater reward for initiative by removing distorting tax shelters. It is important to note in this context the removal of previously allowed negative gearing and the introduction of a capital gains tax. These were necessary and reasonable reforms. They should assist in removing capital from relatively non-productive areas, such as the purchase of real estate and second properties, and placing it in areas which are more productive, and which have greater implications for employment. These reforms have also been received well and understood by most Australian taxpayers. Emphasis will continue to be given to stamping out avoidance and evasion in the Australian tax system. I congratulate the Government on its genuine and courageous attempts to reform the tax system in the way that it has. Dr HARRY EDWARDS(Berowra)(12.03) —The honourable member for Cowan (Ms Jakobsen), along with other Government speakers in this debate, talked as if she really believed the claim of the Treasurer (Mr Keating) that this tax reform package before the House is the largest, most comprehensive and far-reaching reform package to be put down by a government in living memory. That might be true in terms of the number of changes to the system that are assembled in the one package. There is indeed a whole air about this package of the Treasurer casting around to achieve substance and face by the range and number of reform measures in order to make up for the humiliating defeat that he suffered at the July National Taxation Summit. There the famous option C which he favoured and which would have enabled real and fundamental reform was thrown out under pressure from the Australian Council of Trade Unions and the left wing of the Labor Party. So the present package is distinguished by the number of changes it would make, but it fails the test of fundamental reform in terms of the shape of change to which the Treasurer was passionately attached a few months ago, namely to reduce substantially the excessive reliance in the Australian tax system on personal income tax, with a particular focus on changing the present exploitative 46 per cent, 48 per cent and 60 per cent marginal tax rates and the low thresholds at which they become operative-reducing the tax rates and increasing thresholds. I stress the matter of the thresholds as did the Treasurer in his latest statement in which he stated: . . . at the beginning of the 1970s the top rate came in at the current equivalent of $110,000, today it comes in at $35,000. He refers to the threshold but, of course, he is not doing anything about it. He is not in a position to do anything about it. In the welter of discussion about the detail of the array of measures in the present package, it is salutary to pause and review the case for this central thrust of reform, reducing the excessive reliance on personal income tax, as it was put in the June White Paper and, indeed, so eloquently argued up and down the nation by the Treasurer. This case basically looks at the situation in Australia over the years and is not necessarily based on comparisons with overseas countries. In the mid-1950s about 35 per cent of all taxation was personal income tax. In the late 1960s and 1970s that amount was up to 40 per cent and currently personal income tax is about 52 per cent of total receipts for the Government. In fact, that is a higher incidence of personal income tax than in most other Organisation for Economic Co-operation and Development countries. In addition, taxpayers on quite moderate income levels are exposed to very high marginal rates of tax. In 1954-55 only one per cent of taxpayers faced a marginal rate equal to or greater than 46 per cent. Currently, nearly 40 per cent of taxpayers do, that is, nearly half of any additional income that they earn, or any increase in income, goes in tax. Again, in 1954-55 the top marginal rate, then 66 per cent, began at an income level approximately 18 times average weekly earnings which would be equivalent to an income of about $400,000 today. Mr Cadman —Staggering. Dr HARRY EDWARDS —As my colleague says, the comparison is staggering. Currently, the top marginal rate comes in at $35,000 which is 1.6 times average weekly earnings. These marginal rates adversely affect incentives and hence efficiency and growth; they also, of course, encourage people to take steps to avoid or evade paying tax. As the Treasurer put it in his statement, `taxpayers just will not pay ridiculously high marginal rates'. The extent of avoidance and evasion is reflected in the comparison between the situation in 1954-55 and now. In 1954-55, something like 54 per cent of all income tax came from people with incomes up to 1.6 times average weekly earnings. Today, the quantum of income tax coming from that group is barely 21 per cent. All this adds up to an imperative to do something dramatic about the personal tax system; in particular, lowering marginal rates but also increasing thresholds. Perhaps people could live with a marginal rate of 46c in the dollar if it was imposed at a higher level of income than average earnings, or $19,500. Perhaps they could live with a 60 per cent rate if it came in at an income of something like $100,000 which, as the Treasurer said, was the case only as recently as 1972. But when the 60 per cent rate comes in at an income of $35,000, barely one and a half times average earnings, it is totally unacceptable. There are two ways of achieving the desired change. One is to cut substantially the aggregate of government expenditure. We know that this Government will not look at that proposition. It has specifically ruled it out in the discussions of tax reform. The other is to move to a greater reliance on a broad-based indirect tax, which has the added advantage of taxing at the point of spending money in the so-called black or cash economy. That is a very important and significant aspect of this matter. In fact, the White Paper, subsequently embraced by the Treasurer, proposed just such a move. The Treasurer embraced with a sort of bold vision the introduction of a broad-based consumption tax at the very high-indeed, too high-rate of 12 1/2 per cent. That, even allowing for compensating persons disadvantaged by such a tax, would have enabled a substantial change to be made to the income tax system. Indeed, the Treasurer, growing bolder as he went along, suggested that he could go further and even index the personal income tax structure he should finally implement so that that structure would continue. That has always been a highly desirable practice, not least to the union movement. It has always been anomalous that without tax indexation the full indexation of wages-adjusting wages fully to the price index-will still leave employees with a decline in their real incomes. I believe that there is a commitment in the much-vaunted accord to an annual review of tax rates with that purpose in mind. As we know, the broad-based consumption tax was not on, largely owing to the opposition from the Australian Council of Trade Unions and from the left wing of the Australian Labor Party. I give notice that the present policy of the Opposition is to move to less reliance on personal income tax via some form of a broad-based indirect tax. For my own part, that would be a value-added tax-a VAT-but I am not suggesting that that is the policy of the Opposition. What in the end do we get? We get a set of measures-some, like the capital gains tax, operative right now as my colleague the honourable member for Forde (Dr Watson) so adequately expounded this morning-which, notwithstanding some good factors such as the imputation system for company tax having the effect of ending the double taxation of dividends, adds up to a total package which lacks any coherent sense of purpose or direction, is depressing to business and is inimical to growth and employment. In respect of the capital gains tax, let me again quote the Prime Minister (Mr Hawke). On 16 February 1983, the Prime Minister said: . . . let me make one point so that even our opponents can understand it; and let me make it beyond all their powers of misrepresentation and distortion. There will be no new capital gains tax. Mr Cadman —Who could believe him after that? Dr HARRY EDWARDS —Who could indeed? We now have the capital gains tax in place and, in addition, we have an increase in the company tax rate; we have the tax on fringe benefits. I am not necessarily against a tax on fringe benefits, but this tax is to be paid by the employer. These measures, combined with the total disallowance of entertainment expenditure, may be seen-I believe that this is its most disturbing aspect-as potentially the first step in a general attack on the deductibility of business expenses, which would be a very serious matter. We have that package of measures on the one side. What will we get on the other, so far as personal income tax is concerned, which, as I have stressed, is the prime focus of the whole tax reform exercise? The personal tax changes are not to be implemented immediately and are contingent on a variety of macro-economic conditions such as the rate of economic growth, inflation, the Government's containment of spending and the deficit-I do not have too many great expectations in that area-and will not be in the final form until 1 July 1987. What is in prospect in respect of the personal income tax is a change in the marginal rate scale as follows. Apart from a raising of the tax free threshold there are to be no changes at all to thresholds. The 46c rate will be reduced to 43c and then to 40c. That is commendable enough, but it is still to come in at $19,500. The 60 per cent rate is to be reduced by 1 July 1987 to 49 per cent. That is a welcome reduction but the rate is still too high when it comes in at a level of income only 1.6 times average earnings, namely, $35,000. So we have a proposed reduction-we have not yet got the reduction-from 60 per cent to 49 per cent but no change in the thresholds. In this overall package we are looking at a number of measures which, as I said, do not add up to any coherent purpose or direction, are depressing to business and are inimical to growth and employment. The final outcome, after all the trauma and all the potential disruption, is that the proposed changes in marginal tax rates are something of a wimp. I believe that no one who has any understanding of the complexity of the Australian tax system or of the myths and misinformation that surround it would pretend for a moment that the task of tax reform in Australia, or anywhere else, for that matter, is an easy one. There are no easy, quick or simple solutions. But, recognising that fact and seeing how this Government has laboured so hard and long and, in respect of the central objective, brought forth a mouse, it will fall to the next coalition government to accept the challenge of fundamental reform towards a tax system with much less reliance on personal income tax, a system which is conducive to entrepreneurship and growth and which addresses the needs of Australian families. Madam DEPUTY SPEAKER(Mrs Darling) —Order! The honourable member's time has expired. Mr CUNNINGHAM(McMillan)(12.18) —I wish to address my remarks in the first instance to the amendment moved by the Opposition spokesman on Treasury affairs. The Opposition says in the amendment that it welcomes some of the measures outlined by the Government for the relief of the double taxation of dividends and the promised reduction in marginal tax rates. However, it has then gone on its usual way to try to make some sort of criticism based on five or six items. I shall go through them one by one. First of all, the Opposition specifically condemns the Government for the proposed introduction of a new capital gains tax. We know now, following a question answered by the Treasurer (Mr Keating) in this House yesterday, that the Opposition spokesman has stated quite categorically that the Opposition is now in favour of the introduction of a capital gains tax. In fact, the Opposition is in favour of the extension of section 26AAA. This relates to a capital gains tax on speculation which is imposed at the full marginal rate on the full nominal gain. However, honourable members opposite have the audacity to support their Treasury spokesman's amendment condemning the proposed introduction of a very mild capital gains tax announced by the Treasurer in September in order to reform the Australian taxation system. It seems to me that on one hand we have a government prepared to work to reform the taxation system and, on the other hand, we have an opposition prepared to move amendments to the motion to take note of the paper-thus condemning the Government-at the same time as its spokesman for Treasury matters in the Senate has stated that the Opposition proposes to introduce a more severe capital gains tax than the one proposed to be introduced by the Government. We can see that honourable members opposite are very much at sea in relation to their policies in this regard. In paragraph (2) of the amendment the Opposition: notes that under the Government's proposals the share of revenue carried by personal income tax will continue to rise; That would be acceptable because over the last three years-including 1985-86-we have seen growth at a level not achieved in Australia since the 1960s. We have growth in employment and the economy. Therefore, it is quite understandable that there will be a further rise in the share of personal income tax revenues. That is a matter for congratulation, not condemnation. Therefore, any one who understands economics at all will never condemn the fact that there will be a growth in employment and revenue and, henceforth, a growth in the personal share of income tax which will continue to rise. The Opposition in paragraph (3) of the amendment then: condemns the arbitrary nature of the attack on fringe benefits and entertainment expenses; My heart bleeds for all those in the political arena who feel that the taxpayer should pay for free lunches which are legitimately part of business. I do not have any qualms about any person who wants to go to a restaurant for dinner. However, there is no reason in the world why the taxpayer should be asked to pay for those lunches if they are a business expense. If a business takes a decision to run its operations along that line, by all means let it do so. However, if such a business wants to put on a lunch there is no reason why the taxpayer should foot the bill. I quite agree with the position the Government has taken on that matter. That policy will affect politicians and business. It is right across the board and thus could not be said to be arbitrary. In paragraph (4) of the amendment the Opposition states that it: expresses grave concern on enterprise, investment and employment due to the additional cost burdens on business arising from the capital gains tax-- I cannot see where there will be any enormous cost burden on either enterprise or investment in this regard. Certainly, it will have an effect on how people invest in the future. As a result of a tax reform of this nature for the first time investors will be able to sit down and make a legitimate decision as to where they will invest their money for the best return they can get and, also, the best return for the good of the economy. In the future we will not see as much investment in properties on the outskirts of towns around Australia where, as we all know, the price of land far exceeds its value for legitimate returns on investment. Everybody knows that that is being done only for capital gains purposes in the long term. I think as a result of these measures we will see real reforms in this area. The proposed capital gains tax will not have a major effect on people's incomes, nor will it have a major effect on enterprise, investment and employment, as has been stated by the shadow Treasurer. It will have a proper effect on people making correct economic decisions. In paragraph (4) the Opposition further expresses grave concern over the: . . . fringe benefits tax and the loss of deductions for legitimate entertaining expenses; The Opposition says that this also will have the same effect on private enterprise. I think honourable members opposite have a very low opinion of the board rooms of Australian companies. They think that these measures will have a dramatic and detrimental effect on business as to where it will make investments in the future. I firmly believe-I am sure it will be proven, long before the next election-that the measures introduced by this Government will result in proper investments. There will be plenty of enterprise, plenty of investment and plenty of employment in Australia. The figures will continue to show that. In paragraph (5) and (6) of the amendment the Opposition states that it: regrets the package will have an adverse and discriminatory impact on rural Australia; notes the particular discriminatory nature of the attack on the deductibility of farm losses against non-farm income . . . Once again, the intention is quite clear. The taxation package is designed to operate right across the board. The capital gains tax is as important as the element concerning the deductibility of farm losses. That has been put in place in such a way that genuine farmers-those who are working the land; those who are producing a major export industry for this nation-will be protected. The proposed change will affect only the Pitt Street and Collins Street farmers who write off big losses from other industries into the capital speculative areas around our country towns and who push up land prices. This will be the greatest measure for our economy. It will really turn around our investment decisions. It will push people into genuine production investments which, I hope, will push land prices back to a realistic level. A lot of concern has been expressed to the effect that land prices will come down and that this will have a detrimental effect. I do not know how this can be so. The thing that keeps young people and others out of farming in our nation is the ridiculous price of land. The price of land in country areas right around the nation is so ridiculous simply because of the speculative nature of the people who are not genuine farmers who go into that industry. They are pushing land prices up. No doubt, the measures taken in the taxation reform package will have an effect in that area. They will have a positive effect. They will bring land prices down to a realistic level. Some while ago an honourable member interjected to mention the assets test. The only problem that people discovered with the assets test is that their land values were far in excess of their earning capacity. The asset they alleged they had was valued far in excess of what it was worth. That is one of the real problems in our economy. We are not as wealthy as we believe we are. The simple reason for this is that land values are far in excess of what they should be. I will spend the few minutes I have left detailing the quarantining of farm losses and the improved averaging provisions announced by the Government because I believe, as Chairman of the Caucus Primary Industry Committee, that there has been some confusion in country areas in relation to this. I will detail those. In the paper `Reform of the Australian Taxation System' the Treasurer stated: Deductions for losses for the 1986-87 and subsequent income years from a taxpayer's primary production activities are to be limited to the amount of non-farm income deemed to be `notional' annual farm income and specified as the greater of: $15,000 shading out dollar for dollar for non-farm incomes between $15,000 and $30,000, with these thresholds subject to indexation in subsequent years; and the aggregate of the previous 5 years of net farm income. Any excess primary production loss is to be carried forward indefinitely for deduction in later years against the taxpayer's farm income, the annual notional farm income specified above and any taxable gain on disposal of primary production property. Quarantined primary production losses carried forward will be deducted in later years ahead of any losses carried forward under the existing loss provisions of the income tax law. The measure will apply to all individuals, companies, partnerships and trusts carrying on a business of primary production. Many farms are operated as husband and wife partnerships and the notional farm income provisions could benefit both partners if they each earned non-farm income. The specified `national' farm income limit of $15,000 and associated shade-out provisions, together with the indexing of these, will also extend to the current income tax averaging arrangements under which a maximum of $5,000 of `notional' farm income is allowed for averaging purposes. This will provide a significant tax benefit to many genuine primary producers, unrelated to the proposed quarantining measure. The increase in the specified monetary limit from the $10,000 in the draft White Paper to an indexed $15,000 significantly increases the amount of non-farm income able to be earned by farmers without being affected by the quarantining measure. In increasing this monetary limit and indexing it the Government was particularly mindful of the fact that many genuine farmers can earn significant amounts of non-farm income, especially during hard times. Taxpayers will also be able to attract higher notional farm income for quarantining purposes in particular years by demonstrating a proven record of farm profitability, regardless of the level of their non-farm income in those years. This profitability test will address more completely those cases where farm losses are caused by downturns or disasters, rather than by tax sheltering activity. Losses of up to the aggregate of the previous five years' net farm income may be offset against other income. The quarantining of taxpayers' primary production losses to, broadly, their income from primary production is aimed at taxpayers who undertake farm activities to exploit weaknesses in our tax system: particularly, the up-front deductions for full nominal interest payments and rapid write-off provisions, coupled with the later realisation of capital gains which are either not taxed or, as proposed, taxed on a preferential basis. Sheltering non-farm income from tax in loss-making years is an essential part of this exploitation. For similar reasons the Government announced on 17 July 1985 the quarantining of excess interest from `negatively geared' rental property investments to the income and taxable gains from those investments. Similar quarantining measures will be applied to other areas should that prove necessary to protect the revenue from tax sheltering activities. The notional farm income concept to be applied with the quarantining of farm losses is designed to minimise adverse effects of the measure on genuine farmers or other taxpayers undertaking primary production purely for commercial reasons. Such a concept avoids the disadvantages of qualitative and quantitative tests that would otherwise be required and which invariably would be complex, would involve very heavy administrative workloads and could introduce uncertainties as to the outcome in particular cases. The measure will inevitably have some effect on some existing investments, particularly those with longer lead times. Nevertheless, the measure does not apply to losses until the 1986-87 income year and losses incurred before then will remain deductible against either farm or non-farm income of future years. Both the delay in the start-up of the measure and the more generous treatment in relation to non-farm income will ameliorate the effects of the measure on existing investments. Offsetting the revenue gains from the quarantining measure will be the effect of the significant improvement in the primary production averaging provisions. An additional $20 million per annum benefit to farmers will arise from the complementary increase in the notional farm income limit for primary production averaging purposes, from the current level of $5,000 to the new level of $15,000. This represents a significant increase in the amount of non-farm income which may benefit from the averaging provisions. It is estimated that revenue gains from these measures will be $105m in 1987-88 and $75m per annum thereafter. I contend that the major input in this area is that this total package works as a unit. It will have a major effect on investment in Australia in the future. The measures that have been announced in many cases are revenue neutral. They are not designed as tax collecting measures. They have been put together in such a way as to put the economy of this country into a position where it can go into the next century with proper investment. Nobody who understands the Australian economy and who has looked at it over the last 10 years could express anything but alarm at the sort of approach that has been taken. We have had many measures put forward by way of discussion so far as tax reforms are concerned. We have had inquiry after inquiry. A conservative government took over the Australian economy in 1975 and for the next seven years dallied with talk about tax reform but achieved absolutely nothing. That government worked its way through the system at that time with the greatest income bonanza any government could have had from the oil fields in Bass Strait, in my area of Victoria. It did not use that money for the good of Australia. It did not use it to develop this country. It used the money to overcome its inability to tackle tax reform. Massive amounts-$4,000m and $5,000m-came into the coffers of the Government. It was a great short term opportunity-that oil is going to run out in a short time-which this country should not have missed. The conservative forces threw away what was probably the greatest opportunity Australia has ever had. In the last three years this Government has put its mind to work and has put into place tax reforms which will put investment in Australia into the right mode and create more employment and more jobs. There will be more enterprise in Australia. There will be more confidence. Amendments such as that put forward today by the shadow Treasurer will do nothing for the Australian economy. Mr REITH(Flinders)(12.34) —Before I address some of the specific parts of the Government's so-called reform package, let me say that I think it is important to understand that today we are talking very much about shifting the chairs on the Titanic. The one thing that this Government has not been prepared to do is to sit down and talk about the level of government expenditure. The reason it does not want to talk about government expenditure is that it is a government that believes in continually increasing government expenditure, the size of government and the size of bureaucracy. The Australian people want to hear about less government and less taxation. Is it any wonder that the Government's standing in the Australian community is deteriorating day by day and hour by hour? For those of us on this side of the House that is no surprise, particularly in view of the Government's decision to introduce capital gains taxes to king hit the restaurant industry in this country, and at the same time, by way of nice contrast, to pay out to a bloke whom it instructed to be sacked hundreds of thousands of dollars when its own legal opinion has told it that $10 would have been enough. Today I wish to refer particularly to the Government's proposal for identification cards and for the introduction of a capital gains tax. I think the nub of the argument in relation to ID cards is that they will not work, they will not be effective, and they will be a massive intrusion into the privacy of ordinary Australians. They will also be a licence to the criminal element in this country to print money at the expense of ordinary honest Australians. The proposal can be said to be a Canberra bureaucrat's classic which has been frantically pounced upon by a government anxious to pad out its latest tax reform package. The Government's decision to proceed with the scheme has all the hallmarks of a government which has completely lost direction and which has abandoned its principles at virtually every turn. It is no wonder the Government was pretty worried recently, with the ascension to the leadership of the Liberal Party of the honourable member for Bennelong (Mr Howard), when a popularity poll showed that many Australians had a perception of the Prime Minister (Mr Hawke) as one who was very quick to abandon party principle. This failure to abide by policy, by party principle, is fertile ground for the development of a government propensity to go native. Many of my constituents ask me whether what they see on that television program Yes Minister is true. Unfortunately, in this case I would have to say that it is absolutely true. The term `go native' is brilliantly defined in that television series as the tendency of Ministers to forgo their status as advocates of the interests of their constituents, their party and their principles and to become instead representatives of their departments. This is very apparent in the proposal for ID cards. It has been so enthusiastically supported by some of Canberra's bureaucrats that we recently had the spectacle of the Australian Government Publishing Service and the Health Insurance Commission squabbling over who would get the spoils. I say to Australians listening today that when we see bureaucrats fighting over who is going to administer a program, watch out, because what it means is greater expense on them, greater burdens on them, and more and more bureaucracy. As was so appropriately said by Sir Robert Menzies, one thing about bureaucrats is that they never swallow their young. Leave them alone and we will find them increasing every year. Once the cue was given, the bureaucratic machine was very quick to prepare a glossy brochure, at massive public expense, which was paraded at the taxation summit. This is the bureaucrats' idea of producing charisma. In their frenzy, they glossed over the social and economic costs of the proposal and, as we have already seen, there have since been some massive revisions to the original costings. Just for good measure, in a demonstration of complete contempt for the common sense of the ordinary Australian, some bureaucratic boffin dreamt up the idea that the ID card would be more palatable if called the Australia Card, as if people would somehow be fooled by this prostitution of the name `Australia'. Originally the savings were going to be $800m, the establishment cost was going to be a mere $38m, and the running costs were going to be $40m-odd. Now we hear that the start-up of the scheme will cost $127m and the annual running costs will be between $86m and $100m. There will be no real savings until 1991 and the saving of $540m, which will not be reached until 1993, remains totally unsubstantiated. By way of contrast to these meaningless estimates plucked from thin air, the fine print notes that there will be extra costs on business. The Government was quick to tell us the savings, but very reluctant to tell us the costs on business and to make some estimates of those costs. This proposal for ID cards has all the hallmarks of an episode from Yes Minister, with a dose of George Orwell's Big Brother. It gives us more government and, like all schemes said to save money, will take more and more from the average taxpayer. It suits the bureaucratic mind that finds numbers easier than names, and it is all couched in the context of another scheme for the public good. Instead of providing benefits to the average taxpayer, it will open yet another opportunity for the fraudulent and will give thousands of bureaucrats access to the bank accounts of every man, woman and child in this country. From the cradle to the central registry in Canberra to the grave ID cards will keep track of every Australian and will lead to ever greater government control over the private lives of the ordinary, honest citizen. To those who say that the ordinary, honest Australian has nothing to fear, the fact is that it is the ordinary, honest Australian who will cop the abuses of Labor's ID card proposal. Mr Justice Kirby recently described the significance of ID cards when he said: What is at stake is nothing less than the nature of our society, and the power and authority of the State in relation to the individual. This proposal is of such significance that I believe the Government before proceeding with it should conduct a plebiscite so that all Australians can fully participate in this decision. I know that the Government will not take up that proposition and for those who are proponents of the cards the reason is quite clear. There is no doubt that public opinion is moving against this proposal as the outrageous aspects of it become clearer as time proceeds. The proposal in my view will in due course obtain the sort of opposition that is clearly building in the community in regard to the capital gains tax. I now take the opportunity of referring to the capital gains tax. The recent opinion poll that was taken, which confirmed the Opposition's views, showed that 73 per cent of Australian voters expressed their opposition to Labor's plans to introduce a capital gains tax. And if that figure were not high enough for the Government, it is interesting to note that of the 20 per cent said to be in favour, 8 per cent had no idea what level of tax would be appropriate, 8 per cent favoured a rate up to 29 per cent, and only 4 per cent favoured a rate above 30 per cent, which would equate with the taxation of capital gains at the top marginal rate, which is essentially this proposal. The relevance of these figures relates to the principles laid down by the Government when it went to the tax summit. Let me quote one of those principles: Any reform package must have widespread community support . . . Clearly there is not widespread community support for the capital gains tax proposals. And well might there not be public support for it, because the proposal attacks the incentives in this community to build up assets and the standard of living of all Australians. It is a classic piece of Labor legislation aimed at denigrating the tall poppies, attacking the achievers in the society and bringing them all down to the lowest common denominator. This country has a few economic problems. What we want is a government and some legislation which address those problems and which give people some encouragement to get out there and take a risk; to forgo some income and build up some goodwill, build up some good businesses and start to make proper provision for their families. I believe that it is about time this Government started to realise that, instead of relying on rhetoric based on allegations or claims of concern about economic growth, it should face up to realities in the small business community, the farming sector and other sectors in this community which are trying to make a go of things. I state quite clearly that the Liberal Party and the National Party are totally opposed to a capital gains tax proposal. We will vote against it in this House and in the Senate, and we will repeal it on our return to government. Mr DEPUTY SPEAKER(Mr Ruddock) —Order! It being 12.45 p.m., the debate is interrupted in accordance with sessional order 106A. The debate may be resumed at a later hour this day. The honourable member, if he wishes, will have leave to continue his speech when the debate is resumed. Bill presented by Mr Shack, and read a first time. Mr SHACK(Tangney)(12.46) —I move: That the Bill be now read a second time. The Commonwealth Employees (Employment Provisions) Act 1985 was introduced into this House in 1977 by the then coalition Government's Minister for Employment and Industrial Relations, the Honourable Tony Street. It was introduced at a time of great crisis in public sector industrial relations. Mr Deputy Speaker, you, amongst many, will remember it well. Air traffic controllers across Australia had implemented work to rule bans which had crippled air travel at enormous cost and inconvenience to the community. At that time the then Minister said: . . . it would be the Government's hope that it will not be necessary to use this legislation and it is the Government's intention that this Bill will not be proclaimed to operate unless circumstances so dictate. Certainly it recognises that the very great majority of government employees and their union have acted, and do act, responsibly. Indeed, the legislation would not have been necessary but for the actions of a minority. Mr Deputy Speaker, the Bill was passed in 1977 but it was not proclaimed until 1979, and only then in response to disruption in the operations of Telecom Australia because of bans applied by members of the Australian Telecommunications Employees Association. Legislation introduced as a deterrent and as a measure of last resort in the event of union delinquency in the Commonwealth Public Service was proclaimed only after great patience on the then coalition Government's part in the face of excessive and unreasonably defined industrial action by some public sector unions. It was the coalition's view then and it is still our view that public servants have a special responsibility to the community and a particular duty to take into account the public good when pursuing their legitimate collective interests. The Honourable Ian Viner, when Minister for Employment and Youth Affairs in the previous coalition Government, summed up our view nicely when he said: The Australian public has a right to expect of its public servants a fair day's work for a fair day's pay. That was not too much to ask then and it is not too much to ask now. Most public servants would agree that this is a reasonable expectation. Indeed, I believe that their special responsibilities are acknowledged by them and are a source of pride to the overwhelming majority of Australian Commonwealth public servants. In return for a commitment and a standard of behaviour commensurate with those special responsibilities they receive benefits not received by employees generally in the private sector, including permanency of employment and exceptionally generous superannuation arrangements. Until very recently Commonwealth public servants, more than any other group of Australian workers, could be relied upon to pursue the negotiation of their wages and conditions in the most reasonable manner possible. They provided a laudable model of industrial responsibility. However, over the last decade certain sections of the Australian Public Service have shown a regrettable willingness to breach the bounds of reasonable industrial behaviour. This is regrettable not only from the Commonwealth's point of view, as an employer, but also from the community's point of view because it is the community which suffers most from any disruption to the Commonwealth's provision of services. It is also regrettable from the point of view of the majority of public servants who have seen their own reputation decline in the eyes of the community to a point where they were bracketed earlier this year with outrageously militant unions such as the Builders Labourers Federation as a result of the industrial guerilla action campaign they pursued in their quest for an 8.3 per cent wage rise. Public Service union officials must answer to their members for this decline in their reputation, which is a major embarrassment to the many dedicated and serious-minded employees of the Commonwealth Public Service. Let me state unequivocally that public servants are workers; they have an undeniable right to negotiate with their employer over wages and conditions. The coalition recognises this freedom and has no argument with it. However, we do expect public servants to behave always with the public interest foremost in mind. The interruption of vital government services, services which are absolutely central to the Commonwealth Government's fulfilment of its duty to this nation, does not constitute reasonable industrial action. The CE(EP) Act was drafted as a contingency measure to be used in instances where Public Service unionists lost sight of their duty-our joint duty-to the Australian community. The Public Service dispute which occurred in the first quarter of 1985 was certainly such an instance. In place of decisive action on the part of the Government to bring unlawfully militant Public Service unionists into line, we witnessed weakness and compliance. Even if the Government had wished to take the firm and proper stand which the situation and the community called for, the task would have been that much more difficult because of action it took in 1983 to repeal the CE(EP) Act. The Government threw away an effective deterrent without having anything to replace it. The consequences earlier this year were only too apparent. As the Public Service unions campaign for 8.3 per cent rise steamed ahead-a claim which was, incidentally, well outside the ambit of the Government's much vaunted accord-the Government looked decidedly acquiescent. A Full Bench of the institution normally so much loved by the Labor movement and this Government, the Australian Conciliation and Arbitration Commission, ruled against the claim. In fact, it awarded no pay rise whatsoever. But the Public Service unions would not take no for an answer. They would not abide by the umpire's ruling. What followed may be faint in the minds of many people, Mr Deputy Speaker, but it should be remembered that this memory should not be allowed to fade any further. Commonwealth public servants refused to process government revenues; cheques and receipts of all sorts gathered dust as they refused to handle the banking of Commonwealth moneys. In at least one case physical intimidation was used by some Public Service unionists against other public servants who were fulfilling their normal duties. Goods of all types sat idly on the wharves because Customs officials refused to clear import duties. The money market went into a spin as a result of the Government's lack of control and authority in the situation. This contributed to the nose dive of the Australian dollar, which depreciated rapidly against other world currencies and has not recovered much since. Instead of acting rapidly and decisively to end this outrageous industrial blackmail, the Government acquiesced. Instead of reminding public servants of the responsibilities that accompany their substantial rights, the Government caved in. Instead of doing what was right and just, the Government followed the line of least resistance. Even if the Government had decided to live up to its responsibilities to sort out the Public Service unions, the job would have been extremely difficult because of its foolish repeal in 1983 of the previous coalition Government's CE(EP) Act. Mr Deputy Speaker, we do not wish to witness ever again the dithering weakness and compliance of a government held hostage by its own employees. I commend this private member's Bill to the House so that this Government and no other future government are incapable of responding in the appropriate manner to public servants who refuse to work as directed-that is, by standing them down without pay. This Bill will give the Commonwealth a power which should be the right of all employers-the power to stand down without pay employees who refuse to work as directed. The coalition supports this Bill. It is being introduced in a non-confrontationist manner at a time when all is quiet on the Public Service industrial relations front. This Bill is not in response to any particular crisis or emergency; rather, it is designed to return to the range of industrial relations measures available to the Commonwealth one very necessary and legitimate power. While workers have a right to strike, no one has the right to expect to be paid while they refuse to perform the duties required of them. I am confident that the community supports the no work as directed, no pay principle. Apart from anything else, taxpayers have an understandably violent objection to paying the wages of public servants who are denying them the services to which they are justifiably entitled. Further, I am sure that the vast bulk of hard working and dedicated Commonwealth public servants supported the original CE(EP) Act and would support its reintroduction. Without it they know that they and their Public Service are made vulnerable to the destructive excesses of militant trade unionism. I commend the Bill to the House. Mr DEPUTY SPEAKER(Mr Ruddock) —Is the motion seconded? Mr Connolly —I second the motion and I reserve my right to speak. Leave granted for the debate to proceed forthwith. Mr LANGMORE(Fraser)(12.57) —The Commonwealth Employees (Employment Provisions) Bill is an extraordinary example of doctrinaire posturing by the previous shadow Minister for Industrial Relations and the honourable member for Tangney (Mr Shack). It is a clear example of the way in which the Opposition is allowing ideology to direct its policy rather than common sense. It is also a clear example of how little the honourable member for Tangney knows about the Public Service. I wonder whether he has ever met a Public Service union leader and whether he has any sense at all of the intensity of opposition to this Bill which exists throughout the public sector and therefore the extent of the provocation to industrial conflict which he is attempting to cause. Mr Deputy Speaker, there are 10 sound strong reasons why this Bill is inept, any one of which is, by itself, sufficient reason for opposing the Bill. As I have 10 minutes, that is one reason a minute so I will have to be quick. First, the Bill is a provocation of industrial conflict. It is like a red rag to a bull; the honourable member is like a bull in a china shop. All the cliches apply. He appears to be trying to cause conflict rather than to resolve it. If the Bill were passed there would be a wave of protest, of strikes and bans over nothing more than an unnecessary statute, for-this is the second reason-the Government as employer already has the right to apply to the Australian Conciliation and Arbitration Commission to suspend or stand down employees involved in, or affected by, industrial action. That right exists under the Conciliation and Arbitration Act. Therefore, why provoke a dispute when it is entirely unnecessary. Also, this legislation would give the Commonwealth Government powers not available to other employers. The honourable member for Tangney demonstrated his ignorance by saying that the Government had no alternative to the CE(EP) Act when it was abolished. This is simply untrue. The Government has the same clear right as any employer to go to the Commission and ask for a stand-down clause in the award. That is the third reason for opposing the Bill. It is inappropriate for the Commonwealth to be able to suppress conflict just as it would be a rejection of the rights of employees in the private sector to give business that opportunity. Neither public nor private employers should have the unilateral right to withdraw oppressively the right to strike. The more constructive and consultative approach is to take a conflict to the Commission for conciliation and, if necessary, arbitration. Public sector employers can be rigid and unreasonable, just like those in the private sector. They should not be protected from having to argue their case before a tribunal. So, fourthly, there are alternative approaches to dispute settlement which are likely to be more permanently effective. Suppression of conflict does not resolve a dispute; rather the grievance festers, spreads and breaks out more violently later. The positive alternative is to take the dispute to the Commission and, if all other approaches to settlement have failed and there is clear intransigence, apply for stand-down powers. Such an application ensures that the views of all parties are considered rather than just those of the employer. Fifthly, the Bill does not include any right of appeal or avenue of redress other than under the Administrative Decisions (Judicial Review) Act which effectively allows a review only on matters of law and not on the merits of a decision. So the Bill is designed not only to prevent unions from presenting their case to a tribunal but also to prevent them from appealing against any unilateral decision by an employer. Sixthly, the CE(EP) Act, which the Fraser Government introduced, the present Government repealed and the Opposition is now trying to reintroduce, was carefully examined by the International Labour Organisation's Committee on Freedom of Association and was strongly criticised. The ILO committee was highly critical of the virtually unlimited capacity of the Commonwealth to apply the Act to employees involved in industrial action at any time. It was also critical of the lack of any role for an independent adjudicator, and also of the danger that the Act might be used before other conciliation and arbitration procedures were exhausted. The Committee considered that such punitive sanctions would impede harmonious industrial relations. To go ahead with the Bill in the face of such strong and of course well-based international criticism would be a deliberate invitation to Australian public sector unions to start another protest, to cause conflict rather than to resolve it. Seventhly, the Fraser Government used the previous CE(EP) Act nine times yet there is no evidence in any of those cases that the Act had any effect in reducing industrial action or in ending a dispute. Rather, several times use of the Act had the effect of extending a dispute and causing greater disruption to the public. Disputes end only when they are resolved, not when strikes are supressed. In fact-I go to the eighth reason-use of the Act generated yet another costly and time wasting cause of litigiousness. When the present Government repealed the Act in 1983, a large number of actions was still before the Federal Court under the Administrative Decisions (Judicial Review) Act. Those actions were brought by Commonwealth employees challenging the validity of their suspensions under the CE(EP) Act during the social security staffing dispute in 1981 and were based on claims of denial of natural justice. Ninthly, both unions and private employers agreed with the repeal of the Act in 1983. The tripartite National Labour Consultative Council was consulted about the proposal to repeal the Act and agreed to that action. So yet again the Opposition is advocating policies which have no significant support anywhere, from either employers or unions. The honourable member for Tangney is clearly demonstrating more of an authoritarian reflex than any genuine concern about resolving industrial disputes. Tenthly and finally, this Bill is contrary to the whole structure and strategy for industrial relations which is being so successfully applied at present. The Government is encouraging resolution of all conflicts through consultation. The accord between the Government and the Australian Council of Trade Unions sets a fair framework for the maintenance and improvement of real wages. Industrial confrontation and conflict has fallen; in fact, strikes are at their lowest level for 16 years. Claims outside the wage guidelines are prevented but anomalies can be addressed through the system. Other disputes are handled through the normal conciliation and arbitration procedures. So I return to the beginning, Mr Deputy Speaker. There are 10 sound strong reasons why this Bill is inept, any one of which is by itself sufficient reason for opposing it. Together they make a conclusive case against the Bill. That is why it was repealed and why it is simply inept to propose its reintroduction. It is not only inept but also unnecessary, provocative and authoritarian. It has been condemned by the ILO and opposed by both employers' representatives and unions in Australia. The honourable member who introduced the Bill is demonstrating his own ignorance and short-sightedness. The real reasons for moving his actions are difficult to discern. I hope that he will not waste the time of the House on such a misguided proposal again. Mr CONNOLLY(Bradfield)(1.06) —As the seconder of the motion that the Commonwealth Employees (Employment Provisions) Bill be read a second time, it is my great pleasure to speak in support of the proposition which we have put before this House. That proposition is not, as the honourable member for Fraser (Mr Langmore) would have us believe, based on ideology directing our policy, not common sense, but rather on the simple principle put to this House some years ago by the then Minister for Industrial Relations, Mr Viner, when he said: The Australian public has a right to expect of its public servants a fair day's work for a fair day's pay. The honourable member for Fraser went on to suggest-this clearly is a figment of his own imagination-that this legislation was withdrawing the right to strike. I make it absolutely clear that, whatever the personal views of Opposition members may be on the substantial economic and social disruption caused by strikes, the Opposition does not have within its policy-nor has it been suggested in this House on this occasion by my colleague the honourable member for Tangney (Mr Shack) that this legislation in any sense implies it-a withdrawal of the right to strike. Clearly the essence of our proposal is to replace into legislation the provisions which were removed in 1983 by this Labor Government in an attempt, which has proved manifestly to be a failure, to pay off the Australian Council of Trade Unions and win over the support of the Public Service unions. But the question which has to be asked-certainly this is where the element of common sense comes in-is: What has the Government gained by removing the no work as directed no pay provisions from the Act and what benefit have the people of Australia, who pay for their Public Service and for the other services of government, achieved as a result? The strike action which plagued this nation early this year, soon after the last Federal election, remains as living testimony of the fact that the Australian electorate and the Australian economy suffered grievously because of the weak-kneed and pusillanimous attitude of this Government in supporting a proposition put to it when in Opposition that in order to gain the political support of the trade union movement, especially the trade unions relating to the Public Service, it should support the removal of no work as directed no pay provisions. Members of the Government would do well to recall that in the midst of the last Federal election campaign unions associated with the Department of Social Security put to the Prime Minister (Mr Hawke) a simple proposition: You will either agree to what we want or, in the midst of an election, we are going to go on strike and the pensioners of Australia, including 1.6-odd million age pensioners, will find themselves without access to their pensions. If that is not blackmail I would like to know what it is. That is the reality-it is on the record-of the pressure unions can apply to a government from either side of the political spectrum in an election situation. It is precisely because of situations like this that any government needs to have sufficient weapons within its industrial relations arsenal so it can at least be in a position to say to irresponsible unionists that if they take strike action, which it is their right to do, they cannot expect the Australian taxpayer to pay their way while that strike action is in place. I think it is appropriate to point out that the concept of the no work as directed no pay provision was regarded as effective by the Public Service Board and this was emphasised in its report of 1982-83 which stated: The Board considers that the `no work as directed no pay' provision should remain available to management and has expressed that view to the government. Yet the Government, because of the deal that it entered into with certain public sector trade unions, ignored the advice of the statutory body which has been created and supported by both sides of this Parliament to ensure that the Public Service remains as apolitical as possible, that it is an efficient Public Service and that it gives to the Australian taxpayer a level of service and competence which it is entitled to expect. But it was this Government, the Hawke Labor Government, which for purely political reasons did away with this provision and therefore left itself effectively naked in the face of continuing militant action which reached a peak early this year. In the context of the Government's policy of manpower budgeting there surely needs to be some security built into the system because what we saw happen last January, February and March could well occur again in future years. The present campaign of some Public Service unions is not for higher wages, because they know they are locked in by the current accord but rather for better terms and conditions of employment which will ultimately result in less working hours. These are issues which the Government must have the courage to face and, while such issues must of course be approached on the basis of negotiation, if negotiation breaks down and if unions decide to take into their own hands the ultimate control of the situation clearly it is up to the Government to protect the interests of the Australian people and ensure that those strikers are not paid for the time during which they are not performing the functions for which they are employed. Let us go back a few months and examine the situation as it was in early February this year. The Public Service bans which commenced in January were in protest against the Arbitration Commission's rejection on 10 January of an 8.3 per cent anomalies wage claim. All members of the Government are well aware of the fact that that 8.3 per cent claim was completely outside the terms of the wages accord which we have had put to us on so many occasions by members of the Government as the very centre of their industrial relations package. That arrangement went to the Conciliation and Arbitration Commission and it was rejected. It was rejected by the same Commission which the Government claims is meant to act as the arbitrator in matters of dispute such as this. When the Government should have supported the decision of the Arbitration Commission it failed to do so. It started softening up the situation. It started making suggestions that maybe the unions could be met half way despite the fact that the terms of that settlement were absolutely contrary to the very principles which had been espoused by the Government as the basis for its accord. The ultimate result was inevitable. The Conciliation and Arbitration Commission, finding itself alone, with no allies-not even a Minister, not even the government of the day-ultimately had no choice but to seek middle ground and a settlement was reached. It is worth noting that at that particular time, January, the then Deputy Leader and present Leader of the Opposition (Mr Howard) made the observation that the Public Service unions had made it manifestly clear that their strategy `is designed to incapacitate the Government by cutting off its revenue while maintaining its outgoings'. Of course that is exactly what happened. Twenty days after the Public Service bans were introduced this Hawke Labor Government was still continuing to pay the very same public servants who refused to do their duty, who refused to carry out the activities for which they had been employed. But they did not have the courage to go on strike, which as I said earlier was their legal right. No; they took a much more damaging approach and that was to stay at their desks but not do their job and therefore they claimed the right to be paid for doing nothing. The Public Service bans at that stage led to an unsettled money market, which came at the same time as the massive devaluation of the Australian dollar from which, while current policies remain in place, we are not likely to recover. But let no member of the Government be under any illusion that it was the actions of that Public Service dispute early this year which set in place the international perception of a government which is not in control of its own machinery of public administration much less the economy and the development of this nation. The bans disrupted the Reserve Bank of Australia's attempts to stabilise the money market during the crucial tax run-down period which takes place in the early months of every year. As I said earlier, the events of last January are not unique. It is absurd for any government to suggest that they will not occur again, and it is equally foolhardy for any government not to be prepared, through this Parliament and with the support of the Opposition by way of this legislation, to go to the Australian people with the knowledge that it does have the capability, even if it lacks the intestinal fortitude, to at least be able to protect the interests of the Australian people. Because of these disputes we lost in January 8.9 thousand days of work. As I have said, the vast majority of those public servants involved were paid by the Australian people for not doing their duty. In February the dispute was still in place but the number of days lost had been reduced to 2.7 thousand. By March the situation had stabilised and the level of disputation had fallen to 1.3 thousand days. Over that first quarter we lost 12.9 thousand days because of industrial disputation and the failure of this Government to support that basic principle of no work as directed no pay, or, putting it in a more simplistic but equally adequate manner, that public servants have a responsibility to do their duty to the Australian people who, in turn, have a right to expect that their public servants will do a fair day's work for a fair day's pay. The Commonwealth Public Service dispute cost the taxpayer some $18m. The Government stood by and virtually did nothing although its revenue collections were being seriously disrupted by the actions of these militants. Large sections of the business community faced mounting losses due to the dispute which held up hundreds of millions of dollars of imports at ports and airports throughout the nation. In Sydney alone an estimated 9,000 sea freight shipments were held up at container terminals, which were bulging, as were the bonded warehouses. An estimated 340 million cheques, including one for $50m as payment of an Australian oil company's oil levy, were withheld from the Government's bank accounts. These examples represent only a tenth of the goods involved. The sources of revenue dried up, and with that the interest bills which are being carried by this nation obviously rose. For all that, we have never heard from this Government the slightest acceptance of responsibility because, as in so many other areas, it has abrogated its duty to defend the rights of the Australian people. The main bans at that time included refusing to bank cheques of more than $2,000; refusing to send out debit assessments for more than $5,000; data processors did only half their daily work on overtime; and bans were placed on compiling work reports, which made it difficult to assess the effects of the union campaign. In addition to that we had the Customs officers dispute and, as I have said, the effects on business, especially the import and export industries, were clear. The dispute threatened to close down the vehicle production industry in Victoria; General-Motors Holden's Ltd came within minutes of closing its Dandenong works because electronic fuel injectors from West Germany were being held up by Customs officials. Despite this, we are told that the proposals we have put forward today will in some way cut across the natural rights of the Australian who happens to be working in the Public Service. We tend to make the error time and again in this country of forgetting about the natural rights of the vast majority of the 16-odd million people who live in this land and whom we in this place are supposed to represent. They have no other voice. They do not necessarily belong to strong unions; they are not necessarily public servants; they do not have the capacity to find the ears of Ministers or even of members of Parliament. That is why our duty to them is so much more fundamental, and it is equally so much more important that we carry out that duty in a fit and proper way. For all of these reasons this Government has failed the Australian people. It has not even been prepared to leave in place legislation which the Minister of the day said was there to be used only in times of action by extremists. It has been suggested to us today that its very presence on the statutes of the land presents a challenge to natural justice. Natural justice to whom, I ask, and when and where? Where is the natural justice in a situation when during that dispute earlier this year the Victorian Branch of the Administrative and Clerical Officers Association put out a bulletin entitled `Pay Dispute Bulletin No. 2'? This is what it said, and I hope these words will never be forgotten: The nature of the industrial struggle we are fighting is to take control of the work place away from the employer . . . Away from the employer, who in this case happens to be the elected government. Faced by that clear challenge, which has never been denied and which is specified in this document, the Government talks about natural justice. As I said, for whom? And where is duty which must be equally responsive to the concept of authority on the one hand and responsibility on the other. We have a nation where so many people talk about their rights but so few, apparently, are prepared to look to their duties. The Australian Public Service is one of the best in the world and for many years it has had an absolutely outstanding record of minimal industrial disruption because it is made up of professional people who are committed to the future of this land. Yet we have seen in recent years a clear trend of militancy coming into some of the unions related to the Public Service. This Government's response to that trend has been supine weakness-to lie back and let the nation carry the load, to mislead people about what really will happen if we allow the public services of this nation to collapse as they did during the first quarter of this year. As I said, the whole objective of that strike as far as the ACOA Victorian Branch was concerned was to take control of the work place away from the employer. Honourable members opposite make up the Government. They have been elected to make sure that public servants stay at their posts and do their duty; this they have failed to do. We will continue to remind the Australian people, through this Parliament, of what they have not done. If that dispute had taken place before the last Federal election they would be sitting on the other side of the House, of that there is not the slightest doubt. If it had become public during the election campaign that the Prime Minister was forced to give in to unions in the Social Security Department over the issue of cheques for pensioners, do honourable members opposite seriously suggest that those pensioners would have voted for them? Of course not. They depend on that money and it is no good coming into this place and talking about natural justice, because where was the natural justice for them during those months? Where was the natural justice for every Australian taxpayer, whose taxes inevitably have gone up? One reason for that is the fall of the Australian dollar and another is the massive increase in our overall payments on interest bills overseas. Devaluation alone has cost us over a billion dollars in payments every quarter. All of that had its inception in the industrial disputation which took place in the Australian Public Service in the first three months of this year. We want to see no more of that and it is the responsibility of the Government to see that it has in place a sufficient armoury by which we can defend the interests of the Australian people. To do this they should support this Bill. Mr SAUNDERSON(Aston)(1.26) —I wish to speak against the Commonwealth Employees (Employment Provisions) Bill introduced by the honourable member for Tangney (Mr Shack). I suppose I have to start off by saying that I am not quite sure how I should treat this matter because when this Bill was first placed on the Notice Paper the honourable member was the shadow Minister for Industrial Relations. Since the coup that took place on the other side of the House and the rise of new policies within the Liberal Party, the honourable member found himself being shadow Minister for Education rather than Industrial Relations. So I am not sure whether this Bill is in fact the industrial relations policy of the current Opposition, whether it is the previous industrial relations policy of the honourable member or whether it is really another option that has been cast so that the Opposition can wander away somewhere and have another summit. It obviously cannot be up in the snowfields because it is too late in the season, but perhaps their brains might work a bit better somewhere else. They might be able to come up with a cohesive policy. It is very difficult to mount an argument against an Opposition which seems to have half a dozen different ideas about how it might do something if ever its slim hope comes to fruition and it gets back to the government benches. The Bill simply reflects the Opposition's single-minded, ideological fascination with destroying trade unions. The Opposition-it is probably on the other side of this House because it does have this view-cannot see that any useful activities are carried out by the trade union movement, so its solution to these problems is to go out and crush them. The Opposition would implement any form of legislation which would destroy the trade union movement. Of course all of the legislation that the coalition has ever implemented-and this legislation in particular-has proved to be absolutely ineffectual. We heard the honourable member for Bradfield (Mr Connolly) say how important it was for a government to have an effective arsenal. If we look at the record of the CE(EP) legislation we find, if we study each of the case histories where the previous Government applied it, that the Act in almost every case did not resolve the dispute. It exacerbated the dispute, extended it, and made it much more difficult to find a resolution. At the time I was a union official in a Public Service organisation, the Australian Telecommunications Employees Association, to which the honourable member for Tangney referred. I suppose the ATEA can take some credit for the previous Government having implemented the CE(EP) Act. Mr McGauran —Are you proud of it? Mr SAUNDERSON —I think the honourable member asked whether I am proud of it. Obviously I am not necessarily proud that the Government had to stoop to some draconian legislation to resolve industrial disputation. It showed that the previous Government, like the current Opposition, was incapable of handling industrial disputes in a manner which would lead to a resolution. Its only response to disputation was to try to crush the opposition extended rather than resolve the issue. The CE(EP) legislation did nothing to resolve disputation. I can say, as an official, that we went through the farcical situation of finding that statutory bodies and Public Service departments were forbidden to negotiate, which is part of the process of resolving disputation. The previous Liberal Government directed that they extend disputes by immediately implementing the CE(EP) legislation and causing stand-downs. We went through the farcical situation of seeing people queued up by management so that the Government could see the dispute extended to such an extent that it was widespread. That the public was inconvenienced in many of those disputes was the fault of the Government because it deliberately set about creating that situation. Prior to the CE(EP) legislation many of the Public Service organisations were fairly inactive in industrial disputation. Most of them had been through situations in which they had negotiated some form of compromise with the government of the day. Any disputation they embarked on was of a minor nature. One of the previous speakers said that most public servants supported the CE(EP) Act. When that legislation was first introduced it resulted in the greatest attendances seen at public meetings organised by the Public Service unions. Public servants were outraged by the fact that many of them could be roped into a dispute when they actually had no bans in place at all. In fact, in many instances it politicised the Public Service unions. Much of the industrial action taking place now probably would never have occurred if the CE(EP) legislation had not politicised those unions. The extent of disputation can be directly related to the application of the CE(EP) Act. This Government is about proper industrial relations; it is about resolving issues and doing so in a way that causes the least amount of inconvenience to the community and reduces the amount of industrial disputation. The provisions have always existed for governments to resolve disputes by the use of the arbitration system itself. Almost inevitably any dispute between two parties is resolved not by some punitive action but by consultative process which leads to some mutual agreement. Where that cannot be achieved one goes through the arbitration system and obtains an arbitrated result. But the CE(EP) Act tried to get away from the initial process of consultancy. It did not allow for that consultative process to be carried out properly and the previous Government used it as a bludgeoning weapon to try to crush the unions of the day. All it did was exacerbate disputes, as I said before. We now have a situation where, following the removal of the Act, we can enter into normal discussions and negotiations with the unions, and they do not feel that they are under constant threat. That allows for the proper resolution of disputes and we believe it is a much more effective way of achieving such resolution. The previous Government, the current Opposition, obviously has learnt nothing during the time that it has been in opposition or from the personal experiences of honourable members opposite. They would have had a look at the CE(EP) Act itself, at what happened when the bans were introduced and they were applying the CE(EP) Act. One would have thought that they would have gone away with that experience and thought about it. It is obvious that they have not, and it all comes back to this blinkered ideological view that they have. It is obvious that they do not understand industrial relations, and they do not understand human relations. It is highly unlikely that, if ever they had the opportunity to sit again on the benches on this side, which I very much doubt, they would be in the position of really being able to contain industrial relations problems in Australia. The fact that many disputes took place towards the latter part of the previous Government's term was due directly to its policies. Its wages and economic policies were such that it forced many of the trade unions-not just the Public Service unions but those out in private enterprise-into a disputation situation. When private sector people were obtaining benefits in the market place and the Government of the day was saying that the market place should prevail, it is no wonder that public servants were saying that they also had to participate in that activity. But the then Government did not see that as a fit way for public servants to go. The honourable member for Tangney said that we needed the CE(EP) legislation because we want to stop industrial action. He then went on to talk about illegal industrial action. We know that the Opposition's view is that any industrial action is illegal. That is the way it perceives it, and it perceives that you can stop something like that by taking legal action. The realities are that legal action has not resolved any dispute, and I say again that it has to be resolved by consultation between the parties. I remember very vividly one of the very large disputes that I was involved in. When we were before the arbitrator the employer, Telecom Australia, attempted to show that a dispute existed. We were able to point out to the arbitrator that there was no dispute because we had not even been able to discuss the matter with Telecom because it was under the direction of the Government not to discuss, negotiate or talk in any way on the issue. Telecom was forced to apply the CE(EP) provisions and so the issue, the disputation and the disagreement, was extended. So we were not just arguing any longer about an industrial matter, which could have been resolved by negotiation; we were faced with having to extend our claim to ensure that those who had been stood down under the CE(EP) provisions were taken care of, were reinstated with all of their entitlements given back to them. That is exactly what happened at the end, but it became a much more diffcult task for us to resolve those things because of the heavy-handedness of a government which had no comprehension at all of industrial disputation and how to resolve it. It had made a mess of the economy, it had made a mess of wages policy and it had made a mess of industrial relations in Australia, and in order to try to contain its problems it thought it could apply the heavy hand of the law. This Government has shown in its period of office that the alternative way achieves results. By direct negotiations with the Australian Council of Trade Unions and by achieving a social package in the accord we have minimised to a great degree the disputation which exists in Australia today. We can look proudly at that record and see how much industrial disputation in Australia has been reduced. The economy is running along well, and we have the confidence of the business people because we have shown, in terms of being able to get agreements with the trade union movement and being able to restrain wage demand and other such things, that we can achieve our goals. The Opposition has not shown that. Not only has it shown that in the area of economics it cannot make up its mind what it wants to do, that it does not know which way it is are going to go, but it cannot make up its mind in the area of industrial relations, either. On the one hand, Opposition members argue that they want a free market and say that they are going to do away with the Australian Conciliation and Arbitration Commission but, on the other hand, they change their minds as soon as they change their shadow Minister. Now they are not going to have an arbitration court or too much of a free market, because maybe it does not work and there are lots of problems with it. The proposed Bill would be a disaster because it would set us back. It is a draconian Bill which takes away the freedom of unionists to take action to protect their rights. It does not do anything to enhance the industrial relations situation in Australia. We certainly would not entertain any support for legislation of this nature. Mr McGAURAN(Gippsland)(1.40) —If there should perchance have been anybody in Australia who still had some lingering doubts as to this Government's total enslavement to the Australian Council of Trade Unions, the honourable member for Aston (Mr Saunderson), in his own small way, would have dispelled those doubts. For not once, in a lengthy expose of this Government's attempts to deal with the trade union movement to minimise industrial relations problems, did he mention employers. We have had some 15 minutes of how his Government engages in negotiation and consultation directly with the ACTU and the trade unions. Not once was any employer body mentioned. I urge the Government to consider, at least, the fact that good industrial relations involve a tripartite relationship between government, unions and employers. Not one of those bodies can be excluded, and yet we have had a history of this Government excluding employer representatives in its sweetheart deals with the ACTU. The honourable member for Tangney (Mr Shack), in introducing his excellent private member's Bill, the Commonwealth Employees (Employment Provisions) Bill, on behalf of the Opposition, seeks to give effect to the wishes of the overwhelming majority of Australians. The Bill is drafted so as to restore accountability to those public servants engaged in wrongful and unlawful industrial action. In doing so the Bill protects the public interest. The public have rights, and some of those rights are constantly ignored by some sections of the Public Service. This legislation was first introduced by the previous coalition Government in August 1977, and it was repealed by this ACTU-dominated Labor Government in November 1983. It is worth while to consider the events leading up to its introduction in August 1977. At that time, Australia had suffered under a prolonged and disastrous air traffic controller strike, which not only inconvenienced in a personal sense tens of thousands of Australians, but cost this country dearly in economic terms. This legislation was introduced as the notorious postal dispute entered its third week-a postal dispute in which the honourable member for Aston proudly declared his part. That-at the risk of stating the obvious-was a cruel and ineffective dispute which did not achieve its objectives and served only to again inconvenience, often irreconcilably, many members of the public, to the extent that there was a back-up of some four million letters and articles. Where is the public right and the public interest in those circumstances? I believe, as do members of the Opposition, that this Bill with its far reaching powers of suspension, standdown and dismissal of public servants, is necessary to enable the Government to react quickly and responsibly to disputes which affect the public interest. The public interest needs to be protected in the fields of health, transport, communications and social security. This Bill, essentially, empowers the Public Service Board to suspend or ultimately dismiss Commonwealth employees engaged in industrial action. It also empowers the Public Service Board to stand down those Commonwealth employees not directly involved in the dispute but who cannot fulfil their responsibilities or cannot be employed. The Bill allows the Government to bypass the traditional avenues of the Australian Conciliation and Arbitration Commission and does not leave redress to an employee- Madam DEPUTY SPEAKER(Mrs Child) —Order! It is now 1.45 p.m. In accordance with standing order 109 as amended for this session, the debate on the motion for the second reading of the Bill is interrupted. Motion (by Mr Duffy) agreed to: That the time for the discussion of Notice No. 1, General Business, be extended until 2 p.m. Mr McGAURAN —I thank the Minister for extending my time in such a fashion. As I was saying, the Bill permits the Government to bypass to the Conciliation and Arbitration Commission and to suspend, stand down or dismiss employees who fail to adhere to work directives. Interestingly, there were a number of instances of public support for this piece of legislation-none less to the interests of the Minister for Communications (Mr Duffy) than Australia Post. Australia Post made a submission to the Prices Surveillance Authority late last year for an increase in postal rates, but it was rejected by the Authority. In handing down its report, the Prices Surveillance Authority made some scathing criticism of the poor performance of Australia Post, but that is another story, Minister. More importantly, Australia Post blamed the repeal of the `no work as directed, no pay' legislation, as incorporated in this Bill, for making mail services more vulnerable to union work bans and hence more costly to the consumer. So Australia Post is very clear on its commitment to this legislation. One of the problems for Australia Post is, of course, that it is empowered to dismiss workers who strike under the Postal Services Act. However, those members of the unions of which the honourable member for Aston so proudly declares his leadership get around that by engaging in selective bans and disruptions of that nature. For instance, the famous five-minute ban was engaged in as a common practice before the coalition Government's introduction of the Act on many occasions. When the van arrives to unload the mail, there is a five-minute ban which prevents postal workers from unloading that van. They go back to work, of course, soon after; but the mail mounts up. So unless we have legislation in this form, public servants can get around existing legislation and engage in selective bans. It is obvious to members of the Opposition, as it would be to all fair minded Australians, that legislation like this would be invoked only on the most serious occasions when the public interest is indisputably being harmed. The present Minister for Employment and Industrial Relations (Mr Willis), who was shadow Minister when this legislation was introduced initially in August 1977, said this: What this legislation enables is for the employing authority to arbitrarily decide that it will impose this penalty forthwith. The penalty being, of course, standing down, dismissal or suspension. That is it in a nutshell. I agree. That is exactly the power conferred on government. But governments are elected and public servants are not. When public servants have the provision of services within their sphere of responsibility and obviously engage in industrial action which abrogates that responsibility, a duly elected government is compelled to act. This legislation would be invoked only as a final step, and not a step taken lightly. As the honourable member for Tangney has stressed, there is not only a need for more effective powers, as contained in this Bill, but there is also recognition of the very fine service given by a great majority of public servants. It goes without saying that there are many public servants who would support the introduction and invoking of the powers contained in this Bill so as to protect them from the more militant industrial actions that are undertaken by a number of unrepresentative union leaders or union cells. This Bill is introduced at a time when there is a significant change in the mood of industrial relations in this country. That mood is clearly against the unrestricted powers that have been gained by trade unions over the years and accelerated under this Government. Two significant events have convinced me and convinced the Opposition that the Australian public want tough, strong and decisive action by governments when the public interest is so threatened as has occurred on a number of occasions in recent times. The first example is the Electrical Trades Union dispute in Queensland, where the Premier, Sir Joh Bjelke-Petersen, showed that a duly elected State government will not bow to a small strident minority; and the second example is the Mudginberri dispute in the Northern Territory. This is a mood which has even been recognised by the Minister for Employment and Industrial Relations. On 31 July, he addressed a forum in Sydney in regard to the recently issued report of the Hancock Committee of Review into Australian Industrial Relations Law and Systems, which concluded, as if we did not already know, that existing sanctions in the Conciliation and Arbitration Act were virtually a dead letter. The Minister said: The union movement has to decide whether it is prepared to argue for a system where there are absolutely no effective sanctions against industrial activity no matter how outrageous. In short, would the trade union movement propose supporting a system where anything goes? The Minister himself, following on from the actions taken by Sir Joh Bjelke-Petersen, by the National Farmers Federation, and by the Opposition in both the ETU and the Mudginberri disputes, recognised that no union has an unfettered, an unbridled right to withdraw its labour or engage in selective industrial disputes which will harm the competitiveness of this country and bring injury to innocent third parties. Any government which does not, firstly, acknowledge the mood of the Australian people in relation to unbridled union power and, secondly, does not adhere to its responsibilites to ensure the smooth running of Public Service functions, will not enjoy the people's confidence. For that reason, I have no doubt whatsoever that, as this Government goes further down the drain of its subservience to the ACTU, the Australian people will turn to the Opposition for the decisive and consistent strength needed, as shown in this Bill, to quash unreasonable and excessive union power. Mr PUNCH(Barton)(1.53) —It is no wonder Opposition members got the Budget deficit wrong almost by double; they get their speaking time wrong almost by double as well. I thank the honourable member for Gippsland (Mr McGauran) for his contribution. The Commonwealth Employees (Employment Provisions) Bill, the Shack shackling of public servants, is a return to the darkest years of the Howard-Fraserism ideology. It is confused in its own ideology and it is hypocritical in the context of any policy consistency of the Opposition. This legislation seeks to shackle public servants like convicts in 1788. At the very bottom line, like the Opposition's use of the Mudginberri dispute and the Queensland power dispute, this legislation is a cover, a cloak, at the very least an admission, that after two and a half years in opposition and three Opposition spokesmen later, and before that seven years in government and countless numbers of Ministers, the Liberal and National parties still do not have a wages policy. That is a fact. It is a return to the past of the Fraser-Howard years. Confrontation is an end in itself. Confrontation is a political tool deliberately contrived and acknowledged as such-and confrontation at the expense of every Australian. This legislation seeks to make every public servant in Australia a second-class citizen. It is always the view of the Liberal and National parties that public servants are second-class workers, and second-class citizens. It is a handy resource to have around their branch meetings and Federal councils-to push the line of a large, lazy bureaucracy, overpaid and hungry for power, and capable of being blamed for every mistake ever made. But what of the rule of law that the Liberal and National parties always tout yet always seem to be breaking? Here, again, they are breaking their own belief, it would seem, in the rule of law, because this is a duplicitous policy. They are seeking two rules of law, one law for every employee in the private sector and one law for every employee in the public sector. That is, of course, if we put aside for one moment the present Opposition spokesman on employment and industrial relations and his position, as announced last week, where some people will be in the arbitration system and some people will be out-`We will decide about that later'. But there are two rules of law. Where do they stand? What about their so-called striving for freedom in the work-place and the right to choose? How many times have we heard them talk about the right to choose for employees in the private sector? This Bill, if passed, would amount to the greatest legislated control over individuals in the work-place ever put through this place. How about providing an example? This flies in the face of the whole basis of the Opposition's dry policies. If this Government were to follow the example of this legislation in the private sector, there would be screams of `Socialism' and `Government control' and the rest of the contrived contortions through which Opposition members go every week. What about the call for less government? This legislation would impose the greatest control by any government over any employee in Australia. Notwithstanding that, the hypocrisy of it is still touted by every member on the other side. The Commonwealth Employees (Employment Provisions) Act was introduced in haste in 1977 but was not brought into operation until 1979. The Act was first invoked in 1979 and then eight times in 1981-82, when the present Deputy Leader of the Opposition, the honourable member for Menzies (Mr N. A. Brown), was the Minister. This Bill is not only a return to the same failed policies; it is the same failed Minister. The CE(EP) Act was used on each occasion under ministerial direction. During CE(EP) applications in 1981-82 there was no evidence shown that the Act had been effective in minimising industrial action or in bringing that action to an end swiftly. Mr Young —Quite the opposite. Mr PUNCH —Quite the contrary, as the honourable member for Port Adelaide has stressed. On a number of occasions the use of the Act had the effect of extending a dispute and causing greater disruption to the public. Let there be no doubt that this legislation gives too much arbitrary power to the executive government to deal with Commonwealth employees. That is in sharp contrast to what happened in the private sector. The Opposition is contradictory in the extreme in its policies on employment and industrial relations. On the one hand, Opposition members want deregulation of the labour market in the sense that they want to openly confront themselves with the unions by diminishing the role of the conciliation and arbitration system; and, on the other hand, they want to further regulate the labour market by giving more power to the executive government to dictate employment conditions. We do not need another CE(EP) Act. We never needed it in 1980, 1981 and 1982, and we certainly do not need it now. It might interest the House to note that the original Act of 1977 was examined by the International Labour Organisation's governing body Committee on Freedom of Association in 1978, following a complaint by the Administrative and Clerical Officers Association. After noting several points about it, the committee of the ILO was highly critical of the Act on a number of important grounds, including the virtually unlimited capacity to apply the Act to any Commonwealth employee, the lack of any opportunity for an employee, to have recourse to an independent adjudicator, the serious risk that the Act would be used before existing procedures for settlement were exhausted, and that punitive sanctions would impede harmonious industrial relations. In the short time available, let me conclude by saying this: Like Opposition members' economic policies, like the rest of their industrial policies, like their foreign policies, like so much that has been brought out by the new dry Right, the new Rajneesh Right opposite us, this Bill is hypocritical. It is hypocritical in the extreme and it is dangerous. A return to those years would endanger this nation to the industrial chaos that we went through for too long. We should throw this Bill out of the House and have no more of this confrontation. Mr SPEAKER —Order! It being 2 p.m, in accordance with standing order 104, as amended for this session, the time allotted for precedence for General Business has expired. The honourable member for Barton will have leave to continue his speech when the debate is resumed. The resumption of the debate will be made an order of the day under General Business for the next sitting. Mr HAWKE(Wills-Prime Minister) —Mr Speaker, I wish to advise the House that the Minister for Defence (Mr Beazley)-I know that he will be missed by his shadow-will be absent until later this afternoon viewing the naval exercise Coral Sea. The Minister for Sport, Recreation and Tourism (Mr John Brown), as Minister Assisting the Minister for Defence, will answer questions for Mr Beazley. Mr HOWARD —I ask the Prime Minister: Now that it has been revealed that his Department had a copy of Mr Reid's letter to Dr Armstrong of 12 October 1979, setting out the latter's terms of employment, from the time the Prime Minister assumed ministerial responsibility for the Australian Bicentennial Authority, how does the Prime Minister justify his failure to examine the contents of this letter before the Authority's $500,000 payout to Dr Armstrong? Would the Prime Minister not agree that the most basic of inquiries which he should have made would have revealed the existence of that letter? Mr HAWKE —The Leader of the Opposition seems destined to never learn. But that is to our advantage and not to his. Let me read to the House the note that I have received from the Acting Secretary of my Department this day on the matter raised by the Leader of the Opposition. It is to me, Prime Minister. The heading of the note is `Letter of appointment of Dr Armstrong as Chief Executive of the Australian Bicentennial Authority'. It states: I deeply regret that the Department has been responsible for your being- Opposition members interjecting- Mr SPEAKER —Order! I suggest that the Prime Minister resume his seat. It is useless trying to carry on in view of these sorts of organised interjections. I now call the Prime Minister. Mr HAWKE —Mr Speaker, it will be recalled that yesterday the Leader of the Opposition in his totally pathetic attempt to censure me included amongst those weak arguments the pro- position that here was a Prime Minister who did not consult his Department-this Prime Minister was too proud, too arrogant to consult. When I say that I consulted and I get advice from the Department, all we can get from this feeble minded, temporary Leader of the Opposition is a hee haw. I will read to the House the advice that I have received from the Department, something that yesterday he condemned me for not doing. This is the advice I received and I repeat the advice: I deeply regret that the Department has been responsible for your being incorrectly and incompletely advised on the availability on departmental files of documentation on Dr Armstrong's appointment as Chief Executive of the Australian Bicentennial Authority. We consistently advised you that we had been unable to obtain from the ABA, prior to Mr Reid's resignation, a copy of the contract under which Dr Armstrong was employed by the Australian Bicentennial Authority. In the period following the transfer of responsibility for the Bicentennial Authority to your portfolio, a number of requests, including some at the request of your staff, were made to the Authority for details of terms and conditions of employment of senior ABA staff and information was provided by the Authority on levels of salary and allowances and other elements in the remuneration packages of senior staff. It goes on: We did not, however, pursue requests from your office for copies of the specific contracts under which Dr Armstrong and other senior staff were employed, because we had been given to understand by the Authority that these contracts were regarded as being of a private nature between the Authority and its individual senior staff. Following oral advice on 27 September, after Mr Reid's resignation, from an officer of the ABA that a copy of the Letter of Appointment of Dr Armstrong had been sent to the Department of Administrative Services with Board agenda papers in 1980, a search of the 800-odd files inherited from the Department of Home Affairs was initiated. Copies of this document were located on files in the Department on 1 October and the officer in charge of the Bicentennial Branch became aware of this on 8 October. Neither you nor your office were informed that these papers had been located on the Department's files until this morning. That is signed by Mr Visbord, the Acting Secretary of the Department, and it confirms completely the total accuracy of the position that I have put to this Parliament. As distinct from those on the other side of the House, we tell the truth in these matters and do not seek to dissemble and deliberately to misrepresent as has characterised the whole of the Opposition's miserable performance in this matter. Mr SPEAKER —During the Prime Minister's answer I had occasion to refer to `organised interjections'. On reflection I think that was improper because it does involve the suggestion of improper conduct. Perhaps I should have used the term `concerted'. Mr Carlton —Spontaneous. Mr SPEAKER —`Concerted' I think is the proper word. Mr PRICE —I ask the Prime Minister a question. Are the Government's economic policies producing jobs at the rate promised when the Government was elected to office? Mr HAWKE —Certainly, all those on this side of the House and the overwhelming majority of Australians will be thoroughly pleased with the further evidence contained in this morning's statistics as to the continuing strong growth in employment in this country. The Statistician's preliminary labour force statistics for September that were released this morning are, of course, very encouraging. They show a very sharp rise in employment and falls in both the level and the rate of unemployment despite a quite significant increase in the participation rate. The latest employment figures bring now to 487,200 the increase in employment since April 1983. It is quite clear that we are now on the verge of achieving a half a million new jobs that I promised the people of Australia would be achieved in three years from the time of the summit. The unemployment rate decreased to 8.1 per cent from 8.3 per cent and from 10.2 per cent in April 1983, and this was the lowest level since September 1982. It is particularly notable that, among those seeking full time work, the level of unemployment fell in September below 500,000 to 494,000. This is the first time since October 1982 that we have seen that category fall below half a million. In summary, the labour market in this country is continuing to improve very solidly. It is interesting to note that the figures indicate that employment has grown by around 1.5 per cent in three months or, in fact, more than half the Budget forecast growth for the whole of 1985-86. If we are to have a proper appreciation of the alternatives facing this country in terms of economic management and employment growth, it is informing to look at the observations of the Leader of the Opposition. Not being satisfied when he was Treasurer with inflicting upon this economy and upon the people of Australia the greatest damage in the history of this country, he then became the professional doomsayer of the Opposition when he was cast properly into that lot by the decision of the people in March 1983. I ask that the people of Australia should listen to and understand the observations, the predictions and the economic analysis of this Leader of the Opposition. What did he have to say on 3 May 1983? He said: The outcome must unavoidably be that more tens of thousands of Australians will be thrown out of work. That was his prediction at the beginning of 1983. Then we had the indication that he had learned nothing from his disastrous time in office. What was his prescription for what should happen? I will quote what he had to say on 20 September 1983. These are his words: A policy of fighting inflation first. It remains, in my view, the only effective method of tackling unemployment on a permanent basis. Having pursued that miserably unsatisfactory and disastrous policy for five years, he could not learn. As he saw the emergence of the success of the policies of this Government, he said: `No, you are wrong. What you must do is fight inflation first'. He brought the magnificent success of that policy to the country of Australia by bringing about double digit inflation. That is how successful the former Government was at fighting inflation first. But it managed to accompany that with double digit unemployment simultaneously for the first time ever. This is what the Leader of the Opposition had to say on 20 September. This is relevant now to what we have achieved-487,000 new jobs. I quote his words of 20 September, when he said: The election promise of 500,000 new jobs over three years is now joining the rest of Mr Hawke's empty promises on the scrapheap. That was his observation. He thought that we would not get half a million new jobs and that that policy would go on to the scrapheap. Finally, in analysing the Leader of the Opposition on this subject, I refer once again to what he had to say in this place on 7 December 1983. The honourable member for Kooyong should take out a writ against the Leader of the Opposition because, as the former Leader of the Opposition will see, the current Leader of the Opposition has been grossly guilty of plagiarism. What the current Leader of the Opposition had to say is very instructive. This was his analysis: I regard a prices and incomes accord as an absolute fraud on the Australian community. I think that all we have to do is give the prices and incomes accord time to fail. These are the current Leader of the Opposition's words, which I recommend to the former Leader of the Opposition as to whether he should think about taking out a writ against him for plagiarism: As surely as day follows night, the prices and incomes accord in this community will fail. That shows that the current Leader of the Opposition, not being satisfied with inflicting the most savage disaster on the people of this country-160,000 jobs disappeared in the 12 months before we came to office-then set about, in his role as economic spokesman for the Opposition, trying to undermine the very process by which this Government has turned around the employment situation in this country. I say to the Leader of the Opposition that he was a miserable failure in government: He is chaotically incompetent in opposition. All I can say is that the honourable member for Kooyong is looking good and, surprisingly, even the honourable member for Denison, the covetous pretender, is starting to look good by comparison. Mr HOWARD —I ask the Prime Minister a question which is supplementary to the previous question I asked him. I refer the Prime Minister to the answer he gave to my first question. I specifically ask the Prime Minister: Did he request his Department to give advice on the contract between the Australian Bicentennial Authority and Dr Armstrong between 15 August and 30 August, the latter being the date of the payout to Dr Armstrong? Secondly, did he, between those two dates, inform his Department of the arrangements he made with Mr Reid regarding the resignation of Dr Armstrong? Mr HAWKE —I have indicated in the replies I have given that queries were made of the ABA. My Department formed the impression, on the basis of the replies it had been given- Mr Howard —But did you ask it? Mr HAWKE —If the Leader of the Opposition will contain himself, he will get his answer. My Department formed the impression, on the basis of the replies it had been given that the position, which had been put and which it understood, was that, because these documents were in the nature of personal documents between the Authority and those involved, the Department would not be given them. Therefore, by the time I came to consider this matter from 15 August, I was proceeding on the basis particularly of the conversation I had with Mr Reid on 19 August. I remind this House again that that conversation was confirmed by Mr Reid on these occasions: 10 September; 24 September, to the Authority when Mr Reid confirmed that the account which I had given in this House was an accurate statement; and again talking with me on 26 September. I acted, therefore, on the basis of all the information given to me which I will repeat again. It gives me no pleasure to have to repeat it again. I repeat that when I was acting on this matter I acted on the basis that what was being conveyed to me by Mr Reid put the position accurately, and I responded accordingly. Mr HAND —I ask the Minister for Housing and Construction: What effect will the Government's tax reform measures have on the availability of private rental accommodation? Mr WEST —I thank the honourable member for his question. I take the opportunity to refute some claims made publicly by a minority section of the real estate market that the Government's action in quarantining negative gearing and in the introduction of a prospective capital gains tax could have adverse effects on rents and current investments in the private rental market or perhaps on the level of future investment in the private residential rental market. I do not believe that those claims are correct. I believe that those claims have no validity. They certainly should not have any validity if the Government's changes are properly understood. Firstly, the quarantining of negative gearing and a capital gains tax are completely prospective from 17 July and 20 September respectively. So, there should not be any effect whatsoever on rents for property which was held before those dates. As for the future, if this Government perceives that it needs increased investment in residential rental property, we will do that through justifiable incentives and not through encouraging tax shelters, as, of course, occurred under the former Government. I stress that in the encouragement of those tax shelters by the former Government it was the ordinary taxpayer, the ordinary worker, who, in fact, paid for those tax shelters. Yes, we have quarantined negative gearing for investment in residential rental property, but we have also introduced a 4 per cent straight line depreciation allowance on new buildings for residential rental purposes. I make it clear that the current Opposition, as a government, supported tax shelters, and this Government supports legitimate investment allowances in the rental investment industry. The figures I would now like to table for the benefit of honourable members are important because they show the effect of computer modelling of the Government's changes regarding the quarantining of negative gearing, the introduction of the straight line investment allowance and the effect of a prospective capitals gains tax. That all boils down to the fact that an investor who wants to invest a legitimate level of investor equity in a property and who can receive a moderate level of appreciation over time will still do very well from investment in the private rental market, after property realisation. The figures stack up thus: If there is a rate of real property appreciation of 2 per cent over a period and the investor has a 50 per cent equity level, he can still get over time an after tax return of 13.4 per cent from his investment. That is the result of these tax changes. I think that compares well with the after tax returns from investment in other areas, particularly from some financial institutions. Secondly, there is no reason whatsoever for the unjustified attacks by certain sections of the real estate industry on the Government's tax changes. For the benefit of the House I will table the figures with respect to the changes that have been provided by extensive computer modelling, undertaken by the Department of Housing and Construction. Mr HOWARD —I again ask the Prime Minister: On what date did he first consult his Department, or any other section of the Government, regarding the proposed retirement of Dr Armstrong? Mr HAWKE —I have covered this question extensively in answers given in this place. I have nothing to add to what I have said. Mr O'NEIL —Will the Minister representing the Minister for Industry, Technology and Commerce indicate whether the Government is concerned with the accumulation of Broken Hill Proprietary Co. Ltd shares by Robert Holmes a'Court's Bell Group? In particular, is this likely to have any effect on the steel plan agreement established between the Government, BHP and the unions regarding the reinvestment of funds into the steel industry? Mr BARRY JONES —The Government is monitoring the BHP situation closely. I understand from the honourable member for Grey that concern has been expressed by steel workers- Mr Moore —Are you going to start buying some shares? Mr SPEAKER —Order! The honourable member for Ryan persists. If he keeps on persisting the Minister might even produce some out of his pockets. I call the Minister. Mr BARRY JONES —Concern has been expressed by steel workers in the honourable member for Grey's electorate that a change in BHP's ownership might change their employment prospects. The Government has no reason to believe at this stage that if control of BHP changes the agreement made by BHP, the Government and the unions under the steel industry plan will not be adhered to or that BHP's plans for continuing investment in the steel industry will not go ahead. Mr CONNOLLY —I direct my question to the Prime Minister and I hope that his selective amnesia will not prevent him from answering this question. Is it a fact that the Solicitor-General's opinion fails to support one of the reasons the Prime Minister has given for sacking Mr Reid, namely, that the settlement of the Australian Bicentennial Authority with Dr Armstrong was-to quote the Prime Minister-`at least a tax minimisation'? In light of the Solicitor-General's finding in paragraph 46 of his opinion, does the Prime Minister still maintain, as he did in the House this week, that the only motive for the composition of the settlement was tax minimisation? Mr HAWKE —The reasons which moved me to ask for, and receive, the resignation of Mr Reid stand as I gave them to the House. As this question of the impact of the arrangements that were made in regard to Dr Armstrong is a matter for the Bicentennial Authority to handle-it is taking advice as to whether action needs to be taken-it would be quite inappropriate for me to make any comment. Mr BILNEY —My question is directed to the Minister for Primary Industry and relates to the meat industry. I preface my question by saying that 400 people in my electorate work in a very efficient abattoir. Is the Minister aware of a strike which is taking place today in South Australia and the Northern Territory by members of the Meat Inspectors Association? What is the reason for this strike? What are its effects, including animal welfare aspects, and what is the Government's attitude to it? Mr KERIN —I thank the honourable member for his question. I am aware that members of the Meat Inspectors Association are today on strike in South Australia and the Northern Territory. I have also now been informed that meat inspectors are planning to strike tomorrow in New South Wales, Victoria and Queensland and in Western Australia on Monday. I understand that the strike has been called as a protest against the non-payment by my Department of Primary Industry of three inspectors in relation to their failure to attend for duty during a dispute between the Australasian Meat Industry Employees Union and the management of Mudginberri abattoir, an abattoir in the Northern Territory. Mr Spender —We have heard of it. Mr KERIN —That is good. The inspectors had been directed to report for duty. They refused to do so and thus were deemed to be on strike. The irresponsible action taken by the MIA clearly puts to rest the baseless claims by livestock producers that I have acquiesced to union demands in respect of the Mudginberri dispute. Mr McLachlan of the National Farmers Federation sent a letter to the Prime Minister stating: We reject the view that provision of inspection services would lead to a national meat industry strike. We now have a national meat industry strike. It is this sort of industrial action that the Government has persistently attempted to avoid for it has the potential to damage the Australian meat industry substantially. The Government took that attitude throughout the Mudginberri dispute. The Government supports the right of any employee to strike. But let me make it very clear that the Government does not support the payment of such persons while they are on strike. Further, the Government does not support irresponsible use by any employee organisation of the right to strike. The Government firmly believes that the organisation should negotiate and use the due processes of conciliation and arbitration. I urge the MIA to cease its strike action which not only will adversely affect the domestic and export meat industries-of course it will affect employment-but also may cause undue cruelty to animals scheduled for slaughter. The honourable member asked about the animal welfare aspects. In South Australia there are milk lambs in pens which are ready to be slaughtered and, of course, their condition will deteriorate rapidly in today's forecast high temperatures. So there is a real animal welfare concern. This morning I spoke to Mr Simon Crean, the President of the Australian Council of Trade Unions, in an attempt to effect a speedy resolution to this totally inadequate situation. I am fully sympathetic with the representations I have received in respect of this matter from the Minister of Agriculture in South Australia, Mr Frank Blevins, the Meat and Allied Trades Federation of Australia, the Australian Meat Exporters Federal Council and the Country Meatworks Association of New South Wales. Mr HUNT —Is the Treasurer aware that quarantining farm losses discriminates against agriculture when compared with negative gearing on rental properties which will apply only to investments from 18 July 1985? Does he agree that the quarantining provisions in respect of rural farm losses applies to existing investments and thus has a retrospective effect in respect of farm property investments? Mr KEATING —The Government has covered that position in the arrangements because it is possible that the quarantining which will now exist in respect of agriculture can be set against the previous five years income and that losses which have applied before the 1986-87 income year can be brought to book. In other words, any existing or deferred loss which is taken after these measures are introduced will be brought to account. I noticed a remark by the Leader of the Opposition during the week. I think he probably failed to understand that point. Existing losses, that is, losses pre-1986-87 and any losses which have been stored up, can be offset in the future. Any losses which are incurred after the introduction of this measure can be written off against farm income for the previous five years. The other thing I should say is that there is also a very great benefit in the farm sector in respect of averaging. At the moment under the averaging provisions only $5,000 of non-farm income is included, whereas under this arrangement $15,000 of non-farm income will be included, which will make a great difference to the great majority of farmers. Of course, all farmers will benefit from the reduction in marginal tax rates. All farmers will benefit from the fact that the 60 per cent rate will go down to 49 per cent, and the 46 per cent rate to 40 per cent. A lot of farmers do not have any off-farm income, in which case they are not affected. People who are farming without additional income will not be affected. Of course, there is the other offsets test. Up to full loss offsets are available on non-farm incomes of up to $15,000 and partial loss offsets on incomes up to $30,000. So we have treated the farm community very fairly. Over time, Pitt Street farming has been a loophole in the tax system. It has been a tax shelter. With the eradication of all other shelters in the system, or as many as the Government can find, this type of shelter would have been worked to death by people with substantial non-farm incomes. The effect of this over the period has been to drive up the value of rural land in some places, which has substantially disadvantaged the farm community. Farmers have had to purchase properties with big mortgages occasioned by the rise in rural values brought about because so much has been able to be negatively geared and offset against another non-farm income. So the balance of measures protect the farm community. The Deputy Leader of the National Party should understand that existing losses can be stored. Losses can be stored indefinitely against the earnings of the farm. Mr CLEELAND —Has the attention of the Minister for Aboriginal Affairs been drawn to full page advertisements by the Northern Territory Government regarding Ayers Rock? Can he inform the House whether the advertisement is a fair representation of the issues involved in the recognition of the title to Uluru? Mr HOLDING —I have seen the advertisements sponsored by the Northern Territory Government. They are grossly misleading. They are grave distortions of the facts and I believe they are calculated to arouse racial tensions throughout the Australian community. Let us look at a couple of the propositions in these advertisements that are factually incorrect. It is asserted that Uluru National Park will be handed over to fewer than 100 Australians. The advertisement says that all Australians visiting the rock will have to pay a fee to see it. Let us take both those propositions as representing the truth as the Northern Territory Government sees it. The fact is that the rock is not being handed over to any one Australian. It is being handed over to a lands trust which will handle the title for and on behalf of all the indigenous traditional owners of Uluru. That is the first gross distortion of fact. The second is the implication that as a result of this decision Australians will now have to pay to see Uluru. How is it that the Northern Territory Government does not seem to know that a fee has been paid by visitors to the rock for the last 25 years? I will not dwell on the morality of these mischievous and misleading advertisements. It is all very well for Mr Tuxworth to act like a mischievous prophet, hawking himself around Australia and making all sorts of false assertions. I want to direct this House to the reactions of the people of the Territory to this campaign. I can do no better than to go to newspapers which could not be described in any way by anybody in this House as traditional supporters of this Government. The mid-week Territorian of 9 October 1855- Mr Howard —1855? Mr HOLDING —I am sorry, 1985. I was thinking of the attitudes and responses of the gentlemen opposite. What is interesting is the uniform approach that has been taken by all newspapers in the Territory. The Territorian editorial states: In boycotting the handover of Uluru National Park the Territory Government has again unhesitantly pitted one racial group against another . . . The Territory Government has selfishly decided to boycott the handing over of Ayers Rock to Aborigines. I invite the Leader of the Opposition to ponder this next sentence: The handing over is nothing more than a show of respect to a race that has lived in Central Australia thousands of years before the arrival of the first European. The CLP may have won an election on the Ayers Rock issue. But that is no justification for the Territory boycotting an event that is an immense symbolic gesture to a people who only 20 years ago were given the right to vote. In a mid-week poll conducted on the streets one cannot say that any poll of that kind is necessarily conclusive, but it is interesting 30 people were questioned in Alice Springs, the majority of whom identified themselves as Country Liberal Party voters. Eleven agreed with the boycott decision, and the rest supported the handover. The Northern Territory News is not a newspaper which has ever been sympathetic to the Prime Minsiter or this Government. Mr Everingham —You couldn't lie straight in bed. Mr HOLDING —It is important that the honourable member for the Northern Territory should identify himself because he has not been here for most of the week. We are pleased to see him back. Mr Everingham —Come back up to the Territory. You are worth 500 votes to me every time you go up there. Mr HOLDING —I have been told that he is spending most of his time in Queensland looking for a seat. Perhaps he has just been in Queensland handing back the $20,000 legal fee he should never have received. The editorial headline in the Northern Territory News-it is not my headline-describes Mr Tuxworth's cavorting around the capital cities of Australia as a `pointless crusade'. The editorial states: Rhetoric by Mr Tuxworth and former Chief Minister, Mr Paul Everingham, about traditional ownership of Ayers Rock and the need to keep the Rock for all Australians, is a smokescreen designed for electoral gain. A letter from Mr Everingham to Mr Hawke less than a month after winning the 1983 election, which was based on `winning back' the Rock, shows Mr Everingham proposed acknowledging Aboriginal title on the understanding the park subsequently would be leased to the Conservation Commission. As late as August this year, Mr Tuxworth's Government was perfectly happy for Aborigines to hold Territory title to the rock. Opposition Leader, Mr Bob Collins, could well be correct when he says Mr Tuxworth's crusade could deter tourists, who could be forgiven for believing they will find no more than a yawning hole in the ground after the handover. I am quoting to the House the views and editorials of every newspaper in the Territory, and newspapers which, as I pointed out, traditionally do not support this Government. The Advocate's editorial comment was as follows: . . . if Mr Tuxworth is trying to be politically damaging to Prime Minister, Bob Hawke, he would do better to restore the credibility of the Territory in the business fiascos among the Australian business community. It is an interesting exercise for honourable members on this side of the House to be continually lectured by the Leader of the Opposition and his shadow Treasurer on the benefits of privatisation. They are so anxious to support their colleagues in the Northern Territory without any thought or regard to the rights of traditional Aboriginal people and the policy of this Government, which follows the very policy and the very philosophy of the former Prime Minister. Let it not be forgotten that during the whole period of the Fraser Government the question of the future of Uluru was constantly under consideration. The previous Prime Minister made it perfectly clear that under no circumstances would he simply hand over title to the Northern Territory Government unless he had firm guarantees about the recognition of the rights of traditional Aboriginal people. Mr Ian Cameron —Shame. Mr Slipper —That is right, shame, shame. Mr HOLDING —It is interesting to hear the honourable gentlemen opposite saying `Shame' when I refer to the Opposition's own previous policy and philosophy. Mr Goodluck —You will want Tasmania next. Mr HOLDING —There are no traditional owners in Tasmania. I ask the House to consider this: The previous Government made its policy perfectly clear and, more than that, indicated to the Northern Territory Government that it would be prepared to hand title to the Northern Territory Government on the basis of that title then going to the Aboriginal people of Uluru. That is the reality. There is a real question here which I ask the Leader of the Opposition to consider quite seriously. The action of the Governor-General in proceeding on behalf of the Commonwealth to hand over title to the Aboriginal people is of immense relevance not only to the beneficiaries but also to Aboriginal people right around Australia. Mr Ian Cameron —What does Sugar Ray Robinson say? He wants you to give it back to the whites. Mr SPEAKER —Order! The honourable member for Maranoa will cease interjecting. Mr HOLDING —Mr Speaker, my only regret is that some of the comments from the Opposition benches cannot be recorded. This exercise is of tremendous relevance to all Aboriginal people, for the following reason. It is the first occasion upon which the head of the Commonwealth is saying on behalf of the people and the Government of Australia that we recognise the traditions of Aboriginal people and their spiritual relationship to this area of land. No one Australian citizen will be disadvantaged in any way at all. There will be screams and yells from honourable gentlemen opposite as we approach our bicentennial year if any group of Aboriginal people decide not to participate in this ceremony. That will be a matter of concern to this House. I find it extraordinary, therefore, that the Leader of the Opposition and his supporters, who I do not think have thought their way through this seriously, now are prepared to support a white ban on a very serious and important event. They believe that the Northern Territory Government is entitled to say to every public servant in the Territory in respect of an event that is to take place on a weekend in their own time: `You shall not go'. I ask the Leader of the Opposition to think about the implications of that. I finish on a simple note. No one Australian citizen is having any of his rights diminished under the arrangements that have been made. Those arrangements follow very much the policy adopted by the Fraser Government. Finally, the average Australian is not losing Ayers Rock; he is gaining Uluru. Mr SPENDER —My question is directed to the Prime Minister. In view of the understandable and regular involvement of staff on both sides of politics in State election and by-election campaigns, can the Prime Minister assure us that no member of his Ministers' staff has been connected in any way with the matters presently under investigation relating to the Nunawading by-election? Mr HAWKE —Certainly, to the best of my knowledge, that is the case. Mr BALDWIN —My question is directed to the Minister representing the Acting Minister for Foreign Affairs. What is the Government's assessment of the impact of recent developments in the Middle East, particularly the Israeli air strike against Palestine Liberation Organisation headquarters in Tunisia and the subsequent hijacking of an Italian cruise ship by people purporting to act on behalf of the Palestinian cause, on the prospects of achieving long term peace in the region? Mr LIONEL BOWEN —As everybody will know, the Foreign Minister and the Government deplored the Israeli Air Force raid on Tunisia on 1 October and was concerned to learn that there has been a seizure, by those who were later called Palestinian terrorists, of the Achille Lauro on 7 October. It clearly shows that terrorist activity will only harden the attitude of the respective parties in the Middle East, where there has been a conflict for some lengthy period in endeavouring to obtain a peaceful settlement. Let me make it very clear that Australia supported the United Nations Security Council resolution condemning the Israeli raid. That resolution was passed on 4 October. The Government also strongly deplored the taking of the hostages aboard the Achille Lauro. Mr Spender —Do we know whether anyone on the vessel was killed? Mr LIONEL BOWEN —I understand that there is a report to that effect, but I am not able to confirm it. It is disturbing that action, although apparently unrelated, should be taking place when there have been very heartening signs of movement towards a comprehensive settlement in the Middle East. On 11 February, Yasser Arafat and King Hussein of Jordan agreed on what they called a framework for common action on the basis that there would be a peaceful settlement of the Palestinian problem. That in turn was based on the principle that there would be an exchanging of land for peace. The accord and the subsequent developments, particularly King Hussein's address to the United Nations on 27 September, represent encouraging developments in the search for peace, but considerable difficulties remain. The Australian Government, as always, is committed to a negotiated political settlement of the Arab-Israeli dispute. According to Security Council resolutions 242 and 338, we firmly believe that terrorism and violence are unacceptable and that in no way would they be able to achieve politcal objectives. Mr LIONEL BOWEN(Kingsford-Smith-Attorney-General) —Pursuant to section 30 of the Human Rights Commission Act 1981, I present the Commission's report No. 15 entitled `The Human Rights of Australian-born Children: A Report on the Complaint of Mr and Mrs Yilmaz', together with the text of a statement relating to the report. Mr LIONEL BOWEN(Kingsford-Smith-Attorney-General) —Pursuant to section 35 of the Criminal Injuries Compensation Ordinance 1983, I present the annual report on the operation of the Criminal Injuries Compensation Ordinance for the year 1984-85. Mr DAWKINS(Fremantle-Minister for Trade) —Pursuant to section 8 of the Independent Schools Loan Guarantee Act 1969, I present the independent schools loan guarantee report for 1983-84. Mr KERIN(Werriwa-Minister for Primary Industry) —For the information of honourable members, I present a fisheries agreement between the Commonwealth of Australia and the Koah Siung Fishing Boat Commercial Guild. The Clerk —Petitions have been lodged for presentation as follows and copies will be referred to the appropriate Ministers: To the honourable the Speaker and members of the House of Representatives in the Parliament assembled. The humble petition of the undersigned citizens of Australia showeth that whereas: 1. They are completely satisfied with the design of the existing Australian national flag. 2. They are aware it properly reflects the immutable characteristics of Australia, namely: (a) The Union Jack, itself the creation of three Christian Crosses, represents the nation's historical origin and the source of its language and law; (b) The Southern Cross on an azure blue background signifying its geographical location; (c) The large star depicting the advent of Federation. 3. They know the flag has been a source of inspiration to generations of Australians in peace and war. 4. They recall that millions of native-born Australians and newcomers to these shores from other parts of the world have become united under its proud symbolism. 5. They are certain that any change to the flag will produce division in the Australian community. Your petitioners therefore pray that your honourable House will give speedy passage to the Flags Act Amendment Bill which provides that the Australian National Flag can only be changed by a referendum. by Mr Andrew,Mr Beale,Mr Chynoweth,Mr Halverson,Mr Hand,Mr Hawker,Mr Holding,Mr Lloyd,Mr McArthur,Mr Macphee and Mr O'Keefe. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The Petition of the undersigned respectfully showeth: 1. That the overwhelming majority of Australians are completely satisified with the existing Australian National Flag. 2. That we are totally opposed to any change in the Australian National Flag as provided in Section (3) of the Flags Act, unless such proposed change is first voted on by the people of Australia and passed by a majority of voters in a majority of States. And your Petitioners, as in duty bound, will ever pray. by Mr Fife. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of certain citizens of Australia respectfully showeth: That the Australian flag symbolises the continuity between Australia's past, its present and the future; That the presence of the Union Jack on the flag represents not a subservience to Britain, but a reminder of out inheritance of the fruits of hundreds of years of struggle for individual liberty against the forces of tyranny and oppression; Nonetheless recognises the rights of Australians should they wish as a people to change the design of their flag. Your petitioners humbly pray that no change be made to the Australian flag except with the consent of the people in a referendum. And your petitioners as in duty bound, will ever pray. by Mr Ruddock. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned respectfully showeth: Introduction of any additional capital gains taxes, wealth taxes or death duties is opposed on the grounds that: they adversely affect the small and medium size businesses in Australia, destroying incentive and discouraging investment in this important area of the economy; the Australian economy, and employment in particular, is heavily reliant on growth in small businesses; any capital gains that might result when owners of small businesses finally sell the business are not ``windfall gains'' but the result of many hard years of work and sacrifice, with very little being taken out of the business by way of salaries so that the maximum amount of money can be ploughed back into the business to create growth and jobs; the owners of small businesses often depend on a capital gain-which are simply deferred salaries-when they eventually sell their business to sustain them in retirement; Your Petitioners request that the House of Representatives, in Parliament assembled, will protect the rights of private enterprise and reject any inequitable additional taxes. And your petitioners as in duty bound will ever pray. by Mr Cadman,Mr Fife,Mr McArthur and Mr Miles. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The Petition of the undersigned respectfully showeth: 1. That we are completely dissatisfied with the frequent and substantial increase in the price of petrol and diesel fuel. 2. That we are aware that these price increases have an adverse affect on the living standards of the average Australian wage earner. 3. That increases in fuel prices adds to farm costs and further reduces the average income per farmer which has already fallen to one-third of national earnings. Your Petitioners therefore pray that the Government will immediately reduce the price of petrol by three (3) cents per litre in line with the commitment given by the now Prime Minister of Australia during the 1983 election campaign and take all possible action to prevent further increases occurring. And your Petitioners as in duty bound will ever pray. by Mr Andrew. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The Petition of the undersigned citizens respectfully showeth: 1. That we are completely dissatisfied with the pricing of petrol in this country; 2. That under a Labour Government petrol prices have continued to rise excessively, with recent Government decisions adding over 8c. per litre to the price of petrol in some country areas; 3. The proposed consumption tax could lead to a further rise of 6c. per litre; and 4. The high cost of petrol discriminates against country residents who rely on their cars for essential communication and transport. Your petitioners therefore humbly pray that the Australian Government honour the commitment given by the Prime Minister during the 1983 election campaign to reduce petrol prices by 3c. per litre. Further we strongly urge the Government to adopt a petrol pricing policy which does not cause unnecessary rises in the cost of petrol. And your petitioners, as in duty bound, will ever pray. by Mr Fife and Mr Hawker. To The Honourable Speaker and Members of The House of Representatives, the Petition of the undersigned respectfully showeth: That the recent cuts announced in the Mini-Budget to Pre-schools and Day Care Services are a reversal of A.L.P. policy to make child care services available to all at an affordable cost. Further, that the fee rises arising from the cuts will cause great hardship to the majority of families using these services. Your petitioners therefore humbly pray that your Honourable House fully restores all Federal funding to children's services in Australia, and your petitioners as in duty bound will ever pray. by Mr Carlton,Mr Hollis and Mr Nehl. To the Honourable Speaker and Members of the House of Representatives. The humble petition of the undersigned citizens of Australia respectfully sayeth: That we the undersigned are totally opposed to any taxation change which involves a tax on Health Fund contributions or benefits. That we are already required to pay a 1 percent levy to partly finance the Medicare scheme and that we would regard any further taxation of our health insurance arrangements as unfair and unreasonable. That therefore we urge the Government to ensure that there is no taxation on illness and no special taxation on those who seek to insure themselves against the cost of private health care. And your Petitioners, as in duty bound, will ever pray. by Mrs Darling,Mr Fife and Mr Ruddock. To the Honourable Speaker and Members of the House of Representatives in Parliament Assembled. We the undersigned citizens of the Commonwealth do humbly pray that the Commonwealth government. 1. Unhold the principle that the seeds and cuttings of plants are a public resource and a common heritage to all and that accordingly seeds should be freely available to all, freely multipliable, able to be sold, exchanged, exported and imported by anyone who wishes. This is seen as a matter of national food security. 2. Recognize that plant breeding is a highly co-operative venture often involving private enterprise at the very last stages after basic seed collection, storage, and research has been publicly funded. 3. In view of the aforementioned paragraphs, recognize that any system giving `property' or ownership rights over seeds to individuals, organisations or enterprises is inappropriate and unjust. 4. Recognize that legislation establishing plant patenting schemes overseas has had serious adverse effects namely: (i) a slowing-down of scientific information exchange and exchanges in basic plant breeding materials, that is, germ plasm, (ii) subordination and/or curtailment of public breeding programmes, (iii) farmer unrest at seed prices, (iv) monopoly control of seed production and sales has passed into the hands of giant petrochemical and drug corporations also marketing crop chemicals, (v) increased uniformity of crop varieties leading to a vulnerability to pest and disease attack. 5. Reject any proposal to legislate for any system such as the drafted Plant Variety Rights Act, which gives exclusive ownership rights over seeds to individuals, organisations or enterprises. And your petitioners, as in duty bound, will ever pray. by Mr Hollis and Mr Milton. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. This petition of concerned Australian citizens respectfully points out: That, for our survival, an effective Worldpeace Initiative needs to be established which will work toward mutual understanding, world disarmament, economic well-being for all, fulfilling employment, a sustainable society conserving natural resources and revitalising soils essential for growing a plentiful and healthy food supply and tree cover. By achieving these objectives, Australia can set an example for the rest of the world to follow. Your petitioners therefore humbly pray that your Honourable House will: 1. Create an Australian Ministry for Peace specifically devoted to peace-building and the non-violent resolution of conflict; 2. Convene a national Summit for Survival to discuss the issues of world disarmament, security and national and international co-operation; 3. Support the United Nations World disarmament Campaign by allocating the equivalent of at least 10% of our military expenditure to fund peace activities; 4. Actively assist the International Year of Peace in 1986 by initiating programs for peace education, self help development and environmental repair; 5. Develop National Employment Programs to give priority to the planting and growing of forests, food-producing trees and other crops to assist the greening of Australia. 6. Implement National Recycling Programs to reuse water and to compost all presently wasted domestic sewage-sludge and organic garbage with mineral-rich gravel dust, a by-product from rock quarries and mines, into hygienic humus, a natural fertiliser, for use in revitalising impoverished soils. 7. Propose to the United Nations General Assembly that 1989 be declared International Year for Repairing the Earth. And your petitioners as in duty bound will ever pray. by Mr Hollis and Mr Ruddock. To the Honourble the Speaker and Members of the House of Representatives in Parliament assembled. This petition of concerned Australian citizens respectfully points out: That, for our survival, an effective Worldpeace Initiative needs to be established to work towards mutual understanding, world disarmament, economic well-being for all and full employment. This Initiative will help to ensure a sustainable society conserving natural resources, and revitalising soils essential for growing a plentiful and healthy food supply and tree cover for the needs of present and future generations. By working for these objectives, Australia can set an example for the rest of the world. Your petitioners therefore humbly pray that your Honourable House will: 1. Propose to the United Nations General Assembly that 1989 be declared International Year for Repairing the Earth. 2. Implement action programs leading up to 1989 which will include: a. Actively supporting the International Year of Peace in 1986 by reallocating at least 10% of our military expenditure to fund environmental repair programs. b. Implementing National Recycling Programs to reuse water, and to compost into hygienic humus all presently wasted organic garbage and sewage-sludge mixed with fine ground powder from mineral-rich gravels and rocks, to use as a natural fertiliser in revitaliser impovrished soils; c. Developing National Employment Programs giving priority to the planting and growing of healthy forests, food-producing trees and other crops and vegetation including environmentally sound use and reuse of water to assist the greening of Australia. And your petitioners as in duty bound will ever pray. by Mr Keating. To the Honourable the Members of the House of Representatives in Parliament assembled, the humbled Petition of the South Australian Country Women's Association Incorporated and the Undersigned shall showeth: The necessity to restore the concessional price of fuel in rural areas-without which there will be increased freight and production costs. Your Petitioners therefore pray that your Honourable House will restore the concessional price of fuel in rural areas for the benefit of all Australians. And your petitioners as in duty bound will ever pray. by Mr Andrew. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth that: As residents of the towns of Ayr and Home Hill and surrounding districts, your petitioners do humbly pray that the Australian Government, in recognition of the present plight of the sugar industry in our region and other parts of Australia, and in recognition of the importance of the industry to the economic and social well-being of our community, provide urgent financial assistance to that industry to ensure the survival and future viability of our local economy. And your petitioners, as in duty bound, will ever pray. by Mr Braithwaite. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of certain citizens of Australia respectfully showeth. That all steps be taken to prevent the continuous erosion of the rights of the holders of freehold land. Your petitioners draw to the attention of Parliament the denigration of freehold rights as practised in N.S.W. and calls on the Parliament to enact overriding legislation to allow full and proper compensation to all Australians where Government requires the use of private property and traditional rights attached thereto. And your petitioners, as in duty bound, will ever pray. by Mr Cadman. The Honourable the Speaker and Members of the House of Representatives in the Parliament Assembled. The petition of concerned people respectfully showeth their desire to have the wild horses of Queensland and the Northern Territory declared a protected species. Your petitioners therefore humbly pray that your Honourable House set aside National Park for these horses and ensure that killing of feral animals is undertaken in a humane manner with proper legislation and enforcement. And your petitioners in duty bound ever pray. by Mr Cadman. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of certain citizens of Australia respectfully showeth that the current policies of the Community Arts Board of the Australia Council are disadvantaging rural residents with regard to access to the Arts. Your petitioners, therefore, humbly pray that the Federal Government will allocate sufficient funds to the Australia Council specifically to ensure ongoing funding to State Arts Councils to enable those organisations to maintain access to performing and other arts activities in country areas, and your petitioners, as in duty bound, will ever pray. by Mr Ian Cameron. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully shows that: 1. We affirm our belief that, in Jesus Christ, human sexuality is placed in the context of mutual loving relationships and therefore Christians reject any form of pornography which depicts violence against adults and/or children and the economic, physical and spiritual exploitation which is basic to hard-core pornography. 2. We urge the Parliament to prohibit the importation or production of this kind of pornography. 3. We request the Parliament to continue a public enquiry during 1985 to report on the operation of Regulation 4A of the Customs (Prohibited Imports) Regulations and the A.C.T. Classification of Publications Ordinance 1983 in relation to video tapes and video discs which have been refused classification or classified ``X'' by the Film Censorship Board. And your petitioners as in duty bound will ever pray. by Mrs Darling. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of citizens of Australia respectfully shows: That the Fitzroy South Post Office offers an important service to the residents of South Fitzroy which cannot adequately be provided by any other post office in the surrounding area. Your petitioners therefore humbly pray that the Fitzroy South Post Office not be closed. And your petitioners as in duty bound will ever pray. by Mr Hand. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: That in the light of the Labor Government's failure to act to correct the many anomalies in the Assets Test on pensions brought to its notice, the Labor Government's legislation should be repealed before it has an unduly unfair impact on pensioners. Your Petitioners therefore humbly pray that the House of Representatives in Parliament assembled should immediately seek the repeal of the Labor Government's iniquitious and unfair Assets Test. And your petitioners, as in duty bound, will ever pray. by Mr Hawker. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled, the humble petition of citizens of Australia respectfully shows: As a part of the world wide campaign by women in the final year of the United Nations' Decade for Women for `equality, development and peace' (1976-1985) and In view of the grave possibility of nuclear catastrophe, the Union of Australian Women calls on the Australian Government to: intensify its efforts for nuclear disarmament. remove U.S. bases from Australian soil. keep the Pacific and Indian Oceans nuclear free. by Mr Hollis. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The Petition of certain concerned citizens of Australia. Respectfully showeth: that the actions of trade unions have gone beyond their traditional goals of protecting workers conditions and rates of pay and have reached the point where they are seriously affecting the economic health of the nation and the people. Your Petitioners therefore humbly pray: 1. That all Governments throughout Australia acknowledge and protect the Right to Work on behalf of all Australians. 2. That the total sovereignty of individual governments be recognised as a fundamental requirement of a workable, balanced Federal system of government. 3. That all necessary steps be taken to protect the citizens of Australia from any compulsion, threat or intimidation to join any trade union. 4. That the supremacy of elected governments over the sectional interests of trade unions be recognised, and 5. That the provision of essential services be maintained, free from industrial disruption. And your Petitioners, as in duty bound, will ever pray. by Mr Hunt. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of we, the undersigned citizens of Australia, respectfully showeth: That the government reverse its decision to cut pre-school funding in the mini-budget. And your petitioners as in duty bound will ever pray. by Mr Jacobi. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of certain citizens of Australia shows that there is a need to end the current discriminatory application of sales tax on confectionery and the other anomalies existing in sales tax law. Your petitioners therefore humbly pray that this tax should be replaced by a broad-based consumption tax with a uniform ad valorem rate, without any exemptions whatsoever. by Mr Miles. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens respectfully showeth that: 1. the Hawke Government's retirement incomes policies are piecemeal, inequitable, and discriminate against people who save towards achieving reasonable self-reliance in their retirement and 2. the Government's assets test legislation is particularly inequitable and its effects are especially discriminatory against farmers. Your petitioners humbly pray that the House of Representatives, in Parliament assembled, will call upon the Government to: 1. repeal the assets test legislation; 2. institute a broad inquiry into Australia's retirement income and taxation systems; and 3. following the receipt of the report of such an inquiry implement a retirement incomes policy which is fair and equitable, encourages self-provision and will be non-discriminatory in its operation and impact. And your petitioners as in duty bound will ever pray. by Mr Miles. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens respectfully showeth that they are opposed to the proposals contained in the Government's White Paper for the reform of the Australian Tax System in so far as they relate to the imposition of further Capital Gains and Wealth Taxes. Your petitioners humbly pray that the House of Representatives in Parliament assembled will call upon the Government to reject any proposal to increase the burden of Capital Gains and Wealth Taxes on the Australian people. And your petitioners as in duty bound will ever pray. by Mr Nehl. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: That on 28 February 1985 the Senate passed a resolution that read: (i) that Australia, as a member of the United Nations should fulfil its obligation to promote and encourage respect of human rights and fundamental freedom, and should support the European Parliament's Resolution in respect of the Baltic States. (ii) that in order to do so the Australian Government should, on its own initiative, and by seeking the support of like-minded governments, bring the question of human rights and self-determination for the Baltic States before all apropriate forums of the United Nations, and especially before the United Nations Human Rights Commission, and, (iii) that the Department of Foreign Affairs should be directed to take all necessary steps in order to implement this Resolution. Your petitioners humbly pray that the Members and the House of Representatives will concur with that resolution. And your petitioners as in duty bound will ever pray. by Mr Ruddock. To the Honourable Speaker and Members of the House of Representatives in Parliament assembled, we the undersigned call upon all Members to pay due respect to all returned service personnel. Your petitioners therefore humbly pray that all changes to benefits for veterans, and conditions of service for military personnel, as announced in the May Economic Statement, be withdrawn as to allow sufficient time for sensible community debate before any veteran or service person can be unfairly disadvantaged. by Mr Sharp. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled; the humble petition of the undersigned citizens of South Australia showeth that: Without any warning and at the worst possible moment, the Federal Government has abandoned the pensioner patients in South Australia's Nursing Homes. These people are suffering undeserving hardship and trauma as a result of the Federal Government's decision to freeze the nursing home benefit levels in South Australia. The pensioner patients and those on fixed incomes now cannot expect any relief from recent significant fee increases approved by the Department of Community Services and which have coincided with the decision to freeze benefits. 80-85% of nursing home patients are pensioners and the majority are now required to pay in excess of their pension for their nursing care for the very first time. Some are paying over $5 per day on top of their pension. Many are looking for cheaper nursing care that doesn't exist. We request that the Federal Government: 1. alleviate the distress of South Australia's nursing home patients and their families by effective restoration of the principle that pensioner patients should not have to pay more than their pension for nursing home care 2. restore the review of the benefit rates in November 1985 3. resolve its concerns over health care costs with the South Australian Government rather than inflicting unnecessary suffering on nursing home patients. And your petitioners as in duty bound will ever pray. by Mr Andrew and Mr Bilney. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of certain citizens of Queensland, Australia, respectfully showeth that we are totally opposed to any change in the Australian National Flag as declared in the Flags Act 1953. Your petitioners humbly pray that Parliament in its wisdom will take no action to change the Australian national flag. And your petitioners, as in duty bound, will ever pray. by Mr Ian Cameron. To the Honourable Speaker and Members of the House of Representatives in Parliament assembled. The petition of citizens of New South Wales respectfully showeth: 1. Badgery's Creek and surrounding district are unsuitable sites for any major airport due to environmental, conservation and weather factors. 2. Many hundreds of people will be dislocated and many thousands more will be disturbed by the siting of an airport at Badgery's Creek and surrounding districts. 3. NSW taxpayers cannot afford the cost of a second airport when at a minimum of cost upgrading and expansion of Kingsford-Smith will satisfy the needs of NSW air travellers in the foreseeable future. Your petitioners therefore humbly pray that your honourable House will not approve an airport at Badgery's Creek and surrounding districts. And your petitioners, as in duty bound, will ever pray. by Mr Grace. Petitions received. The following Bills were returned from the Senate without amendment or requests: States Grants (Petroleum Products) Amendment Bill 1985. Grain Legumes Levy Bill 1985. Grain Legumes Levy Collection Bill 1985. Wheat Tax Amendment Bill 1985. Mr SPEAKER —I have received a letter from the honourable member for O'Connor (Mr Tuckey) proposing that a definite matter of public importance be submitted to the House for discussion, namely: The Government's wasteful abuse of scarce taxpayers' funds by expenditure on politically motivated projects. I call upon those members who approve of the proposed discussion to rise in their places. More than the number of members required by the Standing Orders having risen in their places- Mr TUCKEY(O'Connor)(2.55) —A perusal of our daily newspapers, television channels and government publications will show massive government expenditure aimed purely at emphasising, enhancing and supporting the Australian Labor Party. A full page advertisement without any penalty for positioning in the Sydney Morning Herald, for example, costs $13,000-plus. A double page spread, as recently used in the Priority One: Young Australia advertising campaign on more than one occasion, costs $26,000. In fact, the Priority One campaign, with advertisements such as the one in the Sydney Morning Herald of 13 September containing whacking great photographs, cost $500,000. I ask honourable members to tell me what use they are to the Australian community. Did that campaign tell the kids how to get a job? It did not tell them how to get a job. It told them what the Prime Minister (Mr Hawke) thought of himself. We are starting to discover a bit about that. Honourable members interjecting- Mr DEPUTY SPEAKER(Mr Keogh) —Order! The honourable member for O'Connor is entitled to be heard in silence. There are far too many interjections from both sides of the House. Mr TUCKEY —Thank you, Mr Deputy Speaker. This type of advertising is a disgrace. The very people who were making the most noise are the ones who will be interested in the words we have used in the matter of public importance. It refers to the `abuse of scarce taxpayers' funds'. Honourable members opposite know where those funds should be going. That money should be spent on the kids shown in the photograph in the advertisement, not on blown up photographs of the Prime Minister because he thinks he is something. In fact, Opposition advice indicates that expenditure on politically motivated media advertising and party political polls and surveys recently exceeded $6.5m. Mr Slipper —How much? Mr TUCKEY —It exceeded $6.5m. That information was provided in answer to a question on notice. What are these people doing? What have we got? We have publications such as the one on the prices and incomes accord. That beautiful publication cost only $750,000. We will talk more about that in a minute. That publication, consisting of 28 pages of cartoons, cost $750,000 and tells people what is good for them. That money is not being spent by the Government on youth training. The Government is not trying to help the kids of Australia. No, that money is being spent on boosting up the Government. It needs boosting up because polls in certain magazines are telling the Government how life is going. We have had full page advertisements in national newspapers supposedly explaining the Government's reasons for tax reform. Those advertisements might tell people what the reasons are but they do not allay any of the fears which exist among people in the real world. The full page advertisement gives a hot line number. However, when one rings that number and asks, for example, how the capital gains tax will affect one's shareholdings if one is interested in putting out a new share issue or anything such as that one cannot find out. What is more, one cannot find out until March of next year. Why? Because the Government does not yet know what it is going to do. The Government is putting ads such as that in the newspapers at great cost to widows and all sorts of people. That is what the Government is doing. The Government knows it; it cannot deny it. There is probably a $1m cost involved in that advertisement in the newspapers. The people are getting hurt; the people who need assistance are being ignored by the Government. Is there anything in the publication on the accord that teaches people anything? It is full of bloody cartoons. Mr DEPUTY SPEAKER(Mr Keogh) —Order! Mr TUCKEY —I apologise for that, Mr Deputy Speaker, but I feel very strongly about this matter. I turn to another area, the Australian Nationwide Opinion Poll surveys. That organisation happens to be the Australian Labor Party's own survey organisation. I guess it is no coincidence that consequently it gets 91 per cent of all government work. One wonders what discount that means for the Australian Labor Party. One wonders how many freebies the Australian Labor Party gets from ANOP. What sorts of surveys has the Government been getting done? I mention the survey concerning community attitudes towards school funding. It is not a survey into what the community wants from school funding. ANOP is going out there to find out whether the community is happy with the way the Labor Party is doing the funding. The Labor Party wants to know how it might buy itself a few more votes. There was a survey entitled: `Tasmania's reaction to Commonwealth policies and programs, 1984'. Why does the Government want to know about Tasmania? It does not hold one seat in Tasmania. That is the point. The ANOP ought to be doing these surveys at the cost of the Labor Party. The Labor Party is the only beneficiary of that sort of information; the Government does not need to know it. The Government should be conducting a survey to find out what the people of Tasmania need. We now have Federal Budget community reaction phase 1 and phase 2 as well as Budgets phases 1 to 25. Of course we also have something which the Minister seems to have to keep secret-the Aboriginal Development Commission inquiry into community attitudes to Aboriginals. That might not have been too bad except that the Minister was trying to ambush the community and get some information that he could have got for nothing from every other poll. He did not need to spend that money. The Government was trying to build up some propaganda. The Government has an obligation to use the media to provide information to the public; that is the role of government advertising. It is expensive enough at between $25m and $40m a year. The Opposition does not protest when this occurs. Our protest has been that the scarce financial resources of the Australian community are redirected to promoting party political advantage and provide no helpful information whatsoever. All these documents are about selling the Government because it is in dire and terrible trouble. It is prepared to spend taxpayers' money but more importantly to take that money away from those people who need it. That is where it is all wrong. When blatant attempts are made to sway community opinion purely to advance the prospects of a political party which has the control of these scarce community funds, the present Opposition has every reason in the world to complain as it is at the moment. I can see that the two honourable gentlemen who will follow me will want to jump up and down and give me some sort of history lesson. I will give them a history lesson. The people of Australia judged the Government on how it would deal with their money in this situation. The honourable member for Adelaide (Mr Hurford) and the Leader of the House, the honourable member for Port Adelaide (Mr Young), tell us that it is not the purpose of this Government to spend money in this way. We do not need a history lesson. If there were faults in the past it told the people about them, as did the Prime Minister in February 1983 when he said about a previous government: The Government's decision to spend almost $1 million to advertise its wages freeze is a disgrace and a shocking misuse of taxpayers' money. Why does the Government not stand on that? If the Prime Minister could find the bloke who wrote that, he would sack him. The Prime Minister would say: `You should never have done that. I will kill you'. If anybody does anything that turns out to be a mistake, it is never the Prime Minister's fault. He says: `It is not my fault. You have to be sacked'. The Prime Minister would chop the person's head off. One day he will try walking on water and he will blame someone when he drowns. The Prime Minister also said in 1983: There ought to be now an end once and for all- once and for all-not `when I get into power', but once and for all- to this appalling misuse of taxpayers' funds for political purposes. The Prime Minister used words like `disgrace' and `shocking'. It is amazing that he did not get a couple of others in that he uses so frequently. Mr Kerin —You are running out of steam. Mr TUCKEY —No, I am not, I am doing very well. I ask Mr Hawke: What of your Government's decision to spend $750,000 to advertise in this way? People are concerned about the application of their taxes. They believed those promises when they heard them, and as usual the promises have been broken. This is a Prime Minister of the `use by' date; he puts a use by date on all his promises because he knows they will not last very long. As I have said before, if the consumer authorities had anything to do with his promises as far as a use by date was concerned they would classify them all as the most perishable. People's trust has been misplaced. Let me just say that any quoting of history by the two honourable gentlemen opposite will go along the lines: `Do not do as I do, do as I say'. This is hypocrisy. Mr Kerin —Get excited. We like it. Mr TUCKEY —That is good. Every member of parliament in this House is able to observe the gaps in the provision of government services. Despite this Government being prepared to raise the tax take to intolerable levels and borrowing $20,000m in the last three years, doubling the accumulated debts of the previous 80-odd years of Federal Government, these matters are still unresolved. The Government is not denying that there are people out there who could do with this sort of money. People still suffer from inadequate government resources. The Opposition stands in defence of these people and in total opposition to the waste of scarce government resources. Wasteful government advertising and promotion of public services in no way advances the welfare of the Australian community but purely the political opportunities of the Government and certain media and survey organisations which give Labor support. It is amazing that we find other community organisations are getting the prime share of this amount of money. The Opposition is not crying foul. It will take the political problems associated with this. If it were not for the community cost the Opposition would not even mind the Prime Minister's picture in the paper. I will tell honourable members why the Opposition does not mind his picture there. Today that photograph is associated with a man who callously and incompetently wasted $400,000 of taxpayers' money in the payment to Dr Armstrong. That is what people see when they see the picture of the Prime Minister now. They see a man who wasted all that money. We do not mind that picture going before the people if the Government can do it for nothing, because that is about what it is worth. It is clear that a large amount of government expenditure is being diverted in this direction. It is not all going out as honourable members may believe. It is going out of government departments. There is $4.943 billion associated with the education vote. People believe that that is going to educate their kids, which is what they want. However, a large proportion of that is funding little brochures which are delivered around schools by school teachers and which make claims about what the Government is doing. I will tell honourable members what people want from the education system. They do not want these sorts of advertisements. They want their kids to be able to read these advertisements. The Government should spend the money it has on ensuring the kids can read. Mr John Brown —The way you are going you won't be able to read for much longer, you will be blind. Mr TUCKEY —I will not be blind from anything the Minister can do to me. I do not have to worry about that. People want that money spent on educating their children, not on telling them that a situation that is still inadequate is in fact better than it is. That is all we get out of these sorts of publications. What about giving some more assistance in the education arena to people in remote areas who are unable to send their kids to school because the Government says that it has not got any money for that when it has got money for this form of advertising? Where do we find all this money going? Seventy per cent of the Priority One: Young Australia program brochure consists of photographs. There is nothing in it but publicity for the Government. There is no information as to where the kids go to get on this training scheme. The Government does not tell them things like that. When they ring the hotline, they get nothing then either. We know what is in the tax advertisements. The accord booklet and the booklet on youth training are all just publicity. They contain no information for people. On the Ayers Rock handover the Government is going to have a real party. An amount of $350,000 is going to be spent on that. I have travelled in the Northern Territory and other places on the House of Representatives Standing Committee on Aboriginal Affairs and I can tell honourable members that there are still heaps of people who just need a house. How many houses could we get for $350,000? I will tell honourable members something else. For children who are battling and who need remedial teaching, the cost of the Priority One program would have paid for the annual services of 200 remedial teachers. The Priority One program did not even tell people where to apply for it. It was just pure publicity. That is the situation we have. Coincidental or not, the company which handled the recent advertising for the Government on its Priority One campaign was Chandler, Hamilton and Mier, whose controlling interest is held by Monahan, Dayman Adams Pty Ltd. Those companies are just three miles apart. The word is out now that that particular group-headed up really, of course, by Mr Phillip Adams, although his name comes last on the list-is favoured to get a $1m contract for advertising the International Year of Peace. I can tell honourable members that that sort of advertising will bring a lot of peace in Australia when people are going short of things such as education and health. The Opposition asks today how much money was diverted through these particular firms that I have just referred to in relation to that scurrilous situation of those how to vote cards at Nunawading. What backhander went out there? Was the printing done in that way? It probably was. There is no reason for the Government to spend this money. It said that it would not do so; it promised not to do so. But the Government is producing things of no value to the community, taking away scarce resources from people who need them, people who are in real trouble. Labor members pontificate about the poor and what they would like to do for them-I refer to the very people who are sitting in this chamber at the moment-but they are prepared to tolerate the situation going on like this. Madam DEPUTY SPEAKER —Order! The honourable member's time has expired. Mr JOHN BROWN(Parramatta-Minister for Sport, Recreation and Tourism)(3.10) —Once again, we have heard the ubiquitous member for O'Connor (Mr Tuckey) raving and ranting in his usual disjointed, illogical fashion on something about which he knows very little. Whatever theories he propounds are based on a doubtful premise. As usual, we had from him a fairly decent expose of alleged dishonesty in Government practice, ranging from innuendo about Australian Nationwide Opinion Polls Pty Ltd and what sort of discounts it would be giving the Government because it happens to do its polling. I do not think that does the honourable member for O'Connor or the party he represents much good, but he continually comes into this House questioning people's honesty. He should look in his own cupboard occasionally before he starts to talk about anybody else. It should be made quite clear that all government advertising and government public relations exercises are propounded on a decent tender system so that everything is above board, above suspicion. Mr Tuckey —Do you ring up Adams and tell him the lowest tender? Mr JOHN BROWN —If the honourable member has any doubts about it and about Phillip Adams, why does he not go outside the House and say it? He is a very courageous man sitting there pouring scorn on a very well-known and favourably received Australian, Phillip Adams. He gets his work, if he gets work from this Government, because he provides the best tender, which is something the honourable member's grubby little mind might be able to comprehend. Our procedures here are above suspicion. If he thinks they are not, he should try to have an inquiry into them and see whether he can find any information to support his grubby little theory. Let me give a few figures. In 1982-83 the previous Government spent $24m on advertising, most of it just before the election, propounding the benefits of the Liberal's great pre-election Budget. The then Government had the indecency to spend $2m during the Flinders by-election pushing the family Budget policy. Anything this Government has done in advertising has been dedicated to making Australians acquainted with what government assistance is available in every area. It was quite predictable that we would produce the Priority One: Young Australia program. I would have thought that there would have been bipartisan support in this Parliament for Priority One, which is about getting kids to work and increasing their employment opportunities by improving their educational possibilities. I make no apology for what money we have spent in co-ordinating the activities in education, employment and industrial relations in this Priority One program. It is making employers aware of what is available in traineeships. Mr Howard —There is no information. The ads are hopeless. Mr JOHN BROWN —The ads are not hopeless. They have been very well received by everybody. I do not need the assistance of the Leader of the Opposition. I usually do a single act. Actually he is a doll; I play him with my foot. The information in those ads is dedicated to letting employers know what opportunities are available for the employment of trainees, for parents to realise what opportunities are available in education and to paint the overall picture. That is then backed up by a great deal of leaflets that are available, as is pointed out in the advertisements. Anything the Opposition protests about in our advertising is discountable. Our advertising is not about us winning the next election, as all of the former Government's advertising was. It is about explaining to people what Government policies are all about. I would have thought that, after all those years, given the huge legacy of youth unemployment left to us by the coalition Government when it left office, the Opposition would now at least adopt a bipartisan approach to something that is dedicated towards getting kids to work. The whole speech of the member for O'Connor was peppered with inaccuracies. For instance, he said that the accord booklet cost $250,000. It cost $40,000. That was a slight inaccuracy; just 600 per cent out. Mr N. A. Brown —How many copies are printed for that? Mr JOHN BROWN —I do not know how many copies have been printed, but if the Opposition wants to know I will get the answer. The total cost was $40,000. The taxation advertising was primarily used to inform people about the hotline. There have been 6,500 calls as a result of that ad from people wanting information. It is an absolute insult for Opposition members to come into this place to tell us how we waste money on propaganda or advertising. Does the Opposition recall its Government's Information Unit? If ever there was an insult to the Australian public in the use of taxpayers' money, the Government Information Unit was a prime example. Everybody in Australia and everybody in this House knew that the GIU was an extension of Liberal Party headquarters. Eggleton made no excuses, not even an apology for it. It was an indictment on honourable members opposite that they spent public money promoting their own political party. To the eternal credit of the Special Minister of State (Mr Young) when he became the Minister responsible for that area in the first term of the Hawke Government, the GIU was disbanded and replaced with the Media Liaison Service, which has taken an absolutely apolitical stance. I defy anybody to prove that the MLS has been anything but an apolitical body. Opposition members-Ha, ha! Mr JOHN BROWN —Opposition members may laugh, but let them produce a bit of proof. Hollow laughter does not do anything to provide any sort of reasoned argument. Opposition members who come in here talking about improper use of taxpayers' funds must be kidding. Let me tell the House about a few of the things they did with taxpayers' funds in order to stay in government, and how unsuccessful they were. Let us look at airports. The coalition Government built international airports in Cairns, Townsville, Brisbane and Adelaide primarily to stay in government. I well remember the late honourable member for Lilley, Kevin Cairns, coming over to me on the day the then Government announced the construction of the new Brisbane Airport to cost $182m. He said: `That will make sure that Lilley remains safe in the hands of democracy'. How right he was, because the Liberal Party lost the seat at the next election. It is now a Labor seat and is safe in the hands of democracy. Mr Blunt —How about Parramatta Park! Mr JOHN BROWN —I am happy to debate that with the Opposition members too, if they like. The then Government decided to build international terminals in Cairns and Townsville. Was there ever a more ridiculous waste of taxpayers' money? We have more international gateways in Australia than there are in the United States of America, and Australia has one-twentieth of its population. The then Government was so unsuccessful that the airport at Adelaide was opened three times. The former Prime Minister opened it once, the former Minister for Aviation opened it once and the local member opened it once and the coalition Government then lost the seat. It could not even spend public money as immorally as it did with any great success. Opposition members are hopeless. They should not start lecturing and hectoring us about how we spend public money. Our advertising has been expended in an honourable fashion by means of tender. It has all been dedicated to explaining to the people of Australia, who actually pay for government programs. I know that is news to the Opposition, but it is true. It is paid for by the Australian public and they are entitled to know what the programs are about, and how they can take advantage of them. I defy Opposition members to produce one piece of information in our advertising that has done anything other than try to explain to the Australian public what information is available. Opposition members can rave and rant all they like about advertising. Our advertising has been a-political and aimed at explaining government programs. Opposition members talk about misleading advertising. Does anybody recall Liberal Party advertising, putting forward the idea of the fistful of dollars? It is evident when considering the sort of transparent dishonesty practised by the Opposition in its own political advertisements as well as in its government advertising. We stand here as a government that has done more to improve the lot of the Australian people in three years than the Liberal Party has managed in 31 of the previous 36 years. Mr Tuckey —Rubbish! Mr JOHN BROWN —The honourable member can say `Rubbish', but the figures are there to prove it. Look at the employment figures released today; look at the economy; look at everything that has happened in Australia in the last three years and tell us that we are not a better government than those opposite could ever have aspired to be. Yet we have not wasted money in promoting a political cause. As I explained a little while ago, the amount of money we spent in 1984-85 is exactly comparable with what those opposite spent in 1982-83. But all of our expenditure has been apolitical. All former Government advertising in 1982-83 was absolutely political, all aimed at promoting the Liberal Party. The Flinders by-election was a perfect example and featured the family Budget produced by the coalition Government. The then Government spent $2m on advertising for the Flinders by-election. The Liberals got their candidate in that time, but the man did not get here. We went to another election first. The family budget program was an exercise in corporate advertising aimed solely at selling the short term politically expedient decisions taken in that year's Budget. Our programs, by comparison, are target-oriented and designed genuinely to provide useful information to the taxpayers who pay for these programs. In 1982-83 the previous Government, the present Opposition, engaged in the biggest political propaganda ever seen in this Parliament. Fraser tried to buy the votes of the Australian population with handouts to the tune of billions of dollars, including massive advertising campaigns. It did not work. If the honourable member for O'Connor can produce any shred of evidence to suggest any form of dishonesty in the way in which we run our advertising campaigns, please produce it. It is easy for him to stand here with his usual flourish, but what he says does not prove a thing. Mr N. A. Brown —It is in the accord pamphlets. Mr JOHN BROWN —Is it? If the honourable member wants to talk about the wasteful use of public money, I have just given him the perfectly good example of airports. It is a pity that more members of the National Party of Australia are not in the House at the moment because we could talk about a few of the handouts that Fraser, Anthony, Street and Sinclair helped themselves to for years-superphosphate subsidies, beef cattle incentive schemes, drought subsidies, anything going. If the honourable member wants to talk about decency in government he should not start lecturing us about our advertising campaigns. Our advertising campaigns are honest, they are clear and they go exactly where they are aimed-to the people of Australia. The honourable member mentioned that the Ayers Rock ceremony will cost $350,000. It will cost $132,000. Mr Howard —It is $400,000. Mr JOHN BROWN —Really? Apparently the honourable member for O'Connor has the figures. They would want to be more accurate than the figures he quoted in his speech, which were all wrong. He said that the accord booklet cost a quarter of a million dollars. In fact, it cost $40,000. All I can suggest to the characters opposite is that it is an absolute sham for them to come in here and start questioning the honesty, the veracity or the decency of this Government's advertising campaigns. The honourable member did not produce one whit of evidence in his quarter-hour speech to prove that we have done any wrong, but we can give honourable members opposite plenty of evidence of what they have done wrong. I have already given them plenty of that. The Flinders by-election is a perfectly good example. The Government Information Unit, that dreadful Goebbels-type propaganda unit that Opposition members employed, was a disgrace to the parliamentary system in Australia. That unit, which was demolished by us and replaced by something decent, was another perfectly good example of how honourable members opposite acted in government. They are a disgrace to this Parliament, and that is why they were removed from office. Honourable members opposite came in here, having won one election, and all they could think about was what they could do to convince the Australian people that they should vote for them next time. What did they do of a constructive nature in all those years in government? I wish they could give me one good living example of any reform they introduced in that period, apart from the few decent things their Prime Minister did in respect of South Africa. The only decent impact they made on the fabric of Australian society was in respect of African affairs. With all those years in government, with all the propaganda they employed about what a great government they were, they were not able to convince the Australian public and they never will again. We stand here very proud of our advertising programs. They are honest, they are fair, and they are decent. If honourable members opposite could produce one whit of evidence to suggest otherwise, we would be very happy to see it. On what we have been shown today, I do not think that is going to happen. If those opposite want a little more evidence, we happen to know that during the 1983 campaign the former Prime Minister spent $40,000 on three business luncheons around Australia. How do they equate that with their record on advertising? Mr Blunt —I have got Newman's files on you. Mr JOHN BROWN —I hope the honourable member will produce them here. I would love to see them produce their files on me. Madam DEPUTY SPEAKER(Mrs Child) —Order! The Minister will- Mr JOHN BROWN —I am very happy to debate my behaviour. Madam DEPUTY SPEAKER —Order! The Minister will not talk while I am talking. The honourable member for Richmond is going to follow in this debate. He will keep quiet until it is his turn to get the call and speak. Mr Porter —You nearly saved him. His time is nearly up. Mr JOHN BROWN —I am very happy to debate anything that is on file about my behaviour as a Minister. Madam DEPUTY SPEAKER —Order! The honourable member for Richmond will withdraw that remark. I consider it an aspersion upon the Chair. Mr Blunt —I withdraw the remark. Mr JOHN BROWN —The honourable member for Richmond spends his time asking grubby little questions. I had another one from him yesterday-he will get the answer very shortly-about the cost of a reception that was put on for me by the Consul-General in New York in 1983. The year referred to in the honourable member's question was 1984. He could not even get the year right, the silly little man. The answer is: Nothing. The Consul-General put on a function in which I produced for the American travel trade Press the Hogan advertisements. It cost nothing. Madam DEPUTY SPEAKER —Order! The Minister's time has expired. It appears that I attributed to the honourable member for Richmond a remark which was made by the honourable member for Barker. The honourable member for Barker will withdraw the remark. Mr Porter —Madam Deputy Speaker, I presume that you were referring to my comments about the Minister having difficulty in filling his time. If that is the case, I withdraw. He did have difficulty, but I withdraw. Madam DEPUTY SPEAKER —Order! The honourable member will not debate the issue. Mr BLUNT(Richmond)(3.27) —I am very pleased that the Minister for Sport, Recreation and Tourism (Mr John Brown) has taken part in this debate. He seems concerned with accuracy. Let us get down to accuracy. The Minister talked about the accord document. There are four direct references to the Australian Labor Party or the Labor Government on pages 1 and 2 of that document. This is apolitical party advertising? The Minister talked about the Government Information Unit. The Labor Party renamed that body the National Media Liaison Group when it came to government. Let me tell the House what the National Media Liaison Group does. It runs Ministers' itineraries and monitors radio programs and newspapers for Australian Labor Party Ministers and members. Let me tell the House something else. It does not report to Parliament. What we have in the Department of Sport, Recreation and Tourism is a mechanism for disseminating government information, government propaganda. We have the National Media Liaison Group, the Ministerial Media Group, and something called the ICB-the Information Co-ordination Branch. This debate today is about the amount of money this Government spends on advertising which is of direct relevance and direct benefit to itself. We are not talking about a few million dollars. Last year the ICB co-ordinated advertising to a total value of in excess of $27m, and I am not talking about classified advertising. Classified advertising and tender advertising cost $9.6m. What I am talking about is campaign advertising. Of that $27m, some $6.5m is directly party political. Let us look at what it is. First of all, the economic summit advertising was run by Monahan Dayman Adams Pty Ltd. The family income supplement advertisements and the community employment program advertisements were done by Monahan Dayman Adams. The superannuation `The Facts' advertisements were done by Monahan Dayman Adams. I defy any advertising copywriter to get the details of the superannuation tax into the sorts of advertisements this agency ran. The first home owners scheme, the national wage case, and the enrol to vote campaign were handled by Monahan Dayman Adams, which involved an amount of $2.4m. The Special Minister of State (Mr Young), who is not in the chamber, said at 6.30 on the night of the election: `I am very happy with this campaign. They did a great job'. On Sunday morning he said: `Oh, it did not work. No one understood how to vote'. But Monahan Dayman Adams did that campaign. Because it does such a great job and everything goes to tender, when there is tangible evidence that the campaign fails, on the Minister's own admission, one would think that agency would not get another job. But what happened? Who did the prices and incomes accord and the sex discrimination Act advertising? It was done by Monahan Dayman Adams. Let us go a little further. How many other campaigns did Monahan Dayman Adams do? It conducted the blood donors campaign. Is it not absolutely astounding? Lo and behold, that agency is probably going to get the International Year of Peace campaign. Apart from the campaigns I have mentioned, we have had the International Year of Youth, participation and equity in education and training, and the sea safety campaign. One thing that stands out above everything else in this is the Phillip Adams connection. Phillip Adams, in case any members of this House do not know, is a professional supporter of the Australian Labor Party. He is the absolute epitome of the Bollinger Bolshevik. I said that this Government had spent some $27m on advertising. It has appointed three master agencies to place that advertising. There are no prizes for guessing the name of one of those agencies. We have USP Needham Pty Ltd, Gordon and Gotch Ltd and Monahan Dayman Adams Pty Ltd. Mr Cobb —Not again. Mr BLUNT —Yes. We have been talking about advertising. Let us have a look at research for a moment, and of course, there is another connection in this area. My colleague the honourable member for O'Connor (Mr Tuckey) made some reference to research, but let us go through it in a little more detail. Australian Nationwide Opinion Polls Pty Ltd, which is coincidentally the Australian Labor Party's research company, has had 91.4 per cent of the ICB's expenditure budget on research placed through it. It is very interesting to examine the titles of these campaigns. In August of 1983 there was research into the awareness and understanding of the 1983-84 Federal Budget. From January to June of 1984 there was research into the attitudes of young Australians to various government policies and programs. From January to June of 1984 there was research into the public understanding of policy on funding for schools. From March to April of 1984 there was initial and follow-up research into the awareness of the Tasmanian public of Commonwealth offers of assistance following the High Court of Australia decision on the Gordon below Franklin dam. The Australian taxpayers paid $74,000 for that. Then we have a classic. In August of 1984 there was research into the community awareness and understanding of the 1984-85 Federal Budget. There are no prizes for guessing what is going on now. There are probably research projects into the May cost cutting exercise, into the August Budget and into what is going on now with the so-called tax reform program. Quite frankly, it is an abuse of position. All this advertising goes through something called the ministerial advertising committee. Lo and behold, who is chairman of it? It is the Minister for Sport, Recreation and Tourism. I say to the Minister, who is still present in the chamber, on behalf of the Opposition that we accept his offer to have an inquiry into advertising placed by this Government. We look forward to it. I hope that the second speaker on behalf of the Government addresses the issue and offers a direct inquiry. Quite frankly, $27m worth of government spending on advertising-with the sorts of relationships that exist, because the advertising is not all put out to tender and because there is, finally, a decision taken on who gets the benefit from placing that advertising-should be subject to public scrutiny. All I can say is that I hope that the second speaker for the Government, whoever it is, accepts the Minister's offer of an inquiry, because that is what we need. That $27m worth of advertising, which is directly influenced by the Minister, is significant. By the way, the Minister talked about how easy it is to get information. This file, which, unfortunately, we will not have time to go through in much detail today-so, we will save the juicy bits for other occasions-was as difficult to extract as extracting teeth with one's bare hand. Honourable members should try to request something under the provisions of the Freedom of Information Act and see what sort of response they get from this Government, especially when they ask it about its advertising campaigns, its research campaigns or how it takes decisions on who will do what advertising. What answers does one get? One gets not a thing. One is told that the information is not suitable to be released, or the charges are levied before anything happens. What happens to the questions on notice on this matter which the Government is asked? How come there are questions on the Notice Paper which have not been answered? The answers to the questions which are given are absolutely obscured by what this Government is scared of revealing in terms of its advertising campaigns. The sensitivity to this issue demonstrated by this Government today is absolutely astounding. Obviously there is concern. Obviously the Government is worried. Obviously there is something that really should be brought out into the open. As the Minister has offered to have an inquiry, I think it is incumbent upon this Government to either put up or shut up. We should have an inquiry into what is going on with government spending. Unlike what the Minister said, this spending is not a-political; every bit of it is political. There is no detail in the Government's campaigns. All we see is the retouched photograph of the Prime Minister (Mr Hawke) in circumstances which are designed to create a favourable impression with the Australian people. Let us go back to the July Federal council meeting of the ALP. What was the decision of that Federal council meeting? It was that the Government should spend more time and effort in promoting programs and ALP policy. The Government spent $27m in the last financial year. If that was the decision of its Federal council meeting in July, just how much money will it spend this year? We can look at the estimates and appropriations of the Department of Sport, Recreation and Tourism for its special information campaigns this year. We see a vote of half a million dollars. In answer to questions asked in the Senate Estimates committee we were told by an officer of the Department that that half a million dollars has been expended on Priority One: Young Australia advertising. Does that mean that no more information campaigns will be run this year? Does that mean that no more research will be undertaken by the ICB? If that is the case, what will we do with all those people who are in the ICB? I suggest that the Minister should read the Estimates committee evidence, because his officers said that the half a million dollars has been spent. I do not know what those people will do for the rest of the year, unless the Department is voted more money. The reality is that in the Department of Sport, Recreation and Tourism we have, sandwiched between sweetness and light, an information production unit which is designed to use taxpayers' funds to promote this Government's programs and policies in the most favourable light. The Government uses research as an extension of party political activity. Madam DEPUTY SPEAKER(Mrs Child) —Order! The honourable member's time has expired. Mr MARTIN(Macarthur)(3.36) —I seem to be making a habit of following the honourable member for Richmond (Mr Blunt) in debate in this place. I think the outcome today will not be any different from what it was in the last few debates. It is interesting to note that we have before us today a matter of public importance that has been proposed by the honourable member for O'Connor (Mr Tuckey). It states: The Government's wasteful abuse of scarce taxpayers' funds by expenditure on politically motivated projects. This comes as a dynamite matter of public importance when we have the taxation package before us for discussion in the House and Bills have to be debated. They are matters which I consider to be far more important than this nonsense. I want to turn quickly to some of the points that have been made. The honourable member for O'Connor was talking about the types of programs that the advertising in the media purported to cover. He talked about Priority One: Young Australia, the accord, the advertising of the reasons for taxation reform, and so on. I suggest that it would be perhaps remiss of any government not to advertise that such programs have been put in place and, indeed, to say to the people of Australia: These are the programs that this Government is able to put in place and this is the way one goes about dealing with them. That is exactly what happens. It is very easy for the honourable member to discuss things such as the cost of a booklet that has been produced, particularly the one on the accord. The honourable member for Richmond also touched on that. He talked about the accord booklet and how it referred to the Australian Labor Party three or four times on the first page. Of course it would. Why would it? The answer is that the accord is the greatest piece of industrial work that has been done between a government, the workers and industry in this country's history. How has it been achieved? It has been achieved because of this Government. What is the political complexion of this Government? It is an ALP government. Honourable members opposite want confrontation. They do not want to be in this process of working together with industry, the workers and government and coming up with something that will be for the benefit of Australia. That is not their bag. Rightly enough, they would not spend any money advertising what they do because their advertising would be about confrontation, strikes, sacking people and taking people to the Australian Conciliation and Arbitration Commission, et cetera. If honourable members opposite wanted to get re-elected, they certainly would not want to have that in front of the people's eyes. Mr Tuckey —You would not spend anything-- Mr MARTIN —I say to the honourable member for O'Connor: Let us be honest. Successive governments have devoted public resources to publicising things such as apprenticeship rebate schemes, home ownership schemes, employment programs, social security benefits, and so on. Of course they have, because utilising the mass media of this country is the only way to go. We are talking about newspapers, magazines, radio and television. One uses the media so that one can get the message across to those people one wants to help. Governments should use the media correctly, and this Government does exactly that. Honourable members opposite should not talk to me about needing to have these massive advertisements with photographs of people and all the rest of it but which say nothing. That is absolute nonsense. Mr Saunderson —He is not interested in what the answer is. Mr MARTIN —Obviously the honourable member for O'Connor is not interested in the answer because he is choosing to leave. The honourable member for Richmond also has left, which is not surprising either. I will mention a couple of the other points which were raised about advertising campaigns that various governments have embarked upon. One which readily springs to mind and which was quoted by the honourable member for Richmond is the enrol to vote campaign. I would have thought that, regardless of whether one is a member on this side of the House or the other side of the House, it is to everyone's advantage to see that the majority of people eligible to vote in this country are in fact enrolled. The business of getting back into this place involves having somebody say: `He is not a bad bloke. I will put a cross or a one beside his name and get him back'. Thus one tries to get the most members of the House elected. That is the difference between people on this side and those on the other side of the House. We know how to get back into government. We know that the people will elect us and we embark upon advertising campaigns, such as the enrol to vote campaign, because we believe in the right of every Australian to exercise his voting rights at every opportunity. It could well be that those on the other side- indeed, the honourable member for Richmond- want those who are eligible to vote not to be on the electoral roll. He is a member of the National Party of Australia. Perhaps he is taking a leaf out of the book of his colleagues in Queensland, where the sheep votes count probably more than the votes of those who are eligible to vote and who walk on two legs. I will not get too carried away with that line of thought. Reference was made to the blood donors campaign. Are honourable members opposite trying to tell me that advertising for blood donors in order to save lives is not a useful exercise? If that is the case and if that is the point being raised by the honourable member for Richmond, it is a very poor state of affairs. Some reference was made by the honourable member for O'Connor to the inclusion of the photograph of the Prime Minister (Mr Hawke) in advertisements. The honourable member said that it was terrific to see it there because it shows the people of Australia what a terrible job he is doing. That is nonsense! I refer the honourable member to two recent visits by the Prime Minister to rural parts of this country. I refer, of course, to Townsville and Warwick. What did we find? Let us look at what happened at Warwick, the heartland of the National Party of Queensland. All the National Party people there live for the day when they will see the socialist Government thrown out of office. These people would say: `Oh no, not a Labor parliamentarian coming to this area'. Interestingly, the local member happens to represent the Australian Labor Party in this place and is a very good member. It was advertised that the Prime Minister was going to Warwick. Can honourable members believe that one had to beat off with a stick people coming to see and hear the Prime Minister? Those people who were being beaten off with a stick were National Party members. On the very night of the dinner the wife of the President of the local branch of the National Party said: `Excuse me, Prime Minister. Would you mind signing an autograph for me and could you make it to me with love from Bob Hawke?' If we are talking about the popularity of Prime Ministers and leaders of the opposition, let us get the facts straight. The man who has the top job in this country and who represents this side of the House is the top man and he will continue to be so. So let us not get carried away with this ridiculous notion about advertising. I will compare some of the facts and figures. The honourable member for O'Connor said: `It is no good going back in history'. It is all very well for him to say that but back in the good old days when honourable members opposite governed this country, they frequently referred to historical exercises and talked about maladministration under Prime Minister Whitlam. It is incumbent upon us to look back because only through looking back will we get an idea of what the other side was able to achieve. Let us look at some advertising expenditure figures for the Fraser Government in what just happened to be the election years. In 1980-81, $23.25m was spent on advertising by the Fraser Government; in 1982-83, $24.84m was spent on advertising. Honourable members opposite are trying to tell us that there is evidence to support the idea that this Government spends money only on political advertising. What nonsense! This statement is typical of the dishonesty of the honourable member for Richmond. I refer also to some points raised by our good friend the honourable member for O'Connor. I am sorry he is no longer in the chamber. He is an expert in the whole area of overexpenditure. We well remember him, as a councillor in Carnarvon Shire, taking his wife on council paid holidays. We certainly will not forget that in February 1980 he was called upon to account for his actions and repay the costs incurred for hotels and air fares. He should not talk to me about overexpenditure and government spending on advertising. I am saddened that the Leader of the Opposition (Mr Howard) has left this chamber. I well remember that when he took over as Leader he said: `If any of my front benchers do not perform they will have to go'. I put it to the House that both honourable gentlemen on the other side who spoke on this matter failed dismally. They put forward a matter of public importance which was absolute nonsense and they failed to give any evidence whatsoever of a failure by this Government in respect of advertising. I put it to honourable members that they blew it. Madam DEPUTY SPEAKER(Mrs Child) —Order! The honourable member's time has expired. The discussion has concluded. Bill received from the Senate, and read a first time. Ordered that the second reading be made an order of the day for the next sitting. Bill received from the Senate, and read a first time. Ordered that the second reading be made an order of the day for the next sitting. Bill received from the Senate, and read a first time. Ordered that the second reading be made an order of the day for the next sitting. Mr BARRY JONES —(Lalor-Minister for Science and Minister Assisting the Minister for Industry, Technology and Commerce)(3.38)-I move: Customs Tariff Proposals No. 10 1985. The Customs tariff proposals which I have just tabled relate to proposed alterations to the Customs Tariff Act 1982. The changes, which operate on and from 11 October 1985, arise from the Government's consideration of the Industries Assistance Commission's report on telecommunications and related equipment and parts. Consideration of the IAC report formed part of an overall review by the Government of its approach to developing the information industries in this country. The fact that the information industries have an impact on all facets of industry and the economy, and have good growth prospects, was an important consideration in formulating the Government's strategy for assisting the communications equipment industry. In this regard the Government was particularly concerned that the domestic communications equipment industry had failed to grow during a period of growth in the world market associated with significant opportunities created by new technology. The Government was also concerned that continuing high levels of protection for this industry would disadvantage users of communications services, and delay necessary changes in the industry. The relative decline of the industry is attributed to a number of interrelated factors which have encouraged a domestic market orientation, a dependence on overseas technology, and a reliance on relatively high levels of protection. Furthermore, a number of studies have suggested that the problems of the industry are likely to be exacerbated by technological change and that further decline could be expected unless research and development is significantly increased and export markets are developed. Neither the Government nor the industry saw this decline as irreversible and a significant factor in determining the approach adopted by the Government has been assurances from the industry that it believed that it had the potential to develop into a major export-oriented industry and that it had already begun to make real commitments to research, development and exports. The Government acknowledges that some of the industry's problems were either the result of constraints imposed by the Government and its agencies or were of a type that could not be satisfactorily addressed by the current resources of the industry. Accordingly, there is a need for co-ordinated action by government and industry to create an environment which would enable and encourage the industry to be more internationally competitive, export oriented and innovative. The starting point in this process is the setting of appropriate levels of protection which are consistent with general and related industry policies. In this context, in examining the Industries Assistance Commission report, the Government was concerned to ensure that its decision was broadly consistent with recent decisions on the consumer electronics and automatic data processing equipment industries. The Government considers that the prevailing high level of protection combined with other factors has contributed to the problems of the industry over the last decade and, unless pressure to change is maintained, there would be a real risk that adjustment will be so slow that the overall decline of the industry would contine. Although broadly accepting the IAC's recommendation for a reduction in levels of assistance for the major goods under reference from 30 per cent to 20 per cent, the Government has recognised that a period of adjustment will be required to allow industry to change and new programs to be effective. Accordingly, the reductions in the tariff will be introduced over a period of four years for most products covered by the reference. For those goods under reference currently dutiable at rates less than 20 per cent, a 20 per cent duty will be applied from tomorrow. The Government has accepted the IAC's recommendation for a 25 per cent value added production bounty to be paid on modems and multiplexors generally used with computers. Implementation of the bounty will be deferred until 1 July 1986 because of the need to establish the appropriate administrative and legislative arrangements. It is also the Government's intention that preforms used in the manufacture of optical fibre be subject to a duty of 20 per cent from 1 July 1986. Following implementation of these tariff proposals, the Government and industry will begin the preparation of a comprehensive strategy to address the industry's long term problems. On the Government's side this package would largely entail improved co-ordiantion of existing government activities, particularly in the areas of government purchasing, offsets, technology programs, regulation and trade strategies. A summary of the alterations contained in these proposals has been prepared and is being circulated for the information of honourable members. I commend the proposals to the House. Debate (on motion by Mr Porter) adjourned. Bill returned from the Senate without amendment. Debate resumed. Mr REITH(Flinders)(3.54) —The sorry saga of Labor's tax reform package started in Perth in the election campaign in December 1984. It started because the Australian Labor Party was beginning to feel vulnerable as it did not have a tax policy and the Australian public was beginning to realise that the Liberal Party of Australia was offering a pretty good policy. Our policy was one of income splitting, child care rebates, an attack on government expenditure and a firm commitment against the introduction of capital gains taxes, death taxes and all the other taxes of Labor's envy and greed. In the classic case of a decision made on the run the Prime Minister (Mr Hawke) in response to a suggestion from a Perth radio announcer said: `Oh, a summit; that is a good idea. I think that we will have a summit'. So off the Government headed towards a summit. It prepared the now famous draft White Paper. The summit was one of the fiascos of all time. The upshot was that on the Thursday night of the summit, the members of the trade union leadership called in the Prime Minister and said: `We do not like what you are offering in your draft White Paper'. They told the Prime Minister what to do: As part of the prices and incomes accord and the general understanding between the Government and the trade union movement, they wanted a capital gains tax. They gave him a free hand to introduce this anti-business and anti-free enterprise tax package. The Government has broken faith on three fundamental issues. The first is that it went into the last election with a principle that was restated in the draft White Paper. It said: Any reform package must have widespread community support. It is quite clear that there is no widespread community support for this project. The Government has broken faith on that issue. Secondly, No. 8 of the tax reform principles stated: Any reform package must provide the best possible climate for investment, growth and employment in Australia. No one could seriously put up the proposition that this package which is directed at the incentives of people to get on, take risks and to build up their own enterprises for their support and that of their family, could possibly contemplate that this package falls within that principle. The Government has broken faith. The classic of all classics was the 1983 ALP policy statement that was delivered to the nation by the now Prime Minister. It is worth quoting. He said: Let me make one point so clear that even our opponents can understand it and let me make it beyond all their powers of misrepresentation and distortion. There will be no new capital gains tax. If ever there was a broken promise beyond misrepresentation and distortion, this is it. The Prime Minister must surely go down in the Guinness Book of Records as Australia's best exponent of the broken promise. In one pull of the trigger, the Prime Minister, the world's greatest Treasurer and the bloodthirsty ideologue troops that support them have fired a broadside at every small business in this country. At a time when businesses and families are reeling under Labor's high interest regime as a result of its disastrous new corporatism economic management, the last thing that we want is more taxes and the last thing that we want specifically is Labor's new capital gains tax. Despite Labor's claim that its capital gains tax is justified on grounds of horizontal and vertical equity and the shoring up of the income tax system, the fact is that this tax is deeply rooted in Labor's discredited theories of the distribution of wealth. It is the old syndrome of cutting down the tall poppies, denigrating the achievers and reducing all to the lowest common denominator. It is yet another indication of the increasing dominance of the forces of the Left in the Labor Party. I conclude by saying that there is a firm commitment in the coalition parties that upon our return to government we will vote to repeal Labor's capital gains tax. Mr O'KEEFE(Burke)(4.00) —In entering into this debate, I wish to pick up a few points I made yesterday when addressing some of the legislation that is encompassed in the new tax package. I wish first of all to make the point that I made yesterday-that the Government has just completed a comprehensive and far reaching tax reform exercise. Enormous Government resources have been allocated to it within the Government, within committees, within advisers and within the Public Service. Enormous resources within the community, within business and within the trade union sector have also been allocated to reaching a fair and equitable tax package that will be accepted and be seen as fair across the Australian community. I think it is reasonable to reflect on why it was necessary for the Australian Government to allocate this sort of effort and these sorts of resources to a reform of our tax system. The reason is that just about everybody in Australia, except a few honourable members on the other side of the House, has perceived that our tax system had become unfair. Not only had it become unfair but also many Australians had decided to opt out. We had created in Australia an attitude of non-compliance, and that attitude became a major threat to the social fabric of this country. Let no one misunderstand the extent of that threat and the depths to which the tax system in Australia had sunk because of those who had decided to opt out of paying their fair share. We had developed a tax system which was no longer progressive. People like to look at tax scales and to think that we have a system whereby the more one earns the greater is one's capacity to pay and therefore the more tax one pays. What had developed under tax law under previous governments was a system whereby the more one earned the less one paid, the higher one's income the greater one's capacity to use fancy techniques to minimise one's tax and to opt out. We had developed a regressive tax system. We have heard so much bleating from the other side of the House in this debate about the steps that have been taken to remove negative gearing. The reason for that, very simply, is that the 60c in the dollar tax deduction that people have been enjoying with their negatively geared investments all these years has resulted not in taxpayers paying 60c in the dollar for their top dollars but, in fact, in their getting 60c in the dollar deductions on loans, business lunches and all sorts of operations. I will return to the question of business lunches in a while, because again we have heard so much bleating about this issue today. It needs to be recognised that very few Australians have been paying tax at the rate of 60c in the dollar. Those who ought to have been doing so have found ways to opt out of the tax system. That is one of the reasons why the Government has proposed the changes that it has to the tax scale. Much of the publicity that has followed the introduction of the Government's tax reform package has centred on two particular areas-the new tax on fringe benefits, including business lunches, and the capital gains tax. That is not what the package is all about. They are two relatively insignificant components of a major reform package. Perhaps I ought to piece together the major components of the package so that there is a better understanding of it. First of all, this Government has addressed the issue of non-compliance. We are facing up to the fact that people must re-enter the tax system. Those who have been opting out must rejoin the ranks of ordinary taxpayers. We have as a government closed off many loopholes in the legislation. We have dramatically increased the resources and powers available to the Commissioner of Taxation to track down tax minimisers and tax avoiders. We have introduced new penalties for the provision of false information to the Australian Taxation Office and we have increased the penalties for those who have been minimising and avoiding tax. We have made very significant attempts to pursue retrospectively those who ought to have been paying their taxes. The reform process also includes the introduction of a national identity card, which has been very popularly received in the community. I want to make just one point about that. The introduction of this national identity card is directed at combating tax evasion and fraud, particularly in the social security system and in relation to the non-declaration of interest, dividends and income of that kind. The legislation will incorporate very strict measures to protect the privacy of individuals and the card will be used only in areas related to social security and the tax system. We have also taken steps to remove two of the major regressive components of our tax system. I think it is worth spelling these out. The new policies as they affect negative gearing will, I think, provide a major stimulus in the right direction for the building industry in Australia. The quarantining of building losses to investments in the building sector, coupled with the capital gains tax, the increased depreciation allowance and the incentive for people investing in the building sector to provide rental accommodation, will lead to a move away from speculation in high-cost, quick turnover profit operations such as the construction of Gold Coast luxury flats to lower-cost ordinary public or private rental accommodation. In other words, this Government is facing up to the fact that thousands of people are looking for rental accommodation at levels they can afford. They are not looking for Gold Coast luxury flats; they are looking for a place in which to live, a roof over their heads at a reasonable price, and each of these decisions will assist investment of that kind. The capital gains tax and the quarantining of farm losses against off-farm income provides very fairly for the ordinary farmer, the ordinary person who is making a go of farming combined with an ordinary off-farm income. The only people who will be affected detrimentally by this move are those who have been offsetting very high income, income that ought to be subjected to pay as you earn tax, against farm losses. It is interesting to note the bleats of those opposite because it reveals whom they represent. They represent the very high income earners who have been using farming operations as tax shelters. That is why they are so upset about the measure. The fringe benefit and capital gains taxes are reasonable. They address the fact that the system has come under pressure and they will stimulate productive investment in the right areas. I refer to an article published in the Age news- paper in Melbourne this morning. The owner of one of the restaurants that has been providing the business lunch over the years says that his restaurant will not be providing such lunches any more. Here I come to an interesting quotation. The proprietor says of his restaurant: Here is where some of the biggest deals in Melbourne were made. Deals that generated productivity and jobs. Deals like the Collins Place project were closed in this room. Here we are being told that multi-million dollar business deals occurred because people were able to have a tax deductible lunch. I have to say that I regard that as nonsense. In my view the restaurants that have been providing this business trade will continue to provide it. There will be a short lived knee-jerk reaction from those who have just lost a 60c in the dollar tax reduction for a business lunch, but if those lunches have been profitable to business people they will continue to have them because they are not going to give up multi-million dollar deals just because they have lost a bit of cream on the cake in the form of a tax deduction. Mr Bilney —People are still going to eat. Mr O'KEEFE —They still have to eat and they will continue to eat at the levels at which they have been eating in the past, as my colleague the honourable member for Kingston has just reminded me. I make the point also that the introduction of the capital gains tax produced a reaction one day before the tax was announced. That gives an indication of the level at which people in this sophisticated industry move. Honourable members may have noted that $30m worth of Broken Hill Proprietary Co. Ltd shares were purchased the day before the capital gains tax was announced. That was $30m worth of shares in one hit. People bought those shares because they were aware that every asset owned before the introduction of the tax would not come within the scope of the new legislation. That legislation refers only to assets bought and resold at some time in the future. Those people knew that if they moved quickly to buy shares on Thursday those shares would never be affected by the new legislation. That is the sort of sophistication I am talking about. When ordinary workers can put together $30m and make a fly such as that they, too, will realise the way in which big business moves and the way in which big business is affected by some of these changes. To reiterate the comments of the Treasurer (Mr Keating), not one dollar of these tax reform measures will remain in government coffers. They are all being turned around and repaid to the community in a redistribution that provides for a genuine attack on poverty, increases in benefits for pensioners and other social security beneficiaries and, most importantly, cuts in pay as you earn taxes and improved incentives for the business sector. I refer in particular to the tax deduction for imputed business dividends. It all fits together as a neat package and will lead, I think, to an era of increased business investment in the productive sector which will be to the benefit of this whole community. I wish now to make a brief point about the National Taxation Summit because I believe that process was a valuable one. The honourable member for Flinders (Mr Reith) made the point in his speech a moment ago that the National Taxation Summit derived from the statement of the Prime Minister (Mr Hawke) in Perth when he promised that we would have a tax summit. What the honourable member passed over, however, was the other event that occurred in Perth and which, in fact, draws to our attention this whole problem in the tax system. I believe the really significant event in Perth occurred in 1973 when the Commissioner of Taxation discovered the bottom of the harbour scheme as it related to events in the office of the Perth Crown Solicitor. What did honourable members opposite do when they were in government? They did nothing from 1973 until they lost office in 1983. They did not do one thing about that appalling rip-off of the Australian tax system. Not only did they do nothing; they are also extremely guilty of an even worse offence. They encouraged the attitude of non-compliance. They created the loopholes approach. They did nothing about solicitors and accountants finding loopholes in the system. They did nothing to make the Attorney-General press these claims. They did nothing to introduce legislation in this House until they were put under incredible pressure and they knew they were about to lose the election. They did nothing. They encouraged non-compliance. They encouraged tax cheating in Australia. They are the ones who created the mentality. They are the ones who in time, must look back in shame at their performance. I will wind up my comments by quoting from the speech of the Treasurer on the night he introduced the tax reform package. He said: . . . the Government has confronted the issue of tax reform. We have been willing to consult with the people of Australia. We have been willing seriously and responsibly to consider the issues involved and we have been willing to take hard decisions . . . The Government is confident that the people of Australia will recognise that these significant measures are taken in the best interests of the nation and for the greater good of every individual Australian. Mr HUNT(Gwydir)(4.14) —The honourable member for Burke (Mr O'Keefe) who has just resumed his seat knows as much about how the taxation package will affect farm industries as he does about what the former Government did to try to overcome the tax rort-the bottom of the harbour tax avoidance devices. Legislation was introduced into this House on the most extensive scale ever to come to grips with the tax fraud in this country. Even the Minister for Trade, the honourable member for Fremantle (Mr Dawkins), has admitted that both in this Parliament and outside it. The honourable member for Burke therefore should eat his words. The taxation statement of the Treasurer (Mr Keating) is the result of months of wheeling and dealing with the Australian Council of Trade Unions. We were all witness to the debacle of the taxation summit of the Prime Minister (Mr Hawke). While speaker after speaker mounted the rostrum in this place to make his or her voice heard as to whether we should have option A, B, C, D or some other taxation scheme, deals were going on behind their backs with the power brokers of the ACTU. At times not even the Treasurer knew what was going on and where his favoured option C was going to end up. We all know that the Prime Minister and his mates of the ACTU effectively pulled the chain on option C at a clandestine meeting which took place behind the Treasurer's back. The National Taxation Summit had degenerated into a debacle of major proportions and the Prime Minister was desperate to stitch up the mess, regardless of the Treasurer's passionate support for option C. In the end Australians have ended up with what was acceptable to the ACTU bosses. The Prime Minister bravely said in support of his Treasurer in June that he would be willing to sacrifice government in order to secure meaningful tax reform. He said: Well, if it costs me government . . . I would do it, because I don't want to take the easy way out . . . If we pay a political price well, okay, but if I believe that in the longer term Australia is going to be better off, that's the course I'll take. We have ended up with an attack on the capital base of small business and the farmers of Australia. The taxpayers have ended up with a long term promise of reductions in the marginal rates of personal income tax the full benefit of which is not likely to eventuate for two years down the track, even if it eventuates then. It is not the option that the Treasurer sought. It is a stitched up expedient taxation regime to satisfy the ever greedy demands of the ACTU bosses-demands to satisfy the wants of today at the expense of the welfare of people tomorrow. When the Treasurer learned that the deal had been done he commented on his tax cart which the Prime Minister had deserted by saying: It's a bit like Ben Hur's; we got across the line with one wheel off. We have a tax regime designed presumably to save the sacred prices and incomes accord with the ACTU. The accord with its full indexation, promises of compulsory employer superannuation contributions and other on-wage goodies will undoubtedly be paid for by future generations. As the union demands are met under the accord, our balance of trade deteriorates, our national and foreign debt climbs, our real interest rates reach record levels and our competitiveness as a nation shrinks. The accord has assured that we will continue to live beyond our means but the day of reckoning will come to our children. `Live for today and to hell with tomorrow' should be the motto of this Government and its ACTU masters. Let our children and their children pay for our indulgences with lower living standards and mounting interest and debt repayments. This ragbag of tax proposals will strike at the very foundations of the farming and small business sectors. The promised personal income tax cuts are to be funded by taxing employers on fringe benefits provided to hard working loyal employees, quarantining farm losses, negative gearing taxation on rental properties and capital gains taxation. The tax on fringe benefits to employees will result in removing special relationships between small business and farmer employers and their staff benefits often paid to employees who have given loyal service to their employers. Labor will ultimately remove these provisions, no doubt to be replaced by special arbitrated allowances payable to all employees whether they earned it or not. The impact of the capital gains tax and the quarantining of farm losses will have a devastating long term effect on the capital structure of agriculture. This is not a political statement or scare tactics on my part. It is a view shared not only by the organisations representing these industries and a wide cross-section of the accountancy profession, but also by the Bureau of Agricultural Economics. This blow to farmers could not have struck at a worse time for them. A BAE survey of some 130,000 farm businesses revealed an average debt load of $53 000, with the wheat belt farmers in Western Australia carrying an average debt load of $148 000. The capital gains tax will be levied at the marginal income tax rates, and the BAE points out that this discriminates against farmers holding single assets for long periods compared with those holding more liquid assets over the short term. In other words, the new tax regime once again penalises those generating real economic wealth and export income. It should concern all Australians as this nation plunges deeper and deeper into its foreign debt quagmire. It should be borne in mind that returns to farm capital are averaging about one-sixth of the current return to savings bank deposits. Mr Fitzgibbon —Tell us why. Mr HUNT —The honourable member for Hunter should ask his Minister. He will give him a lesson on it. Indeed, the real net value of farm production is expected to fall by a further 22 per cent this year. My office alone has received some 2,000 written protests against the capital gains tax. Mr Cohen —What did the Minister try to do about it? Mr HUNT —I do not know. I cannot speak for him, but he ought to speak for himself at some time. Perhaps the worst feature is the depressing effect of the tax on farm investment incentive. Long term gain in the value of farm property in many cases is the only real financial attraction to farming. Family farms comprise 90 per cent of all farm establishments and in most cases the farm property is their largest financial commitment. With record farm borrowings, any further erosion of land values will threaten the security of not only the farmers, but also the financial institutions. The accountancy firm of Peat Marwick Mitchell and Co. has carried out a study of the tax liability that would accrue from the Government's capital tax on some selected properties. The figures show that a property in the New South Wales wheat belt which cost $80,000 in 1976 would have been liable for a tax payment of $26,000 if sold in 1984. The Government cannot hide from the discriminatory effects of this tax, which is certain to stifle capital investment in agriculture. The quarantining of farm losses from profits off-farm beyond the specified limit will compound the problem. It will dry up interest and investment in rural properties, accelerating a fall in land values. Income derived from off-farm work or other sources amounted to $7,600 per farm in 1982-83, representing one-third of average farm income. The Government in its desperate effort to satisfy the demands of the Australian Council of Trade Unions has not studied the consequences of its package on agriculture. It seems to be unaware of the tremendous changes which have taken place in agriculture over the past two decades-the intense reconstruction involving aggregation of farms and the rising level of investment by people with outside resources and outside capital for investment. The widespread incidence of external farm income demonstrates that many family farmers have invested or worked off-farm in order to survive in financial circumstances where there has been an annual decline of about 2 per cent in their terms of trade. I want to debunk the myth that Pitt Street or Collins Street farmers are somehow ripping off the system. They have invested millions of dollars into wealth-producing farm enterprises, which has helped to maintain rural land values and hold up the security against which all farmers have borrowed. Prudent family farmers who are earning substantial income off-farm are making a major contribution towards the development of efficient low cost broad acre farming and the development of industries such as grain, oilseed and cotton production, which are highly capital intensive and which require enormous capital outlays. Mr Peter Fisher —Providing employment. Mr HUNT —Absolutely. They provide employment in country towns and for country businesses generally. These industries are high export income earners. Governments have acted to reduce effective assistance to Australian agriculture. There has been a two-thirds cut over the past decade in effective assistance, which is twice the rate of the cuts made to manufacturing industries. The Hawke Government has reduced Budget expenditure for primary industries by an accumulated $442m since 1983. The Government has systematically discriminated against the farmers with its fiscal and monetary policies. No sector is suffering more economic hardship than farmers and small business people. This quarantining proposal will compound the problems generated by the severe restrictions imposed on tax averaging and the tax benefits of income equalisation deposits since 1983. Where is the equity for farmers when BHP-the big Australian-can offset losses in the steel division against profits from Bass Strait oil? Where is the equity when the proprietor of multiple retail outlets can offset losses against profits, but genuine primary producers are slugged with a new tax burden? Mr Nehl —They hate the farmers. Mr HUNT —They hate the farmers. The Treasurer makes no attempt to assess the cost of these changes in terms of declining investment, falling land values, rural adjustment and social welfare outlays. Foreign interests must be eagerly awaiting a chance to buy up cheap, highly productive agricultural land in Australia. Already this is happening in Western Australia. The discriminatory nature of quarantining of farm losses is highlighted by the fact that negative gearing proposals on rental properties will apply only to properties purchased after 17 July 1985. I might say that the Treasurer today quite deliberately avoided answering the substance of my question during Question Time. He would not answer the question, and he has a good reason for not doing so. Quarantining of farm losses will apply to all properties from 1 July 1986 regardless of when these properties were purchased. It therefore has a distinct retrospective element. It is estimated that one in four Australian farmers in 1983-84 needed off-farm income to stay on the land, despite the fact that the drought had broken. Mr Lloyd —What percentage? Mr HUNT —One in four. Labor justifies its action by attacking Pitt Street and Collins Street farmers, but these are investors who buy and develop land which in many cases would otherwise remain undeveloped. Their investment is helping maintain land prices and is bolstering regional economies through expenditure on farm inputs and services. This investment is especially important with rural unemployment already at 27 per cent. As the National Farmers Federation has warned: Valuable investment in new agricultural enterprises will dry up. The investment funds will go to the many other high risk, initially low return on capital areas of investment in the economy. The cost to farmers of quarantining off-farm income has been estimated by the Government at $105m in 1987-88 and $75m for the years thereafter. In addition to the anti-farm tax trifecta, we find the provision for the immediate write-off in the year of expenditure of on-farm water conservation improvements which are critical to their ability to withstand future droughts. The taxation statement is a thinly veiled assault on the farm industries, small businesses and country people generally. Labor's discrimination against country people is abundantly clear. The Sydney Daily Telegraph yesterday questioned the fairness of continuing a 120 per cent investment allowance for film makers when compared to the changes affecting farmers. The report concluded: One wonders whether the Treasurer considers that the film industry, and not the farming industry, is the backbone of our nation. Labor is at war with farmers. If Labor thinks it can go on bleeding the productive enterprises of the Australian economy without causing immense long term economic damage, it is living in a fool's paradise. Madam DEPUTY SPEAKER(Mrs Darling) —Order! The honourable member's time has expired. Mrs KELLY(Canberra)(4.29) —Tax reform has been introduced in this country not because of the wishes of the Australian Council of Trade Unions or because of the accord or any other single element in this community. It has come about principally because of the deficiencies in the current income tax system. The current income tax system was collapsing under the strain of avoidance and pressure on wage and salary earners. There has been a sharp contraction in the relative contribution to income tax revenue from the upper income ranges. In 1984-85 income tax assessed to individual earning more than 1.6 times average earnings accounted for approximately 21 per cent of the total net tax assessed. In 1954-55 the comparable figure was 54 per cent. That situation could not continue. While deficiencies in our tax law, supported by a number of High Court decisions provided the opportunity for widespread avoidance and evasion, there is no doubt that the incentive of high marginal rates applying to an ever increasing proportion of taxpayers also contributed to major problems in the area of tax. Increasing levels of tax avoidance and evasion increased resentment on the part of those taxpayers, mainly pay as you earn employees, including my constituents, who had to bear an ever increasing share of the total tax burden. It is important that the current tax reform package be evaluated against the reality that the existing system was becoming unworkable and was doing increasing damage to our economy. A central feature of the existing system was that it allowed many sections of the community to benefit, in an unintended manner, at the expense of others. The distortions which allowed this to occur are typically also features of the tax system which are damaging to economic growth. Any significant reform of the tax system will inevitably produce short term winners and losers, although these effects can often be cushioned to some extent by appropriate transitional arrangements. Equally, a soundly based reform will lead to a larger economic cake which will, in the medium to longer term, benefit all Australians. That is what this tax package is all about. It is not just directed at today. It is directed at providing a stable economic base for this country in future. The tax issue has been talked about and reviewed over and over again during the last decade, but very little action has followed. There has been inquiry after inquiry-the Asprey Taxation Review Committee, the Mathews Committee of Inquiry into Inflation and Taxation and the Campbell Committee of Inquiry into the Australian Financial System have all contributed to this debate on the tax issue. There have been reforms in the United States of America, New Zealand and Ireland. We have had the White Paper on the subject, the National Taxation Summit, and finally we had the tax reform package which was introduced only a few weeks ago. So the community cannot say that it was not fully consulted on these issues. In fact, it has been very difficult to go through the whole process of consultation with the community. Mr Slipper —What about the restaurants? Mrs KELLY —I will come to the restaurant industry in a moment. In fact, I have had considerable consultations with the restaurant industry just today. This is a significant tax reform package. It significantly reduces marginal tax rates, it curtails tax avoidance and evasion and restores fairness to the tax system and it gears the tax system for economic growth by providing greater rewards for initiative. By any of these standards the package introduced by the Treasurer (Mr Keating) is fundamental tax reform. One of the most significant areas that is of great benefit to my constituents is the tax cut of half a billion dollars that we will be giving the Australian people in 1986-87. Mr White —Who will get it? Mrs KELLY —The people who will mainly get it will be my constituents-those people who have been PAYE workers and who have been making substantial contributions to the tax coffers. It is they who will be getting the benefits, because they will no longer be paying the high marginal tax rates, which will be significantly reduced. We are reducing that top rate of income tax from 60c in the dollar to 49c, which is a significant change. The intermediate rate of personal income tax will be reduced from 46c to 40c. These tax cuts will be paid for not by increasing the deficit, but by further expenditure restraint-a matter about which the coalition has talked but never had much success in delivering. Putting the matter in simple terms, we, the Labor Government, are giving the average Australian taxpayer a $15.20 a week tax cut. These measures do not stifle enterprise and initiative, as the Opposition claims, but enhance them. It is those people who have been fair taxpayers and who have been making such a great contribution to the tax coffers, without any of the rorts or tax shelters, who will benefit substantially from this tax reform package. One of the areas I would like to address is entertainment expenses. The non-deductibility of entertainment expenses has attracted considerable criticism, some of which I have been exposed to just today from the restaurant industry. The first point to note in this debate is that the line between expenses incurred in providing income and personal expenses is blurred in a number of areas, not just in respect of entertainment. For example, in many private and public organisations employees are expected to maintain a certain standard of dress, but generally are not allowed an income tax deduction, while employees required to wear a uniform are allowed a deduction. The entertainment area, however, is a difficult one in which to draw the line. While the Government recognises that entertainment expenditure can assist business operations, it requires only a moment's thought and consideration for Opposition members and other members of this House to realise that administrative and conceptual difficulties would be involved in isolating for tax purposes the component of entertainment outlays comprising legitimate business expenses. We have yet to see a workable set of guidelines. As the Treasurer has put it, how can the Commissioner of Taxation be expected to verify whether two people having lunch together talk business? In reality, the choice lies between allowing all entertainment expenditure to be deductible and allowing none. In the Government's view, the equity and efficiency of the tax system are better served by the latter. The abolition of entertainment expenses as a business deduction has understandably provoked loud complaints from the restaurant and hospitality industry. The claims about massive job losses concentrated among young people are obvious exaggerations. At this stage it is impossible to assess the impact that it would have. That is not to deny that reductions in the level of business expenditure on entertainment will affect the restaurant industry, especially in the short term. However, I believe that the effects, particularly in an area like Canberra, have been overstated. We are not forcing business people out of restaurants; we are saying to them that no longer will those lunches be subsidised by the taxpayers of Australia-that is all. It is difficult to estimate the size of this effect. For many businesses their existing practices are a fact of life and they will absorb the lost deduction and continue as before. Many people who have been doing business over lunch will continue exactly as they did before. Some others will choose to adjust, principally in the degree of lavishness, which could mean a shift in the pattern of market demand. Of one thing we can be absolutely certain-any restaurant closures in the foreseeable future will be blamed entirely on the tax reform package. As many honourable members know, there are consistent changes in this industry, and many people go broke for all sorts of reasons and would do so whether or not a tax reform package was in existence. Any short run losses in the restaurant industry have to be viewed as one of the necessary costs of obtaining a fairer tax system. The fairness of the tax system should be particularly emphasised. This measure illustrates one of the difficulties of achieving tax reform. The losses are concentrated and are happening now, while the benefits will be widely spread and difficult to perceive and are for the most part in the future. Put another way, tax reform is, in part, an investment which requires incurring some costs now in order to obtain greater benefits in the future. I think that commitment to the future is important. It is also important that we as politicians, particularly those of us on the Labor benches, go out and defend the Government's position on this tax package because of the equity and other considerations for the future that will be ensured by this tax package. The business community as a whole has condemned aspects of the package. However, I would like to point out that this ignores a number of other aspects of the package. Business groups should start examining all aspects to assess its impact. The decision to introduce imputation of dividends has been soundly welcomed by the share market. This decision will discourage traditional share market speculation. It will encourage investment in shares that seem to have the quality of paying consistently reasonable dividends. It will encourage companies, after so many years of decadent signals, to restore an emphasis on sensible dividend policies and sustainable yields. The important thing will once again be to establish a dividend position. There will now be a rational balance between various categories of investment. Some sanity will be restored to the share market. The nation as a whole will benefit from the improved position which share markets now have in relation to their competitors for the investor's dollar. All the paraphernalia which has been set up to exploit the ramshackle structure of the previous tax system will become irrelevant. People will invest in equities on their own merits in terms of yield and growth. More importantly, companies which for years have been forced to devote desperate attention to the idea of capital gains can now concentrate more effectively on actual returns. As one share broker stated: `The genie is out of the bottle. The champagne corks may not be popping in the restaurant industry but they will be in share brokers' offices. What has been the share market's response since the tax package was announced? It has been record trading, record trading and more record trading. The dries in the Opposition have seen their own idol, the share market, give the tax package its full vote of confidence. A tax system which encourages people to spend or invest their money in certain ways merely to reduce the tax they pay reduces the efficiency of the economy and causes it to grow more slowly than it otherwise would. I know it is hard for many members of the Opposition benches to comprehend, but this package means that our economy will be more efficient-that is, it will grow faster. Investment decisions will be made on the basis of profitability rather than tax advantage. The Government has delivered to business the highest profits share since the 1960s. Business profits have increased after tax by $6.5 billion in the last two years. This package reduces that by only half a billion dollars, and this revenue is being channeled back into the community to promote further growth. The Government has delivered 2 1/2 years of industrial peace and two more years are coming up. Wages growth has been restrained and the parameters have been set for a continuation of 5 per cent economic growth. To describe the Hawke Labor Government as anti-business is ludicrous. To sum up, the tax reform package will consolidate the economic growth that this Government has delivered since it has been in government. It will provide a system which will be much more equitable. It is now setting the basis on which people can make sensible, rational decisions about investment instead of just looking at tax avoidance measures. It will ensure that the pay as you earn taxpayers of Australia, those people who, over the years, have borne the burden of tax reform, particulary those in the top income range, will now get certain relief. I congratulate the Treasurer on this tax package. Although in the short term there will be some problems, particularly in the restaurant industry, I am sure that in the long term we will ensure economic growth and an equitable tax system. Mr WHITE(McPherson)(4.44) —The honourable member for Canberra (Mrs Kelly), who has just spoken, got first hand experience today as to what the restaurant industry thinks about the tax package. The effect that it will have on that industry was put to her in no uncertain terms. Until today restaurants were considered to be part of our fast-growing industry. I will come back to that point in a moment. The second observation I want to make on the tax package is the extraordinary sensitivity of the Treasurer (Mr Keating) on the matter. The honourable gent comes into this House and adopts his usual pratice of trying to pour scorn and invective on any views that differ from his own. I notice that he particularly adopts this attitude in respect of members of his own Party who dare to express a view different from his own. There are plenty of those members-the fourth formers he calls them. The Treasurer stands up, turns around and peers down his long nose as if anyone who dares to differ with him must be wrong. There are a few things going against the Treasurer right now. The first one is the poor example set by the Prime Minister (Mr Hawke), his own boss, who cannot run his own Department. That criticism might not seem very relevant at the moment. However, the relevance is this: When things are going bad in any endeavour in life people look at the top. If things are not run properly at the top, everyone down the line is affected. If the Prime Minister is seen as incompetent, the Treasurer sooner or later will also be seen as incompetent. That is the first strike that the Treasurer has going against him. The second strike against the Treasurer is his inability to get his policies through his Party. One has to look back only to the tax summit to see that. One has to look only at this tax package which is a half-baked mish-mash made up of a bit here and a bit there-some of which the Treasurer would like and most of which the Australian Council of Trade Unions and the unions would like. The third strike, of course, is the predominant role that the unions play in this Government. Whether one likes it or not, there is a clear perception among the majority of Australians that the unions are running the Government. One only has to go out and ask the people to establish that this is the case. Just a few months ago every paper in the country reported the spectacle of the Prime Minister sneaking across town in the middle of the night to get some agreement from the ACTU. Of course, the Prime Minister did not take the Treasurer with him. However, he came back and told him just what the deal was. That is the third strike that the Treasurer has going against him. All of those criticisms are fairly formidable in terms of the honourable gentleman presenting himself as a competent Treasurer in a competent Government. The Opposition is clearly opposed to elements of this tax package, and for very good reason. Indeed, members of the Opposition are not the only people to express opposition. Let me quote what was said by John Stone at a recent seminar which I attended. This is the fellow who worked for the Government; the Treasurer's right hand man. Let me tell the House what he had to say to the Australian Travel Industry Association Convention. Mr Stone called on the Government to reconsider the tax package. He talked about the spirit of anti-business vengefulness. He said: Measures contained in the tax package . . . might gratify the class war hatreds of those in the ACTU and the Left and the Centre Left factions of the Parliamentary Labor Party but they were unworthy of a Governmemt which originally appealed to Australia in 1983 with the slogan of bringing Australia together. Mr Kerin —He was speaking in a telephone box. Mr WHITE —It was not a telephone box-he got a standing ovation from those who attended the convention. He went on to say: They would prove to have the most damaging economic consequences. How right he was. Let me turn to the effect that the tax package will have on tax deductions for entertainment which are now to be disallowed. We have heard all the Labor rhetoric, mainly from senior Ministers, of rorts and bludgers. We have heard the abusing, insulting, penalising and condescending comments that have been directed at the wrong people. Those comments have been directed at those involved in the restaurant and catering industry. However, why should the comments not be directed at those who are abusing the system? The honourable member for Canberra, above all, knows that the people in the restaurant and catering industry are very angry at the implications which are being laid at their door. If I were she, I would beat a hasty path to the Ministers who are using those expressions and tell them: `For God's sake, use sensible language and stop insulting the people who have built up an industry in this country to meet a market'. If the Government wants to get into the rorters and the bludgers, it should direct its attention to the people who are abusing the system and get off the backs of the restaurant and catering industry. What is happening is that already 3,000 people have been laid off in Australia since 19 September. Over 2,000 apprentices are at risk in Victoria alone. Mr Saunderson —Two thousand apprentices in Victoria? Mr WHITE —They are at risk. It is estimated by the industry that by February next year between 10,000 and 30,000 people might be out of a job. Even if it is 10,000 people, can honourable members imagine the uproar there would be in the car industry if 10,000 people were to be laid off? Of course, many of these people will be forced to go on the dole, with the accompanying expense. This week's survey by the Restaurant and Catering Association of Victoria states: Over the last week we have carried out an independent survey of 130 restaurants. It reveals that business has declined to the point where at least 1,000 restaurant workers have already been sacked. Let me go on and quote what some of the individual restaurateurs who were interviewed have said. One of the restaurateurs stated: We have already laid off four staff and if this tax package goes ahead I'll be laying them all off. I'm now employing 15 people but if things don't improve I'll have to let them all go and just run the business with members of my family. Maybe Mr Keating can tell me who I should fire first- the young apprentice trying to learn a trade or my chef who's got debts and a family to raise. Another restaurateur has said: As far as the hospitality industry goes, the kids going through the William Angliss College just don't have a chance. Another restaurateur said: I don't think he realises that it's not just us that will be affected but the dry food industry, meat, fish, paper with serviettes and laundry as we won't be using as much of these things as we used to. Everyone connected with the restaurant or catering industry will be affected. The comments go on and on. I come back to Mr Stone, so beloved of the Labor Party. Speaking about the removal of business expenses, he said: ``. . . a model on how to write propaganda, rather than how to present a logical and reasoned case for a serious proposal by a Government which still wants to be taken seriously. Senator Walsh has referred to: . . . bludgers who have free lunches. That is how he described the business community. That is Senator Walsh's opinion of the business community. On the best figures I can obtain-and I think the Treasurer agrees-may- be 15 per cent of business lunches are illegal. The Government is destroying an industry and putting thousands of people out of work to catch that 15 per cent, which can easily and should be taken care of through the tax system by making people vouch with receipts. Mr Saunderson —How? Mr WHITE —The same as any other business expense. Mr Saunderson —How? Mr WHITE —If the honourable member does not understand that, it is a bit late for me to explain it to him now. The Treasurer, in answering questions yesterday, virtually called people in the restaurant industry crooks and thieves. That is making them very angry. They should respond vigorously, and today in Canberra they did. I hope that such meetings will be held around Australia. This industry has been meeting the market. They are not part of the Treasurer's so-called rort. He should be moving to stop the abuses by those who are abusing the system through the tax system. The decision on this matter has been based wholly on figures which are nothing but guesswork. The Treasurer has said that deductions will be denied for genuine business expenses. What are the figures? How come the decision was made so hastily? If the Government were going to affect seriously one of the other industries in Australia, it would phase in the changes and give people some warning. In this case, without warning, bang- Mr Saunderson —Rubbish! Mr WHITE —Of course the Government would do that if the changes affected the car industry in the honourable member's electorate. Mr Saunderson —If it is tax avoidance you cut it out straight away. Mr WHITE —The honourable member knows nothing. There will be a spin-off effect on the hotels and resorts. They are all waiting to see what will happen before deciding whether they will go ahead with certain projects. Time does not permit me to dwell any longer on that point. It is very serious for the economy of this country. Let me say a few words about the effect on rural industries and limiting the use of off-farm income against farm losses. Does the Government realise the huge amount of off-farm money which is going to the development of our rural industry? In many cases in Australia there would be no development in parts of Australia without such money. Does the Government realise how many people can remain on the land only because they have access to off-farm income? One must ask the question: Does the Government really want to see more rural de-population? That is what will happen if we pick out the rural industry. No other industry is being subjected to this imposition. The Minister for Primary Industry (Mr Kerin), who is sitting at the table, knows in his heart what will happen in rural areas. He knows how much off-farm income goes into the development of rural industries in Australia and how productive that has been in many parts of Australia. Today someone stupidly talked about macadamia nuts. What about the big expensive rural industries in this country? Let me talk briefly about the racing industry and what the effects will be there. How will we develop? In the Budget the Government was as proud as punch about what it is doing for the racing industry. Now that it is limiting off-farm income, what does it think will happen? If the Government wants to know, it should try asking Mr Ken Cox of the Stockwell Stud or Colin Hayes what they think about what the Government has done to the racing industry. I have quotes of what they have said. Honourable members can come and read them. I mention some of the other elements of the tax package. The fringe benefits tax is contrary to the very basic element of tax laws, which is to tax the recipient. The reason that was not done is quite simple. It is that the unions would not allow it. The stupidity of a capital gains tax being imposed in a young country which is desperately crying out for capital investment and the encouragement of entrepreneurs is obvious. On balance, the capital gains tax will be a disaster. The one advantage I can see of the great tax cuts, about which the honourable member for Canberra was talking, is two years away. In that time most people in Australia will have moved into a higher income bracket and, of course, they will not get the benefit. The only hope for this tax package is that, on past performance, it will be changed. I sincerely hope that it will be. If it is not, it will have dire economic consequences. Judging on the way the Labor Party runs these things, I hope and think that we will see significant changes before these measures are put into effect. Mr LEE(Dobell)(4.59) —I support unequivocally the tax reform proposals outlined in the statement of the Treasurer (Mr Keating) in this House on 19 September this year. I hope that the honourable member for McPherson (Mr White) remains in the House, because I have a few comments to make about certain campaign promises and statements that were made during the 1981 by-election for the seat of McPherson. I am proud to be a member of the Labor Government which is implementing the most comprehensive tax reform measures since the 1940s, when the income tax powers were transferred from the States to the Commonwealth. In stark contrast, the members of the Liberal and National parties have whinged, whined and opposed every progressive tax reform proposal this Government and this Treasurer have put forward. Let us look at their record on taxation when they were in government. Let us look at the record of the Fraser Government when the Leader of the Opposition (Mr Howard) was Treasurer and in control of Australia's taxation policy. In 1977 the Liberal Party of Australia won an election with the `fistful of dollars' television commercials. The current Leader of the Opposition promised to provide full indexation of the tax scales and an additional income tax cut. Honest John broke both promises. Not only were the tax cuts taken away and tax indexation abandoned but a temporary income tax levy was applied to all Australians in Honest John's first Budget. It was a retrospective income tax levy. Treasurer Howard promised that the 1.5 per cent levy would be lifted after 12 months. Honest John broke that promise as well. The 1.5 per cent levy was not removed after 12 months; it was actually increased to 2.75 per cent. Under the current Leader of the Opposition ordinary wage and salary earners were slugged with high income taxes and promise after promise was broken. While ordinary pay as you earn taxpayers were being slugged, the tax avoidance industry was booming. Under Treasurer Howard the tax avoidance industry was Australia's only growth industry as the economy was squeezed into the most devastating recession since the Great Depression. When the McCabe-Lafranchi report documented the bottom of the harbour tax scandal the Leader of the Opposition dismissed it as a stunt. Commissioner Costigan and the Auditor-General also detailed the tax rorts which had developed because Treasurer Howard had failed to act. The tax avoidance industry spread throughout the high income brackets like a plague communicated by the smart spiv accountants and lawyers. As Treasurer Howard refused to act on the advice of the Australian Taxation Office, the plague spread and more of the taxation burden had to be placed on low and middle income earners because of the honourable member for Bennelong's inaction. That is the Opposition's record of achievement on tax reform. It is a record of broken promises, a record of higher income taxes for ordinary Australians and a record of failing to act to close off the tax evasion and tax avoidance. In 1954 taxpayers with incomes of more than 1.6 times average weekly earnings paid 53 per cent of individual income tax receipts. By the end of Treasurer Howard's stewardship the top brackets contributed only 21 per cent of income tax receipts. Even though inflation was pushing people into higher tax brackets when the Leader of the Opposition was in control, high income earners paid a decreasing share of tax. Middle and low income earners had to make up the difference when high income earners turned to their accountants to minimise their tax. Income tax was virtually optional for high income earners by the time of the 1983 election. Let me now turn to Treasurer Keating's proposals to reform the Australian taxation system. Every member of this House appears to agree that tax reform is needed but every special interest group insists that it not be affected in any detrimental way. The tax on fringe benefits is a courageous measure and it has my full support. Why should my constituents pay tax on every dollar of their income simply because they are ordinary middle income earners while some of the constituents of the previous speaker, the honourable member for McPherson, pay tax only on part of their income because they happen to be company executives? In my electorate low and middle income earners do not have the option of receiving their pay in a package designed so that a third of their income is tax free. High income earners and their employers are the only ones who will be affected by the fringe benefits tax. In my opinion they deserve to be affected because they have an obligation, the same as every other Australian, to pay their fair share of tax. The Treasurer is proposing that all pay their fair share. I am pleased that while the Opposition whinges in this House about the fringe benefits tax its Federal President, Mr John Valder, has different views. Earlier this year he was very candid on the private Westpac video show when he was asked to comment on the proposed fringe benefits tax. He stated: I think again to reverse the whole disease if you like to call it, of fringe benefits which again has developed over a decade or more. I think Paul Keating is being very foolish and taking a massive risk in attempting to reverse that in one stroke. But if one attempted to reverse that in a series of strokes over three or four years, then I think it could be done and I've got to say I think that is the fair and just thing in this country. The Federal President of the Liberal Party, Mr Valder, in his private and candid moments, was honest enough to say that the fringe benefits tax is fair and just for this country. Mr Valder exposes the hypocrisy and sham of the conservatives. In private they agree with our tax reform proposals but in public, to score a few cheap political points, they cave in and oppose the reforms. Mr Snow —They are never game to do anything. Mr LEE —That is right. As the honourable member for Eden-Monaro says, they are never game to implement any of their own policies. This Labor Government believes it is wrong that high income earners should be able to use tax shelters which low and middle income earners could never afford to use. My constituents, and the vast majority of Australians, cannot afford to run a farm at a massive loss just to reduce their income tax as can the Pitt and Collins Street farmers. My constituents and the vast majority of Australians cannot afford to divert income into afforestation, petroleum exploration, water conservation or negatively geared home units on the Gold Coast in the honourable member for McPherson's electorate. My constituents have not been rorting the system and using these tax shelters. They applaud this Government and this Treasurer's proposals to re-establish a fair and equitable taxation system. While very few of my constituents have been disadvantaged by the closing off of tax loopholes, tens of thousands of them will benefit from the $2 billion worth of income tax cuts which will be implemented on 1 September 1986 followed by a second round of income tax cuts to be implemented on 1 July 1987 totalling $4.5 billion. I seek leave to incorporate in Hansard a table detailing the income tax cuts. Leave granted. The table read as follows- TAX REFORM PACKAGE INCOME TAX CUTS Marginal rates (cents per $) Income ($ pa) Present scale Proposed scale 1.9.86 Proposed scale 1.7.87 0-4595... 0 0 0 4,595-5,100... 25 0 0 5,100-12,500... 25 24 24 12,501-19,500... 30 29 29 19,501-28,000... 46 43 40 28,000-35,000... 48 46 40 35,000 and over... 60 55 49 Mr LEE —I thank the House. In September 1986 the tax free threshold will be raised from $4,595 to $5,100. By 1 July 1987 the top marginal rate will have been slashed from 60 per cent to 49 per cent. I have been contacted by several constituents and pensioner organisations in my electorate regarding the tax free threshold. While the tax free threshold is currently $4,595, single pensioners and veterans earning up to $5,533 pay no tax because they benefit from the $250 tax rebate in addition to the tax free threshold. Media reports that the tax free theshold will be raised for all taxpayers to $5,100 have confused pensioners who currently pay no tax while earning up to $5,300. The $250 pensioner tax rebate will, of course, continue to be granted to pensioners. As a result of the tax reform measures, after 1 September 1986 single pensioners and veterans will be able to earn $6,142 before paying tax. That is, pensioners and veterans will be entitled to earn an additional $609 before they pay tax. Married pensioners will also benefit in a similar way. As all honourable members would be aware, the electorate of Dobell, which covers towns such as Long Jetty, The Entrance, Toukley and Budgewoi, has more pensioners than any other electorate in New South Wales. As a result my constituents, more than any others in New South Wales, welcome the relaxation of the three elements of the income test on pensioners which was announced in the Treasurer's tax reform statement. Firstly, on 1 November next year the amount which a single pensioner may earn in addition to his pension, before his or her pension will be affected, will be raised from $30 per week to $40 per week. The limit for married pensioners will be increased from $50 per week to $70 per week. Most pensioners who are receiving a part pension will benefit by $5 per week under the increase in the income limit before tax is paid. Secondly, a very harsh, separate incomes test on rental assistance will be removed from 1 November 1986. Rental assistance of $15 per week will be added to the standard pension like other special supplements and then the general income test will be applied. Thousands of pensioners who are renting private accommodation and are currently ineligible for rental assistance will benefit by up to $15 per week from this measure alone. Thirdly, pensioners with children will be able to earn an additional $6 per week for each child and receive the same assistance. I seek leave to incorporate in Hansard a second table which I have prepared. It summarises the effect of the relaxation of the income test on my constituents. Leave granted. The table read as follows- BENEFIT ON INCOMES TEST CHANGES TO A PENSIONER WITH A PRIVATE INCOME OF $100 PER WEEK Increase due to New Income Limit Increase in Rental Assist- ance Increase due to Children Total Increase $pw $pw $pw $pw Single Pensioner No Children- Not renting... 5 0 0 5 Renting... 5 15 0 20 Two Children- Not renting... 5 0 6 11 Renting... 5 15 6 26 Pensioner Couple Combined No Children- Not renting... 10 0 0 10 Renting... 10 15 0 25 Two Children- Not renting... 10 0 6 16 Renting... 10 15 6 31 Mr LEE —The table indicates that all categories of pensioners listed will receive at least an additional $5 per week after 1 November 1986. A single pensioner with two children in private rented accommodation will receive an additional $26 per week. I congratulate the Treasurer and the Minister for Social Security (Mr Howe) for implementing these reforms. The Minister for Social Security will be visiting my electorate later this month. I am sure that the members of my local Combined Pensioners Association will appreciate the November 1986 income test changes which the Minister has convinced the Cabinet are required. After endorsing the Hawke Government's tax reforms and congratulating the Treasurer on the results he has already achieved, I ask what alternative the Opposition offers the Australian people. The Leader of the Opposition and the shadow Minister for Finance, Senator Messner, have supported the introduction of a flat tax on income. This, together with an increase in sales tax, is the Opposition's response to our tax reform proposals. I remind the House what the Leader of the Opposition thought about flat taxation in 1981 during the McPherson by-election, when the National Party developed a flat tax policy overnight in an attempt to take the seat of McPherson from the Liberals. The newspaper headlines reads `No flat tax-and that's final; and ``Blatantly discriminatory'' says Howard'. The article in the Sydney Morning Herald of 7 February 1981 states: The Treasurer, Mr Howard, has ruled out the possibility that the Government will replace personal income tax with a flat rate tax such as that advocated by the National Country Party. For a stinging criticism of the championing of the flat tax proposal by the Deputy Prime Minister, Mr Anthony, Mr Howard said yesterday: `The tax simply does not work and has the element of fairyland in it'. The Leader of the Opposition continued: I don't believe that the introduction of a flat rate taxation system could conceivably pass the test of equity and fairness which I regard as essential to a taxation system. The plan is blatantly discriminatory and has a particularly severe impact on low-income and single-income families. That is what the Leader of the Opposition thought about flat rate taxation in 1981. I will also recount the opinion of the former Deputy Leader of the Liberal Party, Sir Phillip Lynch. I remind the House of what he thought of flat rate taxation. Under the headline `It's bunk! Libs blast flat tax', the article states: The flat rate tax debate blew up into a major row between the federal coalition parties yesterday. Both the Deputy Leader of the Liberal Party, Sir Phillip Lynch, and the Treasurer, Mr Howard, strongly attacked the National Country Party proposal. Sir Phillip said the proposal was `Economic bunk' and `a swindle of massive proportions'. That article appeared in the Sun News-Pictorial on 7 February 1981. The current Leader of the Opposition was right in 1981. A flat tax would hit low and middle income earners the hardest. Flat tax policies would abolish the tax-free threshold. Currently, no taxpayer pays tax on the first $4,595 of income. After 1 September 1986, no taxpayer will pay on the first $5,100. Under a flat tax regime all income is taxable. The people who would be devastated by flat tax are the retired and pensioners. Like the flat earth theory, the flat tax theory is nothing but fantasy. On the issue of tax reform the Australian people have a clear choice: Under Labor, a package of reform, an attack on the rorts and ramps which the tax dodgers have been exploiting, $4.5 billion in tax cuts, and genuine increases in social welfare to those most in need; under the Liberals, delivered higher taxes, broken promises and a healthy tax avoidance industry. Mr DEPUTY SPEAKER(Mr Ruddock) —Order! The honourable member's time has expired. Mr McARTHUR(Corangamite)(5.14) —I wish to concentrate my remarks in this debate on the so-called `reform of the Australian taxation system' on the aspects of the capital gains tax proposal and its effect on small business. In doing so I thought it would be useful to look at the typical entrant into the small business sector, the reasons for entry into a business venture, the expectations of the small entrepreneur, and the likely consequences of the application of a capital gains tax. I am reliably informed that the individual considering purchasing a small business-and in talking about small businesses I am referring to a business with a total value of under $200,000-will be in their 40s, have come from areas of previous employment such as banks, accountancy, the police force, the nursing profession or school teaching, or from other small business. They are likely to be married and looking to more than one member of the family being involved in the enterprise. They will have had a previous income in the vicinity of $20,000 to $25,000 and will have about $70,000 with which to purchase the business. The average purchase price for a small business in my electorate would be around $100,000, and I would think Corangamite, with its urban Geelong end, including Belmont, Highton and Grovedale, the coastal area of the Bellarine Peninsula extending to Apollo Bay, and the inner rural part centred around Colac, could be taken as a fairly average example of an electorate, excluding capital city electorates, and one in which an enormous variety of small businesses are situated. Such businesses encompass the tourism, manufacturing, service, farming, retailing and export industries. The assets the potential purchaser is likely to have centre around the family home with a value of about $80,000 and with $20,000 owing. Our typical small business entrants will want to go into a business of their own because they will have worked for someone else for about 20 years and have now decided to become self-employed. They want to have a go, are prepared to work hard, make sacrifices, take risks, and apply their imagination and individual skills to an activity which at the end of all their efforts will reflect their personal contribution and the reward will be a profit realisation over and above their initial purchasing price. They will also want to have the business so that a spouse may be involved in the operation and quite often their children, who have left school and may be having difficulty finding a job elsewhere in this very tight labour market. It may well be seen as a way for the family to remain together. This is especially the case in provincial and rural areas, where it is almost inevitable that children will have to leave not only the family home but also their local community and even the State, in order to find employment. We also know that our small business entrants do not normally start and finish in the same business. They will probably be involved in three or four businesses before finally realising their investment and retiring, using the end profit as a form of superannuation. During the period of his small business involvement our typical businessman will expect to work between 50 and 60 hours a week for a return of around $20,000 to $25,000-in fact, no more than the person was receiving when working a 38-hour week with little worry or responsibility. The wife or husband involved as a partner in the business will receive the same amount, but it is important to remember that their savings after tax, after living expenses and after meeting their borrowing commitments will amount to only about $5,000 each. Their prime aim in going into the initial business was to achieve sufficient capital gain, combined with their savings, to place a deposit on a larger business. The Government's proposal to tax this capital gain will clearly act as a disincentive and inhibit the movement and development of new and improved small businesses. The Treasurer (Mr Keating) has stated that a reason for this new capital gains tax was to prevent the flow of unproductive investment from property investment into more productive enterprises. It is my view that the tax, while it may inhibit property investment, will also inhibit investment and retard incentive in those areas where we all know investment and initiative are vital if employment opportunities are to be created and this country is to move ahead. So in this country where we need the activity and enterprise of more small business people to get the country going, we are now saying that we are further going to restrict opportunities. Having made a major change in their lives by moving out of the security of a regular paid job, they have entered the world of risk and long hours for little gratification, only to find they are burdened with excessive regulations, massive levels of bureaucratic interference, licence fees and requirements of local, State and Federal governments. If they happen to expand and need extra employees, they find our rigid, centralised wages and industrial relations system forces them to employ people at uncompetitive rates and conditions. Now we are going to tax the last hope for small businessmen-their capital gain. This capital gains tax on small business owners is an imposition not so much on the concrete assets that they have improved with the business but on the guts, the determination and the initiative that these business people have employed to bring the business to the value it realises when they sell it. Who has helped them to build up this value? It is certainly not the Government. All the Government has done is to overtax, overlicense and overregulate them to a point where all incentive is destroyed. It is the small businessmen and businesswomen themselves who have lifted the value of their assets by their gutsy spirit, all so that the Government can raise $25m in five years time. I turn to the tax statement itself and refer the House to the very categoric statement by the Prime Minister (Mr Hawke) in relation to the capital gains tax issue. He said: And here let me make one point so that even our opponents can understand it; and let me make it beyond all their powers of misrepresentation and distortion. There will be no new capital gains tax. Mr Hawker —Who said that? Mr McARTHUR —It was the Prime Minister-and in September 1985 this package was presented to the House with a capital gains tax component. It has been suggested that under the capital gains tax proposal as presented in the paper the gains will be indexed to ensure that the taxing is on real gains. What will the indexing mechanism be, and will it truly reflect the inflation rate? Upon realisation, will these assets incorporate all the costs of realisation? The rate of tax as indicated by the paper will be the highest in the Western world, at company tax rates and high marginal rates. The paper indicates that it will not be a death duty, but if we read the fine print we see that it is a deferred death duty in a roll-over position. Further, with residences being excluded from the capital gains tax, we see the same problem arising that has arisen in relation to the assets test. Hopefully, capital losses will be incorporated in a true and correct manner. The National Farmers Federation, which has been very active in recent months, has put a very strong point of view on behalf of the farmers of Australia. It has a membership of 100,000 to 150,000 farmers who are also small businessmen. The NFF is adamantly opposed to a capital gains tax. In long term investments with a low rate of returns, farmers are looking at something like a 30-year pay-off and would find that a capital gains tax would be the last straw in their problems. Mr McLachlan, the President of the National Farmers Federation, in observing the problem of the inflation rate and the capital gains tax that is about to be imposed, indicated the very bad effect it will have on the Australian farming community. I quote from his letter to the Australian Financial Review, in which he clearly demonstrated the anomaly that arises when the inflation rate is brought to bear on land valued in the State of New South Wales. He said: Firstly, independent studies clearly demonstrate that rural properties have realised capital gains above inflation during most of the decade to the last year. In New South Wales for example the CPI rose 213.9 per cent between July 1976 and June 1984. Over the same period, according to the New South Wales Valuer General, western grazing lands increased in value by 334.3 per cent, other grazing lands by 280.4 per cent, wheat/sheep land by 322.5 per cent and dairy farms by 272.1 per cent. It is therefore totally incorrect to say that farmers won't be affected by the new capital gains tax provisions. There are two forms of capital investment. One is the speculative investment from which the Treasurer is so keen to collect some tax. The coalition is quite clear in its view that section 26AAA of the Income Tax Assessment Act covers this area of speculative investment. In my view, speculative investment is good for Australia in certain areas. In the area of futures the speculator assists in evening out prices. The coalition places great emphasis upon the productive area of capital investment. Australia needs capital. We have a population of 15 million people. We have export capital investments which support the export industries in mining and in agriculture. These are long term investments which sometimes have small rates of return. For instance, on the North West Shelf massive sums of capital have been invested, the risks have been high and there is a long term pay-off. Likewise in farming, the other important export industry, which has a high capital component, farmers are subjected to the current cost price squeeze and are now facing the possibility of a capital gains tax at the end, all for the sake of raising $25m in the fifth year of the operation of that tax. The final point I make is that the Government is now about to put in place a mechanism for raising a capital gains tax. It has put about the view that it will be insignificant in the short term. We all know that in the longer term, once the mechanism is in place, the criteria will change and the effect of a capital gains tax will become apparent to small businessmen throughout Australia. The coalition is totally opposed to a capital gains tax. It will vote against it on this occasion and it will repeal it when it returns to government. Mr FITZGIBBON(Hunter)(5.27) —Everybody knows the dangers inherent in taxation reform. Why else has every other government walked away from taxation reform in the past 40 years? Sure, governments have known that to ensure a prosperous and fairer Australia, taxation reform was necessary. But I guess that we Australians are more than a little selfish, and perhaps politicians who seek to retain office are a wee bit more selfish than the electorate in general. Also, the electorate is susceptible to fear and, where tax reform is concerned, it is not difficult for oppositions to spread unreasonable fear in the market-place. When a taxation system is antiquated and unfair it follows that various people are advantaged by the existing scheme. Naturally, those groups can be mobilised quickly to resist reform. The groups which benefit from an unfair system are in a favourable position to spend large sums of money to preserve that system-and they do spend. They spend to preserve their advantages. They spend to protect their privileges-their avoidances, their evasions and their tax minimisation schemes. Even those who have not, the have-nots who are disadvantaged by an unfair tax system, are in a quandary. The disadvantaged know in their hearts that they are being ripped off, but they become uneasy when irresponsible Press reports and other subtle propaganda suggest that tax reform will worsen their position. So genuine tax reform is not an easy task. Consequently, every Government member must have experienced some hesitation, some fear even, when this Labor Government embarked upon its campaign of genuine tax reform. Could this Government rid the taxation system of blatant abuses and create a system which was fair for all honest Australians? Would the Opposition cut the Government to pieces with distortions and half truths designed to scare the pants off the voters? Memories of the assets test were aroused. In the pre-Valder days such fears were fresh in our minds. Would a Labor government be resubjected to the greatest scare mongering campaign this nation has ever witnessed? Could this Government create a fairer tax system for all honest Australians-the haves, the pay as you earn taxpayers and the have-nots? Those of us who held such fears, however, were overlooking a couple of key points. We were overlooking the genius of the Treasurer, the honourable member for Blaxland (Mr Keating), and we were overlooking the dedication and expertise of those other Labor Ministers who brought their talents to bear to produce the most far-reaching reform of the Australian tax system in living memory. The tax reform package was announced on 19 September. I waited for the fireworks to start. I waited for the Press and the Opposition to detonate the powder keg which would cause casualties amongst honourable members on this side of the House. I waited in vain. Not from the Opposition did I hear a blast reminiscent of Hiroshima or Nagasaki. Instead, I heard a bumbling burping, more akin to the fizz and flutter of a slightly dampened penny bunger. What did the Press say about Labor's reforms? In referring to the tax package, `brilliant!' said one; `The person who searches for flaws in this tax package will search in vain', said another. What did the people say? Into my electoral office poured hundreds of congratulatory letters and phone calls. There was not one message of condemnation. I passed Opposition members in the corridors of this building and their glum expressions reminded me of those famous lines of T. S. Eliot: This is the way the world ends not with a bang but a whimper. My heart wept for the whimperers. My heart soared with jubilation for all honest Australians, who at long last had received a fair and just tax deal. They had at last received from a Labor government tax justice for which they had waited too darn long. However, it is hard to kill a false ideology. There is still a faint fluttering of life in those defenders of privilege-those supporters of tax cheats-who sit opposite. We have had evidence of that here today in the Opposition's amendment to the Labor Government's reform of the Australian tax system. The Opposition's amendment starts off by praising the Government. It states: This House, whilst welcoming the promised relief of double taxation of dividends and the promised reduction in marginal tax rates . . . Hooray, honourable members opposite praise us! Even those biased members opposite recognise and concede that Labor's reforms have good, praiseworthy features. However, honourable members opposite still seek to condemn us. How miserably their condemnations fail! Without doubt, the present Opposition is the weakest Opposition in the history of this Commonwealth. No Opposition has ever come within cooee of this Opposition's record and consistency for failure. I ask honourable members to consider the recent record of the Opposition. Firstly, it has attempted to preserve loyalty and unity. That has been a failure. Secondly, it has attempted to prevent bitter factionalism. That has been a failure. Thirdly, it has attempted to develop coherent economic policies. That has been a failure. This Opposition's list of failures is surpassed only by its shameful record of failure when it was in Government. I am too much of a gentleman to remind honourable members opposite of their disgraceful performance which carried this nation to the brink of economic collapse. In returning to the amendment which the Opposition has moved to what I would have to describe as the Government's immaculately beneficial tax reform package, we come to its first bleated complaint. Not surprisingly, the Opposition condemned the introduction of a capital gains tax. I will be quite honest: I too felt some concern about having a capital gains tax. I believed that a capital gains tax, although merited, could contain some electoral damage for Government members. However, the capital gains tax introduced has received overwhelming endorsement from the people of this nation. Within my electorate articles were printed in the local papers stating that I would buy a lottery ticket for any person who could prove, not to me but to the paper, that he was disadvantaged as a result of the introduction of the Government's capital gains tax. The headline read `MP puts his money where his mouth is'. Honourable members opposite probably imagine that I was inundated by a flood of claimants. However, they would be quite mistaken. I have bought not one lottery ticket. Not one person has contacted my Hunter electoral office to express concern regarding the capital gains tax. The honourable member for Gwydir (Mr Hunt) stood here and claimed that letters had flooded into his office. That is absolute bunkum. Every honourable member opposite knows that there has been a great calm and quietness out there in the electorate. Mr Lloyd —Mr Deputy Speaker, the honourable member has cast an aspersion on the veracity of the Deputy Leader of the National Party and I ask that he withdraw. Mr FITZGIBBON —I withdraw. I have moved among groups from a wide social spectrum and not one word of criticism of that capital gains tax have I heard. I have been at country shows. I have mixed with people from the National Farmers Federation and from the Livestock and Grain Producers Association. This is a no-no as far as they are concerned. People who used to suck up to big business have lost its confidence. Where are they going now? They are going to try to scare the poor old farmer and try to delude and deceive him. Also they are going to try to get some support from the small business people. They are trying to get support from some other avenue. The cry of the National Party is that Labor hates the farmers. What a ridiculous cry. Farmers are not fools and they will not believe that type of nonsense. Where is the anger in the electorate about a capital gains tax? Farmers and small business people know that they are better off under this Government, which is pursuing responsible economic policies, than they were under the lunatic policies of the Fraser Government when the present Leader of the Opposition (Mr Howard) was Treasurer and those policies brought this country to the brink of economic disaster. The Press has not condemned the initiative. The people have not condemned the initiative. The only people to do so are those honourable members opposite who have searched desperately and unsuccessfully to find a point of legitimate criticism about Labor's tax package. However, interesting things are happening in the post-Valder age. Post-Valder is a good title for the period. Since Mr Valder's revelation that not all members of the Liberal Party are opposed to an assets test, we find similarly that not all Liberals are opposed to a capital gains tax. In fact, recent statements by the Opposition's taxation and finance spokesman, Senator Messner, leave us in no doubt that the coalition would introduce a more severe capital gains tax than that introduced by this Labor Government. Senator Messner lends his support for the most vicious, the most punitive and most savage capital gains tax this country could possibly have. He advocates a full marginal tax rate on a full nominal gain. Senator Messner's statements deserve top marks for honesty, but reveal that the coalition's amendment to the Government's tax reform is hypocritical in the extreme. Not surprisingly, given the form of the Opposition, there has been condemnation of this Government's attack on fringe benefits and entertainment expenses. Most unbiased Australians are fully aware of the inequity of fringe benefits and entertainment expenses and realise that there is no reason why this Government should continue to use the taxes of the poor to benefit the privileged few. Only the Opposition fails to recognise that the tax cuts will provide opportunity for entertainment expenses. I am sure that the position of restaurateurs will soon adjust itself. Need I add that the great majority of the nation, who derive no benefit from fringe benefits and entertainment expenses, will shed few tears about the removal of those privileges. I am running out of time, but they are the two major points in the amendment moved by the Opposition. The other points in the amendment will not be dwelt on by me because they are either mischievous or untrue. For example, there is no validity whatsoever in the Opposition's claim that the tax package will have an adverse and discriminatory impact on rural Australia. Farmers are completely disillusioned with people who lie to them and appreciate, nay, applaud the honesty and the effort on their behalf by the Minister for Primary Industry (Mr Kerin). I am sure that farmers and the rest of the people of Australia will recognise that the hysterical and hypocritical bleatings by members of the Opposition are unworthy of serious consideration and will give enthusiastic endorsement to the Hawke Labor Government's reform of the Australian taxation system. Tax reform was needed. Everyone knew that and once again a Labor government has delivered the goods. Mr IAN ROBINSON(Page)(5.41) —At the outset of my speech, I congratulate you, Mr Deputy Speaker, on your appointment as a Deputy Chairman of Committees of this House. I am sure that you will serve in that role extremely well. The Government's tax package is a severe blow to the rural industries and small businesses of Australia. The Hawke Government has again demonstrated that it is insensitive to the needs of primary producers and those engaged in small business. Changes in the tax system which we are now debating are nothing short of clumsy and extremely negative. Major disadvantages will be imposed on primary producers, small business and those engaged in similar forms of enterprise. The honourable member for Hunter (Mr Fitzgibbon), who has just spoken, is completely insensitive to these major issues and has little and, obviously, limited knowledge of these matters and their effect upon the primary producer sector of the community and on the rural sector in general. The changes will stifle the already hard pressed rural communities. The proposed capital gains tax, which includes a deferred death duty element, will severely restrict the capacity, in terms of economic structure, of the rural industry. The imposition of taxes on employers for fringe benefits which they provide, such as subsidised housing, power, fuel, food and vehicles for family members working on farms, for share farmers and for employees, will very drastically affect the viability of many of our already hard pressed primary producers. The limiting of the amount of farm losses that can be written off against non-farm income where farmers are forced to take outside jobs to keep their farms going will be a serious imposition. Withdrawal of the write-off through tax concessions for expenditure on water conservation and water supply, for example, will be a serious impediment to the future of primary industry. Changes to the wholesale tax structures will increase costs. The capital gains tax, although to apply only to gains on assets purchased or acquired from 19 September, will, in effect, contain a death duty element and will affect the vast majority of people in the community who enter into business from 19 September. In the March 1983 election campaign, the Prime Minister (Mr Hawke) stated categorically: `There will be no capital gains tax'. Again he has breached, and breached without any qualms, a firm undertaking given to the people of Australia. The statement of the Treasurer (Mr Keating) which we are considering says that liability for tax in the case of death will be rolled over to beneficiaries, which simply means, in effect, a deferred death duty. The stipulation appears to be that death duty will be imposed, however, if property is sold after transfer from an estate. That can impose enormous hardship on the family structure. There will be many circumstances where people of advanced age or infants, because of a death occurring in a family for a range of causes, will be seriously affected, in fact, very drastically affected by the imposition of a death duty of that kind. We will await the introduction of the legislation to discover just what the fine print tells us in this very important area of the so-called soft option on the introduction of a capital gains tax. It is interesting to discover that the hot line so widely advertised in recent days for people to use for inquiries is unable to tell those who inquire whether property acquired in the circumstances of a contract exchanged before 19 September and payment of a deposit a day after 19 September will become the subject of capital gains in the future. The hot line-the answer to everything, according to the Treasurer-cannot tell one of my constituents the answer to that question. I hope that is something that will be cleared up during this debate. When the Treasurer replies to this debate, I ask that he specifically answer that particular question. Mr Cowan —It is only one of many. Mr IAN ROBINSON —It is only one of many, as my colleague the honourable member for Lyne mentions. The tax on fringe benefits will seriously affect farmers and small businesses. It will increase employers' costs very drastically indeed, and this must have a flow-on adverse impact on costs as well as a subsequent inflationary effect. The limit to be imposed on the amount of farm losses that can be written off against non-farm income will hit very many small farmers severely. The reason is patently clear. The honourable member for Hunter just would not understand this aspect. Many small farmers find that, due to seasonal circumstances and unless they take outside work, there is no way they can continue to live on their farms and sustain their families. Very often, not only the farmer but also his wife find it necessary to take outside work in order to sustain a low income farm, but which is the place that they and their family live. There is no option. Do they sell? If they do sell, they suffer a severe tax imposition because of the reduced opportunity to allow off-farm income to be offset against farm costs, farm costs which are inescapable in the circumstances that arise due to whatever the nature of the seasonal conditions. The sugar industry, the dairy industry and the fruit growing industry in recent times have all suffered the very severe impact of a fall in world market prices. Many of those farmers, in order to maintain their properties and to stay in existence, have had to take outside work. Naturally they have to offset their farm losses with incomes so derived. We are told that there will be an advantage because there will be a reintroduction of averaging. Those who have the responsibility in terms of an accountancy approach to assess these matters tell me that the farmers-the small farmers-of this country will still be the losers despite the endeavours of the Minister for Primary Industry (Mr Kerin), the Treasurer and others to state a case in support of their determination in this matter. It is a decision which I am sure will reflect as a very unsatisfactory and a very damaging implication as the whole picture of the tax reform package takes shape. We then think, of course, of the direct impact on rural communities in terms of the changes that have immediately prevented those who see, as an essential part of the development of their small farms, the creation of an adequate water supply. As from the announcement on 19 September, no longer will there be a five-year write-off for the provision of an adequate water supply, water storage and all that goes with it. Yet we are told by this same Government-by those who sit on the front bench and by the Prime Minister-that the farmers should do more to provide for the difficulties which they encounter. It is being said: `Go out and provide water storage; provide against drought and bushfires. Don't come to us because you have problems later'. The very incentive that would make that possible has been taken away by the Government overnight without any compunction at all. So the long, sad story goes on in respect of this Government's care of the rural sector. It applies in those important matters not only to the rural sector but to the entire non-metropolitan community. Let us recall that the largest rally ever of farmers expressing concern in this nation was held outside this building on 1 July. The Prime Minister went out there and said: `I promise you a package in the Budget to meet your needs'. So what did we see? There was the Budget, a subsequent economic statement and now this tax package, and nowhere an adequate response from the Prime Minister, from the Minister for Primary Industry or from the Government in any way, shape or form that fulfils that undertaking. It is a reflection on the Government and on those on the Labor benches who support it. This tax package turns out to be a further attempt at nothing short of dire socialisation, a stringent attempt by the Government to cover up what it had been unable to do. The tax options proposed in the great summit in this chamber have been a fizzer, and for very good reason. As the debate went on at that time, all sections of the community discovered that they were getting a raw deal. There just was not a deal in it. So the Prime Minister scampered off to the Lakeside Hotel to make a deal with the Australian Council of Trade Unions and then came back into this chamber and said-not to the Parliament but to a television audience and to other media outlets-`Ah, we have an answer to all this; we will have a different package altogether'. His Treasurer almost died of a heart attack at that moment, and it has taken him months to recover. During that recovery period he has gone for an option that is totally unsatisfactory in terms of the future management of the economy. Let us remember that it is not only the loss of fringe benefits which the socialists, particularly the Socialist Left in this chamber, take some pride in making all sorts of assertions about. It is the impact of the loss of these fringe benefits that will be so adverse to the future of private enterprise. It has to provide the employment that is so necessary in this nation if we are to overcome the ills of unemployment and stagnation that are putting us in hock to an extent that our national debt is the highest ever. The servicing of that debt is a drag on the Budget to the extent that it is almost impossible for any economic adequacy in terms of solving the problem. When we come up with any sensible suggestion from this side of the House, it is ridiculed. It will be a short run to the time when people will realise that the four steps under the proposals in the tax changes that will take effect over the next two years will turn out to be phoney to the extent that at least a million of the taxpayers in the lower brackets will find themselves in a higher bracket. They will pay the same or more tax. The tax take will not be reduced. There is no attempt, as proposed by the coalition parties, for income splitting to assist families to give some relief of a practical kind that might help to overcome the ills or the failures of the Hawke Government which is dragging this nation into severe and irrecoverable debt. Reality must be reached. In this debate we have heard all sorts of references to taxation thus far today, but not a word about the Government's intention as to how it will reduce expenditure and, in the course of so doing, relieve the taxpaying community of Australia. This debate is just an attempt by the Government to pull the wool over the eyes of Australian taxpayers. It will leave us without any effective response to the needs of real tax reform and will ignore the proposals which have been put forward by representatives of the true free enterprise sections of this nation as to possible inputs to assist in the serious circumstances in which the Australian nation finds itself. Mrs DARLING(Lilley)(5.55) —Despite the pseudo-pessimistic outpourings of the Opposition, I believe that all members of the House, including Opposition members, are aware of the wide range of reforms undertaken by this Government in the area of taxation. Previous speakers on the subject have provided a most thorough and comprehensive analysis of the various positive features of the statement by the Treasurer (Mr Keating) on tax reform. I recognise, as I am sure do the majority of Australians, a need for a serious and committed approach to tax reform. It is past the time for politicking. I am also in no doubt that the majority of Australians feel that the Hawke Government is the only option as a government with the commitment, foresight, courage and economic knowhow to achieve real and lasting tax reform. Under the leadership of our opponents, tax avoidance and evasion bit deeply into the public purse. They did nothing to stop it. A range of tax shelters, bottom of the harbour schemes and other tax rorts went uncontrolled while the burden of taxation fell more heavily on the average pay as you earn taxpayer attempting to earn an honest income. The former Government made much of its commitment to end tax avoidance but, in the cold light of day its record in actively achieving any sort of tax reform is deplorably deficient. It did not even try. In 1983 the people of Australia overwhelmingly voiced their opinion at the ballot box that the Hawke Labor Government was the only government capable of pulling this country out of the deep recession caused by our opponents. In the two-and-a-half years since then Australia has been applauded internationally for effecting the most remarkable economic recovery in the Western world. We should remember that unemployment and inflation have been significantly reduced, economic growth is outstripping most of our rivals, and there is a confidence in the electorate that this Government is achieving what it set out to do when it inherited the economic woes of the Fraser-Howard leadership. Under the accord, sustained economic growth has been achieved and the benefits of an expanding revitalised economy will flow on to all Australians. However, economic recovery is not enough. The enlightened economic management of this Government may have healed some of the scars of seven-and-a-half years of virtual Fraser moratorium, but there are shortcomings in our economic system that have existed since long before the 1970s. The economic history of this country has been characterised by the presence of an inequitable, discriminatory and unwieldy taxation system which has hampered the development of the considerable economic resources of this country. As time has gone on, successive governments have recognised the inherent deficiencies which have progressively impaired our tax system, but no government has moved to implement reforms for fear of some electoral backlash-until now. The Hawke Labor Government made tax reform one of its priorities after the 1984 election. The mandate provided by the people of Australia at that poll has ensured that tax reform will at last be achieved. The issue of tax reform is at the very heart of the principles underlying the Labor movement. The Labor Party has always been committed to the principles of fairness, equality and assistance to those in need, and every policy initiated by this Government reflects these aims. Under Labor, welfare has become a prominent part of government policy which, when combined with the innovative and responsible fiscal management of this Government, has ensured the advancement and full development of Australia. The principles underlying the Federal Government's tax reform proposals directly reflect this. For years our opponents neglected the difficult social and economic issues facing our community, preferring instead to take easy options which reinforced the inequalities and anomalies of our economic system. Put quite simply, our opponents underestimated the electorate for the Opposition's perception of Australia is one of a simplistic nature, not given to any commitment to serious social issues or a firm vision of a planned and viable future for Australia and for Australians. The Opposition is hopelessly out of touch with the Australia of 1985, which represents an educated, aware, committed and sophisticated electorate whose concept of what governments can and must do is clearly defined. The Australian people expect a strong competent government with the foresight to anticipate the needs of the future. In 1983 and again in 1984 the Australian people got exactly that. This Government does not underestimate the electorate. We recognise its special needs. We recognise that it has a voice, and we gave it the opportunity to use that voice at the tax summit. The summit brought Australians together in a common quest for tax reform that could never be envisaged under a coalition government which sees such a get- together as merely hot air. Honourable members opposite are certainly experts on hot air. They do not understand that the underlying precepts of the summit were to give people the opportunity to tell their government what it was that they, the people, wanted. Out of that tax summit has come a range of proposals with which the Government has attempted to reflect the will of the community. This is important because ultimately the business of government involves bringing policy to the people. The tax reform proposals announced by the Treasurer last month achieve exactly that. One of the major social issues this Government has not shirked is recognition of the unacceptable level of poverty in Australia. This Government, unlike its predecessors, has recognised that some people in our society are placed in very adverse economic situations. They are disadvantaged through no fault of their own. One of the prime objectives of tax reform must be an attack on poverty. The Government has built into its tax reform proposals measures which ensure that money recouped from those who have in the past abused the tax system will assist in the elimination of the poverty traps that exist in our welfare system. Many people on social security are subject to extremely high marginal tax rates when they try to earn some extra private income for themselves and their families. When income tests overlap the tax system, people often find themselves caught in traps which limit their ability to earn extra money. The Government has recognised this problem and the fact that it most affects those who are in the greatest need of assistance. Tax reform will, therefore, deal with the problems of these traps in three ways. Firstly, the amount pensioners can earn privately before they are affected by the income test will be increased from $30 to $40 a week for single pensioners and from $50 to $70 for couples. Secondly, the additional allowable income for pensioners with children will be doubled from $6 to $12 a week for every child. Thirdly, the separate income test for rent assistance will be abolished. Of course, everyone has a right to shelter and accommodation, not just those who were born or worked their way into an advantageous position. These three measures will ensure that the welfare payments we provide are not disincentives to earning income. The assault on poverty traps is an important aspect of this Government's attempts at tax reform and typifies the commitment to fairness and equity that should characterise any welfare system. However, there are other important aspects to the package. The taxation system is no longer progressive. Tens of thousands of people have walked away from the system because it has been so easy to avoid. The current top marginal rate of 60c in the dollar has been paid by only a few of those whose income should place them in that bracket. The problem has been that in their place middle income earners have been forced to take up the load. These are people who have not been in a position to arrange their affairs to take advantage of the tax shelters, schemes and concessions. It is for these people, and for these reasons, that the major objective of tax reform has been to reduce substantially the heavy hand of marginal tax rates. The package does other commendable things. A mild capital gains tax will ensure that those who choose to increase their wealth through capital gains rather than through income will pay their fair share of tax, not forgetting that for the great majority of taxpayers the new tax will have no impact, particularly when one considers the lack of retrospectivity and the fact that the tax paid will be discounted to compensate for inflation and the rising cost of living. The levying of tax on non-cash fringe benefits will ensure that the proliferation of remuneration packages with substantial fringe benefits will be brought under control and no longer will be a vehicle by which people can escape tax, as so many have. Members of parliament and public servants will, of course, be treated in the same way as everybody else, being the same as everybody else. The double taxation of company dividends will be largely eliminated and the tax free threshold will be raised. Provisional taxpayers will be able to pay their tax in quarterly instalments so that the burden of seasonal interest rate fluctuations is evened out. The Opposition makes a great deal of noise about the capital gains tax, but it should be restated that the tax exempts the family home, life insurance and superannuation payouts, personal items of up to $5 000, and the family car. In addition, the tax will be wholly prospective from 19 September and will be indexed against inflation. No reasonable person could possibly find fault with the fairness or economic sense of this tax, particularly when one considers the state of crisis into which this country has moved, partly because of the policies of the previous Government and partly because of earlier world events. The point remains that large numbers of Australians have been severely disadvantaged. Money has to be raised to pay for the services that are needed to rectify these inequities. This Government is the first government to have looked at these problems, and it has been able to accept that there will be some electoral backlash to the introduction of tax reform. However, it is prepared to overlook party political expediency, and at least it is willing to introduce that tax reform. The introduction of the identification card system will save the people of Australia $540m in tax revenue and welfare benefits within seven years. I particularly wish to mention one other area of the tax reform package, and that is the rationalisation of the wholesale tax rates. Some confusion emerges in some parts of the electorate when the word `tax' is mentioned. In the case of wholesale tax, some people are unaware of the fact that sales tax has always been levied on a number of consumer goods. There has been a graduated system of tax, with four levels from 7.5 per cent to 32 per cent. Within this breakdown there have been a number of anomalies and inconsistencies which have meant that a range of comparable goods are taxed at different levels. The Government has, therefore, moved to rationalise and simplify the sales tax levels by the introduction of a step system of 10 per cent, 20 per cent and 30 per cent. The Government could have to look at some anomalies there, but the adoption of this simplified system will be accompanied by a re-assessment of the levels of sales tax to reduce the sort of inconsistency that has seen a toothpick taxed at the same level as a fur coat or a diamond necklace. In future, the top rate of 30 per cent will be confined in the main to non-essential or luxury items and the more basic consumer goods used by most people will be taxed at the lower levels or exempted completely. The logic underlying the change to that system of applying wholesale taxes is indicative of the attitude of this Government when looking at the important question of tax reform. The Government will issue guidelines covering vesting, preservation, contributions and control and will legislate to establish a safety net superannuation scheme to which employers will be required to contribute where they have failed to provide cover for their employees under an appropriate scheme. This is part of the package which the Government negotiated with trade unions and employers to ensure that genuine superannuation will be a reality for more working people. The Government intends to provide superannuation to those who do not have cover but wish to. It will introduce an umbrella cover to ensure that not less than 50 per cent of Australians are covered by superannuation. Our aim is eventually to give superannuation cover to all Australians. Madam DEPUTY SPEAKER(Mrs Child) —Order! The honourable member's time has expired. Mr HAWKER(Wannon)(6.10) —In speaking on the tax package today I have to say that, overall, it will be bad for Australia, bad for the people who have to get out and make a living and, from our point of view, probably bad for the Government. Unfortunately, Australia will have to live with it for the next two and a half years. It is remarkable that we are debating a tax package which will require several Bills and yet we have seen none of the Bills. I guess that this must be rather unusual. I do not know whether it has happened in this place before, but for us to have to debate legislation we have not even seen does seem to be rather unusual. It is interesting to look at the history of this so-called tax reform that the Treasurer (Mr Keating) has placed before us. In fact, we see that three times he tried to put together a tax package and twice he failed to get approval from his boss, the Australian Council of Trade Unions. In fact, the Treasurer, in one of his more frank moments, in the House on 17 September, said: Yes, I failed, but I tried . . . I guess that that sums it all up. This time, on the third attempt, we have a hotchpotch of taxes which takes the worst aspects of all the proposals that have been put forward-the worst aspects from the White Paper, the worst aspects from the package announced after the White Paper and now, at the third attempt, the worst of all. Of course, the fundamental failure of this package is that it does nothing whatsoever to reduce government spending. We still have the highest taxing government since the last war. It is interesting that much has been made about the change in the mix of taxes. The Treasurer has made a lot of noise about this, but he has done nothing about reducing this burden of tax which is leading to many industries and individuals feeling stifled. It is a tax burden that has given this Government the title of the highest taxing peacetime government in Australia's history. The other curious fact about this cure-all pronouncement is that most of the Government's factions talk about redistribution, but little is said about tax evasion in the cash economy. Whilst it is difficult to quantify the size of the cash economy, the best estimates are rather disturbing. Firstly, the estimates show that the size of the cash economy is enormous, and it is growing. It is estimated that it is in the range of 5 to 15 per cent of the recorded gross domestic product. On those figures, which are for the year ended September 1984, the cash economy represents between $8.5 billion and $27.5 billion. We hear much from the left wing faction in particular about taxing the haves in society, but these same members are curiously silent on what they will do about the cash economy. Does the left wing faction believe that those who evade tax through the cash economy are somehow less guilty than other tax evaders? Why does not the Left maintain some consistency? We hear so much bleating about the need for this capital tax, but when the cash economy is mentioned there is nothing but silence. Honourable members should look at the size of the cash economy. It involves billions, maybe tens of billions of dollars. If the Government in general and the Left in particular are serious about tax reform, a major step must be to start collecting tax from the cash economy. Of course, one way of collecting this evaded tax is by broadening the base of indirect taxes. Yet the Left opposes this. One wonders whether the Left should not be dubbed the real champions of tax evasion. In the short time available to me I will confine most of my remarks to the new capital gains tax. One of the worst aspects of this package is the introduction of a new capital gains tax. As everyone knows, Australia already has a capital gains tax under the provisions of section 26AAA and section 25A of the Income Tax Assessment Act. Under these two sections speculative capital gains are taxed. Most Australians accept that speculative gains should be taxed. However, I remind honourable members of the election promise the Prime Minister (Mr Hawke) made in 1983, just two and a half years ago. He said: And here let me make one point so that even our opponents can understand it; and let me make it beyond all their powers of misrepresentation and distortion. There will be no new capital gains tax. Now we have a capital gains tax, just two and a half years later. That promise, which was made before the 1983 election, has been very conveniently dropped. No wonder people get cynical about the Prime Minister. A new capital gains tax has been proposed. It is not on just speculative gains; it is on genuine gains of people who work, people who endeavour to help themselves, people who endeavour to make this country a better place and people who endeavour to provide extra employment. One of the worst aspects of this capital gains tax is that there is no time limit. It is obvious that people who will be caught by this measure may not know about it until after 10, 20 or 30 years or so. It is obvious that the Government has agonised for months over how to introduce the new capital gains tax in what appears to be a relatively mild form. But never let anyone forget a couple of salient points about tax. When income tax was reintroduced in Britain in 1842, it was considered to be merely a temporary measure. It was levied at the rate of 7d in the #1. I remind honourable members that that was the old #1, when it took 240 pennies to make #1. So the tax was levied at a very low rate-something like 3 per cent. The point I am making is that history can show that when a tax is introduced it nearly always starts at a very low rate. Much is being made about indexing the new capital gains tax for inflation. But who honestly believes that this Government will go through all the criticism associated with introducing a new tax just to raise $25m over five years? Oh no, it will be like the history of other taxes. The Government will start at a low rate and quietly increase the rates after the noise has eased. I challenge the Treasurer to tell the House otherwise. I challenge him to state that within a year or so he will not attempt to tighten the screws on the capital gains tax. Let us look a little further at the new capital gains tax. Firstly, the Treasurer admits that it will not raise much revenue in the overall Budget. Has anyone thought of the complexities of administering such a tax? Has anyone really thought of the complexities of complying with a capital gains tax? As I have already said, there is no time limit. Has the Treasurer thought about how people will keep for decades records of every asset they purchase after 19 September? Imagine the added difficulties of having to work out at the time of sale whether assets accumulated over half a lifetime or more are to be subject to the capital gains tax. Imagine the time and cost involved every time a commercial decision to sell an asset has to be qualified by the effects of a capital gains tax being applied after all those years. The complexities are enormous. This was recognised by the Asprey Taxation Review Committee in 1975 when, speaking about a capital gains tax, it said: It is a tax which, in any administrable form, must be complex and difficult, and produce some anomalies and inequities of its own. There is no doubt whatever that any revenue it raises could be more cheaply and easily raised in other ways. By the criterion of simplicity it fails. That is, by the criterion of simplicity, a capital gains tax fails. But the Government has prepared itself well for this capital gains tax. Let us look at the pensioners and at what the assets test has done. The Government has bullied pensioners to disclose all their assets. Many pensioners now have the value of their assets on a government register. Imagine how pensioners must feel now, knowing that any change in their assets from now on will mean that the capital gains tax will hang over their heads. Every change in assets will be recorded on the government register. Can we not leave older people some dignity? Apparently, in the eyes of the Treasurer, the answer is no. Because of the sensitivities of the capital gains tax the Government is very quick to point out that the family home will be exempt. Let us examine what effect this will have. Already we are seeing pressure on pensioners to move their assets into more expensive homes in order to qualify for a pension. Exempting the family home from a capital gains tax would accelerate this move. The result will be counter-productive to the aims of those who want cheaper housing in Australia. Instead, more and more of a family's assets will be sunk into its home. In other words, more and more of Australia's capital will be diverted from productive areas to become tied up in non-productive houses. Think of what this will do to rental housing. If nothing else, a capital gains tax which exempts the family home, when coupled with the pensions assets test, will mean that many Australians will end up with the best homes in the world. The other side of the coin is that it will lead to reduced investment in productive resources. Such a move could be disastrous to our industries and could have devastating effects in country areas. It must also reduce the opportunities for new investment, which is needed to create jobs. What about the effects of a capital gains tax on farming? The Treasurer claims that farmers do not have to worry because the value of land does not increase faster than the consumer price index. As my colleague the honourable member for Corangamite mentioned earlier today, this has been shown to be a complete fallacy. The National Farmers Federation has taken out some figures which show that land values in farming areas increase faster in many cases than the rate of inflation. Rural land values move much more in line with commodity prices. For example, in the wheat belt land values go up and down roughly in line with wheat prices. Seasons also affect land values. Thus, if a farmer shows enterprise and buys a farm during a recession, he will be penalised for showing that enterprise, penalised for taking a risk, and this capital gains tax will hang over his head for years. Let us look at some of the other effects of a capital gains tax. It has already been mentioned that it includes an element of death duties. The Treasurer has tried to ignore this, but when one analyses it one finds that with the rollover provisions someone who inherits, say, a small farm and then, showing industriousness and endeavour, expands it in order to be more productive and to create further employment could be locked into a capital gains tax which goes back over 10, 20, 30 years or more. Obviously such a person would be in the awkward position of wondering what to do. If he sold the farm in order to expand, the additional capital that he would need to buy a new farm would be whipped away by a capital gains tax. The Treasurer makes much about the fact that the capital gains tax will not affect current land values. I suggest he will find things will be very different because current land values obviously will be affected. People know now that any block of land or farm they buy from now on will be subject to a capital gains tax. Obviously people will not seek to put their money into a productive asset such as a farm because they will have that additional burden. It has already been mentioned in this chamber today that farming is not a highly profitable enterprise. Many farmers are struggling just to break even. Nowadays the average return on farming capital is somewhat less than 2 per cent. The current figures of the Bureau of Agricultural Economics show that the returns on farming will drop by a further 22 per cent in the current year. I do not think that it can be argued that taxing an enterprise such as this will not have an effect on land values; it will have a very severe effect on land values. People who already own land and who have already borrowed in order to expand will find that they will lose a lot of their equity due to depressed land values, so they will find it even more difficult to service their loans. I assure all honourable members that many farmers are now facing an intolerable situation with the high interest rates that currently exist in this country. Mr Downer —The highest rates for 50 years. Mr HAWKER —As the honourable member for Mayo has just reminded me, they are the highest interest rates for 50 years. With a reduced equity, it will be harder and harder for farmers to get out of their debt situation. For those honourable members who want a more authoritative opinion on the matter of a capital gains tax, I shall quote an editorial of 18 March in the Australian headed `Capital gains must be ruled out'. The editorial stated: The arguments against any new such tax are overwhelming. It further stated: Such a tax would probably have the overall effect of actually lowering the amount of tax revenue raised. This is because, like all taxes, it would affect incentive. A new capital gains tax would automatically discourage the formation of capital and therefore discourage investment and new jobs. There can be no doubt that a capital gains tax should not be introduced in this Parliament. The Treasurer still has time to withdraw the legislation since we have not even seen it. As I have stated, it would be extremely complex to administer, extremely complex to comply with and extremely costly. It would raise little revenue-the Treasurer has already admitted that-but it would lead to the diverting of scarce capital into unproductive resources. The Treasurer has, in his own words, failed. Australia will not benefit by this tax package. Madam DEPUTY SPEAKER(Mrs Child) —Order! The honourable member's time has expired. Mr WRIGHT(Capricornia)(6.26) —I enter this debate first of all to praise the Hawke Government for the most significant tax reforms that have been undertaken in this country by an Australian government. These reforms have been well received by millions of Australians who believe in tax justice. I have listened to the comments put forward by the Opposition and I am not surprised that it is desperate to try to discredit the proposals. Whilst I will not cast aspersions on the honourable member for Wannon (Mr Hawker), who has just resumed his seat, I certainly wish to comment on other Opposition members, particularly members of the National Party of Australia. It is clear from Press releases that have appeared throughout Queensland that the National Party is prepared to go to any length to discredit the tax proposals put forward by the Treasurer, Mr Keating. Some most dishonest claims have come from the National Party. I am pleased that the honourable member for Hinkler (Mr Conquest) is in the chamber. On 21 September in the Morning Bulletin, which circulates throughout central Queensland, the Premier of Queensland, Sir Joh Bjelke- Petersen, claimed that these tax reforms would bring about a death duty. Over many years I have heard of the sort of stupidity that the Premier of Queensland, Sir Joh Bjelke-Petersen, can be linked with and heard some of the mad claims that he makes, but I would have thought that a member of this chamber, having had the chance to read the statement by Treasurer Keating, would not restate that lie. Instead, we find in the Morning Bulletin of 26 September the honourable member for Hinkler, Mr Conquest, in an article which I believe would have been prepared by National Party headquarters and which was headed `Budget blow to man on the land claims member', stating: The proposed capital gains tax includes a deferred death duty. Mr Conquest —That is right. Mr WRIGHT —I am simply amazed that the honourable member now reiterates that lie. I hope that he will try to substantiate this statement because it is simply untrue. Madam DEPUTY SPEAKER(Mrs Child) —Order! I ask the honourable member to substitute another word for the one that is not considered parliamentary. Mr WRIGHT —The untruths told by the honourable member for Hinkler are blatant misrepresentations. There is no death duty in the proposals put forward by Treasurer Keating. There is no deferred death duty in the proposals put forward by the Hawke Labor Government. The Bjelke-Petersen Government, the National Party in Queensland and the honourable member for Hinkler stand condemned for their strategy of telling untruths in order, I believe, to engender fear and to try to gain politically. The new capital gains tax-it is really an extension of existing provisions-has been carefully designed after close consideration of community views. Its impact will be moderate, and that has been admitted by Opposition speakers. Its impact will also be very gradual. Mr Conquest —Are you still on the rural committee? Mr WRIGHT —Yes, I am. I spoke to grain growers in Biloela and Thangool last Thursday night. Once I explained the truth and told them what was really happening, they could understand why the Federal Government has introduced this provision. This proposed capital gains tax does not apply in any way to any asset owned by any person prior to 19 September. All the assets owned or acquired before 19 September are exempt from the tax and will remain exempt for ever and ever while that person owns that property or asset. Sitting suspended from 6.30 to 8 p.m. (Quorum formed) Mr WRIGHT —Prior to the suspension for dinner I was commenting on the outlandish claims, fabrications, blatant misrepresentation and untruths that have been propagated by Bjelke-Petersen in Queensland and the honourable member for Hinkler. They made out that the new capital gains tax is in fact a death duty. I pointed out that this is certainly untrue. There is no death duty in the package presented by the Treasurer. In fact, there is no way that properties owned at this time cannot be transferred. Honourable members will appreciate, as I continue my speech, that from generation to generation a property owned at this moment can be passed on. All assets owned or acquired before 19 September are exempt from tax. These properties or assets will remain exempt from tax in the future. If a person dies, that property or asset can be passed on to a son, daughter or relative, and still not be taxed. It is an outright untruth to claim that we have imposed death duties. A person owning land now could pass it on to sons or daughters who could keep it until they in turn die. It could then be passed on to their son or daughter in 30, 40 or 50 years' time and there would still be no tax. I stress that the capital gains tax applies to assets acquired only on or after 20 September. Even then, it does not apply to the family home, farmhouse or to a reasonable amount of surrounding land. It does not apply to the sale of a motor vehicle or personal items up to the value of $5,000. I note also that some National Party members claim that the capital gains tax applies to any increase in the value of an asset if it is sold. That is bunkum. It is totally untrue. That may be Liberal or National Party policy but it is certainly not the policy of the Hawke Labor Government. Under this Government the proposed capital gains tax will apply only to assets which increase in value more rapidly than the rate of inflation. Therefore, many people will make significant capital gains and yet they will pay no tax. Many others will pay a very small amount of tax. I will explain this by giving an example. If a person purchases a farm or a building on 30 September 1985 for $100,000 and sells that property for $150,000 in July 1993, and if one assumes that during those eight years the compounded consumer price index increases by 45 per cent that is, to $45,000-the real capital gain liable for tax will be only $5,000. Even then, if the taxpayer is liable for tax at a marginal rate of perhaps 40 per cent, the tax that that person will pay on the realised real capital gain would be $2,000, after having a property initially worth $100,000 which was sold for $150,000. That tax is peanuts. We need to contrast that with the proposition being put forward by the National Party and the Liberal Party. First, we heard that the Liberal and National parties would repeal the capital gains tax. Now we are told by Senator Tony Messner that that would not necessarily be so. In fact, he said that the Liberal-National Party policy would be to use section 26A or section 26AAA of the Income Tax Assessment Act to apply its capital gains tax. If that happened, the taxpayer would not pay tax on the $5,000, he would pay tax on the difference-$50,000. If farmers are concerned, they ought to be concerned about people such as the honourable member for Hinkler and the National Party cronies that surround him. The Labor Party says very clearly that tax shall be applied to the actual realised capital gain. In the example that I gave that is an amount of $5,000, and the tax would be $2,000. That would be a totally different story under the Liberal Party, because it would apply tax on $50,000. Those opposite are hypocrites. On one hand, they say that there will be no capital gains tax, and on the other they say that there will be. I would be pleased to hear comments from the National Farmers Federation. It is always quick to castigate and argue against policies put forward by the Labor Party. I note that even today its representatives were speaking against the capital gains tax proposed by the Labor Party but they have not yet said anything about the proposals being put forward by the National Party and the Liberal Party. We will wait and see. Let us further contrast the policy of the Liberal and National parties with that of the Labor Party. The ALP policy is not only to allow deductions for inflation-as I pointed out before there would be $45,000 of deductions for inflation on the sale that I mentioned-but also the money spent on capital improvements to the property would be indexed to the inflation rate and deductible from the sale proceeds when calculating the capital gains tax. So it is quite possible that when people sell their properties, because of the improvements that they have made, they would pay no tax. Furthermore, it is part of this policy that the capital losses in money terms can be offset against capital gains. Despite all the fear that the Liberals and Nationals have tried to generate in the community, they are telling blatant untruths. They are fabricating the position. Despite what the National Party says, the tax will not apply to any assets transferred at death. So a farm can pass on from generation to generation without tax being levied. The tax applies only when the asset is disposed of. If someone inherits a property, he pays no tax. If he later chooses to sell, the capital gains tax will apply only to the actual real realised capital gain on the value of the property from when it was inherited. Again, I will use the example that if the property was worth $100,000 when inherited, and if it was sold some years later for $150,000, using the same CPI figures that I cited before, a tax of $2,000 would be paid under our policy. Under the Liberals and Nationals it would be far more than that. In fact, the tax would be about $20,000 on that gain. People throughout the nation have asked: Why the need for a capital gains tax? That is a fair question because we have had a capital gains tax written into our tax law but it has not always been applied. I believe, as does the Labor Party, that any tax system should be even-handed. Everyone realises that for many years some people have got much of their income from capital gains. They have certainly got their income from this area but they have paid no tax. That is not the situation for the ordinary worker, the farmer or the small business person. They pay tax on everything they earn-but not these people. They have been able to make in many cases hundreds of thousands of dollars. Mr Beale —Farmers do not pay tax. They do not have enough income. Mr WRIGHT —The farmer pays tax on everything that he sells- Mr Beale —They do not have enough income. Don't you read the papers? Mr WRIGHT —Some of them do. I accept the honourable member's point. That is one of the reasons why this tax will not hurt farmers. We have had situations in which the lack of capital gains has helped tax avoiders. In the past people have dressed up their ordinary income as tax free capital gains. We are going to put an end to that. In the past also, we have had investments placed in certain areas only because of the tax advantage. No thought has been given to the benefit in terms of income earning capacity or to the fact that it might employ people; it has been done only to create a tax shelter or a tax advantage. A capital gains tax as has been proposed by the Labor Government will stimulate investment in the productive areas. It will generate more jobs and more profits for the whole nation. It will help the farmers also. I spoke to a group of farmers last Thursday night. They admitted that very often the price of land has been forced up because of the Pitt Street farmer-that person who goes into the tax shelter area, who has invested in properties and who would not know one end of a cow from the other. Such people go into this area simply to save tax or to avoid paying any tax at all. Years later they sell that property at enormous profits and push up the price of surrounding land. I believe that the proposed capital gains tax will put an end to that. It will put an end to the developers, the speculators and those professionals who have been investing in farm lands and other businesses just to evade tax. I was told of the case of a fellow on the Gold Coast who bought a unit when it was on the plan, later sold it at a profit of some $205,000 and paid no tax on that investment. Mr Shipton —He took a risk. Mr WRIGHT —He may have taken some risks. I believe in risk and reward, but I doubt whether there was any risk in that. He paid a very minor deposit when he went into the sale and later on he made a massive profit and did not pay one cent of tax on that money. He still gets the benefit from the nation; he still rides on the roads; his kids are still educated in our schools; he still gets the benefit of the health system; and he can still get all the benefits of the defence forces. He gets all the benefits of our society but he makes no real contribution to it. So there is a need for change. We need to ensure that people pay their way. For the first few years, this tax will not derive very much-it is a matter of some $25 million-but it is a start. It means that we are going to make sure that our tax system is even-handed. We are going to make sure that it has that degree of justice and equity. I believe that the Hawke Government has shown enormous courage. It has shown that it is prepared to make tough decisions and to grapple with the problems. At the same time, it is prepared to acknowledge problems that can arise for ordinary people. That is why in this tax measure we find that there are exemptions for the farm house and the surrounding property, the family home, assets and motor vehicles. Exemptions will be provided by way of deduction for the consumer price index or inflation. There will be exemptions or deductions for the expenditure one might put into developing a property. This is the fair and proper way to administer a tax such as this. In the closing moments of my speech, I reiterate that the capital gains tax which the Liberal-National Party now admits it is going to have will be on the actual capital gain. A person who buys something for $100,000 and sells it later for $200,000 will pay capital gains tax on $100,000. There is no reference in section 26AAA or section 26A- Mr SPEAKER —Order! The honourable member's time has expired. Mr ANDREW(Wakefield)(8.14) —I rise to address the House in this debate on the taxation statement of the Treasurer (Mr Keating) from the point of view of those who have been the most disadvantaged in the Australian community-those from rural areas who have seen incomes falling while this taxation statement has been handed down. The only real statement of fact in this taxation statement occurs on the cover, the words on which, if one reads them vertically downwards, spell RATS. That is precisely what this package is. This taxation statement by the Treasurer has been mere rhetoric, and the Treasurer knows it. This is not the document that the Treasurer wanted to introduce into the House of Representatives. It is not a document setting out real reform of the Australian taxation system. When the honourable member for Capricornia (Mr Wright) said that it was a matter of significant reform, he knew that he was deceiving the House and himself. What we have here is nothing more than a smorgasbord of minimal reform, a conglomeration of the compromises that the Treasurer was forced to make as he backed down from options A, B and C to the option he finished up with. Mr Lee —Rubbish! Mr ANDREW —This document is nothing more than an attack on the prudent people in our community. No one in this House has denied that there is a real need in Australia for taxation reform, and the need is best illustrated by the simple, inescapable fact that in 1954 or 1955 one would have had to have an income, in 1985 terms, of $400,000 before one had to pay tax at the rate of 60 cents in the dollar at which people with a salary of $35,000 currently pay tax. No one denies that there is a need for reform, but even the economically illiterate know that this document does nothing to achieve real taxation reform because there can be no real taxation reform unless we determine how we are to reduce government expenditure. Unless the Government is prepared to accept less and spend less there can be no real taxation changes. Even the economically illiterate know that. In fact, in spite of the protestations from the people opposite, the equally inescapable reality is that the Hawke Government has, during its time in office, increased the tax burden carried by all Australians. I note that there are those anxious to interject with the word `rubbish'. So, let me quote not from some Liberal Party document but from a taxation statement which shows that the Budget Papers-the Budget Papers, if you please-show that the total Budget receipts, total government revenue, is at an all time high of 27 per cent of gross domestic product. That figure is even higher than in the first two Hawke Budgets. But, more pointed than that, the first three Hawke Budgets have increased taxes by an average of 5.7 per cent in real terms compared with an average increase of 3.4 per cent over the seven Fraser Budgets. There are those opposite who have been anxious to point out that this is a Government of taxation reform. I wish to illustrate the number of taxes that have been introduced in Australia and the governments that have chosen to introduce them. On 27 May, I asked the Treasurer, on notice, the following question: When were (a) personal income tax, (b) sales tax, (c) death duties, (d) gift duties, (e) pay-roll tax and (f) entertainment tax first introduced and by which government. The reply I received was: Mr KEATING —The answer to the honourable member's question is as follows: (1) (a) Federal personal income tax was introduced in 1915 by the Fisher Government. (b) Sales tax was introduced in 1930- as a temporary measure- by the Scullin Government. (c) Estate duties, also known as death duties, were introduced in 1914 by the Fisher Government. Subsequently, of course, they were removed by the coalition. The answer continued: (d) Gift duty was introduced in 1941 by the Curtin Government. It was subsequently removed by the coalition government. The answer continued: (e) Pay-roll tax- I indicate this to show that I am being as bipartisan as possible in this debate- was introduced in 1941 by the Menzies Government. It was subsequently passed over to the States. The answer continued: (f) Entertainment tax was introduced in 1916 by the Hughes Government. These measures covered the major area of taxation revenue. The record of those opposite in taxation reform is not as rosy as they would want us to believe. In fact, in spite of what has been said, we cannot escape the truth that no one did as much to tidy up tax rorts as did the present Leader of the Opposition (Mr Howard). I opened my contribution to this debate by saying that the taxation statement currently being discussed is an attack on the prudent. I reinforce it by focusing on the real attack that the taxation statement represents on rural Australians. Much has been made of the fact that this document introduces a capital gains tax. As we listened to the honourable member for Capricornia we could have been forgiven for imagining that a capital gains tax was some sort of tax that did not apply in Australia and therefore ought to be introduced. Of course, in reality there has long been a capital gains tax in place which has picked up tax on speculative gains and which has been supported by members on this side of the House. In addition, a major part of local government revenue comes from capital gains taxation. What we are debating tonight is a proposal for a capital gains tax that runs counter to a promise that the Prime Minister (Mr Hawke) made when he said: `There will be no capital gains tax'. I noted that the honourable member for Wannon (Mr Hawker) challenged the Treasurer to offer the House an assurance that he would not expand this tax. While I appreciate the sentiments behind the honourable member for Wannon's statement, I have to ask him what the promises would be worth in view of the Prime Minister's original promise not to introduce such a tax. I could not believe my ears when the honourable member for Hunter (Mr Fitzgibbon) stood in the House and said: `In my office there has been no criticism of the capital gains tax'. Furthermore, the honourable member for Hunter said that the honourable member for Gwydir (Mr Hunt) was speaking an untruth when the honourable member for Gwydir suggested that he had had letters of criticism of the Goverment's capital gains tax. I am not quite sure what method of mail interception the honourable member for Hunter uses that allows him to keep an eye on the mail of the honourable member for Gwydir but I can reassure him that all of the mail in my office referring to capital gains taxation has been critical and has expressed the real concern that farmers feel about this new taxation measure. Mr Hawker —With good reason. Mr ANDREW —The honourable member has interjected: `With good reason'. That is not because the capital gains tax involves a large amount of money but because the capital gains tax has to be the thin end of the wedge. There is no way that a Treasurer from either side of the House would introduce a tax to raise $25m over five years without intending to expand that taxation base. In fact, the Treasurer has refused to give a guarantee not to expand that base because he would not have introduced this measure if he had not intended to raise more than $25m in five years. The defence of the capital taxation measure that we have heard from the honourable member for Capricornia and other honourable members opposite has been nothing short of absurd. I repeat, for the benefit of those honourable members opposite who have chosen to be less than honest in their assessment of the policies espoused here, that the Opposition is committed to repealing this particularly offensive piece of legislation. I have said that the capital gains tax in fact will generate nothing more than $25m over five years. While I am on the subject of lump sums of $25m, I refer to another portion of the tax package. That is the portion which looks to removing the opportunity for tax write-offs that existed as a result of money spent in water distribution and irrigation equipment. In fact, the Government has chosen to attack those irrigation farmers and water distributors across Australia. Mr Lee —Like yourself. Mr ANDREW —The Government has chosen to take from them the sum of $25m. I am pleased that the honourable member for Dobell has chosen to interject, because he is quite right. I have used this particular facility. It is for that reason that I speak with some passion about what he is doing to South Australian irrigators. I do not know why the Premier of South Australia has failed to alert the Government to the damage that will be done to South Australia-I refer not only to South Australian irrigators, but also to South Australia and South Australians-as a result of this measure in the tax package. Nothing has done as much to improve water distribution in the water hungry State of South Australia as has this tax write-off measure. Furthermore, nothing has done as much to improve the quality of water available to all South Australians as has this measure. This measure has meant that far from the awfully extravagant use of flood irrigation water we have had people choosing to apportion to plants the water those plants need. That has minimised the drainage inflows and the consequent saline build-up in the River Murray. It does not just affect the River Murray irrigators. Every farmer who chooses to improve stock watering facilities is now denied the write-off he once had for that improvement. Every farmer who chooses to be something of an environmentalist by planting trees and providing supplementary irrigation by drip irrigation loses the opportunity to sustain those trees adequately as a result of this tax measure. For what reason is that measure being introduced? It is being imposed for the sake of $25m. That sum will be paid by those farmers who are among the most struggling. Of course, it is this focus on the strugglers in the rural community that I turn to when I remind the House that the quarantining of farm losses also is a burden borne directly by struggling farmers. Too few people realise that it is those farmers on small properties who have often got on to those properties by being able to work off the property in the first instance. Mr Hawker —Starting off shearing. Mr ANDREW —Of course, they are often people who have started off as shearers or contract fruit pickers and who are prepared to work no matter what the weather in order to get on to a small property. The opportunity to offset farm losses against the income they earn somewhere else is to be denied those people. The impression one has from the views espoused by honourable members opposite is that this is some sort of attack on the wealthy. The reality is that the people being protected by those of us debating the matter on this side of the House are rural people who are struggling to make ends meet. Their plight produces nothing but mirth from honourable members opposite. The honourable member for Dobell (Mr Lee) in his speech said that people in his electorate do not write off large incomes. I remind him that this offsetting of farm losses does not help just those on large incomes. It helps those who are endeavouring to get on to the land, often in a very small way. This taxation statement by the Treasurer is an attack on the risk takers, the prudent and self-motivated in our community. It is being sold through an expensive advertising campaign that offers a hot line. However, my electoral office already has been inundated by people who have dialled the hot line and got no answer at all. If honourable members will pardon the Irish logic, those people who got an answer, got an answer that was not an answer at all. This statement attacks those who are already disadvantaged. It attacks the rural people of Australia who, having faced falling incomes, now face a further fall in their farm incomes as a result of the Treasurer's supposed reform of the Australian taxation system. As I said in my opening statement, the only honest statement is on the outside cover of the Treasurer's policy where this reform is referred to as `RATS'. Mr PRICE(Chifley)(8.29) —Tonight I am pleased to speak in support of the taxation package announced by the Treasurer (Mr Keating) on 19 September. This package is the result of the commitment by the Government given to the people of Australia during the last election to reform the taxation system. The current taxation regime is an inheritance of neglect and deceit bequeathed by our political opponents, the Liberal and National parties, in 30 years of government out of the last 35 years. The Government, when re-elected, embarked on a massive and far reaching review of the system, inviting public participation and widespread discussion. At no time was the Government's task assisted by the miserable members opposite in an earnest endeavour to achieve bipartisan support for a more equitable and fairer system. Not only did the Opposition spit the dummy out, and refuse to attend the Taxation Summit, but worse still-we have heard it here tonight from speaker after speaker-at each and every opportunity it attempted to obfuscate, to distort and to instil fear in the Australian public. Opposition members are truly the merchants of doom and gloom. No other government has attempted to inform the Australian people of the massive breakdown of taxation and the difficult options faced by this reforming Government. The success of the Government's campaign of public information and public education can be seen in the general acceptance by the people of the need to reform the system-I am very pleased to hear that the honourable member for Wakefield (Mr Andrew) at least admits that there is a need for reform, although we would not have heard that before the statement-and indeed the acceptance of the decisions and the proposals contained in this package. The package needs to be seen in the general economic framework. The Hawke Labor Government inherited an economy of double digit inflation, double digit unemployment, an economy which, far from growing, was actually contracting. That is the record of the Opposition. It is not our record. That is what the previous Government left us. That is what its good management for the high risk takers gave the people of Australia. Mr Beale —How are you going with real interest rates now? Mr PRICE —Hello, the shadow Minister for sugarless jam has spoken. Welcome to the debate. The economy, far from growing, was actually contracting. We inherited an economy in full retreat and a deficit blowout of $9 billion. In that last fateful year, each and every day, 700 men and women of Australia were losing their jobs. That is the Opposition's miserable record. No wonder the outlook of the Australian people was bleak. No wonder the outlook of the Australian people was pessimistic. This was the situation presided over by the then Treasurer and now Leader of the Opposition, the so-called Honest John Howard. Mr Lee —Dishonest John Howard. Mr PRICE —I cannot disagree with my honourable colleague. The Hawke Labor Government has consistently pursued policies directed towards restoring strong economic growth and creating a fairer Australian society. To the extreme discomfort of those few honourable members opposite, those born to rule, this Labor Government has been extremely successful. In the past two years Australia has enjoyed record growth rates. Indeed, growth projections for the current year show a growth rate twice that for Organisation for Economic Co-operation and Development countries. The package announced by the Treasurer includes income tax, reform of the marginal tax rates, moves to ease poverty traps, the closure of loopholes currently allowing tax avoidance and unfair minimisation, an end to double taxation of dividends, and a rationalisation of the existing tax scale regime. It is important that the people understand that when the package is fully in force, it will cost the Government $4.5 billion, which is considerably more-I have to emphasise that for my friends opposite-than the $1.5 billion which will be actually raised by these reforms. I would like to talk about some of these changes. I am pleased that the tax free threshold has been increased to $5,100. This will be of considerable benefit to the people of my electorate. In a two-stage reduction of marginal rates of personal income tax, the lower rates of taxation will be cut from 1 September 1986 and the higher rates from 1 July 1987. Too many workers and too many people in Australia have been pushed into the marginal rates of 48c in the dollar and 60c in the dollar. I remind the House yet again that it was honourable members opposite who allowed this disgraceful situation. The honourable member for Wakefield actually compared the situation in 1951, when he was in government, and the situation today. We have only been in government for two and a half years. Mr Lee —The do nothing government. Mr PRICE —The do nothings. They say a lot but they do nothing. These high marginal rates of taxation will be reduced to 40 cents and 49 cents respectively. No Australian, whether he be a farmer, a worker, a manager or a business man, will pay more than half his income in tax. The need to reduce marginal rates was often talked about by the Opposition and now will be achieved by this reforming Hawke Labor Government. Typical taxpayers will get an income tax cut of $6 a week from September 1986 and more from July 1987. This is in addition to the average tax cut of around $7.60 a week in November last year. I have spoken before on the issue of poverty traps, and I am very pleased by the measures announced in the package. Some 450,000 social welfare recipients currently receiving a part rate pension will receive an increase of up to $5 per week. This is because the amount of private income a pensioner may earn before his or her pension is reduced under the income test will be increased by $10 per week for single pensioners and by $20 for pensioner couples. The Government will abolish the separate income test on rent assistance. This will reduce the marginal rate of income withdrawal faced by some 700,000 pensioners and beneficiaries receiving rental assistance, in most cases from 50 per cent to zero. Further assistance will be given to pensioners with children. At present the weekly income a pensioner may earn without a reduction of pension is $6 for each child. This allowance is to rise to $12 per child. These measures will be of particular benefit to the large number of social welfare recipients in my electorate and have been well received. This measure will increase the pension rate of all part rate pensioners with children by up to $3 per week for each child. We on this side of the House often get accused of betraying a lack of interest in the business community. There are a number of measures which I believe were long overdue and which in my experience have been well received by the business community. Business will benefit from the introduction of the imputation system, which will remove double taxation of dividends. Mr Beale —You do not even know how it works yet. Your Treasurer doesn't. Mr PRICE —What has the honourable member's Party done? What can the shadow Minister for sugarless jam say his Party has ever done in government to reform the system? Mr Lee —They promised imputation. Mr PRICE —The Opposition promises things but it never delivers. That is the difference between his side of the House and this side. In 1988, when the people come to judge who has actually managed the economy out of the recession, who has the proven track record of success, who has the track record of failure, as the Leader of the Opposition has, the people will decide. It will be clear cut. They will know in their minds instantly who is credible on economic management and who lacks credibility. I was talking about the issue of double taxation of dividends. I want to make it clear from this side of the House that I am very pleased to see that the Government has undertaken this long-overdue major reform. It will allow the strengthening of the corporate sector capital base and will allow for the development of a broader and more efficient capital market. This proposal has been little understood by the Opposition. The share markets of this country have responded favourably and dramatically, and one only has to look at what the indices have been. In the brief time that is left to me I want to return to the point that was made by the shadow Minister for sugarless jam, the honourable member for Deakin (Mr Beale), about performance. As my colleague the honourable member for Dobell (Mr Lee) has reminded people constantly in this House, the Leader of the Opposition has a miserable track record on taxation reform. He was part of the dishonest campaign of a fistful of dollars and when he became Treasurer he removed that. The Opposition promised indexation and it removed that. On the issue of a capital gains tax, I would like to refer to statements made by Senator Messner. I am surprised that no Opposition members have in any way discussed what seems to be a confused position among the Opposition. On the one hand, the Leader of the Opposition (Mr Howard) is saying `We will introduce a consumption tax', and on the other hand the shadow Minister for Finance says: `No, a consumption tax is out'. Mr Beale —Misreported. Mr PRICE —The Leader of the Opposition was saying in the McPherson by-election-was this misreported?-that he was against a flat rate taxation system. Now he is saying: `I was apparently wrong then. I have had another rethink. It is right now. We are all in favour of flat rate taxation'. The Leader of the Opposition says `No way' to a capital gains tax, and his shadow Minister for Finance says: `I think we will have to have a capital gains tax, and it will not be on the real increase, that is, the nominal increase less inflation, and then at the marginal rate'. I hope that Opposition members will tell their constituents and their farmers that they intend to put a capital gains tax on the nominal increase at the full marginal rate. Let the people of Australia know this conflicting and confusing story that comes from the Opposition. I wish now to conclude. There are a number of matters I could have dealt with in this package, but my time in this debate is limited. I am proud to be part of this reform package that has been announced by the Treasurer and, I believe, accepted by the people of Australia. Mr IAN CAMERON(Maranoa)(8.42) —It is my pleasure to take part in this debate on this iniquitous reform. Having heard the remarks of the honourable member for Chifley (Mr Price), I wish to make the position clear to the 170,000 farmers listening to the radio out there tonight. I wonder why any of them would ever want to support what the Australian Labor Party represents in this debate, particularly the iniquitous capital gains tax which the Labor Government has introduced. Never let any Australian forget that it was the ALP that introduced this tax. No other party but the Labor Party has seen fit to put this iniquitous new tax on us. Who needs a new tax in Australia? Not one individual Australian wishes to see any new taxation. Yet this Hawke socialist Government sees fit to introduce a brand new tax which militates against the farming community and puts it at a tremendous disadvantage. It is important for the Australian people to understand that this is the fourth Labor Budget we have had in the past six months-and it is the worst of the four Budgets. We told our constituents that after August there was worse to come. We have certainly copped it in this so-called reform. There is nothing reformist about this package. All it amounts to is a whole range of new tax measures. The Minister for Sport, Recreation and Tourism (Mr John Brown) understands that. Where is his package on tourism? He promised that six weeks ago but he still has not brought it into this House. Mr John Brown —Which package are you talking about? Mr IAN CAMERON —The Minister promised new tax incentives to the tourist industry. He said that he would put them before the House, but he has done nothing about it, and that is still the case. The real increase in taxation in the last 12 months under this Government is 7 per cent. There has been a 12.5 per cent increase in the amount of tax people are being asked to pay. Keating comes in here day by day and tries to hoodwink the Australian population into believing that there has been no increase in taxation. I repeat that there has been a 12.5 per cent increase in the amount of tax paid on average by every Australian in the last 12 months. It is disgusting that people are expected to pay more and more in taxation when we are in the depths of a recesssion. The great white leader, Bob Hawke, had a summit in this chamber. Indeed, the Labor Party is still abusing this chamber in that it is still having summits. I suggest, and continue to suggest, that we need a summit on expenditure. Until we get down and nut out exactly where we are going and how much money we want to spend, we shall get nowhere. We shall just see increasing taxation. The country has got itself into a sad state. Not just this Government is to blame but governments in the past, probably in the last 10 to 15 years. There has been an enormous increase in the move from the private to the public sector in that period. This is the problem not only with Australia but also with New Zealand. I have just paid a visit to New Zealand with my family and that country is in an incredible economic mess. It is even worse there than it is here. In New Zealand farmers are being asked to pay 30 per cent in interest. The going interest rate in New Zealand is 23 per cent. A video recorder costs $1,500 and costs are enormous. Unfortunately, the people there are suffering under a socialist government, the the Lange Government, in the same way as we are suffering under the socialist Hawke Government. The people there are feeling the pinch in the same way as we are here. There must have been some reason why 40,000 farmers came to the doors of this Parliament on 1 July. When Keating and the Labor Government commenced the so-called reform of the taxation system for the people of Australia, for small business and the farmers whom I represent, 40,000 to 50,000 of them turned up outside this building. They did not leave their homes throughout Australia without feeling concern about what was happening to them. They came here to plead to this Government to do something sensible. But what did this Government do? In this reform package it brought down a whole range of tax disincentives against the farming community. It totally discriminated against farmers, and I regard that as incredible. One of the worst things that has happened concerns the Income Tax Assessment Bill (No. 4) 1984. Sections 80 and 80AAA in that Bill, which was introduced by a Labor Government, allows companies to transfer both losses and profits within themselves provided that they have a 100 per cent common interest. What do we see in the tax reform? Mr Keating takes the view that farmers- Madam DEPUTY SPEAKER(Mrs Child) —Order! I am reluctant to interrupt the honourable gentleman in full flow, but I ask him to refer to Ministers by their correct titles. Mr IAN CAMERON —The Treasurer-Mr Keating is the Treasurer, unfortunately for the people of Australia-introduced this reform package and one of the many sections contained within it relating to the transfer of profits and losses on or off the farm means that farmers are being totally discriminated against. They can own a farm as individuals but can no longer go off the farm in their own persons and earn incomes and put either profits or losses against the income of the farm. Yet BHP and all the big companies in Australia are allowed to do so. Labor introduced a Bill in this House in 1984 to allow companies to take that course. Although Labor members regard this tax package as reform, I do not call it reform. I cannot understand why one farming family in Australia would want to vote for the Labor Party at the next election. We have heard a great deal about capital gains tax. Most people have talked about it. It is a new tax and again is discriminatory. The Treasurer says that there will be no distortions in the system, but what does the great white leader, Prime Minister Hawke, say? In Perth he said that the family home will be exempted from this wonderful new reform package. We shall see palaces built around Melbourne and Sydney. The Prime Minister lives in a pretty decent sort of place in Melbourne, but no doubt we shall see him living in an even better home in Melbourne. It is a total distortion of the system. It is ridiculous. It is a move from one side of taxation to another. The worst aspect of the capital gains tax, as has been pointed out by many speakers in this debate, is that it is just the beginning. How long will the inflation component in it last? I suggest that it will not be very long. I give it to the next Budget, if not before. The inflation component of the capital gains tax will be abolished in the next Budget. The Government says that there is no death duty component in the capital gains tax. Most families in Australia have to sell their assets that they are left and this Government will tax those assets. Most assets will be sold within 12 months or 18 months of the death of a family member. As if people are not in enough trouble following a death in a family, this Government will hound them. These people will have to pay an indirect death duty because the assets of a deceased family member will be sold and split up. As soon as this happens people will be paying 49 cents in the dollar in tax. I ask honourable members: What is fair and reasonable about that? The answer is nothing. The Government cannot be trusted. We know that all taxes increase. Sales taxes go up and down. The level of tax paid on capital gains will go up from year to year as each Treasurer comes in and needs more funds. Unfortunately we do not seem to be able to stop injecting ourselves with the hypodermic needle that makes us spend and waste money. Dick Smith talked to us tonight about the aviation industry. It costs $450m to run this industry, and the plane per pilot cost is enormous. These are the problems that we have to look at in this country. I think the other problem of off farm income tremendously disadvantages people who are trying to buy a farm. The Labor Party does not seem to understand that there are a lot of battlers out there who actually support the Labor Party. Many people in the electorate of Maranoa still actually vote for the Labor Party. Why they ever would I do not know. Mind you, there are not many of them left, but after this package is implemented they will all be voting for me and the National Party of Australia. There are still some people such as shearers and kangaroo shooters who still want to go out to earn an honest living and who wish to own a block of land. But this Government will stop them from doing this by taxing their off-farm income. I will be very pleased to be able to come back to this House after the next election with an even greater majority. I can tell honourable members here and now that my majority will go up because there will not be a Labor supporter left in Maranoa who will give a second thought to voting for Bob Hawke and his team at the next election. We now have the highest real interest rates since the last Depression as a result of the deficit spending of the Government. The honourable member for Chifley (Mr Price) and other honourable members try to get up and tell us that we do not have high unemployment. The unemployment figure is not down on the figure that applied under the Fraser Government. The figure is static because we have to take account of the enormous public expenditure of funds that are being made available to keep people in jobs. This situation cannot last. New Zealand is right down the tube; we are half down the tube. Unfortunately, we will be right down with New Zealand by the time honourable members opposite are finished with us. This is a very sad state of affairs. Interest rates in New Zealand are running at 30 per cent. Mr McLachlan from the National Farmers Federation spoke to us last night. It is amazing how the Prime Minister gets up in this place and tells us that he is the friend of the farmers. What rot! The NFF does not agree with one section of this package-not one. Mr McLachlan listed a whole range of things. He told us why it was that the Labor Party ought to be put out of office. I would like to make a suggestion that I have put forward before. I am not saying that farmers will reduce the high interest rates by creating their own bank but at least if they had such a bank they would have things in their own hands and be able to control some of their destiny. I cannot see why foreign banks should be allowed in this country while farmers are forced to sit back and do nothing about their banking arrangements. I know that the big commercial banks do not like what I am saying about farmers creating their own bank. However, one needs $25m in capital to set up a bank. The farmers of Australia would easily be able to raise that amount if they transferred their funds from the present banking system into their own bank. A gearing ratio of only 6.5 per cent is needed for funds to be lent. In other words, one is allowed to lend $150m if one has capital of $25m. I believe that such an arrangement would make a lot of sense. Before I conclude my speech I would like to mention the claim by the Treasurer that the fuel tax has been of benefit to farmers. I would like to tell the farmers in Maranoa, Gippsland, Mallee and the other good places around Australia that on average farmers are paying $3,300 in fuel tax whereas the householder is paying only $1,300. This is another example of total discrimination by the Australian Government against the farming community of Australia. Not only is the Government imposing higher taxes on farmers but also it withdrew the fuel freight subsidy a few weeks ago. I ask the Treasurer to re-introduce that subsidy. The time available to me in this debate is almost exhausted. Before I conclude I would like to give my good friend, the Premier of Queensland, Sir Joh Bjelke-Petersen, my full support for advocating the only real tax reform in this country, and that is a single rate of taxation. No other real reform has been mentioned. The only reform with any semblance of merit that came out of the tax summit was Joh's single tax rate. I believe it will not be until that tax is introduced that we will see good government in this country. Madam DEPUTY SPEAKER(Mrs Child) —Order! The honourable member's time has expired. Mr SNOW(Eden-Monaro)(8.57) —In December 1975 Australia elected a political coalition to power which had told the people that it would form a government which would stand up to the unions and lessen strikes, reduce inflation and straighten out the tax system. It would be tough and decisive. But what happened? There were seven years of toughness, the toughness of a jelly; seven years of decisiveness, the decisiveness of a sheep separated from its herd. In those seven years strikes became far worse, not better. Inflation improved little following the effect of the 1975 Hayden Budget. But, worst of all was the hidden attack on Australia's taxpayers-tax rorts, money to the bottom of the harbour, people forced into tax avoidance through the failure by the Fraser-Howard Budgets to face up to the need to reform the tax system. Who was left with the baby? It was the ordinary wage and salary earner, the bulk of the Australian people. I have not heard one Opposition member mention the effect of this package on the wage and salary earner. Wage and salary taxpayers will be on average $9 a week better off when the new tax system is introduced next year. Without doubt, wage and salary earners who have taxes deducted from their wages have borne the brunt of taxes while other people have developed strategies to try to avoid their share of tax. The reduction of the 60c margin will make it less worthwhile for high income earners to take up expensive tax evasion and avoidance strategies and will increase the number of people paying their fair share of tax. The raising of the threshold by $500 to $5,100 before any tax is payable will assist people who are at present trapped into poverty by the tax system. The $12,500 threshold will be increased to $12,600. These changes will apply from 1 September 1986 when the Government's receipts start to come in as a result of its attack on avoidance. Further changes will take place from 1 July 1987 when the final tax rates will drop even further. The previous Government talked about the need for reform of the tax system for a long time but it was never game to effect reform. Another aspect of the tax package will help small business. The non-taxing of dividends has been requested by business for 30 years and at last we have a government that is prepared to do it. The tax on dividends from shares in a company no longer applies. Half the cost of doing that will be borne by a higher tax on companies and half by other government savings through anti-tax evasion measures and reduction in error through the introduction of identification cards. While large corporations are complaining, I am sure their shareholders are not; nor are small companies whose shareholders are small in number and control the amount paid in dividends. Most complaints come from corporate executives who are inclined to favour retention of funds for further investment rather than the distribution of dividends. I note that some Opposition speakers, in spite of the fact that the capital gains tax has been explained by speaker after speaker on this side of the House, still talk of the capital gains tax as if it is a threat to the farming community. So, I am forced into repeating what previous speakers on this side of the House such as the honourable member for Capricornia (Mr Wright) have said: This new tax will apply only to assets acquired after 19 September 1985 and will be imposed at ordinary rates of personal or company income tax on realised capital gains adjusted for inflation. The tax will not, therefore, apply to capital gains derived from assets acquired by a taxpayer on or before 19 September 1985, notwithstanding that the asset concerned might not be disposed of for many years to come. Mr Nehl —It is the thin end of the wedge. Mr SNOW —For the purpose of determining the amount of a capital gain derived by a taxpayer, the cost of the asset to the taxpayer will be adjusted upwards to reflect the increase in the consumer price index over the period during which the asset was owned by the taxpayer. Another point that has not been acknowledged by the Opposition is that realised capital losses will be able to be set off against capital gains realised in the same year or, in the absence of capital gains in that year, may be carried forwarded indefinitely and offset against gains in subsequent years. The principal residence owned and occupied by a taxpayer will be exempt from the tax. Only one residence may be treated as the principal residence of a taxpayer and his or her family. I note that honourable members opposite are calling the capital gains tax the thin end of the wedge. I am sure that they do not really need to be reminded that the thin end of the wedge is already in the legislation. In fact, one Opposition member, Senator Tony Messner, actually advocated a continuation of the capital gains tax and a strengthening of existing provisions which would provide for a tax, not on realised capital gains, not on capital gains adjusted for inflation, but on capital gains increases. The previous Government, we ought not forget, talked about the need for reform for seven long years, seven years which yielded nothing. The need for reform of the tax system has now been faced up to. It is an important working part of this Government's economic management. I support the proposals. I have noted the continuing support from the electorate, without any criticism of the capital gains tax from the many farmers or small businesses in my electorate, and with strong support from the people who have been helped most by the reform, namely, the wage and salary earners of Australia. Mr DOWNER(Mayo)(9.04) —The Australian Labor Party's obsession with wealth distribution and its negative and destructive opposition to society's small business and rural wealth creators have come through only too clearly as the principal theme in the tax reform package. It is the Hawke Government's greatest monument so far to the politics of envy. The evidence for this is simply that the wealth creating business sector is being asked to bear the bulk of the burden created by this package. The Treasurer (Mr Keating) pointed this out quite clearly in his statement of 19 September. He quite surprisingly recognised the link between wealth creation, profits, jobs and growth. The Treasurer, in Attachment C to his tax statements, stated: Ultimately, of course, the corporate burden will be shifted to individuals. The burden is likely to be borne by corporate shareholders via reduced dividends and/or slower growth in the value of shares reflecting lower retained earnings. What the Treasurer is saying is that the tax package will reduce profits and the effect of that fall in profits will ultimately flow through to the rest of the community. Community wealth, as every bush economist knows, is created by productive investment. Funds for investment come either directly or indirectly from profits; even loan funds must be repaid ultimately out of profits; and equity is unlikely to be invested in an unprofitable firm. The tax package makes a direct assault on profits and on investment. It is a quite alarming and savage attack on business, on Australia's wealth creators. Let us look at just a few of the details. First, there is the invidious tax on fringe benefits. This tax is a direct assault on wealth creation for a number of reasons. It is a tax misdirected against business rather than against the beneficiaries of the benefits-and, therefore, it attacks corporate profitability. On this latter point, the Treasurer's taxation White Paper stated: The best approach, in principle, would be to include the defined value of fringe benefits in the employee's assessable income so that tax would be paid on total remuneration, whether received as salaries or wages or by way of fringe benefits, at the employee's personal tax rate. Why did the Government not follow the `best approach'? We all know the answer: The Australian Council of Trade Unions would not accept it. Simon said no. The result is an anti-business tax which will cost the Broken Hill Proprietary Co. Ltd alone $15m a year. It is a tax which discriminates against small businesses, which have less capacity to meet the higher wages bill than big business. Consequently, the more talented employees in small business will be attracted to big business, which can put together better salary packages. Small business, about which the Labor Party does not care, will be the loser. This tax is also a breach of fundamental principles of tax law-that is, the tax liability incurred by an employee is being borne by a non-beneficiary. It is the first time in Australia's history that such a basic principle has been stood on its head. But it is the detailed aspects of the fringe benefits tax which principally weaken the wealth creation mechanisms of Australia. The tax is obviously a tax on employment. It will force up the cost of jobs to employers and thereby will make a contribution-the Labor Party has never worried about this-to unemployment. In taxing those employers, in taxing business and in forcing people out of jobs, it is attacking ordinary Australians, not just the rich. It is doing that in a lot of other ways. For example, those employees who receive low interest loans, such as employees of banks, typically earn less than average weekly earnings. If the employer, the bank, refuses to pay the extra tax which the Labor Government has imposed on it, that will reduce the income of those employees by 14 per cent. Let us take the example of those employees who are provided with cars by their employers. Seventy per cent of these people receive cars in the Commodore-Falcon range. These employees are not the rich. They are not people with Rolls Royces and BMWs. These are people who are earning approximately average weekly earnings. The effect also on employees in the car industry and on the car industry as a whole will clearly be deleterious. The Australian Automobile Dealers Association has forecast a loss of 50,000 units a year. That forecast may well be an exaggeration; I do not know. But the point is perfectly clear. John Spalvins, the chief executive of the Adelaide Steamship Co. Ltd, made that point only too clearly when recently-just two days ago-he said that, as a result of this tax, 4,000 cars in his fleet will no longer be provided. That will be at a cost of $50m to the automotive industry. Its effect on South Australia which is moving towards a State election will clearly be particularly harmful. I believe the fringe benefits tax will disrupt the Button car industry plan-the plan which has generally been welcomed by members of this Parliament-because employers will move away from the larger car market and buy smaller cars for their employees. Honourable members opposite will certainly not know that, by moving towards buying smaller cars, employers will be moving towards cars which have a lower local content. Moving towards cars with a lower local content will disrupt, if not destroy, the Labor Party's own car plan. A further deleterious effect of this absurd fringe benefits tax has been the wrangle over whether the States will pay the tax. All the Premiers, except Mr Cain, who presumably has been preoccupied with manifold crises of his own, have said that they will not pay the tax. South Australia has said it will not pay the $5m that the Commonwealth will try to extract from it. This is the first time in Australia's history that the Commonwealth Government has run the constitutional gauntlet of trying to extract taxation from State governments. All I can say is that that underlies the complete absurdity of the fringe benefits tax, a tax which, as I have pointed out, will undo generations of taxation laws, create absurd anomalies and weaken the wealth creation sectors of the economy. The capital gains tax will also have this effect. Honourable members have spoken about this at some length. Let me make one simple point. Capital accumulation is central to economic growth. Income does not come out of thin air; it comes from the combination of capital and labour. Capital is the source of jobs; it is the source of wealth for the future. Any sensible, intelligent government should encourage, not discourage capital accumulation. That is why the American Government is reducing its capital gains tax rate. That is why the Canadians, and even the Socialist Mitterrand Government of France, with all its faults, are doing precisely the same thing. The Labor Party argues that this capital gains tax is a mild capital gains tax and that it will not affect current asset holders. As the honourable member for Forde (Dr Watson) has pointed out, that is utter and arrant nonsense. It will depress the value of existing assets. As the honourable member also pointed out, who would deny that an asset bought on 18 September would cost a higher price than one bought on 20 September? In other words, the value of farmers' land, the value of property in general, will fall, but so will the value of the capital stock of small businesses. That is capital which is needed for future trading. It would have created growth and jobs. It is also capital which is reasonably needed for the provision of adequate retirement funds, a point repeatedly made by the Small Business Corporation of South Australia, which was established by the Bannon Labor Government. The capital gains tax will also distort investment patterns, particularly in housing. I admit that it will force up some prices. Those prices will be the land and property prices in places such as Toorak and Vaucluse. People will sell the properties they are renting and put those investment funds into the one thing that is free of the capital gains tax-their own homes. Clearly, the effect of selling those other properties will be a shortage of rental accommodation, a rise in rents-because there will be less investment in rented accommodation-and a shortage of rental accommodation which already exists to a very serious extent. For example, in Sydney the problem will be exacerbated and again the losers will not be high income earners or the rich people. The losers will be the low income earners and those who are dependent on social security who have to use rental accommodation. Of course, the biggest losers from the Labor Party's tax plan and its capital gains tax will be small business people. They are the people who ultimately will lose the incentive to invest, lose the incentive to create jobs and lose the incentive to build the economy of Australia. That is why ultimately this aspect of the tax package is little more than a savage attack on wealth creation. I would like to refer tonight to one other aspect of the tax package. It is one which perhaps has not been debated very much so far. I refer to the foreign tax credit system. Again this is part of what the Labor Party is all about-undermining wealth creation. The measure has been around for some time. It has been opposed by the business community, it has been opposed by business associations but the Treasurer and his Party have been deaf. The effect of this tax will be perfectly clear. In the main it will impose a higher tax on those companies which have overseas earnings, on those companies, for example, which invest in the United Kingdom where they would pay 35 per cent company tax or in countries of the Association of South East Asian Nations where the tax is 40 per cent, or in the United States of America where it will be reduced to 33 per cent. Such companies will now be hit with a tax rate of 49 per cent whereas their competitors from those countries will still pay the lower company tax rates charged in those countries. To make this point perfectly clear, let me quote what the Business Council of Australia has said about the foreign tax credit system. It stated: . . . the imposition of a foreign tax credit system will have a serious and negative effect on existing overseas business operations of Australian companies, and restrict desirable future investment with an attendent depressing effect on Australia's trade growth through development in and commitment to, overseas markets. It will inhibit the ability of Australian companies to expand by seeking economies of scale beyond the constraints of the Australian domestic market. Ultimately, this will result in lower economic and employment growth within Australia. The Labor Party does not care about that. It is not even listening to the points that the Business Council has made. We all know why. The Labor Party hates multinationals but we never guessed that the multinationals it hated the most were Australian multinationals. Finally, I express my deep concern about the quarantining of farm losses, a point that other members have made quite solidly. This quarantining is an ignorant assault on primary producers who have already been brought to their knees by the big spending, big taxing madness of Labor. I say `ignorant' because the Government makes two false assumptions: Firstly it assumes that investment by Rundle Street or Collins Street farmers damages the rural community. The reverse is the case. Those people provide much needed investment capital for country towns and communities and their withdrawal will depress land prices and economic activity, thereby lowering the level of the assets of primary producers. The second false assumption is that the practice of earning additional income and offsetting it against farm losses is conducted only by wealthy doctors and airline pilots. Many farmers need extra jobs especially during a rural depression which, of course, they are experiencing at present. Many of them shear part time or even full time; many work as truck drivers and do all sorts of other activities many of which the honourable member for Wakefield (Mr Andrew) referred to earlier. In the United States 60 per cent of farmers earn income in this way to supplement the very small incomes they get from their enterprises. It is an economically irrational measure because it is inconsistent. Elsewhere, the losses in one part of a business can be offset against the profits of another. For example, if one had a delicatessen and a dry cleaning business one could offset the losses of one against the profits of the other but when it comes to the rural community and rural investment, the Labor Party hates them. It has discriminated against them and it is reducing still further rural incomes and rural investment. I end where I began. This is the tired, tried formula of the politics of envy which is so much part and parcel of the tried and tired Labor philosophy. The Labor Party has never been interested in wealth creation; it is interested only in wealth distribution and redistribution and that is what this tax package is all about. Madam DEPUTY SPEAKER(Mrs Darling) —Order! The honourable member's time has expired. Mr GRACE(Fowler)(9.19) —Tonight I congratulate the Government on its efforts to reconstruct the taxation system. During the 1984 election campaign the Hawke Government made a commitment to change and restructure the tax system which, for many years, has been favouring those on high incomes. Honourable members will also recall that the Prime Minister (Mr Hawke) set out nine principles on tax reform and before any reform took place all nine principles had to be met. The Treasurer (Mr Keating) was relentless in his efforts to change the system which exists today. One must stop and think why we need tax reform. Why reduce personal income tax rates and introduce new taxes? Why? Because people with large disposable incomes have been avoiding paying their fair share of tax. The middle income earners with salaries between $19,500 and $35,000 have had to bear the brunt of the tax burden. They are the ones paying more and more tax. What do the two words `tax reform' mean? I will try to explain them. Tax reform is about creating a fair and equitable society for all Australians, not just a few who, because of their privileged positions, can decide that they do not want to pay tax. This practice has gone on for far too long and the Government has set about correcting those anomalies so that every person who works pays his fair share of tax, whether it be through wages and salaries or through a capital gains tax. The capital gains tax is a very interesting part of our package. From 19 September 1985 it will apply to those who have bought property or invested their money for the specific purpose of gaining capital income. This violates the horizontal equity principle since it favours those who take their income as capital and discriminates against those who earn their money through wages and salaries. It also undermines the progressivity of the tax system. Honourable members opposite and the poor little rich farmers say that they will be discriminated against, but they will not be. If they already own their own property and wish to pass it on to their children without having to pay tax on it, they will be able to do so. Farmers will also benefit from the reduction in the marginal rate of income tax and the lifting of the tax threshold. Only the Pitt Street and Collins Street farmers, who invest in farming because of its attraction as a tax shelter, will suffer. An example of this is the quarantining of farm losses. This provision will help genuine farmers. It will also help those farmers who may need to acquire additional properties for grazing and it will help people who wish to start a new life on a farm. Apparently many people in Australia are willing to do that, but because the Pitt Street farmers have taken up land as tax shelters land prices have been at a premium level. Because land will not be worth buying for taxation purposes more properties will come onto the market, so obviously land will be cheaper. We will also reduce the top rate of income tax from 60c in the dollar to 49c in the dollar. The 48c and 46c marginal rates will be reduced to 40c. Mr Price —They didn't do anything, Ted. Mr GRACE —Those changes will be introduced over two years. As the honourable member for Chifley has remined me, the previous Government did not do anything. Of course, the two lowest rates will be reduced by one per cent. These reductions will mean that no taxpayer in Australia will pay more than half his salary or wages in tax. As I have travelled around my electorate and visited my local branches of the Australian Labor Party I have noticed some dissatisfaction with the way the Government has reduced substantially the higher rates while reducing the rate for those in the low income bracket by only one per cent. I say to them what I will say here tonight: It is not those in the lower bracket who can afford to set up tax shelters, invest in property and write it off. We want to reduce the higher rates so that people on high incomes will be discouraged from avoiding paying their fair share of tax. I point out to the House that we have not forgotten the low income earners. In November last year we gave low and middle income earners tax cuts averaging $7.60 a week, which cost the Government in the vicinity of $2.5 billion. We have helped low income families under the prices and incomes accord and through the introduction of Medicare. Since we came to power those on incomes of $240 have had an increase of around 13 per cent over and above wage indexation. We are gradually eliminating poverty traps, having taken major steps in that area, and we have taken positive steps in this most recent reform package. We will increase the allowable earnings of pensioners so that single pensioners will be able to earn up to $40 a week and married pensioners up to $70 a week before their pensions are affected. Along with the increases in the tax free threshold and the indexation of pensions in line with the consumer price index, this will go a long way towards helping those unfortunate people. Social security beneficiaries who are renting in the private sector are entitled to rent assistance, which is now subject to an income test. We will abolish this income test, which was one of the most severe traps this Government inherited from the previous Government. In effect, the application of the income test deterred pensioners from earning any further income because of the threat of losing some of their benefits, therefore they fell further and further behind average worker income levels. We have helped restore some form of dignity to those people. In the last two years of the Fraser Government social security beneficiaries were far worse off than they are now. Since we came to office we have increased the unemployment benefit by $27, in line with the CPI. That is helping those people who were put out of work under the previous Government to survive while this Government sets about creating new job opportunities for them. I turn to fringe benefits. Millions of dollars go back into the pockets of big companies, company executives and high-ranking officials. Fringe benefits, offered in the form of packages, are used to attract employees. This is a shameful practice. Let me outline some of the deals that have been done. Let us look at a marketing executive. He may be paid a salary of $50,000 per annum and he would be offered a package as follows: A car worth $30,000; overseas travel worth $10,000; either education for his children or a low interest housing loan, worth roughly $4,000, a grand total of $94,000 yet he pays tax on only $50,000. As well, he is able to claim on his tax return each year entertainment and expense allowances such as providing drinks, business meals-or so-called business meals-cocktail parties, staff social functions, sightseeing tours for the wife of a client or someone he wishes to impress and entertainment allowance for his wife just to hand around the gin and tonics. Honourable members opposite would be very familiar with this practice. The ordinary worker in the street does not have access to these deceitful and shameful practices which mean that such people pay little or no income tax. The Government has not stopped here. It is going further to catch those who abuse the system by claiming more than one social security payment or the cheat who has one job during the day and another during the evening under an assumed name. To eradicate yet another deceitful practice we will introduce a national identification card, commonly referred to as the Australia Card. I believe that this is probably one of the most important parts of our taxation package. It will be a card along the lines of the Medicare card. It will contain only a name, an address and a person's signature. I must admit that I would have liked to have seen us go the whole hog and put a photograph on it-but that is a personal opinion. To guard against improper use of the Australia Card, legislation will be introduced to assist in combating tax evasion and to reduce the scope of abuse of the social security system and other government allowances. It will also help identify illegal immigrants and others working in Australia who are not entitled to do so. The card will also be used to aid in the identification of participants in certain financial transactions, such as opening, closing and operating bank accounts and the payment of interest. It will also help to identify persons lawfully entitled to undertake work in Australia for tax linkage purposes and persons entitled to government benefits, pensions and other income support. The introduction of the Australia Card will provide the long overdue means of ensuring that everybody pays his fair share of tax. An increase in the amount of taxation revenue will be the major benefit derived from the introduction of such a card. I will now discuss the next part of this Government's tax reform package. When wage and salary earners earn their money, tax is taken out by the employer. What do we do with those other people who earn income throughout the year? At present they pay tax in one lump sum. We will introduce a system whereby compulsory quarterly provisional tax will be paid at the beginning of each quarter. Only about 800,000 provisional taxpayers will be affected, being those with a provisional tax liability of over $2,000 per year. The amount of tax payable will not be changed-only the date on which it is to be paid. People with fluctuating incomes will be permitted, under special circumstances, to undertake an alternative pattern of instalment payment. This will be available to any taxpayer who can prove to the Commissioner of Taxation that he will receive more than three-quarters of his gross yearly income after the earliest due date for the second instalment of provisional tax; that is, in December. I am proud to be a member of the second Hawke Government-a government that has set about ensuring that we have a fairer and more just system of taxation which will help those who are more disadvantaged in our community. Along with other Government members, I do not want our constituents to be subsidising with their hard-earned money people such as those honourable members opposite whose constituents have been taking advantage of a system set up by the Liberals for the Liberals and who do not worry about anybody else. The then Treasurer and now Leader of the Opposition (Mr Howard) failed to bring in any reform that would ensure that all Australians benefited from being in such a rich nation as ours. It is in the self-perpetuating interest of honourable members opposite to oppose this tax reform package, but they know in their own hearts that what this Government is doing will be of benefit to the nation as a whole in the future. I give my full support to this package and commend it to the House. Mr SPENDER(North Sydney)(9.34) —It is a source of wonder to honourable members on this side of the House to hear two lines coming from the other side again and again. The first is the parrot phrasing that this great reformation of the Australian taxation system that the Government has brought about is what the Government and the Treasurer (Mr Keating) intended to do. We all know that it was not what the Treasurer intended. It just happens to be what the Treasurer ended up with. The second point is the attack upon the Leader of the Opposition (Mr Howard) to the effect that he was unable to get radical tax reform proposals through. We all know that the option which the Treasurer wanted was denied to him. What happened? He was unable to get through the radical tax reform proposals on which he had set his heart so dearly, and in respect of which he allowed the possibility, which he did not finally carry out, that if he did not get his way he might leave and go elsewhere. He has not left. We still have him. That is bad for the Australian people but good for those of us in opposition. The need for reformation of the tax system is undisputed. The history of this package is known-I have just referred to it. It was sired on a talk-back show when the Prime Minister (Mr Hawke), as a passing idea, decided that a tax summit would be a good idea and Ben Hur, as the Treasurer described himself, got over the line with half a chariot intact, looking as though he was a refugee from a natural disaster. The objectives of a reform package for a tax system should be to improve growth, foster initiative and promote international competitiveness. Those objectives are desperately needed in this country, as a survey of principal economic indicators will show. We have a deficit on current account for the past financial year of $10.1 billion. We depend on the inflow of foreign capital to keep the money system afloat. Last year, $9.8 billion of foreign capital flowed into this country. The gross overseas debt has escalated in a manner that can only be described as astonishing and deeply worrying. In June 1975, it was about $6 billion. By June 1984, it had grown to just on $45 billion. By June 1985, it was just on $68.5 billion, an increase in 12 months of over $20 billion. Does anybody really believe that we can afford to continue to borrow at this rate and that the financial system of this country can stand those kinds of strains? Apparently the Treasurer and this Government do, as they treat these indicators with a disdain which is as astonishing as the ignorance displayed is frightening. Public debt interest, again, is reaching astonishing proportions. If one looks to the detail, one finds that in 1984-85, excluding payments to the States, it was the fourth largest item of Budget outlays. For the 1985-86 financial year it is estimated that it will be equal second, so that before we can do anything we have to pay a steadily increasing proportion of income tax to meet the interest on our public debt. Real interest rates are historically high. I will give the figures for public debt interest. In 1984-85 interest on our public debt was $5,656,000,000. In 1985-86 it is estimated that it will have increased by more than a billion dollars to $6,724,000,000. As I said, it will be in equal second position, putting to one side the States grants. It is now ahead of defence in terms of outlays. That amount is just to keep government borrowings afloat. Of course, that is not just government borrowings of this Government but accumulated borrowings which are being made very much worse and are at a very much higher rate because of the economic policies entered into by this Government. Real interest rates are historically high, the highest since the Great Depression. Apparently this is a source of pride to the Treasurer. He has said in this House: `Look, people are borrowing now to invest, not like when you were in power, when they were borrowing to stay afloat'. Does anybody really believe that people are borrowing at these historically high interest rates simply for the purpose of investment? It is the most transparent nonsense. What about the value of the Australian dollar? If one ever wished to see a vote of no confidence in this country's currency and its financial management, it is to be found there. In the 12 months since September 1984, our currency has dropped by just over 14 per cent against the United States dollar, by just on 25 per cent against the Japanese yen and by just over 19 per cent on the trade weighted index. What a marvellous performance; what a performance that we can be proud of! Perhaps we can bring our dollar down even lower. Perhaps we can get an Australian dollar which will buy us 50 cents in the US dollar market. For another vote of no confidence in this Government's economic management, let us look at private Australian overseas investment. It is another first for the Hawke Government. In 1983-84, Australian private investment overseas amounted to $1,953m. In 1984-85, in the first full financial year after the exchange controls on overseas investment had been virtually wiped to one side, private overseas investment amounted to $2,980m-and this at a time when our currency was going downward. What are people saying? They are saying that it is better to invest out of Australia than in Australia. It is not overseas investors who are saying that, but Australian investors. Effectively, therefore, we are borrowing ourselves into oblivion. We have currency which is going downhill and we have a flight of capital from this country for the very good reason that people believe that they can do better overseas and are worried about what will take place here, about the consequences of this Government's economic policies. Let me say something about a few of the specific measures in this taxation package-the capital gains tax, death duties, the foreign tax issue and entertainment expenses. As to capital gains, we are told that we will be taxed only at the marginal rate. Is that not perfectfully marvellous? When we look at how the system works, what does it mean to us? It means effectively that almost everyone will be taxed at the highest rate because, if a person has a capital gain of any sort at all that will be lumped in with his other income for the purposes of determining the rate at which he should be paying tax. If this Government is lucky enough that the rates can ever be brought down to 49 per cent-it is making some assumptions about growth that many commentators dispute-we will see a top rate of 49 per cent and a capital gains tax at that rate. This tax will be disincentive to Australian entepreneurs, a disincentive to small business and a tax on small business. It will be an incentive to cheat, to invest overseas and to engage in off-shore tax aviodance. The Treasurer has breathed life back into the tax planning community in a stroke. For foreign investors it is a marked disincentive to investment in this country, because the capital gains taxes in other major countries such as the United States of America and Britain are lower than here. What would one do? One would invest where one could get the best possible rate. I turn to death duties. It has been said-I heard the honourable member for Capricornia (Mr Wright) say it-that there is no death duty in the package presented. What absolute nonsense! The only charitable thing one can say of him is that he has not understood it. The Treasurer, in his statement, said: The Government has decided that the deemed realisation at death proposal, outlined in the draft White Paper, will not apply. That is reassuring, one would think. Then, when one turns to the fine print, one sees the following statement: Capital gains tax will not be levied following the death of a taxpayer unless his or her assets are actually realised by the administrator of the deceased estate or disposed of by a beneficiary of the estate. Does the Treasurer not understand what happens when people die? They either leave a will or die intestate. If they die intestate, the whole of the estate is realised. When they leave a will, almost invariably they make some specific bequests but the bulk of the estate is sold up and divided amongst those they want to benefit. In most cases those persons are members of their family. What does that mean, therefore? It means capital gains. What will the taxation rates be? In most cases, if we are looking at an estate, we are once again looking at a capital gains tax at a very high rate. What does that amount to? It amounts to death duties, pure and simple, at a punitive level. We are given this bogus and despicable argument that no death duties are involved in this package. The foreign tax credit system has been extolled by the Treasurer and by honourable members opposite as though it was going to be of some marvellous benefit to this country. Let us look at how it will work. At present, foreign source income on which tax is paid is exempt from income tax. What does the foreign tax credit proposal mean? It means that investors will be taxed on their overseas earnings at the same rate at which they would pay tax on Australian earnings. What will that do? It will encourage Australian organisations to disinvest. It will prevent us from building up overseas Australian-owned business which will repatriate dividends into this country and help us to shore up our current account. Some would remember that it was a major reason for Britain's former economic strength that it had major overseas investments. The loss of those investments has been one of the reasons why Britain fell into such parlous economic conditions. Therefore, the medium to long term effect will be a contraction of our overseas investment. As has been made apparent, that contraction may take place very much more quickly than some thought. Indeed, Sir Tristan Antico of Pioneer Concrete Services Limited has raised the question of the disposition or flotation of the company's foreign-owned organisations because of these great reforms in the tax system. We also have the abolition of entertainment expenses. Of course entertainment expenses can be abused. Nobody would dispute that. But if we look at what has been done elsewhere such as in Britain, we see that they have been specifically curtailed and that they can be curtailed. Those here who would say that entertainment expenses have no part in business have not the least idea of the way in which business operates, particularly business that has to deal with overseas customers such as the Japanese. It is an integral part of dealing with the Japanese that we entertain them. What are we going to do? Are we to wipe away entertainment expenses because of the politics of envy and push another impost on to business? This proposal has been attacked by different elements of the Australian community across the nation. It is deceitful in the way in which it seeks to tell the community that there will be no death duty. There will be a death duty. It betrays the thrifty, punishes families on death, taxes small business and, above all, exemplifies the politics of envy which, despite some of the modern protestations of the Labor Party, are embedded into it. Mr MILDREN(Ballarat)(9.49) —I am sure that the speech we just heard was particularly elucidating for all those people in Australia who are now being accused of being envious-those hundreds of thousands of Australians who over the years have had to support those people who have had the opportunity to defraud this country through all forms of tax evasion. So far today we have heard this Opposition proclaim the virtues of tax shelters, non-compliance schemes and the maintenance of privilege for the privileged. That is what we heard espoused just a moment ago-the maintenance of privilege for the privileged. Those people who demur in that regard are called envious. These people who have been paying the larger burden of tax in this country are called envious because they do not wish to continue to do that on such an inequitable basis. All this talk is about making certain that there is some equity in the system. The tax reform package is not about revenue raising; it is a matter of ensuring that those people in the community who have not been meeting their tax responsibilities actually do so. At no time has the Opposition indicated any commitment whatsoever to the tax burden imposed on those who have had to shoulder the burden for so long, largely under conservative governments. It is not particularly surprising-to the contrary-that this state of affairs has developed in the many years of conservative government in this country. Had there been some concern to ensure that the tax burden should be shared equitably we would have seen at least some evidence over the years that there was some desire to implement reform. Not only have we not seen that but also the Opposition, when in government, had the political means to implement such a policy because it controlled both houses of the Parliament. There were no impediments, except a lack of will, a lack of courage and, in fact, of course, a perception by some people who thought because of their privileged position that they should be able to avoid taxes. The Opposition turned away from the issue and allowed non-compliance in the area of tax responsibility to be refined into an industry of evasion and avoidance. We now find a belief that the new class of the privileged should be protected at the expense of the great majority of Australians-those who are the pay as you earn taxpayers. The privileged people are now screaming because they are being asked to pay their share. The representatives of these people on the Opposition benches are screaming with them. For them it makes no sense to try to right the wrongs in the system even though it is irrefutable that reform is long overdue. The tactic that we are now witnessing from the Opposition is to look at the supposed manifestations of endangered jobs. We recognise, of course, that some of these jobs have been created-in tax shelter industry. If these people were honest they would come to the nub of the matter. Since they have allowed the imbalance in the system to develop, even though they have been aware of the inequities, they could at least say what their actions imply, namely: `We believe that the PAYE taxpayer should be prepared to support those whose incomes are made otherwise'. Why do they not say this? Obviously they believe that the PAYE taxpayers do not deserve to be protected against those who use the non-compliance devices to minimise tax payments. Why do these people not come clean and admit that they believe that there are two classes of citizens where tax payment is concerned, those who are PAYE taxpayers and those who can choose to pay tax if they so desire? During the 1950s Federal taxes collected from income taxes represented 30 per cent of government revenue. Today it is more than 50 per cent. Because of the unchecked bracket creep PAYE taxpayers have been pushed into higher brackets. At that time 30 years ago it was necessary for a person to be earning nearly 19 times the average weekly income to be taxed at the top rate. However, today that person would have to earn only 1.6 times the average weekly income. That is not something which has happened overnight; it has been evident for years. There has not, however, been any preparedness on the part of the Opposition to do anything about it. In 1955 the person on the average weekly income would have faced a marginal taxation rate of 19 per cent. Today that person would be taxed at a rate of 46 per cent. Hence we have the need to address this issue and to reduce the marginal rates. This drift upwards took effect unchecked and unrelieved during what was largely the reign of the Liberal and National parties. I repeat that during that time the privileged people in this society were able to take advantage of devices which were developed by the tax evasion and tax avoidance industry. This was done quite deliberately and was known to the Opposition when in government. Those people in government in 1977-some of whom might be listening tonight-will recall having promised, in the course of an election campaign by the Fraser Government, to give relief to all PAYE taxpayers. We all know what happened following that election. The Government said: `Terribly sorry; can't deliver'. It dealt the Australian electorate a massive confidence trick. That Government then compounded its deception by refusing to tackle the main problems in the system. Only under the impact of a concerted campaign by the Australian Labor Party was that Government dragged screaming into a belated attempt to block the use of bottom of the harbour devices. There is no denying the fact that governments of today now require greater revenue than did governments in earlier times. Even though the Government is determined to reduce the deficit it still has major outlay imperatives to meet. The Treasurer (Mr Keating) deserves to be congratulated on the product of his labours. He has attempted to reform the tax system, as far as the community could be expected to adjust to it, while at the same time he has moved in this package to ensure that the poor in this country are given relief. All this cannot be done without some people being required to relinquish some of their privileges. Whether they be politicians, journalists, unionists or businessmen and women they cannot expect to continue to receive the benefits of a system which increased their purchasing power outside the taxation system. For the great majority of PAYE taxpayers these devices, known as non-cash fringe benefits and related devices, are simply not available. Back in 1955 people who earned 1.6 times the average weekly income paid about 54 per cent of income tax collected. What is the situation we face today? That group earning 1.6 times the average weekly income now pays only 21 per cent of total taxes collected. Who now pays the remainder? Obviously those on lower and middle incomes pay. Those on higher incomes often really have a choice as to whether they will pay tax at all. The Opposition has never been concerned about these matters. The Opposition has been crying out about the proposed imposition of a moderate capital gains tax. The previous speaker, the honourable member for North Sydney (Mr Spender), tried to fool the people of Australia by calling that a death duty. This capital gains tax is only a mild broadening of the existing capital gains taxes already in place. It is not essentially a revenue earning device. We have been asked why we are doing it. If honourable members opposite are honest in asking that question, they are either thick or they cannot read. The capital gains tax is an economic device to redirect investment capital into more productive areas. To see whether or not this is likely to be achieved, I suggest that people look at the activity on the nation's stock exchanges since this annoucement. I feel sorry for honourable members opposite because they are embarrassed by the Government's courage in tackling the taxation scandal when over the years they have done absolutely nothing because, as I said, they neither had the courage nor the will. Some honourable members opposite are saying how sorry they feel for those who make money by capital gain but who might have to pay a tax on it if property is bought after 19 September 1985. It is a rather pathetic pleading for the retention of the bastions of privilege. Such capital gains increase the purchasing power of those people. Everybody else in the community whose purchasing power is increased is required to pay a tax. We are now being asked for the ordinary taxpayer to subsidise these people. That obviously will not do. There is little appreciation of the inequities in the present system and little honest endeavour to examine the real benefits of the measures that the Government has introduced. It would be easy for us all to be misled into thinking that the misuses or the measures were all about cutting down on tax evasion, imposing a new capital gains tax and cutting out the advantages bestowed by the lurks and perks. However, we must also see that the Government is firmly committed to assisting that section of the community caught in the cycle of poverty. This is a difficult area to tackle, but the measures to alleviate some of the problems of poverty traps will give considerable relief to these people. The pension-free area of income will be raised by $10 per week for single pensioners to $40 per week. That is up 100 per cent since we assumed office. It will be increased to $70 per week for a couple, which is up from $40, again since we took office. The removal of the separate income test on rent assistance will mean for 300,000 social security pensioners and beneficiaries an increase of the equivalent of $15 per week. The increase in the income disregarded for each child of a pensioner is increased from $6 to $12 and is a real buffer against the poverty trap. I am very proud to belong to a government which has had the guts to tackle an issue which was long overdue to be tackled. Mr COWAN(Lyne)(10.03) —During the last week the Parliament met, the Treasurer (Mr Keating) submitted to the House the tax reform package. This is the subject that we are debating tonight. I wonder, when we see most of the legislation, whether there may be some changes to what the Treasurer has already actually determined within the package. My mind goes back to the assets test legislation when the Government changed its mind three times before we saw the final legislation passed here by the Parliament. Mr McGauran —And it was still a mess. Mr COWAN —It was still a mess. I hope they have learned from some of the mistakes that were made at that time. I look upon this tax package as more or less a band-aid affair. I think that any government entering the tax reform field would look first of all to the years ahead to see what its expenditure would be and impose a tax accordingly. The Treasurer and the Cabinet must have a very firm idea about the funds they have to raise because of the responsibility they have when spending that money. It is interesting to look at the history of the Government since the Prime Minister (Mr Hawke) said in Perth during the last election campaign that a taxation summit would be held. That summit was held. It was a disaster. It was a disaster because the packages that the Treasurer placed before it were unacceptable, not only to the unions and to industry, but to everybody who was represented at that summit. My friend the honourable member for Page (Mr Ian Robinson) said only this evening that the farmers who rallied outside Parliament House were promised by the Prime Minister that there would be relief for the primary producers of Australia in his tax packages. But what relief have we seen? I do not have a lot of faith in what this tax reform will produce for Australia. I refer in particular to the capital gains issue, the fringe benefits issue and negative gearing. Compared with the rest of the world, Australia is a young developing country. I would accept that in Europe and maybe in the United States of America-they may even do away with their very small capital gains tax-a capital gains tax is suitable because they are developed countries. Our country is not developed to the potential that many Australians would like to see. We do not want to create any impediments, either by way of legislation or by any other way that will stop this country from developing and producing the food, the minerals and the necessities of life for the rest of the world and to encourage the personal initiative and motivation that this country needs and which is not being given by this Government. I cannot see that and certainly nobody has convinced me of that. One has to look only at the growth in the gross domestic product which the Prime Minister and the Treasurer talk about at length every Question Time. Forty-two per cent of that comes from government initiative. This is not what this country wants. We want a situation where people are encouraged to do things. The previous speaker, the honourable member for Ballarat (Mr Mildren), spoke about the pay as you earn taxpayer receiving a reduction in tax. We welcome that. We think that that is a wonderful initiative. However, I wonder whether it is as good as the Treasurer said. If one does a little mathematics, one finds that a person on a gross salary of $15,000 as at July 1985 paid tax of $2,726, resulting in a net pay of $12,274. Allowing for an 8 per cent increase in salary by July 1987, that person will receive a salary of $17,496-an increase of 16.6 per cent. His tax will be $3,219, an increase of 18.1 per cent. His net pay will be $14,277, an increase of 16.3 per cent. If the growth of 8 per cent in wages were to continue, this same tax payer would be pushed into the higher 40 per cent tax bracket by the end of 1988. They are the PAYE taxpayers of this country. So far as this Government is concerned, there is no indexation of taxation. A million workers in this country will enter higher tax brackets. Place upon them the extra sales tax in certain commodities that they have to meet, and the PAYE people in Australia will be no better off under this Goverment. They are the people who this Government should be helping. I ask: Why does this Government always support big unions, big business and the Left? This is a typical example. It is no use the Government talking about the PAYE people. It is not going to assist them. It never did. It always hurts the working man. I challenge the Treasurer to bring us out of his ideological bondage with socialism in this country. I challenge the Treasurer to continue on the path that he spoke about when he presented those papers to the National Taxation Summit in this chamber. I challenge him to do that. If he wanted the consumption tax, why was it killed? Why were other initiatives killed-initiatives that were possibly acceptable to the bulk of the people of Australia? The answer was no because the unions said no, big business said no, and the Left here agreed. That is why there has been a rape of the taxation system. I spoke a little while ago about initiative and the 730,000 small businesses within Australia. They comprise people with initiative who have to be encouraged. They are the people in relation to whom Labor considered imposing a special service tax, but there was pressure and the Government had to yield to it. The Treasurer did a deal with the unions on a 2 per cent reduction in pay until 1986. People in the 730,000 small businesses work up to 60 or 70 hours a week and they do not depend on any government to pay them an age pension or to give them any assistance. Are they not the types of people we must assist? I should like now to deal with capital gains. The honourable member for Gwydir (Mr Hunt) dealt with this matter very clearly in terms of the effect of such a tax on primary industry. The Treasurer should know that negative gearing and a capital gains tax will rob the little investor of the incentive to provide housing and other services. Mr Howe —Oh! Mr COWAN —It is all very well for the Minister for Social Security (Mr Howe) to take that attitude, but many more people will be seeking his assistance, if he is still here. This will kill the incentive of people to erect accommodation for low income earners. The Real Estate Institute of New South Wales was correct in saying that there will be a great rise in the cost of rental accommodation-and who will pay? It will be the young family, the working man who has not yet had the opportunity to purchase his own home or unit. Let us consider the position of the farmer. I appreciate that the capital gains tax is not in place now, but it will be. It is all very well for Government members to say that it will yield only $25 million over a five-year period. Mr Hunt —It is the foot in the door. Mr COWAN —Yes, the primary industries do not trust the Government because it has its foot in the door. That is the important thing. Labor members can talk of Pitt Street and Collins Street farmers. Let them not forget that 42,000 farmers are estimated by the National Farmers Federation to have to work off their properties in order to pay off their farms and get sufficient money on which to live. What does the Government intend to do? Does it intend to tax those people? Labor has an embedded hatred of people who own anything. Why is the primary producer, who is responsible for so much of this nation's income, under attack, besieged the whole time by a Labor Government? I cannot understand it. Primary producers employ people and create the affluence within the community that allows Australia to develop. They are the people this Government is out to knock. There is the question of death duties to be considered. Let it not be said that there are no death duties because there are. Death duties are embedded in the Government's capital gains tax. If Labor members look at the tax, they will soon find out; and if they do not know, the primary industries, business and the ordinary man in the street will tell them. Mr Simmons —Nonsense! Mr COWAN —The honourable member for Calare will know it, because he has people in his electorate who will be affected, as has the member for Eden-Monaro (Mr Snow). They will both realise what will happen before long. As to the quarantining of the primary producer, I do not know what those words were conceived to mean, but we will find out before long because, once again, the farmer will be knocked. Debate interrupted. Mr SPEAKER —Order! It being 10.15 p.m., I propose the question: That the House do now adjourn. Mr RUDDOCK(Dundas)(10.15) —On the adjournment tonight I wish to speak briefly about the planning and funding policies for new non-government schools in relation to yesterday's announcement of those schools which were to receive funding. I wish also to refer to a news report about the schools that would not receive funding as a consequence of this Government's decision. I wish particularly to speak in support of a school just outside my electorate which is attended by students from my electorate. I refer to Our Lady of Lebanon School, Harris Park. It is one of the schools that applied for recurrent funding for the secondary school curriculum it seeks to develop in a new junior secondary school at Harris Park. The school has operated for some years as a primary school and now seeks to extend its operations with a year 7 program for next year, with additional years being added to the program in subsequent years. We now have the first evidence of the restrictive new guidelines approved by the Hawke Labor Government for the establishment of new non-government schools. This indicates the Government's philosophy and its approach, and there are case studies that one can examine. The Government has determined under its guidelines, and perhaps with advice from committees it has set up, that with declining enrolments at government schools, particularly in the Parramatta area, it is not appropriate to allow this particular non-government school to expand at this time. All that the critics have said about the Labor Party and its attitude to non-government schools is now being proved to be correct. This decision is nothing more than an attack on the basic rights of all Australian parents to choose where they want their children to go and the schools they should attend. The Labor Government has consistently refused to recognise the legitimacy of a dual system of education. We now have the evidence in relation to Our Lady of Lebanon School as to the way in which the Labor Party is responding in this situation. The school is in Parramatta, the electorate of the Minister for Sport, Tourism and Recreation (Mr John Brown), and I would like to think that he will take an interest in the plight of this school, and certainly in the desire of parents to have their children enrolled in this very special and unique school. We have here evidence that the Minister for Education, Senator Ryan, who failed in her attempts to cut off funding generally to non-government schools when she got rolled by her more pragmatic colleagues, is now trying this back door method to put the lid on the funding of new non-government schools. The Labor Party is still trying to meet its debt to the teacher unions, which have consistently feared competition and have resented the fact that parents have been voting with their feet. With the collusion between this Government and the unions, we have seen the consequences of the barriers that are being erected to new non-government schools. This denies parents the right to educate their children according to their religious beliefs. In the case of the Lebanese people in the western suburbs of Sydney, we must consider their desire to see their children educated in a unique multicultural environment which preserves the language of their own nation. This will bring considerable benefit to Australia over a long period of time. The government school system will ultimately survive, not because of the protective barriers erected by this Labor Government but because parents have confidence in the quality of education it offers. They should be prepared to meet the competition. If the Labor Government fails to recognise this, it does a grave injustice to the government school system as well. I wish to put the matter in that context. Our Lady of Lebanon School is unique. It is a Maronite Catholic school offering a special sort of education to its students. It meets the needs of the multicultural objectives which this Government says are important. Because of the extent to which enrolments have been falling in government schools, in which parents, particularly Lebanese parents, do not wish to see their children enrolled, we see the Government responding in this discriminatory way. I have mentioned already the emphasis on language teaching at Our Lady of Lebanon School. I also want to mention the fact that the school has been approved by the New South Wales Government authorities and would be eligible to take students notwithstanding the fact that the Federal Government has refused recurrent funding for it under the schools program for next year. I want to make a plea to the Minister for Education to reconsider the situation in relation to Our Lady of Lebanon School at Harris Park. I want to make a plea on behalf of the parents; I want to make a plea on behalf of the sisters, whom I know well; I want to make a plea on behalf of those who believe that there ought to be choice in education and who believe that this special school is deserving of the support and encouragement of every member of this House. Mr CLEELAND(McEwen)(10.21) —I rise tonight to support a proposed declaration of scientific responsibility in relation to nuclear weaponry for submission to the United Nations. The declaration has been drafted by Professor Weeramantry, the Professor of Law at Monash University. Because of the text and the time limitations in this debate, the best I can do is read into Hansard the text of the draft submission. Opposition members interjecting- Mr CLEELAND —If honourable members opposite listen they might learn about peace. The document states: Recognising that in age dominated by science and technology, it is essential that science and technology should be devoted to the service of mankind. Gravely concerned that the development and production of nuclear weapons and the nuclear arms race are endangering the future of mankind and indeed of life on this planet. Conscious that the most recent and meticulous scientific inquiries have established the probability of a nuclear winter with disastrous consequences to mankind and our planet in the event of a nuclear confrontation. Realising that the nuclear arms race would be impossible to sustain without the active cooperation of scientists and technologists. Taking account of the fact that the general principles of international law as contained in (a) International custom (b) The general principles of law recognised by civilised nations (c) Judicial decisions and the teachings of jurists (d) Inernational covenants. place beyond doubt the illegality of the use of nuclear weaponry having regard to its violation of the principles of proportionality, discrimination, aggravation of pain and suffering, nullification of a return to peace and non-destruction of neutral states. Aware that the use of nuclear weaponry would undoubtedly result in ecocide, genocide and, if there are any survivors, in massive intergenerational damage Convinced that the concept of a limited nuclear war is unrealistic and a nuclear war once started is totally unlikely to be contained Persuaded that the concepts of self-defence and deterrence have become meaningless in the context of nuclear weaponry and thus afford no justification for their production, possession, testing or deployment Mindful that the use, production, testing, possession and deployment of nuclear weapons thus constitute a violation of international law and a crime against humanity Recalling that this Assembly by Resolution 3384 (XXX) of 10 November 1975 proclaiming the Declaration on the Use of Scientific and Technological Progress in the Interest of Peace and for the Benefit of Mankind and has since taken numerous steps towards the implementation of this resolution, including the passing of Resolution 37/189A of 18 December 1982 calling upon all states, specialized agencies, intergovernmental and non-governmental organisations to take the necessary measures to ensure that the results of scientific and technological progress are used exclusively in the interests of international peace, for the benefit of mankind and for promoting and encouraging respect for human rights and fundamental freedoms Noting that the Human Rights Committee of the United Nations at its 563rd meeting (twenty-third session) held on 2 November 1984 in its general comment 14 (23) c/ (article 6) declared that the production, testing, possession, deployment and use of nuclear weapons should be prohibited and recognised as a crime against humanity Noting also that the said Committee in the said general comment called upon all States, whether Parties to the Covenant or not, to take urgent steps unilaterally and by agreement to rid the world of this menace Persuaded that the legal and moral responsibility borne by scientists participating in such activities is today infinitely greater than at the time of the creation of the first nuclear weapons by reason inter alia of the greater knowledge now available of the disastrous atmospheric, agricultural, medical and social impacts of the use of nuclear weaponry, the possibility of nuclear retaliation, the enormously enhanced destructive power of current nuclear weaponry and the vast nuclear arsenals now available in the event of nuclar war Deeply moved by the consideration that the power of science is such, in the words of the Russell-Einstein Manifesto, as to open the way to a new paradise or lead to the risk of universal death Believing that the participation of scientists and technologists is crucial to the determination of the choice between these alternatives Convinced that the principle of individual responsibility for crimes against humanity is well established in international law Convinced also that superior orders do not constitute a defence in international law in regard to crimes against humanity and Determined that in the light of the above circumstances a consideration of the responsibility of scientists and technologists engaged in the nuclear weapons enterprise should no longer be further delayed by the international community. The proposed declaration continues but time prohibits me from putting the active part of it. However, the declaration calls on all scientists and technologists to cease involvement in the production of nuclear weaponry and to seek peace throughout the world. Mr SPEAKER —I call the honourable member for Fisher. Mr McGauran —He is an excellent member. Mr SLIPPER(Fisher)(10.26) —I thank the honourable member for Gippsland for his comment. Many honourable members may recall receiving recently a booklet entitled `Service and Business Outlook for 1985/86' distributed by Telecom Australia. What a self-serving publication it is. In it there is a glowing reference to Telecom's first 10 years of operation. The Chairman, R. W. Brack, goes so far as to say that this organisation is `proud of the substantial achievements that have been made during this time with the help of new technologies and continuing productivity improvements by management and staff'. It is a pity, however, that the Chairman could not visit my electorate. Residents of Caboolture and nearby areas cannot get a telephone installed at any price until lines finally become available late this month or early November. There are many people in this district who have been waiting many months for telephones. Telecom had the ability to make these lines available. The fact that it chose not to do so is a disgusting example of the inefficiencies associated with a government monopoly. Bell Canada would not have subjected its customers to similar treatment-it would not have been tolerated in Canada. I would like to provide to the House an example of the problems that have arisen. Some installations at last have been finalised after numerous delays, while others are still waiting. On 27 February this year a business applied for a connection of three lines and a commander system in new office facilities at Morayfield. On 27 March the system was installed minus two of the lines requested and the business was advised that the lines would be provided prior to the end of March. As a result of this advice the organisation employed staff and set up its office at considerable cost. In April, Telecom suddenly changed its tune, advising that lines would not become available for some three to four months. Such a situation should not have happened and a number of problems need to be addressed. Why did Telecom sell a system that could not be used immediately? Why was the business told that there would be no problem associated with the allocation of lines? Why should installation and rental be payable on a useless service? Why has Telecom not acted upon the need for a rapid development of facilities in growth areas? In this instance, lost business was estimated by the company to be approximately $100,000. Will compensation be paid by Telecom? I very much doubt it. Such a situation should not have been tolerated. Caboolture is not a remarkably isolated area, being on the northern highway less than 30 miles north of Brisbane. By August this year my office had been inundated with inquiries from constituents seeking the immediate connection of phones. At one stage the number of inquiries reached such a point that two days a week in my office were designated for contacting the regional Telecom office in order to forward individual complaints. The reply from Telecom was courteous but to the point. It was claimed that financial restrictions prevented the updating of facilities until the introduction of improvements to Caboolture exchange early in 1986. Understandably, many constituents were not too pleased with this reply. During August, my office was contacted by a Brisbane current affairs program with a view to finding out the true extent of the problem. A number of constituents indicated they were quite prepared to appear on the show. Within a week of hearing of the proposed program, Telecom had suddenly found the ability to bring forward the development of lines in the area. Honourable members will understand that late October is a far cry from early 1986. What I would like to know is the decision-making process that allowed such a rescheduling of priorities. In an article in the local media on 22 September the district Telecom manager said the exchange had been exhausted five months earlier than predicted due to a combination of numerous sub-divisions and equipment delays. During this time the area recorded an increase of 17 per cent in the call for new lines. Surely such a progressive increase would not go unnoticed. Forward planning should have been implemented. The district Telecom manager in the same article said further that he felt it would now be intolerable for people and businesses to have to wait up to five months. Unfortunately, Telecom has already had its effect upon the Caboolture area. People preparing to set up business ventures have moved elsewhere, real estate development has been hampered, and the economic growth of the area has been harmed accordingly. Telecom must make itself efficient. It must give the service that the people of Australia require. I do not wish this speech to be interpreted as an attack on Telecom staff, as I personally have found them courteous and helpful. But Telecom must shape up or ship out. the people of Fisher and Australia demand it. Mr SPEAKER —Order! The honourable member's time has expired. Mr SIMMONS(Calare)(10.30) —on 24 September I challenged the Leader of the National Party, the right honourable member for New England (Mr Sinclair), to produce documentary evidence to prove that he rejected the Bathurst-Orange area as a possible site for an Army base while he was Minister for Defence. I maintained that claims by the Leader of the National Party that, while Minister for Defence, he rejected proposals for the siting of the Army base in the Bathurst-Orange area or any of the other proposed sites lacked substance in the light of documents I have obtained under the Freedom of Information Act. In all of the documents obtained under the Act, not once did he state his rejection of the Army's proposals. He was well aware that Bathurst-Orange was one of the most favoured sites of the Army, yet he did not ask the Defence Department to reappraise its proposals in any way. The Leader of the National Party visited the Orange area- Mr Cadman —Mr Speaker, I raise a point of order. I wonder whether the honourable member has had the courtesy to give the right honourable member notice of his intention this evening. Mr SIMMONS —Yes, I have. Mr SPEAKER —Order! That is not a point of order. That is a matter of practice. Mr Cadman —How could you? He is not here. Mr SIMMONS —That is his fault. I rang his office at a quarter to nine. Mr SPEAKER —Order! I call the honourable member for Calare. Mr SIMMONS —The Leader of the National Party visited the Orange area on 22 September in an attempt to make cheap political points. In the light of his visit to the region and the statements he made while there, it is even more interesting that not once did he ask for a study to be made of the possibility of Crown land being used for a base and not once did he question the productivity of the land in the proposed regions. The right honourable member for New England may rant, rave and make attacks on me, but he cannot deny what is contained in official ministerial papers. He has made numerous protestations of his innocence. However, these lack any credibility, considering the information contained in the documents. In Parliament on 6 June 1984 the Leader of the National Party said: I have acknowledged that I was aware of the sites. I have confirmed today that I believed them all suitable for a school area. He went on to say: Any one of the areas would be suitable for an infantry or artillery school. The Leader of the National Party knew about the Army's proposals from the early days of planning, yet he failed to voice any disapproval while he was the Minister responsible for defence; nor did he alert any of the people likely to be affected by the Army's plans. I contend that his whole behaviour, in the light of his recent stance on the Army base, is highly questionable. It is most unfortunate that while he was in a position to influence the planning for the base he failed to do so. Yet, more than two years later, he is seeking credit for leading a fight against the proposed base. It is the clearly accepted practice for Ministers to have all their directives and policy decisions in print; so it is surprising that the Leader of the National Party, the right honourable member for New England, should claim that he rejected the Army proposals. In the complete set of documents relating to the Army base issue while he was Minister for Defence, not once did he question the Army's proposals. I have all the documents with me. His comments on 22 September while he was in Orange are full of political rhetoric. When it comes to the facts, he has no defence. His protestations of innocence hold absolutely no water. What upsets me is that this matter is too important for him to use as an issue to boost his flagging support. The emergence of the Rural Australia Party, the growing appeal of the National Farmers Federation and the drop in support for the National Party of Australia are obviously worrying him. His appearance in the region can be construed only as being politically motivated and not as a genuine concern for the people in the proposed area. Following the visit to my electorate by the Leader of the National Party, I challenged him to back up his claims by producing documents which proved that he did direct the Defence Department to study other alternative areas and that he objected to the Bathurst-Orange area being considered and ordered it off the list of proposed sites. If he can produce documentary evidence to back up his pleas of innocence, I will be more than happy to withdraw my claims. Otherwise, he should acknowledge his role in the Defence Department's plans. When I received the documents under the Freedom of Information Act in April of this year, I was assured that they were the only ones the Leader of the National Party, while Minister for Defence, saw in relation to the Army training facilities project. I therefore call upon the Leader of the National Party to prove that he has not misled the people of the central west. He should either produce documents proving that he rejected the proposed Army training sites or apologise for his deliberate misleading of this House and the people of New South Wales. Mr SINCLAIR(New England-Leader of the National Party of Australia)(10.35) —I thank the honourable member for Calare (Mr Simmons) for giving me the courtesy of making me realise for the first time who is the honourable member for Calare in this place. It is important that the people of the electorate which he currently and temporarily represents understand that his mark is very slight and, consequently, his impact is insignificant within the Federal Parliament. It is also important that we comprehend that his actions with respect to the Orange-Bathurst land base have been totally contrary to the interests of several causes. The first is the interests of those who own land and are concerned about continuing to operate land and who have owned that land not just in their own names but for successive generations. Indeed, in my experience there are few areas of Australia where land has been so strongly and well held for so long by so many people. In the area there are a number of families who, through their forebears, have been there ever since the first settlement. The honourable gentleman has failed to represent them. Secondly, he has been quite prepared- Mr Simmons —What about these documents? Mr SINCLAIR —I will come to that. The honourable member should just wait. Many people in the area have quite properly expressed concern that their continued operations are seriously prejudiced because the Government, which the honourable gentleman supports, has been prepared now to place an embargo on normal commercial transactions. There is a virtually total hiatus in investment, rural development and the normal circumstance of people conducting their business. The honourable gentleman, as their member, is really trying to ensure that this Government, of which he is a supporter, continues in its irresponsible way. The third action for which the honourable member has been responsible is that, in terms of trying to encourage the transfer of the Army base to that area, he has seriously led business people in Bathurst and Orange to believe that there will be some genuine benefit to them. I say to them now, as I did when I was in Bathurst and Orange, that it is likely that the principal contracts will not go to people in the district. They are more likely to go to people in Sydney. It is more likely that the continued benefit will be not to people in his community but to people in the capital city. If the facility were to be established in his electorate, it is unlikely that there would be any continuing benefit, as most of the soldiers who would be there would be there on short term postings and would be returning to the city and would be spending their money there, not locally. The honourable gentleman has made a number of allegations. He is very anxious for me to produce the evidence. Let me explain the circumstance. His Minister for Defence at the time, the present Minister for Territories (Mr Scholes), took action immediately after his election to ensure that there would be a processing of an investigation into three areas in New South Wales. He appointed consultants-Dames and Moore-who are still there inquiring into this site. I refused to accept that advice. The honourable gentleman, if he has- Mr Simmons —You did not. Mr SINCLAIR —I did, I am afraid, my friend. There has been no action anywhere which shows my endorsement of that proposal. I rejected that proposal. Mr Simmons —You did not. Mr SINCLAIR —I did. I am afraid that the honourable gentleman not only is prepared to mislead the people of his electorate but also, by asserting that something happened which did not happen, is trying hard to mislead this House. I did not process that claim. I did not accept the statement that was submitted by the Department of Defence, in order to get a joint statement from the Premier saying that we would go ahead with it, because I did not accept that it should proceed. I say to my friend that if it had proceeded I would have gone ahead and made sure that the statement was renounced. I did not do that. I did nothing with it. Mr Simmons —You did not say `No' either. Mr SINCLAIR —No. I say to my friend that what happened was that there was no way I would accept the proposal. Nothing happened while we were in government, because I rejected the proposal. The falsity in the honourable gentleman's claim is that I would have processed the representations from the Department if I had accepted them. I did not accept them, and the reason nothing is in print is that I rejected them. It was not until Labor took office it was prepared to destroy private rights. Labor ignored the interests of landholders. I am as opposed to the Army land base going to Orange and Bathurst now as I was then. There is adequate Crown land in New South Wales which should be investigated before private land is acquired anywhere in that State. There is reason for the Cobar area also to be considered in relation to an area outside New South Wales. There is no basis in the honourable gentleman's claim. Mr SPEAKER —Order! The right honourable gentleman's time has expired. Mr KENT(Hotham)(10.41) —This is not the first time that I have risen in this House to express my concern about events in Sri Lanka. I first expressed my alarm in the wake of mob violence against the Tamils in 1983 when thousands of innocent people, whose only crime was that they were Tamils, suffered death or injury and their property was burned and looted in a government that orchestrated and condoned riot. I felt then, as I feel now, that it is my duty to speak out against racist violence wherever it occurs. I wonder what happened to that tranquil island once called Ceylon so well known to tourists because of its image of peacefulness. My wife and I spent a day in Colombo in early 1954 when we, as migrants, were heading to settle in Australia. Since then I have learned a lot about the history of that beautiful island and the oppression of the Tamil minority there since 1956 when the Sinhala language was introduced as the only official language. It negated a place for the Tamil language in the country. However, the world at large knew little about the discrimination against the Tamil minority in Sri Lanka until the large scale racial violence in 1983. The world knew very little about the fate of more than a million Tamils who were disenfranchised and made stateless even though they had worked and lived in Sri Lanka for generations. The human rights situation in Sri Lanka today is as bad as, if not worse than, it is in South Africa. The only difference between South Africa and Sri Lanka is that in South Africa a small minority is oppressing the large majority of the population while in Sri Lanka it is the majority that is oppressing a large minority, since the Tamils represent about 18 per cent of the population. Both regimes-South African apartheid and the regime of President Jayawardene in Sri Lanka-are based on racial violence. Both regimes are depriving people of basic human rights and are using state terrorism to oppress their population. In this case of South Africa, our Government has undertaken actions in domestic and international forums to stop the racist policies of that state. Yet at the same time we have done very little to persuade the Sri Lankan Government to stop the racist violence against the Tamil minority. The state organised terrorism against the innocent Tamil civilians never ceased after the 1983 racial riots. Detention without trial, arrests, torture and killings continue under the organisation of the Minister for National Security. His security troops, trained by Israeli experts, are committing atrocities daily against the Tamil population. I have a score of cables reporting those atrocities. Yet our Government continues to supply aid to Sri Lanka, including military aid. I hate to think that Australian bullets may be used by perpetrators of racial violence against the innocent Tamil population. Of course the continued oppression and racist violence by the authorities forced the Tamil youths to organise in self-defence to resist the terror. Notwithstanding that, our Government can no longer say that the problems in Sri Lanka are internal matters. When state organised and state condoned racial killings take place there is an obligation on the international community to intervene and take action to stop it. Let me remind the House of our duty to intervene by stating: First they came for the Jews and I did not speak out- because I was not a Jew. Then they came for the communists and I did not speak out- because I was not a communist. Then they came for the trade unionist. and I did not speak out- because I was not a trade unionist. Then they came for me and there was none left to speak out for me. I think that we as a government have a duty to speak out against the persecution of the Tamil minority in Sri Lanka. Mr MILES(Braddon)(10.45) —It is most interesting to listen from time to time to the way some Government members talk about privatisation. If one did not listen carefully one would think that they were talking about fiction. They are certainly not talking from a well-informed basis or a considered foundation. Instead, they wish to use only scare tactics in an attempt to deceive and frighten the Australian population, and in so doing they deny people the opportunity to participate more meaningfully in their jobs. I will explore some of the reasons why the concept of privatisation-even though it is a big word and one which we would probably prefer not to use-will gain acceptance throughout the Western communities of the world. The reason it will gain acceptance is the three or four factors which people notice are happening and have been happening for a long period. The first measure is the growth of government. I will indicate a little about the growth of government from 1969 to 1985. In 1969 the number of persons in Australia in receipt of welfare per 100 private sector employees was 26 and in 1985 it is 66 people. We have to support that number of people. That is a big increase. People in the Australian community are concerned about it. In 1969 the number of government employees per 100 private sector employees was 25; now we have 34, an increase of 36 per cent. The number of persons in receipt of government incomes per 100 private sector employees in 1969 was 51 and in 1985, 100. The figure has doubled. Mr Hollis —That includes you. Mr MILES —I realise that that figure includes me. People in Australia realising that this process cannot go on because ultimately the private sector, the people who are productive in this community, will not be able to afford it. People see that the functions of the Public Service have changed. Instead of just having the traditional Public Service functions, for example, policy advice and implementation, tax collection, the armed forces and law enforcement, which take up 30 per cent of the people who are employed by the government, we now find the government is now into trading activities such as Trans Australia Airlines, Qantas Airways Ltd and other major operations. That is where 70 per cent of government employees are now operating. In other words, government is performing functions for this nation which could well be handled by people in the private sector. Over the years people have heard governments say: `Let us cut back the size of government'. Governments have used various tactics such as efficiency drives, elimination of waste, elimination of unnecessary programs and limits on expenditure by government departments. However, these measures have not worked. People in the Western world know that a different tack must be used. This is why the people of Australia will take up the concept of privatisation. As they do I believe we will find a much healthier economy. Privatisation is about increasing personal independence and freedom. It will give workers and unionists a greater opportunity of creating wealth for their families. It will enable more people to have the opportunity to be owners; it will encourage competition; it will reduce the powers of monopolies; it will help break the present arbitrary divisions between owners and earners; and it will hold taxes to a minimum. The reason the Government is concerned about privatisation and the capacity- Mr SPEAKER —Order! The honourable member's time has expired. Mr BLANCHARD(Moore)(10.50) —Mr Speaker, we still have a long way to go before it can be said that we have reached that goal of adequate support for those in genuine need. Although the 1985-86 Budget has accelerated the process, an issue which is reflective of the fact that many people in Australia today are living below Henderson's poverty line, is that of the crisis in emergency relief. The general view of the State Ministers for Community Services and councils of social service is that emergency relief no longer constitutes emergency payments to meet crisis situations but has become a form of income supplementation for social security recipients, who make up 90 per cent of those applying for emergency relief. Emergency relief as an income supplement has been criticised by State governments because of the added demands on their social welfare expenditure. The councils of social service are critical of the continued funding of emergency relief as they believe that, firstly, it is stigmatising and can be described as institutionalised begging; secondly, it does not address the real issue of social security pensions and benefits being significantly below the Henderson poverty line; and, thirdly, it draws agencies away from their stated aims into delivering emergency relief. The Standing Committee of Social Welfare Administrations, representing the State governments, recently resolved that the State and Territory administrations should cease providing emergency relief payments used as income supplementation from 1 January 1986. The New South Wales Government has already withdrawn, that withdrawal having taken effect on the 1 October 1985. The indications are that other State and Territory governments are reviewing their emergency relief delivery policies to produce more restrictive guidelines to reduce expenditure. The Northern Territory Government is introducing new guidelines from February 1986 and the Queensland Government is making arrangements for emergency relief to be taken over by the St Vincent de Paul Society and the Salvation Army. In Western Australia new guidelines, which are retrospective, are being introduced and non-government sector is being asked to take up the slack in this area. I turn to the Commonwealth role. Until the financial year 1979-80, the Commonwealth Government played no role in providing funds for emergency relief. In that year the Commonwealth made an initial contribution to the funds of non-government agencies of $0.5m. On its return to office in 1983 the Government doubled the then Commonwealth contribution to $5m. This contribution increased to $6m in 1985-86. Notwithstanding this increase in funding by the Commonwealth to non-government agencies, the latter have been placed faced with ever increasing demands for emergency relief. The Victorian emergency relief project, which represents some 350 agencies giving emergency relief in that State, indicates that the average value of assistance has fallen significantly in recent years. The agencies state: Despite a tenfold increase in Federal Emergency Relief grants between 1981-1984 the average value of assistance given to a family in Victoria has fallen significantly. There is a need, therefore, for some urgent measures to be taken. I feel that this is something which should be done by the Commonwealth, by State governments and by the non-government sectors. I should like to see established a working party to look at the issue of emergency relief in relation to levels of social security pensions and benefits and in relation to concessions. Mr SPEAKER —Order! The honourable member's time has expired. Mr GOODLUCK(Franklin)(10.55) —I read with interest today, I think in the Melbourne Age, that Senator Gareth Evans had been reported as saying-I shall not be unkind to him-that Australia had the second lowest price for petrol in the countries of the Organisation for Economic Co-operation and Development. Senator Evans said that it was an average of 51c a litre. I thought to myself that the price of petrol in Tasmania is 60c a litre. This comparison is always made and it is said that Australia has the second lowest price. It seems to substantiate the argument that we are the second lowest in price, and it sounds great. But everyone seems to forget that Australia is a very large country. When compared with prices in other countries, our prices do not add up because we are 70 per cent self-sufficient. So the argument does not mean anything. The point is very significant. The average price of petrol in Australia is 51c a litre, yet the Tasmanian people are paying 60c a litre. I know that others in Australia are paying even more than that. So the whole matter is very clearly highlighted. Another thing that is most annoying relates to liquid petroleum gas. Motor vehicles can be and are driven economically and efficiently on LPG. In Victoria it is about 17c to 19c per litre, yet in Tasmania it is 33c a litre. Mr Hodgman —How much? Mr GOODLUCK —It is 33c a litre; nearly twice the price charged elsewhere. Mr Chynoweth —The petrol companies are ripping them off. Mr GOODLUCK —There is a monopoly in Tasmania by Boral. I shall write to Boral. I shall give Boral a chance, first; but I have a very good tongue in this House and I shall say exactly what I think: `You have the monopoly in Tasmania. LPG is 33c a litre-about 17c a litre more. You cannot add that up in freight charges, so something is wrong'. I think of the many people who have turned to the alternative of LPG-taxi drivers and suppliers. When the price of petrol to farmers and everyone else in Australia is increased that increase flows right through the economy. Therefore, the people of Tasmania are being disadvantaged. I touch on another subject very briefly. I have been involved as the patron of the Tasmanian Parents Without Partners for a long time. Many people knock Parents Without Partners without realising that it is doing a very good job behind the scenes. Young children who are reared by single parents have a cross to bear. We should give them as much support as is humanly possible. I know that most of us do so. People with a little charity and common sense would say: `Things have changed. There are a lot of marriage break-ups today. Many people die and many children are left to be reared by single parents, and if they are given love by one good parent at least they will have a chance in this complicated world'. Therefore I urge everyone who hears people running down these unfortunate parents without partners because they meet and try to make a better life for themselves and their children, to defend them. There are many knockers in the world. Many people talk about girls who have young children to rear on their own. I have even heard anti-abortionists-just like myself-saying: `You should not give the benefit to the single woman'. These arguments do not add up. One must be very sincere and not hypocritical, because one will be found out. It is useless for someone to plead with me on the one side saying `Fight against abortion, Bruce' yet on the other hand saying: `You should not give the benefit to that poor single girl'. What would such people rather have? Would they rather have the child aborted than have the child given the chance to be reared in a decent, respectable way? Mr CADMAN(Mitchell)(10.59) —Mr Speaker, I should like to draw to your attention the unsatisfactory situation that we have had this year with Hansard. I know that you are aware of it. I find it very difficult to work in this place when Hansard is consistently delivered one day or two days late. It makes it extremely difficult for back benchers to answer effectively arguments or criticisms that have been directed against them. It must be extremely difficult for Ministers to deal with matters about which they have been criticised. You have made a couple of explanations, Mr Speaker. I cannot stress my concern too strongly, and I wish you to take action about this matter. Mr SPEAKER —I shall answer the honourable member for Mitchell (Mr Cadman) in the 15 seconds that I have. There is no action that can be taken by the Parlimentary Department. Every necessary act is carried out by the Parliamentary Reporting Staff. The difficulty is with the Government Printing Office, which is not under my control. Mr Cadman —Thank you, Mr Speaker. Mr SPEAKER —Order! It being 11 p.m. the debate is interrupted. House adjourned at 11 p.m. The following notice was given: Dr Blewett to present a Bill for an Act to amend various laws relating to health, and for related purposes. The following papers were deemed to have been presented on 10 October 1985: Public Service Act-Determination-1985-No. 80. Seat of Government (Administration) Act-Variation of plan of lay-out of City of Canberra and its environs, dated 9 October 1985.